Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-16465 Retractable Technologies, Inc. (Exact name of registrant as specified in its charter) Texas 75-2599762 (State or ot ...

Core Viewpoint - Zacks Investment Research has initiated coverage of Retractable Technologies, Inc. (RVP) with an "Underperform" recommendation due to concerns over financial performance and operational challenges [1] Company Overview - Retractable Technologies, based in Little Elm, TX, manufactures safety medical products, primarily syringes and needles, aimed at reducing needlestick injuries and preventing cross-contamination [2] Financial Performance - In Q1 2025, Retractable Technologies reported an operating loss of $4.7 million, widening from a loss of $2.9 million a year earlier, primarily due to elevated tariffs and rising costs from transitioning to domestic manufacturing [3] - The company's quarterly net loss reached $10.5 million, which includes a $7.2 million unrealized decline in the value of its securities portfolio [3] - Cash position declined to $3.4 million at the end of March 2025 from $4.2 million at the end of 2024, although the company holds $32.3 million in tradable securities as a liquidity buffer [4] Growth Challenges - Key factors that may hinder future growth include rising concentration risk, declining average selling prices, and exposure to a volatile pricing and contracting environment [5] - Long-term growth uncertainty post-COVID windfall and shifts in the global manufacturing landscape are additional challenges [5] Positive Developments - The company has reduced its reliance on Chinese imports to 62.7% in Q1 2025 from 90.4% a year earlier, aided by equipment upgrades and workforce expansion at its Texas facility [6] - Retractable Technologies benefits from over $81 million in funding through a U.S. government Technology Investment Agreement, generating $1.5 million in non-operating income per quarter [6] Market Positioning - Retractable Technologies' stock has significantly underperformed compared to industry peers and the broader market over the past year, indicating high risk and low investor confidence in future earnings and growth potential [7] Additional Information - The company has a modest market capitalization of $19.8 million, and the full Zacks research report provides a detailed analysis of its financial health, strategic initiatives, and market positioning [8]

PART I – FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed financial statements for Q1 2025 report a net loss of $10.5 million, driven by gross loss and unrealized investment losses [Condensed Balance Sheets](index=3&type=section&id=CONDENSED%20BALANCE%20SHEETS) Total assets decreased to $149.3 million as of March 31, 2025, from $160.7 million, driven by reduced cash and investments Condensed Balance Sheet Summary (unaudited) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $63,662,376 | $73,272,059 | | **Total Assets** | $149,307,449 | $160,724,202 | | **Total Current Liabilities** | $9,497,961 | $8,780,916 | | **Total Liabilities** | $72,695,085 | $73,553,511 | | **Total Stockholders' Equity** | $76,612,364 | $87,170,691 | [Condensed Statements of Operations](index=4&type=section&id=CONDENSED%20STATEMENTS%20OF%20OPERATIONS) Q1 2025 net loss was $10.5 million, or ($0.35) per share, driven by a gross loss and a $7.2 million unrealized investment loss Q1 2025 vs. Q1 2024 Operating Results (unaudited) | Metric | Q1 2025 (Three Months Ended Mar 31) | Q1 2024 (Three Months Ended Mar 31) | | :--- | :--- | :--- | | **Sales, net** | $8,295,173 | $7,599,363 | | **Gross Profit (Loss)** | ($1,911) | $1,900,929 | | **Loss from Operations** | ($4,676,752) | ($2,986,137) | | **Unrealized Gain (Loss) on Securities** | ($7,156,513) | $1,732,649 | | **Net Income (Loss)** | ($10,500,716) | $429,384 | | **Diluted Earnings (Loss) per Share** | ($0.35) | $0.01 | [Condensed Statements of Cash Flows](index=5&type=section&id=CONDENSED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash used in operating activities was $1.5 million in Q1 2025, resulting in a net decrease of $0.85 million in cash and equivalents Q1 2025 Cash Flow Summary (unaudited) | Cash Flow Activity | Three Months Ended March 31, 2025 | | :--- | :--- | | Net cash used in operating activities | ($1,475,185) | | Net cash from (used in) investing activities | $762,239 | | Net cash used in financing activities | ($139,527) | | **Net decrease in cash and cash equivalents** | **($852,473)** | | **Cash and cash equivalents at end of