| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 |
|--------|----------------------------------------------------------------------------------------|

|  ̈ | TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 |
|--------|---------------------------------------------------------------------------------|

| Delaware                                                      |  11-1719724                     |
|---------------------------------------------------------------|--------------------------------------|
| (State or Other Jurisdiction ofIncorporation or Organization) | (I.R.S. Employer Identification No.) |

----

|   | Large accelerated filer | £ |
|--------|-------------------------|--------|

|   | Non-accelerated filer | £  (Do not check if a smaller reporting company) |
|--------|-----------------------|-----------------------------------------------------------------|

|   | Accelerated filer | £ |
|--------|-------------------|--------|

|   | Smaller reporting company | þ |
|--------|---------------------------|--------|

----

|                                                                                                                       | Page No. |
|----------------------------------------------------------------------------------------------------------------------------|----------|
| Part I.  FINANCIAL INFORMATION                                                                                   |     |
|                                                                                                                       |     |
| Item 1 -  Condensed Financial Statements                                                                         |     |
|                                                                                                                       |     |
| Statements of Income - Three and Nine Months ended September  30, 2010 and 2009 (unaudited)                      | 2        |
|                                                                                                                       |     |
| Balance Sheets – September 30, 2010 (unaudited) and December 31, 2009                                                | 3-4      |
|                                                                                                                       |     |
| Statements of Cash Flows –  Nine months ended September 30, 2010 and 2009 (unaudited)                      | 5        |
|                                                                                                                       |     |
| Notes to Financial Statements (unaudited)                                                                                  | 6-11     |
|                                                                                                                       |     |
| Item 2 -    Management's Discussion and Analysis of Financial Condition and Results of Operations | 11-16    |
|                                                                                                                       |     |
| Item 3 -    Quantitative and Qualitative Disclosures About Market Risk                                 | 16       |
|                                                                                                                       |     |
| Item 4T -  Controls and Procedures                                                                               | 16-17    |
|                                                                                                                       |     |
| Part II.  OTHER INFORMATION                                                                                      |     |
|                                                                                                                       |     |
| Item 1 -    Legal Proceedings                                                                          | 17       |
|                                                                                                                       |     |
| Item 1A -  Risk Factors                                                                                          | 17       |
|                                                                                                                       |     |
| Item 2 -    Unregistered Sales of Equity Securities and Use of Proceeds                                | 17       |
|                                                                                                                       |     |
| Item 3 -    Defaults Upon Senior Securities                                                            | 17       |
|                                                                                                                       |     |
| Item 4 -    Submission of Matters to a Vote of Security Holders                                        | 17       |
|                                                                                                                       |     |
| Item 5 -    Other Information                                                                          | 17       |
|                                                                                                                       |     |
| Item 6 -    Exhibits                                                                                   | 18       |
|                                                                                                                       |     |
| Signatures                                                                                                                 | 18       |

