Retractable Technologies Inc 10-Q for FY2021 Q3

Retractable Technologies Inc (RVP)

10-Q 2021-11-15 For: 2021-09-30

Added on April 06, 2026

About this 10-Q

Retractable Technologies Inc filed this 10-Q on November 15, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $36.36M; up 34.2% from $27.09M a year earlier
Net income: $6.52M; down 24.4% from net income of $8.63M a year earlier
Diluted EPS: $0.19; down 42.4% from $0.33 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	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 6.	Exhibits	27
SIGNATURES		27


	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	16,363,163	$	17,566,682
Accounts receivable, net		30,040,562		21,131,841
Receivable from Technology Investment Agreement (TIA)		8,764,753		11,779,078
Investments in debt and equity securities, at fair value		13,583,943		8,081,833
Inventories		18,696,764		10,234,646
Other current assets		767,829		684,317
Total current assets		88,217,014		69,478,397

Property, plant, and equipment, net		76,625,980		30,816,504
Deferred tax asset		13,145,274		4,631,206
Other assets		5,675		44,567
Total assets	$	177,993,943	$	104,970,674

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	24,410,852	$	16,256,444
Current portion of long-term debt		285,519		1,030,763
Accrued compensation		841,290		826,762
Dividends payable		1,399,744		49,091
Accrued royalties to shareholder		2,297,527		1,973,781
Other accrued liabilities		4,422,865		3,398,904
Income taxes payable		2,545,692		4,365,770
Total current liabilities		36,203,489		27,901,515

Other long-term liabilities		60,306,784		24,478,697
Long-term debt, net of current maturities		1,886,271		2,710,337
Total liabilities		98,396,544		55,090,549

Commitments and contingencies – see Note 8

Stockholders’ equity:
Preferred stock, $1 par value:
Class B; authorized: 5,000,000 shares
Series II, Class B convertible; outstanding: 156,200 shares at September 30, 2021 and December 31, 2020		156,200		156,200
Series III, Class B convertible; outstanding: 80,245 and 106,745 shares at September 30, 2021 and December 31, 2020, respectively		80,245		106,745
Common Stock, no par value; authorized: 100,000,000 shares; outstanding: 33,764,283 and 33,957,204 at September 30, 2021 and December 31, 2020, respectively		—		—
Additional paid-in capital		61,863,653		59,285,401
Retained earnings (accumulated deficit)		20,336,627		(9,668,221)
Common stock in treasury – at cost		(2,839,326)		—
Total stockholders’ equity		79,597,399		49,880,125
Total liabilities and stockholders’ equity	$	177,993,943	$	104,970,674


	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020

Sales, net	$	36,356,047	$	27,091,064	$	128,926,716	$	49,867,126
Cost of sales:
Cost of manufactured product		20,663,651		11,580,674		60,074,349		25,331,916
Royalty expense to shareholder		2,297,527		1,681,885		7,819,529		3,502,525
Total cost of sales		22,961,178		13,262,559		67,893,878		28,834,441
Gross profit		13,394,869		13,828,505		61,032,838		21,032,685

Operating expenses:
Sales and marketing		1,020,244		1,160,412		3,398,905		3,148,290
Research and development		199,200		134,575		747,525		399,367
General and administrative		4,209,836		2,185,980		12,824,957		5,696,901
Total operating expenses		5,429,280		3,480,967		16,971,387		9,244,558
Income from operations		7,965,589		10,347,538		44,061,451		11,788,127

Gain on forgiveness of PPP loan		—		—		1,377,652		—
Interest and other income (loss)		(318,663)		(87,483)		1,014,348		881,316
Interest expense		(52,886)		(36,124)		(172,668)		(105,959)
Income before income taxes		7,594,040		10,223,931		46,280,783		12,563,484
Provision (benefit) for income taxes		1,072,155		1,598,180		11,140,889		(151,153)
Net income		6,521,885		8,625,751		35,139,894		12,714,637
Preferred Stock dividend requirements		(59,111)		(145,535)		(183,219)		(493,826)
Deemed contribution on extinguishment of preferred stock		—		2,525,848		—		2,519,124
Income applicable to common shareholders	$	6,462,774	$	11,006,064	$	34,956,675	$	14,739,935

