U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities
--------- Exchange Act of 1934
For the quarterly period ended June 30, 2004
------------------
_______ Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to ___________
Commission File Number 1-10526
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UNITED-GUARDIAN, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 11-1719724
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
230 Marcus Boulevard., Hauppauge, New York 11788
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(Address of Principal Executive Offices)
(631) 273-0900
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(Issuer's Telephone Number)
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(Former Name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
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Cover Page 1 of 2 Pages
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the Registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes _________ No ____________
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
4,929,539
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Cover Page 2 of 2 Pages
UNITED-GUARDIAN, INC.
INDEX
Page No.
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Part I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Statements of Earnings -
Six Months Ended June 30, 2004 and 2003.................. 2
Consolidated Balance Sheets -
June 30, 2004 and December 31, 2003..................... 3-4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 2004 and 2003.................. 5
Consolidated Notes to Financial Statements............... 6-10
Item 2 - Management's Discussion and Analysis or Plan of
Operations ............................................. 10-14
Item 3 - Controls and Procedures................................... 14
Part II. OTHER INFORMATION
Item 1 - Legal Proceedings......................................... 14
Item 2 - Changes in Securities and Use of Proceeds................. 14
Item 3 - Defaults Upon Senior Securities........................... 14
Item 4 - Submission of Matters to a Vote of Security Holders....... 14
Item 5 - Other Information......................................... 14
Item 6 - Exhibits and Reports On Form 8-K.......................... 14-15
Signatures............................................................ 15
1
Part I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
UNITED-GUARDIAN, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
SIX MONTHS ENDED THREE MONTHS ENDED
June 30, June 30,
2004 2003 2004 2003
Revenue:
Net sales $ 5,990,071 $ 6,317,077 $ 3,022,968 $ 3,099,544
---------- ---------- ---------- ----------
Costs and expenses:
Cost of sales 2,598,815 3,053,516 1,325,555 1,523,369
Operating expenses 1,347,487 1,262,808 701,636 631,110
---------- ---------- ---------- ----------
3,946,302 4,316,324 2,027,191 2,154,479
---------- ---------- ---------- ----------
Income from operations 2,043,769 2,000,753 995,777 945,065
Other income (expense):
Investment income 106,412 79,164 49,320 39,923
Gain on sale of assets - 500 - -
Other (17) (25) - (25)
---------- --------- ---------- ---------
Income before income taxes 2,150,164 2,080,392 1,045,097 984,963
Provision for income taxes 768,000 742,000 372,800 350,000
--------- --------- --------- ---------
Net income $ 1,382,164 $ 1,338,392 $ 672,297 $ 634,963
========= ========= ========= =========
Earnings per common share
(basic and diluted) $ 0.28 $ 0.27 $ 0.14 $ 0.13
========= ========= ========= =========
Weighted average shares
- basic 4,926,753 4,883,951 4,929,539 4,886,733
========= ========= ========= =========
Weighted average shares
- diluted 4,937,206 4,900,032 4,937,759 4,905,740
========= ========= ========= =========
See notes to financial statements
2
UNITED-GUARDIAN, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2004 2003
------------ -------------
ASSETS (UNAUDITED) (DERIVED FROM
AUDITED FINANCIAL
STATEMENTS)
Current assets:
Cash and cash equivalents $ 3,038,098 $ 2,710,029
Temporary investments 1,517,008 1,615,751
Marketable securities 6,092,186 6,098,986
Accounts receivable, net of
allowance for doubtful accounts
of 27,000 at June 30, 2004
and December 31, 2003 1,315,482 1,007,055
Inventories (net) 1,478,979 1,093,312
Prepaid expenses and other
current assets 257,533 264,978
Deferred income taxes 237,017 207,817
----------- -----------
Total current assets 13,936,303 12,997,928
----------- -----------
Property, plant and equipment:
Land 69,000 69,000
Factory equipment and fixtures 2,919,710 2,825,125
Building and improvements 2,073,191 2,068,752
Waste disposal plant 133,532 133,532
----------- -----------
5,195,433 5,096,409
Less: Accumulated depreciation 4,173,273 4,070,158
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1,022,160 1,026,251
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Other assets:
Processes and patents, net of
accumulated amortization of
$981,797 and $981,732 at
June 30, 2004 and December 31,
2003, respectively - 65
Other 700 700
----------- -----------
700 765
----------- -----------
$ 14,959,163 $ 14,024,944
=========== ===========
See notes to financial statements
3
UNITED-GUARDIAN, INC.