period** | **$3,382,915** | [Notes to Condensed Financial Statements](index=7&type=section&id=NOTES%20TO%20CONDENSED%20FINANCIAL%20STATEMENTS) Notes detail significant policies, including concentration risks, tariff impacts, investment losses, and a subsequent workforce reduction - The company obtained **62.7%** of its products from Chinese manufacturers in Q1 2025, creating a significant concentration risk[37](index=37&type=chunk) - Tariffs on goods imported from China have been adjusted to **130%** for needles and syringes and **30%** for other products, which is expected to have a material impact on financial results[40](index=40&type=chunk) - In April 2025, after the reporting period, the company reduced its workforce by approximately **7%**[81](index=81&type=chunk) Revenue by Geography (Q1 2025 vs Q1 2024) | Geographic Segment | Q1 2025 Sales | Q1 2024 Sales | | :--- | :--- | :--- | | U.S. sales | $7,432,309 | $6,641,168 | | North and South America (ex-U.S.) | $553,500 | $154,633 | | Other international sales | $309,364 | $803,562 | | **Total** | **$8,295,173** | **$7,599,363** | - The company recorded a valuation allowance of **$11.3 million** against its net deferred tax asset as of March 31, 2025, an increase from **$9.1 million** at year-end 2024[49](index=49&type=chunk)[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the Q1 2025 net loss to tariffs and unrealized investment losses, outlining mitigation strategies and affirming liquidity - Tariffs on Chinese imports are expected to have a material impact. The company spent approximately **$1.5 million** on tariff expenses in Q1 2025[88](index=88&type=chunk)[106](index=106&type=chunk) - The company is shifting more manufacturing to its domestic facility to mitigate tariff impacts, leading to an estimated **$3.8 million** increase in annualized compensation and benefits expense[88](index=88&type=chunk)[115](index=115&type=chunk) - In April 2025, the company reduced its workforce by approximately **7%**, which is expected to save an estimated **$1.6 million** in annual wages and benefits, offset by **$300 thousand** in one-time separation payments[89](index=89&type=chunk) - A material portion of the net loss for Q1 2025 is comprised of a **$7.2 million** unrealized loss in debt and equity securities[98](index=98&type=chunk)[107](index=107&type=chunk) - Management believes the company has adequate liquidity to meet short-term needs for at least 12 months, with access to cash reserves and investments[118](index=118&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has indicated that this item is not applicable for this reporting period - The company stated that this section is 'Not applicable'[122](index=122&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to unremediated material weaknesses - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were not effective[123](index=123&type=chunk) - The ineffectiveness is due to ongoing material weaknesses related to the COSO framework (risk assessment and control activities) and specific controls over revenue contract evaluation[124](index=124&type=chunk) - Remediation efforts are underway, including enhanced review of contractual modifications, but management cannot yet estimate a completion date[125](index=125&type=chunk)[126](index=126&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) This section details an ongoing lawsuit filed by the company against its former legal counsel for alleged malpractice and negligence - The company is engaged in a lawsuit against its former legal representation, Locke Lord, LLP, for alleged malpractice and negligence[73](index=73&type=chunk)[129](index=129&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its most recent annual report - There were no material changes in Risk Factors from those set forth in the most recent annual report[130](index=130&type=chunk) [Other Information](index=38&type=section&id=Item%205.%20Other%20Information) No new Rule 10b5-1 trading arrangements were adopted or terminated in Q1 2025, though CEO Thomas J. Shaw's existing plan remains active - CEO Thomas J. Shaw has an active Rule 10b5-1 plan to purchase up to **$800,000** in company common stock, which may continue through November 19, 2025[131](index=131&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and financial data in Inline XBRL format - The filed exhibits include officer certifications (31.1, 31.2, 32) and financial statements formatted in Inline XBRL (101, 104)[135](index=135&type=chunk)

