10-Q

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 March 31, 2020

or

¨ Transition report PURSUANT TO Section 13 or 15(d) of the Exchange Act OF 1934

For the transition period from        to

Commission file number: 001-16465

Retractable Technologies, Inc.

(Exact name of registrant as specified in its charter)

Texas	75-2599762
(State or 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) 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 ¨

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 ¨

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

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  x	Smaller reporting company   x
	Emerging growth company  ¨

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 ¨ 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 ¨ No

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: 32,682,454 shares of Common Stock, no par value, issued and outstanding on May 1, 2020.

RETRACTABLE TECHNOLOGIES, INC.

FORM 10-Q

For the Quarterly Period Ended March 31, 2020

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1.       Financial Statements.		1
	CONDENSED BALANCE SHEETS	1
	CONDENSED STATEMENTS OF OPERATIONS	2
	CONDENSED STATEMENTS OF CASH FLOWS	3
	CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY	4
	NOTES TO CONDENSED FINANCIAL STATEMENTS	5
Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations.		15
Item 3.       Quantitative and Qualitative Disclosures About Market Risk.		18
Item 4.       Controls and Procedures.		18
PART II—OTHER INFORMATION
Item 1.       Legal Proceedings.		18
Item 1A.    Risk Factors.		19
Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds.		19
Item 3.       Defaults Upon Senior Securities.		19
Item 6.       Exhibits.		20
SIGNATURES		20

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

RETRACTABLE TECHNOLOGIES, INC.

CONDENSED BALANCE SHEETS

(unaudited)

	March 31, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	7,605,134		$	5,934,749
Accounts receivable, net		5,193,840			6,564,371
Investments in debt and equity securities, at fair value		7,649,081			7,771,660
Inventories, net		6,373,132			7,450,592
Income taxes receivable		100,785			50,392
Other current assets		669,767			635,201
Total current assets		27,591,739			28,406,965
Property, plant, and equipment, net		10,607,718			10,632,057
Income taxes receivable		—			50,393
Other assets		67,832			88,315
Total assets	$	38,267,289		$	39,177,730
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,434,967		$	5,007,604
Current portion of long-term debt		264,579			260,939
Accrued compensation		774,659			607,339
Dividends payable		54,800			54,800
Accrued royalties to shareholder		869,108			921,445
Other accrued liabilities		822,882			1,387,149
Income taxes payable		618			17,944
Total current liabilities		7,221,613			8,257,220
Long-term debt, net of current maturities		2,310,248			2,378,055
Total liabilities		9,531,861			10,635,275
Commitments and contingencies — see Note 7
Stockholders’ equity:
Preferred stock, $1 par value:
Series I, Class B		96,000			96,000
Series II, Class B		171,200			171,200
Series III, Class B		126,745			129,245
Series IV, Class B		337,500			342,500
Series V, Class B		34,000			34,000
Common stock, no par value		—			—
Additional paid-in capital		61,538,444			61,660,744
Accumulated deficit		(33,568,461	)		(33,891,234	)
Total stockholders’ equity		28,735,428			28,542,455
Total liabilities and stockholders’ equity	$	38,267,289		$	39,177,730

See accompanying notes to condensed unaudited financial statements

1

RETRACTABLE TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Sales, net	$	11,202,217		$	7,932,474
Cost of sales
Cost of manufactured product		6,802,675			4,776,744
Royalty expense to shareholder		869,108			665,411
Total cost of sales		7,671,783			5,442,155
Gross profit		3,530,434			2,490,319
Operating expenses
Sales and marketing		1,135,980			875,546
Research and development		138,537			127,456
General and administrative		1,775,204			1,662,095
Total operating expenses		3,049,721			2,665,097
Income (loss) from operations		480,713			(174,778	)
Interest and other income (expense)		(141,417	)		91,432
Interest expense		(33,849	)		(45,875	)
Income (loss) before income taxes		305,447			(129,221	)
Provision (benefit) for income taxes		(17,326	)		—
Net income (loss)		322,773			(129,221	)
Preferred Stock dividend requirements		(174,143	)		(176,249	)
Income (loss) applicable to common shareholders	$	148,630		$	(305,470	)
Basic earnings (loss) per share	$	0.00		$	(0.01	)
Diluted earnings (loss) per share	$	0.00		$	(0.01	)
Weighted average common shares outstanding:
Basic		32,681,204			32,666,454
Diluted		32,745,972			32,666,454

See accompanying notes to condensed unaudited financial statements

2

RETRACTABLE TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Cash flows from operating activities
Net income (loss)	$	322,773		$	(129,221	)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation and amortization		210,369			211,754
Net unrealized (gain) loss on investments		164,342			(43,102	)
Provision for doubtful accounts		125,000			—
(Increase) decrease in operating assets:
Accounts receivable		1,245,531			263,928
Inventories		1,077,460			130,992
Other current assets		(34,566	)		(73,290	)
Other assets		20,483			—
Decrease in operating liabilities:
Accounts payable		(572,637	)		(522,320	)
Accrued liabilities		(466,610	)		(554,745	)
Net cash provided (used) by operating activities		2,092,145			(716,004	)
Cash flows from investing activities
Purchase of property, plant, and equipment		(186,030	)		(29,485	)
Purchase of debt and equity securities		(41,763	)		(4,515,612	)
Net cash used by investing activities		(227,793	)		(4,545,097	)
Cash flows from financing activities
Repayments of long-term debt		(64,167	)		(102,454	)
Repurchase of preferred stock		(75,000	)		—
Payment of preferred stock dividends		(54,800	)		(55,113	)
Net cash used by financing activities		(193,967	)		(157,567	)
Net increase (decrease) in cash and cash equivalents		1,670,385			(5,418,668	)
Cash and cash equivalents at:
Beginning of period		5,934,749			9,647,292
End of period	$	7,605,134		$	4,228,624
Supplemental schedule of cash flow information:
Interest paid	$	33,851		$	45,875
Income taxes paid	$	—		$	—
Supplemental schedule of noncash investing and financing activities:
Preferred dividends declared, not paid	$	54,800		$	55,113

See accompanying notes to condensed unaudited financial statements

3

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, 2020:

	Common Stock		Series I Class B Preferred Stock		Series II Class B Preferred Stock		Series III Class B Preferred Stock			Series IV Class B Preferred Stock			Series V Class B Preferred Stock		Additional Paid-In Capital			Accumulated Deficit			Total
Balance at December 31, 2019	$	—	$	96,000	$	171,200	$	129,245		$	342,500		$	34,000	$	61,660,744		$	(33,891,234	)	$	28,542,455
Exchange of Preferred Stock for Common Stock		—		—		—		(2,500	)		(5,000	)		—		(67,500	)		—			(75,000	)
Dividends		—		—		—		—			—			—		(54,800	)		—			(54,800	)
Net Income		—		—		—		—			—			—		—			322,773			322,773
Balance at March 31, 2020	$	—	$	96,000	$	171,200	$	126,745		$	337,500		$	34,000	$	61,538,444		$	(33,568,461	)	$	28,735,428

The following shows the changes in stockholders’ equity for the three-month period ended March 31, 2019:

	Common Stock		Series I Class B Preferred Stock		Series II Class B Preferred Stock		Series III Class B Preferred Stock		Series IV Class B Preferred Stock		Series V Class B Preferred Stock		Additional Paid-In Capital			Accumulated Deficit			Total
Balance at December 31, 2018	$	—	$	98,500	$	171,200	$	129,245	$	342,500	$	40,000	$	61,871,756		$	(37,039,468	)	$	25,613,733
Dividends		—		—		—		—		—		—		(55,112	)		—			(55,112	)
Net Loss		—		—		—		—		—		—		—			(129,221	)		(129,221	)
Balance at March 31, 2019	$	—	$	98,500	$	171,200	$	129,245	$	342,500	$	40,000	$	61,816,644		$	(37,168,689	)	$	25,429,400

See accompanying notes to condensed unaudited financial statements

4

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. 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 30, 2020 for the year ended December 31, 2019.

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.

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. No 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 their being uncollectible. Trade receivables are considered delinquent when payment has not been made within contract terms. The Allowance for bad debt was $271 thousand and $147 thousand as of March 31, 2020 and December 31, 2019, respectively.

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

5

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 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 insignificant.

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 excess or obsolete inventories or they may be written off.

Investments in Debt and Equity Securities

The Company holds high-grade exchange-traded and closed-end funds (ETFs), mutual funds, 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 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 disposals are included in operations.

The Company's property, plant, and equipment primarily consist of buildings, 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:

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

6

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 estimates, equals their recorded values. Investments in equity securities consist primarily of 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 U.S. Treasury Notes 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, U.S. Treasury Notes, exchange-traded and closed-end funds, mutual funds, 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. As a consequence, Management considers any exposure from concentrations of credit risks to be limited.

The following table reflects our significant customers for the first quarters of 2020 and 2019:

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Number of significant customers	3		3
Aggregate dollar amount of net sales to significant customers	$5.4 million		$3.9 million
Percentage of net sales to significant customers	48.2	%	48.6	%

The Company manufactures some of its products in Little Elm, Texas as well as utilizing manufacturers in China. The Company obtained roughly 80.3% and 76.1% of its products in the first three months of 2020 and 2019, respectively, from its Chinese 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 and EasyPoint^® needles.

Revenue recognition

The Company recognizes revenue when it has satisfied all performance obligations to the customer, generally when title and risk of loss pass to the customer. 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

7

the Company has not received tracking reports. Rebates are recorded when issued and 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 in the Condensed Statements of Operations. Accounts payable included estimated contractual allowances for $3,113,608 and $3,586,726 as of March 31, 2020 and December 31, 2019, respectively. 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 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’s domestic return policy also generally provides that a customer may return product that is overstocked. Overstocking returns are limited to two 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’s international distribution agreements generally do not provide for any returns.

