Retractable Technologies Inc 10-Q for FY2022 Q3

Retractable Technologies Inc (RVP)

10-Q 2022-11-14 For: 2022-09-30

Added on April 06, 2026

About this 10-Q

Retractable Technologies Inc filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $23.06M; down 36.6% from $36.36M a year earlier
Net income: $5.39M; down 17.4% from net income of $6.52M a year earlier
Diluted EPS: $0.16; down 15.8% from $0.19 a year earlier

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Texas		75-2599762
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

511 Lobo Lane
Little Elm, Texas		75068-5295
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	RVP	NYSE American


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☐


	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	CONDENSED BALANCE SHEETS	1
	CONDENSED STATEMENTS OF OPERATIONS	2
	CONDENSED STATEMENTS OF CASH FLOWS	3
	CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY	4
	NOTES TO CONDENSED FINANCIAL STATEMENTS	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 6.	Exhibits	24
SIGNATURES		24


	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	13,417,554	$	29,162,913
Accounts receivable, net		17,901,973		34,859,505
Receivable from Technology Investment Agreement (TIA)		1,836,826		5,924,136
Investments in equity securities, at fair value		26,314,374		13,268,986
Inventories		18,519,177		20,589,919
Income taxes receivable		13,027,101		—
Other current assets		767,281		701,969
Total current assets		91,784,286		104,507,428

Property, plant, and equipment, net		98,821,412		87,925,651
Deferred tax asset		9,971,960		13,865,834
Other assets		5,674		5,675
Total assets	$	200,583,332	$	206,304,588

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,132,977	$	20,404,573
Current portion of long-term debt		291,111		289,114
Accrued compensation		817,064		1,056,656
Dividends payable		1,417,937		1,438,371
Accrued royalties to shareholder		1,488,811		3,450,684
Other accrued liabilities		2,845,672		3,725,527
Income taxes payable		—		4,959,878
Total current liabilities		14,993,572		35,324,803

Other long-term liabilities		75,006,588		69,996,330
Long-term debt, net of current maturities		1,598,537		1,814,194
Total liabilities		91,598,697		107,135,327

Commitments and contingencies – see Note 8

Stockholders’ equity:
Preferred stock, $1 par value:
Class B; authorized: 5,000,000 shares
Series II, Class B		156,200		156,200
Series III, Class B		76,245		76,245
Common Stock, no par value		—		—
Additional paid-in capital		66,472,660		63,024,888
Retained earnings		50,368,208		41,182,429
Common stock in treasury – at cost		(8,088,678)		(5,270,501)
Total stockholders’ equity		108,984,635		99,169,261
Total liabilities and stockholders’ equity	$	200,583,332	$	206,304,588


	Three Months		Three Months		Nine Months		Nine Months
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Sales, net	$	23,061,285	$	36,356,047	$	82,140,204	$	128,926,716
Cost of sales:
Cost of manufactured product		16,835,848		20,663,651		53,225,651		60,074,349
Royalty expense to shareholder		1,488,811		2,297,527		4,963,406		7,819,529
Total cost of sales		18,324,659		22,961,178		58,189,057		67,893,878
Gross profit		4,736,626		13,394,869		23,951,147		61,032,838

Operating expenses:
Sales and marketing		1,174,675		1,020,244		3,258,435		3,398,905
Research and development		105,749		199,200		407,675		747,525
General and administrative		4,146,821		4,209,836		13,311,488		12,824,957
Total operating expenses		5,427,245		5,429,280		16,977,598		16,971,387
Income (loss) from operations		(690,619)		7,965,589		6,973,549		44,061,451

Gain on forgiveness of PPP loan		—		—		—		1,377,652
Other income - TIA		861,850		—		1,954,404		—
Unrealized loss on equity securities		(615,215)		(373,574)		(1,187,629)		—
Interest and other income		105,661		54,911		201,152		1,014,348
Interest expense		(40,273)		(52,886)		(125,746)		(172,668)
Income (loss) before income taxes		(378,596)		7,594,040		7,815,730		46,280,783
Provision (benefit) for income taxes		(5,763,850)		1,072,155		(1,544,383)		11,140,889
Net income		5,385,254		6,521,885		9,360,113		35,139,894
Preferred Stock dividend requirements		(58,111)		(59,111)		(174,333)		(183,219)
Net income applicable to common shareholders	$	5,327,143	$	6,462,774	$	9,185,780	$	34,956,675

Basic earnings per share	$	0.16	$	0.19	$	0.28	$	1.03

Diluted earnings per share	$	0.16	$	0.19	$	0.28	$	1.02

Weighted average common shares outstanding:
Basic		32,936,959		33,883,684		33,049,411		33,950,742
Diluted		33,229,866		34,262,681		33,358,225		34,330,967