Sales Performance - In 2024, syringes accounted for 68.5% of total sales, EasyPoint® products for 27.1%, and other products for 4.5%[105] - Domestic sales represented 88.9% of revenues in 2024, with a 15.1% decrease in domestic revenues primarily due to lower average selling prices and a 4.3% decrease in domestic unit sales[124] - International revenues decreased by 59.1% in 2024, largely due to fewer international vaccination-related sales, contributing to an overall revenue decline of 24.2%[124] Financial Performance - Gross profit margins fell from 20.9% in 2023 to (3.1)% in 2024, driven by decreased revenues and increased costs associated with tariffs and domestic production[127] - The loss from operations was $21.1 million in 2024, compared to a loss of $11.5 million in 2023, primarily due to lower gross profit[128] - The company held $40.3 million in debt and equity securities as of December 31, 2024, representing 25.1% of total assets[115] Operational Changes - The company plans to convert existing equipment to produce 0.5 mL syringes domestically, with commercial quantities expected in the second half of 2025[107] - The company expects to spend approximately $1 million to convert domestic equipment to increase production capacity, with completion targeted for the second quarter of 2025[139] - An estimated $3.8 million increase in annual compensation and benefits expense is anticipated due to hiring additional manufacturing personnel to mitigate tariff impacts[106] Customer Rebates and Estimates - As of December 31, 2024, the estimated total potential future credits to be issued for unclaimed prior purchases is $2.1 million[140] - The company relies on historical trends and assumptions for estimating customer rebates, including redemption rates and inventory turnover[140] - There is an inherent risk that the estimates and underlying assumptions may not reflect actual future results, potentially impacting future financial outcomes[140] - The company does not expect significant changes to the current inputs and assumptions used in rebate estimate calculations[140] - The establishment of a liability for future claims of rebates requires understanding of sales distribution channels and product categories[140] - The company examines historical results of estimates against actual results to refine future assumptions[140] - The estimates for customer rebates are based on past experience and expectations of economic factors[140] - The company has sufficient historical data to establish reserves for contractual obligations related to rebates[140] - Adjustments to reserves may have a material impact on future results if estimates or assumptions are incorrect[140] Market Risk - The disclosures about market risk are not applicable to smaller reporting companies[141] Tariff Expenses - Tariff expenses amounted to approximately $1.6 million from September to December 2024, with an additional $951,000 incurred from January 1 to March 21, 2025[106][126]

Sales Performance - Syringes accounted for 70.7% of sales in the first nine months of 2024, with EasyPoint® products at 24.4% and other products at 4.8%[89] - Domestic sales represented 93.1% of revenues for Q3 2024, with domestic unit sales increasing by 29.6%[104] - For the nine months ended September 30, 2024, domestic sales accounted for 88.8% of revenues, while international revenues decreased by approximately 62.6%[110] International Revenue - International revenues decreased approximately 23.8% in Q3 2024, primarily due to the timing of international shipments[104] Financial Performance - The gross profit margin fell from 41.8% to (0.1%) in Q3 2024, driven by lower average selling prices and rising production costs[106] - The loss from operations for Q3 2024 was $5.1 million, compared to a loss of $936 thousand in Q3 2023[107] - Cash flow used by operations was $10.5 million for the nine months ended September 30, 2024, impacted by a $8.4 million increase in valuation allowance related to deferred tax assets[114] Tariff Impact - The company incurred $568 thousand in tariff expenses to date, with an expected total of approximately $1.5 million through February 2025 due to 100% tariffs on imported syringes and needles[91][117] - Recently enacted tariffs are expected to materially increase costs and negatively impact operations, with efforts to shift more manufacturing to domestic facilities[128] Manufacturing and Operational Strategy - The company is working to shift a larger portion of manufacturing to domestic facilities to mitigate tariff impacts, although this will increase