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 within 30 to 60 days of receipt at the time product is shipped.

The Company recognizes revenue from licensing agreements when collection of such amounts from third parties is reasonably assured. If the Company licenses its products for sale, the Company is obligated to pay Thomas J. Shaw, the owner of certain patented technology, a certain percentage 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, 2020:
Geographic Segment	Syringes		Blood Collection Products		EasyPoint® Needles		Other Products		Total Product Sales
U.S. sales	$	6,972,935	$	580,123	$	765,860	$	17,879	$	8,336,797
North and South America sales (excluding U.S.)		2,054,784		2,700		1,496		687,420		2,746,400
Other international sales		114,830		1,740		—		2,450		119,020
Total	$	9,142,549	$	584,563	$	767,356	$	707,749	$	11,202,217

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	For the three months ended March 31, 2019:
Geographic Segment	Syringes		Blood Collection Products		EasyPoint® Needles		Other Products		Total Product Sales
U.S. sales	$	5,625,387	$	451,077	$	48,472	$	14,975	$	6,139,911
North and South America sales (excluding U.S.)		1,330,330		3,863		252		925		1,335,370
Other international sales		241,243		210,700		—		5,250		457,193
Total	$	7,196,960	$	665,640	$	48,724	$	21,150	$	7,932,474

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 Company has established a valuation allowance for its net deferred tax asset as future taxable income cannot be reasonably assured. Penalties and interest related to income taxes are classified as General and administrative expense and Interest expense, respectively, in the Condensed Statements of Operations.

Earnings per share

The Company computes basic earnings or loss 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 common stock deliverable pursuant to stock options or common stock issuable upon the conversion of convertible preferred stock. The calculation of diluted EPS excluded 382,800 and 1,357,803 shares of common Stock underlying issued and outstanding stock option at March 31, 2020 and 2019, respectively, as their effect was antidilutive. All common stock issuable upon the conversion of convertible preferred stock is excluded from the calculation of of diluted EPS as their effect was antidilutive for all periods presented. The potential dilution, if any, is shown on the following schedule:

	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Net income (loss)	$	322,773		$	(129,221	)
Preferred stock dividend requirements		(174,143	)		(176,249	)
Income (loss) applicable to common shareholders	$	148,630		$	(305,470	)
Weighted average common shares outstanding		32,681,204			32,666,454
Weighted average common and common equivalent shares outstanding — assuming dilution		32,745,972			32,666,454
Basic earnings (loss) per share	$	0.00		$	(0.01	)
Diluted earnings (loss) per share	$	0.00		$	(0.01	)

Shipping and handling costs

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

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Research and 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 Other assets, Other accrued liabilities, and Other long-term liabilities on the Condensed Balance Sheets. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the 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 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.

Recently Adopted Pronouncements

The Company adopted ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” as well as subsequent clarifying amendments on January 1, 2020 effective for the quarter ended March 31, 2020.  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 previously will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses.  The adoption of ASU 2016-13, as well as the Targeted Transition Relief as provided by ASU 2019-05, “Financial Instruments – Credit Losses (Topic 326) – Targeted Transition Relief” did not have a material impact on the Company’s financial statements.

The Company adopted ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):  Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (a Consensus of the FASB Emerging Issues Task Force)” on January 1, 2020 effective for the quarter ended March 31, 2020.  This amendment requires that implemented costs incurred in a hosting arrangement that is a service contract should be accounted for in accordance with ASC 350-40 Internal-Use Software.  Accordingly, costs incurred during the preliminary project and post-implementation stages are expensed and costs associated with the application development phase are capitalized.  The amendment also requires that capitalized costs be amortized over the term of the hosting arrangement and that capitalized costs should be evaluated for impairment.  The adoption of this ASU did not have a material impact on the Company’s financial statements or disclosures.

In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The amendment modifies, among other things, disclosure requirements on fair value measurements and eliminates certain disclosures related to transfers and valuation levels of Level 3 fair value measurements. Additionally, the amendment requires disclosure of changes in unrealized gains and losses in other comprehensive income for Level 3 fair value measurements and certain qualitative factors related to significant unobservable inputs used in Level 3 valuations. The amendment is effective for annual periods beginning after December 15, 2019 and interim periods within the annual period. The adoption of ASU 2018-13 does not currently have a material effect on the Company’s financial statements, as the Company does not currently have any investments classified as Level 3 fair value measurements.

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Recently Issued Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes. The new standard intended to simplify the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the 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 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, with early adoption permitted. Adoption of the standard requires certain changes to primarily be made prospectively, with some changes to be made retrospectively. The Company is currently evaluating the impact adoption of ASU 2019-12 will have on its financial statements.

3. INVENTORIES

Inventories consist of the following:

	March 31, 2020			December 31, 2019
Raw materials	$	1,335,568		$	1,254,313
Finished goods		5,334,772			6,493,487
		6,670,340			7,747,800
Inventory reserve		(297,208	)		(297,208	)
	$	6,373,132		$	7,450,592

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, 2020
	Level 1		Level 2		Level 3		Total
Mutual funds and exchange traded funds	$	6,575,762	$	—	$	—	$	6,575,762
Certificates of deposit		—		1,073,319		—		1,073,319
	$	6,575,762	$	1,073,319	$	—	$	7,649,081

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Mutual funds and exchange traded funds	$	6,708,746	$	—	$	—	$	6,708,746
Certificates of deposit		—		1,062,914		—		1,062,914
	$	6,708,746	$	1,062,914	$	—	$	7,771,660

The Company holds high-grade exchange-traded and closed-end funds (ETFs), mutual funds, 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.

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The following table summarizes gross unrealized gains and losses from Investments in debt and equity securities:

	March 31, 2020
			Gross Unrealized					Aggregate
	Cost		Gains		Losses			Fair Value
Mutual funds and exchange traded funds	$	6,634,108	$	—	$	(58,346	)	$	6,575,762
Certificates of deposit		1,050,000		23,319		—			1,073,319
	$	7,684,108	$	23,319		(58,346	)	$	7,649,081

	December 31, 2019
			Gross Unrealized				Aggregate
	Cost		Gains		Losses		Fair Value
Mutual funds and exchange traded funds	$	6,592,345	$	116,401	$	—	$	6,708,746
Certificates of deposit		1,050,000		12,914		—		1,062,914
	$	7,642,345	$	129,315		—	$	7,771,660

Unrealized gains (losses) on investments in debt and equity securities was ($164,342) and $43,102 for the three months ended March 31, 2020 and 2019, respectively.

5. INCOME TAXES

The Company’s effective tax rate on the net income (loss) before income taxes was 0.2% and 0.0% for the three months ended March 31, 2020 and March 31, 2019, respectively.

6. OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:

	March 31, 2020		December 31, 2019
Prepayments from customers	$	273,584	$	998,601
Accrued property taxes		117,000		—
Accrued professional fees		303,000		263,757
Other accrued expenses		129,298		124,791
	$	822,882	$	1,387,149

7. COMMITMENTS AND CONTINGENCIES

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 Roy Hardin in connection with their legal representation of the Company in its previous litigation against Becton, Dickinson and Company (“BD”). The Company alleges that the defendants breached their fiduciary duties, committed malpractice, and were negligent in their representation of the Company. The Company seeks actual and exemplary damages, disgorgement, costs, and interest. The defendants have filed a motion to dismiss and the Court has scheduled a hearing on such motion on June 3, 2020.

8. 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:

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	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
U.S. sales	$	8,336,797	$	6,139,911
North and South America sales (excluding U.S.)		2,746,400		1,335,370
Other international sales		119,020		457,193
Total sales	$	11,202,217	$	7,932,474

Long-lived assets by geography are as follows:

	March 31, 2020		December 31, 2019
Long-lived assets
U.S.	$	10,524,380	$	10,542,688
International		83,338		89,369
Total	$	10,607,718	$	10,632,057

9. DIVIDENDS

The Board declared and the Company paid dividends to Series I and Series II Class B Preferred Shareholders in the following amounts: $12,313 and $42,800, respectively, on January 18, 2019 and April 22, 2019. The Board declared and the Company paid dividends to Series I and Series II Class B Preferred Shareholders in the following amounts: $12,000 and $42,800, respectively, on July 19, 2019, October 21, 2019, January 22, 2020 and April 20, 2020.

10. LEASES

The Company has operating leases for a corporate office and equipment.  The leases have a remaining lease term of less than one year.  The Company currently has no finance leases.  The right-of-use (“ROU”) asset is determined based on the lease liability adjusted for lease incentives received.  Lease expense is recognized on a straight-line basis over the lease term.  The leases may include various expenses incidental to the use of the property, such as common area maintenance, property taxes and insurance.  These costs are separate from the minimum rent payment and are not considered in the determination of the lease liability and ROU asset.  The Company has not noted any material instances in its leases where these costs were combined with the minimum rent payment and has therefore elected the policy to not separate lease from non-lease components if they are combined with the minimum rent payment.  The option periods are not included in the determination of the lease liability and right-of-use asset as the Company is not reasonably certain if it will extend at the time of lease commencement.

The operating lease cost component of the lease expense was $20,283 for the 3-month period ended March 31, 2020.  The cash paid for amounts included in the measurement of lease liabilities as a component of cash flows related to leases was $20,283 for the three months ended March 31, 2020. The operating lease cost component of the lease expense was $19,854 at March 31, 2019. The cash paid for amounts included in the measurement of lease liabilities as a component of cash flows related to leases was $19,854 for the three months ended March 31, 2019.