CONSOLIDATED BALANCE SHEETS
June 30 December 31,
2004 2003
--------------- ------------
LIABILITIES AND (UNAUDITED) (DERIVED FROM AUDITED
STOCKHOLDERS' EQUITY FINANCIAL STATEMENTS)
Current liabilities:
Dividends payable $ - $ 737,736
Accounts payable 475,893 309,921
Accrued expenses 480,340 350,769
Taxes payable 19,001 -
--------- ---------
Total current liabilities 975,234 1,398,426
--------- ---------
Deferred income taxes 10,000 10,000
--------- ---------
Stockholders' equity:
Common stock, $.10 par value;
10,0000,000 shares authorized;
4,991,739 and 4,984,439 shares
issued, respectively; 4,929,539
and 4,922,239 shares outstanding,
respectively 499,174 498,444
Capital in excess of par value 3,740,613 3,717,160
Accumulated other comprehensive loss (79,550) (30,614)
Retained earnings 10,173,322 8,791,158
Treasury stock, at cost; 62,200 shares (359,630) (359,630)
--------- ---------
Total stockholders' equity 13,973,929 12,616,518
--------- ---------
$ 14,959,163 $ 14,024,944
========== ==========
See notes to financial statements
4
UNITED-GUARDIAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
June 30,
------------
2004 2003
------- -------
Cash flows provided by operating activities:
Net income $ 1,382,164 $ 1,338,392
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 103,180 102,539
Amortization of bond premium - 4,589
Net gain on sale of equipment - (500)
Provision for doubtful accounts - 11,406
Provision for inventory obsolescence (91,000) 34,000
Increase (decrease) in cash resulting
from changes in operating assets and
liabilities
Accounts receivable (308,427) (564,454)
Inventories (294,667) 349,175
Prepaid expenses and other assets 7,445 109,911
Accounts payable 165,972 993
Accrued expenses and taxes payable 148,572 60,368
---------- --------
Net cash provided by operating activities 1,113,239 1,446,419
---------- --------
Cash flows from investing activities:
Acquisition of plant and equipment (99,024) (83,584)
Proceeds from sale of equipment - 500
Net change in temporary investments 98,743 1,377,512
Purchase of marketable securities (1,247,013) (1,900)
Proceeds from sale of marketable securities 1,175,677 430,000
---------- --------
Net cash (used in) provided by
investing activities (71,617) 1,722,528
---------- --------
Cash flows from financing activities:
Proceeds from exercise of stock options 24 183 101,050
Dividends paid (737,736) (488,114)
---------- --------
Net cash used in financing activities (713,553) (387,064)
---------- --------
Net increase in cash and cash
equivalents 328,069 2,781,883
Cash and cash equivalents at beginning of period 2,710,029 3,184,599
---------- ---------
Cash and cash equivalents at end of period $ 3,038,098 $ 5,966,482
========== =========
See notes to financial statements
5
UNITED-GUARDIAN, INC.
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of June 30, 2004
and the results of operations and cash flows for the three and six months ended
June 30, 2004 and 2003. The accounting policies followed by the Company are set
forth in the Company's financial statements included in its December 31, 2003
Annual Report to Shareholders.
2. The results of operations for the three and six months ended June 30,
2004 and 2003 are not necessarily indicative of the results to be expected for
the full year.
3. Stock-Based Compensation: At its meeting on March 19, 2004 the Board of
Directors of the Company approved the adoption of a new stock-based employee
compensation plan to replace the previous two stock-based employee compensation
plans that expired in 2003. The new plan covers both employees and Directors.
The adoption and implementation of new plan was ratified by the shareholders of
the Company at the Company's annual meeting of shareholders on May 19, 2004. As
permitted under FAS NO. 148, (Accounting for Stock-Based Compensation-Transition
and Disclosure), which amended SFAS NO. 123, (Accounting for Stock-Based
Compensation), United-Guardian has elected to continue to follow the intrinsic
value method in accounting for its stock-based employee compensation
arrangements as defined by Accounting Principle Board Opinion ("APB") No. 25,
(Accounting for Stock Issued to Employees), and related interpretations
including Financial Accounting Standards Board Interpretation No. 44,
(Accounting for Certain Transactions involving Stock Compensation), an
interpretation of APB No. 25. The following table illustrates the effect on net
income and earnings per share if the company had applied the fair value
recognition provisions of SFAS No.123 to stock-based employee compensation.