----

PART 

ITEM 

| UNITED-GUARDIAN, INC. STATEMENTS OF INCOME(UNAUDITED)  |
|------------------------------------------------------------------|
|                                                             |   | NINE MONTHS ENDEDSEPTEMBER 30, |   |   | THREE MONTHS ENDEDSEPTEMBER 30, |
|                                                             |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                        |   | $ | 11,159,860 |   |   | $ | 10,281,426 |   |   | $ | 3,848,393 |   |   | $ | 3,393,139 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                                                    |   |   | 4,261,999 |   |   |   | 4,137,843 |   |   |   | 1,450,053 |   |   |   | 1,317,927 |   |
| Operating expenses                                               |   |   | 1,925,438 |   |   |   | 1,938,293 |   |   |   | 598,809 |   |   |   | 540,911 |   |
| Pension plan termination                                         |   |   | 847,744 |   |   |   | --- |   |   |   | --- |   |   |   | --- |   |
|                                                             |   |   | 7,035,181 |   |   |   | 6,076,136 |   |   |   | 2,048,862 |   |   |   | 1,858,838 |   |
| Income from operations                                           |   |   | 4,124,679 |   |   |   | 4,205,290 |   |   |   | 1,799,531 |   |   |   | 1,534,301 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income:                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment income                                                |   |   | 291,100 |   |   |   | 274,010 |   |   |   | 65,954 |   |   |   | 88,927 |   |
| Gain on sale of assets                                           |   |   | --- |   |   |   | 420 |   |   |   | --- |   |   |   | 420 |   |
|                                                             |   |   | 291,100 |   |   |   | 274,430 |   |   |   | 65,954 |   |   |   | 89,347 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income from operations before income taxes                       |   |   | 4,415,779 |   |   |   | 4,479,720 |   |   |   | 1,865,485 |   |   |   | 1,623,648 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                                       |   |   | 1,451,626 |   |   |   | 1,487,300 |   |   |   | 621,700 |   |   |   | 541,900 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income                                                       |   | $ | 2,964,153 |   |   | $ | 2,992,420 |   |   | $ | 1,243,785 |   |   | $ | 1,081,748 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per common share(Basic and Diluted)                     |   | $ | 0.62 |   |   | $ | 0.60 |   |   | $ | 0.27 |   |   | $ | 0.22 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares – basic and diluted                |   |   | 4,786,183 |   |   |   | 4,946,439 |   |   |   | 4,596,439 |   |   |   | 4,946,439 |   |

----

UNITED

| ASSETS                                                                                                                              |   | SEPTEMBER 30, |      | DECEMBER 31, |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------------------------|--------------|
|                                                                                                                                |   |  2010    |                     |         |   | 2009 |   |
|                                                                                                                                |   | (UNAUDITED)   |                     |         |   |   |   |
| Current assets:                                                                                                                     |   |          |                     |         |   |   |   |
| Cash and cash equivalents                                                                                                           |   | $             | 1,688,688                |         |   |   | $ | 5,021,073 |   |
| Certificates of deposit                                                                                                             |   |          | ---                      |         |   |   |   | 1,014,866 |   |
| Marketable securities                                                                                                               |   |          | 8,826,180                |         |   |   |   | 8,438,757 |   |
| Accounts receivable, net of allowance for doubtful accounts of $27,000 at September 30, 2010 and   December 31, 2009 |   |          | 1,371,527                |         |   |   |   | 1,364,886 |   |
| Inventories (net)                                                                                                                   |   |          | 1,150,499                |         |   |   |   | 1,153,134 |   |
| Prepaid expenses and other current assets                                                                                           |   |          | 139,443                  |         |   |   |   | 220,815 |   |
| Deferred income taxes                                                                                                               |   |          | 263,393                  |         |   |   |   | 443,034 |   |
| Total current assets                                                                                                                |   |          | 13,439,730               |         |   |   |   | 17,656,565 |   |
|                                                                                                                                |   |          |                     |         |   |   |   |   |   |
| Property, plant and equipment:                                                                                                      |   |          |                     |         |   |   |   |   |   |
| Land                                                                                                                                |   |          | 69,000                   |         |   |   |   | 69,000 |   |
| Factory equipment and fixtures                                                                                                      |   |          | 3,609,727                |         |   |   |   | 3,302,967 |   |
| Building and improvements                                                                                                           |   |          | 2,618,253                |         |   |   |   | 2,541,115 |   |
| Waste disposal plant                                                                                                                |   |          | 133,532                  |         |   |   |   | 133,532 |   |
|                                                                                                                                |   |          | 6,430,512                |         |   |   |   | 6,046,614 |   |
| Less: Accumulated depreciation                                                                                                      |   |          | 5,217,898                |         |   |   |   | 5,099,903 |   |
| Total property, plant and equipment, net                                                                                            |   |          | 1,212,614                |         |   |   |   | 946,711 |   |
|                                                                                                                                |   |          |                     |         |   |   |   |   |   |
| Other assets                                                                                                                        |   |          | 84,762                   |         |   |   |   | 113,016 |   |
|                                                                                                                                |   |          |                     |         |   |   |   |   |   |
| TOTAL ASSETS                                                                                                                        |   | $             | 14,737,106               |         |   |   | $ | 18,716,292 |   |

