# Retractable Technologies Inc: Form 10-Q for the period ended Mar 31, 2025

- Company: [Retractable Technologies Inc](/companies/rvp.md) (CIK 946563)
- Form: 10-Q
- Filed: 2025-05-15
- Accepted by EDGAR: May 15, 2025, 14:03 ET
- Period: 2025-03-31
- Accession: 0001558370-25-007853
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/946563/000155837025007853/tmb-20250331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/946563/000155837025007853/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $8.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $8.3m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | −$1.9k | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $191.2k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$4.7m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $23.5k | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $285.8k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$10.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.35 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.35 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 29,937,159 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$1.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $87.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-03-31 | $3.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $63.7m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $149.3m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $9.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $72.7m | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $807.4k | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-03-31 | $343.2k | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-31 | $76.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 19,653 characters.

### FORWARD-LOOKING STATEMENT WARNING

Certain statements included by reference in this filing containing the words “could,” “may,” “believes,” “anticipates,” “intends,” “expects,” and similar such words constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Any forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others: tariffs; material changes in demand; our ability to maintain liquidity; our maintenance of patent protection; our ability to maintain favorable third party manufacturing and supplier arrangements and relationships; foreign trade risk; our ability to access the market; production costs; the impact of larger market players in providing devices to the safety market; and any other factors referenced in Item 1A. Risk Factors in Part II. Given these uncertainties, undue reliance should not be placed on forward-looking statements.

### MATERIAL CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS

#### Overview

We have been manufacturing and marketing our products since 1997. Syringes comprised 83.9% of our sales in the first three months of 2025. EasyPoint® products accounted for 11.9% and other products, including our IV safety catheter and blood collection products, were 4.2% of our sales in the first three months of 2025.

Our products have been and continue to be distributed nationally and internationally through numerous distributors. Some of our popular syringe products provide low dead-space. Low dead-space syringes reduce residual medication remaining in the syringe after the dose has been administered. In some instances, the low dead-space allows for additional doses of medication to be obtained from the vials.

On September 13, 2024, the Office of the U.S. Trade Representative (“USTR”) revealed final adjustments to increase tariffs on certain goods imported from China under Section 301 of the Trade Act of 1974. Among those products included were syringes and needles, at a rate of 100%. In April 2025, an additional imposition of tariffs at a rate of 145% went into effect on products imported from China. The April 2025 tariff rate applies to our non-syringe and non-needle products, and is in addition to the 100% tariffs on syringes and needles. On May 12, 2025 and effective on May 14, 2025, the tariff rate has been reduced to 30% as a baseline to replace the 145% rate announced in April. As a result, we believe the tariff rate on needles and syringes imported from China will be 130% and the remaining products we import will be 30%. This most recent change will be part of a 90-day agreement while the U.S. and China work to solidify a broader deal on tariffs and trade policy. While we have manufacturing capabilities to manufacture most of the products we currently sell domestically, some of our products are sourced exclusively from China. 62.7% and 90.4% of the products we obtained in the first quarter of 2025 and 2024, respectively, were purchased from our manufacturers in China, most of which are now impacted by the tariffs. Tariffs are expected to have a material impact to our results of operations and financial position. Approximately $3.1 million was spent on tariff expenses from September 2024 to May 1, 2025, and of this amount $1.5 million was expended in the first quarter of 2025. We are working to lessen the financial impact of the tariffs, including shifting a larger portion of manufacturing of 1mL, 3mL, and EasyPoint® needles to our domestic manufacturing facility, but while these actions would decrease tariff expenses, they have led to an annualized estimated $3.8 million increase in compensation and benefits expense as we have hired additional manufacturing personnel.

In connection with allocating more resources to domestic manufacturing, in April 2025, we reduced our workforce (predominantly employees engaged in general and administrative functions) by approximately 7%. The reduction is expected to save an estimated $1.6 million in annual wages and benefits, or approximately 7.8% of total estimated workforce costs. The expected savings is offset by one-time separation payments of approximately $300 thousand to the affected workers.

We have recently adapted some equipment to increase our domestic manufacturing capabilities. The adaptations to existing equipment will allow us to produce 0.5 mL syringes domestically. Once operational, we will no longer rely on imports for these products, and they will no longer be affected by tariff costs. We expect that commercial quantities will be available in the second half of 2025.

Certain products must be purchased from third party suppliers as we do not currently have the machinery to manufacture our entire product line in our U.S. facility. When equipment was added to our U.S. facility pursuant to the TIA, it was strictly for product lines typically used in the administration of vaccines, as required by the TIA.