Six months ended Three months ended
June 30, June30,
2004 2003 2004 2003
-------- -------- -------- --------
Reported net income $1,382,164 $1,338,392 $ 672,297 $ 634,963
Stock-based employee compensation
expense included in reported net
income, net of related tax effects 0 0 0 0
Stock-based employee compensation
determined under the fair value based
method, net of related tax effect 0 (13,195) 0 (5,979)
--------- -------- --------- --------
Pro forma net income $1,382,164 $1,325,197 $ 672,297 $628,984
========== ======== ========== ========
Earnings per share (basic and diluted)
As reported $ .28 $ .27 $ .14 $ .13
Pro forma $ .28 $ .27 $ .14 $ .13
6
4. Inventories - Net
Inventories consist of the following: June 30, December 31,
2004 2003
---------- ----------
Raw materials and work in process $ 520,452 $ 225,443
Finished products and fine chemicals 958,527 867,869
---------- ----------
$1,478,979 $1,093,312
========== ==========
At June 30, 2004 and December 31, 2003, the Company has reserved $128,000
and $219,000, respectively, for slow moving and obsolete inventory.
5. For purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments purchased with a maturity of three months or less to
be cash equivalents.
Cash payments for taxes were $712,432 and $617,645 for the six months ended
June 30, 2004 and 2003, respectively.
6. Comprehensive Income (Loss)
The components of comprehensive income (loss) are as follows:
Six months ended June 30, Three months ended June 30,
2004 2003 2004 2003
------ ----- ------ ------
Net income $1,382,164 $1,338,392 $ 672,297 $ 634,963
--------- --------- --------- ---------
Other comprehensive income (loss)
Unrealized gain (loss) on
marketable securities (78,136) 22,243 (93,311) 27,369
--------- --------- --------- ---------
Income tax (benefit) on
comprehensive (loss) gain (29,200) 8,280 (34,930) 10,193
--------- --------- --------- ---------
Other comprehensive (loss) income (48,936) 13,963 (58,381) 17,176
--------- --------- --------- ---------
Comprehensive income $1,333,228 $1,352,355 $ 613,916 $ 652,139
========= ========= ========= =========
Accumulated other comprehensive income (loss) is comprised of unrealized
gains and losses on marketable securities, net of the related tax effect.
7
7. Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share at June 30, 2004 and 2003.
Six months ended Three months ended
June 30, June 30,
2004 2003 2004 2003
------ ------ ------ ------
Numerator:
Net income $1,382,164 $1,338,392 $ 672,297 $ 634,963
========= ========= ======= =======
Denominator:
Denominator for basic earnings
per share (weighted average
shares) 4,926,753 4,883,951 4,929,539 4,886,733
Effect of dilutive securities:
Employee stock options 10,453 16,081 8,220 19,007
--------- --------- --------- ---------
Denominator for diluted earnings
per share (adjusted weighted-average
shares) and assumed conversions 4,937,206 4,900,032 4,937,759 4,905,740
========= ========= ========= =========
Basic and diluted earnings per share $ 0.28 $ 0.27 $ 0.14 $ 0.13
========= ========= ========= =========
8. The Company has the following two reportable business segments: Guardian
Laboratories and Eastern Chemical. The Guardian segment conducts research,
development and manufacturing of cosmetic ingredients, personal and health care
products, pharmaceuticals, and specialty industrial products. The Eastern
segment distributes fine chemicals, solutions, dyes and reagents.
The accounting policies used to develop segment information correspond to
those described in the summary of significant accounting policies as set forth
in the Annual Report for the year ended December 31, 2003. Segment earnings or
loss is based on earnings or loss from operations before income taxes. The
reportable segments are distinct business units operating in different
industries. They are separately managed, with separate marketing and
distribution systems. The following information about the two segments is for
the six and three month periods ended June 30, 2004 and 2003.