	Nine Months		Nine Months
	Ended		Ended
	September 30, 2022		September 30, 2021
Cash flows from operating activities
Net income	$	9,360,113	$	35,139,894
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,984,785		702,384
Net unrealized (gain) loss on investments		1,187,629		(816,150)
Realized loss on investments		38,378		—
Accreted interest		46,957		83,282
Deferred taxes		3,893,874		(8,514,068)
Provision for doubtful accounts		—		146,395
Share-based compensation		3,433,972		2,503,152
Gain on forgiveness of PPP loan		—		(1,377,652)
(Increase) decrease in operating assets:
Accounts receivable		16,957,532		(9,055,116)
Inventories		2,070,742		(8,462,118)
Other current assets		(65,312)		(83,512)
Prepaid estimated taxes		(13,027,101)		—
Other assets		—		38,892
Increase (decrease) in operating liabilities:
Accounts payable		(12,271,594)		8,154,409
Accrued liabilities		(3,067,833)		1,490,008
Income taxes payable		(4,959,878)		(1,820,078)
Net cash provided by operating activities		6,582,264		18,129,722

Cash flows from investing activities
Purchase of property, plant, and equipment		(13,880,546)		(46,511,859)
Purchase of equity securities		(16,196,164)		(4,685,960)
Proceeds from the sales of equity securities		1,924,769		—
Net cash used by investing activities		(28,151,941)		(51,197,819)

Cash flows from financing activities
Repayments of long-term debt		(213,661)		(206,310)
Proceeds from Technology Investment Agreement (TIA)		10,138,234		39,848,368
Proceeds from the exercise of stock options		13,800		48,600
Payment of preferred stock redemption price payable		—		(101,250)
Payment of preferred stock repurchase payable		(1,101,110)		(1,101,110)
Payment of preferred stock dividends		(194,768)		(3,784,394)
Repurchase of common stock		(2,818,177)		(2,839,326)
Net cash provided by financing activities		5,824,318		31,864,578

Net decrease in cash and cash equivalents		(15,745,359)		(1,203,519)
Cash and cash equivalents at:
Beginning of period		29,162,913		17,566,682
End of period	$	13,417,554	$	16,363,163

Supplemental schedule of cash flow information:
Interest paid	$	78,789	$	89,386
Income taxes paid	$	12,323,857	$	21,068,540

Supplemental schedule of noncash investing and financing activities:
Preferred dividends declared, not paid	$	1,417,937	$	1,399,744
Conversion of preferred stock to common stock	$	—	$	26,500
Amounts receivable under Technology Investment Agreement (TIA)	$	1,836,826	$	(3,014,325)
Preferred stock repurchase payable	$	1,084,795	$	—


			Series II		Series III
			Class B		Class B		Additional				Treasury
	Common		Preferred		Preferred		Paid-In		Retained		Stock –
	Stock		Stock		Stock		Capital		Earnings		at cost		Total
Balance at June 30, 2022	$	—	$	156,200	$	76,245	$	65,312,124	$	45,041,065	$	(8,088,678)	$	102,496,956
Stock Option Exercises		—		—		—		3,300		—		—		3,300
Dividends		—		—		—		—		(58,111)		—		(58,111)
Stock Option Compensation		—		—		—		1,157,236		—		—		1,157,236
Net Income		—		—		—		—		5,385,254		—		5,385,254
Balance at September 30, 2022	$	—	$	156,200	$	76,245	$	66,472,660	$	50,368,208	$	(8,088,678)	$	108,984,635


Production equipment		3 to 13 years
Office furniture and equipment		3 to 10 years
Buildings		39 years
Building improvements		15 years


	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Number of significant customers		2			2			4			1
Aggregate dollar amount of net sales to significant customers	$	15.5	million	$	22.6	million	$	60.0	million	$	83.6	million
Percentage of net sales to significant customers		67.4%			62.1%			73.0%			64.8%


	For the three months ended September 30, 2022:
			Blood						Total
			Collection		EasyPoint^®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales	$	6,947,856	$	815,964	$	1,426,060	$	7,253	$	9,197,133
Sales to U.S. government		—		—		—		—		—
North and South America sales (excluding U.S.)		9,825,120		—		—		16,416		9,841,536
Other international sales		3,915,102		8,590		97,724		1,200		4,022,616
Total	$	20,688,078	$	824,554	$	1,523,784	$	24,869	$	23,061,285


