**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**Washington,D.C. 20549**

**FORM 10-Q**

(Mark One)

**[X]  QUARTERLY REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
| For the quarterly period ended | June 30, 2007 |   |
|----------------------------------------------------|---------------|--------|
|                                               |          |   |   |   |   |
|                                                    |               |        |  |  |  |  |

 

or

**[  ]  TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934**
| For the transition period from |   | to |   |
|--------------------------------|--------|----|--------|

 
| Commission file number | 000-30885 |   |
|------------------------|-----------|--------|

 
|        |   | Retractable  Technologies, Inc.                         |   |
|--------|--------|---------------------------------------------------------|--------|
|   |   | (Exact name of  registrant as specified in its charter) |   |

 

| Texas                                     |   | 75-2599762           |
|-------------------------------------------|--------|----------------------|
| (State or other  jurisdiction of          |   | (I.R.S. Employer     |
| incorporation or  organization)           |   | Identification  No.) |
|                                      |   |                 |
| 511 Lobo Lane                             |   |                 |
| Little Elm,  Texas                        |   | 75068-0009           |
| (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) |

 

Indicate by checkmark whether the registrant  (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.  Yes [ X ]   No [   ]

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer,or a non-accelerated filer.  Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2 ofthe Exchange Act.  (Check one):
| Large accelerated filer [  ] |   | Accelerated  filer [  ] |   | Non-accelerated  filer [ x ] |
|-----------------------------------|--------|------------------------------|--------|------------------------------|

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act). Yes [   ]     No [ x ]

APPLICABLE ONLY TOISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURINGTHE PRECEDING FIVE YEARS:

Indicate by check markwhether the registrant has filed all documents and reports required to be filedby Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequentto the distribution of securities under a plan confirmed by a court.   Yes [  ]    No [   ]

APPLICABLE ONLY TOCORPORATE ISSUERS

Indicate thenumber of shares outstanding of each of the issuer’s classes of common stock,as of the latest practicable date: 23,744,164 shares of Common Stock, no parvalue, issued and outstanding on August 1, 2007.

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**TABLE OFCONTENTS**
| **PART I-FINANCIAL INFORMATION** |
|----------------------------------|
| ** **                       | ** ** | ** ** | ** ** | ** ** |
| **Item 1.**                      | ** ** | **Financial Statements** | ** ** | **3** |
| ** **                       | ** ** | ** ** | ** ** | ** ** |
| ** **                       | **CONDENSED  BALANCE SHEETS** |   | 3 |
| ** **                       | **CONDENSED STATEMENTS OF OPERATIONS** |   | 4 |
| ** **                       | **CONDENSED STATEMENTS OF CASH FLOWS** |   | 5 |
| ** **                       | **NOTES TO CONDENSED FINANCIAL STATEMENTS** |   | 6 |
| ** **                       |   | ** ** |   |   |
| **Item 2.**                      | ** ** | **Management’s  Discussion and Analysis of Financial Condition and Results of Operations** | ** ** | **10** |
| ** **                       | ** ** | ** ** | ** ** | ** ** |
| **Item 3.**                      | ** ** | **Quantitative  and Qualitative Disclosures About Market Risk** | ** ** | **14** |
| ** **                       | ** ** | ** ** | ** ** | ** ** |
| **Item 4.**                      | ** ** | **Controls and  Procedures** | ** ** | **14** |
| ** **                       | ** ** | ** ** | ** ** | ** ** |
| **PART  II- OTHER INFORMATION**  |
| ** **                       |   | ** ** |   |   |
| **Item 1.**                      | ** ** | **Legal Proceedings** | ** ** | **14** |
| ** **                       | ** ** | ** ** | ** ** | ** ** |
| **Item 1A.**                     | ** ** | **Risk Factors** | ** ** | **14** |
| ** **                       | ** ** | ** ** | ** ** | ** ** |
| **Item 2.**                      | ** ** | **Unregistered  Sales of Equity Securities and Use of Proceeds** | ** ** | **15** |
| ** **                       | ** ** | ** ** | ** ** | ** ** |
| **Item 3.**                      | ** ** | **Defaults Upon  Senior Securities** | ** ** | **15** |
| ** **                       | ** ** | ** ** | ** ** | ** ** |
| **Item 5.**                      | ** ** | **Other Information** | ** ** | **15** |
| ** **                       | ** ** | ** ** | ** ** | ** ** |
| **Item  6.**                     | ** ** | **Exhibits** | ** ** | **15** |
| ** **                       | ** ** | ** ** | ** ** | ** ** |
| **SIGNATURES**                   | ** ** | **16** |
|                                  |  |  |  |  |  |  |  |  |

 

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**PART I-FINANCIAL INFORMATION**

