RETRACTABLE TECHNOLOGIES INC
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
RVP$0.57-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001558370-24-008277
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001558370-24-012200
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 43 previous paragraphs and 50 current paragraphs.
22 unchanged; 17 reworded; 5 added; 2 removed; 2 previous and 6 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
On May 14, 2024, President Biden directed the Office of the U.S. Trade Representative (“USTR”) 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 50%. As noted in this report, for the first six months of 2024, 91% of our products were purchased from our manufacturers in China, most of which would be impacted by the contemplated tariffs. On July 30, 2024, the USTR announced that, in response to more than 1,100 public comments received regarding the modifications, it would continue reviewing the comments and expects its final determination will be issued in August, and that the modifications slated for 2024 will take effect approximately two weeks after its final determination. In the event that the tariffs affecting syringes and needles are enacted, the resulting increase in costs could have a material impact to our results of operations and financial position. We are working to evaluate options 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. While this shift to increase our domestic production of those products will not require additional capital outlays for equipment, we will most likely incur an increase in our headcount and associated employee costs for production staff. The impact to our overall production staff costs will be dependent on our product mix and timing of implementation, but is expected to increase our overall wage expense.
Current report
A material portion of our net losses for the 2024 periods presented in this report is comprised of the approximately $8.3 million change in valuation allowance on the deferred tax asset which is included as a provision for income taxes on the Condensed Statements of Operations and additionally is reflected as a removal of that asset from the Condensed Balance Sheets. In short, the devaluation of the deferred tax asset is related to our determination that, based on current information, it is more likely than not that we wouldn’t be in a position to use loss carryforwards against future taxable net income based on a variety of factors and accounting guidelines. The expected implementation of tariffs on imported syringes from China was one of the factors considered in this determination.
Current report
Comparison of Six Months Ended June 30, 2024 and June 30, 2023
Current report
The provision for income taxes was $8.4 million for the first six months of 2024 as compared to a benefit for income taxes of $701 thousand in the first six months of 2023. The year-to-date income tax provision is primarily related to the second quarter of 2024 as a result of fully reserving the Company’s Deferred tax asset.
Current report
If new tariffs become effective and we determine to increase domestic production, we expect to spend approximately $1 million over the next six to eight months to improve and add to our domestic equipment in order to begin producing products we cannot currently produce at our U.S. facility.
Removed paragraphs (2)
Previous report
On July 13, 2023, we received a refund of previously paid estimated state tax payments of approximately $8 million. The $8 million was recorded as Income Taxes Receivable on the Balance Sheets at December 31, 2022 through June 30, 2023.
Previous report
Since the execution of the TIA on July 1, 2020, we have significantly expanded our facilities. There are no remaining capital projects.
Reworded paragraphs (17)
Previous wording
factors include, among others: material changes in demand; potential tariffs; 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.
Current wording
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.
Previous wording
We have been manufacturing and marketing our products since 1997. Syringes comprised 84.0% of our sales in the first three months of 2024. EasyPoint®products accounted for 9.2% and other products, including our IV safety catheter and blood collection products, were 6.8% of our sales in the first three months of 2024.
Current wording
We have been manufacturing and marketing our products since 1997. Syringes comprised 86.4% of our sales in the first six months of 2024. EasyPoint®products accounted for 7.3% and other products, including our IV safety catheter and blood collection products, were 6.4% of our sales in the first six months of 2024.
Previous wording
Although we have recently experienced certain cost increases in raw materials, those costs primarily affected our domestic manufacturing because the finished goods we purchased from China (being 90.4% of our products) are subject to a long-term fixed price contract. Other factors that could affect our unit costs include increases in tariffs, supplier cost increases, and changing production volumes. Increases in costs may not be recoverable through price increases of our products.
Current wording
Over the past several years, we have experienced certain cost increases in raw materials, but those costs primarily affect our domestic manufacturing because the finished goods we purchased from China (being 91% of our products) are subject to a long-term fixed price contract. Other factors that could affect our unit costs include increases in tariffs, supplier
Previous wording
As detailed in Note 4 to the financial statements, we held $36.6 million in debt and equity securities as of March 31, 2024, which represented 20.8% of our total assets.
