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   March 31, 2006
                                               --------------

   [ ]    Transition report under Section 13 or 15(d) of the Exchange Act

              For the transition period from __________  to  ___________


                    Commission File Number:   1-10526
                                            -----------


                           UNITED-GUARDIAN, INC.
-------------------------------------------------------------------------
         (Exact name of registrant as specified in its charter)


          Delaware                                11-1719724
-------------------------------      ------------------------------------
(State or other jurisdiction of      (I.R.S. Employer Identification No.)
 incorporation or organization)


                230 Marcus Boulevard., Hauppauge, New York 11788
-------------------------------------------------------------------------
                    (Address of principal executive offices)


                                 (631) 273-0900

-------------------------------------------------------------------------
                         (Registrant's telephone number)

-------------------------------------------------------------------------
            (Former name, former address and former fiscal year,
                         if changed since last report)



     Indicate  by check  mark  whether  the  registrant  (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  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.

                                                                Yes [X]  No [ ]





                             Cover Page 1 of 2 Pages
<page>

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act.)

                                                                Yes [ ]  No [X]



         APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                         DURING THE PRECEDING FIVE YEARS

     Indicate by check mark whether the Company  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:

           4,942,139 shares of common stock, par value $.10 per share, as of
              May 1, 2006


     Transitional Small Business Disclosure Format (Check one): Yes [ ]  No [X]
































                             Cover Page 2 of 2 Pages
<page>
                              UNITED-GUARDIAN, INC.

                                      INDEX

                                                                        Page No.
                                                                       ---------
Part I.  FINANCIAL INFORMATION

   Item 1 - Financial Statements

              Consolidated Statements of Income -
                Three Months Ended March 31, 2006 and 2005 (unaudited)....    2

              Consolidated Balance Sheets -
                March 31, 2006 (unaudited) and December 31, 2005..........  3-4

              Consolidated Statements of Cash Flows -
                Three Months ended March 31, 2006 and 2005 (unaudited)....    5

              Consolidated Notes to (unaudited) Financial Statements.....  6-11

   Item 2 - Management's Discussion and Analysis of Financial Condition
              and Results of Operations.................................. 11-14

   Item 3 - Controls and Procedures......................................    14

Part II. OTHER INFORMATION

   Item 1 - Legal Proceedings.............................................   15

   Item 2 - Changes in Securities and Use of Proceeds.....................   15

   Item 3 - Defaults Upon Senior Securities...............................   15

   Item 4 - Submission of Matters to a Vote of Security Holders...........   15

   Item 5 - Other Information.............................................   15

   Item 6 - Exhibits and Reports On Form 8-K..............................   15

Signatures................................................................   15



















                                        1
<page>
                          Part I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

                              UNITED-GUARDIAN, INC.
                        CONSOLIDATED STATEMENTS OF INCOME

                                   (UNAUDITED)

                                                     THREE MONTHS ENDED
                                                           MARCH 31,
                                                      2006         2005
                                                     ------        ------

Revenue:
  Net sales                                       $ 2,864,797   $ 3,880,117
                                                   ----------    ----------
Costs and expenses:
  Cost of sales                                     1,352,611     1,768,767
  Operating expenses                                  641,124       668,693
                                                   ----------    ----------
                                                    1,993,735     2,437,460
                                                   ----------    ----------
      Income from operations                          871,062     1,442,657


Other income (expense):
  Investment income                                    80,423        66,339
  Loss on sale of marketable securities                  -         (114,231)
  Other                                                  -              (48)
                                                    ---------    ----------
      Income before income taxes                      951,485     1,394,717

Provision for income taxes                            329,500       539,000
                                                    ---------     ---------
      Net income                                  $   621,985   $   855,717
                                                     ========     =========
Earnings per common share
   (basic and diluted)                            $       .13   $      0.17
                                                    =========     =========
Weighted average shares - basic                     4,940,183     4,932,539
                                                    =========     =========
Weighted average shares - diluted                   4,944,311     4,940,272
                                                    =========     =========