**Item 1.        FinancialStatements.**

**RETRACTABLE TECHNOLOGIES, INC.CONDENSED BALANCE SHEETS**
|                                                  | ** ** | **June 30, 2007** | ** ** | ** ** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------|------------|-----------------------------|------------|------------|------------|-----------------------|------------|
| ** **                                       | ** ** | **(unaudited)**             | ** ** | ** ** | ** ** | **2006**              | ** ** |
|                                             |       |                        |       |       |       |                  |       |
| **ASSETS**                                       | ** ** | ** **                  | ** ** | ** ** | ** ** | ** **            | ** ** |
| Current assets:                                  |       |                        |       |       |       |                  |       |
| Cash and cash  equivalents                       |       | $40,955,507                 |       |       |       | $46,814,689           |       |
| Accounts  receivable, net                        |       | 2,238,778                   |       |       |       | 1,956,756             |       |
| Inventories, net                                 |       | 8,119,019                   |       |       |       | 6,385,780             |       |
| Income taxes  receivable                         |       | 2,357,811                   |       |       |       | 2,355,732             |       |
| Other current  assets                            |       | 762,772                     |       |       |       | 267,707               |       |
| Total current  assets                            |       | 54,433,887                  |       |       |       | 57,780,664            |       |
|                                             |       |                        |       |       |       |                  |       |
| Property, plant, and  equipment, net             |       | 11,853,857                  |       |       |       | 12,212,140            |       |
| Intangible assets, net                           |       | 389,520                     |       |       |       | 279,846               |       |
| Other assets                                     |       | 507,896                     |       |       |       | 522,294               |       |
| Total assets                                     |       | $67,185,160                 |       |       |       | $70,794,944           |       |
|                                             |       |                        |       |       |       |                  |       |
|                                             |       |                        |       |       |       |                  |       |
| **LIABILITIES AND STOCKHOLDERS’  EQUITY**   | ** ** | ** **                  | ** ** | ** ** | ** ** | ** **            | ** ** |
| Current liabilities:                             |       |                        |       |       |       |                  |       |
| Accounts payable                                 |       | $4,077,647                  |       |       |       | $4,247,630            |       |
| Current portion  of long-term debt               |       | 306,235                     |       |       |       | 261,905               |       |
| Accrued  compensation                            |       | 534,766                     |       |       |       | 472,573               |       |
| Dividends  payable                               |       | 1,053,544                   |       |       |       | —                |       |
| Marketing fees  payable                          |       | 1,419,760                   |       |       |       | 1,419,760             |       |
| Accrued  royalties to a shareholder              |       | 403,925                     |       |       |       | 2,755                 |       |
| Other accrued  liabilities                       |       | 532,544                     |       |       |       | 440,253               |       |
| Current deferred  tax liability                  |       | 21,976                      |       |       |       | 45,697                |       |
| Total current  liabilities                       |       | 8,350,397                   |       |       |       | 6,890,573             |       |
|                                             |       |                        |       |       |       |                  |       |
| Long-term debt, net of  current maturities       |       | 3,970,857                   |       |       |       | 4,137,231             |       |
| Long-term deferred tax  liability                |       | 56,827                      |       |       |       | 56,828                |       |
| Total  liabilities                               |       | 12,378,081                  |       |       |       | 11,084,632            |       |
|                                             |       |                        |       |       |       |                  |       |
| Stockholders’ equity:                       |       |                        |       |       |       |                  |       |
| Preferred stock  $1 par value:                   |       |                        |       |       |       |                  |       |
| Series I, Class  B                               |       | 144,000                     |       |       |       | 164,000               |       |
| Series II, Class  B                              |       | 224,700                     |       |       |       | 224,700               |       |
| Series III,  Class B                             |       | 130,245                     |       |       |       | 135,245               |       |
| Series IV, Class  B                              |       | 553,500                     |       |       |       | 553,500               |       |
| Series V, Class  B                               |       | 1,288,721                   |       |       |       | 1,363,721             |       |
| Common stock, no  par value                      |       | —                      |       |       |       | —                |       |
| Additional  paid-in capital                      |       | 53,785,764                  |       |       |       | 54,709,108            |       |
| Retained  earnings (deficit)                     |       | (1,319,851)                 |       |       |       | 2,560,038             |       |
| Total  stockholders’ equity                 |       | 54,807,079                  |       |       |       | 59,710,312            |       |
| Total liabilities and  stockholders’ equity |       | $67,185,160                 |       |       |       | $70,794,944           |       |

 

See accompanying notes to condensed financial statements

3

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**RETRACTABLE TECHNOLOGIES, INC.CONDENSED STATEMENTS OF OPERATIONS(unaudited)**
|                                              | ** ** | **Three Months  Ended  June 30, 2007**               | ** ** | ** ** | ** ** | **Three Months  Ended  June 30, 2006** | ** ** | ** ** | ** ** | **Six Months  Ended  June 30, 2007**           | ** ** | ** ** | ** ** | **Six Months  Ended  June 30, 2006**           | ** **                                                                                 |
|----------------------------------------------|------------|---------------------------------------------------------------------|------------|------------|------------|-------------------------------------------------------|------------|------------|------------|---------------------------------------------------------------|------------|------------|------------|---------------------------------------------------------------|--------------------------------------------------------------------------------------------|
|                                         |       |                                                                |       |       |       |                                                  |       |       |       |                                                          |       |       |       |                                                          |                                                                                       |
| Sales, net                                   |       | $5,274,982                                                          |       |       |       | $5,301,445                                            |       |       |       | $11,048,805                                                   |       |       |       | $9,183,250                                                    |                                                                                       |
| Reimbursed discounts                         |       | —                                                              |       |       |       | 2,135,161                                             |       |       |       | —                                                        |       |       |       | 3,776,086                                                     |                                                                                       |
| Total sales                                  |       | 5,274,982                                                           |       |       |       | 7,436,606                                             |       |       |       | 11,048,805                                                    |       |       |       | 12,959,336                                                    |                                                                                       |
| Cost of sales                                |       |                                                                |       |       |       |                                                  |       |       |       |                                                          |       |       |       |                                                          |                                                                                       |
| Cost of  manufactured product                |       | 2,728,087                                                           |       |       |       | 4,240,364                                             |       |       |       | 6,803,001                                                     |       |       |       | 7,482,326                                                     |                                                                                       |
| Royalty expense  to shareholders             |       | 403,925                                                             |       |       |       | 472,438                                               |       |       |       | 843,325                                                       |       |       |       | 841,666                                                       |                                                                                       |
| Total cost of  sales                         |       | 3,132,012                                                           |       |       |       | 4,712,802                                             |       |       |       | 7,646,326                                                     |       |       |       | 8,323,992                                                     |                                                                                       |
| Gross profit                                 |       | 2,142,970                                                           |       |       |       | 2,723,804                                             |       |       |       | 3,402,479                                                     |       |       |       | 4,635,344                                                     |                                                                                       |
|                                         |       |                                                                |       |       |       |                                                  |       |       |       |                                                          |       |       |       |                                                          |                                                                                       |
| Operating expenses:                          |       |                                                                |       |       |       |                                                  |       |       |       |                                                          |       |       |       |                                                          |                                                                                       |
| Sales and  marketing                         |       | 1,349,080                                                           |       |       |       | 1,464,939                                             |       |       |       | 2,691,002                                                     |       |       |       | 2,577,945                                                     |                                                                                       |
| Research and  development                    |       | 239,680                                                             |       |       |       | 181,208                                               |       |       |       | 421,715                                                       |       |       |       | 496,403                                                       |                                                                                       |
| General and  administrative                  |       | 2,512,316                                                           |       |       |       | 1,843,054                                             |       |       |       | 4,988,354                                                     |       |       |       | 3,566,825                                                     |                                                                                       |
| Total operating  expenses                    |       | 4,101,076                                                           |       |       |       | 3,489,201                                             |       |       |       | 8,101,071                                                     |       |       |       | 6,641,173                                                     |                                                                                       |
| Loss from  operations                        |       | (1,958,106)                                                         |       |       |       | (765,397)                                             |       |       |       | (4,698,592)                                                   |       |       |       | (2,005,829)                                                   |                                                                                       |
|                                         |       |                                                                |       |       |       |                                                  |       |       |       |                                                          |       |       |       |                                                          |                                                                                       |
| Interest and other  income                   |       | 448,698                                                             |       |       |       | 488,878                                               |       |       |       | 989,895                                                       |       |       |       | 951,075                                                       |                                                                                       |
| Interest expense, net                        |       | (94,398)                                                            |       |       |       | (127,984)                                             |       |       |       | (171,192)                                                     |       |       |       | (238,691)                                                     |                                                                                       |
| Net loss before income  taxes                |       | (1,603,806)                                                         |       |       |       | (404,503)                                             |       |       |       | (3,879,889)                                                   |       |       |       | (1,293,445)                                                   |                                                                                       |
| Benefit for income  taxes                    |       | —                                                              |       |       |       | (201,195)                                             |       |       |       | —                                                        |       |       |       | (490,199)                                                     |                                                                                       |
| Net loss                                     |       | (1,603,806)                                                         |       |       |       | (203,308)                                             |       |       |       | (3,879,889)                                                   |       |       |       | (803,246)                                                     |                                                                                       |
| Preferred stock  dividend  requirements      |       | (349,200)                                                           |       |       |       | (364,104)                                             |       |       |       | (704,251)                                                     |       |       |       | (731,182)                                                     |                                                                                       |
| Loss  applicable to common  shareholders     |       | $(1,953,006)                                                        |       |       |       | $(567,412)                                            |       |       |       | $(4,584,140)                                                  |       |       |       | $(1,534,428)                                                  |                 |
|                                         |       |                                                                |       |       |       |                                                  |       |       |       |                                                          |       |       |       |                                                          |                                                                                       |
| Loss per share – basic  and diluted     |       | $          (0.08) |       |       |       | $      (0.02)           |       |       |       | $         (0.19) |       |       |       | $         (0.07) |                                                                                       |
|                                         |       |                                                                |       |       |       |                                                  |       |       |       |                                                          |       |       |       |                                                          |                                                                                       |
| Weighted average common  shares  outstanding |       | 23,731,664                                                          |       |       |       | 23,594,117                                            |       |       |       | 23,704,164                                                    |       |       |       | 23,557,834                                                    |                                                                                       |