----

UNITED

| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                            |   |          |       |   |         |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------|--------------|--------|
|                                                                                                                                                                                                                       |   | SEPTEMBER 30, |       |   | DECEMBER 31, |   |
|                                                                                                                                                                                                                       |   |  2010    |       |   |  2009   |   |
| Current liabilities:                                                                                                                                                                                                       |   | (UNAUDITED)   |       |   |         |   |
|                                                                                                                                                                                                                       |   |          |       |   |         |   |   |   |
| Dividends payable                                                                                                                                                                                                     |   | $             | ---        |   |         | $      | 1,582,860 |   |
| Accounts payable                                                                                                                                                                                                      |   |          | 92,216     |   |         |   | 322,325 |   |
| Accrued expenses                                                                                                                                                                                                           |   |          | 598,575    |   |         |   | 819,194 |   |
| Pension liability                                                                                                                                                                                                     |   |          | ---        |   |         |   | 108,892 |   |
| Income taxes payable                                                                                                                                                                                                       |   |          | 157,303    |   |         |   | 87,403 |   |
| Total current liabilities                                                                                                                                                                                             |   |          | 848,094    |   |         |   | 2,920,674 |   |
|                                                                                                                                                                                                                       |   |          |       |   |         |   |   |   |
| Deferred income taxes                                                                                                                                                                                                 |   |          | 58,121     |   |         |   | 138,007 |   |
|                                                                                                                                                                                                                       |   |          |       |   |         |   |   |   |
| Stockholders’ equity:                                                                                                                                                                                           |   |          |       |   |         |   |   |   |
| Common stock $.10 par value; 10,000,000 shares authorized; 4,596,439 and 5,008,639 shares issued, and 4,596,439 and 4,946,439 shares outstanding, at September 30, 2010 and December 31, 2009, respectively |   |          | 459,644    |   |         |   | 500,864 |   |
| Capital in excess of par value                                                                                                                                                                                        |   |          | ---        |   |         |   | 3,819,480 |   |
| Accumulated other comprehensive income (loss)                                                                                                                                                                         |   |          | 109,567    |   |         |   | (345,992 | ) |
| Retained earnings                                                                                                                                                                                                     |   |          | 13,261,680 |   |         |   | 12,042,889 |   |
| Treasury stock, at cost; 62,200 shares at December 31, 2009                                                                                                                                                      |   |          | ---        |   |         |   | (359,630 | ) |
| Total stockholders’ equity                                                                                                                                                                                      |   |          | 13,830,891 |   |         |   | 15,657,611 |   |
|                                                                                                                                                                                                                       |   |          |       |   |         |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                            |   | $             | 14,737,106 |   |         | $      | 18,716,292 |   |

