Retractable Technologies Inc 10-Q for FY2022 Q2

Retractable Technologies Inc (RVP)

10-Q 2022-08-15 For: 2022-06-30

Added on April 06, 2026

About this 10-Q

Retractable Technologies Inc filed this 10-Q on August 15, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

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

Revenue: $14.34M; down 66.3% from $42.5M a year earlier
Net loss: $3.64M; compared with net income of $10.66M a year earlier
Diluted EPS: -$0.11; compared with $0.31 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 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 6.	Exhibits	24
SIGNATURES		24


	June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	20,443,327	$	29,162,913
Accounts receivable, net		7,731,830		34,859,505
Receivable from Technology Investment Agreement (TIA)		3,567,913		5,924,136
Investments in debt and equity securities, at fair value		26,873,166		13,268,986
Inventories		21,193,879		20,589,919
Prepaid estimated taxes		7,361,845		—
Other current assets		768,440		701,969
Total current assets		87,940,400		104,507,428

Property, plant, and equipment, net		96,688,256		87,925,651
Deferred tax asset		9,646,367		13,865,834
Other assets		5,674		5,675
Total assets	$	194,280,697	$	206,304,588

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,287,601	$	20,404,573
Current portion of long-term debt		296,444		289,114
Accrued compensation		1,011,716		1,056,656
Dividends payable		1,417,937		1,438,371
Accrued royalties to shareholder		906,404		3,450,684
Other accrued liabilities		3,329,366		3,725,527
Income taxes payable		—		4,959,878
Total current liabilities		16,249,468		35,324,803

Other long-term liabilities		73,870,255		69,996,330
Long-term debt, net of current maturities		1,664,018		1,814,194
Total liabilities		91,783,741		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		65,312,124		63,024,888
Retained earnings		45,041,065		41,182,429
Common stock in treasury – at cost		(8,088,678)		(5,270,501)
Total stockholders’ equity		102,496,956		99,169,261
Total liabilities and stockholders’ equity	$	194,280,697	$	206,304,588


	Three Months		Three Months		Six Months		Six Months
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Sales, net	$	14,336,569	$	42,496,944	$	59,078,919	$	92,570,669
Cost of sales:
Cost of manufactured product		9,783,565		20,253,357		36,389,803		39,410,698
Royalty expense to shareholder		906,404		2,600,405		3,474,595		5,522,002
Total cost of sales		10,689,969		22,853,762		39,864,398		44,932,700
Gross profit		3,646,600		19,643,182		19,214,521		47,637,969

Operating expenses:
Sales and marketing		1,065,877		1,447,430		2,083,761		2,378,661
Research and development		206,388		399,042		301,926		548,325
General and administrative		4,436,186		5,121,885		9,164,667		8,615,121
Total operating expenses		5,708,451		6,968,357		11,550,354		11,542,107
Income (loss) from operations		(2,061,851)		12,674,825		7,664,167		36,095,862

Gain on forgiveness of PPP loan		—		1,377,652		—		1,377,652
Other income - TIA		737,465		—		1,092,554		—
Unrealized gain (loss) on equity securities		(3,903,523)		85,752		(572,414)		1,189,724
Interest and other income		60,579		52,480		95,491		143,287
Interest expense		(38,368)		(54,687)		(85,473)		(119,782)
Income (loss) before income taxes		(5,205,698)		14,136,022		8,194,325		38,686,743
Provision (benefit) for income taxes		(1,564,101)		3,473,897		4,219,467		10,068,734
Net income (loss)		(3,641,597)		10,662,125		3,974,858		28,618,009
Preferred Stock dividend requirements		(58,111)		(59,170)		(116,222)		(124,108)
Net income (loss) applicable to common shareholders	$	(3,699,708)	$	10,602,955	$	3,858,636	$	28,493,901

Basic earnings (loss) per share	$	(0.11)	$	0.31	$	0.12	$	0.84

Diluted earnings (loss) per share	$	(0.11)	$	0.31	$	0.12	$	0.83

Weighted average common shares outstanding:
Basic		32,945,821		34,000,771		33,105,637		33,984,271
Diluted		33,256,588		34,376,335		33,426,429		34,365,092


	Six Months		Six Months
	Ended		Ended
	June 30, 2022		June 30, 2021
Cash flows from operating activities
Net income	$	3,974,858	$	28,618,009
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		1,777,991		429,709
Net unrealized (gain) loss on investments		572,414		(1,189,724)
Realized loss on investments		38,378		—
Accreted interest		33,799		58,160
Deferred taxes		4,219,467		(6,615,764)
Provision for doubtful accounts		—		146,395
Provision for inventory reserve		98,974		—
Share-based compensation		2,276,736		1,345,915
Gain on forgiveness of PPP loan		—		(1,377,652)
(Increase) decrease in operating assets:
Accounts receivable		27,127,674		(5,209,061)
Inventories		(702,934)		(344,617)
Other current assets		(66,470)		10,731
Prepaid estimated taxes		(7,361,845)		—
Other assets		—		25,806
Increase (decrease) in operating liabilities:
Accounts payable		(11,116,971)		13,993,219
Accrued liabilities		(2,958,736)		1,465,375
Income taxes payable		(4,959,878)		156,263
Net cash provided by operating activities		12,953,457		31,512,764

Cash flows from investing activities
Purchase of property, plant, and equipment		(10,540,595)		(38,151,235)
Purchase of equity securities		(16,139,741)		(4,631,475)
Proceeds from the sales of equity securities		1,924,769		—
Net cash used by investing activities		(24,755,567)		(42,782,710)