 

See accompanyingnotes to condensed financial statements

4

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**RETRACTABLE TECHNOLOGIES, INC.****CONDENSEDSTATEMENTS OF CASH FLOWS(unaudited)**
|                                                                                            | ** ** | **Six Months  Ended  June 30, 2007**                                   | ** ** | ** ** | ** ** | **Six Months  Ended  June 30, 2006**                                   | ** ** |
|--------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------|------------|------------|------------|---------------------------------------------------------------------------------------|------------|
| **Cash flows from operating  activities**                                                  |       |                                                                                  |       |       |       |                                                                                  |       |
| Net loss                                                                                   |       | $(3,879,889)                                                                          |       |       |       | $(803,246)                                                                            |       |
| Adjustments to  reconcile net loss to net cash provided by (used by) operating activities: |       |                                                                                  |       |       |       |                                                                                  |       |
| Depreciation and  amortization                                                             |       | 721,889                                                                               |       |       |       | 754,470                                                                               |       |
| Capitalized  interest                                                                      |       | (91,394)                                                                              |       |       |       | (27,686)                                                                              |       |
| Stock option  compensation                                                                 |       | 6,478                                                                                 |       |       |       | 337,065                                                                               |       |
| Provisions for  doubtful accounts                                                          |       | 2,242                                                                                 |       |       |       | 54,969                                                                                |       |
| Accreted  interest                                                                         |       | 62,547                                                                                |       |       |       | 71,193                                                                                |       |
| Deferred income  taxes                                                                     |       | —                                                                                |       |       |       | (29,550)                                                                              |       |
| (Increase)  decrease in assets                                                             |       |                                                                                  |       |       |       |                                                                                  |       |
| Inventories                                                                                |       | (1,733,239)                                                                           |       |       |       | 179,259                                                                               |       |
| Accounts  receivable                                                                       |       | (284,261)                                                                             |       |       |       | (460,173)                                                                             |       |
| Income taxes  receivable                                                                   |       | (2,079)                                                                               |       |       |       | (551,759)                                                                             |       |
| Other current  assets                                                                      |       | (495,065)                                                                             |       |       |       | (35,073)                                                                              |       |
| Increase  (decrease) in liabilities                                                        |       |                                                                                  |       |       |       |                                                                                  |       |
| Accounts payable                                                                           |       | (169,983)                                                                             |       |       |       | (26,667)                                                                              |       |
| Other accrued  liabilities                                                                 |       | 555,652                                                                               |       |       |       | (75,287)                                                                              |       |
| Net cash used by  operating activities                                                     |       | (5,307,102)                                                                           |       |       |       | (612,485)                                                                             |       |
| ** **                                                                                 |       |                                                                                  |       |       |       |                                                                                  |       |
| **Cash flows from investing  activities**                                                  |       |                                                                                  |       |       |       |                                                                                  |       |
| Purchase of  property, plant, and equipment                                                |       | (236,090)                                                                             |       |       |       | (842,700)                                                                             |       |
| Acquisitions of  patents, trademarks, licenses and intangibles                             |       | (131,400)                                                                             |       |       |       | (4,576)                                                                               |       |
| Net cash used by  investing activities                                                     |       | (367,490)                                                                             |       |       |       | (847,276)                                                                             |       |
| ** **                                                                                 |       |                                                                                  |       |       |       |                                                                                  |       |
| **Cash flows from financing  activities**                                                  |       |                                                                                  |       |       |       |                                                                                  |       |
| Repayments of  long-term debt and notes payable                                            |       | (184,590)                                                                             |       |       |       | (193,279)                                                                             |       |
| Proceeds from  the exercise of stock options                                               |       | —                                                                                |       |       |       | 74,780                                                                                |       |
| Net cash used by  financing activities                                                     |       | (184,590)                                                                             |       |       |       | (118,499)                                                                             |       |
| Net decrease in cash  and cash equivalents                                                 |       | (5,859,182)                                                                           |       |       |       | (1,578,260)                                                                           |       |
|                                                                                       |       |                                                                                  |       |       |       |                                                                                  |       |
| Cash and cash  equivalents at:                                                             |       |                                                                                  |       |       |       |                                                                                  |       |
| Beginning of  period                                                                       |       | 46,814,689                                                                            |       |       |       | 52,513,935                                                                            |       |
| End of period                                                                              |       | $40,955,507                                                                           |       |       |       | $50,935,675                                                                           |       |
|                                                                                       |       |                                                                                  |       |       |       |                                                                                  |       |
| Supplemental  disclosures of cash flow information:                                        |       |                                                                                  |       |       |       |                                                                                  |       |
| Interest paid                                                                              |       | $    200,038                                                      |       |       |       | $    266,377                                                      |       |
| Income taxes  paid                                                                         |       | $             — |       |       |       | $      38,829                                           |       |
|                                                                                       |       |                                                                                  |       |       |       |                                                                                  |       |
| Supplemental schedule  of noncash financing activities                                     |       |                                                                                  |       |       |       |                                                                                  |       |
| Preferred dividends  declared                                                              |       | $1,053,544                                                                            |       |       |       | $             — |       |