Assets and liabilities associated with these leases included in the Condensed Balance Sheets are as follows:

	March 31, 2020		December 31, 2019
OPERATING LEASES
Other assets	$	62,077	$	82,359
Other accrued liabilities	$	62,077	$	82,359
Other long-term liabilities		—		—
Total operating lease liabilities	$	62,077	$	82,359

The weighted average remaining lease term is nine months and the weighted average discount rate is 4.0%.

Future minimum payments under non-cancelable operating leases and financing leases consist of the following at March 31, 2020:

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Year ending December 31, 2020	$	63,116
Less imputed interest		(1,039	)
Total	$	62,077

11. EXCHANGE OF COMMON STOCK FOR PREFERRED STOCK

Effective January 13, 2020, the Company agreed with two preferred stockholders to purchase outstanding Class B Convertible Preferred Stock (the “Preferred Stock”) for cash and Common Stock. Such preferred stockholders tendered to the Company a total of 2,500 shares of Series III Preferred Stock and 5,000 shares of Series IV Preferred Stock. A total of $75,000 and 7,500 shares of Common Stock were issued as consideration therefor. In accordance with the terms of the agreements, the preferred stockholders agreed to waive all unpaid dividends in arrears associated with their Preferred Stock, which resulted in a waiver of a total of $149,795 in unpaid dividends in arrears.

12. COVID-19

To date, the Company’s manufacturing facility in Little Elm, Texas has continued to operate due to its status as an essential business. As a result of the COVID-19 pandemic, the Company has implemented certain safety precautions at its facility to reduce the risk of the potential spread of the novel coronavirus. The Company has implemented arrangements to reduce the number of office staff employees working on-site at the production facility, as well as instituting personal distancing policies and monitoring of essential production staff to minimize the risk of infection. Such precautions have not reduced the Company’s ability or capacity to operate at normal manufacturing levels. The Company continues to monitor the evolving situation and will work to further mitigate risks to our staff and to our customers. At this time, the Company believes that it has sufficient inventory, manufacturing capacity, and the ability to source products to meet current demand. The Company is unable to predict with certainty the course of the pandemic and resulting potential effect on our ability to maintain current operational functionality. The Company is continuing to evaluate the ever-changing circumstances surrounding this pandemic as relates to its ability to continue to source materials and products, maintain a workforce, and operate our business effectively and efficiently.

13. SUBSEQUENT EVENTS

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 (the “Lender”) pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act, administered by the U.S. Small Business Administration (“SBA”). The PPP Loan matures on April 17, 2022 and bears interest at a rate of 1.0% per annum. Commencing November 17, 2020, the Company is required to pay the Lender equal monthly payments of principal and interest as necessary to fully amortize the principal amount outstanding by the maturity date. The PPP Loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The PPP Loan is unsecured and is a non-recourse obligation. All or a portion of the PPP Loan may be forgiven upon application to the Lender during the 8-week period beginning on the date of first disbursement for certain expenditure amounts, including payroll costs, in accordance with the requirements under the PPP. In the event all or any portion of the PPP Loan is forgiven, the amount forgiven is applied to outstanding principal.

On May 1, 2020, the Company was 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. The total fixed price under the delivery order is $83,788,440. The existing contract was executed in September 2018, but the order placed on May 1, 2020 is unusually significant to the Company. The Company expects to increase both domestic and foreign production and add additional personnel in response to this material delivery order. The Company expects to perform under this delivery order during 2020 and a portion of 2021.

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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 factors include, among others, global pandemics, potential tariffs, our ability to maintain liquidity, our maintenance of patent protection, our ability to maintain favorable third party manufacturing and supplier arrangements and relationships, foreign trade risk, our ability to quickly increase capacity in response to an increase in demand, our ability to access the market, our ability to maintain or lower production costs, our ability to continue to finance research and development as well as operations and expansion of production, the impact of larger market players, specifically Becton, Dickinson and Company ("BD"), in providing devices to the safety market, and 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. VanishPoint^® syringes comprised 81.6% of our sales in the first quarter of 2020. We also manufacture and market the EasyPoint^® needle, 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 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 the EasyPoint^® needle. EasyPoint^® needles made up 6.9% of revenues for the quarter ended March 31, 2020. 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.

Our products have been and continue to be distributed nationally and internationally through numerous distributors. Although we have made limited progress in some areas, such as the alternate care market, our volumes are not as high as they should be given the nature and quality of our products and 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, as well as other markets, including attempting to gain access to the market through our sales efforts, our innovative technology, introduction of new products, and, when necessary, litigation.

Historically, unit sales have increased in the latter part of the year due, in part, to the demand for syringes during the flu season. As discussed below, we expect an increase in sales due to a recent order from the United States government. We can reasonably expect the order relates to the novel coronavirus pandemic. We cannot predict whether our sales trends will correspond with the usual flu season this year and we cannot estimate the consequences to our industry of stay-at-home orders and other precautions on sales to our customers other than the United States government.

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. The total fixed price under the delivery order is $83,788,440. The existing contract was executed in September 2018, but the order placed on May 1, 2020 is unusually significant. We expect to increase both domestic and foreign production and add

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additional personnel in response to this material delivery order. We expect to perform under this delivery order during 2020 and a portion of 2021.

As discussed in Note 13 to the financial statements, on April 17, 2020, we entered into a promissory note in the principal amount of $1,363,000 (the “PPP Loan”) in favor of Independent Bank (the “Lender”) pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act, administered by the U.S. Small Business Administration (“SBA”).

The Further Consolidated Appropriations Act signed into law on December 20, 2019, has permanently repealed the 2.3% medical device excise tax. Prior to the repeal, the tax was on a 4-year moratorium. As a result of the repeal and the prior moratorium, sales of taxable medical devices after December 31, 2015, are not subject to the tax.

Product purchases from our Chinese manufacturers have enabled us to increase manufacturing capacity with little capital outlay and have provided a competitive manufacturing cost. In the first quarter of 2020, our Chinese manufacturers produced approximately 80.3% of our products. Despite the global disruption of the coronavirus pandemic, we have not experienced a significant disruption to our supply chain. 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 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 of products subject to the license and he receives fifty percent (50%) of the royalties paid to the Company 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 possible tariffs, increases in costs by third party manufacturers, changing production volumes, costs of petroleum products, and transportation costs. Increases in such costs may not be recoverable through price increases of our products. Recently, decreases in costs of petroleum products have reduced certain costs.

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. Dollar amounts have been rounded for ease of reading. All period references are to the periods ended March 31, 2020 or 2019.

Comparison of Three Months Ended March 31, 2020 and March 31, 2019

Domestic sales accounted for 74.4% and 77.4% of our revenues for the three months ended March 31, 2020 and 2019, respectively. Domestic revenues increased 35.8% principally due to increased volumes. Domestic unit sales increased 31.4%. Domestic unit sales were 65.2% of total unit sales for the three months ended March 31, 2020. International unit sales and revenues increased 56.8% and 59.9%, respectively, due to higher unit sales. Our international orders may be subject to significant fluctuation over time. Overall unit sales increased 39.2%. While we cannot predict the effect of the novel coronavirus on future periods, we do not believe that the virus had a material effect on sales in the first quarter of 2020.

Gross profit increased 41.8% primarily due to higher unit sales volumes and average unit pricing.

The cost of manufactured products sold increased by 42.4% due to an increase in overall units sold and the composition of product mix. Profit margins can fluctuate depending upon, among other things, the cost of

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manufactured product and the capitalized cost of product recorded in inventory, as well as product sales mix. Royalty expense increased 30.6% due to increased gross sales.

Operating expenses increased 14.4% or $385 thousand. The increase was primarily due to payroll and employee-related costs, including health insurance benefits.

Our operating income was $481 thousand compared to an operating loss of $175 thousand for the same period last year. The increase was due primarily to an increase in sales.

Our effective tax rate on the net loss before income taxes was 0.2% and 0.0% for the three months ended March 31, 2020 and March 31, 2019, respectively.

Discussion of Balance Sheet and Statement of Cash Flow Items

Cash comprises 19.9% of total assets. Working capital was $20.4 million at March 31, 2020, an increase of $177 thousand from December 31, 2019.

Cash provided by operations was $2.1 million for the three months ended March 31, 2020 due primarily to a decrease of both accounts receivable and inventories.

LIQUIDITY

At the present time, Management does not intend to publicly raise equity capital. Our ability to obtain additional funds through traditional loans is uncertain.

Historical 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 and Market Access

To achieve routinely 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 the second quarter of 2020, we plan to increase our workforce in response to a material order from the United States government. Additional equipment may also be necessary for foreign and/or domestic production.

Fluctuations in the cost and availability of raw materials and inventory and our ability to maintain favorable manufacturing arrangements and relationships could result in the need to manufacture all (as opposed to 19.7%) of our products in the U.S. or find other manufacturers. This could temporarily increase unit costs as we ramp up domestic production.

The mix of domestic and international sales affects the average sales price of our products. Generally, the higher the ratio of domestic sales to international sales, the higher the average sales price will be. Some international sales of our products are shipped directly from China to the customer. The number of units produced by us versus manufactured in China can have a significant effect on the carrying costs of Inventory as well as Cost of sales. 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.

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Seasonality

Historically, unit sales have increased during the flu season. However, we expect an increase in sales due to a recent order from the United States government. We can reasonably expect the order relates to the novel coronavirus pandemic. We cannot predict whether our sales trends will correspond with the usual flu season this year and we cannot estimate the consequences to our industry of stay-at-home orders and other precautions on sales to our customers other than the United States government.

Cash Requirements

We have sufficient cash reserves, recently received a PPP loan, and have begun to realize profits 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.

External Sources of Liquidity

Our ability to obtain additional funds through traditional loans is uncertain, but we recently received a PPP Loan, as described above, in the principal amount of $1,363,000. It is unlikely we would choose to raise funds by the public sale of equity.