                 See consolidated notes to financial statements

                                        2
<page>
                              UNITED-GUARDIAN, INC.
                           CONSOLIDATED BALANCE SHEETS



                                              MARCH 31,         DECEMBER 31,
                                                2006               2005
                                            ------------       -------------
              ASSETS                         (UNAUDITED)         (AUDITED)
Current assets:
     Cash and cash equivalents           $   2,456,204      $    3,425,593
     Temporary investments                     699,942             699,363
     Marketable securities                   7,063,070           7,066,797
     Accounts receivable, net of
       allowance for doubtful accounts
       of $37,000 and $47,500 at
       March 31, 2006 and December 31,
       2005 respectively                     1,332,145           1,083,992
     Inventories (net)                       1,769,204           1,031,563
     Prepaid expenses and other
        current assets                         402,015             440,380
     Deferred income taxes                     231,189             217,389
                                           -----------         -----------
              Total current assets          13,953,769          13,965,077
                                           -----------         -----------

Property, plant and equipment:
     Land                                       69,000              69,000
     Factory equipment and fixtures          3,085,882           3,068,050
     Building and improvements               2,133,422           2,133,422
     Waste disposal plant                      133,532             133,532
                                           -----------         -----------
                                             5,421,836           5,404,004
       Less: Accumulated depreciation        4,503,860           4,455,524
                                           -----------         -----------
                                               917,976             948,480
                                           -----------         -----------

Other assets                                   108,430             108,680
                                           -----------         -----------
                                        $   14,980,175      $   15,022,237
                                           ===========         ===========
















                 See consolidated notes to financial statements

                                        3
<page>
                              UNITED-GUARDIAN, INC.
                           CONSOLIDATED BALANCE SHEETS

                                             MARCH 31,         DECEMBER 31,
                                               2006                2005
                                          ---------------      ------------
                                            (UNAUDITED)         (AUDITED)
LIABILITIES AND
STOCKHOLDERS' EQUITY

Current liabilities:
   Dividends payable                       $     -             $1,086,391
   Accounts payable                           442,312             148,051
   Accrued expenses                           464,517             448,990
   Taxes payable                              121,443                -
                                            ---------           ---------
         Total current liabilities          1,028,272           1,683,432
                                            ---------           ---------
 Deferred income taxes                         59,817              59,817
                                            ---------           ---------

Stockholders' equity:
   Common stock $.10 par value,
      authorized, 10,000,000 shares;
      5,004,339 and 5,000,339 shares
      issued, respectively, and
      4,942,139 and 4,938,139
      shares outstanding, respectively        500,434             500,034
   Capital in excess of par value           3,792,478           3,778,838
   Accumulated other comprehensive loss      (107,292)            (84,365)
   Retained earnings                       10,066,096           9,444,111
   Treasury stock, at cost; 62,200 shares    (359,630)           (359,630)
                                            ---------           ---------
         Total stockholders' equity        13,892,086          13,278,988
                                            ---------           ---------
                                         $ 14,980,175        $ 15,022,237
                                           ==========          ==========





















                 See consolidated notes to financial statements

                                        4
<page>
                                  UNITED-GUARDIAN, INC.
                          CONSOLIDATED STATEMENTS OF CASH FLOWS

                                       (UNAUDITED)
                                                          THREE MONTHS ENDED
                                                                MARCH 31,
                                                              ------------
                                                         2006             2005
                                                       -------          -------
Cash flows provided by operating activities:

  Net income                                       $   621,985      $   855,717
  Adjustments to reconcile net earnings
    to net cash flows from operations:
      Depreciation and amortization                     48,336           49,820
      Realized loss on sale of marketable securities      -             116,855
      Reversal of provision for doubtful accounts      (10,500)         (11,029)
      Increase (decrease) in cash resulting from
        changes in operating assets and liabilities:
         Accounts receivable                          (237,653)      (1,083,016)
         Inventories                                  (737,641)         350,752
         Prepaid expenses and other current
           and non-current assets                       38,615          156,057
         Accounts payable                              294,261          185,619
         Accrued expenses and taxes payable            136,970          331,223
                                                    ----------       ----------
      Net cash provided by operating activities        154,373          951,998
                                                    ----------       ----------
Cash flows from investing activities:

