UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2022

o☐ 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 other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

511 Lobo Lane
Little Elm, Texas		75068-5295
(Address of principal executive offices)		(Zip Code)

~~(972)~~ (972) 294-1010

(Registrant’s telephone number, including area code)

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	RVP	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☑ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x☑ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of ~~“large~~"large accelerated filer,~~” “accelerated filer”~~" "accelerated filer," "smaller reporting company" and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

~~Large accelerated filer~~ o		~~Accelerated filer~~ o
Large accelerated filer	☐	Accelerated filer	☐
~~Non-accelerated filer~~ o		~~Smaller reporting company~~ x
~~(Do not check if a smaller reporting company)~~Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth companyo	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☑

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o◻ No o

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~32,666,454~~32,935,959 shares of Common Stock ~~no par value,~~ outstanding, excluding treasury shares on ~~November 1, 2017.~~May 2, 2022.

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RETRACTABLE TECHNOLOGIES, INC.

FORM 10-Q

For the Quarterly Period Ended ~~September 30, 2017~~March 31, 2022

TABLE OF CONTENTS

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1.Financial Statements.

~~Item 1.~~~~Financial Statements.~~

RETRACTABLE TECHNOLOGIES, INC.

CONDENSED BALANCE SHEETS

(unaudited)

September 30, 2017

December 31, 2016

ASSETS

Current assets:

Cash and cash equivalents
$
15,866,458
$
16,199,043

Accounts receivable, net

5,246,322

3,267,838

Inventories, net

7,353,247

7,017,224

Other current assets

505,656

192,548

Total current assets

28,971,683

26,676,653

Property, plant, and equipment, net

11,663,988

12,092,037

Other assets

7,063

10,289

Total assets
$
40,642,734
$
38,778,979

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable
$
5,046,014
$
4,471,756

Current portion of long-term debt

430,089

430,393

Accrued compensation

924,879

536,456

Dividends payable

55,113

55,113

Accrued royalties to shareholder

847,301

659,443

Insurance proceeds

876,250

—

Other accrued liabilities

950,770

1,019,283

Total current liabilities

9,130,416

7,172,444

Long-term debt, net of current maturities

3,172,321

3,498,244

Total liabilities

12,302,737

10,670,688

Commitments and contingencies — see Note 6

Stockholders’ equity:

Preferred stock, $1 par value:

Series I, Class B

98,500

98,500

Series II, Class B

171,200

171,200

Series III, Class B

129,245

129,245

Series IV, Class B

342,500

342,500

Series V, Class B

40,000

40,000

Common stock, no par value

—

—

Additional paid-in capital

62,127,956

59,290,333

Accumulated deficit

(34,569,404
)
(31,963,487
)
Total stockholders’ equity

28,339,997

28,108,291

Total liabilities and stockholders’ equity
$
40,642,734
$
38,778,979


	March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	43,110,346	$	29,162,913
Accounts receivable, net		19,527,398		34,859,505
Receivable from Technology Investment Agreement (TIA)		5,542,048		5,924,136
Investments in debt and equity securities, at fair value		18,703,523		13,268,986
Inventories		18,857,009		20,589,919
Other current assets		759,597		701,969
Total current assets		106,499,921		104,507,428

Property, plant, and equipment, net		92,197,851		87,925,651
Deferred tax asset		8,794,315		13,865,834
Other assets		5,674		5,675
Total assets	$	207,497,761	$	206,304,588

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	13,291,544	$	20,404,573
Current portion of long-term debt		292,743		289,114
Accrued compensation		855,743		1,056,656
Dividends payable		1,417,937		1,438,371
Accrued royalties to shareholder		2,568,191		3,450,684
Other accrued liabilities		4,330,151		3,725,527
Income taxes payable		5,674,204		4,959,878
Total current liabilities		28,430,513		35,324,803

Other long-term liabilities		72,005,475		69,996,330
Long-term debt, net of current maturities		1,739,314		1,814,194
Total liabilities		102,175,302		107,135,327

Commitments and contingencies – see Note 8

Stockholders’ equity:
Preferred stock, $1 par value:
Class B; authorized: 5,000,000 shares
Series II, Class B		156,200		156,200
Series III, Class B		76,245		76,245
Common Stock, 0 par value		0		0
Additional paid-in capital		64,167,466		63,024,888
Retained earnings		48,740,773		41,182,429
Common stock in treasury – at cost		(7,818,225)		(5,270,501)
Total stockholders’ equity		105,322,459		99,169,261
Total liabilities and stockholders’ equity	$	207,497,761	$	206,304,588

See accompanying notes to condensed unaudited financial statements

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RETRACTABLE TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

Three Months
Ended
September 30, 2017

Three Months
Ended
September 30, 2016

Nine Months
Ended
September 30, 2017

Nine Months
Ended
September 30, 2016

Sales, net
$
10,412,036

$
8,840,134

$
24,981,833

$
22,337,169

Cost of sales

Cost of manufactured product

6,304,397

4,900,072

15,116,805

12,400,679

Royalty expense to shareholder

847,301

680,287

2,070,699

1,868,064

Total cost of sales

7,151,698

5,580,359

17,187,504

14,268,743

Gross profit

3,260,338

3,259,775

7,794,329

8,068,426

Operating expenses:

Sales and marketing

1,220,451

1,058,029

3,472,004

2,953,773

Research and development

159,921

117,939

465,765

389,712

General and administrative

1,912,824

2,165,246

6,346,731

6,306,085

Total operating expenses

3,293,196

3,341,214

10,284,500

9,649,570

Loss from operations

(32,858
)

(81,439
)

(2,490,171
)

(1,581,144
)

Interest and other income

19,477

8,609

44,155

19,822

Interest expense, net

(52,962
)

(51,994
)

(159,053
)

(158,327
)
Net loss before income taxes

(66,343
)

(124,824
)

(2,605,069
)

(1,719,649
)
Provision for income taxes

283

480

848

1,440

Net loss

(66,626
)

(125,304
)

(2,605,917
)

(1,721,089
)
Preferred stock dividend requirements

(176,249
)

(176,249
)

(528,747
)

(528,747
)
Loss applicable to common shareholders
$
(242,875
)
$
(301,553
)
$
(3,134,664
)
$
(2,249,836
)

Basic loss per share
$
(0.01
)
$
(0.01
)
$
(0.10
)
$
(0.08
)

Diluted loss per share
$
(0.01
)
$
(0.01
)
$
(0.10
)
$
(0.08
)

Weighted average common shares outstanding:

Basic

32,166,454

29,649,874

31,722,010

29,252,652

Diluted

32,166,454

29,649,874

31,722,010

29,252,652


	Three Months		Three Months
	March 31, 2022		March 31, 2021
Sales, net	$	44,742,350	$	50,073,725
Cost of sales:
Cost of manufactured product		26,606,238		19,157,341
Royalty expense to shareholder		2,568,191		2,921,597
Total cost of sales		29,174,429		22,078,938
Gross profit		15,567,921		27,994,787

Operating expenses:
Sales and marketing		1,017,884		931,231
Research and development		95,538		149,283
General and administrative		4,728,481		3,493,236
Total operating expenses		5,841,903		4,573,750
Income from operations		9,726,018		23,421,037

Other income - TIA		355,089		—
Unrealized gain on equity securities		3,331,109		1,103,972
Interest and other income		34,912		90,807
Interest expense		(47,105)		(65,095)
Income before income taxes		13,400,023		24,550,721
Provision for income taxes		5,783,568		6,594,837
Net income		7,616,455		17,955,884
Preferred Stock dividend requirements		(58,111)		(64,938)
Net income applicable to common shareholders	$	7,558,344	$	17,890,946

Basic earnings per share	$	0.23	$	0.53

Diluted earnings per share	$	0.23	$	0.52

Weighted average common shares outstanding:
Basic		33,265,453		33,967,771
Diluted		33,594,142		34,378,683

See accompanying notes to condensed unaudited financial statements

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`RETRACTABLE TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

Nine Months
Ended
September 30, 2017

Nine Months
Ended
September 30, 2016

Cash flows from operating activities

Net loss
$
(2,605,917
)
$
(1,721,089
)
Adjustments to reconcile net loss to net cash used by operating activities:

Provision for doubtful accounts

(81,152
)

92,000

Share-based compensation

652,860

84,651

Depreciation and amortization

603,582

672,000

(Increase) decrease in assets:

Accounts receivable

(1,897,332
)

(352,444
)
Inventories

(336,023
)

(908,099
)
Other current assets

(313,108
)

1,338,622

Other assets

—

(750
)
Increase (decrease) in liabilities:

Accounts payable

574,258

(988,248
)
Other accrued liabilities

507,768

139,817

Income taxes payable

—

2,717

Insurance proceeds

876,250

—

Net cash used by operating activities

(2,018,814
)

(1,640,823
)

Cash flows from investing activities

Purchase of property, plant, and equipment

(172,305
)

(1,671,649
)
Net cash used by investing activities

(172,305
)

(1,671,649
)

Cash flows from financing activities

Repayments of long-term debt and notes payable

(326,227
)

(187,418
)
Proceeds from the sale of common stock

2,350,100

—

Proceeds from the exercise of stock options

—

839,200

Payment of Preferred Stock dividends

(165,339
)

(165,640
)
Net cash provided by financing activities

1,858,534

486,142

Net decrease in cash and cash equivalents

(332,585
)

(2,826,330
)

Cash and cash equivalents at:

Beginning of period

16,199,043

18,045,044

End of period
$
15,866,458

$
15,218,714

Supplemental schedule of cash flow information:

Interest paid
$
159,053

$
158,325

Income taxes paid
$
—

$
2,025

Supplemental schedule of noncash investing and financing activities:

Preferred dividends declared, not paid
$
55,113

$
55,113


	Three Months		Three Months
	Ended		Ended
	March 31, 2022		March 31, 2021
Cash flows from operating activities
Net income	$	7,616,455	$	17,955,884
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		696,846		210,683
Net unrealized gain on investments		(3,331,109)		(1,103,972)
Realized loss on investments		38,378		—
Accreted interest		21,097		32,277
Deferred taxes		5,071,519		(1,738,795)
Provision for doubtful accounts		—		150,000
Share-based compensation		1,132,078		—
(Increase) decrease in operating assets:
Accounts receivable		15,332,107		(7,904,815)
Inventories		1,732,909		1,288,595
Other current assets		(57,627)		(129,173)
Other assets		—		12,844
Increase (decrease) in operating liabilities:
Accounts payable		(7,113,028)		(1,952,858)
Accrued liabilities		(439,435)		1,433,224
Income taxes payable		714,326		8,333,638
Net cash provided by operating activities		21,414,516		16,587,532

Cash flows from investing activities
Purchase of property, plant, and equipment		(4,969,045)		(12,611,028)
Purchase of debt and equity securities		(4,066,575)		(4,578,082)
Proceeds from the sales of debt and equity securities		1,924,769		—
Net cash used by investing activities		(7,110,851)		(17,189,110)

Cash flows from financing activities
Repayments of long-term debt		(71,252)		(68,128)
Proceeds from Technology Investment Agreement (TIA)		3,431,899		15,235,812
Proceeds from the exercise of stock options		10,500		43,350
Payment of preferred stock redemption price payable		—		(101,250)
Payment of preferred stock repurchase payable		(1,101,110)		(1,101,110)
Payment of preferred stock dividends		(78,545)		(49,091)
Repurchase of common stock		(2,547,724)		—
Net cash provided (used) by financing activities		(356,232)		13,959,583