CAPITAL RESOURCES

There were no material commitments for capital expenditures in the first quarter of 2020.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

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, John W. 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 March 31, 2020, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes during the first quarter of 2020 or subsequent to March 31, 2020 in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Please refer to Note 7 to the financial statements for a complete description of all legal proceedings.

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Item 1A. Risk Factors.

In addition to the Risk Factors as set forth in our most recent annual report which is available on EDGAR, we note that the novel coronavirus has disrupted daily life in the United States and remains a significant risk to every aspect of our operations including the health and welfare of our workforce, our ability to secure transportation, and the maintenance of our supply chain. Additionally, our material $83.8 million delivery order from the United States government presents unusual challenges for our business. Our performance may not be realized if we cannot timely and adequately increase domestic and foreign production. Moreover, in light of such volume requirements, we may not be able to maintain our usual service levels to our existing customers.

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

Effective January 13, 2020, we agreed with two preferred stockholders to purchase outstanding Class B Convertible Preferred Stock (the “Preferred Stock”) for cash and Common Stock. Such preferred stockholders tendered to us a total of 2,500 shares of Series III Preferred Stock and 5,000 shares of Series IV Preferred Stock. A total of $75,000 and 7,500 shares of Common Stock were issued as consideration therefor. In accordance with the terms of the agreements, the preferred stockholders agreed to waive all unpaid dividends in arrears associated with their Preferred Stock, which resulted in a waiver of a total of $149,795 in unpaid dividends in arrears. We are relying on Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”) to exempt these transactions from the registration requirements of the Securities Act.

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 in the aggregate amount of $54,800. This dividend was paid on April 20, 2020.

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 three months ended March 31, 2020, no dividends were in arrears.

Series II Class B Convertible Preferred Stock

For the three months ended March 31, 2020, no dividends were in arrears.

Series III Class B Convertible Preferred Stock

For the three months ended March 31, 2020, the amount of dividends in arrears was $30,587 and the total arrearage was $4,383,270 as of March 31, 2020.

Series IV Class B Convertible Preferred Stock

For the three months ended March 31, 2020, the amount of dividends in arrears was $86,036 and the total arrearage was $6,813,771 as of March 31, 2020.

Series V Class B Convertible Preferred Stock

For the three months ended March 31, 2020, the amount of dividends in arrears was $2,720 and the total arrearage was $1,022,916 as of March 31, 2020.

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Item 6. Exhibits.

Exhibit No.	Description of Document
10.1	U.S. Small Business Administration Note*
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 March 31, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets as of March 31, 2020 and December 31, 2019, (ii) Condensed Statements of Operations for the three months ended March 31, 2020 and 2019, (iii) Condensed Statements of Cash Flows for the three months ended March 31, 2020 and 2019, (iv) Condensed Statement of Changes in Stockholders’ Equity for the three months ended March 31, 2020 and 2019; and (v) Notes to Condensed Financial Statements

*       Incorporated herein by reference to RTI’s Form 8-K filed on April 22, 2020

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:         May 15, 2020	RETRACTABLE TECHNOLOGIES, INC.
	(Registrant)
	By:	/s/ JOHN W. FORT III
		JOHN W. FORT III
		VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
		AND CHIEF ACCOUNTING OFFICER

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EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Thomas J. Shaw, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Retractable Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves Management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2020

/s/ THOMAS J. SHAW

THOMAS J. SHAW

PRESIDENT, CHAIRMAN, AND

CHIEF EXECUTIVE OFFICER

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, John W. Fort III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Retractable Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves Management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2020

/s/ JOHN W. FORT III

JOHN W. FORT III

VICE PRESIDENT,

CHIEF FINANCIAL OFFICER,

AND CHIEF ACCOUNTING OFFICER

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Solely in connection with the filing of the Quarterly Report of Retractable Technologies, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2020, as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Thomas J. Shaw, Chief Executive Officer, and John W. Fort III, Chief Financial Officer, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the issuer.

Date: May 15, 2020

/s/ Thomas J. Shaw

Thomas J. Shaw

President, Chairman, and

Chief Executive Officer

/s/ JOHN W. FORT III

JOHN W. FORT III

vice president, Chief Financial

Officer, AND CHIEF ACCOUNTING

OFFICER

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2020

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

7.    COMMITMENTS AND CONTINGENCIES

On November 7, 2019, the Company filed a lawsuit in the 44th District Court of Dallas County, Texas (No. DC-19-17946) against Locke Lord, LLP and Roy Hardin in connection with their legal representation of the Company in its previous litigation against Becton, Dickinson and Company ("BD"). The Company alleges that the defendants breached their fiduciary duties, committed malpractice, and were negligent in their representation of the Company. The Company seeks actual and exemplary damages, disgorgement, costs, and interest. The defendants have filed a motion to dismiss and the Court has scheduled a hearing on such motion on June 3, 2020.

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EXCHANGE OF COMMON STOCK FOR PREFERRED STOCK

3 Months Ended

Mar. 31, 2020

EXCHANGE OF COMMON STOCK FOR PREFERRED STOCK

EXCHANGE OF COMMON STOCK FOR PREFERRED STOCK

11.  EXCHANGE OF COMMON STOCK FOR PREFERRED STOCK

Effective January 13, 2020, the Company agreed with two preferred stockholders to purchase outstanding Class B Convertible Preferred Stock (the "Preferred Stock") for cash and Common Stock. Such preferred stockholders tendered to the Company a total of 2,500 shares of Series III Preferred Stock and 5,000 shares of Series IV Preferred Stock. A total of $75,000 and 7,500 shares of Common Stock were issued as consideration therefor. In accordance with the terms of the agreements, the preferred stockholders agreed to waive all unpaid dividends in arrears associated with their Preferred Stock, which resulted in a waiver of a total of $149,795 in unpaid dividends in arrears.

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LEASES (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
LEASES
Operating lease cost	$ 20,283	$ 19,854
Cash outflows related to leases	20,283	$ 19,854
Assets and liabilities associated with these leases in Balance Sheets
Other assets	$ 62,077		$ 82,359
Other assets [Extensible List]	us-gaap:OtherAssets		us-gaap:OtherAssets
Other accrued liabilities	$ 62,077		$ 82,359
Other accrued liabilities [Extensible List]	us-gaap:OtherAccruedLiabilitiesCurrent		us-gaap:OtherAccruedLiabilitiesCurrent
Other long-term liabilities [Extensible List]	us-gaap:OtherLiabilitiesNoncurrent		us-gaap:OtherLiabilitiesNoncurrent
Total operating lease liabilities	$ 62,077		$ 82,359
Weighted average remaining lease term	9 months
Weighted average discount rate	4.00%
Maximum
LEASES
Remaining lease term	1 year

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INCOME TAXES (Details)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Reconciliation of income taxes based on the federal statutory rate and the effective income tax rate
Effective tax rate (as a percent)	0.20%	0.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue recognition (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2020 USD ($) item	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)
Revenue recognition
Estimated contractual allowance	$ 3,113,608		$ 3,586,726
Period for return of incorrect shipments	10 days
Number of times overstocking returns are limited | item	2
Period for return of product due to overstock	12 months
Maximum percentage of distributor's total purchase for the prior 12-month period	1.00%
Sales, net	$ 11,202,217	$ 7,932,474
Minimum
Revenue recognition
Period of revenue recognition	30 days
Maximum
Revenue recognition
Period of revenue recognition	60 days
Syringes
Revenue recognition
Sales, net	$ 9,142,549	7,196,960
Blood Collection Products
Revenue recognition
Sales, net	584,563	665,640
Easy Point Needles
Revenue recognition
Sales, net	767,356	48,724
Other Products
Revenue recognition
Sales, net	707,749	21,150
U.S.
Revenue recognition
Sales, net	8,336,797	6,139,911
U.S. | Syringes
Revenue recognition
Sales, net	6,972,935	5,625,387
U.S. | Blood Collection Products
Revenue recognition
Sales, net	580,123	451,077
U.S. | Easy Point Needles
Revenue recognition
Sales, net	765,860	48,472
U.S. | Other Products
Revenue recognition
Sales, net	17,879	14,975
North and South America sales (excluding U.S.)
Revenue recognition
Sales, net	2,746,400	1,335,370
North and South America sales (excluding U.S.) | Syringes
Revenue recognition
Sales, net	2,054,784	1,330,330
North and South America sales (excluding U.S.) | Blood Collection Products
Revenue recognition
Sales, net	2,700	3,863
North and South America sales (excluding U.S.) | Easy Point Needles
Revenue recognition
Sales, net	1,496	252
North and South America sales (excluding U.S.) | Other Products
Revenue recognition
Sales, net	687,420	925
Other international sales
Revenue recognition
Sales, net	119,020	457,193
Other international sales | Syringes
Revenue recognition
Sales, net	114,830	241,243
Other international sales | Blood Collection Products
Revenue recognition
Sales, net	1,740	210,700
Other international sales | Other Products
Revenue recognition
Sales, net	$ 2,450	$ 5,250

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CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
CONDENSED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Common stock, par value (in dollars per share)	$ 0	$ 0

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of estimated useful lives of property, plant and equipment

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

Schedule of significant customers

	Three Months Ended			Three Months Ended
	March 31, 2020			March 31, 2019
Number of significant customers		3			3
Aggregate dollar amount of net sales to significant customers	$	5.4 million		$	3.9 million
Percentage of net sales to significant customers		48.2	%		48.6	%

Schedule of disaggregated information of revenue recognized from contracts with customers and licensing fees

	For the three months ended March 31, 2020:
			Blood						Total
			Collection		EasyPoint®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales	$	6,972,935	$	580,123	$	765,860	$	17,879	$	8,336,797
North and South America sales (excluding U.S.)		2,054,784		2,700		1,496		687,420		2,746,400
Other international sales		114,830		1,740		—		2,450		119,020
Total	$	9,142,549	$	584,563	$	767,356	$	707,749	$	11,202,217