   Acquisition of property, plant and equipment        (17,832)         (56,017)
   Net change in temporary investments                    (579)          (1,738)
   Purchase of marketable securities                   (33,000)      (4,284,726)
   Proceeds from sale of marketable securities            -           3,465,351
                                                    ----------       ----------
       Net cash used in investing activities           (51,411)        (877,130)
                                                    ----------       ----------
Cash flows from financing activities:

   Proceeds from exercise of stock options              14,040             -
   Dividends paid                                   (1,086,391)        (887,677)
                                                    ----------       ----------
     Net cash used in financing activities          (1,072,351)        (877,677)
                                                    ----------       ----------

Net (decrease) increase in cash and cash
   equivalents                                        (969,389)        (812,809)

Cash and cash equivalents at beginning of period     3,425,593        3,735,945
                                                    ----------       ----------
Cash and cash equivalents at end of period         $ 2,456,204      $ 2,923,136
                                                    ==========       ==========






                 See consolidated notes to financial statements

                                        5
<page>
                              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 March 31,
2006 and the results of operations for the three months ended March 31, 2006 and
2005.  The  accounting  policies  followed  by the  Company are set forth in the
Company's financial statements included in its Annual Report to Shareholders for
the fiscal year ended December 31, 2005.

     2. The results of operations  for the three months ended March 31, 2006 and
2005 are not  necessarily  indicative of the results to be expected for the full
year.

     3.  Stock-Based  Compensation:  At March  31,  2006,  the  Company  had two
stock-based  employee  compensation plans, which are more fully described in the
Company's  Annual  Report on Form 10-KSB,  for the year ended 2005. As permitted
under Statement of Financial  Accounting  Standards ("SFAS") No. 123, Accounting
for Stock-based Compensation ("FAS 123"), through December 31, 2005, the Company
elected to follow the  guidance  of APB  Opinion  No. 25,  Accounting  for Stock
Issued to  Employees  ("APB  25"),  and  Financial  Accounting  Standards  Board
Interpretation  No. 44,  Accounting  for Certain  Transactions  Involving  Stock
Compensation--an  Interpretation of APB Opinion No. 25 ("FIN 44"), in accounting
for the Company's stock-based employee compensation  arrangements.  Accordingly,
no compensation cost was recognized for any of the Company's fixed stock options
granted to employees  when the exercise price of each option equaled or exceeded
the fair  value of the  underlying  common  stock as of the grant  date for each
stock option. Changes in the terms of stock option grants, such as extensions of
the  vesting  period or changes in the  exercise  price,  resulted  in  variable
accounting  in accordance  with APB 25.  Accordingly,  compensation  expense was
measured in accordance with APB 25 and recognized  over the vesting  period.  If
the modified  grant was fully vested,  any  additional  compensation  costs were
recognized  immediately.  The Company accounted for equity instruments issued to
non-employees in accordance with the provisions of FAS 123.

     In December 2004, the Financial  Accounting Standards Board ("FASB") issued
SFAS No. 123 (revised 2004),  Share-Based  Payment ("FAS 123R"),  which replaced
FAS 123 and  supersedes APB 25 and FIN 44. FAS 123R requires that the fair value
all  share-based  payments to  employees,  including  grants of  employee  stock
options,  be recognized as expense in the  financial  statements.  The pro forma
disclosures  previously  permitted under FAS 123 are no longer an alternative to
financial statement  recognition.  The Company adopted the provisions of FAS 123
on January 1, 2006 using the modified prospective application method of adoption
which requires the Company to record compensation cost related to unvested stock
awards as of December 31, 2005 by recognizing  the  unamortized  grant date fair
value of these awards over the remaining service periods of those awards with no
change in historical  reported earnings.  Awards granted after December 31, 2005
are  valued  at fair  value  in  accordance  with  provisions  of FAS  123R  and
recognized on a straight line basis over the service periods of each award.  The
estimated  forfeiture  rates for the  first  quarter  of 2006 were  based on the
Company's historical  experience.  Upon adoption of FAS 123R the Company elected
to continue using the Black-Scholes option pricing model.