----

UNITED

|                                                                                                                                                                                                                                                                                                                                                |   | NINE MONTHS ENDED |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                |   | September 30,     |       |
|                                                                                                                                                                                                                                                                                                                                                |   | 2010              |       |   | 2009 |   |
| Cash flows from operating activities:                                                                                                                                                                                                                                                                                                               |   |              |       |   |   |   |
| Net income                                                                                                                                                                                                                                                                                                                                          |   | $                 | 2,964,153  |   |   | $ | 2,992,420 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                                                                                                                                                                                                                                                         |   |              |       |   |   |   |   |   |
|                    Depreciation and amortization                                                                                                                                                                                                                                                  |   |              | 176,349    |   |   |   | 128,544 |   |
|                    Realized (gain) loss  on sales of marketable securities                                                                                                                                                            |   |              | (47,080    | ) |   |   | 633 |   |
|                    Gain on sale of equipment                                                                                                                                                                                                         |   |              | ---        |   |   |   | (420 | ) |
|                    Realized loss on pension termination                                                                                                                                                                                              |   |              | 338,655    |   |   |   | --- |   |
|                    Reduction in allowance for bad debts                                                                                                                                                                                                                                           |   |              | ---        |   |   |   | (2,616 | ) |
|                    Decrease (increase) in cash resulting from changes in operating assets                        and liabilities: |   |              |       |   |   |   |   |   |
|                               Accounts receivable                                                                                                                                             |   |              | (6,641     | ) |   |   | (127,643 | ) |
|                               Inventories                                                                                                                                                                                                                                |   |              | 2,635      |   |   |   | 144,829 |   |
|                               Prepaid expenses and other current and non-current assets                                                                                                  |   |              | 81,372     |   |   |   | (30,464 | ) |
|                               Deferred income taxes                                                                                                                                           |   |              | 37,742     |   |   |   | --- |   |
|                               Accounts payable                                                                                                                                                |   |              | (230,109   | ) |   |   | 17,910 |   |
|                               Accrued expenses and taxes payable                                                                                                                              |   |              | (150,719   | ) |   |   | 95,361 |   |
|                               Pension liability                                                                                                                                               |   |              | (108,892   | ) |   |   | --- |   |
| Net cash provided by operating activities                                                                                                                                                                                                                                                                                                      |   |              | 3,057,465  |   |   |   | 3,218,554 |   |
|                                                                                                                                                                                                                                                                                                                                                |   |              |       |   |   |   |   |   |
| Cash flows from investing activities:                                                                                                                                                                                                                                                                                                               |   |              |       |   |   |   |   |   |
|           Acquisitions of property, plant and equipment                                                                                                                                                                                                                                           |   |              | (413,998   | ) |   |   | (28,521 | ) |
|           Proceeds from sale of assets                                                                                                                                                                                                                                                            |   |              | ---        |   |   |   | 20,000 |   |
|           Proceeds from sales  of marketable securities                                                                                                                                                                                                                                 |   |              | 5,404,428  |   |   |   | 900,000 |   |
|           Purchases of marketable securities                                                                                                                                                                                                                                                      |   |              | (5,565,854 | ) |   |   | (536,725 | ) |
|           Net change in certificates of deposit                                                                                                                                                                                                                                                   |   |              | 1,014,866  |   |   |   | (2,027,503 | ) |
| Net cash provided by (used in) investingactivities                                                                                                                                                                                                                                                                                                  |   |              | 439,442    |   |   |   | (1,672,749 | ) |
|                                                                                                                                                                                                    |   |              |       |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                                                                                                                                                                                                                               |   |              |       |   |   |   |   |   |
|           Acquisition of treasury stock                                                                                                                                                                                                                                                           |   |              | (3,762,500 | ) |   |   | --- |   |
|           Payment of long term debt                                                                                                                                                                                                                                                                                        |   |              | ---        |   |   |   | (6,657 | ) |
|           Dividends paid                                                                                                                                                                                                                                                                                                   |   |              | (3,066,792 | ) |   |   | (2,770,006 | ) |
| Net cash used in financing activities                                                                                                                                                                                                                                                                                                               |   |              | (6,829,292 | ) |   |   | (2,776,663 | ) |
|                                                                                                                                                                                                                                                                                                                                                |   |              |       |   |   |   |   |   |
| Net decrease in cash and cashequivalents                                                                                                                                                                                                                                                                                                            |   |              | (3,332,385 | ) |   |   | (1,230,858 | ) |
| Cash and cash equivalents at beginning of period                                                                                                                                                                                                                                                                                                    |   |              | 5,021,073  |   |   |   | 3,425,538 |   |
| Cash and cash equivalents at end of period                                                                                                                                                                                                                                                                                                          |   | $                 | 1,688,688  |   |   | $ | 2,194,680 |   |

----

UNITED

| 1. | Nature of Business |
|----|--------------------|

| 3. | Stock-Based Compensation |
|----|--------------------------|

|       | The Company recognizes the fair value of all share-based payments to employees, including grants of employee stock options, as a compensation expense in the financial statement. |
|--------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | As of September 30, 2010, the Company had no share-based awards outstanding and exercisable and did not grant any options during the nine months ended September 30, 2010. |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | As of September 30, 2010, there was no remaining unrecognized compensation cost related to the non-vested share-based compensation arrangements granted under the Company's plans. |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | The Company did not record any compensation expense during the nine- and three-month periods ended September 30, 2010 and 2009. |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------|

|   | The Company did not receive any proceeds from the exercise of options during the nine months ended September 30, 2010 and 2009. |
|--------|---------------------------------------------------------------------------------------------------------------------------------|