 

See accompanyingnotes to condensed financial statements

5

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**RETRACTABLE TECHNOLOGIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)**

**1.**      **BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION**

 

**Business ofthe Company**

Retractable Technologies,Inc. (the “Company”) was incorporated in Texas on May 9, 1994, to design,develop, manufacture and market safety syringes and other safety medicalproducts for the healthcare profession. The Company began to develop itsmanufacturing operations in 1995. The Company’s manufacturing andadministrative facilities are located in Little Elm, Texas. The Company’sprimary products are the VanishPoint® syringe in the 1cc, 3cc, 5cc and 10cc sizes,blood collection tube holders, allergy trays, and IV catheters.  The Company has conducted preliminaryclinical evaluations and worked with national distributors to encouragehealthcare facilities to transition from the use of standard syringes to theVanishPoint® syringe. 

**Basis ofpresentation**

The accompanying condensedfinancial statements are unaudited and, in the opinion of management, reflectall adjustments that are necessary for a fair presentation of the financialposition and results of operations for the periods presented. All suchadjustments are of a normal and recurring nature. The results of operations forthe periods presented are not necessarily indicative of the results to beexpected for the entire year. The condensed financial statements should be readin conjunction with the financial statement disclosures contained in theCompany’s audited financial statements filed in Form 10-K on April 2, 2007, forthe year ended December 31, 2006. 

**2.**      **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Accountingestimates**

The preparation of financialstatements in conformity with United States generally accepted accountingprinciples requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period. Actual resultscould differ significantly from those estimates.

**Cash andcash equivalents**

For purposes of reportingcash flows, cash and cash equivalents include unrestricted cash and investmentswith original maturities of three months or less.

**Accountsreceivable**

The Company records tradereceivables when revenue is recognized. No product has been consigned tocustomers. The Company’s allowance for doubtful accounts is primarilydetermined by review of specific trade receivables. Those accounts that aredoubtful of collection are included in the allowance. An additional allowancehas been established based on a percentage of receivables outstanding. Theseprovisions are reviewed to determine the adequacy of the allowance for doubtfulaccounts. Trade receivables are charged off when there is certainty as to theirbeing uncollectible. Trade receivables are considered delinquent when paymenthas not been made within contract terms.

6

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**Inventories**

Inventories are valued atthe lower of cost or market, with cost being determined using a standard costmethod, which approximates average cost. A reserve is established for anyexcess or obsolete inventories.

**Property,plant and equipment**

Property, plant andequipment are stated at cost. Expenditures for maintenance and repairs arecharged to operations as incurred. Cost includes major expenditures forimprovements and replacements which extend useful lives or increase capacityand interest cost associated with significant capital additions.  Gains or losses from property disposals areincluded in income.

Depreciation andamortization are calculated using the straight-line method over the followinguseful lives: 
| Production equipment            |   | 3  to 13 years |   |
|---------------------------------|--------|----------------|--------|
| Office furniture  and equipment |   | 3  to 10 years |   |
| Buildings                       |   | 39  years      |   |
| Building  improvements          |   | 15  years      |   |
| Automobiles                     |   | 7  years       |   |

 

**Long-livedassets**

The Company assesses therecoverability of long-lived assets using an assessment of the estimatedundiscounted future cash flows related to such assets. In the event that assetsare found to be carried at amounts which are in excess of estimated grossfuture cash flows, the assets will be adjusted for impairment to a levelcommensurate with a discounted cash flow analysis of the underlying assets.

**Reclassifications**

Certain prior year amountshave been reclassified to conform with the current year’s presentation.

**Intangibleassets**

Intangible assets are statedat cost and consist primarily of patents, a license agreement grantingexclusive rights to use patented technology, and trademarks which are amortizedusing the straight-line method over 17 years.

**Financialinstruments**

The fair value of financialinstruments is determined by reference to various market data and othervaluation techniques as appropriate. The Company believes that the fair valueof financial instruments approximates their recorded values.

**Concentrationrisks**

The Company’s financialinstruments exposed to concentrations of credit risk consist primarily of cash,cash equivalents and accounts receivable. Cash balances, some of which exceedfederally insured limits, are maintained in financial institutions; however,management believes the institutions are of high credit quality. The majorityof accounts receivable are due from companies which are well-establishedentities. As a consequence, management considers any exposure fromconcentrations of credit risks to be limited. 

The Company manufacturessyringes in Little Elm, Texas as well as utilizing a manufacturer inChina.  During the first six months of2007, approximately 74.5% of the units were produced in China.

7

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**Revenuerecognition**

Revenue is recognized forsales to distributors when title and risk of ownership passes to thedistributor, generally upon shipment. Revenue is recorded on the basis of salesprice to distributors, less contractual pricing allowances. Contractual pricingallowances consist of (i) rebates granted to distributors who providetracking reports which show, among other things, the facility that purchasedthe products, and (ii) a provision for estimated contractual pricingallowances for products that the Company has not received tracking reports.Rebates are recorded when issued and are applied against the customer’sreceivable balance. The provision for contractual pricing allowances isreviewed at the end of each quarter and adjusted for changes in levels ofproducts for which there is no tracking report. Additionally, if it becomesclear that tracking reports will not be provided by individual distributors,the provision is further adjusted. The estimated contractual allowance isnetted against individual distributors’ accounts receivable balances forfinancial reporting purposes. The resulting net balance is reflected in accountsreceivable or accounts payable, as appropriate. The terms and conditions ofcontractual pricing allowances are governed by contracts between the Companyand its distributors. Revenue for shipments directly to end-users is recognizedwhen title and risk of ownership passes from the Company. Any product shippedor distributed for evaluation purposes is expensed.

