RETRACTABLE TECHNOLOGIES INC

Previous wording

We have been manufacturing and marketing our products since 1997. Syringes comprised 68.8% of our sales in the first six months of 2025. EasyPoint®products accounted for 27.6% and other products, including our IV safety catheter and blood collection products, were 3.6% of our sales in the first six months of 2025. The significant increase in unit sales of our EasyPoint®needle products for the first six months of 2025 positively affected our overall net revenues, but the lower selling price attributable to the products resulted in a reduction of the total average selling price for the periods presented.

Current wording

We have been manufacturing and marketing our products since 1997. Syringes comprised 65.0% of our sales in the first nine months of 2025. EasyPoint®products accounted for 31.3% and other products, including our IV safety catheter and blood collection products, were 3.7% of our sales in the first nine months of 2025. For the first nine months of 2025, the sales mix included a higher proportion of international product sales compared to the first nine months of 2024. Traditionally, international sales carry lower average selling prices compared to domestic sales.

Previous wording

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. The announcement was part of a 90-day agreement while the U.S. and China negotiated a broader deal on trade and tariffs. As a result, and until a final trade deal has been announced, Management believes the tariff rate on needles and syringes imported from China will be 130% and the remaining products we import will be 30%. As foreign trade policy continues to evolve and as new trade deals are being negotiated, uncertainty as to future tariff rates and affected products remains. Tariffs are expected to have a continuing material impact to our results of operations and financial position.

Current wording

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%. During 2025, the on-going development and negotiation of U.S. foreign trade policy with China and other nations has caused the prevailing tariff rates on products imported into the U.S. to fluctuate. These fluctuations have impacted certain goods or groups of goods, and have varied based on country of origin. As of September 30, 2025, the prevailing tariff rate on most syringe and needle products imported from China was 130%. Other products we import from China, which do not fall under the category of needles and syringes, are subject to a 30% tariff rate. As foreign trade policy continues to evolve and as new trade deals are being negotiated, uncertainty as to future tariff rates and affected products remains. Tariffs are expected to have a continuing material impact to our results of operations and financial position. We are working to lessen the financial impact of the tariffs through strategic ordering of products from our Chinese suppliers and shifting a larger portion of manufacturing of 1mL, 3mL, and EasyPoint® needles to our domestic manufacturing facility.

Previous wording

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% and 91% of the products we obtained in the six months 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 $2.1 million was spent on tariff expenses in the first six months 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. This shift would decrease tariff expenses but would lead to an increase in our manufacturing workforce costs as we hire new employees. The cost of increasing our manufacturing workforce was estimated to be approximately $3.8 million annually in combined wages and employee benefits. 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 was offset by one-time separation payments of approximately $300 thousand to the affected workers.

Current wording

While we have manufacturing capabilities to manufacture most of the products we currently sell domestically, some of our products are sourced exclusively from China. 61.7% and 90% of the products we obtained in the first nine months 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 $2.3 million was spent on tariff expenses in the first nine months 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. This shift would decrease tariff expenses but would lead to an increase in our manufacturing workforce costs as we hire new employees. We implemented reductions in force in the second and third quarters of 2025 primarily within non-manufacturing functions, each expected to save approximately $1.6 million, however, overall workforce levels increased due to higher domestic manufacturing. As such, we expect that manufacturing workforce increases instituted in 2025 will raise payroll costs by approximately $825 thousand on an annualized basis.

Previous wording

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. We expect that commercial quantities will be available in the second half of 2025.

Current wording

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. We currently anticipate that commercial quantities will become available, as market demand necessitates, in the first half of 2026.

Previous wording

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.

Current wording

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 U.S. government preference in the event of a public health emergency.

Previous wording

As detailed in Note 4 to the financial statements, we held $30.0 million in debt and equity securities as of June 30, 2025, which represented 20.4% of our total assets.

Current wording

As detailed in Note 4 to the financial statements, we held $30.5 million in debt and equity securities as of September 30, 2025, which represented 20.8% of our total assets.

Previous wording

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. Purchases from our retail pharmacy customers may differ from purchasing patterns of general line distributors. Second quarter EasyPoint® sales volumes increased primarily for this reason.