Net increase in cash and cash equivalents		13,947,433		13,358,005
Cash and cash equivalents at:
Beginning of period		29,162,913		17,566,682
End of period	$	43,110,346	$	30,924,687

Supplemental schedule of cash flow information:
Interest paid	$	26,009	$	32,818

Supplemental schedule of noncash investing and financing activities:
Preferred dividends declared, not paid	$	1,417,937	$	39,050
Conversion of preferred stock to common stock	$	—	$	5,000
Amounts receivable under Technology Investment Agreement (TIA)	$	5,542,048	$	5,477,603
Preferred stock repurchase payable	$	1,058,935	$	1,098,282

See accompanying notes to condensed unaudited financial statements

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RETRACTABLE TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

The following shows the changes in stockholders’ equity for the three-month period ended March 31, 2022:


			Series II		Series III
			Class B		Class B		Additional				Treasury
	Common		Preferred		Preferred		Paid-In		Retained		Stock –
	Stock		Stock		Stock		Capital		Earnings		at cost		Total
Balance at December 31, 2021	$	—	$	156,200	$	76,245	$	63,024,888	$	41,182,429	$	(5,270,501)	$	99,169,261
Stock Option Exercises		—		—		—		10,500		—		—		10,500
Dividends		—		—		—		—		(58,111)		—		(58,111)
Stock Option Compensation		—		—		—		1,132,078		—		—		1,132,078
Repurchase of Common Stock – at cost		—		—		—		—		—		(2,547,724)		(2,547,724)
Net Income		—		—		—		—		7,616,455		—		7,616,455
Balance at March 31, 2022	$	—	$	156,200	$	76,245	$	64,167,466	$	48,740,773	$	(7,818,225)	$	105,322,459

The following shows the changes in stockholders’ equity for the three-month period ended March 31, 2021:


			Series II		Series III
			Class B		Class B		Additional
	Common		Preferred		Preferred		Paid-In		Retained
	Stock		Stock		Stock		Capital		Earnings		Total
Balance at December 31, 2020	$	—	$	156,200	$	106,745	$	59,285,401	$	(9,668,221)	$	49,880,125
Conversion of Preferred Stock into Common Stock		—		—		(5,000)		5,000		—		—
Stock Option Exercises		—		—		—		43,350		—		43,350
Dividends		—		—		—		(39,050)		—		(39,050)
Net Income		—		—		—		—		17,955,884		17,955,884
Balance at March 31, 2021	$	—	$	156,200	$	101,745	$	59,294,701	$	8,287,663	$	67,840,309

See accompanying notes to condensed unaudited financial statements

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RETRACTABLE TECHNOLOGIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

1. BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION

Business of the Company

Retractable Technologies, Inc. (the “Company”) was incorporated in Texas on May 9, 1994, and designs, develops, manufactures, and markets safety syringes and other safety medical products for the healthcare profession. The Company began to develop its manufacturing operations in 1995. The Company’s manufacturing and administrative facilities are located in Little Elm, Texas. The Company’s products are the VanishPoint^® 0.5mL insulin syringe; 1mL tuberculin, insulin, and allergy antigen syringes; 0.5mL, 1mL, 2mL, 3mL, 5mL, and 10mL syringes; the blood collection tube holder; the small diameter tube adapter; the allergy tray; the IV safety catheter; the Patient Safe^® syringes; the Patient Safe^® Luer Cap; the VanishPoint^®Blood Collection Set; and the EasyPoint^® needle as well as a standard 3mL syringe packaged with an EasyPoint^® needle. The Company also sells VanishPoint^®autodisable syringes in the international market in addition to the Company’s other products.

Basis of presentation

The accompanying condensed financial statements are unaudited and, in the opinion of Management, reflect all adjustments that are necessary for a fair presentation of the financial position and results of operations for the periods presented. All such adjustments are of a normal and recurring nature. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the entire year. The unaudited condensed financial statements should be read in conjunction with the financial statement disclosures contained in the Company’s audited financial statements incorporated into its Form 10-K filed on March 31, ~~2017~~2022 for the year ended December 31, ~~2016.~~2021.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. The amount reported as a contractual allowance for rebates involves examination of past historical trends related to sales to customers and the related credits issued once contractual obligations of the customers have been met. The establishment of a liability for future claims of rebates against sales in the current period requires that the Company has an understanding of the relevant sales with respect to product categories, sales distribution channels, and the likelihood of contractual obligations being satisfied.

Cash and cash equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash, money market accounts, and investments with original maturities of three months or less.

Accounts receivable

The Company records trade receivables when revenue is recognized. NoNaN product has been consigned to customers. The Company’s allowance for doubtful accounts is primarily determined by review of specific trade receivables. Those accounts that are doubtful of collection are included in the allowance. This provision is reviewed to determine the adequacy of the allowance for doubtful accounts. Trade receivables are charged off when there is certainty as to

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their being uncollectible. Trade receivables are considered delinquent when payment has not been made within contract terms.

The Allowance for bad debt was $352,217 as of both March 31, 2022 and December 31, 2021.

The Company requires certain customers to make a prepayment prior to beginning production or shipment of their order. Customers may apply such prepayments to their outstanding invoices or pay the invoice and continue to carry forward the deposit for future orders. Such amounts are included in Other accrued liabilities on the Condensed Balance Sheets and are shown in Note 5,6, Other Accrued Liabilities.

The Company records an allowance for estimated returns as a reduction to Accounts receivable and Gross sales. Historically, returns have been ~~immaterial.~~insignificant.

~~Inventories~~Receivable from Technology Investment Agreement (TIA)

The amounts set forth as Receivable from Technology Investment Agreement (TIA) represent amounts receivable under a contractual agreement under the TIA. The amounts may represent advance requests or reimbursement requests for expenditures the Company makes or has made under its obligations with the federal government. For further explanation, please refer to Note 15 – Technology Investment Agreement.

Inventories

Inventories are valued at the lower of cost or net realizable value, with cost being determined using actual average cost. The Company compares the average cost to the net realizable value and records the lower value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Management considers such factors as the amount of inventory on hand and in the distribution channel, estimated time to sell such inventory, the shelf life of inventory, and current market conditions when determining excess or obsolete inventories. ~~A reserve is established for any~~Once inventory items are deemed to be either excess or obsolete, ~~inventories~~they are written down to their net realizable value.

Investments in debt and equity securities

The Company holds high-grade exchange-traded and closed-end funds (ETFs), mutual funds, equity securities, and debt securities as investments. These assets are readily marketable and are carried at fair value as of the date of the Condensed Balance Sheets. Net unrealized and realized gains or ~~they may be written off.~~losses on investments in debt and equity securities are reflected as a component of Interest and other income. Realized gains or losses on investments in debt and equity securities are recognized using the specific identification method.

Property, plant, and equipment

Property, plant, and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Cost includes major expenditures for improvements and replacements which extend useful lives or increase capacity and interest cost associated with significant capital additions. Gains or losses from ~~property~~ disposals are included in Interest and other income.

The ~~Company’s~~Company's property, plant, and equipment primarily consist of buildings, ~~and improvements,~~ land, assembly equipment, molding machines, molds, office equipment, furniture, and fixtures. Depreciation and amortization are calculated using the straight-line method over the following useful lives:

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Production equipment		3 to 13 years
Office furniture and equipment		3 to 10 years
Buildings		39 years
Building improvements		15 years

Long-lived assets

The Company assesses the recoverability of long-lived assets using an assessment of the estimated undiscounted future cash flows related to such assets. In the event that assets are found to be carried at amounts which are in excess of estimated gross future cash flows, the assets will be adjusted for impairment to a level commensurate with fair value determined using a discounted cash flow analysis or appraised values of the underlying assets.

Fair value measurements

For assets and liabilities that are measured using quoted prices in active markets, total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs are valued by reference to similar assets or liabilities, adjusted for contract restrictions and other terms specific to that asset or liability. For these items, a significant portion of fair value is derived by reference to quoted prices of similar assets or liabilities in active markets. For all remaining assets and liabilities, fair value is derived using a fair value model, such as a discounted cash flow model or Black-Scholes model.

Financial instruments

The Company estimates the fair value of financial instruments through the use of public market prices, quotes from financial institutions, and other available information. Judgment is required in interpreting data to develop estimates of fair value and, accordingly, amounts are not necessarily indicative of the amounts that could be realized in a current market exchange. Short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and other liabilities, consist primarily of instruments without extended maturities, the fair value of which, based on ~~Management’s~~Management's estimates, equals their recorded values. Investments in equity securities consist primarily of individual equity securities, exchange-traded and closed-end funds and mutual funds and are reported at their fair value based upon quoted prices in active markets. Investments in certificates of deposit (CD) with original maturities of greater than three months are reported at their estimated fair value based upon the duration of the CD and the interest rate earned on the CD versus current interest rates of similar duration CDs. The fair value of long-term liabilities, based on Management’s estimates, approximates their reported values.

Concentration risks

The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash, cash equivalents, certificates of deposit, exchange-traded and closed-end funds, mutual funds, equity securities, and accounts receivable. Cash balances, some of which exceed federally insured limits, are maintained in financial institutions; however, Management believes the institutions are of high credit quality. The Company assesses market risk in debt and equity securities through consultation with its outside investment advisors. Management is responsible for directing investment activity based on current economic conditions. The majority of accounts receivable are due from companies which are well-established entities. AsIn the first quarter of 2022, a ~~consequence,~~material portion of the Company’s sales were to the U.S. government, which Management does not consider a credit risk. Management considers any exposure from concentrations of credit risks to be limited.

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The following table reflects ~~our~~ significant customers for the ~~three~~three-month periods of 2022 and ~~nine months ended September 30, 2017 and 2016:~~

Three Months ended
September 30, 2017

Three Months ended
September 30, 2016

Nine Months ended
September 30, 2017

Nine Months ended
September 30, 2016

Number of significant customers

3

2

2

1

Aggregate dollar amount of net sales to significant customers

$5.1 million

$3.5 million

$9.4 million

$7.1 million

Percentage of net sales to significant customers

49.1%

39.3%

37.5%

31.6%

2021:


	Three Months Ended			Three Months Ended
	March 31, 2022			March 31, 2021
Number of significant customers		3			1
Aggregate dollar amount of net sales to significant customers	$	33.8	million	$	37.8	million
Percentage of net sales to significant customers		75.6%			75.5%

The Company manufactures some of its products in Little Elm, Texas as well as utilizing manufacturers in China. The Company ~~purchases most~~obtained roughly 93.7% and 90.3% of its product components from single suppliers, including needle adhesives and packaging materials. There are multiple sources of these materials. The Company obtained roughly 90.4% and 85.1% of its VanishPoint® ~~syringes~~products in the first ~~nine~~three months of ~~2017~~2022 and ~~2016,~~2021, respectively, from its ~~primary~~ Chinese ~~manufacturer. Purchases from this Chinese manufacturer aggregated 93.0% and 92.7% of VanishPoint~~® ~~syringes in the three month periods ended September 30, 2017 and 2016, respectively.~~manufacturers. In the event that the Company becomes unable to purchase products from its Chinese manufacturers, the Company would need to find an alternate manufacturer for its blood collection set, IV catheter, Patient Safe^® syringe, 0.5mL insulin syringe, 0.5mL autodisable syringe, and 2mL, 5mL, and 10mL syringes, and would increase domestic production for the 1mL and 3mL ~~syringes.~~

~~Revenue recognition~~

syringes and EasyPoint^® needles.