compensation expenses[91] - The company plans to spend approximately $1 million in the next few months to convert domestic equipment to increase production capacity at its U.S. facility, expected to be completed by Q2 2025[120] Liquidity and Financial Outlook - The company expects to have adequate means to meet short-term operational needs for at least 12 months, with anticipated cash uses including payroll, inventory purchases, and taxes[119] - Management anticipates a material decline in liquidity over the next 1-3 years due to increased expenses from tariffs and domestic manufacturing costs[119] - Management is prepared to reduce operational costs if cash needs cannot be met through existing cash and investments[119] Customer Rebates - As of September 30, 2024, the total potential future credits for customer rebates not yet claimed is estimated at $1.8 million[122] - The company does not expect significant changes to the current inputs and assumptions used in estimating customer rebates[121] Internal Controls and Governance - The company has evaluated its disclosure controls and procedures, concluding they were effective as of September 30, 2024[125] - There have been no changes in internal control over financial reporting that materially affect the company as of September 30, 2024[126] Stock Purchase Plan - The company has a plan for the purchase of common stock with an aggregate purchase price of up to $800,000, which may continue through November 19, 2025[131] Market Valuation - The unrealized gain on debt and equity securities was $1.5 million in Q3 2024, reflecting increased market values[107]

Sales Performance - In the first six months of 2024, syringes comprised 86.4% of total sales, with EasyPoint® products accounting for 7.3% and other products at 6.4%[75]. - Domestic sales decreased by 31.3% in Q2 2024 compared to Q2 2023, with domestic unit sales down 22.1%[86]. - International revenues increased by approximately 51.5% or $345 thousand in Q2 2024, primarily due to the timing of international shipments[86]. - Domestic revenues accounted for 85.5% of total revenues for the first half of 2024, down from 67.1% in the same period of 2023[88]. Financial Performance - The loss from operations for the first six months of 2024 was $8.7 million, compared to a loss of $7.8 million for the same period last year[89]. - The provision for income taxes was $8.4 million for the first six months of 2024, compared to a benefit of $701 thousand in the same period of 2023[90]. - Cash flow used by operations was $4.7 million for the six months ended June 30, 2024, impacted by an increase of $8.4 million in valuation allowance related to deferred tax assets[91]. - The unrealized loss on debt and equity securities was $1.8 million due to decreased market values[87]. Assets and Investments - The company held $35.1 million in debt and equity securities as of June 30, 2024, representing 21.8% of total assets[79]. - The company expects to spend approximately $1 million over the next six to eight months to improve and add to domestic equipment for production[95].

Sales Performance - In the first three months of 2024, syringes comprised 84.0% of total sales, with EasyPoint® products accounting for 9.2% and other products at 6.8%[89]. - Domestic sales represented 87.4% of revenues for Q1 2024, a significant increase from 49.3% in Q1 2023, with domestic revenues rising by 22.5%[104]. - International revenues decreased approximately 82.8% due to fewer international vaccination-related sales, leading to an overall unit sales decrease of 48.2%[104]. Financial Performance - The loss from operations was nearly $3.0 million for Q1 2024, compared to a loss of $2.7 million in the same period last year[106]. - Cash flow used by operations was $2.0 million for Q1 2024, influenced by a $1.5 million recognition of other income from the Technology Investment Agreement (TIA)[110]. - As of March 31, 2024, the company held $36.6 million in debt and equity securities, representing 20.8% of total assets[96]. - The unrealized gain on debt and equity securities was $1.7 million due to increased market values[106]. - Royalty expense decreased by 15.6% due to a decrease in gross sales, while operating expenses decreased by 12.9% from the prior year[105]. - The provision for income taxes was $86 thousand for Q1 2024, down from $231 thousand in Q1 2023[107]. - The company estimates total potential future credits to be issued as a result of prior purchases not yet claimed at $1.6 million as of March 31, 2024[119].