----

| 4. | Recent Accounting Pronouncements |
|----|----------------------------------|

|   | NEW ACCOUNTING STANDARDS ADOPTED IN FISCAL 2010 |
|--------|-------------------------------------------------|

| 5.   | Investments |
|----------------|-------------|

----

| •   | Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| •   | Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
|---------------------|---------------------------------------------------------------------------------------------------------------------|

|                                                                                                      |   |   |      |   |       |   |      | Unrealized  |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|------------|--------|-----------|-------------|--------|
| September 30, 2010                                                                                        |   | Cost   |      |   | Fair Value |   |      | Gain/(Loss) |   |
|                                                                                                      |   |   |      |   |       |   |      |        |   |
|  Available for Sale:                                                                            |   |   |      |   |       |   |      |        |   |
|        U.S. Treasury and agencies                                                |   |   |      |   |       |   |      |        |   |
|           Mature within 1 year                          |   | $      | 1,102,908 |   |       | $      | 1,096,334 |        |   | $ | (6,574 | ) |
|           Mature after 1 year through 5 years           |   |   | 249,136   |   |       |   | 246,915   |        |   |   | (2,221 | ) |
|             Total US Treasury and agencies    |   |   | 1,352,044 |   |       |   | 1,343,249 |        |   |   | (8,795 | ) |
|        Corporate bonds                                                 |   |   |      |   |       |   |      |        |   |   |   |   |
|            Maturities after 1 year through 5 years |   |   | 267,251   |   |       |   | 262,067   |        |   |   | (5,184 | ) |
|        Fixed income mutual funds                                                 |   |   | 6,791,442 |   |       |   | 7,001,308 |        |   |   | 209,866 |   |
|        Equity and other mutual funds                                             |   |   | 247,755   |   |       |   | 219,556   |        |   |   | (28,199 | ) |
|                                                                                                      |   | $      | 8,658,492 |   |       | $      | 8,826,180 |        |   | $ | 167,688 |   |

|                                                                                                         |   |   |      |   |       |   |      | Unrealized  |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|------------|--------|-----------|-------------|--------|
| December 31, 2009                                                                                            |   | Cost   |      |   | Fair Value |   |      | Gain/(Loss) |   |
|                                                                                                         |   |   |      |   |       |   |      |        |   |
|  Available for Sale:                                                                               |   |   |      |   |       |   |      |        |   |
|        U.S. Treasury and agencies                                                   |   |   |      |   |       |   |      |        |   |
|           Mature within 1 year                             |   | $      | 1,650,218 |   |       | $      | 1,659,596 |        |   | $ | 9,378 |   |
|           Maturities after 1 year through 5 years          |   |   | 1,108,726 |   |       |   | 1,124,527 |        |   |   | 15,801 |   |
|              Total US Treasury and agencies |   |   | 2,758,944 |   |       |   | 2,784,123 |        |   |   | 25,179 |   |
|        Corporate bonds                                                    |   |   |      |   |       |   |      |        |   |   |   |   |
|            Maturities after 1 year through 5 years    |   |   | 267,251   |   |       |   | 262,846   |        |   |   | (4,405 | ) |
|        Fixed income mutual funds                                                    |   |   | 5,179,005 |   |       |   | 5,181,990 |        |   |   | 2,985 |   |
|        Equity and other mutual funds                                                |   |   | 244,786   |   |       |   | 209,798   |        |   |   | (34,988 | ) |
|                                                                                                         |   | $      | 8,449,986 |   |       | $      | 8,438,757 |        |   | $ | (11,229 | ) |