Revenue ~~is recognized for sales~~recognition

The Company recognizes revenue when ~~title and risk~~control of ~~ownership~~performance obligations passes to the customer, generally ~~upon shipment.~~when the product ships. Payments from customers with approved credit terms are typically due 30 days from the invoice date. Under certain contracts, revenue is recorded on the basis of sales price to distributors, less contractual pricing allowances. Contractual pricing allowances consist of: (i) rebates granted to distributors who provide tracking reports which show, among other things, the facility that purchased the products, and (ii) a provision for estimated contractual pricing allowances for products for which the Company has not received tracking reports. ~~Rebates~~When rebates are ~~recorded when~~ issued, ~~and~~they are applied against the customer’s receivable balance. Distributors receive a rebate for the difference between the Wholesale Acquisition Cost and the appropriate contract price as reflected on a tracking report provided by the distributor to the Company. If product is sold by a distributor to an entity that has no contract, there is a standard rebate (lower than a contracted rebate) given to the distributor. One of the purposes of the rebate is to encourage distributors to submit tracking reports to the Company. The provision for contractual pricing allowances is recognized in the period the related sales are recognized and is reviewed at the end of each quarter and adjusted for changes in levels of products for which there is no tracking report. Additionally, if it becomes clear that tracking reports will not be provided by individual distributors, the provision is further adjusted. The estimated contractual allowance is included in Accounts payable in the Condensed Balance Sheets and deducted from ~~revenues~~Revenues in the Condensed Statements of Operations. Accounts payable included estimated contractual allowances for ~~$3,714,733 and $3,591,534~~$6.2 million as of ~~September 30, 2017~~both March 31, 2022 and December 31, ~~2016, respectively.~~2021. The terms and conditions of contractual pricing allowances are governed by contracts between the Company and its distributors. Revenue for shipments directly to end-users is recognized when title and risk of ownership pass from the Company. End-users do not receive any contractual allowances on their purchases. Any product shipped or distributed for evaluation purposes is expensed.

The Company provides product warranties that: i) the products are fit for medical use as generally defined within the boundaries of United States FDA approval; ii) the products are not defective; and iii) the products will conform to the descriptions set forth in their respective labeling, provided that they are used in accordance with such labeling and the Company’s written directions for use. The Company has historically not incurred significant warranty claims.

The Company’s domestic return ~~policy is set forth in its standard Distribution Agreement. This~~ policy provides that a customer may return incorrect shipments within 10 days following arrival at the distributor’s facility. In all such cases, the distributor must obtain an authorization code from the Company and affix the code to the returned product. The ~~Company will not accept returned goods without a returned goods authorization number. The Company may refund the customer’s money or replace the product.~~

~~The~~ Company’s domestic return policy also generally provides that a customer may return product that is overstocked. Overstocking returns are limited to ~~two~~2 times in each 12-month period up to 1% of distributor’s total purchase of products for the prior 12-month period. All product overstocks and returns are subject to inspection and acceptance by the Company. The Company has historically not incurred significant returns.

The Company’s international distribution agreements generally do not provide for any returns.

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The Company requires certain customers to pay in advance of product shipment. Such prepayments from customers are recorded in Other accrued liabilities and are generally recognized as revenue upon shipment of the product.

The Company periodically recognizes revenue from licensing agreements. If the Company licenses its products for sale and the customers of the sublicensee are not known to the Company, the Company is obligated to pay Thomas J. Shaw, the owner of certain patented technology, fifty percent (50%) of such revenue pursuant to the terms of the Technology License Agreement between the Company and Mr. Shaw.

Disaggregated information of revenue recognized from contracts with customers and licensing fees recognized are as follows:

For the three months ended March 31, 2022:




Blood





Total

Collection

EasyPoint^®

Other

Product
Geographic Segment

Syringes

Products

Needles

Products

Sales
U.S. sales (excluding U.S. government)

$
8,395,303

$
1,077,695

$
729,970

$
9,874

$
10,212,842
Sales to U.S. government

15,731,136

—

—

—

15,731,136
North and South America sales (excluding U.S.)

11,074,246

—

2,608

274

11,077,128
Other international sales

7,505,438

211,368

2,888

1,550

7,721,244
Total

$
42,706,123

$
1,289,063

$
735,466

$
11,698

$
44,742,350

For the three months ended March 31, 2021:




Blood





Total

Collection

EasyPoint^®

Other

Product
Geographic Segment

Syringes

Products

Needles

Products

Sales
U.S. sales (excluding U.S. government)

$
8,759,314

574,008

1,612,333

15,536

$
10,961,191
Sales to U.S. government

37,782,360

—

—

—

37,782,360
North and South America sales (excluding U.S.)

825,820

—

11,968

109,440

947,228
Other international sales

199,316

37,350

144780

1,500

382,946
Total

$
47,566,810

$
611,358

$
1,769,081

$
126,476

$
50,073,725

Income taxes

The Company evaluates tax positions taken or expected to be taken in a tax return for recognition in the financial statements based on whether it is “more-likely-than-not” that a tax position will be sustained based upon the technical merits of the position. Measurement of the tax position is based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

The Company provides for deferred income taxes through utilizing an asset and liability approach for financial accounting and reporting based on the tax effects of differences between the financial statement and tax bases of assets and liabilities, based on enacted rates expected to be in effect when such differences reverse in future periods. Deferred tax assets are periodically reviewed for realizability. ~~The~~In prior periods, the Company ~~has~~ established a valuation allowance for its net deferred tax asset as future taxable income ~~cannot~~which could not be reasonably assured. ~~Penalties and interest related to income~~During the quarter ended June 30, 2020, the Company released its valuation allowance based on available evidence supporting that its deferred tax ~~are classified as General and administrative expense and Interest expense, respectively,~~assets will be realized in ~~the Condensed Statements of Operations. Such expenses are not material.~~full.

Earnings per share

The Company computes basic earnings per share (“EPS”) by dividing net earnings for the period (adjusted for any cumulative dividends for the period) by the weighted average number of common shares outstanding during the period. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect, if any, of the

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common stock deliverable pursuant to stock options and/or common stock issuable upon the conversion of convertible preferred stock.

The calculation of diluted EPS ~~excluded 93,125~~under the treasury stock method included the following shares in the three-month periods ending March 31, 2022 and 670,338 shares of Common Stock underlying issued and outstanding stock options for the three months ended September 30, 2017 and September 30, 2016, respectively, as their effect was antidilutive. The calculation of diluted EPS excluded 128,540 and 674,042 shares of Common Stock underlying issued and outstanding stock options for the nine months ended September 30, 2017 and September 30, 2016, respectively, as their effect was antidilutive. 2021:


	Three Months Ended	Three Months Ended
	March 31, 2022	March 31, 2021
Common Stock underlying issued and outstanding stock options	96,244	152,967
Common stock issuable upon the conversion of convertible preferred shares	232,445	257,945
	328,689	410,912

The potential dilution, if any, is shown on the following schedule:

Three Months Ended
September 30, 2017

Three Months Ended
September 30, 2016

Nine Months Ended
September 30, 2017

Nine Months Ended
September 30, 2016

Net loss
$
(66,626
)
$
(125,304
)
$
(2,605,917
)
$
(1,721,089
)
Preferred dividend requirements

(176,249
)

(176,249
)

(528,747
)

(528,747
)
Loss applicable to common shareholders after assumed conversions
$
(242,875
)
$
(301,553
)
$
(3,134,664
)
$
(2,249,836
)
Average common shares outstanding

32,166,454

29,649,874

31,722,010

29,252,652

Average common and common equivalent shares outstanding – assuming dilution

32,166,454

29,649,874

31,722,010

29,252,652

Basic loss per share
$
(0.01
)
$
(0.01
)
$
(0.10
)
$
(0.08
)
Diluted loss per share
$
(0.01
)
$
(0.01
)
$
(0.10
)
$
(0.08
)


	Three Months Ended		Three Months Ended
	March 31, 2022		March 31, 2021
Net income	$	7,616,455	$	17,955,884
Preferred stock dividend requirements		(58,111)		(64,938)
Income applicable to common shareholders	$	7,558,344	$	17,890,946
Average common shares outstanding		33,265,453		33,967,771
Average common and common equivalent shares outstanding — assuming dilution		33,594,142		34,378,683
Basic earnings per share	$	0.23	$	0.53
Diluted earnings per share	$	0.23	$	0.52

Shipping and handling costs

The Company classifies shipping and handling costs as part of Cost of sales in the Condensed Statements of Operations.

~~Research and development costs~~

~~Research and development costs are expensed as incurred.~~

Share-based ~~compensation~~

Compensation

The Company’s share-based payments are accounted for using the Black-Scholes fair value method. The Company records share-based compensation expense on a straight-line basis over the requisite service period. The Company incurred ~~the following~~ share-based compensation ~~costs:~~

Three Months
Ended
September 30, 2017

Three Months
Ended
September 30, 2016

Nine Months
Ended
September 30, 2017

Nine Months
Ended
September 30, 2016

Cost of sales
$
74,683

$
37,995

$
270,800

$
37,995

Sales and marketing

38,578

20,723

143,255

20,723

Research and development

12,458

6,310

45,174

6,310

General and administrative

56,832

19,623

193,631

19,623

$
182,551

$
84,651

$
652,860

$
84,651

~~Insurance Proceeds~~

Receipts from insurance up to the amount of any loss recognized by the Company are considered recoveries. Any such recoveries are recorded when they are received. Insurance recoveries are not recognized as a component of earnings (loss) from operations until all repairs are made.

~~Recent pronouncements~~

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory,” which is part of the FASB’s Simplification Initiative. Inventory, including inventory measured at average cost, would be valued at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of ~~completion, disposal,~~$1.1 million which were classified as General and ~~transportation. ASU 2015-11 is effective~~administrative expenses.

Self-insured employee benefit costs

The Company self-insures certain health insurance benefits for its employees under certain policy limits. The Company has additional coverage provided by an insurance company for any individual with claims in excess of $100,000 and/or total plan claims in excess of $1.6 million for the ~~Company’s annual periods~~plan year.

Research and ~~interim periods within those annual periods beginning January 1, 2017. Amendments~~development costs

Research and development costs are expensed as incurred.

Leases

The Company determines if an arrangement is a lease at inception. Operating and finance leases are included in ~~this ASU should be applied prospectively with earlier application permitted at the beginning of an interim or annual reporting period. The adoption of this pronouncement had no impact~~Other assets, Other accrued liabilities, and Other long-term liabilities on the Condensed Balance Sheets. Right-of-use

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(“ROU”) assets represent the Company’s ~~Balance Sheet, Results of Operations, or Cash Flows in the period of adoption.~~

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. These amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The updated guidance is effectiveright to use an underlying asset for the ~~Company’s quarter ending March 31, 2018, with early adoption permitted. The Company does not expect ASU 2016-18 to have a material effect on its financial statements as~~lease term and lease liabilities represent the ~~Company currently holds no restricted cash or restricted cash equivalents.~~

In June 2016, the FASB issued Accounting Standards Update 2016-13, “Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. Among other things, these amendments require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. This ASU is effective for the Company’s quarter ending March 31, 2020 with early application permitted for the Company’s quarter ending March 31, 2019. The Company is currently assessing the impact that adoption of this guidance will have on its financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (topic 842). Under the new ASU, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from athe lease. Operating lease ~~measured~~ROU assets and liabilities are recognized at the commencement date based on ~~a discounted basis; and (2) a right-of-use asset, which is an asset that represents~~ the ~~lessee’s right to use, or control the use~~present value of ~~a specified asset for~~lease payments over the lease term. ~~Under~~As the ~~new guidance lessor accounting~~Company’s leases do not provide an implicit rate, the incremental borrowing rate based on information available at the commencement date was used in determining the present value of lease payments.