Current wording
As detailed in Note 4 to the financial statements, we held $35.1 million in debt and equity securities as of June 30, 2024, which represented 21.8% of our total assets.
Previous wording
Product purchases from our Chinese manufacturers have enabled us to increase manufacturing capacity with little capital outlay and have provided a competitive manufacturing cost. In the first quarter of 2024, our Chinese manufacturers produced approximately 90.4% of our products. In the event that we become unable to purchase products from our Chinese manufacturers, we may need to find an alternate manufacturer for the blood collection set, IV catheter, Patient Safe® syringe, 0.5mL insulin syringe, 0.5mL autodisable syringe, and 2mL, 5mL, and 10mL syringes, and we would increase domestic production for the 1mL and 3mL syringes and EasyPoint®needles.
Current wording
Product purchases from our Chinese manufacturers have enabled us to increase manufacturing capacity with little capital outlay and have provided a competitive manufacturing cost. In the second quarter of 2024, our Chinese manufacturers produced approximately 92% of our products. In the event that we become unable to purchase products from our Chinese manufacturers, we may need to find an alternate manufacturer for the blood collection set, IV catheter, Patient Safe® syringe, 0.5mL insulin syringe, 0.5mL autodisable syringe, and 2mL, 5mL, and 10mL syringes, and we would increase domestic production for the 1mL and 3mL syringes and EasyPoint®needles.** **
Previous wording
Included in net sales for the first quarter of 2024 is $99 thousand in licensing fees recorded under a sublicensing agreement with one of our Chinese manufacturers. Under the terms of our licensing agreement with Mr. Shaw, he is entitled to receive 50% of this amount, which is recorded as royalty expense to shareholder in total cost of sales for the year.
Current wording
Included in net sales for the second quarter of 2024 is $90 thousand in licensing fees recorded under a sublicensing agreement with one of our Chinese manufacturers. Under the terms of our licensing agreement with Mr. Shaw, he is
Previous wording
Cost of manufactured product decreased 31.4% principally due to decreased unit sales.** **Royalty expense decreased 15.6% due to the associated decrease in gross sales.
Current wording
Cost of manufactured product decreased 15.7% principally due to lower unit sales.** **Royalty expense decreased 8.8% due to the associated decrease in gross sales.
Previous wording
The loss from operations was nearly $3.0 million as compared to a loss of $2.7 million for the same period last year. The increased loss was due to lower gross profit for the current period, offset by a reduction in overall operating expenses.
Current wording
The loss from operations was $5.8 million compared to a loss of $5.0 million for the same period last year. The increased loss was due to lower gross profit for the current period, offset by a slight reduction in overall operating expenses.
Previous wording
The unrealized gain on debt and equity securities was $1.7 million due to the increased market values of those securities.
Current wording
The unrealized loss on debt and equity securities was $1.8 million due to the decreased market values of those securities.
Previous wording
The provision for income taxes was $86 thousand for the first quarter of 2024 as compared to a provision for income taxes of $231 thousand for the first quarter of 2023.
Current wording
The provision for income taxes was $8.3 million for the second quarter of 2024 as compared to a benefit for income taxes of $932 thousand in the second quarter of 2023. The increase in income tax expense is primarily related to the valuation allowance against the Deferred tax asset.
Previous wording
Domestic sales accounted for 87.4% and 49.3% of the revenues for the three months ended March 31, 2024 and 2023, respectively. Domestic revenues increased 22.5%. Domestic unit sales increased 18.3%. Domestic unit sales were 86.1% of total unit sales for the three months ended March 31, 2024. International revenues decreased approximately 82.8% predominately due to fewer international vaccination-related sales. Overall unit sales decreased 48.2%. There is uncertainty as to the timing of future international orders.
Current wording
Domestic sales accounted for 85.5% and 67.1% of the revenues for the six months ended June 30, 2024 and 2023, respectively. Domestic revenues decreased 8.4% principally due to lower demand. Domestic unit sales decreased 4.6%. Domestic unit sales were 82.8% of total unit sales for the six months ended June 30, 2024. International revenues decreased approximately 68.4% predominately due to fewer international vaccination-related sales. Overall unit sales decreased 35.8%. There is uncertainty as to the timing of future international orders.