8
Six months ended June 30,
2004 2003
------------------------------------ ------------------------------------
GUARDIAN EASTERN TOTAL GUARDIAN EASTERN TOTAL
------------ ------------ ----------- ------------ ------------ -----------
Revenues from external customers $ 5,422,334 $ 567,737 $ 5,990,071 $ 5,738,137 $ 578,940 $ 6,317,077
Depreciation and amortization 49,767 - 49,767 45,807 - 45,807
Segment income (loss) before
income taxes 2,165,996 (46,054) 2,119,942 2,126,841 (39,988) 2,086,853
Segment Assets 3,134,561 551,755 3,686,316 2,406,962 275,078 2,682,040
Capital Expenditure 92,221 - 92,221 58,845 - 58,845
Reconciliation to Consolidated Amounts
Income before income taxes
----------------------------
Total income for reportable segments $ 2,119,942 $ 2,086,853
Other income, net 106,395 79,639
Corporate headquarters expense (76,173) (86,100)
---------- ---------
Consolidated earnings before income taxes $ 2,150,164 $ 2,080,392
========== =========
ASSETS
------
Total Assets for reportable segments $ 3,686,316 $ 2,682,040
Corporate headquarters 11,272,847 10,052,092
----------- ----------
Total consolidated assets $14,959,163 $ 12,734,132
=========== ==========
Three months ended June 30,
2004 2003
------------------------------------ ------------------------------------
GUARDIAN EASTERN TOTAL GUARDIAN EASTERN TOTAL
------------ ------------ ----------- ------------ ------------ -----------
Revenues from external customers $ 2,727,102 $ 295,866 $ 3,022,968 $ 2,842,162 $ 257,382 $ 3,099,544
Depreciation and amortization 23,921 - 23,921 25,611 - 25,611
Segment income (loss) before
income taxes 1,062,065 (28,654) 1,033,411 1,013,127 (29,212) 983,915
9
Income before income taxes
----------------------------
Total income for reportable segments $ 1,033,411 $ 983,915
Other income, net 49,320 39,898
Corporate headquarters expense (37,634) (38,850)
---------- ---------
Consolidated earnings before income taxes $ 1,045,097 $ 984,963
========== =========
Other significant items
-----------------------
Six Months ended June 30,
2004 2003
------------------------------------------ -------------------------------------------
Segment Consolidated Segment Consolidated
Totals Corporate Totals Totals Corporate Totals
------------ ------------ ------------- ------------- ------------ ------------
Capital Expenditures $ 92,221 $ 6,803 $ 99,024 $ 58,845 $ 24,739 $ 83,584
Depreciation and amortization 49,767 53,413 103,180 45,807 56,732 102,539
Geographic Information
----------------------
2004 2003
--------------------------- ---------------------------
Revenues Long-Lived Revenues Long-Lived
Assets Assets
----------- ------------- ----------- -------------
United States $ 2,936,424 $ 1,022,160 $ 2,323,878 $ 1,087,071
France 753,847 714,879
Other countries 2,299,800 3,278,320
----------- ------------- ----------- -------------
$ 5,990,071 $ 1,022,160 $ 6,137,077 $ 1,087,071
=========== ============= =========== =============
Major Customers
---------------
Customer A (Guardian)* $ 2,527,401 $ 2,230,979
Customer B (Guardian) 627,476 621,640
All other customers 2,835,194 3,464,458
----------- -----------
$ 5,990,071 $ 6,317,077
=========== ===========
* At June 30, 2004 Customer A and B had balances approximating 40% and 14%
respectively of accounts receivable. At June 30, 2003 Customer A and B had
balances approximating 25% and 9% respectively of accounts receivable.
10
Item 2. Management's Discussion and Analysis or Plan of Operation
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-QSB which are not purely historical are
forward-looking statements with respect to the goals, plans, objectives,
intentions, expectations, financial condition, results of operations, future
performance and business of the Company. Forward-looking statements may be
identified by the use of such words as "believes," "may," "will," "should,"
"intends," "plans," "estimates," or "anticipates" or other similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and
important factors (many of which are beyond our control) could cause actual
results to differ materially from those set forth in the forward-looking
statements. In addition to those specific risks and uncertainties set forth in
the Company's reports currently on file with the SEC, some other factors that
may affect the future results of operations of the Company are: the development
of products that may be superior to the those of the Company; changes in the
quality or composition of the Company's products; lack of market acceptance of
the Company's products; the Company's ability to develop new products; general
economic or industry conditions; intellectual property rights; changes in
interest rates; new legislation or regulatory requirements; conditions of the
securities markets; the Company's ability to raise capital; changes in
accounting principals, policies or guidelines; financial or political
instability; acts of war or terrorism; and other economic, competitive,
governmental, regulatory and technical factors that may affect the Company's
operations, products, services and prices.