**Marketingfees**

The Company paid AbbottLaboratories, Inc.  (“Abbott”) marketing fees for services they provided.The contracted services were to include participation in promotionalactivities, development of educational and promotional materials,representation at trade shows, clinical demonstrations, inservicing andtraining, and tracking reports detailing the placement of the Company’s productsto end-users. Marketing fees were accrued at the time of the sale of product toAbbott. These fees were paid after Abbott provided the Company a trackingreport of product sales to end-users. These costs were included in Sales andmarketing expense in the Condensed Statements of Operations. No marketing feeshave been accrued since October 15, 2003, the date the National Marketing andDistribution Agreement with Abbott was terminated. The Company has a lawsuitagainst Abbott that will proceed in court and not in arbitration as argued bythe defendant.

**Reimburseddiscounts**

The Company receivedreimbursed discounts from one of the settlement agreements reached in itsfederal antitrust lawsuit, Retractable Technologies, Inc. v. Becton Dickinson& Co. (“BD”) et al.  Payments under the discount reimbursement programwere recognized upon invoicing of amounts due under the agreement providedcollection was reasonably assured.  Such amounts are presented in theCondensed Statements of Operations as a separate component of revenues. All funds available under the discount reimbursement program were recognized bythe third quarter of 2006. 

**Income taxes**

The Company provides fordeferred income taxes in accordance with Statement of Financial AccountingStandard No. 109, *Accounting for IncomeTaxes* (“SFAS 109”). SFAS 109 requires an asset and liabilityapproach for financial accounting and reporting for income taxes based on thetax effects of differences between the financial statement and tax bases ofassets and liabilities, based on enacted rates expected to be in effect whensuch basis differences reverse in future periods. Deferred tax assets areperiodically reviewed for realizability. The Company has established avaluation allowance for its net deferred tax assets as future taxable incomecannot be reasonably assured.

**Earnings per share**

TheCompany has adopted Statement of Financial Accounting Standards No. 128, *Earnings Per Share*, which establishes standards forcomputing and presenting earnings per share. Basic earnings per share is computed by dividing net earnings for theperiod (adjusted for any cumulative dividends for the period) by the weightedaverage number of common shares outstanding during the period.  The Company’s potentially dilutive CommonStock equivalents consist of options, convertible debt and convertiblePreferred Stock and are all antidilutive for the three and six months endedJune 30, 2007 and 2006.  Accordingly,basic loss per share is equal to diluted earnings per share.  

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**Research and development costs**

Research and developmentcosts are expensed as incurred.

**Share-based compensation**

The Company has issuedoptions under three stock-based director, officer and employee compensationplans as well as several individual option agreements.  The two 1996 plans have terminated; however,the options continue until their expected maturity dates.  The Company adopted the fair valuerecognition provisions of Statement of Financial Accounting Standards No. 123, *Accounting for Stock-Based Compensation*, to all awardsgranted, modified, or settled after December 31, 2001.  Awards generally vest over periods up tothree years.  

The Company adopted theprovisions of Statement of Financial Accounting Standards No. 123 (Revised2004) (“SFAS No. 123 R”), *Share-Based Payment*,effective January 1, 2006.  It did nothave a material impact on the financial statements of the Company.  In accordance with the disclosurerequirements of SFAS No. 123 R, the Company incurred the following share-basedcompensation costs:

 
|                             |   | **Three Months  Ended  June 30, 2007** | ** ** | ** ** | ** ** | **Three Months  Ended  June 30, 2006** | ** ** | ** ** | ** ** | **Six Months  Ended  June 30, 2007** | ** ** | ** ** | ** ** | **Six Months  Ended  June 30, 2006** |   |
|-----------------------------|--------|-------------------------------------------------------|------------|------------|------------|-------------------------------------------------------|------------|------------|------------|-----------------------------------------------------|------------|------------|------------|-----------------------------------------------------|--------|
|                        |   |                                                  |       |       |       |                                                  |       |       |       |                                                |       |       |       |                                                |   |
| Cost of sales               |   | $  —                                   |       |       |       | $30,744                                               |       |       |       | $6,648                                              |       |       |       | $54,615                                             |   |
|                        |   |                                                  |       |       |       |                                                  |       |       |       |                                                |       |       |       |                                                |   |
| Sales and  marketing        |   | —                                                |       |       |       | 46,318                                                |       |       |       | 3,086                                               |       |       |       | 92,637                                              |   |
|                        |   |                                                  |       |       |       |                                                  |       |       |       |                                                |       |       |       |                                                |   |
| Research and  development   |   | —                                                |       |       |       | 4,625                                                 |       |       |       | (7,863)                                             |       |       |       | 9,249                                               |   |
|                        |   |                                                  |       |       |       |                                                  |       |       |       |                                                |       |       |       |                                                |   |
| General and  administrative |   | —                                                |       |       |       | 89,072                                                |       |       |       | 4,607                                               |       |       |       | 178,144                                             |   |
|                        |   | $  —                                   |       |       |       | $170,759                                              |       |       |       | $6,478                                              |       |       |       | $334,645                                            |   |

 

**3.**      **INVENTORIES**

Inventories consist of thefollowing: 
|                    | ** ** | **June 30,** | ** ** | ** ** | ** ** | **December 31,** | ** ** |
|--------------------|------------|-------------------|------------|------------|------------|-----------------------|------------|
| ** **         | ** ** | **2007**          | ** ** | ** ** | ** ** | **2006**              | ** ** |
| ** **         | ** ** | ** **        | ** ** | ** ** | ** ** | ** **            | ** ** |
| Raw materials      |       | $1,600,092        |       |       |       | $1,546,288            |       |
| Finished goods     |       | 6,568,927         |       |       |       | 4,889,492             |       |
|               |       | 8,169,019         |       |       |       | 6,435,780             |       |
| Inventory  reserve |       | (50,000)          |       |       |       | (50,000)              |       |
|               |       | $8,119,019        |       |       |       | $6,385,780            |       |

 

**4.**      **INCOME TAXES**

The Company’s effective taxrate on the net loss before income taxes was zero percent for 2007.  The Company’s effective tax rates on the netloss before income taxes, a benefit in 2006, were 49.7% and 37.9% for the threeand six months ended June 30, 2006, respectively.  The effective rates in 2006 differed from theexpected rates due to a reduction in the 2006 valuation allowance for adeferred tax asset attributable to stock options. The tax benefits for 2007 arefully reserved.