The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is ~~largely unchanged.~~reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of twelve months or less are not recorded on the Condensed Balance Sheets; however, rent expense is recognized on a straight-line basis over the lease term.

Technology Investment Agreement (TIA)

Effective July 1, 2020, the Company entered into a Technology Investment Agreement (“TIA”) with the United States Government Department of Defense, U.S. Army Contracting Command-Aberdeen Proving Ground, Natick Contracting Division & Edgewood Contracting Division (ACC-APG, NCD & ECD) on behalf of the Biomedical Advanced Research and Development Authority (BARDA), as amended, for $81,029,518 in government funding for expanding the Company’s domestic production of needles and syringes. Pursuant to the terms of the TIA, the Company has made significant additions to its facilities which should allow the Company to increase domestic production. As reimbursements are received from the U.S. government for such expenditures, the Company records a deferred liability. The deferred liability will be systematically amortized as a gain over the life of the related property, plant, and equipment as to offset the related depreciation expense of the assets acquired. The amortization will be presented separately from the depreciation expense on the Condensed Statements of Operations.

Recently Adopted Pronouncements

In December 2019, the FASB issued ASU 2019-12, “Income Taxes: Simplifying the Accounting for Income Taxes”. The new ~~lease guidance simplified~~standard is intended to simplify the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified

~~retrospective transition~~income taxes by eliminating certain exceptions related to the approach for ~~leases existing at, or entered into after,~~intraperiod tax allocation, the ~~beginning~~methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the ~~earliest comparative~~accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for annual periods beginning after December 15, 2020 and interim periods within the annual period, ~~presented~~with early adoption permitted. Adoption of the standard requires certain changes primarily be made prospectively, with some changes to be made retrospectively. The Company has determined that the adoption of ASU 2019-12 did not have a material impact on its financial statements.

The Company adopted ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance”. The new standard is intended to provide increased transparency by requiring business entities to disclose information about certain types of government assistance they receive in the notes to the financial statements. ASU 2021-10 also adds a new Topic – ASC 832, Government Assistance – to the FASB’s Codification. Included in the disclosures under the guidance are the nature of the transaction including the nature of the assistance being given, the accounting policies being used to account for the transaction and other provisions of relevance. The ~~modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. This ASU~~guidance is effective for ~~the Company’s quarter ending March 31, 2019,~~annual periods beginning after December 15, 2021, with early adoption permitted. The Company ~~is currently evaluating the impact of this standard.~~

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. This ASU’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects consideration to which the company expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption. In July 2015, the FASB voted to delay the effective date of this ASU by one year. The ASU will now be effective commencing with the Company’s quarter ending March 31, 2018. Early adoption of this ASU is allowed no sooner than the original effective date. Management’s preliminary assessment ishas determined that the ~~implementation of the amended~~ guidance will not have a material impact on its financial statements as such disclosures surrounding the ~~Company’s balance sheet, statements of operations, changes~~TIA, including the accounting policies used to account for the agreement have been in stockholders’ equity and cash flows. The Company’s revenue is generated from sales of finished goods (disposable medical devices). Revenue from these sales will continue to be recognized when titleplace since its inception

Recently Issued Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the ~~products is passed~~Effects of Reference Rate Reform on Financial Reporting”, to ease the ~~customer. Management expects materially similar results under~~potential burden in accounting for reference rate reform. The new guidance provides optional expedients for contracts that reference LIBOR, if certain criteria are met,

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that can be applied through December 31, 2022. The Company has determined that the amended guidance as compared to the Company’s current policies and procedures regarding revenue recognition. This preliminary assessment may change prior to adoption. Additionally, Management anticipates adopting this amended guidanceadoption of ASU No. 2020-04 would not have a material impact on ~~a Modified Retrospective basis in the first quarter of 2018.~~its financial statements.

3.~~INVENTORIES~~

3. INVENTORIES

Inventories consist of the following:

		September 30, 2017			December 31, 2016

							March 31, 2022		December 31, 2021
Raw materials	$	1,543,972		$	1,303,278		$	4,114,611	$	4,402,828
Finished goods		6,404,798			6,309,469			14,742,398		16,187,091
		7,948,770			7,612,747
Inventory reserve		(595,523	)		(595,523	)
	$	7,353,247		$	7,017,224
							$	18,857,009	$	20,589,919

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 820, “Fair Value Measurements”, defines fair value, establishes a framework for measuring fair value and requires additional disclosures regarding certain fair value measurements. ASC 820 establishes a three-tier hierarchy for measuring fair value, as follows:

●

Level 1 – quoted market prices in active markets for identical assets and liabilities

●

Level 2 – inputs other than quoted prices that are directly or indirectly observable

●

Level 3 – unobservable inputs where there is little or no market activity

The following tables summarize the values of assets designated as Investments in debt and equity securities:

March 31, 2022


Level 1

Level 2

Level 3

Total
Equity securities

$
16,665,257

$
—

$
—

$
16,665,257
Mutual funds and exchange traded funds

2,038,266

—

—

2,038,266

$
18,703,523

$
—

$
—

$
18,703,523

December 31, 2021


Level 1

Level 2

Level 3

Total
Equity securities

$
9,112,607

$
—

$
—

$
9,112,607
Mutual funds and exchange traded funds

4,156,379

—

—

4,156,379

$
13,268,986

$
—

$
—

$
13,268,986

The Company holds high-grade ETFs, mutual funds, individual equity stocks, and debt securities as investments. These assets are readily marketable and are carried at fair value as of the date of the Condensed Balance Sheets. The Company intends to hold these assets for possible future operating requirements. The following table summarizes gross unrealized gains and losses from Investments in debt and equity securities:

March 31, 2022

Gross Unrealized

Aggregate


Cost

Gains

Losses

Fair Value
Equity securities

$
10,765,378

$
5,899,879

$
—

$
16,665,257
Mutual funds and exchange traded funds

2,094,182

—

(55,916)

2,038,266

$
12,859,560

$
5,899,879

$
(55,916)

$
18,703,523

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December 31, 2021

Gross Unrealized

Aggregate


Cost

Gains

Losses

Fair Value
Equity securities

$
6,729,245

$
2,383,362

$
—

$
9,112,607
Mutual funds and exchange traded funds

4,018,488

137,891

—

4,156,379

$
10,747,733

$
2,521,253

$
—

$
13,268,986

Unrealized gains on investments in debt and equity securities were $3,331,109 and $1,103,972 for the three months ended March 31, 2022 and 2021, respectively.

5. INCOME TAXES

The Company’s effective tax rate on the net ~~earnings (loss)~~income before income taxes was ~~0.0%~~43.2% and ~~(0.1)%~~ 26.9% for ~~the nine months ended September 30, 2017 and September 30, 2016, respectively. For~~ the three months ended ~~September 30, 2017~~March 31, 2022 and ~~September 30, 2016,~~2021, respectively.

A reconciliation of the federal statutory corporate tax rate to the Company’s effective tax rate onis as follows:


	Three Months Ended		Three Months Ended
	March 31, 2022		March 31, 2021
U.S. statutory federal tax rate	21.0	%	21.0	%
State tax, net of federal tax	3.2	%	5.9	%
Stock options	5.2	%	—	%
Out of period adjustment	4.0	%	—	%
Rate Change	8.1	%	—	%
Other	1.7	%	—	%
Effective tax rate	43.2	%	26.9	%

The Company uses the recognition and measurement provisions of the FASB ASC Topic 740, Income Taxes (“Topic 740”), to account for income taxes. The provisions of Topic 740 require a company to record a valuation allowance when the “more likely than not” criterion for realizing net deferred tax assets cannot be met. Furthermore, the weight given to the potential effect of such evidence should be commensurate with the extent to which it can be objectively verified. As a result, the Company reviewed the operating results, as well as all of the positive and negative evidence related to realization of such deferred tax assets to evaluate the need for a valuation allowance at March 31, 2022 and 2021.

The effective tax rate for the three months ended March 31, 2022 and 2021 was different from the federal statutory rate due primarily to stock-based compensation, an out of period adjustment due to compensation limits under IRC Section 162(m), and a change in the estimate of the apportionment of earnings ~~(loss) before income taxes was (0.4)% and (0.4)%, respectively.~~across various state jurisdictions.

6. OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:

		September 30, 2017		December 31, 2016

					March 31, 2022		December 31, 2021
Prepayments from customers	$	376,984	$	692,922	$	2,470,949	$	2,339,530
Accrued property taxes		363,075		—		292,741		—
Accrued professional fees		159,526		266,747		290,828		185,515
Current portion – preferred stock repurchase						1,058,935		1,098,282
Other accrued expenses		51,185		59,614		216,698		102,200
	$	950,770	$	1,019,283
Total					$	4,330,151	$	3,725,527

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7. OTHER LONG-TERM LIABILITIES

6.Other long-term liabilities consist of the following:

March 31, 2022

December 31, 2021
Technology Investment Agreement (TIA)

$
72,005,475

$
68,955,664
Stock repurchase

—

1,040,666
Total

$
72,005,475

$
69,996,330

The TIA provides for reimbursement to the Company for the purchase of equipment and supplies related to the expansion of the Company’s domestic production of needles and syringes. Under the TIA, reimbursable amounts will be reflected as a liability until the time its deferred income can be systematically amortized over a period matching the useful life of the purchased assets.
At December 31, 2021, the stock repurchase liability of amounts payable by the Company to former preferred shareholders as a result of private stock purchases in 2020 (See Note 12) was classified as a long-term liability. As of March 31, 2022, the final installment of $1,101,110 due in February 2023 is instead classified as Other accrued liabilities on the Condensed Balance Sheets.