Revenue Performance - In 2023, domestic sales accounted for 79.4% of revenues, a decrease of 33.7% compared to 2022, primarily due to the lack of U.S. government sales[122] - International revenues decreased by 78.9% in 2023, largely due to fewer international vaccination-related sales[122] - Overall revenues decreased by 54.0% in 2023, with total unit sales down by 58.7%[122] - Total net sales for 2023 were $43.6 million, a decrease of 54% compared to $94.8 million in 2022[159] - Total revenue for the year ended December 31, 2023, was $43.6 million, a decrease from $94.8 million in 2022[194] - U.S. sales (excluding U.S. government) for blood collection syringes amounted to $26.1 million in 2023, down from $29.3 million in 2022[194] - U.S. sales (excluding U.S. government) in 2023 were $34.6 million, down from $36.5 million in 2022 and $53.9 million in 2021[263] - Total sales for 2023 were $43.6 million, a significant decrease of 54% from $94.8 million in 2022 and 77% from $188.4 million in 2021[263] Profitability and Loss - Gross profit margins fell from 29.8% in 2022 to 20.9% in 2023 due to significant declines in net revenues[124] - Gross profit for 2023 was $9.1 million, down from $28.3 million in 2022, reflecting a gross margin decline[159] - The company reported a net loss of $7.0 million for 2023, compared to a net income of $5.1 million in 2022[159] - Basic earnings per share for 2023 were $(0.24), compared to $0.15 in 2022, reflecting a significant decline in profitability[159] - The diluted earnings per share (EPS) for 2023 was $(0.24), compared to $0.15 in 2022 and $1.63 in 2021[200] - Net income for 2023 was a loss of $7,011,036, compared to a profit of $5,078,557 in 2022 and $56,064,241 in 2021[163] Cash Flow and Liquidity - Cash flow from operations was $2.8 million in 2023, bolstered by an $8 million tax refund[129] - Cash flows from operating activities generated $2,766,848 in 2023, down from $16,768,128 in 2022 and $32,793,499 in 2021[163] - Cash and cash equivalents fell to $12.7 million in 2023, down from $19.7 million in 2022, representing a decrease of 35%[157] - Total cash and cash equivalents decreased to $12,667,550 at the end of 2023 from $19,721,345 at the end of 2022[163] - The company reported a net cash used by investing activities of $10,762,283 in 2023, compared to $31,202,814 in 2022[163] Assets and Liabilities - The company held $34.6 million in debt and equity securities as of December 31, 2023, representing 19.3% of total assets[113] - Total assets decreased to $179.7 million in 2023 from $195.7 million in 2022, a decline of approximately 8.2%[157] - The company’s total liabilities decreased to $80.4 million in 2023 from $89.1 million in 2022, a reduction of about 9.7%[157] - The allowance for credit losses increased to $890,541 in 2023 from $675,208 in 2022[168] - The company has a long-term debt of $1,537,510 as of December 31, 2023, with an interest rate of 8.75%[219] Inventory and Expenses - Total inventories decreased to $17,581,368 in 2023 from $20,684,168 in 2022, with raw materials at $4,349,029 and finished goods at $13,232,339[209] - The Company recognized estimated contractual pricing allowances for rebates at $2.2 million as of December 31, 2023[150] - Research and development expenses increased slightly to $581,172 in 2023 from $525,727 in 2022, indicating continued investment in innovation[159] - Research and development costs are expensed as incurred, indicating a focus on innovation and product development[204] Stock and Shareholder Information - The average common shares outstanding decreased to 29,937,159 in 2023 from 32,896,348 in 2022[200] - The company has 3,649,508 stock options issued under the 2008 Stock Option Plan, with 147,150 options outstanding as of December 31, 2023[249] - The Company has 2,000,000 shares available for future issuance under the 2021 Stock Option Plan[250] - The Class B Series II and III stock had 156,200 and 74,245 shares outstanding, respectively, at December 31, 2023[239] - The company matched employee contributions to the 401(k) Plan up to 2% of compensation, totaling $240,635 in 2023[262] Tax and Government