	For the three months ended March 31, 2019:
			Blood						Total
			Collection		EasyPoint®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales	$	5,625,387	$	451,077	$	48,472	$	14,975	$	6,139,911
North and South America sales (excluding U.S.)		1,330,330		3,863		252		925		1,335,370
Other international sales		241,243		210,700		—		5,250		457,193
Total	$	7,196,960	$	665,640	$	48,724	$	21,150	$	7,932,474

Schedule of earnings per share

	Three Months Ended		Three Months Ended
	March 31, 2020		March 31, 2019
Net income (loss)	$	322,773	$	(129,221)
Preferred stock dividend requirements		(174,143)		(176,249)
Income (loss) applicable to common shareholders	$	148,630	$	(305,470)
Weighted average common shares outstanding		32,681,204		32,666,454
Weighted average common and common equivalent shares outstanding — assuming dilution		32,745,972		32,666,454
Basic earnings (loss) per share	$	0.00	$	(0.01)
Diluted earnings (loss) per share	$	0.00	$	(0.01)

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BUSINESS SEGMENT (Tables)

3 Months Ended

Mar. 31, 2020

BUSINESS SEGMENT

Schedule of company's sales and long-lived assets by geography

Revenues by geography are as follows:

	Three Months Ended		Three Months Ended
	March 31, 2020		March 31, 2019
U.S. sales	$	8,336,797	$	6,139,911
North and South America sales (excluding U.S.)		2,746,400		1,335,370
Other international sales		119,020		457,193
Total sales	$	11,202,217	$	7,932,474

Long-lived assets by geography are as follows:

	March 31, 2020		December 31, 2019
Long-lived assets
U.S.	$	10,524,380	$	10,542,688
International		83,338		89,369
Total	$	10,607,718	$	10,632,057

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BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2020

BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION

BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION

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.  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 30, 2020 for the year ended December 31, 2019.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration risks (Details)	3 Months Ended
	Mar. 31, 2020 USD ($) customer	Mar. 31, 2019 USD ($) customer
Concentration risks
Aggregate dollar amount of net sales to significant customers	$ 11,202,217	$ 7,932,474
Customer Concentration Risk
Concentration risks
Number of significant customers | customer	3	3
Aggregate dollar amount of net sales to significant customers	$ 5,400,000	$ 3,900,000
Percentage of net sales to significant customers	48.20%	48.60%
Supplier Concentration Risk
Concentration risks
Percentage of net sales to significant customers	80.30%	76.10%

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EXCHANGE OF COMMON STOCK FOR PREFERRED STOCK (Details)	Jan. 13, 2020 USD ($) stockholder shares
Class of Stock
Number of shareholders agreed to purchase outstanding | stockholder	2
Cash consideration | $	$ 75,000
Common Stock were issued as consideration	7,500
Unpaid dividends in arrears waived | $	$ 149,795
Series III, Class B
Class of Stock
Total shares of preferred stockholders	2,500
Series IV, Class B
Class of Stock
Total shares of preferred stockholders	5,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, plant and equipment (Details)	3 Months Ended
	Mar. 31, 2020
Production equipment | Minimum
Property, plant, and equipment
Useful lives (in years)	3 years
Production equipment | Maximum
Property, plant, and equipment
Useful lives (in years)	13 years
Office furniture and equipment | Minimum
Property, plant, and equipment
Useful lives (in years)	3 years
Office furniture and equipment | Maximum
Property, plant, and equipment
Useful lives (in years)	10 years
Buildings
Property, plant, and equipment
Useful lives (in years)	39 years
Building Improvements
Property, plant, and equipment
Useful lives (in years)	15 years

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CONDENSED BALANCE SHEETS - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 7,605,134	$ 5,934,749
Accounts receivable, net	5,193,840	6,564,371
Investments in debt and equity securities, at fair value	7,649,081	7,771,660
Inventories, net	6,373,132	7,450,592
Income taxes receivable	100,785	50,392
Other current assets	669,767	635,201
Total current assets	27,591,739	28,406,965
Property, plant, and equipment, net	10,607,718	10,632,057
Income taxes receivable		50,393
Other assets	67,832	88,315
Total assets	38,267,289	39,177,730
Current liabilities:
Accounts payable	4,434,967	5,007,604
Current portion of long-term debt	264,579	260,939
Accrued compensation	774,659	607,339
Dividends payable	54,800	54,800
Accrued royalties to shareholder	869,108	921,445
Other accrued liabilities	822,882	1,387,149
Income taxes payable	618	17,944
Total current liabilities	7,221,613	8,257,220
Long-term debt, net of current maturities	2,310,248	2,378,055
Total liabilities	9,531,861	10,635,275
Commitments and contingencies - See Note 8
Preferred stock, $1 par value:
Common stock, no par value
Additional paid-in capital	61,538,444	61,660,744
Accumulated deficit	(33,568,461)	(33,891,234)
Total stockholders' equity	28,735,428	28,542,455
Total liabilities and stockholders' equity	38,267,289	39,177,730
Series I, Class B
Preferred stock, $1 par value:
Preferred stock	96,000	96,000
Series II, Class B
Preferred stock, $1 par value:
Preferred stock	171,200	171,200
Series III, Class B
Preferred stock, $1 par value:
Preferred stock	126,745	129,245
Series IV, Class B
Preferred stock, $1 par value:
Preferred stock	337,500	342,500
Series V, Class B
Preferred stock, $1 par value:
Preferred stock	$ 34,000	$ 34,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting estimates

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.

Cash and cash equivalents

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

Accounts receivable

The Company records trade receivables when revenue is recognized.  No 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 their being uncollectible.  Trade receivables are considered delinquent when payment has not been made within contract terms.  The Allowance for bad debt was $271 thousand and $147 thousand as of March 31, 2020 and December 31, 2019, respectively.

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 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 insignificant.

Inventories

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 excess or obsolete inventories or they may be written off.

Investments in Debt and Equity Securities

Investments in Debt and Equity Securities

The Company holds high-grade exchange-traded and closed-end funds (ETFs), mutual funds, 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 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

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 disposals are included in operations.

The Company's property, plant, and equipment primarily consist of buildings, 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:

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

Long-lived assets

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

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

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 estimates, equals their recorded values.  Investments in equity securities consist primarily of 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 U.S. Treasury Notes 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

Concentration risks

The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash, cash equivalents, certificates of deposit, U.S. Treasury Notes, exchange-traded and closed-end funds, mutual funds, 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.  As a consequence, Management considers any exposure from concentrations of credit risks to be limited.

The following table reflects our significant customers for the first quarters of 2020 and 2019:

	Three Months Ended			Three Months Ended
	March 31, 2020			March 31, 2019
Number of significant customers		3			3
Aggregate dollar amount of net sales to significant customers	$	5.4 million		$	3.9 million
Percentage of net sales to significant customers		48.2	%		48.6	%

The Company manufactures some of its products in Little Elm, Texas as well as utilizing manufacturers in China.  The Company obtained roughly 80.3% and 76.1% of its products in the first three months of 2020 and 2019, respectively, from its Chinese 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 and EasyPoint® needles.

Revenue recognition

Revenue recognition

The Company recognizes revenue when it has satisfied all performance obligations to the customer, generally when title and risk of loss pass to the customer.  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 are recorded when issued and 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 in the Condensed Statements of Operations.  Accounts payable included estimated contractual allowances for $3,113,608 and $3,586,726 as of March 31, 2020 and December 31, 2019, respectively.  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 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’s domestic return policy also generally provides that a customer may return product that is overstocked.  Overstocking returns are limited to two 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’s international distribution agreements generally do not provide for any returns.

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 within 30 to 60 days of receipt at the time product is shipped.

The Company recognizes revenue from licensing agreements when collection of such amounts from third parties is reasonably assured. If the Company licenses its products for sale, the Company is obligated to pay Thomas J. Shaw, the owner of certain patented technology, a certain percentage 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, 2020:
			Blood						Total
			Collection		EasyPoint®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales	$	6,972,935	$	580,123	$	765,860	$	17,879	$	8,336,797
North and South America sales (excluding U.S.)		2,054,784		2,700		1,496		687,420		2,746,400
Other international sales		114,830		1,740		—		2,450		119,020
Total	$	9,142,549	$	584,563	$	767,356	$	707,749	$	11,202,217

	For the three months ended March 31, 2019:
			Blood						Total
			Collection		EasyPoint®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales	$	5,625,387	$	451,077	$	48,472	$	14,975	$	6,139,911
North and South America sales (excluding U.S.)		1,330,330		3,863		252		925		1,335,370
Other international sales		241,243		210,700		—		5,250		457,193
Total	$	7,196,960	$	665,640	$	48,724	$	21,150	$	7,932,474

Income taxes

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 Company has established a valuation allowance for its net deferred tax asset as future taxable income cannot be reasonably assured.  Penalties and interest related to income taxes are classified as General and administrative expense and Interest expense, respectively, in the Condensed Statements of Operations.