8. COMMITMENTS AND CONTINGENCIES

~~In May 2010,~~On November 7, 2019, the Company filed a lawsuit in the 44^th District Court of Dallas County, Texas (No. DC-19-17946) against Locke Lord, LLP and ~~an officer’s suit~~Roy Hardin in connection with their legal representation of the Company in its previous litigation against Becton, Dickinson and Company ~~(“BD”~~("BD"). The Company alleges that the defendants breached their fiduciary duties, committed malpractice, and were negligent in their representation of the ~~U.S. District~~Company. The Company seeks actual and exemplary damages, disgorgement, costs, and interest. On October 6, 2020, the Court ~~for~~dismissed Locke Lord, LLP and Mr. Hardin’s motion to dismiss. Such order was affirmed on April 20, 2021 by the ~~Eastern~~Court of Appeals, Fifth District of Texas Marshall Division alleging violations of antitrust acts, false advertising, product disparagement, tortious interference, and unfair competition was reopened. The trial commenced on September 9, 2013, in the U.S. District Court for the Eastern District of Texas, Tyler Division, and the jury found that BD illegally engaged in anticompetitive conduct with the intent to acquire or maintain monopoly power in the safety syringe market and engaged in false advertising under the Lanham Act. The jury awardedat Dallas. On April 7, 2022, the Company $113,508,014 in damages, which was trebled pursuant to statute. The Court granted injunctive relief to take effect January 15, 2015. In doing so, the Court found that BD’s business practices limited innovation, including false advertisements that suppressed sales of the VanishPoint® syringes. The specific injunctive relief includes: (1) enjoining BD’s use of “World’s Sharpest Needle” or any similar assertion of superior sharpness; (2) requiring notification to all customers who purchased BD syringe products from July 2, 2004 to date that BD wrongfully claimed thatamended its ~~syringe needles were sharper~~petition. On March 23, 2022 and ~~that its statement that it had “data~~again on ~~file” was false~~May 4, 2022, Locke Lord, LLP and ~~misleading; (3) requiring notification to employees, customers, distributors, GPOs, and government agencies that the deadspace of the VanishPoint~~® ~~has been within ISO standards since 2004 and that BD overstated the deadspace of the VanishPoint~~® to represent that it was higher than some of BD’s syringes when it was actually less, and that BD’s statement that it had “data on file” was false and misleading, and, in addition, posting this notice on its website for a period of three years; (4) enjoining BD from advertising that its syringe products save medication as compared to VanishPoint® products for a period of three years; (5) requiring notification to all employees, customers, distributors, GPOs, and government agencies that BD’s website, cost calculator, printed materials, and oral representations alleging BD’s syringes save medication as compared to the VanishPoint® ~~were based on false and inaccurate measurement of the VanishPoint~~®, and, in addition, posting this notice on its website for a period of three years; and (6) requiring the implementation of a comprehensive training program for BD employees and distributors that specifically instructs them not to use old marketing materials and not to make false representations regarding VanishPoint® syringes. Final judgment was entered on January 15, 2015, awarding the Company $340,524,042 in damages and $11,722,823 in attorneys’ fees, as well as granting injunctive relief consistent with the orders as indicated above. The parties stipulated that the amount of litigation costs recoverable by the Company is $295,000. On January 14, 2015, the District Court stayed the portion of the injunctive relief that requires BD to notify end-user customers but also ordered BD to comply with internal correction activities as well as mandatory disclosures as set out above to its employees, customers, distributors and Group Purchasing Organizations. BD filed an appeal of that ruling with the 5th ~~Circuit Court of Appeals and that appeal was denied on February 3, 2015. On February 12, 2015, BD~~Mr. Hardin filed a motion ~~to amend~~for partial summary judgment regarding the Company’s cause of action for breach of fiduciary duty. A hearing on the partial summary judgment directed most specifically to the issue of award of prejudgment interest. On April 23, 2015, the Court entered an Amended Final Judgment that removed prejudgment interest but kept all other monetary and injunctive relief the same as was granted in the original Final Judgment. BD filed its brief in the appeal on July 20, 2015. Oral argument occurred on Monday, February 29, 2016. On December 2, 2016, the 5th Circuit Court of Appeals overturned the antitrust damages. The finding of false advertising liability was affirmed and the case was remanded to the Eastern District of Texasmotion is set for a redetermination as to the amount of damages to which the Company is entitled. The Company’s petition for certiorari to the U.S. Supreme Court was denied on March 20, 2017. The Eastern District of TexasJune 3, 2022. A jury trial date ~~was May 11, 2017. On August 17, 2017, District Court~~of January 30, 2023 has been set for ~~the Eastern District of Texas issued the Court’s Final Judgment ordering that the Company take nothing in its suit against BD and dismissing the~~this case. On September 13, 2017, the Company filed a Motion to Alter or Amend the Judgment and on September 14, 2017, the Company filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit. On October 27, 2017, the Eastern District denied the Company’s Motion to Alter or Amend the Judgment. As a result of the District Court’s denial of the Motion to Amend, an amended Notice of Appeal was filed with the United States Court of Appeals for the Fifth Circuit on November 3, 2017.

In September 2007, BD and MDC Investment Holdings, Inc. (“MDC”) sued the Company in the United States District Court for the Eastern District of Texas, Texarkana Division, initially alleging that the Company is infringing two U.S. patents of MDC (6,179,812 and 7,090,656) that are licensed to BD. BD and MDC seek injunctive relief and unspecified damages. The Company counterclaimed for declarations of non-infringement, invalidity, and unenforceability of the asserted patents. The plaintiffs subsequently dropped

allegations with regard to patent no. 7,090,656 and the Company subsequently dropped its counterclaims for unenforceability of the asserted patents. On June 30, 2015, the Court ordered that further proceedings in this matter be stayed and that this case remain administratively closed until resolution of all appeals in the case detailed in the preceding paragraph. The case remains stayed as a result of the ongoing proceedings regarding the Lanham Act claims in the separate proceeding described above.

7.9. BUSINESS SEGMENT

The Company does not operate in separate reportable segments. Shipments to international customers generally require a prepayment either by wire transfer or an irrevocable confirmed letter of credit. The Company does extend credit to international customers on some occasions depending upon certain criteria, including, but not limited to, the credit worthiness of the customer, the stability of the country, banking restrictions, and the size of the order. All transactions are in U.S. currency.

Revenues by geography are as follows:

		Three Months Ended September 30, 2017		Three Months Ended September 30, 2016		Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016
U.S. sales	$	8,358,847	$	7,303,015	$	20,361,847	$	19,750,504

									Three Months Ended		Three Months Ended
									March 31, 2022		March 31, 2021
U.S. sales (excluding U.S. government)									$	10,212,842	$	10,961,191
Sales to U.S. government										15,731,136		37,782,360
North and South America sales (excluding U.S.)		1,900,892		1,406,720		3,728,452		2,058,594		11,077,128		947,228
Other international sales		152,297		130,399		891,534		528,071		7,721,244		382,946
Total sales	$	10,412,036	$	8,840,134	$	24,981,833	$	22,337,169	$	44,742,350	$	50,073,725

~~Long -lived~~14

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Long-lived assets by geography are as follows:

	September 30, 2017		December 31, 2016


					March 31, 2022		December 31, 2021
Long-lived assets
U.S.	$	11,520,337	$	11,930,293	$	87,678,525	$	83,695,991
International	$	143,651	$	161,744		4,519,326		4,229,660
Total					$	92,197,851	$	87,925,651

10. DIVIDENDS

In January 2021, a cash dividend payment of $10,041 was made to Series I preferred shareholders. The Company caused a redemption of its Series I preferred stock on December 31, 2020 pursuant to the terms of the Certificate of Designation for such series.

A cash dividend of $39,050 was paid in January 2021, April 2021, October 2021, January 2022, and April 2022 to Series II preferred shareholders. Series III preferred shareholders were paid $39,495 in January 2022 and $19,061 in April 2022.

In June 2021, the Board of Directors approved payments to its Series II, Series III, and former Series IV and Series V Class B Preferred Shareholders in the cumulative amount of $5,056,945 representing all current dividends, dividends in arrears, as well as dividends still owed to shareholders who converted their preferred stock in the past. The dividends were paid on July 22, 2021 to all shareholders who had been contacted and confirmed as the rightful owner entitled to payment. The Company has not yet established contact with all former shareholders, most of whom converted their shares prior to 2001. As of May 6, 2022, the Company is continuing its efforts to establish contact with approximately 90 former shareholders who are entitled to approximately $1.4 million. This, along with the current declared dividends, are reflected in Dividends payable on the Condensed Balance Sheets.

11. TREASURY STOCK

In June 2021, the Company approved a stock repurchase plan as described by Note 16. The Company accounts for the purchased shares under the cost method as Common Stock Held in Treasury – at cost, which represents the cost of the shares and the cost of acquiring the shares through the Company’s broker.

12. EXCHANGE OF COMMON STOCK FOR PREFERRED STOCK

In 2020, the Company entered into several agreements with shareholders to purchase its outstanding Class B Convertible Preferred Stock. The consideration for these purchases consisted of both cash and Common Stock. In addition, in each such transaction, the preferred shareholder counterparty waived all rights to unpaid dividends in arrears. The aggregate cash consideration equaled $3,786,000, of which $482,670 was paid in 2020. The balance is payable over a three-year period which began in February 2021. In February 2022 and 2021, the Company paid the first two of 3 equal installments of $1,101,110.

13. STOCK OPTIONS

Stock options were exercised by 1 director during the three months ended March 31, 2022, and, consequently, a total of 10,000 shares of Common Stock were issued for an aggregate payment to the Company of $10,500 to exercise such options.

8.~~DIVIDENDS~~14. PAYCHECK PROTECTION PROGRAM LOAN

On April 17, 2020, the Company entered into a promissory note in the principal amount of $1,363,000 (the “PPP Loan”) in favor of Independent Bank pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), administered by the U.S. Small Business Administration (“SBA”). The PPP Loan’s original maturity date was April 17, 2022 with an interest rate of 1.0% per annum. The PPP

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Loan had a prepayment option with no prepayment penalties. The PPP Loan was unsecured and was a non-recourse obligation.

On May 13, 2021, the Company was informed that the SBA granted its request for loan forgiveness for the entire original principal and accrued interest, for a total of $1,377,652. No payments were made prior to receiving forgiveness.

15. TECHNOLOGY INVESTMENT AGREEMENT

Effective July 1, 2020, the Company entered into the TIA with the U.S. government. The principal purpose of the TIA is to fund the expansion of the Company’s manufacturing capacity for hypodermic safety needles and corresponding syringes in response to the worldwide COVID-19 global pandemic. The award is an expenditure-type TIA, whereby the U.S. government will make payments to the Company for the Company’s expenditures for equipment and supplies in carrying out the expansion of the Company’s domestic production. The Company’s contributions under the terms of the TIA to enhance domestic capacity of pandemic-essential technology include providing facilities, technical expertise, labor, and maintenance of the TIA-funded equipment for a ten-year term.

As of March 31, 2022, the Company had negotiated contracts for the purchase of automated assembly equipment, molds, and molding equipment, as well as portions of auxiliary equipment, for approximately $46.4 million. The Company has received a temporary certificate of occupancy for the approximately 27,800 square foot controlled environment and a certificate of occupancy for the approximately 55,000 square foot new warehouse space. The final cost of the controlled environment within existing properties is $6.7 million. The new warehouse space final cost is $5.9 million. The cost of the controlled environment was funded by the U.S. government under the TIA, while the cost of the new warehouse was funded by the Company. A May 2021 amendment to the TIA required further expansion, including an additional controlled environment space, and new assembly lines. As of March 31, 2022, the Company has issued purchase orders for approximately $17.5 million for the purchase of additional production and ancillary equipment in connection with the foregoing amendment. The estimated cost for the additional controlled environment space is $6.1 million, funded by the U.S. government.

16. STOCK REPURCHASE PLAN

The Company ~~declared dividends~~entered into a repurchase plan (the “Plan”) dated June 4, 2021 with an independent broker for the purchase of up to $10 million of the Company’s Common Stock. Under the Plan, open market purchases of the Company’s Common Stock commenced June 18, 2021 and 499,807 shares were purchased in the first quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on April 21, 2016. The Company declared dividends in the second quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on July 28, 2016. The Company declared dividends in the third quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on October 20, 2016. The Company declared dividends in the first quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on April 27, 2017. The Company declared dividends in the second quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on July 20, 2017. The Company declared dividends in the third quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on October 20, 2017.