In 2020 and 2021, we were awarded significant orders and contracts by the U.S. government for safety syringes for COVID-19 vaccination efforts. From 2020 through the first quarter of 2022, the U.S. government was a significant customer. We cannot predict whether any future U.S. government orders may occur.

Recent additions of manufacturing equipment and facilities under the 2020 TIA have increased our production capacity and our overhead costs. Under the TIA and its successor agreement, until June 30, 2030 we must continue to abide by ongoing terms which include maintenance of equipment, availability of capacity, and US government preference in the event of a public health emergency.

The U.S. government orders as well as the TIA are material events particular to the COVID-19 pandemic and are not indicative of future operations.

Over the past several years, we have experienced certain cost increases in raw materials. Those costs primarily affected our domestic manufacturing because the finished goods we purchased from China were subject to a long-term fixed price contract. Sensitivity to cost fluctuations are likely to become more pronounced as we transition away from production under such a fixed price contract. Other factors that could affect our unit costs include tariffs, supplier cost increases, increases in workforce costs associated with increased domestic production, and changing production volumes. Increases in costs may not be recoverable through price increases of our products.

We believe domestic customers have retained products provided for vaccination purposes in inventory. Customers have reported that demand was diminished due to their remaining syringe inventory. It is difficult to estimate how much of the remaining inventory might still remain in the market.

As detailed in Note 4 to the financial statements, we held $32.3 million in debt and equity securities as of March 31, 2025, which represented 21.6% of our total assets.

Historically, unit sales have increased during the flu season. From 2020-2022, seasonal effects of the flu season on our revenues were less impactful due to the dramatic increase in sales attributable to COVID-19 vaccinations. Seasonal trends for syringe sales may now be following pre-pandemic patterns. Additionally, there may be more demand for EasyPoint® products during the flu season, particularly in the retail pharmacy market. Overall demand may be affected by public sentiment and acceptance of the safety and efficacy of vaccinations. While some products in our catalog of products are unrelated to the administration of vaccines, changes in the acceptance of vaccinations could have a material impact on our business.

A material portion of our net losses for the three months ended March 31, 2025 is comprised of approximately $7.2 million in unrealized loss in debt and equity securities on the Condensed Statements of Operations.

In 1995, we entered into a license agreement with Thomas J. Shaw for the exclusive right to manufacture, market, and distribute products utilizing his patented automated retraction technology and other patented technology. This technology is the subject of various patents and patent applications owned by Mr. Shaw. The license agreement generally provides for quarterly payments of a 5% royalty fee on gross sales of products subject to the license and he receives fifty percent (50%) of the royalties paid to us by certain sublicensees of the technology subject to the license.

### RESULTS OF OPERATIONS

The following discussion may contain trend information and other forward-looking statements that involve a number of risks and uncertainties. Our actual future results could differ materially from our historical results of operations and those discussed in any forward-looking statements. All period references are to periods ended March 31, 2025 or 2024, as applicable. Dollar amounts have been rounded for ease of reading.

### Comparison of Three Months Ended March 31, 2025 and March 31, 2024

Domestic sales accounted for 89.6% and 87.4% of total revenues for the three months ended March 31, 2025 and 2024, respectively. Domestic revenues increased 11.9%, while domestic unit sales increased 17.2%. Domestic unit sales represented 84.9% of total unit sales for the three months ended March 31, 2025. The increase in unit sales did not translate into a proportional increase in domestic revenues, primarily due to a decrease in average selling price, which was largely impacted by higher transaction costs associated with distributor agreements.

International revenues for the three months ended March 31, 2025 remained consistent compared to the same period in 2024. However, average selling price per unit declined relative to the first quarter of 2024, primarily due to a shift in product mix. International sales for the three months ended March 31, 2024 included a higher proportion of premium-priced Blood Collection Sets and Easy Point Needles, which typically yield higher average selling price. There remains uncertainty regarding the timing of future international orders.

Overall, units sales increased 18.9%.

Cost of manufactured product increased 50.3% principally due to an increase in tariffs and additional period costs related to increased domestic production activities. Royalty expense increased 8.8% primarily due to the increase in gross sales, slightly offset by a decrease in royalties received from sublicenses.

Tariffs are expected to continue to materially increase our costs in future periods. Approximately $1.5 million was spent on tariff expenses in the first quarter of 2025. These costs are included in Cost of manufactured product.

