##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

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



For the quarterly period ended June 30, 2005



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 000-30885



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Retractable Technologies, Inc.

(Exact name of registrant as specified in its charter)



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|                                |  |                    
|------------------------------- |  | -------------------
|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 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 is an accelerated filer (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 Section 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: 23,342,198 shares of
Common Stock, no par value, issued and outstanding on August 1, 2005.



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##### Table of Contents

TABLE OF CONTENTS



|                             |  |                                                                                        |  |   
|---------------------------- |  | -------------------------------------------------------------------------------------- |  | --
|PART I-FINANCIAL INFORMATION |  |                                                                                       
|                             |  |                                                                                       
|Item 1.                      |  | Financial Statements.                                                                  |  |   
|                             |  |                                                                                       
|                             |  | 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. |  | 9 
|                             |  |                                                                                       
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk.                            |  | 13
|                             |  |                                                                                       
|Item 4.                      |  | Controls and Procedures.                                                               |  | 13
|                             | 
|PART II-OTHER INFORMATION    |  |                                                                                       
|                             |  |                                                                                       
|Item 1.                      |  | Legal Proceedings.                                                                     |  | 13
|                             |  |                                                                                       
|Item 2.                      |  | Unregistered Sales of Equity Securities and Use of Proceeds.                           |  | 13
|                             |  |                                                                                       
|Item 3.                      |  | Defaults Upon Senior Securities.                                                       |  | 14
|                             |  |                                                                                       
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders.                                   |  | 14
|                             |  |                                                                                       
|Item 5.                      |  | Other Information.                                                                     |  | 14
|                             |  |                                                                                       
|Item 6.                      |  | Exhibits.                                                                              |  | 14
|                             | 
|SIGNATURES                   |  | 15                                                                                    



2



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##### Table of Contents

PART I-FINANCIAL INFORMATION



Item 1. Financial Statements.



RETRACTABLE TECHNOLOGIES, INC.

CONDENSED BALANCE SHEETS



|                                           |  |               |            |                   |   |           
|------------------------------------------ |  | ------------- | ---------- | ----------------- | - | ----------
|                                           |  | June 30, 2005 |            | December 31, 2004
|                                           |  | (unaudited)   |            |                  
|ASSETS                                     |  |               |            |                   |   |           
|Current assets:                            |  |               |            |                   |   |           
|Cash and cash equivalents                  |  | $             | 51,911,786 |                   | $ | 55,868,526
|Accounts receivable, net                   |  |               | 1,482,615  |                   |   | 1,864,514 
|Inventories, net                           |  |               | 4,500,081  |                   |   | 3,778,949 
|Income taxes receivable                    |  |               | 2,025,971  |                   |   | 1,349,144 
|Current deferred tax asset                 |  |               | 1,872,860  |                   |   | 1,887,347 
|Other current assets                       |  |               | 312,371    |                   |   | 296,683   
|                                           |  |               |            |                   |   |           
|Total current assets                       |  |               | 62,105,684 |                   |   | 65,045,163
|                                           |  |              
|Property, plant, and equipment, net        |  |               | 11,969,381 |                   |   | 11,056,865
|Intangible assets, net                     |  |               | 337,516    |                   |   | 358,659   
|Other assets                               |  |               | 30,233     |                   |   | 34,005    
|                                           |  |               |            |                   |   |           
|Total assets                               |  | $             | 74,442,814 |                   | $ | 76,494,692
|                                           |  |               |            |                   |   |           
|LIABILITIES AND STOCKHOLDERS EQUITY       |  |               |            |                   |   |           
|Current liabilities:                       |  |               |            |                   |   |           
|Accounts payable                           |  | $             | 1,903,670  |                   | $ | 3,402,037 
|Current portion of long-term debt          |  |               | 322,629    |                   |   | 271,842   
|Accrued compensation                       |  |               | 337,477    |                   |   | 322,861   
|Marketing fees payable                     |  |               | 1,419,760  |                   |   | 1,419,760 
|Accrued royalties                          |  |               | 356,958    |                   |   | 504,016   
|Other accrued liabilities                  |  |               | 272,509    |                   |   | 118,832   
|Income taxes payable                       |  |               | 1,525,947  |                   |   | 1,813,084 
|                                           |  |               |            |                   |   |           
|Total current liabilities                  |  |               | 6,138,950  |                   |   | 7,852,432 
|                                           |  |               |            |                   |   |           
|Long-term debt, net of current maturities  |  |               | 4,448,964  |                   |   | 3,535,410 
|Long-term deferred tax liability           |  |               | 1,377,302  |                   |   | 1,442,145 
|                                           |  |               |            |                   |   |           
|Total liabilities                          |  |               | 11,965,216 |                   |   | 12,829,987
|                                           |  |              
|Stockholders equity:                      |  |               |            |                   |   |           
|Preferred stock $1 par value:              |  |               |            |                   |   |           
|Series I, Class B                          |  |               | 178,000    |                   |   | 199,400   
|Series II, Class B                         |  |               | 275,200    |                   |   | 289,000   
|Series III, Class B                        |  |               | 135,245    |                   |   | 137,745   
|Series IV, Class B                         |  |               | 556,000    |                   |   | 556,000   
|Series V, Class B                          |  |               | 1,387,471  |                   |   | 1,389,971 
|Common Stock, no par value                 |  |               |           |                   |   |          
|Additional paid-in capital                 |  |               | 53,861,268 |                   |   | 53,424,744
|Retained earnings                          |  |               | 6,084,414  |                   |   | 7,667,845 
|                                           |  |               |            |                   |   |           
|Total stockholders equity                 |  |               | 62,477,598 |                   |   | 63,664,705
|                                           |  |               |            |                   |   |           
|Total liabilities and stockholders equity |  | $             | 74,442,814 |                   | $ | 76,494,692
|                                           |  |               |            |                   |   |           