     All of the  Company's  stock  options  were fully vested as of December 31,
2005.  At March 31,  2006 the  Company  had 4,300  share-based  awards  that are
outstanding and exercisable, with a weighted average exercise price of $3.29, an
aggregate  intrinsic value of $28,327,  and weighted  average  remaining term of
5.78 years.

                                        6
<page>
     As of March 31, 2006 there was no remaining unrecognized  compensation cost
related to the nonvested share-based compensation arrangements granted under the
Company's plans.

     The Company did not record any compensation expense during the three-months
ended March 31, 2006 under the provisions of FAS 123R.

     Cash  received  from  option   exercise  under  all   share-based   payment
arrangements for the three-months ended March 31, 2006, was $14,040.

     The  following  table  illustrates  the effect on net income and income per
share for the  three-months  ended March 31, 2005 if the Company had applied the
fair value recognition  provisions of FAS 123 since the original  effective date
of FAS 123 to stock-based  employee  compensation  for options granted under the
Company's   arrangements  as  well  as  to  the  arrangement  of  the  Company's
subsidiaries:

                                                              Three-Months Ended
                                                                 March 31, 2005
                                                                 --------------

 Net income as reported                                            $855,717

 Add back (deduct): Total stock-based employee
     compensation expense determined under APB 25 for
     all awards, net of related tax effects (1)                       --

  Deduct: Total stock-based employee compensation
     expense determined under fair value-based method
     for all awards, net of related tax effects (1)                   --

   Pro forma net income                                            $855,717
                                                                    =======

   Income per share:
         Basic--as reported                                        $    .17
         Basic--pro forma                                          $    .17
         Diluted--as reported                                      $    .17
         Diluted--pro forma                                        $    .17


        The Company did not grant any options  under the plans  during the three
months ended March 31, 2006 and 2005.

     4. Marketable Securities

                                                                     Unrealized
     March 31, 2006                       Cost       Fair Value      Gain/(Loss)
     ------------------                ----------    ----------      -----------
     Available for Sale:
       U.S. Treasury and agencies      $2,046,900    $2,030,829     $   (16,071)
       Corporate debt securities          900,594       894,792          (5,802)
       Fixed income mutual funds        4,060,272     3,911,136        (149,136)
       Equity and other mutual funds      226,594       226,313            (281)
                                       ----------     -----------    -----------
                                        7,234,360     7,063,070        (171,290)
                                       ==========     ===========    ===========



                                        7
<page>
                                                                     Unrealized
    December 31, 2005                     Cost        Fair Value     Gain/(Loss)
    ------------------                 ----------     ----------     -----------
     Available for Sale:
       U.S. Treasury and agencies      $2,046,900     $2,028,984     $  (17,916)
       Corporate debt securities          900,595        892,110         (8,485)
       Fixed income mutual funds        4,028,072      3,928,513        (99,559)
       Equity and other mutual funds      225,793        217,190         (8,603)
                                       ----------     -----------    -----------
                                       $7,201,360     $7,066,797     $ (134,563)
                                       ==========     ===========    ===========
     5. Inventories - Net

     Inventories consist of the following:        March 31,     December 31,
                                                    2006            2005
                                                ----------      ----------
     Raw materials and work in process          $  349,455      $  376,308
     Finished products and fine chemicals        1,419,749         655,255
                                                ----------      ----------
                                                $1,769,204      $1,031,563
                                                ==========      ==========

     At March 31, 2006 and December 31, 2005, the Company has reserved  $108,000
for slow moving and obsolete inventory.

     6. 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 $49,802 and $38,174 for the three months ended
March 31,  2006 and 2005,  respectively.  There were no  payments  for  interest
during these periods.