Accordingly, results actually achieved may differ materially from those
anticipated as a result of such forward-looking statements, and those statements
speak only as of the date they are made. The Company does not undertake, and
specifically disclaims, any obligation to update any forward-looking statements
to reflect events or circumstances occurring after the date of such statements.
OVERVIEW
The Company is a Delaware corporation that operates in two business
segments. Its Guardian Laboratories Division ("Guardian") conducts research,
product development, manufacturing and marketing of cosmetic ingredients,
personal and health care products, pharmaceuticals, and specialty industrial
products. The products manufactured by Guardian are marketed through marketing
partners, distributors, direct advertising, mailings, and trade exhibitions. Its
most important personal care product line is its LUBRAJEL(R) line of water based
moisturizing and lubricating gels. It also sells two pharmaceutical products,
which are distributed primarily through drug wholesalers and surgical supply
houses. There are also indirect sales to the Veteran's Administration and other
government agencies, and to some hospitals and physicians.
While the Company does have competition in the marketplace for some of its
products, many of its products or processes are either unique in their field or
have some unique characteristics, and therefore are not in direct competition
with the products or processes of other pharmaceutical, chemical, or health care
companies. Guardian's research and development department is actively working on
the development of new products to expand the Company's personal care line.
11
The Company has been issued many patents and trademarks, and intends
whenever possible to make efforts to obtain patents in connection with its
product development program.
The Company's Eastern Chemical subsidiary distributes an extensive line of
fine organic chemicals, research chemicals, test solutions, indicators, dyes and
reagents. Eastern's products are marketed through advertising in trade
publications and direct mailings and are sold both to distributors and directly
to end users for use in a wide variety of applications. Since the Company's
business activities and marketing efforts over the past several years have
focused increasingly on the Guardian division, which the Company believes has
greater growth potential, the Company has reduced Eastern's inventory levels in
order to make the subsidiary more marketable in the event the Company decides to
sell the Eastern operation at some future date. This has resulted in some
reduction in sales for this division. Sales of this division have also declined
as a result of increased competition from new and existing competitors that are
making increased use of the the Internet as a selling tool.
Products manufactured by the Company are marketed worldwide through its
extensive marketing and distribution arrangements. Currently approximately half
of the Company's sales are to foreign customers.
The following discussion and analysis covers material changes in the
financial condition of the Company since December 31, 2003, and a comparison of
the results of operations for the three and six month periods ended June 30,
2004 and June 30, 2003. This discussion and analysis should be read in
conjunction with "Management's Discussion and Analysis or Plan of Operation"
included in the Company's Form 10-KSB for the year ended December 31, 2003.
RESULTS OF OPERATIONS
Gross revenue from operations
-----------------------------
For the six month period ended June 30, 2004 net sales decreased $327,006
(5.2%) versus the comparable period in 2003. The Guardian Laboratories division
("Guardian") had a sales decrease of $315,803 (5.5%) while the Eastern Chemical
subsidiary ("Eastern") had a sales decrease of $11,203 (1.9%).
For the three month period ended June 30, 2004 net sales decreased $76,576
(2.5%) versus the comparable period in 2003. Guardian sales decreased $115,060
(4.0%) while Eastern sales increased $38,484 (15%).
The decreases in Guardian's sales is believed to be due mainly to normal
fluctuations in purchasing patterns of its customers. The six month decrease and
three month increase in Eastern's sales is believed to be partially attributable
to normal fluctuations in purchasing patterns of its customers, but the decrease
may also be partially due to some loss of business due to the Company
maintaining lower inventory levels as compared to the prior year.