Funding - The total income tax provision for 2023 was $(1,905,161), compared to $83,870 in 2022, indicating a significant tax benefit shift[227] - The effective tax rate for the Company in 2023 was 21.5%, compared to 1.6% in 2022, reflecting a substantial increase[233] - The Company has received $81,029,518 in government funding under the Technology Investment Agreement to expand domestic production capacity[206] Other Financial Metrics - The company incurred a net unrealized loss on investments of $10,521,166 in 2023, compared to a gain of $2,343,359 in 2022[163] - The company reported depreciation and amortization of $7,527,227 in 2023, an increase from $4,602,961 in 2022[163] - Preferred dividends declared but not paid amounted to $1,417,437 in 2023, consistent with $1,417,937 in 2022[163] - The Company recorded a $101 thousand lower of cost or net realizable value inventory adjustment associated with the VanishPoint® 3mL and EasyPoint® needle product segments[172] - The Company recognized $778 thousand in licensing fees for the year ended December 31, 2023, compared to no licensing fees recognized for the year ended December 31, 2022[191]

Sales Performance - VanishPoint® syringes accounted for 80.5% of sales in the first nine months of 2023, while EasyPoint® products represented 14.1%[83] - Domestic sales constituted 90.9% of revenues for Q3 2023, a significant increase from 39.9% in Q3 2022, with domestic revenues rising by 2.1%[101] - International revenues decreased approximately 93.2% in Q3 2023, primarily due to fewer international vaccination-related sales[101] - Overall unit sales dropped by 66.1% in Q3 2023, with domestic unit sales increasing by 1.8%[101] - Domestic revenues decreased by 50.5% for the nine months ended September 30, 2023, mainly due to the lack of sales to the U.S. government[105] Financial Losses - The loss from operations was $936 thousand in Q3 2023, compared to a loss of $691 thousand in Q3 2022, attributed to decreased revenues[103] Investment and Securities - The unrealized loss on debt and equity securities was $11.3 million for the first nine months of 2023, with a recognized gain of $5.6 million from sales of equity securities[108] - The company held $33.7 million in debt and equity securities as of September 30, 2023, representing 18.5% of total assets[92] Cash Flow and Expenses - Cash flow provided by operations was $873 thousand for the nine months ended September 30, 2023, influenced by a $4.5 million income from the Technology Investment Agreement[111] - The company incurred approximately 30.9% more in sales and marketing expenses in the first nine months of 2023, primarily for travel and trade show expenses[107]

Sales Performance - VanishPoint® syringes accounted for 85.5% of sales in the first six months of 2023, while EasyPoint® products made up 8.2%[88] - Domestic sales decreased by 64.2% for the six months ended June 30, 2023, primarily due to a lack of sales to the U.S. government[108] - Overall unit sales decreased by 67.3% for the six months ended June 30, 2023[108] - Domestic unit sales decreased by 60.8% for the six months ended June 30, 2023, with domestic unit sales representing 55.7% of total unit sales[108] - International revenues decreased approximately 73.5% due to fewer international vaccination-related sales[108] Financial Performance - The loss from operations was $7.8 million for the first half of 2023, compared to an income from operations of $7.7 million for the same period last year[111] - Cash flow used by operations was $6.9 million for the six months ended June 30, 2023[114] - Cash used by investing activities was $9.9 million for the six months ended June 30, 2023, primarily due to the purchase of $43.9 million of debt and equity securities[115] - The unrealized loss on debt and equity securities was $4.8 million due to decreased market values, but a gain of $5.6 million was recognized on sales of equity securities[111] Workforce Reduction - The company reduced its workforce by approximately 38% from June 2022 to March 2023, resulting in savings of approximately $2.1 million in employee-related costs in the first half of 2023[96]