Earnings per share

Earnings per share

The Company computes basic earnings  or loss 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 common stock deliverable pursuant to stock options or common stock issuable upon the conversion of convertible preferred stock. The calculation of diluted EPS excluded 382,800 and 1,357,803 shares of common Stock underlying issued and outstanding stock option at March 31, 2020 and 2019, respectively, as their effect was antidilutive. All common stock issuable upon the conversion of convertible preferred stock is excluded from the calculation of of diluted EPS as their effect was antidilutive for all periods presented.  The potential dilution, if any, is shown on the following schedule:

	Three Months Ended		Three Months Ended
	March 31, 2020		March 31, 2019
Net income (loss)	$	322,773	$	(129,221)
Preferred stock dividend requirements		(174,143)		(176,249)
Income (loss) applicable to common shareholders	$	148,630	$	(305,470)
Weighted average common shares outstanding		32,681,204		32,666,454
Weighted average common and common equivalent shares outstanding — assuming dilution		32,745,972		32,666,454
Basic earnings (loss) per share	$	0.00	$	(0.01)
Diluted earnings (loss) per share	$	0.00	$	(0.01)

Shipping and handling costs

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

Research and development costs are expensed as incurred.

Leases

Leases

The Company determines if an arrangement is a lease at inception.  Operating and finance leases are included in Other assets, Other accrued liabilities, and Other long-term liabilities on the Condensed Balance Sheets. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease.  Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.  As the 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 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.

Recently Adopted Pronouncements and Recently Issued Pronouncements

Recently Adopted Pronouncements

The Company adopted ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” as well as subsequent clarifying amendments  on January 1, 2020 effective for the quarter ended March 31, 2020.  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 previously will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses.  The adoption of ASU 2016-13, as well as the Targeted Transition Relief as provided by ASU 2019-05, “Financial Instruments – Credit Losses (Topic 326) – Targeted Transition Relief” did not have a material impact on the Company’s financial statements.

The Company adopted ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):  Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (a Consensus of the FASB Emerging Issues Task Force)" on January 1, 2020 effective for the quarter ended March 31, 2020.  This amendment requires that implemented costs incurred in a hosting arrangement that is a service contract should be accounted for in accordance with ASC 350-40  Internal-Use Software.  Accordingly, costs incurred during the preliminary project and post-implementation stages are expensed and costs associated with the application development phase are capitalized.  The amendment also requires that capitalized costs be amortized over the term of the hosting arrangement and that capitalized costs should be evaluated for impairment. The adoption of this ASU did not have a material impact on the Company's financial statements or disclosures.

In August 2018, the FASB issued ASU 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." The amendment modifies, among other things, disclosure requirements on fair value measurements and eliminates certain disclosures related to transfers and valuation levels of Level 3 fair value measurements. Additionally, the amendment requires disclosure of changes in unrealized gains and losses in other comprehensive income for Level 3 fair value measurements and certain qualitative factors related to significant unobservable inputs used in Level 3 valuations.

The amendment is effective for annual periods beginning after December 15, 2019 and interim periods within the annual period.  The adoption of ASU 2018-13 does not currently have a material effect on the Company's financial statements , as the Company does not currently have any investments classified as Level 3 fair value measurements.

Recently Issued Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes. The new standard intended to simplify the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the 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 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, with early adoption permitted. Adoption of the standard requires certain changes to primarily be made prospectively, with some changes to be made retrospectively. The Company is currently evaluating the impact adoption of ASU 2019-12 will have on its financial statements.

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OTHER ACCRUED LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2020

OTHER ACCRUED LIABILITIES

Schedule of other accrued liabilities

	March 31, 2020		December 31, 2019
Prepayments from customers	$	273,584	$	998,601
Accrued property taxes		117,000		—
Accrued professional fees		303,000		263,757
Other accrued expenses		129,298		124,791
	$	822,882	$	1,387,149

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CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)	Preferred Stock Series I, Class B	Preferred Stock Series II, Class B	Preferred Stock Series III, Class B	Preferred Stock Series IV, Class B	Preferred Stock Series V, Class B	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2018	$ 98,500	$ 171,200	$ 129,245	$ 342,500	$ 40,000	$ 61,871,756	$ (37,039,468)	$ 25,613,733
Increase (Decrease) in Stockholders' Equity
Dividends						(55,112)		(55,112)
Net income (loss)							(129,221)	(129,221)
Balance at Mar. 31, 2019	98,500	171,200	129,245	342,500	40,000	61,816,644	(37,168,689)	25,429,400
Balance at Dec. 31, 2019	96,000	171,200	129,245	342,500	34,000	61,660,744	(33,891,234)	28,542,455
Increase (Decrease) in Stockholders' Equity
Exchange of Preferred Stock for Common Stock			(2,500)	(5,000)		(67,500)		(75,000)
Dividends						(54,800)		(54,800)
Net income (loss)							322,773	322,773
Balance at Mar. 31, 2020	$ 96,000	$ 171,200	$ 126,745	$ 337,500	$ 34,000	$ 61,538,444	$ (33,568,461)	$ 28,735,428

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SUBSEQUENT EVENTS (Details) - Subsequent Events - USD ($)	May 01, 2020	Apr. 17, 2020
SUBSEQUENT EVENTS
Total fixed price under the delivery order	$ 83,788,440
PPP Loan
SUBSEQUENT EVENTS
Face amount of debt		$ 1,363,000
Prepayment penalties		$ 0

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OTHER ACCRUED LIABILITIES

3 Months Ended

Mar. 31, 2020

OTHER ACCRUED LIABILITIES

OTHER ACCRUED LIABILITIES

6.    OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:

	March 31, 2020		December 31, 2019
Prepayments from customers	$	273,584	$	998,601
Accrued property taxes		117,000		—
Accrued professional fees		303,000		263,757
Other accrued expenses		129,298		124,791
	$	822,882	$	1,387,149

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LEASES

3 Months Ended

Mar. 31, 2020

LEASES

LEASES

10.  LEASES

The Company has operating leases for a corporate office and equipment. The leases have a remaining lease term of less than one year. The Company currently has no finance leases. The right-of-use (" ROU") asset is determined based on the lease liability adjusted for lease incentives received. Lease expense is recognized on a straight-line basis over the lease term. The leases may include various expenses incidental to the use of the property, such as common area maintenance, property taxes and insurance. These costs are separate from the minimum rent payment and are not considered in the determination of the lease liability and ROU asset. The Company has not noted any material instances in its leases where these costs were combined with the minimum rent payment and has therefore elected the policy to not separate lease from non-lease components if they are combined with the minimum rent payment. The option periods are not included in the determination of the lease liability and right-of-use asset as the Company is not reasonably certain if it will extend at the time of lease commencement.

The operating lease cost component of the lease expense was $20,283 for the 3-month period ended March 31, 2020. The cash paid for amounts included in the measurement of lease liabilities as a component of cash flows related to leases was $20,283 for the three months ended March 31, 2020. The operating lease cost component of the lease expense was $19,854 at March 31, 2019. The cash paid for amounts included in the measurement of lease liabilities as a component of cash flows related to leases was $19,854 for the three months ended March 31, 2019.

Assets and liabilities associated with these leases included in the Condensed Balance Sheets are as follows:

	March 31, 2020		December 31, 2019
OPERATING LEASES
Other assets	$	62,077	$	82,359
Other accrued liabilities	$	62,077	$	82,359
Other long-term liabilities		—		—
Total operating lease liabilities	$	62,077	$	82,359

The weighted average remaining lease term is  nine months and the weighted average discount rate is 4.0%.

Future minimum payments under non-cancelable operating leases and financing leases consist of the following at March 31, 2020:

Year ending December 31, 2020	$	63,116
Less imputed interest		(1,039)
Total	$	62,077

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OTHER ACCRUED LIABILITIES (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
OTHER ACCRUED LIABILITIES
Prepayments from customers	$ 273,584	$ 998,601
Accrued property taxes	117,000
Accrued professional fees	303,000	263,757
Other accrued expenses	129,298	124,791
Total	$ 822,882	$ 1,387,149

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings per share (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Earnings per share
Stock options excluded from calculation of diluted EPS	382,800	1,357,803
Net income (loss)	$ 322,773	$ (129,221)
Preferred stock dividend requirements	(174,143)	(176,249)
Income (loss) applicable to common shareholders	$ 148,630	$ (305,470)
Weighted average common shares outstanding	32,681,204	32,666,454
Weighted average common and common equivalent shares outstanding - assuming dilution	32,745,972	32,666,454
Basic earnings (loss) per share	$ 0.00	$ (0.01)
Diluted earnings (loss) per share	$ 0.00	$ (0.01)

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LEASES - Future minimum payments (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Future minimum payments under non-cancelable operating leases and financing leases
Remainder of 2020	$ 63,116
Less imputed interest	(1,039)
Total	$ 62,077	$ 82,359

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

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.  No 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 their being uncollectible.  Trade receivables are considered delinquent when payment has not been made within contract terms.  The Allowance for bad debt was $271 thousand and $147 thousand as of March 31, 2020 and December 31, 2019, respectively.

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 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 insignificant.

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 excess or obsolete inventories or they may be written off.

Investments in Debt and Equity Securities

The Company holds high-grade exchange-traded and closed-end funds (ETFs), mutual funds, 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 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 disposals are included in operations.

The Company's property, plant, and equipment primarily consist of buildings, 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:

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 estimates, equals their recorded values.  Investments in equity securities consist primarily of 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 U.S. Treasury Notes 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, U.S. Treasury Notes, exchange-traded and closed-end funds, mutual funds, 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.  As a consequence, Management considers any exposure from concentrations of credit risks to be limited.

The following table reflects our significant customers for the first quarters of 2020 and 2019:

	Three Months Ended			Three Months Ended
	March 31, 2020			March 31, 2019
Number of significant customers		3			3
Aggregate dollar amount of net sales to significant customers	$	5.4 million		$	3.9 million
Percentage of net sales to significant customers		48.2	%		48.6	%

The Company manufactures some of its products in Little Elm, Texas as well as utilizing manufacturers in China.  The Company obtained roughly 80.3% and 76.1% of its products in the first three months of 2020 and 2019, respectively, from its Chinese 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 and EasyPoint® needles.