----

| 6. | Inventories - Net  |
|----|-------------------------|

|                                        |   | September 30, |      |   | December 31, |   |
|---------------------------------------------|--------|---------------|-----------|--------|--------------|--------|
|                                        |   | 2010          |      |   | 2009         |   |
| Inventories consist of the following:  |   |          |      |   |         |   |
| Raw materials and work in process           |   | $             | 459,924   |   |         | $      | 329,562 |   |
| Finished products                      |   |          | 690,575   |   |         |   | 823,572 |   |
|                                        |   | $             | 1,150,499 |   |         | $      | 1,153,134 |   |

| 7. | Supplemental Financial Statement Information |
|----|----------------------------------------------|

|       | The Company paid $3,066,792 ($0.62 per share) and $2,770,006 ($0.56 per share) in dividends for the nine months ended September 30, 2010 and September 30, 2009, respectively. |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On May 29, 2010 the Company retired 350,000 shares of stock that it purchased from Kenneth H. Globus, the Company's President and largest stockholder.  On June 9, 2010 the Company retired the 62,200 shares of its stock which it previously held as treasury stock. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Research and development expenses amounted to $466,441 and $400,928 for the nine months ended September 30, 2010 and September 30, 2009, respectively, and are included in operating expenses. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8. | Income Taxes |
|----|--------------|

|   | The Company’s tax provision is based on its estimated annual effective rate.  The Company continues to fully recognize its tax benefits, which are offset by a valuation allowance to the extent that it is more likely than not that the deferred tax assets will not be realized. As of September 30, 2010 and December 31, 2009 the Company did not have any unrecognized tax benefits. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|       | The Company files consolidated Federal income tax returns in the U.S. with its inactive subsidiary, and separate income tax returns in New York State. The Company is subject to examination by the Internal Revenue Service and by New York State for years 2007 through 2009. |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9. | Comprehensive Income |
|----|----------------------|

|                                                                                                                                                               |   | Nine months ended September 30, |      |   | Three months ended September 30, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-----------|--------|---------------------------------------|--------|
|                                                                                                                                                          |   | 2010                                 |      |   | 2009                                  |   |   | 2010 |   |   | 2009 |   |
|                                                                                                                                                               |   |                                 |      |   |                                  |   |   |   |   |   |   |   |
| Net income                                                                                                                                                    |   | $                                    | 2,964,153 |   |                                  | $      | 2,992,420 |   |   | $ | 1,243,785 |   |   | $ | 1,081,748 |   |
|                                                                                                                                                               |   |                                 |      |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income                                                                                                                                         |   |                                 |      |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
|      Unrealized gain  on marketable securities during period                                                               |   |                                 | 178,917   |   |                                  |   | 329,700 |   |   |   | 115,031 |   |   |   | 182,923 |   |
|       Adjustment for pension termination                                                                                        |   |                                 | 518,296   |   |                                  |   | --- |   |   |   | --- |   |   |   |  --- |   |
|                                                                                                                                                               |   |                                 |      |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
|      Income tax expense related to other comprehensive income            |   |                                 | (241,654  | )      |                                  |   | (114,274 | ) |   |   | (39,870   | ) |   |   | (63,401   | ) |
|                                                                                                                                                               |   |                                 |      |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income, net of tax                                                                                                                        |   |                                 | 455,559   |   |                                  |   | 215,426 |   |   |   | 75,161 |   |   |   | 119,522 |   |
| Comprehensive income                                                                                                                                          |   | $                                    | 3,419,712 |   |                                  | $      | 3,207,846 |   |   | $ | 1,318,946 |   |   | $ | 1,201,270 |   |

|       | Accumulated other comprehensive income comprises unrealized gains and losses on marketable securities and liability for pension benefit net of the related tax effect. |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10. | Defined Benefit Pension Plan and New Defined Contribution Plan. |
|-----|-----------------------------------------------------------------|

----

| 11. | Other Information |
|-----|-------------------|

|                      |   | September 30, |    |   | December 31, |   |
|---------------------------|--------|---------------|---------|--------|--------------|--------|
|                      |   | 2010          |    |   | 2009         |   |
|                      |   |          |    |   |         |   |
| Accrued bonuses           |   | $             | 90,000  |   |         | $      | 182,000 |   |
| Accrued distribution fees |   |          | 171,900 |   |         |   | 303,493 |   |
| Other                     |   |          | 336,675 |   |         |   | 333,701 |   |
|                      |   | $             | 598,575 |   |         | $      | 819,194 |   |