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In June 2006, the FinancialAccounting Standards Board (“FASB”) issued Financial Interpretation No. 48, *Accounting for Income Tax Uncertainties* (“FIN 48”).  FIN 48 is effective for years beginning afterDecember 15, 2006.  FIN 48 prescribes arecognition threshold and measurement attribute for financial statementrecognition and measurement of a tax position taken or expected to be taken ina tax return.  FIN 48 requires that acompany evaluate whether it is “more-likely-than-not” that a tax position willbe sustained based upon the technical merits of the position.  Measurement of the tax position is based uponthe largest amount of benefit that is greater than 50% likely of being realizedupon ultimate settlement.  The Companyadopted FIN 48 on January 1, 2007.  FIN48 had no material effect on the financial statements upon adoption.  

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

FORWARD-LOOKINGSTATEMENT WARNING

Certain statements included by reference in this filing containing thewords “could,” “may,” “believes,” “anticipates,” “intends,” “expects,” andsimilar such words constitute forward-looking statements within the meaning ofthe Private Securities Litigation Reform Act. Any forward-looking statementsinvolve known and unknown risks, uncertainties, and other factors that maycause our actual results, performance, or achievements to be materiallydifferent from any future results, performance, or achievements expressed orimplied by such forward-looking statements. Such factors include, among others,our ability to maintain liquidity, our maintenance of patent protection, theimpact of current litigation, the impact of dramatic increases in demand, ourability to quickly increase capacity in the event of a dramatic increase indemand, our ability to access the market, our ability to maintain or lowerproduction costs, our ability to continue to finance research and developmentas well as operations and expansion of production, the increased interest oflarger market players, specifically BD, in providing safety needle devices, andother factors listed in **Item 1A Risk Factors**.Given these uncertainties, undue reliance should not be placed onforward-looking statements.

The following discussion contains trend information and otherforward-looking statements that involve a number of risks and uncertainties.Our actual future results could differ materially from our historical resultsof operations and those discussed in the forward-looking statements. Varianceshave been rounded for ease of reading. All period references are to the periodsended June 30, 2007 or 2006. 

OVERVIEW

We have been manufacturing and marketing our products since 1997. Ourproducts have been and continue to be distributed nationally through numerousdistributors. However, we have been blocked from access to the market by exclusivemarketing practices engaged in by BD, who dominates the market. We believe thatits monopolistic business practices continue despite its paying $100 million tosettle a lawsuit with the Company for anticompetitive practices, businessdisparagement, and tortious interference. Although we have made limitedprogress in some areas, such as the alternate care and international markets,our volumes are not as high as they should be given the nature and quality ofour product, the federal and state legislation requiring use of safe needledevices, and various Senate Subcommittee hearings on Group PurchasingOrganizations (“GPOs”). We continue to pursue various strategies to have betteraccess to the hospital market, as well as other markets, including attemptingto gain access to the market through our sales efforts and innovativetechnology. In the event we continue to have only limited market access and thecash provided by the litigation settlements and generated from operationsbecomes insufficient, the Company would take cost cutting measures to reducecash requirements including, but not limited to, reduction of units beingproduced, reduction of workforce, reduction of salaries of officers and other nonhourlyemployees, and deferral of royalty payments.

We have several products under development.  We anticipate that such development may becompleted by year end.

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We are marketing more product internationally. In 2004, 2005 and 2006,we were awarded a federal contract to supply syringes to various Africancountries. The first award from PATH was for 1,530,000 units. The second awardwas for 11,700,000 units. For the third year, the Company was awarded acontract for 16,400,000 units.  Shipmentsof the products are generally filled over multiple quarters due principally tologistical requirements for the orders. We are hopeful that these awards willcontinue to increase under this program. 

Product purchases from Double Dove, a Chinese manufacturer, haveenabled us to increase manufacturing capacity with little capital outlay andprovided a competitive manufactured cost. Double Dove manufactured, in thefirst six months of 2007, approximately 74.5% of the units produced by theCompany.  The cost of production per unithas generally declined as volumes increased. 

Wealso have a license agreement with BTMD, a Chinese company. The factory,assembly equipment, and the related infrastructure are substantially completefor some products.  However, there are still manufacturing processes beingaddressed, and, therefore, we do not believe the required government approvalswill be obtained before the end of the year.  Accordingly, we now do notexpect the payment of royalties to begin any earlier than 2008. **  **

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

RESULTSOF OPERATIONS

*Comparison of Three Months EndedJune 30, 2007, and June 30, 2006*

Domestic sales accounted for 88.3% and 83.6% of the revenues for thethree months ended June 30, 2007 and 2006, respectively. International salesaccounted for the remaining revenues. Domestic revenues decreased 24.6%,principally due to lower volumes, and international revenues decreased 49.6%due primarily to the timing of the prior PATH shipments.  The average selling price decreasedslightly.  Overall, unit sales decreased25.6%. Domestic unit sales decreased 9.7% and international sales decreased54.1% primarily due to the timing of the PATH shipments, which fluctuates fromquarter to quarter.  Domestic unit saleswere 77.9% of total unit sales for the three months ended June 30, 2007. 

Gross profit decreased primarily due to lower volumes and lower averageselling prices in domestic markets.  Theaverage cost of manufactured product sold per unit decreased by 13.5% dueprincipally to fixed costs being spread over more units produced.  Profit margins can fluctuate depending upon,among other things, the cost of product manufactured and the capitalized costof product recorded in inventory, as well as product sales mix.  The lower cost in ending inventory at June30, 2007, should have a continuing positive effect on profit margins for thethird quarter.  Royalty expense decreaseddue to lower gross sales.

The Company had offered certain discounts to participating facilitiesthrough December 31, 2006.  It wasreimbursed up to a cumulative amount of $8.0 million under a litigationsettlement agreement. Cumulative reimbursements of $8.0 million were recordedthrough September 30, 2006. The Company continued offering such discounts toparticipating facilities through the end of the year.  The discount program ended December 31, 2006.  Accordingly, no reimbursements of discountswere received for the three months ended June 30, 2007. 

Operating expenses increased 17.5%principally due to increased legal expenses which are reflected in General andadministrative costs.  Compensation andfreight costs for General and administrative expenses also increased, mitigatedby reduced stock option expense, repairs and maintenance, and franchisetax.  The decrease in expense for Salesand marketing was attributable primarily to lower cost of samples, travel andentertainment, and stock option expense. Compensation costs increased slightly. Research and development costs increased slightly. 

Loss from operations increased due principally to lower gross profitmargins and higher operating expenses.  