Revenue recognition

The Company recognizes revenue when it has satisfied all performance obligations to the customer, generally when title and risk of loss pass to the customer.  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 are recorded when issued and 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 in the Condensed Statements of Operations.  Accounts payable included estimated contractual allowances for $3,113,608 and $3,586,726 as of March 31, 2020 and December 31, 2019, respectively.  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 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’s domestic return policy also generally provides that a customer may return product that is overstocked.  Overstocking returns are limited to two 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’s international distribution agreements generally do not provide for any returns.

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 within 30 to 60 days of receipt at the time product is shipped.

The Company recognizes revenue from licensing agreements when collection of such amounts from third parties is reasonably assured. If the Company licenses its products for sale, the Company is obligated to pay Thomas J. Shaw, the owner of certain patented technology, a certain percentage 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, 2020:
			Blood						Total
			Collection		EasyPoint®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales	$	6,972,935	$	580,123	$	765,860	$	17,879	$	8,336,797
North and South America sales (excluding U.S.)		2,054,784		2,700		1,496		687,420		2,746,400
Other international sales		114,830		1,740		—		2,450		119,020
Total	$	9,142,549	$	584,563	$	767,356	$	707,749	$	11,202,217

	For the three months ended March 31, 2019:
			Blood						Total
			Collection		EasyPoint®		Other		Product
Geographic Segment	Syringes		Products		Needles		Products		Sales
U.S. sales	$	5,625,387	$	451,077	$	48,472	$	14,975	$	6,139,911
North and South America sales (excluding U.S.)		1,330,330		3,863		252		925		1,335,370
Other international sales		241,243		210,700		—		5,250		457,193
Total	$	7,196,960	$	665,640	$	48,724	$	21,150	$	7,932,474

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 Company has established a valuation allowance for its net deferred tax asset as future taxable income cannot be reasonably assured.  Penalties and interest related to income taxes are classified as General and administrative expense and Interest expense, respectively, in the Condensed Statements of Operations.

Earnings per share

The Company computes basic earnings  or loss 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 common stock deliverable pursuant to stock options or common stock issuable upon the conversion of convertible preferred stock. The calculation of diluted EPS excluded 382,800 and 1,357,803 shares of common Stock underlying issued and outstanding stock option at March 31, 2020 and 2019, respectively, as their effect was antidilutive. All common stock issuable upon the conversion of convertible preferred stock is excluded from the calculation of of diluted EPS as their effect was antidilutive for all periods presented.  The potential dilution, if any, is shown on the following schedule:

	Three Months Ended		Three Months Ended
	March 31, 2020		March 31, 2019
Net income (loss)	$	322,773	$	(129,221)
Preferred stock dividend requirements		(174,143)		(176,249)
Income (loss) applicable to common shareholders	$	148,630	$	(305,470)
Weighted average common shares outstanding		32,681,204		32,666,454
Weighted average common and common equivalent shares outstanding — assuming dilution		32,745,972		32,666,454
Basic earnings (loss) per share	$	0.00	$	(0.01)
Diluted earnings (loss) per share	$	0.00	$	(0.01)

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.

Leases

The Company determines if an arrangement is a lease at inception.  Operating and finance leases are included in Other assets, Other accrued liabilities, and Other long-term liabilities on the Condensed Balance Sheets. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease.  Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.  As the 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 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.

Recently Adopted Pronouncements

The Company adopted ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” as well as subsequent clarifying amendments  on January 1, 2020 effective for the quarter ended March 31, 2020.  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 previously will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses.  The adoption of ASU 2016-13, as well as the Targeted Transition Relief as provided by ASU 2019-05, “Financial Instruments – Credit Losses (Topic 326) – Targeted Transition Relief” did not have a material impact on the Company’s financial statements.

The Company adopted ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):  Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (a Consensus of the FASB Emerging Issues Task Force)" on January 1, 2020 effective for the quarter ended March 31, 2020.  This amendment requires that implemented costs incurred in a hosting arrangement that is a service contract should be accounted for in accordance with ASC 350-40  Internal-Use Software.  Accordingly, costs incurred during the preliminary project and post-implementation stages are expensed and costs associated with the application development phase are capitalized.  The amendment also requires that capitalized costs be amortized over the term of the hosting arrangement and that capitalized costs should be evaluated for impairment. The adoption of this ASU did not have a material impact on the Company's financial statements or disclosures.

In August 2018, the FASB issued ASU 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." The amendment modifies, among other things, disclosure requirements on fair value measurements and eliminates certain disclosures related to transfers and valuation levels of Level 3 fair value measurements. Additionally, the amendment requires disclosure of changes in unrealized gains and losses in other comprehensive income for Level 3 fair value measurements and certain qualitative factors related to significant unobservable inputs used in Level 3 valuations.

The amendment is effective for annual periods beginning after December 15, 2019 and interim periods within the annual period.  The adoption of ASU 2018-13 does not currently have a material effect on the Company's financial statements , as the Company does not currently have any investments classified as Level 3 fair value measurements.

Recently Issued Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes. The new standard intended to simplify the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the 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 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, with early adoption permitted. Adoption of the standard requires certain changes to primarily be made prospectively, with some changes to be made retrospectively. The Company is currently evaluating the impact adoption of ASU 2019-12 will have on its financial statements.

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INVENTORIES (Tables)

3 Months Ended

Mar. 31, 2020

INVENTORIES

Schedule of inventories

	March 31, 2020		December 31, 2019
Raw materials	$	1,335,568	$	1,254,313
Finished goods		5,334,772		6,493,487
		6,670,340		7,747,800
Inventory reserve		(297,208)		(297,208)
	$	6,373,132	$	7,450,592

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LEASES (Tables)

3 Months Ended

Mar. 31, 2020

LEASES

Schedule of assets and liabilities relating to leases included in the Condensed Balance Sheets

Assets and liabilities associated with these leases included in the Condensed Balance Sheets are as follows:

	March 31, 2020		December 31, 2019
OPERATING LEASES
Other assets	$	62,077	$	82,359
Other accrued liabilities	$	62,077	$	82,359
Other long-term liabilities		—		—
Total operating lease liabilities	$	62,077	$	82,359

Schedule of future minimum payments under non-cancelable operating leases and financing leases

Future minimum payments under non-cancelable operating leases and financing leases consist of the following at March 31, 2020:

Year ending December 31, 2020	$	63,116
Less imputed interest		(1,039)
Total	$	62,077

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CONDENSED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Sales, net	$ 11,202,217	$ 7,932,474
Cost of sales
Total cost of sales	7,671,783	5,442,155
Gross profit	3,530,434	2,490,319
Operating expenses
Sales and marketing	1,135,980	875,546
Research and development	138,537	127,456
General and administrative	1,775,204	1,662,095
Total operating expenses	3,049,721	2,665,097
Income (loss) from operations	480,713	(174,778)
Interest and other income (expense)	(141,417)	91,432
Interest expense	(33,849)	(45,875)
Income (loss) before income taxes	305,447	(129,221)
Provision (benefit) for income taxes	(17,326)
Net income (loss)	322,773	(129,221)
Preferred Stock dividend requirements	(174,143)	(176,249)
Income (loss) applicable to common shareholders	$ 148,630	$ (305,470)
Basic earnings (loss) per share	$ 0.00	$ (0.01)
Diluted earnings (loss) per share	$ 0.00	$ (0.01)
Weighted average common shares outstanding:
Basic (in shares)	32,681,204	32,666,454
Diluted (in shares)	32,745,972	32,666,454
Costs of manufactured product
Cost of sales
Total cost of sales	$ 6,802,675	$ 4,776,744
Royalty expense to shareholder
Cost of sales
Total cost of sales	$ 869,108	$ 665,411

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DIVIDENDS (Details) - USD ($)							3 Months Ended
	Apr. 20, 2020	Jan. 22, 2020	Oct. 21, 2019	Jul. 19, 2019	Apr. 22, 2019	Jan. 18, 2019	Mar. 31, 2020	Mar. 31, 2019
Dividends
Preferred dividends declared							$ 54,800	$ 55,113
Series I, Class B
Dividends
Preferred dividends declared	$ 12,000	$ 12,000	$ 12,000	$ 12,000	$ 12,313	$ 12,313
Series II, Class B
Dividends
Preferred dividends declared	$ 42,800	$ 42,800	$ 42,800	$ 42,800	$ 42,800	$ 42,800

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Investments in equity securities
Investments in debt and equity securities, at fair value	$ 7,649,081		$ 7,771,660
Gross Unrealized
Cost	7,684,108		7,642,345
Gains	23,319		129,315
Gross Unrealized Losses	(58,346)
Unrealized gains (losses) on investments in debt and equity securities	(164,342)	$ 43,102
Level 1
Investments in equity securities
Investments in debt and equity securities, at fair value	6,575,762		6,708,746
Level 2
Investments in equity securities
Investments in debt and equity securities, at fair value	1,073,319		1,062,914
Mutual funds and exchange traded funds
Investments in equity securities
Investments in debt and equity securities, at fair value	6,575,762		6,708,746
Gross Unrealized
Cost	6,634,108		6,592,345
Gains			116,401
Gross Unrealized Losses	(58,346)
Mutual funds and exchange traded funds | Level 1
Investments in equity securities
Investments in debt and equity securities, at fair value	6,575,762		6,708,746
Certificates of deposit
Investments in equity securities
Investments in debt and equity securities, at fair value	1,073,319		1,062,914
Gross Unrealized
Cost	1,050,000		1,050,000
Gains	23,319		12,914
Certificates of deposit | Level 2
Investments in equity securities
Investments in debt and equity securities, at fair value	$ 1,073,319		$ 1,062,914

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2020

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

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, 2020
	Level 1		Level 2		Level 3		Total
Mutual funds and exchange traded funds	$	6,575,762	$	—	$	—	$	6,575,762
Certificates of deposit		—		1,073,319		—		1,073,319
	$	6,575,762	$	1,073,319	$	—	$	7,649,081

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Mutual funds and exchange traded funds	$	6,708,746	$	—	$	—	$	6,708,746
Certificates of deposit		—		1,062,914		—		1,062,914
	$	6,708,746	$	1,062,914	$	—	$	7,771,660

The Company holds high-grade exchange-traded and closed-end funds (ETFs), mutual funds, 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, 2020
			Gross Unrealized				Aggregate
	Cost		Gains		Losses		Fair Value
Mutual funds and exchange traded funds	$	6,634,108	$	—	$	(58,346)	$	6,575,762
Certificates of deposit		1,050,000		23,319		—		1,073,319
	$	7,684,108	$	23,319		(58,346)	$	7,649,081

	December 31, 2019
			Gross Unrealized				Aggregate
	Cost		Gains		Losses		Fair Value
Mutual funds and exchange traded funds	$	6,592,345	$	116,401	$	—	$	6,708,746
Certificates of deposit		1,050,000		12,914		—		1,062,914
	$	7,642,345	$	129,315		—	$	7,771,660

Unrealized gains (losses) on investments in debt and equity securities was ($164,342) and $43,102 for the three months ended March 31, 2020 and 2019, respectively.