Current wording

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. Purchases from our retail pharmacy customers may differ from purchasing patterns of general line distributors. Second and third quarter EasyPoint® sales volumes increased primarily for this reason.

Previous wording

A material portion of our net loss for the six months ended June 30, 2025 is comprised of approximately $5.6 million in unrealized loss in debt and equity securities on the Condensed Statements of Operations.

Current wording

A material portion of our net loss for the nine months ended September 30, 2025 is comprised of approximately $3.2 million in unrealized loss in debt and equity securities on the Condensed Statements of Operations. A material portion of our net income for the three months ended September 30, 2025 is comprised of approximately $2.4 million in unrealized gain in debt and equity securities on the Condensed Statements of Operations.

Previous wording

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.

Current wording

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.

Previous wording

Domestic sales accounted for 81.3% and 83.2% of total revenues for the three months ended June 30, 2025 and 2024, respectively. Domestic revenues increased 69.3%, while domestic unit sales increased 81.8%. Domestic unit sales represented 68.9% of total unit sales for the three months ended June 30, 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. The average selling price was impacted by product mix and higher transaction fees associated with distributor agreements. The average selling price reduction was significantly impacted by the increase in EasyPoint®needle sales in relation to all products sold.

Current wording

Domestic sales accounted for 91.1% and 93.1% of total revenues for the three months ended September 30, 2025 and 2024, respectively. Domestic revenues decreased 4.6%, while domestic unit sales decreased 20.4%. Domestic unit sales represented 83.9% of total unit sales for the three months ended September 30, 2025 compared to 92.4% for the same period last year. The decrease in unit sales did not translate into a proportional decrease in domestic revenues, primarily due to an increase in average domestic selling price. The average selling price was impacted by change in product mix. The average domestic selling price increased due to decreased EasyPoint®needle sales in relation to all products sold.

Previous wording

International revenues for the three months ended June 30, 2025 increased 92.6% compared to the same period in 2024. However, average selling price per unit declined relative to the second quarter of 2024, primarily due to a shift in product mix. International sales for the three months ended June 30, 2025 included Easy Point Needles sold at a discount to certain international customers which reduced the overall average selling price. There remains uncertainty regarding the timing of future international orders.

Current wording

International revenues for the three months ended September 30, 2025 increased 25% compared to the same period in 2024. However, the average international selling price per unit declined relative to the third quarter of 2024, primarily due to a shift in product mix. International sales for the three months ended September 30, 2025 included EasyPoint®needles sold at a discount to certain international customers which reduced the overall average selling price. There remains uncertainty regarding the timing of future international orders.

Previous wording

Tariffs are expected to continue to materially increase our costs in future periods. Approximately $561 thousand was spent on tariff expenses in the second quarter of 2025. These costs are included in Cost of manufactured product.

Current wording

Tariffs are expected to continue to materially impact our costs in future periods. Approximately $172 thousand was spent on tariff expenses in the third quarter of 2025. These costs are included in Cost of manufactured product.

Previous wording

The unrealized gain on debt and equity securities was $1.6 million due to the increased market values of those securities.

Current wording

The unrealized gain on debt and equity securities was $2.4 million due to the increased market values of those securities.

Previous wording

International revenues for the six months ended June 30, 2025 increased 42.8% compared to the same period in 2024. However, average selling price per unit declined relative to the first half of 2024, primarily due to a shift in product mix. International sales for the six months ended June 30, 2025 included Easy Point Needles sold at a discount to certain

Current wording

International revenues for the nine months ended September 30, 2025 increased 38.1% compared to the same period in 2024. However, average international selling price per unit declined relative to the first nine months of 2024, primarily due to a shift in product mix. International sales for the nine months ended September 30, 2025 included EasyPoint®needles sold at a discount to certain international customers which reduced the overall average selling price. There remains uncertainty regarding the timing of future international orders.

Previous wording

Tariffs are expected to continue to materially increase our costs in future periods. Approximately $2.1 million was spent on tariff expenses in the first six months of 2025. These costs are included in Cost of manufactured product.

Current wording

Tariffs are expected to continue to materially impact our costs in future periods. Approximately $2.3 million was spent on tariff expenses in the first nine months of 2025. These costs are included in Cost of manufactured product.

Previous wording

The loss from operations was $5.1 million compared to a loss of approximately $5.8 million for the same period last year. The decreased loss was due to a decrease in bad debt expense.