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The Company’s effective tax rates (a benefit for the three months endedJune 30, 2006) on the net loss before income taxes were zero percent and 49.7%for the three months ended June 30, 2007 and 2006, respectively.  The effective tax rate for the three months endedJune 30, 2007, was zero percent due to the fact that all tax benefits have beenfully reserved.

*Comparison of Six Months EndedJune 30, 2007, and June 30, 2006*

Domestic sales accounted for 79.1% and 86.6% of the revenues for thesix months ended June 30, 2007 and 2006, respectively.  International sales accounted for theremaining revenues.  Domestic revenuesdecreased 21.8%, principally due to lower domestic pricing in some markets, andinternational revenues increased 32.3%, due primarily to the timing of priorPATH shipments, which fluctuates from quarter to quarter.  Overall, unit sales increased 9.2%.  Domestic unit sales decreased 0.6% andinternational sales increased 33.2%. Domestic unit sales were 64.6% of total unit sales for the six monthsended June 30, 2007.

Gross profit decreased primarily due to lower average selling prices indomestic markets mitigated by higher volumes sold.  The average cost of manufactured product soldper unit decreased by 16.7% due principally to fixed costs being spread overmore units produced.  Profit margins canfluctuate depending upon, among other things, the cost of product manufacturedand the capitalized cost of product recorded in inventory, as well as productsales mix.  The lower cost in endinginventory at June 30, 2007, should have a continuing positive effect on profitmargins for the third quarter.  Royaltyexpense increased due to slightly higher gross sales.

The Company had offered certain discounts to participating facilitiesthrough December 31, 2006.  It wasreimbursed up to a cumulative amount of $8.0 million under a litigationsettlement agreement.  Cumulativereimbursements of $8.0 million were recorded through September 30, 2006. TheCompany continued offering such discounts to participating facilities throughthe end of the year.  The discountprogram ended December 31, 2006. Accordingly, no reimbursements of discounts were received for the sixmonths ended June 30, 2007.

Operating expenses increased 22% principally due to increased legalexpenses which are reflected in General and administrative costs.  Compensation and freight costs for Generaland administrative expenses also increased, mitigated by reduced stock optionexpense, travel and entertainment cost, franchise tax, and lower bad debtexpense.  The increase in expense forSales and marketing was attributable primarily to compensation costs, traveland entertainment, trade shows, and consulting. The increase was mitigated by a reduction in marketing expenses andstock option expense.  The decrease inResearch and development costs was due principally to decreased cost related toengineering samples.  

Loss from operations increased due principally to lower gross profitmargins and higher operating expenses.

The Company’s effective tax rates (a benefit for the six months endedJune 30, 2006) on the net loss before income taxes were zero percent and 37.9%for the six months ended June 30, 2007 and 2006, respectively. The effectivetax rate for the six months ended June 30, 2007, was zero percent due to thefact that all tax benefits have been fully reserved.

The Company’s balance sheet remains strong with cash making up 61.0% oftotal assets.  Working capital was $46.1million at June 30, 2007, a decrease of $4.8 million from December 31,2006.  The current ratio was 8.4 at December31, 2006, and 6.5 at June 30, 2007.  Thequick ratio decreased from 7.5 at December 31, 2006, to 5.5 at June 30,2007.  These indicators continue todemonstrate a strong financial position. The liability for Accrued royalties paid to a shareholder was lower atthe end of the year due to the payment of the fourth quarter royalties beforethe end of the year. This allowed the Company to include that payment as a losscarryback in 2006.

Approximately $5.3 million in cash flow was used by operating activities.  $1.7 million of that amount was incurred toincrease inventory levels to insulate us from supply disruptions and/orincreases in demand.  The remaining usesof cash were for capital costs incurred for the acquisition of plant, propertyand equipment and intangible assets, and the repayment of long-term debt. 

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**LIQUIDITY AND FUTURE CAPITAL REQUIREMENTS**

HistoricalSources of Liquidity

We have historically funded operations primarily from proceeds fromprivate placements, loans, and litigation efforts. We were capitalized withapproximately $52.6 million raised from six separate private placementofferings. We also funded operations through loans aggregating over $15.0million. We received cash payments of $88.5 million and discount reimbursementsof $8.0 million from litigation settlements.

InternalSources of Liquidity

*Margins and Market Access*

In early 2004 we began to receive shipment of product from Double Dove.We believe as we receive and produce greater quantities our unit cost of goodssold could decrease.  We believe, if wehave market access, our profit margins, for the long-term, could increase asmargins tend to improve with additional sales and higher production levels. Tobe profitable from operations we would need minimal access to hospital marketswhich has been difficult to obtain due to the monopolistic marketplace whichwas the subject of our lawsuit against BD. We will continue to attempt to gainaccess to the market through our sales efforts and innovative technology. 

The mix of domestic and international sales affects the average salesprice of our products. Generally, the higher the ratio of domestic sales tointernational sales, the higher the average sales price will be. Typicallyinternational sales are shipped directly from China. Purchases of productmanufactured in China, if available, usually decrease the average cost ofmanufacture for all units as domestic costs, such as indirect labor andoverhead, remain relatively constant. The number of units produced by theCompany and manufactured in China can have a significant effect on the carryingcosts of inventory as well as cost of sales. The Company will continue toevaluate the appropriate mix of products manufactured domestically and thosemanufactured in China to achieve economic benefits as well as to maintain ourdomestic manufacturing capability. Currently, approximately 25.5%****of our syringes are produced domestically. 

*Seasonality*

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

*Licensing Agreement*

Weentered into a License Agreement with BTMD as of May 13, 2005, which wasapproved by the People’s Republic of China (the “PRC”) on August 1, 2005.We have granted to BTMD a limited exclusive license to manufacture and alimited exclusive right to sell syringes in the PRC having retractable needlesthat incorporate our technology for a term of three years. This LicenseAgreement is subject to the Technology License Agreement dated June 23,1995, between Mr. Thomas J. Shaw, our founder and CEO, as licensorand the Company, as licensee. Accordingly, 5% of the licensing proceeds wereceive from BTMD will be paid under the Technology License Agreement. BTMD hasagreed to manufacture and sell these products in the PRC and to pay us aquarterly royalty of two and one-half cents per unit on 1/2 cc, 3 cc, and 5 ccsyringes and a royalty of three and one-half cents per unit on 1 cc and 10 ccsyringes.  The factory, assemblyequipment, and the related infrastructure are substantially complete for someproducts.  However, there are still manufacturing processes beingaddressed. The facility should be operational by the end of the year. However, we do not expect the required governmental approvals to be obtainedthis year.  Accordingly, we now do not expect the payment of royalties tobegin any earlier than 2008. **  **

The obligation to pay the royalties continues even if any and all ofour patent rights in the PRC are found to be invalid or unenforceable for anyreason. We have the right, but not the obligation, to terminate the agreementif we have not received certain royalty payments.  We had the right to terminate the agreementin 2006 because we did not receive royalty payments for at least 25,000,000units.  We have the right to terminatethe agreement if we do not receive royalty payments for at least 50,000,000units in 2007 or 100,000,000 units per year for each year thereafter.  We have not received royalties under thisagreement; however, we do not plan to terminate the agreement at this time andwill continue to work with BTMD to facilitate production.