	For the nine months ended September 30, 2022:
			Blood						Total
			Collection		EasyPoint^®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales (excluding U.S. government)	$	22,220,324	$	2,419,915	$	4,294,603	$	36,941	$	28,971,783
Sales to U.S. government		15,731,136		—		—		—		15,731,136
North and South America sales (excluding U.S.)		24,421,790		—		2,608		232,834		24,657,232
Other international sales		12,418,679		255,204		103,420		2,750		12,780,053
Total	$	74,791,929	$	2,675,119	$	4,400,631	$	272,525	$	82,140,204


	Three Months Ended	Three Months Ended	Nine Months Ended	Nine Months Ended
	September 30, 2022	September 30, 2021	September 30, 2022	September 30, 2021
Common Stock underlying issued and outstanding stock options	60,462	142,552	76,370	143,780
Common stock issuable upon the conversion of convertible preferred shares	232,445	236,445	232,445	236,445
	292,907	378,997	308,815	380,225


	September 30, 2022		December 31, 2021
Raw materials	$	4,817,808	$	4,402,828
Finished goods		13,701,369		16,187,091
	$	18,519,177	$	20,589,919


	September 30, 2022
	Level 1		Level 2		Level 3		Total
Equity securities	$	24,458,406	$	—	$	—	$	24,458,406
Mutual funds and exchange traded funds		1,855,968		—		—		1,855,968
	$	26,314,374	$	—	$	—	$	26,314,374


	Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021
U.S. statutory federal tax rate	21.0	%	21.0	%
State tax, net of federal tax	0.6	%	5.8	%
Stock options	8.9	%	(0.1)	%
State tax nexus study	(89.5)	%	—	%
State rate change	34.3	%	—	%
Other	4.9	%	(1.8)	%
PPP loan	—	%	(0.8)	%
Effective tax rate	(19.8)	%	24.1	%


Exhibit No.		Description of Document

31.1		Certification of Principal Executive Officer

31.2		Certification of Principal Financial Officer

32		Certification Pursuant to 18 U.S.C. Section 1350

101		The following materials from Retractable Technologies, Inc.’s Form 10-Q for the period ended September 30, 2022, formatted in inline XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of September 30, 2022 and December 31, 2021, (ii) Condensed Statements of Operations for the three and nine months ended September 30, 2022 and 2021, (iii) Condensed Statements of Cash Flows for the nine months ended September 30, 2022 and 2021, (iv) Condensed Statement of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021; and (v) Notes to Condensed Financial Statements

104		Interactive Data File (formatted Inline XBRL and contained in Exhibit 101)

DATE: November 14, 2022	RETRACTABLE TECHNOLOGIES, INC.
	(Registrant)


	By:	/s/ John W. Fort III
		JOHN W. FORT III VICE PRESIDENT, CHIEF FINANCIAL OFFICER, AND CHIEF ACCOUNTING OFFICER


	September 30, 2022
			Gross Unrealized				Aggregate
	Cost		Gains		Losses		Fair Value
Equity securities	$	22,866,864	$	1,591,542	$	—	$	24,458,406
Mutual funds and exchange traded funds		2,122,851		—		(266,883)		1,855,968
	$	24,989,715	$	1,591,542	$	(266,883)	$	26,314,374


	September 30, 2022		December 31, 2021
Prepayments from customers	$	676,843	$	2,339,530
Accrued property taxes		668,690		—
Accrued professional fees		254,608		185,515
Current portion – preferred stock repurchase		1,084,795		1,098,282
Other accrued expenses		160,736		102,200
Total	$	2,845,672	$	3,725,527


	September 30, 2022		December 31, 2021
Technology Investment Agreement (TIA)	$	75,006,588	$	68,955,664
Stock repurchase		—		1,040,666
Total	$	75,006,588	$	69,996,330


	September 30, 2022		December 31, 2021
Long-lived assets
U.S.	$	94,171,727	$	83,695,991
International		4,649,685		4,229,660
Total	$	98,821,412	$	87,925,651

Date: November 14, 2022

/s/ Thomas J. Shaw
THOMAS J. SHAW
PRESIDENT, CHAIRMAN, AND
CHIEF EXECUTIVE OFFICER

Date: November 14, 2022

/s/ John W. Fort III
JOHN W. FORT III
VICE PRESIDENT,
CHIEF FINANCIAL OFFICER,
AND CHIEF ACCOUNTING OFFICER

Date:	November 14, 2022	/s/ Thomas J. Shaw

		THOMAS J. SHAW PRESIDENT, CHAIRMAN, AND CHIEF EXECUTIVE OFFICER

		/s/ John W. Fort

		JOHN W. FORT III VICE PRESIDENT, CHIEF FINANCIAL OFFICER, AND CHIEF ACCOUNTING OFFICER