See accompanying notes
to condensed financial statements



3



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##### Table of Contents

RETRACTABLE TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)



|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|------------------------------------------------- |  | -------------------------------- | ---------- | - | -------------------------------- | - | ---------- | ------------------------------ |  | - | ------------------------------ | - |  | - | ---------- | -
|                                                  |  | Three Months ended June 30, 2005 |            |   | Three Months ended June 30, 2004 |   |            | Six Months ended June 30, 2005 |  |   | Six Months ended June 30, 2004 |  
|Sales, net                                        |  | $                                | 4,517,335  |   |                                  | $ | 4,272,283  |                                |  | $ | 8,581,209                      |   |  | $ | 8,600,597  |  
|Reimbursed discounts                              |  |                                  | 498,483    |   |                                  |   | 21,254     |                                |  |   | 678,783                        |   |  |   | 31,386     |  
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Total sales                                       |  |                                  | 5,015,818  |   |                                  |   | 4,293,537  |                                |  |   | 9,259,992                      |   |  |   | 8,631,983  |  
|Cost of sales                                     |  |                                  | 4,003,978  |   |                                  |   | 2,697,456  |                                |  |   | 6,735,613                      |   |  |   | 5,906,161  |  
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Gross profit                                      |  |                                  | 1,011,840  |   |                                  |   | 1,596,081  |                                |  |   | 2,524,379                      |   |  |   | 2,725,822  |  
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Operating expenses:                               |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Sales and marketing                               |  |                                  | 989,119    |   |                                  |   | 948,524    |                                |  |   | 1,929,502                      |   |  |   | 1,687,766  |  
|Research and development                          |  |                                  | 204,849    |   |                                  |   | 120,960    |                                |  |   | 323,943                        |   |  |   | 244,047    |  
|General and administrative                        |  |                                  | 1,632,359  |   |                                  |   | 3,099,690  |                                |  |   | 3,088,141                      |   |  |   | 5,412,033  |  
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Total operating expenses                          |  |                                  | 2,826,327  |   |                                  |   | 4,169,174  |                                |  |   | 5,341,586                      |   |  |   | 7,343,846  |  
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|                                                  |  |                                  |            |  
|Loss from operations                              |  |                                  | (1,814,487 | ) |                                  |   | (2,573,093 | )                              |  |   | (2,817,207                     | ) |  |   | (4,618,024 | )
|                                                  |  |                                  |            |  
|Interest income                                   |  |                                  | 334,045    |   |                                  |   | 22,875     |                                |  |   | 586,184                        |   |  |   | 31,974     |  
|Interest expense, net                             |  |                                  | (60,689    | ) |                                  |   | (66,529    | )                              |  |   | (123,102                       | ) |  |   | (137,588   | )
|Litigation settlements, net                       |  |                                  |           |   |                                  |   | 9,051,250  |                                |  |   |                               |   |  |   | 9,051,250  |  
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Net income (loss) before income taxes             |  |                                  | (1,541,131 | ) |                                  |   | 6,434,503  |                                |  |   | (2,354,125                     | ) |  |   | 4,327,612  |  
|Provision (benefit) for income taxes              |  |                                  | (480,634   | ) |                                  |   | 62,433     |                                |  |   | (770,693                       | ) |  |   | 62,433     |  
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Net income (loss)                                 |  |                                  | (1,060,497 | ) |                                  |   | 6,372,070  |                                |  |   | (1,583,432                     | ) |  |   | 4,265,179  |  
|Preferred stock dividend requirements             |  |                                  | (376,770   | ) |                                  |   | (562,574   | )                              |  |   | (758,115                       | ) |  |   | (1,132,217 | )
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Earnings (loss) applicable to common shareholders |  | $                                | (1,437,267 | ) |                                  | $ | 5,809,496  |                                |  | $ | (2,341,547                     | ) |  | $ | 3,132,962  |  
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Earnings (loss) per share  basic                 |  | $                                | (0.06      | ) |                                  | $ | 0.26       |                                |  | $ | (0.10                          | ) |  | $ | 0.14       |  
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Earnings (loss) per share  diluted               |  | $                                | (0.06      | ) |                                  | $ | 0.22       |                                |  | $ | (0.10                          | ) |  | $ | 0.11       |  
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Weighted average common shares outstanding        |  |                                  | 23,251,998 |   |                                  |   | 22,226,454 |                                |  |   | 23,227,831                     |   |  |   | 22,197,607 |  
|                                                  |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  



