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]

Sales Performance - VanishPoint® syringes accounted for 89.7% of sales in Q1 2023, while EasyPoint® products made up 2.7%[87] - Domestic sales decreased by 79.1% in Q1 2023, accounting for 49.3% of total revenues compared to 58.0% in Q1 2022[104] - International revenues decreased approximately 70.3% in Q1 2023, primarily due to fewer orders for international vaccination campaigns[104] - Overall unit sales decreased by 73.0%, and total revenues decreased by 75.4% year-over-year[104] Financial Performance - The loss from operations was $2.7 million in Q1 2023, compared to income from operations of $9.7 million in the same period last year[107] - Cash flow used by operations was $3.7 million in Q1 2023, influenced by an unrealized gain of $1.5 million on investments[110] - Cash used by investing activities was $9.6 million in Q1 2023, primarily due to the purchase of $16.0 million in debt and equity securities[112] - The company held $41.0 million in debt and equity securities as of March 31, 2023, representing 21.2% of total assets[96] Workforce Changes - The workforce was reduced by approximately 22% in March 2023, following a 16% reduction in June 2022, due to the completion of facility expansion and fulfillment of government orders[97] Marketing Investment - The company invested approximately 33% more in sales and marketing expenses in Q1 2023 to improve future revenues[106]

Revenue Performance - In 2022, domestic sales accounted for 55.1% of total revenues, a significant decrease from 88.9% in 2021, with domestic revenues dropping by 68.8% due to reduced U.S. government orders and declining demand for COVID-19 vaccinations [124]. - International revenues increased by 105% in 2022, attributed to international vaccination campaigns, while overall revenues decreased by 49.7% [124]. - Net sales for the year ended December 31, 2022, were $94.82 million, a decrease of 49.6% compared to $188.38 million in 2021 [165]. - Total sales for 2022 were $94,818,938, a decrease of 49.5% from $188,382,454 in 2021 [274]. - U.S. sales (excluding U.S. government) for 2022 amounted to $36.49 million, down from $53.89 million in 2021, indicating a decline of approximately 32% [199][201]. Financial Performance - The company reported a loss from operations of $853 thousand in 2022, compared to an income of $72.6 million in 2021, primarily due to the decline in U.S. government sales and increased operating expenses [127]. - The company reported a net income of $5.08 million for 2022, a significant decline from $56.06 million in 2021 [165]. - Basic and diluted earnings per share for 2022 were both $0.15, compared to $1.65 and $1.63 in 2021, respectively [165]. - The total income tax provision for 2022 was $83,870, a significant decrease from $18,886,570 in 2021, influenced by federal net operating losses of $22.7 million [239]. - The effective tax rate for 2022 was 1.6%, significantly lower than 25.2% in 2021 [246]. Operating Expenses - Operating expenses rose by 27.9% in 2022, largely due to a $5.5 million increase in stock option expenses related to the cancellation of underwater stock options [126]. - Operating expenses increased to $29.11 million in 2022, up 27.9% from $22.76 million in 2021 [165]. - Stock-based compensation expense for 2022 totaled $10.1 million, which included an additional $5.5 million recognized due to the cancellation of stock options [271][276]. Cash Flow and Investments - Cash flow from operations was $16.8 million in 2022, primarily due to a $29.7 million reduction in accounts receivable [131]. - Cash used in investing activities amounted to $31.2 million in 2022, mainly for property, plant, and equipment purchases [134]. - The company reported a net cash used by investing activities of $31.20 million in 2022, compared to $63.04 million in 2021 [170]. - The company has access to liquid investments to fund operations if necessary [138]. Assets and Liabilities - Total current liabilities decreased from $35.32 million in 2021 to $12.14 million in 2022, a reduction of approximately 65.6% [162]. - Total assets decreased from $206.30 million in 2021 to $195.67 million in 2022, a decline of approximately 5.1% [162]. - The company held $29.7 million in debt and equity securities as of December 31, 2022, representing 15.2% of total assets, with an unrealized gain of $2.3 million recognized during the year [111]. - As of December 31, 2022, total inventories amounted to $20,684,168, a slight increase from $20,589,919 in 2021, with raw materials at $4,896,904 and finished goods at $15,787,264 [222]. Workforce and Cost Management - The company reduced its workforce by approximately 22% in March 2023, resulting in expected annualized savings of about $1.7 million, or 13% compared to 2022 expenses [112][114]. - The company maintains a focus on managing raw material costs and transportation expenses to positively affect margins [137]. - The company experienced a significant increase in freight costs in 2022, which materially impacted the cost of manufactured products [108]. Research and Development - Research and development expenses decreased to $0.53 million in 2022 from $0.90 million in 2021, reflecting a reduction of 41.7% [165]. - Research and development costs are expensed as incurred, reflecting the Company's commitment to innovation [211]. Shareholder Information - The Company paid dividends of $96,679 to Series III Class B Stockholders in 2022, down from $3,245,693 in 2021 [257]. - A total of 11,200 shares of Common Stock were issued in 2022 from stock options exercised, generating $13,800 in payments [267]. - The Company has 29,937,159 shares of Common Stock outstanding as of December 31, 2022, down from 33,484,935 in 2021 [259]. - The Company repurchased three million shares of stock at $1.60 per share from a related party on December 26, 2022 [262]. Investment Performance - The fair value of equity securities increased significantly to $27,692,459 in 2022 from $9,112,607 in 2021, reflecting a substantial growth in marketable assets [223]. - The cumulative unrealized gains on equity securities reached $4,778,720 as of December 31, 2022, compared to $2,383,362 in 2021, indicating improved investment performance [225]. - The company reported unrealized gains on investments of $2,343,359 for the year ended December 31, 2022, compared to $513,529 in 2021 [225].