9.~~PRIVATE PURCHASE~~

The Company approved three of its executive officers to purchase shares directly from the Company. Thomas J. Shaw, CEO, exercised his purchase rights on January 12, 2017, buying two million shares at market pricequarterly period ended March 31, 2022 for an aggregate purchase price of ~~$1.78 million,~~$2.5 million. These treasury share purchases are accounted for under the cost method and ~~he exercised the remainder~~are included as a component of his purchase rights on August 23, 2017 by purchasing one million shares at market price for aggregate consideration of $570,100. Mr. Cowan, CFO, and Ms. Larios, Vice President and General Counsel, are authorized to purchase 500,000 shares each at market price any time prior to September 9, 2018. The approximate dollar value of these potential future purchases cannot be predicted.

~~10.~~~~BONUSES~~

~~In February of 2017, Mr. Cowan and Ms. Larios were each granted cash bonuses of $250,000. Ms. Larios received her bonus~~treasury stock in the ~~first quarter~~Company’s balance sheets. The Plan was terminated on April 14, 2022. A total of ~~2017. Mr. Cowan will receive his bonus later this year.~~1,087,145 shares were purchased under the Plan for a total of $8.1 million.

~~11.~~~~STORM DAMAGE AND INSURANCE PROCEEDS~~

~~On March 26, 2017, a hail storm passed through Little Elm, TX, resulting~~17. SUBSEQUENT EVENTS

As discussed above in ~~damage to~~Note 16, the Company’s ~~two buildings. During~~repurchase plan for open market purchases of Common Stock was terminated on April 2017, the Company performed an inspection of its facilities and determined that possible roof damage had been sustained. In late April 2017, the Company’s insurance carrier inspected the two buildings and confirmed that damage occurred from the hail storm. This damage was principally to the roofs of the buildings but also many of the HVAC units and a wall alongside one of the buildings.14, 2022.

The Company’s insurance carrier has assessed damages of $1,009,960 and the Company’s deductible is $5,000. The Company has received these funds from its carrier. At this time, the Company does not expect the cost of repairs to the roofs, the wall, and to the HVAC units to exceed its coverage. Repairs commenced during the third quarter of 2017 and are expected to be completed by the end of the year. The Company does not currently anticipate that these repairs will result any significant disruption to its operations or interruption to its production. The Company expects that all repairs will be covered by the insurance proceeds.

During the third quarter of 2017, the Company incurred and recognized $128,710 in repairs due to the storm damage. There is $876,250 of remaining insurance proceeds. This repair expense was offset by the insurance proceeds, resulting in no impact to the Statement of Operations. These costs and offsets are included in General and administrative expense in the Statement of Operations.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENT WARNING

Certain statements included by reference in this filing containing the words “could,” “may,” “believes,” “anticipates,” “intends,” “expects,” and similar such words constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Any forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such

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factors include, among ~~others,~~others: the impact of COVID-19 on all facets of logistics and operations as well as costs; our ability to scale up production volumes in response to an increase in demand; potential tariffs; our ability to maintain ~~liquidity,~~liquidity; our maintenance of patent ~~protection, the impact of current and future Court decisions regarding current litigation,~~protection; our ability to maintain favorable third party manufacturing and supplier arrangements and ~~relationships, our ability to quickly increase capacity in response to an increase in demand,~~relationships; foreign trade risk; our ability to access the ~~market, our ability to maintain or lower~~market; production ~~costs, our ability to continue to finance research and development as well as operations and expansion of production,~~costs; the ~~continuing interest~~impact of larger market players, specifically Becton, Dickinson and Company, ~~(“BD”),~~ in providing devices to the safety ~~market,~~market; and any other factors referenced in Item 1A. Risk Factors in Part II. Given these uncertainties, undue reliance should not be placed on forward-looking statements.

MATERIAL CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We have been manufacturing and marketing our products since 1997. ~~Safety~~VanishPoint^® syringes comprised ~~90.6%~~95.4% of our sales in the first ~~nine~~three months of ~~2017.~~2022. EasyPoint^®products accounted for 1.6% of sales in the first three months of 2022. We also manufacture and market ~~the EasyPoint~~®,an IV safety catheter and blood collection products, including the blood collection tube holder ~~IV safety catheter,~~ and VanishPoint^®Blood Collection ~~Set. We currently provide other safety medical products in addition to safety products utilizing retractable technology. One such~~Set which were 2.9% of our total product ~~is the Patient Safe~~® ~~syringe, which is uniquely designed to reduce the risk of bloodstream infections associated with catheter hub contamination.~~

~~In the second quarter of 2016, we began selling a new product, the EasyPoint~~® ~~needle.~~ ~~EasyPoint~~® ~~needle~~ sales ~~made up 9.8% of third quarter revenues and 4.9% of revenues~~ for the first ~~nine~~three months of ~~2017. The EasyPoint~~® ~~is a retractable needle that can be used with Luer lock syringes, Luer slip syringes, and prefilled syringes to give injections. The EasyPoint~~® ~~needle can also be used to aspirate fluids and collect blood.~~

~~Historically, unit sales have increased in the latter part of the year due, in part, to the demand for syringes during the flu season.~~

2022.

Our products have been and continue to be distributed nationally and internationally through numerous distributors. ~~Although~~Some of our popular syringe products provide low dead-space. Low dead-space syringes reduce residual medication remaining in the syringe after the dose has been administered. In some instances, the low dead-space allows for additional doses of medication to be obtained from the vials. We plan to highlight the advantages of our low dead-space products, including the potential to reduce the costs associated with wasted medication, as part of our overall marketing message.

On May 1, 2020, we were awarded a delivery order under an existing contract by the Department of Health and Human Services of the United States to supply automated retraction safety syringes for COVID-19 vaccination efforts, which order was in the amount of $83.8 million plus $10 million in expedited freight costs. The period of performance for this order ended in March 2022.

The Department of Health and Human Services awarded us another contract on February 12, 2021 to supply low dead-space safety syringes for COVID-19 vaccination efforts. The base price for the contract and purchase order was $54.2 million for the five-month base period of performance (February 15, 2021 to July 14, 2021). We received non-binding notice that the contract would be extended for seven additional months beyond the base period of performance with a total contract price during such period of approximately $92.8 million plus an additional $6 million in air freight costs. However, to date, we have ~~made limited progress~~received a commitment to exercise only the first four option periods which extended through the end of December 2021. For each period, the freight reimbursement cost is included in ~~some areas, such as~~total overall contract value and is estimated at approximately 25% of the ~~alternate care market, our volumes are not as high as they should be given~~overall price.

Our sales under both of the ~~nature and quality~~foregoing orders from the U.S. government were $15.7 million during the first three months of 2022, representing 35.2% of our ~~products and~~total sales for such period. Both of the federal and state legislation requiring the use of safe needle devices. The alternate care market is composed of facilities that provide long-term nursing and out-patient surgery, emergency care, physician services, health clinics, and retail pharmacies.

~~We continue to pursue various strategies to have better access to the hospital market,~~above-mentioned orders as well as ~~other markets, including attempting to gain access~~the TIA (as defined below) from the U.S. government are material events particular to the ~~market through our sales efforts, our innovative technology, introduction~~COVID-19 pandemic and may not be indicative of future operations. While we continue to work with the Department of Health and Human Services, additional orders are uncertain. In the absence of new U.S. government orders and/or an increase in our domestic orders, we would expect our revenues to decline. The addition of manufacturing equipment and facilities will greatly increase our production capacity. However, in the absence of significant demand, such capacity may be underutilized.

Effective July 1, 2020, we entered into a Technology Investment Agreement (“TIA”) with the United States Government Department of Defense, U.S. Army Contracting Command-Aberdeen Proving Ground, Natick Contracting Division & Edgewood Contracting Division (ACC-APG, NCD & ECD) on behalf of the Biomedical Advanced Research and Development Authority (BARDA) for $53.7 million in government funding for expanding our domestic production of needles and syringes to meet ongoing and future U.S. COVID-19 medical countermeasures demands. Effective May 12, 2021, we entered into an amendment to the TIA providing an additional $27.4 million in funding to add 12,500 square feet of controlled environment and two additional assembly lines to increase our existing domestic manufacturing

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capabilities. The amended completion date is August 29, 2022. As of May 6, 2022, we have negotiated contracts for the purchase of automated assembly equipment, molds, and molding equipment, as well as portions of auxiliary equipment, for approximately $64.2 million. We have also received a temporary certificate of occupancy for the $6.7 million 27,800 square foot controlled environment which was funded by the U.S. government under the original agreement. In addition, we have substantially completed the additional controlled environment space required under the May 12, 2021 amendment. Finally, we have received the certificate of occupancy for the new $5.9 million 55,000 square foot warehouse which is our financial responsibility.

As a result of the COVID-19 pandemic, we have faced and continue to deal with the logistical challenges of sourcing raw materials and finished goods, particularly finished goods from China. We utilize multiple transportation providers to ensure we can meet our delivery schedules, but we are subject to the global supply chain and its complexities. To date, the freight challenges have neither caused a loss of customers nor a cessation of production. However, freight costs have materially increased. The increase in freight costs has significantly impacted our cost of manufactured product, and we expect this trend to continue as long as the global supply chain challenges persist. These cost increases are not unique to our business, but the fact that a substantial percent of our prior period sales were related to orders from the U.S. government with reimbursed freight costs will affect comparability of 2022 costs and margins to prior periods. In addition to increased costs associated with the global supply chain, we have had challenges sourcing transportation. There is also possible risk from the political environment in Europe and Asia. We believe that with our current levels of products on-hand and ~~when necessary, litigation.~~our ability to produce domestically, we are positioned to continue to operate and meet the needs of our customers currently. Other factors that could affect our unit costs include increases in tariffs, costs by third party manufacturers, and changing production volumes. Increases in costs may not be recoverable through price increases of our products.

Other factors which could have a material impact on our business include COVID-19 booster shot recommendations, flu shot campaigns, and inefficient domestic distribution networks. An increase in the frequency or necessity to administer additional COVID-19 boosters or flu shots is still uncertain and may not lead to an increase in our product sales.

We have ~~reported~~entered into an agreement to expand our existing administrative offices by 14,000 square feet. We currently expect that the cost of expansion will be approximately $5.6 million. The expected substantial completion date for the new office space is October 2022. To date, we have spent approximately $2.0 million.

As detailed in ~~the past that our progress is limited principally due~~Note 4 to the ~~practices engaged~~financial statements, we held $18.7 million in ~~by BD,~~debt and equity securities as of March 31, 2022, which represented 17.5% of our current assets. Such amount includes unrealized gains on investments, as well as an additional $2.0 million cash investment during the ~~dominant maker and seller of disposable syringes. We initiated a lawsuit in 2007 against BD which was dismissed on August 17, 2017. We have filed for appeal.~~

~~Our litigation expenses were significantly less in 2017 and we have expanded our sales and marketing staff in an effort to gain market share.~~

~~Our remaining stock option expense for grants in 2016 will be expensed in the fourth~~first quarter of ~~2017.~~2022. We continually monitor our invested balances.