12
Cost of sales
-------------
Cost of sales as a percentage of sales decreased to 43.4% for the six
months ended June 30, 2004 from 48.3% for the comparable period ended June 30,
2003. For the three month period ended June 30 2004 compared to the three month
period ended June 30, 2003 cost of sales as a percentage of sales decreased to
43.8% from 49.1%. These decreases are mainly due to a reduction in the
capitalization of overhead for the six and three month periods in 2004 as
compared to the comparable periods in the prior year.
Operating Expenses
------------------
Operating expenses increased $84,679 (6.7%) for the six months ended June
30, 2004 compared to the comparable period in 2003. For the three month period
ended June 30, 2004 operating expenses increased $70,526 (11.2%) over the
comparable period in 2003. Increases in expenses for the six month and three
month periods were mainly due to increases in insurance costs and payroll
related costs, including a bonus accrual.
Investment income
-----------------
Investment income increased $27,248 (34.4%) for the six months ended June
30, 2004 when compared to the comparable period in 2003 and $9,397 (23.5) for
the three months ended June 30, 2004 when compared to the comparable period in
2003. This increase is attributable to an increase in investment in bonds with
higher yields as opposed to lower-yielding money market funds and certificates
of deposit. Investment income is recorded net of brokerage fees.
Provision for income taxes
--------------------------
The provision for income taxes increased $26,000 (3.5%) for the six months
ended June 30, 2004 as compared to the comparable period in 2003 and $22,800
(6.5%) for the three months ended June 30, 2004 when compared to the comparable
period in 2003. The increases for the six and three months ended June 30, 2004
when compared to the comparable period in 2003 are mainly due to an increases in
operating income and investment income.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased from $11,599,502 at December 31, 2003 to
$12,961,069 at June 30, 2004. The current ratio increased from 9.3 to 1 at
December 31, 2003 to 14.3 to 1 at June 30, 2004. The Company has no commitments
for any further significant capital expenditures during the remainder of 2004,
and believes that its working capital is and will continue to be sufficient to
support its operating requirements.
The company generated cash from operations of $1,113,239 and $1,446,419 for
the six months ended June 30, 2004 and June 30, 2003 respectively. The decrease
was primarily due to the net effect of increases in inventory and accounts
receivable partially offset by an increase in accounts payable.
13
During the six month period ended June 30, 2004 $71,617 was used in
investment activities, as compared to the six months ended June 30, 2003 when
$1,722,528 was provided by investing activities. The change was primarily due to
the redemption of certificates of deposit in 2003 and the purchase of temporary
investments in 2004 (primarily money market funds).
Cash used in financing activities was $713,553 and $387,064 for the six
months ended June 30, 2004 and June 30, 2003 respectively. The increase is due
primarily to an increase in dividends paid during the six months ended June 30,
2004 as compared to the three months ended June 30, 2003.
Item 3. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Within 90 days prior to the filing of this Quarterly Report on Form 10-QSB
the Company's principal executive officer and principal financial officer
evaluated the effectiveness of the design and operation of Company's disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the
Securities Exchange Act of 1934 (the "Exchange Act")) and concluded that the
Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is accumulated and communicated to the Company's
management, including its officers, as appropriate to allow timely decisions
regarding required disclosure, and are effective to ensure that such information
is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms.
(b Changes in Internal Controls
The Company's principal executive officer and principal financial officer
have also concluded there were no significant changes in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS: NONE
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS: NONE
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES: NONE
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: NONE
ITEM 5 - OTHER INFORMATION: NONE
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
31.1 Certification of Alfred R. Globus, Chairman and Chief
Executive Officer of the Company, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2 Certification of Kenneth H. Globus, President and Chief
Financial of the Company, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
14
32.1 Certification of Alfred R. Globus, Chairman and Chief
Executive Officer of the Company, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of Kenneth H. Globus, President and Chief
Financial Officer of the Company, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
b. Reports on Form 8-K
On May 27, 2004 the Company filed a report on Form 8-K pertaining
to an earnings release that the Company had issued on May 7, 2004.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
UNITED-GUARDIAN, INC.
(Registrant)
By: /s/ Alfred R. Globus
--------------------
Alfred R. Globus
Chief Executive Officer
By: /s/ Kenneth H. Globus
---------------------
Kenneth H. Globus
Chief Financial Officer
Date: August 9, 2004
15