Retractable Technologies Inc 10-Q for FY2023 Q2

Retractable Technologies Inc (RVP)

10-Q 2023-08-14 For: 2023-06-30

Added on April 06, 2026

About this 10-Q

Retractable Technologies Inc filed this 10-Q on August 14, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $7.97M; down 44.4% from $14.34M a year earlier
Net loss: $3.87M; compared with a net loss of $3.64M a year earlier
Diluted EPS: -$0.13; compared with -$0.11 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	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 6.	Exhibits	21
SIGNATURES		22


	June 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	4,142,889	$	19,721,345
Accounts receivable, net		7,223,222		4,835,119
Receivable from Technology Investment Agreement (TIA)		—		2,025,413
Investments in debt and equity securities, at fair value		39,773,094		29,657,314
Inventories		20,914,779		20,684,168
Income taxes receivable		9,195,113		10,619,835
Prepaid estimated taxes		4,295		4,295
Other current assets		1,297,439		1,262,221
Total current assets		82,550,831		88,809,710

Property, plant, and equipment, net		96,824,184		100,152,768
Deferred tax asset		7,219,868		6,518,663
Other assets		170,695		184,524
Total assets	$	186,765,578	$	195,665,665

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,581,422	$	6,404,925
Current portion of long-term debt		293,539		285,954
Accrued compensation		928,341		997,530
Dividends payable		1,417,937		1,417,937
Accrued royalties to shareholder		653,478		973,701
Other accrued liabilities		1,990,314		1,992,144
Income taxes payable		5,235		63,631
Total current liabilities		8,870,266		12,135,822

Other long-term liabilities		72,965,630		75,459,612
Long-term debt, net of current maturities		1,386,691		1,533,422
Total liabilities		83,222,587		89,128,856

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		73,164,501		73,164,501
Retained earnings		43,034,723		46,028,541
Common stock in treasury – at cost		(12,888,678)		(12,888,678)
Total stockholders’ equity		103,542,991		106,536,809
Total liabilities and stockholders’ equity	$	186,765,578	$	195,665,665


	Three Months		Three Months		Six Months		Six Months
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Sales, net	$	7,971,280	$	14,336,569	$	18,972,382	$	59,078,919
Cost of sales:
Cost of manufactured product		6,940,895		9,783,565		14,302,759		36,389,803
Royalty expense to shareholder		653,478		906,404		1,423,187		3,474,595
Total cost of sales		7,594,373		10,689,969		15,725,946		39,864,398
Gross profit		376,907		3,646,600		3,246,436		19,214,521

Operating expenses:
Sales and marketing		1,545,453		1,065,877		2,895,624		2,083,761
Research and development		138,761		206,388		268,518		301,926
General and administrative		3,725,463		4,436,186		7,855,487		9,164,667
Total operating expenses		5,409,677		5,708,451		11,019,629		11,550,354
Income (loss) from operations		(5,032,770)		(2,061,851)		(7,773,193)		7,664,167

Other income - TIA		1,474,019		737,465		3,031,798		1,092,554
Unrealized gain (loss) on debt and equity securities		(6,251,650)		(3,903,523)		(4,759,639)		(572,414)
Gain (loss) on sale of equity securities		4,828,529		—		5,574,791		—
Interest and other income		218,651		60,579		428,466		95,491
Interest expense		(37,469)		(38,368)		(81,024)		(85,473)
Income (loss) before income taxes		(4,800,690)		(5,205,698)		(3,578,801)		8,194,325
Provision (benefit) for income taxes		(932,122)		(1,564,101)		(701,205)		4,219,467
Net income (loss)		(3,868,568)		(3,641,597)		(2,877,596)		3,974,858
Preferred Stock dividend requirements		(58,111)		(58,111)		(116,222)		(116,222)
Net income (loss) applicable to common shareholders	$	(3,926,679)	$	(3,699,708)	$	(2,993,818)	$	3,858,636

Basic earnings (loss) per share	$	(0.13)	$	(0.11)	$	(0.10)	$	0.12

Diluted earnings (loss) per share	$	(0.13)	$	(0.11)	$	(0.10)	$	0.12

Weighted average common shares outstanding:
Basic		29,937,159		32,945,821		29,937,159		33,105,637
Diluted		30,169,604		33,256,588		30,169,604		33,426,429


	Six Months		Six Months
	Ended		Ended
	June 30, 2023		June 30, 2022
Cash flows from operating activities
Net income (loss)	$	(2,877,596)	$	3,974,858
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization		3,884,970		1,777,991
Net unrealized loss on investments		4,759,639		572,414
Realized (gain) loss on investments		(5,574,791)		38,378
Accreted interest		9,157		33,799
Deferred taxes		(701,205)		4,219,467
Provision for doubtful accounts		370,573		—
Share-based compensation		—		2,276,736
Provision for inventory reserve		143,290		98,974
Other income - TIA		(3,031,798)		—
(Increase) decrease in operating assets:
Accounts receivable		(2,758,677)		27,127,674
Inventories		(373,901)		(702,934)
Other current assets		(35,220)		(66,470)
Income taxes receivable		1,424,723		—
Prepaid estimated taxes		—		(7,361,845)
Other assets		13,830		—
Increase (decrease) in operating liabilities:
Accounts payable		(2,823,502)		(11,116,971)
Accrued liabilities		700,711		(2,958,736)
Income taxes payable		(58,396)		(4,959,878)
Net cash from operating activities		(6,928,193)		12,953,457