     7. Comprehensive Income (Loss)

            The components of comprehensive income (loss) are as follows:

                                                    Three months ended March 31,
                                                         2006            2005
                                                        ------          ------

Net income                                           $  621,985      $  855,717
                                                     ----------      ----------
Other comprehensive income (loss):
   Unrealized (loss) gain on marketable
     securities during period ......................    (36,727)        (99,193)
   Less: reclassification adjustment for net
     losses included in net income .................       -            116,855
                                                     ----------      ----------
   Other comprehensive (loss) income before tax ....    (36,727)         17,662

Income tax expense (benefit) related to other
   comprehensive income ............................    (13,800)          6,600
                                                     ----------      ----------
Other comprehensive (loss) income, net of tax.......    (22,927)         11,062
                                                     ----------      ----------
Comprehensive income net of tax .................... $  599,058      $  866,779
                                                     ==========      ==========


                                        8
<page>
     Accumulated  other  comprehensive  income (loss) is comprised of unrealized
gains and losses on marketable securities, net of the related tax effect.

         8. Earnings Per Share

         The  following  table sets forth the  computation  of basic and diluted
earnings per share at March 31, 2006 and 2005.

                                                    Three months ended
                                                        March 31,
                                                    2006           2005
                                                   ------         ------
Numerator:
   Net income                                   $  621,985     $  855,717
                                                   =======      =========
Denominator:
   Denominator for basic earnings
   per share (weighted average
   shares)                                       4,940,183      4,932,539

Effect of dilutive securities:
   Employee stock options                            4,128          7,733
                                                 ---------      ---------

Denominator for diluted earnings
   per share (adjusted weighted-average
   shares) and assumed conversions               4,944,311      4,940,272
                                                 =========      =========
Basic and diluted earnings per share            $     0.13     $     0.17
                                                 =========      =========

      9.  The  Company  has  two  reportable  business  segments:  the  Guardian
Laboratories   Division   ("Guardian")   conducts   research,   development  and
manufacturing  of  cosmetic  ingredients,  personal  and health  care  products,
pharmaceuticals and specialty industrial products.  Eastern Chemical Corporation
("Eastern"),  a  wholly-owned  subsidiary of the Company,  distributes a line of
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, 2005.  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 three month period ended March 31, 2006 and 2005.

<table>
<caption>
                                                                  Three months ended March 31,
                                                     2006                                            2005
                                     ------------------------------------            ------------------------------------
                                     GUARDIAN       EASTERN         TOTAL            GUARDIAN       EASTERN         TOTAL
                                   ------------   ------------   -----------       ------------   ------------   -----------
<S>                                <C>            <C>            <C>               <C>            <C>            <C>
Revenues from external customers   $ 2,581,034    $   283,763    $ 2,864,797       $ 3,567,748    $   312,369    $ 3,880,117
Depreciation and amortization           22,168           -            22,168            21,335           -            21,335


</table>
                                        9
<page>
<table>
Segment income before income
  taxes                                887,193         22,334        909,527         1,470,057         12,274      1,482,331

Segment assets                       3,292,436        445,742      3,738,178         3,362,005        377,467      3,739,472

Capital expenditure                     16,713           -            16,713            11,662            -           11,662

Reconciliation to Consolidated Amounts

Income before income taxes
----------------------------
Total earnings for reportable segments                           $   909,527                                     $ 1,482,331
Other income, net                                                     80,423                                         (47,940)
Corporate headquarters expense                                       (38,465)                                        (39,674)
                                                                  ----------                                      ----------
Consolidated earnings before income taxes                        $   951,485                                     $ 1,394,717
                                                                  ==========                                      ==========

Assets
------
Total assets for reportable segments                             $ 3,738,178                                     $ 3,739,472
Corporate headquarters                                            11,241,997                                      11,177,847
                                                                  ----------                                      ----------
      Total consolidated assets                                  $14,980,175                                     $14,917,319
                                                                  ==========                                      ==========
Other Significant items
-----------------------
                                                                   Three months ended March 31,
                                                     2006                                           2005
                                   ------------------------------------------       -------------------------------------------
                                     Segment                     Consolidated          Segment                     Consolidated
                                      Totals       Corporate        Totals              Totals        Corporate       Totals
                                   ------------   ------------   -------------      -------------   ------------   -------------
<S>                                  <C>            <C>             <C>               <C>            <C>             <C>
Capital expenditures                 $ 16,713       $  1,119        $ 17,832          $ 11,662       $ 44,355        $ 56,017
Depreciation and amortization          22,168         26,168          48,336            21,335         28,485          49,820
</table>