Sales Performance - VanishPoint® syringes accounted for 91.1% of total sales in the first nine months of 2022, while EasyPoint® products made up 5.4%[97] - Domestic sales decreased by 73.0% in Q3 2022, primarily due to the lack of sales to the U.S. government, with domestic unit sales down 71.6%[117] - International revenues surged approximately 507.4% in Q3 2022, driven by international vaccination campaigns[117] Financial Performance - The company reported a loss from operations of $691 thousand in Q3 2022, compared to an income of $8.0 million in the same period last year[119] - Operating income for the nine months ended September 30, 2022, was $7.0 million, a significant decrease from $44.1 million in the same period of 2021[126] - Cash flow from operations was $6.6 million for the nine months ended September 30, 2022, primarily due to the collection of accounts receivable[129] Investments and Assets - The company held $26.3 million in equity securities as of September 30, 2022, representing 28.7% of current assets[108] - Cash used by investing activities was $28.2 million for the nine months ended September 30, 2022, mainly for property and equipment purchases[130] - As of September 30, 2022, the company had $26.3 million invested in third-party securities as a source of liquidity[140] Government Contracts and Agreements - The company entered into a Technology Investment Agreement with the U.S. government for $53.7 million to expand domestic production of needles and syringes[102] - The company was awarded a delivery order by the U.S. Department of Health and Human Services totaling approximately $83.8 million, plus expedited freight expenses[138] - A contract for additional safety syringes was received, representing expected revenues of $54.2 million for a five-month period ending July 14, 2021[138] - The company entered into a TIA with the U.S. government for approximately $81.0 million to expand domestic production of needles and syringes, with $75.5 million received as of September 30, 2022[139] Workforce and Operations - The company reduced its workforce by approximately 16% in June 2022 due to the completion of facility expansion and U.S. government orders[109] - The company has ongoing capital projects, including an expansion of administrative offices by 14,000 square feet, with a remaining financial obligation of approximately $650 thousand[141] - The company believes it has adequate means to meet short-term operational needs for at least 12 months[135] Sales Strategy and Market Dynamics - The mix of domestic and international sales affects the average sales price, with a higher ratio of domestic sales generally leading to higher average prices[134] - An overall increase in units sold can positively affect the company's margins, influenced by raw material and transportation costs[134] - The company is committed to evaluating the appropriate mix of domestically manufactured products and those produced in China to achieve economic benefits[134]

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 Little Elm, Texas 75068-5295 For the quarterly period ended June 30, 2022 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) ...