Cash flows from investing activities
Purchase of property, plant, and equipment		(556,385)		(10,540,595)
Purchase of debt and equity securities		(43,868,141)		(16,139,741)
Proceeds from the sales of debt and equity securities		34,567,513		1,924,769
Net cash from investing activities		(9,857,013)		(24,755,567)

Cash flows from financing activities
Repayments of long-term debt		(139,146)		(142,847)
Proceeds from Technology Investment Agreement (TIA)		2,563,229		7,270,814
Proceeds from the exercise of stock options		—		10,500
Payment of preferred stock repurchase payable		(1,101,110)		(1,101,110)
Payment of preferred stock dividends		(116,223)		(136,656)
Repurchase of common stock		—		(2,818,177)
Net cash from financing activities		1,206,750		3,082,524

Net decrease in cash and cash equivalents		(15,578,456)		(8,719,586)
Cash and cash equivalents at:
Beginning of period		19,721,345		29,162,913
End of period	$	4,142,889	$	20,443,327

Supplemental schedule of cash flow information:
Interest paid	$	28,312	$	51,675
Income taxes paid	$	—	$	12,324,153

Supplemental schedule of noncash investing and financing activities:
Amounts receivable under Technology Investment Agreement (TIA)	$	—	$	3,567,913


			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, 2023	$	—	$	156,200	$	76,245	$	73,164,501	$	46,961,402	$	(12,888,678)	$	107,469,670
Dividends		—		—		—		—		(58,111)		—		(58,111)
Net Loss		—		—		—		—		(3,868,568)		—		(3,868,568)
Balance at June 30, 2023	$	—	$	156,200	$	76,245	$	73,164,501	$	43,034,723	$	(12,888,678)	$	103,542,991


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, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Number of significant customers		3			3			3			4
Aggregate dollar amount of net sales to significant customers	$	4.4	million	$	8.3	million	$	10.2	million	$	44.4	million
Percentage of net sales to significant customers		55.0%			57.6%			53.9%			75.2%


	For the three months ended June 30, 2023:
			Blood						Total
			Collection		EasyPoint^®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales	$	5,780,080	$	346,297	$	1,165,634	$	8,665	$	7,300,676
Sales to U.S. government		—		—		—		—		—
North and South America sales (excluding U.S.)		210,232		—		—		—		210,232
Other international sales		366,312		1,748		87,612		4,700		460,372
Total	$	6,356,624	$	348,045	$	1,253,246	$	13,365	$	7,971,280


	For the six months ended June 30, 2023:
			Blood						Total
			Collection		EasyPoint^®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales (excluding U.S. government)	$	10,583,166	$	744,673	$	1,378,121	$	18,164	$	12,724,124
Sales to U.S. government		—		—		—		—		—
North and South America sales (excluding U.S.)		4,771,512		—		—		212,040		4,983,552
Other international sales		871,854		213,948		174,204		4,700		1,264,706
Total	$	16,226,532	$	958,621	$	1,552,325	$	234,904	$	18,972,382


	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


	June 30, 2023		December 31, 2022
Raw materials	$	4,636,587	$	4,896,904
Finished goods		16,278,192		15,787,264
	$	20,914,779	$	20,684,168


	June 30, 2023
	Level 1		Level 2		Level 3		Total
Equity securities	$	—	$	—	$	—	$	—
Mutual funds		39,104,081		—		—		39,104,081
Municipal bonds		669,013		—		—		669,013
	$	39,773,094	$	—	$	—	$	39,773,094


	Six Months Ended		Six Months Ended
	June 30, 2023		June 30, 2022
U.S. statutory federal tax rate	21.0	%	21.0	%
State tax, net of federal tax	0.1	%	3.2	%
Stock options	0.4	%	8.6	%
Rate Change	—	%	13.1	%
Out of period adjustment	(0.8)	%	(0.2)	%
Return-to-provision and other	(1.1)	%	5.8	%
Effective tax rate	19.6	%	51.5	%


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, 2023, formatted in inline XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of June 30, 2023 and December 31, 2022, (ii) Condensed Statements of Operations for the three and six months ended June 30, 2023 and 2022, (iii) Condensed Statements of Cash Flows for the six months ended June 30, 2023 and 2022, (iv) Condensed Statement of Changes in Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022; and (v) Notes to Condensed Financial Statements

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

DATE: August 14, 2023	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, 2023
			Cumulative Unrealized				Aggregate
	Cost		Gains		Losses		Fair Value
Equity securities	$	—	$	—	$	—	$	—
Mutual funds		39,041,485		62,596		—		39,104,081
Municipal bonds		634,932		34,081		—		669,013
	$	39,676,417	$	96,677	$	—	$	39,773,094


	June 30, 2023		December 31, 2022
Prepayments from customers	$	298,116	$	435,916
Accrued property taxes		1,122,453		—
Accrued professional fees		476,394		254,584
Current portion – preferred stock repurchase		6,000		1,097,954
Other accrued expenses		87,351		203,690
Total	$	1,990,314	$	1,992,144


	June 30, 2023		December 31, 2022
Long-lived assets
U.S.	$	92,424,385	$	95,587,561
International		4,399,799		4,565,207
Total	$	96,824,184	$	100,152,768

Date: August 14, 2023

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

Date: August 14, 2023

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

Date:	August 14, 2023	/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