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INTERIM REPORT
(FOURTH QUARTER, 2000)

                                                                                                           February 9, 2001

Dear Stockholder:

As we have been doing for the past couple of years we are issuing this Interim Report to keep our stockholders updated on the events that have taken place since the Nine Month Report was issued on November 15th of last year.  Our next full report will be the Annual Report to Stockholders that will be issued in April.

While our final financial figures for the year will not be reported until next month, I can report that we expect to finish the year with a significant increase in sales and earnings over last year.  We had a very strong fourth quarter, and I believe that our stockholders are going to be very pleased with the end of the year results.  I am also happy to report that we had a very good start to the new fiscal year, with sales in January exceeding $1 million.  Considering the fact that November and December had been very strong as well, we are very optimistic about this excellent start to the new fiscal year.

One of the most significant areas of growth for us over the past year has been sales of our Lubrajel line of products into Mainland China.  We recently met with International Specialty Products, our marketing arm in China, and according to them we now have a couple of hundred customers in China for our Lubrajel products, including some of the largest producers of cosmetics in China, and they expect this to continue to grow.  I will report in more detail about our increased marketing efforts worldwide in the Annual Report to Stockholders in April.

Our project with a major consumer products company in the United Kingdom that has been evaluating a variation of one of our Lubrajel products for a widely used consumer health care product is continuing, and they recently placed a second order for product to be delivered in March.  Their initial test marketing of the product did not turn up any problems that would prevent them from initiating a full scale marketing effort in the near future. While the volumes are still not significant, we expect sales to them over the next year to grow as they introduce the product into more of their manufacturing plants worldwide.  While the introduction of the new product has been done at a slower pace than we originally expected, in the long run this should be an excellent revenue producer for us.

We have been working on several fronts to expand the marketing of our Razoride shaving gel.  We have suspended our experimental sampling program on our web site, but are still receiving occasional orders and reorders for the product from people all over the country who are enthusiastic about the product.  We recently signed a contract with a catalog marketing company that intends to market this product, as well as other products of ours, to the mail order catalogs that they work with.  We always felt that this particular product could be marketed very effectively if we found the right company to assist us, and I think we now have.  We are also working with Kline & Company, a well known international business consultant, to locate possible marketers of this product into the retail sector.  Although their report to us is not due until mid-February, they have already generated some potential leads that we are following up.  We are also working with an advertising agency that has put us in touch with one of their customers that is interested in working with this product as well as other products of ours.  We are hopeful that with all of these efforts going on simultaneously we will be able to  generate the sales of this product that we have long believed were possible.

The results from our latest tests of Sonarite, our proprietary formulation to reduce snoring and sleep apnea, showed that the product is still not as effective as an earlier formulation had been.  That formulation had to be discontinued because of the inclusion of a raw material that was not approved for our intended use.   We have now made what we believe will be our final modification to the formulation, and we are hoping that this change will bring the efficacy of the product up to the level of the earlier formulation.  We expect to have this formulation tested by Queens University in Canada in the next few weeks.  The results of these tests will determine whether or not this project will be continued.

We have now made tentative arrangements with the Boston University School of Dental Medicine to work with us to determine the effectiveness of Clorpactin, our proprietary antimicrobial product, in treating gingivitis, a disease of the gums.  We expect this work to be completed, and a report issued, by mid-year.

We believe that you will be very pleased with the financial results for 2000, and we are very excited about our prospects for 2001.

 Sincerely,

UNITED-GUARDIAN, INC.


Dr. Alfred R. Globus
Chairman and CEO