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

|   | FORWARD-LOOKING STATEMENTS |
|--------|----------------------------|

----

|       | 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; changes in 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 principles, 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 conducts research, product development, manufacturing and marketing of cosmetic ingredients, personal and health care products, pharmaceuticals, and specialty industrial products. All of the products that the Company manufactures, with the exception of its RENACIDIN IRRIGATION®, are produced at its facility in Hauppauge, New York, and are marketed through marketing partners, distributors, wholesalers, direct advertising, mailings, and trade exhibitions. Its most important personal care product line is its LUBRAJEL® line of water-based moisturizing and lubricating gels. It also sells two pharmaceutical products for urological uses. Those products are sold primarily through the major drug wholesalers, which in turn sell the products to pharmacies, hospitals, nursing homes and other long-term care facilities, and to government agencies, primarily the Veteran's Administration. |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | While the Company does have competition in the marketplace for some of its products, many of its products are either unique in their field or have some unique characteristics, and therefore are not in direct competition with the products of other pharmaceutical, specialty chemical, or health care companies.  Many of the Company’s products are manufactured using patented or proprietary processes.  The Company’s research and development department is actively working on the development of new products to expand the Company's line of personal care and performance products. |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | assured.  An allowance for returns, based on historical experience, is taken as a reduction of sales within the same period the revenue is recognized. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | 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.     |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | CRITICAL ACCOUNTING POLICIES |
|--------|------------------------------|

|       | As disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, the discussion and analysis of the Company’s financial condition and results of operations are based on its financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles. The preparation of those financial statements required the Company to make estimates and assumptions that affect the carrying value of assets, liabilities, revenues and expenses reported in those financial statements. Those estimates and assumptions can be subjective and complex, and consequently actual results could differ from those estimates and assumptions. The Company’s most critical accounting policies relate to revenue recognition, concentration of credit risk, inventory, pension costs, patents, and income taxes. Since December 31, 2009, there have been no significant changes to the assumptions and estimates related to those critical accounting policies, other than the costs related to the settlement and termination of the Company's DB Plan. |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | The following discussion and analysis covers material changes in the financial condition of the Company since the year ended December 31, 2009, and a comparison of the results of operations for the nine and three months ended September 30, 2010 and September 30, 2009. This discussion and analysis should be read in conjunction with "Management's Discussion and Analysis or Plan of Operation" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2009. |
|--------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | RESULTS OF OPERATIONS |
|--------|-----------------------|

|   | Sales |
|--------|-------|

| (a)   | Pharmaceuticals:  Pharmaceutical sales for the nine months ended September 30, 2010 decreased $183,861 (8.1%) compared with the same period in 2009, and pharmaceutical sales for the three months ended September 30, 2010 increased $89,166 (14.7%) when compared with the three months ended September 30, 2009.  The decrease in the nine-month sales for 2010 compared with 2009 was the result of a price increase that was implemented on May 1, 2009, which caused a significant increase in sales in April 2009 as customers purchased additional inventory in anticipation of the price increase. The Company implemented a price increase on April 1, 2010, but the increase in sales prior to the effective date of the 2010 increase was much smaller than it was in 2009. As a result, 2010 sales of these products are gradually approaching 2009 levels. Since the annual unit sales volume of these products is relatively stable from year-to-year, the Company estimates |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|    | that the dollar value of pharmaceutical sales in calendar 2010 will increase as a result of the price increase that occurred in April 2010. |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Personal care products: For the nine months ended September 30, 2010, the Company’s sales of personal care products increased by $1,020,082 (16.9%) when compared with the nine months ended September 30, 2009. For the three months ended September 30, 2010, the Company’s sales of personal care products increased by $120,117 (5.0%) when compared with the three months ended September 30, 2009. These increases were primarily the result of sales increases in 2010 to the Company’s two largest marketing partners, ISP and Sederma. For the nine- and three-month periods ended September 30, 2010, sales to ISP increased by $682,993 (14.8%) and $247,571 (13.8%), respectively, compared with the corresponding periods in 2009. Sales to Sederma increased by $296,463 (49.9%) for the nine-month period ended September 30, 2010, but decreased by $152,168 (47.3%) for the three-month period ended September 30, 2010, compared with the corresponding periods in 2009. The Company believes that these changes are due primarily to inconsistencies in Sederma's ordering pattern. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Medical (non-pharmaceutical) products:  Sales of the Company’s medical products decreased by $199,984 (9.3%) for the nine-month period ended September 30, 2010, when compared with the corresponding period ended September 30, 2009. For the three months ended September 30, 2010, the Company’s sales of medical products increased by $214,300 (49.0%) when  compared with the three months ended September 30, 2009. These changes are primarily due to one of the Company’s customers that concentrated all of its 2009 purchases into the first six months of 2009 prior to moving a production facility in late 2009. That customer's purchases have been more evenly distributed in 2010, resulting in higher sales of these products in the second half of 2010 when compared with the second half of 2009. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | LIQUIDITY AND CAPITAL RESOURCES |
|--------|---------------------------------|