Current wording

The loss from operations was $13.5 million compared to a loss of approximately $13.9 million for the same period last year. This was primarily due to a decrease in legal and litigation fees.

Previous wording

The unrealized loss on debt and equity securities was $5.6 million due to the decreased market values of those securities.

Current wording

The unrealized loss on debt and equity securities was $3.2 million due to the decreased market values of those securities.

Previous wording

The provision for income taxes was $288 thousand as compared to a provision for income taxes of $8.4 million for the same period in 2024. The difference is primarily related to fully reserving our deferred tax asset in the second quarter of 2024.

Current wording

The provision for income taxes was $289 thousand as compared to a provision for income taxes of $8.4 million for the same period in 2024. The difference is primarily related to fully reserving our deferred tax asset in the second quarter of 2024.

Previous wording

Cash flow used by operations was $5.2 million for the six months ended June 30, 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 $3.0 million in other income from the TIA, offset by $5.6 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 increased by $388 thousand, inventories increased nearly $1.9 million, and accounts payable decreased by $230 thousand.

Current wording

Cash flow used by operations was $6.5 million for the nine months ended September 30, 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 $4.5 million in other income from the TIA, offset by $3.2 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 increased by $904 thousand, inventories increased by $2.4 million, and accounts payable increased by $284 thousand.

Previous wording

Cash flow from investing activities was $4.3 million for the six months ended June 30, 2025, primarily reflecting $5.0 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 $5 million obtained as a result of the sale of securities was used to fund operating activities during the first six months of 2025.

Current wording

Cash flow from investing activities was $6.1 million for the nine months ended September 30, 2025, primarily reflecting $7 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 $7 million obtained as a result of the sale of securities was used to fund operating activities during the first nine months of 2025.

Previous wording

Cash used by financing activities was $280 thousand for the six months ended June 30, 2025. This was primarily due to repayments of long-term debt and payment of preferred stock dividends.

Current wording

Cash used by financing activities was $423 thousand for the nine months ended September 30, 2025. This was primarily due to repayments of long-term debt and payment of preferred stock dividends.

Previous wording

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. As detailed in Note 8 to the financial statements, we received a settlement payment of $1.9 million in May 2025.

Current wording

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. We received a settlement payment of $1.9 million in May 2025.

Previous wording

equipment plus the purchase of additional molds to produce products which have never been produced domestically is expected to cost approximately $1 million, most of which has already been expended. Those products accounted for roughly 9.4% of our overall domestic unit sales and 16.0% of our domestic syringe unit sales for the three months ended June 30, 2025. The products accounted for roughly and 12.0% of our overall domestic unit sales and 17.3% of our domestic syringe unit sales for the six months ended June 30, 2025. 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, although the Company recently reduced its manufacturing and manufacturing support staff by approximately $1.6 million on an annual basis as we refine our manufacturing process and continue to evaluate our importing practices.

Current wording

The imposition of tariffs on our products will continue to 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 0.5 mL syringes which have never been produced domestically is expected to cost approximately $1 million, most of which has already been expended. Those products accounted for roughly 9.1% of our overall domestic unit sales and 15.2% of our domestic syringe unit sales for the three months ended September 30, 2025. The products accounted for roughly and 10.9% of our overall domestic unit sales and 16.6% of our domestic syringe unit sales for the nine months ended September 30, 2025. We expect that workforce increases, primarily in manufacturing, instituted in 2025 to support higher domestic production will raise payroll costs by approximately $825 thousand on an annualized basis.

Previous wording

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.

Current wording

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 expect to incur higher manufacturing costs in the near term, but will continue to work to minimize our reliance on imported products.

Previous wording

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 were substantially completed in the second quarter of 2025.

Current wording

To produce more units at our U.S. facility, we expected to spend approximately $1 million to purchase molds and convert domestic equipment, most of was expended in the second quarter of 2025. Additional equipment expenditures may be necessary in the future.

Previous wording

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 June 30, 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 $2.0 million. These credits are recognized as a liability and included in Accounts payable on the Condensed Balance Sheets.

Current wording

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 September 30, 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 $2.2 million. These credits are recognized as a liability and included in Accounts payable on the Condensed Balance Sheets.