Geographic Information
----------------------
<table>
<caption>
                                                       2006                                2005
                                           ---------------------------         ---------------------------
                                             Revenues      Long-Lived            Revenues      Long-Lived
                                                             Assets                              Assets
                                           -----------    -------------        -----------    -------------
<S>                                        <C>           <C>                   <C>           <C>
United States                              $ 1,377,758   $      917,976        $ 2,130,315   $    1,003,870
France                                         245,600                             471,888
Other countries                              1,241,439                           1,277,914
                                           -----------    -------------        -----------    -------------
                                           $ 2,864,797   $      917,976        $ 3,880,117   $    1,003,870
                                           ===========    =============        ===========    =============




</table>
                                       10
<page>
<table>
<S>                                        <C>                                 <C>

Major Customers
---------------
Customer A (Guardian)**                    $ 1,128,726                         $ 1,176,586
Customer B (Guardian)**                        168 847                             404,941
All other customers                          1,567,224                           2,298,590
                                           -----------                         -----------
                                           $ 2,864,797                         $ 3,880,117
                                           ===========                         ===========
</table>
     ** At March 31, 2006 Customers A and B had balances  approximating  29% and
13% of net accounts receivable respectively. At March 31, 2005 Customers A and B
had balances approximating 26% and 4% of net accounts receivable respectively.

Item 2. Management's Discussion and Analysis of Financial Condition and
          Results of Operations

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 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.  Guardian conducts research,  product  development,  manufacturing and





                                       11
<page>
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.

     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.

     Eastern  distributes a 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.  Since  the
Company's business  activities and marketing efforts over the past several years
have  focused  increasingly  on the Guardian  division,  the Company has reduced
Eastern's  inventory levels in order to make it more marketable in the event the
Company  decides  to sell it at some  future  date.  This has  resulted  in some
reduction in sales as compared to previous  years.  Sales of this  division have
also  declined  as a result  of  increased  competition  from  new and  existing
competitors.

     Products  manufactured  by  Guardian  are  marketed  worldwide  through the
Company's extensive marketing and distribution arrangements.  Approximately half
of Guardian's sales are to foreign customers.

     The  following  discussion  and  analysis  covers  material  changes in the
financial condition of the Company since the year ended December 31, 2005, and a
comparison of the results of operations  for the three month periods ended March
31, 2006 and March 31, 2005.  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, 2005.

RESULTS OF OPERATIONS

     Gross revenue from operations
     -----------------------------

     For the three  month  period  ended  March 31,  2006,  net sales  decreased
$1,015,320  (26.2%) versus the comparable  period in 2005.  Guardian had a sales
decrease of $986,714 (27.7%) and Eastern had a sales decrease of $28,606 (9.2%).

     The decrease in Guardian's sales for the three month period ended March 31,
2006 is due to a number of factors.  The most important  factor  contributing to
the  decrease  in sales in the first  quarter of 2006 than the first  quarter of
2005 was  a price  increase for  the company's pharmaceutical products  that was




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implemented  on March 1, 2005,  which  resulted in an  unusually  high volume of
sales of the company's  pharmaceutical  products in the first quarter of 2005 in
anticipation  of the price  increase,  a situation which was not repeated in the
first quarter of 2006. In addition,  the first  quarter of 2005  experienced  an
unusual  number of orders that customers had requested not be shipped out at the
very end of 2004. This same situation did not recur at the end of 2005.

     The  decrease  in  Eastern's   sales  is  believed  to  be  due  to  normal
fluctuations in the purchasing patterns of its customers.