~~The Consolidated Appropriations Act, 2016 (Pub. L. 114-113), signed into law on December 18, 2015, includes~~In response to, among other factors, the global COVID-19 pandemic, our delivery orders from the U.S. government, and the TIA, employee headcount and related salary and benefits costs have increased significantly. As of March 31, 2022, the Company employed approximately 269 full-time, part-time, and temporary employees. This represents approximately a ~~two year moratorium on the 2.3% medical device excise tax imposed by Internal Revenue Code section 4191. Thus, the medical device excise tax was suspended beginning on January 1, 2016~~29.3% increase in our workforce since March 2021 and ~~ending on December 31, 2017.~~compensation costs increased 25.6%.

~~We reevaluated several compensation strategies in late 2016 and early 2017. We also approved three~~As a result of our ~~executive officers~~completion of the original U.S. government delivery orders and the progression of the TIA, we continue to monitor our current level of operating expenses, including the overall impact of our staffing structure.

Effective June 4, 2021, we entered into a repurchase plan (the “Plan”) for the purchase of up to $10 million of our Common Stock. Under the Plan, open market purchases of our Common Stock commenced June 18, 2021 and 1,087,145 shares ~~directly from~~were purchased through the ~~Company. Thomas J. Shaw exercised his purchase rights~~Plan’s termination on ~~January 12, 2017, buying two million shares at market price~~April 14, 2022 for an aggregate purchase price of ~~$1.78 million,~~approximately $8.1 million. We terminated the plan because our stock price appears not to be correlated with our economic performance at this time.

Historically, unit sales have increased during the flu season. Seasonal trends in 2020 and ~~he exercised the remainder of his purchase rights on August 23, 2017 by purchasing one million shares at market price for aggregate consideration of $570,100.~~

~~As discussed in Note 11~~2021 were less pronounced due to demand related to the ~~financial statements, we received $1,004,960~~COVID-19 vaccine.With the completion of our delivery orders from ~~our insurance carrier in~~ the ~~second quarter~~U.S. government, flu season orders may have a more pronounced effect on 2022 revenues.

Table of ~~2017 and began repairing the buildings using these funds in the third quarter of 2017.~~Contents

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 ~~nine~~three months of ~~2017,~~2022, our ~~primary~~ Chinese ~~manufacturer~~manufacturers produced approximately ~~90.4%~~93.7% of our ~~VanishPoint~~® ~~syringes.~~products. In the event that we become unable to purchase products from our Chinese manufacturers, we would 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.~~

syringes and EasyPoint^®needles.

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.~~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.

With increased volumes, our manufacturing unit costs have generally tended to decline. Factors that could affect our unit costs include increases in costs by third party manufacturers, changing production volumes, product

~~mix, costs of petroleum products, and transportation costs. Increases in such costs may not be recoverable through price increases of our products.~~

RESULTS OF OPERATIONS

The following discussion may contain trend information and other forward-looking statements that involve a number of risks and uncertainties. Our actual future results could differ materially from our historical results of operations and those discussed in any forward-looking statements. All period references are to periods ended March 31, 2022 or 2021, as applicable. Dollar amounts have been rounded for ease of reading. ~~All period references are to the periods ended September 30, 2017 or 2016.~~

~~RESULTS OF OPERATIONS~~

Comparison of Three Months Ended ~~September 30, 2017~~March 31, 2022 and ~~September 30, 2016~~March 31, 2021

Domestic sales, including sales to the U.S. government, accounted for ~~80.3%~~58.0% and ~~82.6%~~97.3% of the revenues for the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, respectively. Domestic revenues ~~increased 14.5%~~decreased 46.8% principally due to ~~higher volumes mitigated by~~ lower ~~average prices.~~sales to the U.S. government. Domestic unit sales ~~increased 23.9%~~decreased 48.9%. Domestic unit sales were ~~71.8%~~45.1% of total unit sales for the three months ended ~~September 30, 2017.~~March 31, 2022. Domestic unit sales excluding the U.S. government decreased approximately 16.4%. International ~~revenue and~~revenues increased approximately 1,313.2% predominately due to purchases from a non-governmental humanitarian organization for international vaccination campaigns. Overall unit sales increased ~~33.6%~~8.5%. While international unit sales and ~~29.8%, respectively, due~~revenues increased dramatically, there is uncertainty as to the timing of ~~significant~~future international ~~sales. Our~~orders. In addition, the revenues on a per-unit basis in the international market are significantly lower than in the U.S. market. As a result, material increases in international orders ~~may be subject to significant fluctuation over time. Overall~~and unit sales ~~increased 25.5%.~~have the potential to lower our overall revenues on a per-unit basis, as well as our profit margins.

~~The~~ Cost of manufactured product increased ~~by 28.7%~~38.9% principally due to ~~higher volumes~~increases in transportation costs, a higher-cost product mix, and ~~higher manufacturing costs. Profit margins can fluctuate depending upon, among~~an increase in units sold. Royalty expense decreased 12.1% due to decreased gross sales.

Operating expenses increased 27.7% from the prior year. This is substantially due to increased headcount and other ~~things, the cost of manufactured product and the capitalized cost of product recorded in inventory,~~employee-related expenses, as well as ~~product mix. Royalty~~consulting expenses. Each of these is attributable to the larger volume of orders and the expansion activities required by the TIA. Included in the increased employee expenses were $1.1 million of share-based compensation expense ~~increased 24.6% due to higher gross sales.~~

~~Gross profit was flat primarily due to higher manufacturing costs.~~

~~Operating expenses decreased 1.4% or $48.0 thousand. The decrease was principally due to lower legal cost,~~ and ~~reduced bad debt expense in General~~$686 thousand from general salary increases and ~~administrative expense, offset by an increase in~~larger headcount. Sales and marketing ~~personnel.~~expenses increased due to increased access to travel for our sales staff.

~~Our operating loss~~Income from operations was ~~$32.9 thousand~~$9.7 million compared to ~~an operating loss~~income from operations of $23.4 million for the same period last ~~year~~year. The decrease was due to an overall decrease in revenues and higher costs as well as fewer orders associated with freight reimbursement.

Unrealized gain on equity securities increased by 201.7% due to the increased market values of ~~$81 thousand due primarily to lower operating expenses.~~

~~Our effective tax rate~~those securities. However, a realized loss on the ~~net loss before~~sale of investments led to a 61.6% decrease in interest and other income. Interest expense for the first quarter of 2022 decreased by approximately 27.6% from the same period in the prior year due to less imputed interest associated with the stock exchanges discussed in Note 12 of the financial statements.

The provision for income taxes decreased to $5.8 million for the first quarter of 2022 from $6.6 million in the first quarter of 2021. For a detailed description of the determination and components of calculating the provision, please refer to Note 5 of the financial statements.

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Discussion of Balance Sheet and Cash Flow Items

Cash comprises 20.8% of total assets. Cash flow from operations was ~~(0.4)% and (0.4)%~~$21.4 million for the three months ended ~~September 30, 2017 and September 30, 2016, respectively.~~

~~Comparison of Nine Months Ended September 30, 2017 and September 30, 2016~~

~~Domestic sales accounted for 81.5% and 88.4% of the revenues for the nine months ended September 30, 2017 and 2016, respectively. Domestic revenues increased 3.1%~~March 31, 2022 principally due to ~~higher volume. Domestic unit sales increased 5.1%. Domestic unit sales were 73.8%~~a $15.3 million reduction of Accounts receivable. Additionally, we have recorded deferred taxes of $5.1 million which is material to the adjustments to total ~~unit sales~~cash flow from operations. The deferred tax asset represents amounts available to reduce income taxes payable on taxable income in future years.

Cash used by investing activities was $7.1 million for the ~~nine~~three months ended ~~September 30, 2017. International revenue and unit sales increased 78.6% and 82.5%, respectively,~~March 31, 2022 due primarily to the ~~timing~~purchase of ~~significant international sales. Our international orders may be subject to significant fluctuation over time. Overall unit sales increased 18.3%.~~

~~The Cost of manufactured product increased 21.9% due to higher volumes~~property, plant and ~~higher manufacturing costs. Profit margins can fluctuate depending upon, among other things, the cost of manufactured product~~equipment, building improvements, and the ~~capitalized cost~~purchase of ~~product recorded~~equity securities. The $5.0 million impact to cash from the purchase of fixed assets primarily reflects down payments on orders for certain assets as discussed in ~~inventory, as well as product mix. Royalty expense increased 10.8% due~~Note 15 to ~~higher gross sales.~~the financial statements. Of the $5.0 million, $1.0 million was spent on additional assembly equipment and a new warehouse outside the TIA reimbursement provisions.

~~Gross profit decreased 3.4%~~Cash used by financing activities was $356 thousand for the three months ended March 31, 2022. This was primarily due to ~~lower average price and higher manufacturing costs.~~

~~Operating expenses increased 6.6% or $635 thousand. The increase~~proceeds from the government under the TIA for down payments on our orders for fixed assets, but was due to stock option expense, an increase in Sales and marketing personnel, travel expenses for Sales and marketing, higher payroll costs in Research and development, and bonuses paid to two officers. These increased expenses were offset by ~~lower legal costs and reduced bad debt expense.~~

~~Our operating loss was~~our repurchase of common stock in the amount of $2.5 ~~million compared to an operating loss for the same period last year of $1.6 million due primarily to lower gross profit and higher operating expenses.~~

~~Our effective tax rate on the net loss before income taxes was 0.0% and (0.1)% for the nine months ended September 30, 2017 and September 30, 2016, respectively.~~

~~Discussion of Balance Sheet and Statement of Cash Flow Items~~

~~Cash comprises 39.0% of total assets. Working capital was $19.8 million at September 30, 2017, an increase of $337 thousand from December 31, 2016.~~

~~Cash flow used by operations was $2.0 million for the nine months ended September 30, 2017 due primarily to our net loss.~~

We also received approximately $1.0 million from our insurance carrier which is being used to repair damage to our buildings from a hail storm, as discussed herein. We also received $2.35 million from selling Common Stock at market price to our CEO, Thomas J. Shaw.

million.

LIQUIDITY AND CAPITAL RESOURCES

At the present time, Management does not intend to publicly raise equity capital. Due to the funds received from prior litigation and direct purchases of our stock, we have sufficient cash reserves and intend to rely on operations, cash reserves, and debt financing, when available, as the primary ongoing sources of cash. Our ability to obtain additional funds through loans is uncertain.

~~Historical~~Internal Sources of Liquidity

We have historically funded operations primarily from the proceeds from revenues, private placements, litigation settlements, and loans.

~~Internal Sources of Liquidity~~

~~Margins~~ We expect to fund operations going forward from revenues, cash reserves, and ~~Market Access~~

To routinely achieve positive or break even quarters, we need increased access to hospital markets which has been difficult to obtain. We will continue to attempt to gain access to the market through our sales efforts, innovative technology, the introduction of new products, and, when necessary, litigation.

~~We continue to focus on methods of upgrading our manufacturing capability and efficiency in order to reduce costs.~~

~~Fluctuations in the cost and availability of raw materials and inventory and our ability to maintain favorable manufacturing arrangements and relationships could result in~~investments available for sale if the need to ~~manufacture all (as opposed~~access those funds arises. We do not, and historically have not, utilized lines of credit to ~~18.3%) of our products in the U.S. This could temporarily increase unit costs as we ramp up domestic production.~~fund operations.

Margins

The mix of domestic and international sales ~~as well as product mix,~~ affects the average sales price of our products. Generally, the higher the ratio of domestic sales to international sales, the higher the average sales price will be. 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~~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.