|       | Working capital decreased by $2,144,255 to $12,591,636 at September 30, 2010 from $14,735,891 at December 31, 2009.  The decrease in working capital was primarily due to the acquisition by the Company of 350,000 shares of Company stock from the Company's largest shareholder. The current ratio increased to 15.8 to 1 at September 30, 2010 from 6.0 to 1 at December 31, 2009. The increase in the current ratio was primarily due to the effect of a decrease in dividends payable, partially offset by other changes in working capital items. |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | During the nine-month period ended September 30, 2010, the average period of time that an account receivable was outstanding was approximately 33 days. The average period of time that an account receivable was outstanding during the nine-month period ended September 30, 2009 was 39 days. |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | The Company believes that its working capital is and will continue to be sufficient to support its operating requirements for at least the next twelve months.  The Company does not expect to incur any significant capital expenditures for the remainder of 2010. |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | The Company generated cash from operations of $3,057,465 and $3,218,554 for the nine months ended September 30, 2010 and September 30, 2009, respectively. The decrease was |
|--------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Cash provided by investing activities for the nine-month period ended September 30, 2010 was $439,442, while cash used in investing activities was $1,672,749 for the nine-month period ended September 30, 2009. This increase was primarily due to the redemption of certificates of deposit. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | Cash used in financing activities was $6,829,292 and $2,776,663 for the nine months ended September 30, 2010 and September 30, 2009, respectively.  This increase was mainly due to the acquisition of treasury stock from the President of the Company. |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company expects to continue to use its cash to make dividend payments, to purchase marketable securities, and to take advantage of other opportunities that are in the best interest of the Company, should they arise. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | RECENT ACCOUNTING PRONOUNCEMENTS |
|--------|----------------------------------|

|   | The Company has no off-balance-sheet transactions that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | CONTRACTUAL OBLIGATIONS AND COMMITMENTS |
|--------|-----------------------------------------|

|   | The information to be reported under this item is not required of smaller reporting companies. |
|--------|------------------------------------------------------------------------------------------------|

Item 

Item 

| (a)   | DISCLOSURE CONTROLS AND PROCEDURES |
|-----------------|------------------------------------|

----

| (b)   | CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING |
|-----------------|------------------------------------------------------|

PART 

| ITEM 1. | LEGAL PROCEEDINGS |
|---------|-------------------|

| ITEM 1A. | RISK FACTORS |
|----------|--------------|

|   | The information to be reported under this item is not required of smaller reporting companies. |
|--------|------------------------------------------------------------------------------------------------|

| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
|---------|--------------------------------------------------------------|

| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
|---------|---------------------------------|

| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
|---------|-----------------------------------------------------|

ITEM 

----

ITEM 

| 31.1      | Certification of Kenneth H. Globus, President and principal executive officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |                                                                                                                                                     |
| 31.2      | Certification of Robert S. Rubinger, Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                   |
|                     |                                                                                                                                                     |
| 32.1      | Certification of Kenneth H. Globus, President and principal executive officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|                     |                                                                                                                                                     |
| 32.2      | Certification of Robert S. Rubinger, Chief Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                  |

SIGNATURES

----