Cash flows from financing activities
Repayments of long-term debt		(142,847)		(136,790)
Proceeds from Technology Investment Agreement (TIA)		7,270,814		17,676,051
Proceeds from the exercise of stock options		10,500		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		(136,656)		(88,141)
Repurchase of common stock		(2,818,177)		(154,424)
Net cash provided by financing activities		3,082,524		16,142,936

Net increase (decrease) in cash and cash equivalents		(8,719,586)		4,872,990
Cash and cash equivalents at:
Beginning of period		29,162,913		17,566,682
End of period	$	20,443,327	$	22,439,672

Supplemental schedule of cash flow information:
Interest paid	$	51,675	$	61,620
Income taxes paid	$	12,324,153	$	16,122,340

Supplemental schedule of noncash investing and financing activities:
Preferred dividends declared, not paid	$	1,417,937	$	5,056,946
Conversion of preferred stock to common stock	$	—	$	26,500
Amounts receivable under Technology Investment Agreement (TIA)	$	3,567,913	$	10,324,812
Preferred stock repurchase payable	$	1,071,637	$	—


			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 March 31, 2022	$	—	$	156,200	$	76,245	$	64,167,466	$	48,740,773	$	(7,818,225)	$	105,322,459
Dividends		—		—		—		—		(58,111)		—		(58,111)
Stock Option Compensation		—		—		—		1,144,658		—		—		1,144,658
Repurchase of Common Stock – at cost		—		—		—		—		—		(270,453)		(270,453)
Net Loss		—		—		—		—		(3,641,597)		—		(3,641,597)
Balance at June 30, 2022	$	—	$	156,200	$	76,245	$	65,312,124	$	45,041,065	$	(8,088,678)	$	102,496,956


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			Six Months Ended			Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Number of significant customers		3			1			4			1
Aggregate dollar amount of net sales to significant customers	$	8.3	million	$	27.4	million	$	44.4	million	$	65.1	million
Percentage of net sales to significant customers		57.6%			64.4%			75.2%			70.4%


	For the three months ended June 30, 2022:
			Blood						Total
			Collection		EasyPoint^®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales	$	6,877,166	$	526,256	$	2,138,573	$	19,814	$	9,561,809
Sales to U.S. government		—		—		—		—		—
North and South America sales (excluding U.S.)		4,096,984		—		—		216,144		4,313,128
Other international sales		423,578		35,246		2,808		—		461,632
Total	$	11,397,728	$	561,502	$	2,141,381	$	235,958	$	14,336,569


	For the six months ended June 30, 2022:
			Blood						Total
			Collection		EasyPoint^®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales (excluding U.S. government)	$	15,272,468	$	1,603,951	$	2,868,543	$	29,688	$	19,774,650
Sales to U.S. government		15,731,136		—		—		—		15,731,136
North and South America sales (excluding U.S.)		15,171,230		—		2,608		216,418		15,390,256
Other international sales		7,929,017		246,614		5,696		1,550		8,182,877
Total	$	54,103,851	$	1,850,565	$	2,876,847	$	247,656	$	59,078,919


	For the six months ended June 30, 2021:
			Blood						Total
			Collection		EasyPoint^®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales (excluding U.S. government)	$	19,652,047		1,030,826		2,971,268		28,946	$	23,683,087
Sales to U.S. government		65,140,200		—		—		—		65,140,200
North and South America sales (excluding U.S.)		2,293,328		—		56,848		109,440		2,459,616
Other international sales		771,836		62,640		450,440		2,850		1,287,766
Total	$	87,857,411	$	1,093,466	$	3,478,556	$	141,236	$	92,570,669


	June 30, 2022		December 31, 2021
Raw materials	$	4,652,329	$	4,402,828
Finished goods		16,541,550		16,187,091
	$	21,193,879	$	20,589,919


	June 30, 2022
	Level 1		Level 2		Level 3		Total
Equity securities	$	24,944,879	$	—	$	—	$	24,944,879
Mutual funds and exchange traded funds		1,928,287		—		—		1,928,287
	$	26,873,166	$	—	$	—	$	26,873,166


Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 – April 14, 2022	59,169	$4.51	59,169	0


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 June 30, 2022, formatted in inline XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of June 30, 2022 and December 31, 2021, (ii) Condensed Statements of Operations for the three and six months ended June 30, 2022 and 2021, (iii) Condensed Statements of Cash Flows for the six months ended June 30, 2022 and 2021, (iv) Condensed Statement of Changes in Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021; and (v) Notes to Condensed Financial Statements

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

DATE: August 15, 2022	RETRACTABLE TECHNOLOGIES, INC.
	(Registrant)


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


	June 30, 2022
			Gross Unrealized				Aggregate
	Cost		Gains		Losses		Fair Value
Equity securities	$	22,824,690	$	2,120,189	$	—	$	24,944,879
Mutual funds and exchange traded funds		2,103,938		—		(175,651)		1,928,287
	$	24,928,628	$	2,120,189	$	(175,651)	$	26,873,166


	June 30, 2022		December 31, 2021
Prepayments from customers	$	961,426	$	2,339,530
Accrued property taxes		585,481		—
Accrued professional fees		504,775		185,515
Current portion – preferred stock repurchase		1,071,637		1,098,282
Other accrued expenses		206,047		102,200
Total	$	3,329,366	$	3,725,527


	June 30, 2022		December 31, 2021
Technology Investment Agreement (TIA)	$	73,870,255	$	68,955,664
Stock repurchase		—		1,040,666
Total	$	73,870,255	$	69,996,330


	June 30, 2022		December 31, 2021
Long-lived assets
U.S.	$	91,954,093	$	83,695,991
International		4,734,163		4,229,660
Total	$	96,688,256	$	87,925,651

Date: August 15, 2022

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

Date: August 15, 2022

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

Date:	August 15, 2022	/s/ Thomas J. Shaw

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

		/s/ John W. Fort III

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