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*Cash Requirements*

Due to prior litigation settlements, we have sufficient cash reservesand intend to rely on operations, cash reserves, and debt financing as theprimary ongoing sources of cash. In the event we continue to have only limitedmarket access and cash generated from operations becomes insufficient tosupport operations, we would take cost cutting measures to reduce cashrequirements. Such measures could result in reduction of units being produced,reduction of workforce, reduction of salaries of officers and other nonhourlyemployees, and deferral of royalty payments.

ExternalSources of Liquidity

We have obtained several loans from the inception of the Company, whichhave, together with the proceeds from sales of equities and litigation efforts,enabled us to pursue development and production of our products. Currently webelieve we could obtain additional funds through loans if needed. Furthermore,the shareholders previously authorized an additional 5,000,000 shares of aClass C Preferred Stock that could, if necessary, be designated and used toraise funds through the sale of equity. 

**Item 3.        Quantitativeand Qualitative Disclosures About Market Risk.**

None

**Item 4.        Controlsand Procedures.**

Pursuant to paragraph (b) of Rule 13a-15 or Rule 15d-15 of theSecurities Exchange Act of 1934 (the “Exchange Act”) and on August 8, 2007, ourPresident, Chairman, and Chief Executive Officer, Thomas J. Shaw (the “CEO”),and our Vice President and Chief Financial Officer, Douglas W. Cowan (the “CFO”),acting in their capacities as our principal executive and financial officers,evaluated the effectiveness of our disclosure controls and procedures, asdefined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act, andconcluded that, as of June 30, 2007, and based on the evaluation of thesecontrols and procedures as required by paragraph (b) of Rule 13a-15 or Rule15d-15 under the Exchange Act, there were no significant deficiencies in theseprocedures. The CEO and CFO concluded that our disclosure controls andprocedures are effective.  

There have been no material changes in our internal controls overfinancial reporting identified in connection with the evaluation required byparagraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act thatoccurred during the second fiscal quarter or in any other factor that hasmaterially affected, or is reasonably likely to materially affect, our internalcontrols over financial reporting. 

**PART II-OTHER INFORMATION**

**Item 1.        LegalProceedings.**

Wefiled a lawsuit against BD on June 15, 2007. Please see exhibit no. 99.

**Item 1A.     RiskFactors.**

There were nomaterial changes in risk factors applicable to the Company as set forth in ourForm 10-K annual report for 2006 which was filed on April 2, 2007, and which isavailable on EDGAR other than the following: 

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Most internationalsales are filled by production from Double Dove.  In the event that we were unable to purchasesuch product from Double Dove, we would need to find an alternative supplier toavoid a disruption in supply.    For thefirst six months of 2007, approximately 74.5% of our production was provided byDouble Dove.  

**Item 2.        UnregisteredSales of Equity Securities and Use of Proceeds.**

Unregistered Sales ofEquity Securities and Use of Proceeds

None.  

Working CapitalRestrictions and Limitations on the Payment of Dividends

The certificatesof designation for each of the outstanding series of Class B ConvertiblePreferred Stock each provide that, if a dividend upon any shares of PreferredStock is in arrears, no dividends may be paid or declared or any otherdistribution made upon any stock ranking junior to such stock and generally nosuch junior stock may be redeemed.

We maintain cash for use as collateral for letters of credit we providefrom time to time to enable, among other things, the purchase of product fromChina. As of June 30, 2007, we had no funds held as restricted cash for suchpurposes.  The Board of Directors hasauthorized management to borrow and incur indebtedness in the form of lettersof credit in an aggregate amount, at any one time, of $5,000,000. 

**Item 3.        DefaultsUpon Senior Securities.**

Series III Class BConvertible Preferred Stock

As of the sixmonths ended June 30, 2007, the amount of dividends in arrears is $68,000 andthe total arrearage is $2,921,000.

Series IV Class BConvertible Preferred Stock

As of the sixmonths ended June 30, 2007, the amount of dividends in arrears is $276,000 andthe total arrearage is $6,200,000.

Series V Class BConvertible Preferred Stock

As of the sixmonths ended June 30, 2007, the amount of dividends in arrears is $211,000 andthe total arrearage is $2,693,000.

**Item 5.        OtherInformation.**

The2007 annual meeting shall be held on September 28, 2007, at 10:00 a.m. at Little Elm City Hall; 100West Eldorado Parkway; Little Elm, Texas, 75068.

**Item 6.        Exhibits.**
| Exhibit No. |   | Description of Document                          |   |
|-------------|--------|--------------------------------------------------|--------|
|        |   |                                             |
| 31.1        |   | Certification of Principal Executive Officer     |
|        |   |                                             |
| 31.2        |   | Certification of Principal Financial Officer     |
|        |   |                                             |
| 32          |   | Certification Pursuant to 18 U.S.C. Section 1350 |
|        |   |                                             |
| 99.         |   | Complaint filed against BD on June 15, 2007 *    |

 

*                 Incorporatedherein by reference to RTI’s Form 8-K filed on June 19, 2007.

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**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
| DATE:  August 14, 2007 |   |   | RETRACTABLE TECHNOLOGIES, INC. |                     |
|-----------------------------|--------|--------|--------------------------------|--------------------------|
|                        |   |   |                           | (Registrant)             |   |
|                        |   |   |                           |                     |   |
|                        |   |   |                           |                     |   |
|                        |   |   | BY:                            | /s/ Douglas W.  Cowan    |   |
|                        |   |   |                           | DOUGLAS W. COWAN         |
|                        |   |   |                           | VICE PRESIDENT  AND      |
|                        |   |   |                           | CHIEF FINANCIAL  OFFICER |
|                             |        |        |                                |                          |  |  |

 

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