Nine
Months Report
November 15, 2000
Dear
Stockholder:
Once
again I am pleased to report that we had a very successful
third quarter, and our earnings for the first nine months of
the year have already exceeded our earnings for all of last
year. Our
earnings for the first 9 months of this year increased 38%
compared to last year, rising from $1,145,348 ($.23 per share)
in 1999 to 1,579,687 ($.32 per share) in 2000, which is $.04
per share more than we earned all of last year! Revenue for the period increased 10% from $7,093,503 in 1999
to $7,795,787 in 2000. For
the three months ended September 30, 2000, net earnings
increased 19% from $303,728 in 1999 ($.06 per share) to
$361,313 ($.07 per share) in 2000.
Because the increase in revenue and earnings for this
year has been primarily the result of increased market
penetration of our existing product lines, we are in an
excellent position to significantly increase sales over the
next few years if some of our current projects turn out to be
as successful as we think they are going to be. We are continuing to work on several exciting projects, some
of which have taken longer than we had expected, but which we
hope will begin generating revenue soon.
One of them is with a large personal care products
company headquartered in the United Kingdom that is working
with one of our Lubrajel products to replace an existing
ingredient in one of their products that has extensive
worldwide distribution. The
latest word we have from them is that they intend to meet in
mid-December to evaluate initial test marketing results. If
those results are good they will go forward with full
marketing of the reformulated product, and we should start
receiving orders from them shortly thereafter.
Another project that was on hold for a while but
which is now active again is the use of another form of
Lubrajel in wound healing.
There had been interest in this project on the part of
a large medical products company last year, but the project
was put on hold. Our
understanding is that it has now been reactivated, and we hope
that they will continue to pursue this with us.
We are continuing our work on Sonarite, our
proprietary formulation to reduce sleep apnea and snoring.
We are now working with Queens University in Canada to
perform some preliminary clinical studies on our most recent
formulation, and they are currently in the process of
enlisting patients for the study.
We hope to have some initial results in a few months.
Another company that markets a different type of
product to reduce snoring has previously expressed in interest
in Sonarite, and is awaiting the results of these tests along
with us.
We completed an initial market test of Razoride™ on
the Internet, and while we did not receive a large number of
orders, the real purpose of the test was to obtain some
feedback on the product, and the orders that we did receive
were accompanied by extremely favorable comments.
We are currently having discussions with several
advertising agencies interested in working with us on this
project, and several interesting marketing ideas are being
discussed. We
expect to come to a decision on the direction we want to go
and which agency we want to work with by the end of November,
and hope to begin our marketing efforts in earnest in the
first quarter of next year.
Those of you who subscribe to Forbes Magazine may
already know this, but for those who don’t I am pleased to
report that in its October 30th issue Forbes
Magazine included United-Guardian
on
its list of the “200 Best Small Companies in America”.
This
is the first time the company has appeared on this very
prestigious list, and we believe it is an indication of the
excellent progress the company has made over the past few
years in increasing its revenue, earnings, and financial
strength. In
order to even be considered for inclusion on this list a
company must have sales of between $5 million and $350
million, show at least a 5% annual growth in revenue and
earnings-per-share over the past five years, and have total
net income in excess of $1 million over the past four fiscal
quarters. In the
case of United-Guardian, the earnings growth rate over the
past five years has averaged 40% per year, placing us 78th
out of the 200 companies listed.
We also ranked 85th for average annual
growth in Return on Equity over the past five years, 55th
for Return on Equity growth over the past 12 months, and 33rd
for Return on Enterprise Value.
The list included such well known companies as eBay,
Perry Ellis, and Learning Tree.
We are very excited about being included on this list,
which is the result of the ongoing efforts we have been making
over the past few years to expand the marketing of our
products. We hope
that this will be just the beginning of a long tenure for us
on this list.
Our new Confetti® II
Dermal Delivery Flakes have now been introduced to the market,
and we will soon be placing ads in industry trade journals to
promote the product worldwide.
This product incorporates various oil soluble
ingredients into colorful flakes that can be suspended in
water-based formulations to create products that are both
colorful and functional.
The new product overcomes some limitations our previous
product had, and should allow the product to be used by many
more companies.
We have located a major
university interested in working with us on the Phase I
clinical trials needed to determine the effectiveness of
Clorpactin®, our proprietary chlorine-based antimicrobial
product, in treating periodontal disease.
We hope to work out the necessary arrangements with
them in the next few weeks, and to begin the clinical trials
early next year.
Our
last quarter has started out well, and we are looking forward
to finishing up another record year for the company.
Sincerely,
UNITED-GUARDIAN,
INC.
DR. ALFRED R. GLOBUS
Chairman and CEO
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