Operating expenses decreased 4.3%. The decrease was primarily driven by lower legal and litigation fees, as well as a reduction in outside accounting fees.

The loss from operations was $4.7 million compared to a loss of approximately $3 million for the same period last year. The increased loss was due to lower gross profit for the current period.

The unrealized loss on debt and equity securities was $7.2 million due to the decreased market values of those securities.

The provision for income taxes was $286 thousand as compared to a provision for income taxes of $86 thousand for the same period in 2024. The difference is primarily related to fully reserving our deferred tax asset in the second quarter of 2024.

### Discussion of Balance Sheet and Cash Flow Items

Cash flow used by operations was $1.5 million in the first quarter of 2025 due to a number of factors. Aside from the various reconciling items used in determining the overall use of cash, our net loss for the period was the predominant factor. We recognized approximately $1.5 million in other income from the TIA, offset by $7.2 million in unrealized loss in debt and equity securities which is material to the adjustments to total cash flow from operations. Changes in working capital also impacted cash flows from operating activities. Accounts receivable decreased by $2.5 million, inventories increased nearly $2.0 million, and accounts payable increased by $433 thousand.

Cash flow from investing activities was $762 thousand for the first quarter of 2025, primarily reflecting $1.0 million in proceeds from the sale of debt and equity securities, partially offset by purchases of property, plant, and equipment and additional investments in debt and equity securities. The $1 million obtained as a result of the sale of securities was used to fund operating activities during the first quarter of 2025.

Cash used by financing activities was $140 thousand for the first quarter of 2025. This was primarily due to repayments of long-term debt and payment of preferred stock dividends.

### LIQUIDITY AND CAPITAL RESOURCES

We have historically funded operations primarily from the proceeds from revenues, private placements, litigation settlements, and loans. We may fund operations going forward from revenues, cash reserves, and investments in trading securities should the need to access those funds arise.

The imposition of tariffs on our products will have a material effect on our operating results and liquidity. Additional capital improvements and increases to our manufacturing workforce will also increase expenses in the near-term as a result of the tariffs and our expected increase in domestic manufacturing. The conversion of existing equipment plus the purchase of additional molds to produce products which have never been produced domestically is expected to cost approximately $1 million, some of which has already been expended. Those products accounted for roughly 15.9% of our overall domestic unit sales and 19.2% of our domestic syringe unit sales. The overall impact of additional workforce needed to produce these and other products is an increase of approximately $3.8 million on an annual basis.

#### Margins

The mix of domestic and international sales, along with product mix, affects the average sales price of our products. Generally, the higher the ratio of domestic sales to international sales, the higher the average sales price will be. Additionally, product mix plays a role, with syringe sales typically having higher average selling prices and gross profit margins than our other product lines. Some international sales of our products are shipped directly from China to the customer. The number of units produced by us versus manufactured in China can have a significant effect on the carrying costs of Inventory as well as Cost of sales. Generally, an overall increase in units sold can positively affect our margins. The cost of raw materials used in manufacturing, transportation costs, and the impact of tariffs can also significantly affect our margins.

Our margins have experienced significant fluctuations over the past two years. Most recently, our margins have faced negative pressure from numerous factors. The tariffs enacted in 2024-2025 have had a direct negative impact on products we import from China to date. In reaction to the tariffs, we have acted to increase our domestic production and reduce, to the extent possible, our reliance on imports. While we believe these efforts will enable us to avoid some of the impact of the tariffs, we will be forced to import the products we are unable to produce in the U.S. As we work to increase our domestic production and achieve manufacturing efficiencies, we will continue to work to minimize our reliance on imported products.

#### Cash Requirements

We believe we will have adequate means to meet our short-term needs to fund operations for at least 12 months from the date of issuance of the financial statements. Besides cash reserves and expected income from operations, we also have access to our investments which may be liquidated in the event that we need to access the funds for operations. Expected short-term uses of cash include payroll and benefits, royalty expense, inventory purchases, tariffs, contractual obligations, payment of income taxes, quarterly preferred stock dividends, and other operational priorities. Our liabilities are our bank debt as set forth as Long-term debt on our Condensed Balance Sheets and other liabilities detailed herein in Note 6 to the financial statements. We believe we will have adequate means to meet our currently foreseeable long-term liquidity needs although the new tariffs and our costs related to an increase in domestic manufacturing will increase our expenses materially. For the next 1-3 years, we believe our liquidity will decline materially, but we expect that we may be able to satisfy our long-term cash requirements using a combination of cash and liquidation of our equity investments. If cash needs cannot be met using existing cash and investments, management would further reduce operational costs. In the event that the foregoing is insufficient, we may liquidate certain assets.