Basic earnings per share	$	0.19	$	0.33	$	1.03	$	0.45

Diluted earnings per share	$	0.19	$	0.33	$	1.02	$	0.45

Weighted average common shares outstanding:
Basic		33,883,684		33,371,471		33,950,742		32,947,241
Diluted		34,262,681		33,984,934		34,330,967		33,071,652


			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, 2021	$	—	$	156,200	$	80,245	$	60,706,417	$	13,853,792	$	(154,424)	$	74,642,230
Dividends		—		—		—		—		(39,050)		—		(39,050)
Stock Option Compensation		—		—		—		1,157,236		—		—		1,157,236
Repurchase of Common Stock – at cost		—		—		—		—		—		(2,684,902)		(2,684,902)
Net Income		—		—		—		—		6,521,885		—		6,521,885
Balance at September 30, 2021	$	—	$	156,200	$	80,245	$	61,863,653	$	20,336,627	$	(2,839,326)	$	79,597,399


			Series I		Series II		Series III		Series IV		Series V
			Class B		Class B		Class B		Class B		Class B		Additional
	Common		Preferred		Preferred		Preferred		Preferred		Preferred		Paid-In		Accumulated
	Stock		Stock		Stock		Stock		Stock		Stock		Capital		Deficit		Total
Balance at June 30, 2020	$	—	$	96,000	$	171,200	$	126,745	$	335,000	$	34,000	$	62,087,831	$	(29,802,348)	$	33,048,428
Exchange of Preferred Stock for Common Stock		—		—		—		—		(300,000)		—		(2,423,248)		—		(2,723,248)
Conversion		—		—		(15,000)		—		—		—		15,000		—		—
Stock Option Exercises		—		—		—		—		—		—		224,325		—		224,325
Dividends		—		—		—		—		—		—		(52,242)		—		(52,242)
Net Income		—		—		—		—		—		—		—		8,625,751		8,625,751
Balance at September 30, 2020	$	—	$	96,000	$	156,200	$	126,745	$	35,000	$	34,000	$	59,851,666	$	(21,176,597)	$	39,123,014


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, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Number of significant customers		2			2			1			2
Aggregate dollar amount of net sales to significant customers	$	22.6	million	$	16.4	million	$	83.6	million	$	21.7	million
Percentage of net sales to significant customers		62.1%			60.6%			64.8%			43.6%


	For the three months ended September 30, 2021:
			Blood						Total
			Collection		EasyPoint^®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales (excluding U.S. government)	$	11,033,291	$	560,065	$	4,048,292	$	11,399	$	15,653,047
Sales to U.S. government		18,420,480		—		—		—		18,420,480
North and South America sales (excluding U.S.)		670,602		4,800		26,400		—		701,802
Other international sales		1,389,226		900		189,992		600		1,580,718
Total	$	31,513,599	$	565,765	$	4,264,684	$	11,999	$	36,356,047


	For the nine months ended September 30, 2021:
			Blood						Total
			Collection		EasyPoint^®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales (excluding U.S. government)	$	30,685,338	$	1,590,891	$	7,019,560	$	40,345	$	39,336,134
Sales to U.S. government		83,560,680		—		—		—		83,560,680
North and South America sales (excluding U.S.)		2,963,930		4,800		83,248		109,440		3,161,418
Other international sales		2,161,062		63,540		640,432		3,450		2,868,484
Total	$	119,371,010	$	1,659,231	$	7,743,240	$	153,235	$	128,926,716


	September 30, 2021		December 31, 2020
Raw materials	$	2,370,760	$	1,320,214
Finished goods		16,326,004		8,914,432
	$	18,696,764	$	10,234,646


	September 30, 2021
	Level 1		Level 2		Level 3		Total
Equity securities	$	9,357,931	$	—	$	—	$	9,357,931
Mutual funds and exchange traded funds		4,150,405		—		—		4,150,405
Certificates of deposit		—		75,607		—		75,607
	$	13,508,336	$	75,607	$	—	$	13,583,943