Cash Requirements

We believe we will have adequate means to meet our short-term needs to fund operations for at least 12 months.Besides cash reserves and expected income from operations, we also have access to our investments which may be liquidated in the event that we need to access the funds for operations. Expected short-term uses of cash include payroll and benefits, royalty expense, inventory purchases, contractual obligations, capital expenditures, payment of income taxes, quarterly preferred stock dividends, and other operational priorities. Our long-term plans involving material cash requirements for capital expenditures are detailed in this section below under “Capital Resources” and our liabilities are our bank debt as set forth as out Long-term debt on our Condensed Balance Sheets and other liabilities detailed herein in Note 7 to the financial statements. We believe we will have adequate means to meet our currently foreseeable long-term liquidity needs.

Contracts with the U.S. Government

As discussed above, we were awarded a material delivery order by the Department of Health and Human Services of the United States in the total amount of approximately $83.8 million, plus certain expedited freight expenses. In February 2021, we received another material contract from the Department of Health and Human Services for additional

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~~Fluctuations~~safety syringes representing expected revenues and reimbursable freight costs of $54.2 million for a five-month period ending July 14, 2021 and approximately $92.8 million (plus an additional $6 million in air freight costs) for seven monthly option periods. To date, we have received a commitment to exercise only the first four option periods which extended through the end of December 2021. We have not received additional orders beyond the first four option periods. While we continue to work with the Department of Health and Human Services, significant future orders are uncertain.

As discussed above, we entered into a TIA with the U.S. government for a total value of approximately $81.0 million in government funding for expanding our domestic production of needles and syringes. As of May 6, 2022, we have received approximately $68.7 million for down payments on the purchase of certain fixed assets. In 2021, we contributed approximately $5.9 million towards the completion of the new 55,000 square foot warehouse as a portion of the cost sharing agreement. The Company will continue to fund the expansion efforts primarily through providing the necessary workforce to implement the addition of new assets, as well as provide the ongoing necessary support.

External Sources of Liquidity

We received a PPP Loan in the principal amount of $1.4 million. On May 13, 2021, we were informed that the entire original principal amount of $1.4 million would be forgiven.

We consider our investment portfolio a source of liquidity as well. As of March 31, 2022, $18.7 million was invested in third party securities.

Capital Resources

Since the execution of the TIA on July 1, 2020, we have significantly expanded our facilities. As of May 6, 2022, we had received a temporary certificate of occupancy for the approximately 27,800 square feet of additional controlled environment within existing properties and a certificate of occupancy for the 55,000 square feet of new warehouse space. We have substantially completed an additional 12,500 square feet of controlled environment space. As of May 6, 2022, we have negotiated contracts for the purchase of automated assembly equipment, molds, and molding equipment, as well as portions of auxiliary equipment, under the original TIA and the modification for approximately $64.2 million. To fund the purchase of the automated assembly equipment, auxiliary equipment, and construction of the controlled environment, we are reimbursed by the U.S. government according to the terms in the TIA. The TIA also allows us to request an advance of funds for larger purchases when necessary. The expenditures which are not reimbursable from the U.S. government under the TIA are funded with cash from operations. The capital assets funded by us under the TIA include the construction of the new warehouse as well as certain accessory equipment.

We have entered into an agreement to expand our existing administrative offices by 14,000 square feet. We currently expect that the cost of ~~oil (since~~expansion will be approximately $5.6 million which we will fund from cash from operations. The expected substantial completion date for the new office space is October 2022. To date, we have spent approximately $2.0 million.

As mentioned above in the section “Cash Requirements”, we have cash reserves, investments which could be liquidated in the event of our ~~products~~requirements therefor, as well as the ability to generate cash flow from operations. In the event that our long-term cash requirements exceed our current reserves and our ability to generate cash from operations, management would necessarily undertake to reduce our operational cash requirements.

CRITICAL ACCOUNTING ESTIMATES

We are ~~petroleum based)~~responsible for developing estimates for amounts reported as assets and ~~transportation~~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 customers and the ~~volume~~related credits issued once contractual obligations of ~~units purchased from our Chinese manufacturers may~~the customers have been met. The establishment of a liability for future claims of rebates against sales in the current period requires that we have an ~~impact on~~understanding of the ~~unit costs~~relevant sales with respect to product

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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 ~~product. Increases~~basis for assumptions in ~~such costs may not be recoverable through price increases~~future periods, as well as the accuracy of ~~our products. Reductions in oil prices may not quickly affect petroleum product prices.~~

~~Seasonality~~

~~Historically, unit sales have increased during the flu season.~~

~~Cash Requirements~~

~~Due to funds received from prior litigation and direct purchases of stock,~~past estimates. While we believe that we have sufficient ~~cash~~historical data, and a firm basis for establishing reserves for contractual obligations, there is an inherent risk that our estimates and ~~intend to rely on operations, cash reserves, and debt financing, when available, as~~ the ~~primary ongoing sources of cash. We have taken steps to decrease our legal costs and we continue to evaluate these costs.~~underlying assumptions may not reflect actual future results. In the ~~future, if we need to take cost cutting measures, we may reduce the number of units being produced, reduce the workforce, reduce the salaries of officers and other employees,~~event that these estimates and/or ~~defer royalty payments. Some increases in compensation were made in 2016 and 2017.~~

~~External Sources of Liquidity~~

We have obtained several loans since our inception, which have, together with the proceeds from the sales of equities and litigation efforts, enabled us to pursue development and production of our products. Our ability to obtain additional funds through loans is uncertain. Due to the current market price of our Common Stock, it is unlikely we would choose to raise funds by the public sale of equity.

We have approved three of our executive officers to engage in private purchases of stock at market prices. Thomas J. Shaw, CEO, exercised his purchase rights on January 12, 2017, buying two million shares at market price for an aggregate purchase price of $1.78 million, and he exercised the remainder of his purchase rights on August 23, 2017 by purchasing one million shares at market price for aggregate consideration of $570,100.

As discussed in Note 11 to the financial statements, we received $1,004,960 from our insurance carrier in the second quarter of 2017 and began repairing the building using these funds in the third quarter of 2017.

~~CAPITAL RESOURCES~~

~~We have committed to make necessary repairs~~assumptions are incorrect, adjustments to our ~~building from storm damage using insurance proceeds, as discussed herein.~~reserves may have a material impact on future results.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

~~No update.~~

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, Management, with the participation of our President, Chairman, and Chief Executive Officer, Thomas J. Shaw (the “CEO”), and our Vice President and Chief Financial Officer, ~~Douglas~~John W. ~~Cowan~~Fort III (the “CFO”), acting in their capacities as our principal executive and principal financial officers, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. The term disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us in our periodic reports is: i) recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms; and ii) accumulated and communicated to our Management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based upon this evaluation, the CEO and CFO concluded that, as of ~~September 30, 2017,~~March 31, 2022, our disclosure controls and procedures were effective.

We initially reported a material weakness in our Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 30, 2016, in connection with the accounting for raw materials. We have remedied this weakness by running parallel accounting systems and increased review procedures, both of which give credence to reliable results. Additionally, we intend to fully implement the Oracle accounting system by the end of 2017.

Changes in Internal Control Over Financial Reporting

There have been no changes during the ~~third~~first quarter of ~~2017~~2022 or subsequent to ~~September 30, 2017~~March 31, 2022 in our internal control over financial reporting that ~~has~~have materially affected or isare reasonably likely to materially affect our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Please refer to Note 68 to the financial statements for a complete description of all legal proceedings.

Item 1A. Risk Factors.

There were no material changes in ~~the~~our Risk Factors ~~applicable to the Company~~ as set forth in our ~~Form 10-K~~most recent annual report ~~for 2016.~~which is available on EDGAR.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

~~There~~

Issuer Purchases of Equity Securities


Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 – January 31, 2022	136,734	5.95	136,734	3,923,659
February 1 – February 28, 2022	160,076	4.88	160,076	3,142,728
March 1 – March 31, 2022	202,997	4.64	202,997	2,201,367
Total	499,807	5.07	499,807

(1)These shares were ~~no unregistered sales~~purchased pursuant to our Common Stock repurchase plan structured to comply with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of ~~equity securities, other than~~1934, announced on June 7, 2021. On June 4, 2021, the Board of Directors authorized the repurchase of up to $10 million of Common Stock subject to Rule 10b-18 limitations as ~~previously disclosed in a Current Report on Form 8-K filed August 24, 2017.~~

~~Item 3.~~ ~~Defaults Upon Senior Securities.~~

~~Working Capital Restrictions and Limitations on the Payment of Dividends~~

~~The Company declared a dividend to the Series I Class B and Series II Class B Convertible Preferred Shareholders~~well as certain market value constraints specified in the ~~aggregate amount of $55,113. This dividend~~plan. The plan was ~~paid~~terminated on ~~October 20, 2017.~~April 14, 2022.

The certificates of designation for each of the outstanding series of Class B Convertible Preferred Stock each currently provide that, if a dividend upon any shares of Preferred Stock is in arrears, no dividends may be paid or declared upon any stock ranking junior to such stock and generally no junior preferred stock may be redeemed. However, under certain conditions, and for certain Series of Class B Convertible Preferred Stock, we may purchase junior stock when dividends are in arrears.

~~Series I Class B Convertible Preferred Stock~~

~~For~~ ~~the nine months ended September 30, 2017, no dividends were in arrears.~~

~~Series II Class B Convertible Preferred Stock~~

~~For~~ ~~the nine months ended September 30, 2017, no dividends were in arrears.~~

~~Series III Class B Convertible Preferred Stock~~

~~For~~ ~~the nine months ended September 30, 2017, the amount of dividends in arrears was $96,934 and the total arrearage was $4,113,000 as of September 30, 2017.~~

~~Series IV Class B Convertible Preferred Stock~~

~~For~~ ~~the nine months ended September 30, 2017, the amount of dividends in arrears was $256,875 and the total arrearage was $6,055,000 as of September 30, 2017.~~

~~Series V Class B Convertible Preferred Stock~~

~~For~~ ~~the nine months ended September 30, 2017, the amount of dividends in arrears was $9,600 and the total arrearage was $993,000 as of September 30, 2017.~~

Item 6.Exhibits.


Exhibit No.		Description of Document

31.1		Certification of Principal Executive Officer

31.2		Certification of Principal Financial Officer

32		Certification Pursuant to 18 U.S.C. Section 1350

101		The following materials from Retractable Technologies, Inc.’s Form 10-Q for the quarter ended ~~September 30, 2017,~~March 31, 2022, formatted in inline XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, (ii) Condensed Statements of Operations for the three months ended March 31, 2022 and ~~nine months ended September 30, 2017 and 2016,~~2021, (iii) Condensed Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021, (iv) Condensed Statement of Changes in Stockholders’ Equity for the three months ended March 31, 2022 and ~~(iv)~~2021; and (v) Notes to Condensed Financial Statements

104		Interactive Data File (formatted Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DATE: ~~November 14, 2017~~May 16, 2022	RETRACTABLE TECHNOLOGIES, INC.
		(Registrant)


	By:		/s/ John W. Fort III
		~~BY:~~	~~/s/ Douglas~~JOHN W. ~~Cowan~~
			~~DOUGLAS W. COWAN~~ FORT III VICE PRESIDENT, CHIEF FINANCIAL OFFICER, AND CHIEF ACCOUNTING OFFICER