#### Capital Resources

To produce more units at our U.S. facility, we expect to spend approximately $1 million to purchase molds and convert domestic equipment, some of which has already been expended. While additional equipment expenditures may be necessary in the future, these near-term equipment expenditures are expected to be completed in the second quarter of 2025.

CRITICAL ACCOUNTING ESTIMATES

We are responsible for developing estimates for amounts reported as assets and liabilities, and revenues and expenses in conformity with U.S. generally accepted accounting principles (“GAAP”). Those estimates require that we develop assumptions of future events based on past experience and expectations of economic factors. Among the more critical estimates management makes is the estimate for customer rebates. The amount reported as a contractual allowance for rebates involves examination of past historical trends related to our sales to distributors and the related credits issued once our distributors have satisfied their contractual obligations. The estimate includes consideration of historical redemption rates, discount rates, a combination of estimated distributor inventories based on tracking information provided by the distributors or if known, inventory turnover rates. The establishment of a liability for future claims of rebates against sales in the current period requires that we have an understanding of the relevant sales with respect to product categories, sales distribution channels, and the likelihood of contractual obligations being satisfied. We examine the results of estimates against actual results historically and use the determination to further develop our basis for assumptions in future periods, as well as the accuracy of past estimates. Based on distributors’ purchasing and claiming rebates practices, we do not expect significant changes to the current inputs and assumption used in the estimate calculations. While we believe that we have sufficient historical data, and a firm basis for establishing reserves for contractual obligations, there is an inherent risk that our estimates and the underlying assumptions may not reflect actual future results. In the event that these estimates and/or assumptions are incorrect, adjustments to our reserves may have a material impact on future results. As of March 31, 2025, we estimate that the total potential future credits to be issued as a result of prior purchases which have not yet been claimed is $1.7 million.

## Controls and procedures

As filed, 3,782 characters.

#### Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, Management, with the participation of our President, Chairman, and Chief Executive Officer, Thomas J. Shaw (the “CEO”), and our Vice President and Chief Financial Officer, John W. Fort III (the “CFO”), acting in their capacities as our principal executive and principal financial officers, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. The term disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us in our periodic reports is: i) recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms; and ii) accumulated and communicated to our Management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based upon this evaluation, the CEO and CFO concluded that, as of March 31, 2025, our disclosure controls and procedures were not effective as of March 31, 2025.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As of December 31, 2024, Management identified the following material weaknesses in internal controls as:

- The Company did not maintain the risk assessment and control activities components of the COSO framework. These material weaknesses gave rise to the following control deficiency, which was also determined to be a material weakness.
- The Company did not design and maintain effective controls to timely document and evaluate revenue contract terms and the related revenue recognition accounting conclusions when entering into significant revenue contracts.

Management has determined that the foregoing weaknesses in internal controls have not been sufficiently remedied. We are unable, at this time, to estimate how long it will take to compete the remediation of our material weaknesses, and our efforts may not be successful.

In light of the material weaknesses in internal control over financial reporting, Management intends to further enhance our review and analysis of contractual modifications with our customers, utilizing senior members of our accounting team, including the CFO, to identify and properly classify revenue transactions and their impact on our financial statements. Management believes that such enhancements to our review and analysis procedures will prevent errors from occurring, or that potential errors will be discovered and remediated in a timely manner.

#### Changes in Internal Control Over Financial Reporting

Since material weaknesses were reported as of December 31, 2024, work has begun to improve our review and analysis of contractual modifications with customers to work towards identifying and properly classifying revenue transactions and their impact on our financial statements. As stated above, Management intends to engage in further enhanced reviews to fully remediate the continuing internal control weaknesses. Other than these steps to attempt to remediate the previously-reported weakness in internal control over financial reporting, there have been no other changes during the first quarter of 2025 or subsequent to March 31, 2025 in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

## Risk factors

As filed, 125 characters.

There were no material changes in our Risk Factors as set forth in our most recent annual report which is available on EDGAR.

Filed May 15, 2025.
Source: SEC EDGAR, the filing index for accession 0001558370-25-007853. Last ingested by Listed: Oct 24, 2026, 15:01 ET. No prices; not investment advice.