	September 30, 2021
			Gross Unrealized				Aggregate
	Cost		Gains		Losses		Fair Value
Equity securities	$	6,698,032	$	2,659,899	$	—	$	9,357,931
Mutual funds and exchange traded funds		3,994,001		156,404		—		4,150,405
Certificates of deposit		75,000		607		—		75,607
	$	10,767,033	$	2,816,910	$	—	$	13,583,943


	Nine Months		Nine Months
	Ended		Ended
	September 30, 2021		September 30, 2020
Cash flows from operating activities
Net income	$	35,139,894	$	12,714,637
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		702,384		624,998
Net unrealized gain on investments		(816,150)		(559,543)
Realized gains on investments		—		(162,595)
Accreted interest		83,282		—
Deferred taxes		(8,514,068)		(804,357)
Provision for doubtful accounts		146,395		125,000
Share-based compensation		2,503,152		—
Gain on forgiveness of PPP loan		(1,377,652)		—
(Increase) decrease in operating assets:
Accounts receivable		(9,055,116)		(7,542,375)
Inventories		(8,462,118)		(301,951)
Other current assets		(83,512)		(18,053)
Other assets		38,892		10,125
Increase (decrease) in operating liabilities:
Accounts payable		8,154,409		2,272,302
Accrued liabilities		1,490,008		1,803,433
Income taxes payable		(1,820,078)		670,531
Net cash provided by operating activities		18,129,722		8,832,152

Cash flows from investing activities
Purchase of property, plant, and equipment		(46,511,859)		(9,478,182)
Purchase of debt and equity securities		(4,685,960)		(2,174,980)
Proceeds from the sales of debt and equity securities		—		3,965,329
Net cash used by investing activities		(51,197,819)		(7,687,833)

Cash flows from financing activities
Repayments of long-term debt		(206,310)		(194,985)
Proceeds of long-term debt		—		1,363,000
Proceeds from Technology Investment Agreement (TIA)		39,848,368		6,883,103
Proceeds from the exercise of stock options		48,600		851,012
Payment of preferred stock redemption price payable		(101,250)		—
Payment of preferred stock repurchase payable		(1,101,110)		(100,000)
Payment of preferred stock dividends		(3,784,394)		(164,400)


Period	Total Number of Shares (or Units) Purchased⁽¹⁾	Average Price Paid Per Share (or Unit)	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
June 18, 2021 through June 30, 2021	13,500	$11.44	13,500	$9,845,576
July 1, 2021 through July 31, 2021	70,577	$11.08	70,577	$9,063,332
August 1, 2021 through August 31, 2021	78,947	$11.99	78,947	$8,116,667
September 1, 2021 through September 30, 2021	81,797	$11.69	81,797	$7,160,674
Total	231,321	$11.61	231,321


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 quarter ended September 30, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of September 30, 2021 and December 31, 2020, (ii) Condensed Statements of Operations for the three and nine months ended September 30, 2021 and 2020, (iii) Condensed Statements of Cash Flows for the nine months ended September 30, 2021 and 2020, (iv) Condensed Statement of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020; and (v) Notes to Condensed Financial Statements

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

DATE: November 15, 2021	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, 2021		December 31, 2020
Prepayments from customers	$	2,609,684	$	1,686,868
Accrued property taxes		338,540		—
Accrued professional fees		228,204		331,204
Current portion – preferred stock repurchase		1,084,795		1,092,282
Other accrued expenses		161,642		288,550
Total	$	4,422,865	$	3,398,904


	September 30, 2021		December 31, 2020
Technology Investment Agreement (TIA)	$	59,278,368	$	22,444,324
Stock repurchase		1,028,416		2,034,373
Total	$	60,306,784	$	24,478,697


	September 30, 2021		December 31, 2020
Long-lived assets
U.S.	$	72,822,361	$	30,751,259
International		3,803,619		65,245
Total	$	76,625,980	$	30,816,504


	September 30, 2021		December 31, 2020
OPERATING LEASES
Other assets	$	—	$	38,892
Other accrued liabilities	$	—	$	38,892
Other long-term liabilities		—		—
Total operating lease liabilities	$	—	$	38,892