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BUSINESS SEGMENT

3 Months Ended

Mar. 31, 2020

BUSINESS SEGMENT

BUSINESS SEGMENT

8.    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		Three Months Ended
	March 31, 2020		March 31, 2019
U.S. sales	$	8,336,797	$	6,139,911
North and South America sales (excluding U.S.)		2,746,400		1,335,370
Other international sales		119,020		457,193
Total sales	$	11,202,217	$	7,932,474

Long-lived assets by geography are as follows:

	March 31, 2020		December 31, 2019
Long-lived assets
U.S.	$	10,524,380	$	10,542,688
International		83,338		89,369
Total	$	10,607,718	$	10,632,057

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COVID-19

3 Months Ended

Mar. 31, 2020

COVID-19

COVID-19

12.  COVID-19

To date, the Company's manufacturing facility in Little Elm, Texas has continued to operate due to its status as an essential business. As a result of the COVID-19 pandemic, the Company has implemented certain safety precautions at its facility to reduce the risk of the potential spread of the novel coronavirus. The Company has implemented arrangements to reduce the number of office staff employees working on-site at the production facility, as well as instituting personal distancing policies and monitoring of essential production staff to minimize the risk of infection. Such precautions have not reduced the Company's ability or capacity to operate at normal manufacturing levels. The Company continues to monitor the evolving situation and will work to further mitigate risks to our staff and to our customers. At this time, the Company believes that it has sufficient inventory, manufacturing capacity, and the ability to source products to meet current demand. The Company is unable to predict with certainty the course of the pandemic and resulting potential effect on our ability to maintain current operational functionality. The Company is continuing to evaluate the ever-changing circumstances surrounding this pandemic as relates to its ability to continue to source materials and products, maintain a workforce, and operate our business effectively and efficiently.

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BUSINESS SEGMENT (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Sales by geography
Aggregate dollar amount of net sales to significant customers	$ 11,202,217	$ 7,932,474
Long-lived assets
Long-lived assets	10,607,718		$ 10,632,057
U.S.
Sales by geography
Aggregate dollar amount of net sales to significant customers	8,336,797	6,139,911
Long-lived assets
Long-lived assets	10,524,380		10,542,688
North and South America sales (excluding U.S.)
Sales by geography
Aggregate dollar amount of net sales to significant customers	2,746,400	1,335,370
Other international sales
Sales by geography
Aggregate dollar amount of net sales to significant customers	119,020	$ 457,193
International
Long-lived assets
Long-lived assets	$ 83,338		$ 89,369

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INVENTORIES (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
INVENTORIES
Raw materials	$ 1,335,568	$ 1,254,313
Finished goods	5,334,772	6,493,487
Inventory, gross	6,670,340	7,747,800
Inventory reserve	(297,208)	(297,208)
Inventory, net	$ 6,373,132	$ 7,450,592

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2020

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

13.  SUBSEQUENT EVENTS

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 (the "Lender") pursuant to the Paycheck Protection Program (the "PPP") of the Coronavirus Aid, Relief, and Economic Security Act, administered by the U.S. Small Business Administration ("SBA"). The PPP Loan matures on April 17, 2022 and bears interest at a rate of 1.0% per annum. Commencing November 17, 2020, the Company is required to pay the Lender equal monthly payments of principal and interest as necessary to fully amortize the principal amount outstanding by the maturity date. The PPP Loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The PPP Loan is unsecured and is a non-recourse obligation. All or a portion of the PPP Loan may be forgiven upon application to the Lender during the 8-week period beginning on the date of first disbursement for certain expenditure amounts, including payroll costs, in accordance with the requirements under the PPP. In the event all or any portion of the PPP Loan is forgiven, the amount forgiven is applied to outstanding principal.

On May 1, 2020, the Company was 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. The total fixed price under the delivery order is $83,788,440. The existing contract was executed in September 2018, but the order placed on May 1, 2020 is unusually significant to the Company. The Company expects to increase both domestic and foreign production and add additional personnel in response to this material delivery order. The Company expects to perform under this delivery order during 2020 and a portion of 2021.

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INCOME TAXES

3 Months Ended

Mar. 31, 2020

INCOME TAXES

INCOME TAXES

5.    INCOME TAXES

The Company’s effective tax rate on the net income (loss) before income taxes was 0.2% and 0.0%  for the three months ended March 31, 2020 and March 31, 2019, respectively.

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DIVIDENDS

3 Months Ended

Mar. 31, 2020

DIVIDENDS

DIVIDENDS

9.  DIVIDENDS

The Board declared and the Company paid dividends  to Series I and Series II Class B Preferred Shareholders in the following amounts: $12,313 and $42,800  , respectively, on January 18, 2019 and April 22, 2019.  The Board declared and the Company paid dividends to Series I and Series II Class B Preferred Shareholders in the following amounts: $12,000 and $42,800, respectively, on July 19, 2019 , October 21, 2019 , January 22, 2020 and April 20, 2020.

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 01, 2020
Cover
Entity Registrant Name	RETRACTABLE TECHNOLOGIES INC
Entity Central Index Key	0000946563
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		32,682,454
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2020

FAIR VALUE OF FINANCIAL INSTRUMENTS

Summary of value of assets designated as investments in debt and equity securities

	March 31, 2020
	Level 1		Level 2		Level 3		Total
Mutual funds and exchange traded funds	$	6,575,762	$	—	$	—	$	6,575,762
Certificates of deposit		—		1,073,319		—		1,073,319
	$	6,575,762	$	1,073,319	$	—	$	7,649,081

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Mutual funds and exchange traded funds	$	6,708,746	$	—	$	—	$	6,708,746
Certificates of deposit		—		1,062,914		—		1,062,914
	$	6,708,746	$	1,062,914	$	—	$	7,771,660

Schedule of unrealized gains (losses) on investments in equity securities

	March 31, 2020
			Gross Unrealized				Aggregate
	Cost		Gains		Losses		Fair Value
Mutual funds and exchange traded funds	$	6,634,108	$	—	$	(58,346)	$	6,575,762
Certificates of deposit		1,050,000		23,319		—		1,073,319
	$	7,684,108	$	23,319		(58,346)	$	7,649,081

	December 31, 2019
			Gross Unrealized				Aggregate
	Cost		Gains		Losses		Fair Value
Mutual funds and exchange traded funds	$	6,592,345	$	116,401	$	—	$	6,708,746
Certificates of deposit		1,050,000		12,914		—		1,062,914
	$	7,642,345	$	129,315		—	$	7,771,660

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accounts receivable
Allowance for bad debt	$ 271	$ 147

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CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities
Net income (loss)	$ 322,773	$ (129,221)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation and amortization	210,369	211,754
Net unrealized gains on investments	164,342	(43,102)
Provision for doubtful accounts	125,000
(Increase) decrease in operating assets:
Accounts receivable	1,245,531	263,928
Inventories	1,077,460	130,992
Other current assets	(34,566)	(73,290)
Other assets	20,483
Decrease in operating liabilities
Accounts payable	(572,637)	(522,320)
Accrued liabilities	(466,610)	(554,745)
Net cash provided (used) by operating activities	2,092,145	(716,004)
Cash flows from investing activities
Purchase of property, plant, and equipment	(186,030)	(29,485)
Purchase of debt and equity securities	(41,763)	(4,515,612)
Net cash used by investing activities	(227,793)	(4,545,097)
Cash flows from financing activities
Repayments of long-term debt	(64,167)	(102,454)
Repurchase of preferred stock	(75,000)
Payment of preferred stock dividends	(54,800)	(55,113)
Net cash used by financing activities	(193,967)	(157,567)
Net increase (decrease) in cash and cash equivalents	1,670,385	(5,418,668)
Cash and cash equivalents at:
Beginning of period	5,934,749	9,647,292
End of period	7,605,134	4,228,624
Supplemental schedule of cash flow information:
Interest paid	33,851	45,875
Supplemental schedule of noncash investing and financing activities:
Preferred dividends declared, not paid	$ 54,800	$ 55,113

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INVENTORIES

3 Months Ended

Mar. 31, 2020

INVENTORIES

INVENTORIES

3.    INVENTORIES

Inventories consist of the following:

	March 31, 2020		December 31, 2019
Raw materials	$	1,335,568	$	1,254,313
Finished goods		5,334,772		6,493,487
		6,670,340		7,747,800
Inventory reserve		(297,208)		(297,208)
	$	6,373,132	$	7,450,592