Previous wording
Operating expenses decreased 12.9% from the prior year. This is substantially due to a reduction of expense associated with our allowance for anticipated credit losses and a reduction of property tax expense as a result of newly enacted property tax exemption legislation relating to medical device property.
Current wording
Operating expenses decreased 7.2% from the prior year. This is substantially due to a reduction of property tax expense as a result of newly enacted property tax exemption legislation relating to medical device property.
Previous wording
Cash flow used by operations was $2.0 million for the three months ended March 31, 2024 due to a number of factors. We recognized approximately $1.5 million in other income from the TIA during the first three months of 2024. Changes in working capital also impacted cash flows from operating activities. Accounts receivable decreased by $3.2 million, inventories increased by $1.9 million, and accounts payable decreased by $2.2 million.
Current wording
Cash and investments comprise 26.1% of total assets. Cash flow used by operations was $4.7 million for the six months ended June 30, 2024 due to a number of factors. We recognized approximately $3.0 million in other income from the TIA during the first six months of 2024, offset by increase of $8.4 million in valuation allowance related to deferred tax assets 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 $5.6 million, inventories increased by $4.4 million, and accounts payable decreased by $1.7 million.
Previous wording
Cash flow used by investing activities was $503 thousand for the three months ended March 31, 2024 due to the purchase of assets and securities.
Current wording
Cash flow used by investing activities was $825 thousand for the six months ended June 30, 2024 due to the purchase of assets and securities.
Previous wording
Cash flow used by financing activities was $131 thousand for the three months ended March 31, 2024 due to repayments of long-term debt and payment of preferred stock dividends.
Current wording
Cash flow used by financing activities was $264 thousand for the six months ended June 30, 2024 due to repayments of long-term debt and payment of preferred stock dividends.
Previous wording
The mix of domestic and international sales 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. 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 and transportation costs can also significantly affect our margins. We will continue to evaluate the appropriate mix of products manufactured domestically and those manufactured in China to achieve economic benefits as well as to maintain our domestic manufacturing capability.
Current wording
The mix of domestic and international sales 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. 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. We will continue to evaluate the appropriate mix of products manufactured domestically and those manufactured in China to achieve economic benefits as well as to maintain our domestic manufacturing capability.
Previous wording
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, 2024, we estimate that the total potential future credits to be issued as a result of prior purchases which have not yet been claimed is $1.6 million.
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 June 30, 2024, we estimate that the total potential future credits to be issued as a result of prior purchases which have not yet been claimed is $1.3 million.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
cost increases, and changing production volumes. Increases in costs may not be recoverable through price increases of our products.
Current report — wording carried from elsewhere
entitled to receive 50% of this amount, which is recorded as royalty expense to shareholder in total cost of sales for the year.
Current report — wording carried from elsewhere
Domestic sales accounted for 83.2% and 91.6% of the revenues for the three months ended June 30, 2024 and 2023, respectively. Domestic revenues decreased 31.3% principally due to lower demand. Domestic unit sales decreased 22.1%. Domestic unit sales were 79.3% of total unit sales for the three months ended June 30, 2024. International revenues increased approximately 51.5% or $345 thousand. The increase in international revenues is primarily due to the timing of international shipments. Overall unit sales decreased 13.6%. There is uncertainty as to the timing of future international orders.
Current report — wording carried from elsewhere
Operating expenses decreased 1.2% from the prior year due to a reduction of property tax expense as a result of newly enacted property tax exemption legislation relating to medical device property, offset by an increase in our allowance for anticipated credit losses.
Current report — wording carried from elsewhere
Cost of manufactured product decreased 23.8% principally due to lower unit sales.** **Royalty expense decreased 12.5% due to the associated decrease in gross sales.
Current report — wording carried from elsewhere
The loss from operations was $8.7 million compared to a loss of $7.8 million for the same period last year. The increased loss was due to lower gross profit for the current period, offset by a slight reduction in overall operating expenses.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
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
Previous report — wording carried elsewhere
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