     Cost of sales
     -------------

     Cost of sales as a  percentage  of sales  increased  to 47.2% for the three
months ended March 31, 2006 from 45.6% for the comparable period ended March 31,
2005.  This  increase  is due to an  increase  in  standard  overhead  rates for
Guardian that  resulted  primarily  from  increases in insurance and payroll and
payroll related expenses.

     Operating Expenses
     ------------------

     Operating  expenses  decreased  $27,569  (4.1%) for the three  months ended
March 31, 2006  compared to the  comparable  period in 2005.  This  decrease was
mainly attributable to a reduction in the company's bad debt reserve.

     Other income
     ------------

     Investment income increased to $80,423 from a loss of $47,940 for the three
month period ended March 31, 2006 and March 31, 2005  respectively,  an increase
of $128,363 (267.8%) This increase was mainly  attributable to the net effect of
an  increase  in income  from  investments  of $14,084 in 2006 and the sale of a
portfolio  of  marketable  securities  in the first  quarter of 2005,  primarily
bonds,  the bulk of which  had  been  managed  for the  Company  by a  financial
institution.  The sale of this  portfolio in 2005 resulted in a realized loss of
approximately  $116,000,  of which  approximately  $107,000 had previously  been
recorded in the equity  section of the balance  sheet as an  "accumulated  other
comprehensive  loss".  Approximately  $108,000  of the above loss was due to the
sale of the bond portfolio managed by a financial  institution,  which, over the
18 months the company held it, had realized  interest  income net of broker fees
of approximately $154,000. Investment income is recorded net of brokerage fees.

     Provision for income taxes
     --------------------------

     The provision  for income taxes  decreased  $209,500  (38.9%) for the three
months ended March 31, 2006 when compared to the comparable period in 2005. This
decrease was due to (a) decreased earnings before taxes of $443,232 in 2006, and
(b) the adding back of the approximately  $116,000 capital loss from the sale of
the bond portfolio in 2005,  which loss will be available to offset any realized
capital  gains in 2005 and any  excess  may be  carried  forward  for five years
following the year of the loss.







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<page>
     We had effective  income tax rates of 34.6% and 38.6% for the  three-months
ended March 31, 2006 and 2005, respectively. Differences in the effective income
tax rate from the statutory  federal income tax rate arise  primarily from state
taxes net of federal benefits and other differences.

LIQUIDITY AND CAPITAL RESOURCES

     Working  capital  increased  from  $12,281,645  at  December  31,  2005  to
$12,925,497  at March 31, 2006.  The current  ratio  increased  from 8.3 to 1 at
December 31, 2005 to 13.6 to 1 at March 31, 2006.  The increase in current ratio
was primarily due to the net effect of a decrease in dividends payable offset by
increases in inventories, increases in accounts receivable and accounts payable.
The Company has no commitments for any further significant capital  expenditures
during the remainder of 2006, 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 $154,373 and $951,998 for the
three months ended March 31, 2006 and March 31, 2005 respectively.  The decrease
was  primarily  due to the  decrease in net income from  operations  and the net
effect of an increase in inventory.

     During the three month  period  ended  March 31,  2006  $51,411 was used in
investment  activities,  as compared to the three month  period  ended March 31,
2005 when $877,130 was used in investing activities. The change is mainly due to
the net effect of the sale  (primarily  bonds)  and  purchases  (primarily  bond
funds) of marketable securities during the three months ending March 31, 2005.

     Cash used in financing activities was $1,072,351 and $877,677 for the three
months  ended March 31, 2006 and March 31, 2005  respectively.  The increase was
due  primarily  to an increase in  dividends  paid during the three months ended
March 31, 2006.

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.




                                       14
<page>
                           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 Officer of the  Company, pursuant to Section 302 of the
              Sarbanes-Oxley Act of 2002

        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

     There was one  report on Form 8-K filed  during the  fiscal  quarter  ended
March 31, 2006. It was filed on March 24, 2006 and related to the issuance of an
earnings release by the Company on March 24, 2006.


                                   SIGNATURES

     In accordance with the requirements of the Securities Exchange Act of 1934,
the  Company  has duly  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:  May 10, 2006




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