See accompanying notes
to condensed financial statements



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RETRACTABLE TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                            |  |                                |            |   |                               |   |            |  
|------------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | - | ----------------------------- | - | ---------- | -
|                                                                                            |  | Six Months ended June 30, 2005 |            |   | Six Monthsended June 30, 2004 |  
|Cash flows from operating activities                                                        |  |                                |            |   |                               |   |            |  
|Net income (loss)                                                                           |  | $                              | (1,583,432 | ) |                               | $ | 4,265,179  |  
|Adjustments to reconcile net income to net cash provided by (used by) operating activities: |  |                                |            |   |                               |   |            |  
|Depreciation and amortization                                                               |  |                                | 663,569    |   |                               |   | 649,551    |  
|Capitalized interest                                                                        |  |                                | (83,581    | ) |                               |   | (5,780     | )
|Stock option compensation                                                                   |  |                                | 296,324    |   |                               |   | 392,786    |  
|Provision for inventory valuation                                                           |  |                                | 13,977     |   |                               |   |           |  
|Provision for doubtful accounts                                                             |  |                                | 17,551     |   |                               |   |           |  
|Accreted interest                                                                           |  |                                | 50,560     |   |                               |   | 50,560     |  
|Deferred income taxes                                                                       |  |                                | (50,356    | ) |                               |   |           |  
|Loss on disposal of assets                                                                  |  |                                | 4,474      |   |                               |   |           |  
|Change in assets and liabilities:                                                           |  |                                |            |   |                               |   |            |  
|(Increase) decrease in restricted cash                                                      |  |                                |           |   |                               |   | (248,814   | )
|(Increase) decrease in inventories                                                          |  |                                | (735,109   | ) |                               |   | (1,687,535 | )
|(Increase) decrease in accounts and note receivable                                         |  |                                | 364,348    |   |                               |   | 200,839    |  
|(Increase) decrease in income taxes receivable                                              |  |                                | (676,823   | ) |                               |   |           |  
|(Increase) decrease in other current assets                                                 |  |                                | (11,664    | ) |                               |   | (224,193   | )
|Increase (decrease) in accounts payable                                                     |  |                                | (1,498,367 | ) |                               |   | 1,093,229  |  
|Increase (decrease) in other accrued liabilities                                            |  |                                | 21,235     |   |                               |   | (520,449   | )
|Increase (decrease) in income taxes payable                                                 |  |                                | (287,134   | ) |                               |   | (17,954    | )
|                                                                                            |  |                                |            |   |                               |   |            |  
|Net cash provided (used) by operating activities                                            |  |                                | (3,494,428 | ) |                               |   | 3,947,419  |  
|                                                                                            |  |                                |            |   |                               |   |            |  
|Cash flows from investing activities                                                        |  |                                |            |   |                               |   |            |  
|Purchase of property, plant, and equipment                                                  |  |                                | (1,426,638 | ) |                               |   | (552,341   | )
|Proceeds from the sale of assets                                                            |  |                                | 3,400      |   |                               |   |           |  
|                                                                                            |  |                                |            |   |                               |   |            |  
|Net cash used by investing activities                                                       |  |                                | (1,423,238 | ) |                               |   | (552,341   | )
|                                                                                            |  |                                |            |   |                               |   |            |  
|Cash flows from financing activities                                                        |  |                                |            |   |                               |   |            |  
|Repayments of long-term debt and notes payable                                              |  |                                | (189,920   | ) |                               |   | (38,880    | )
|Proceeds from long-term debt                                                                |  |                                | 1,050,846  |   |                               |   |           |  
|Proceeds from the exercise of stock options                                                 |  |                                | 100,000    |   |                               |   |           |  
|                                                                                            |  |                                |            |   |                               |   |            |  
|Net cash provided (used) by financing activities                                            |  |                                | 960,926    |   |                               |   | (38,880    | )
|                                                                                            |  |                                |            |   |                               |   |            |  
|Net increase (decrease) in cash                                                             |  |                                | (3,956,740 | ) |                               |   | 3,356,198  |  
|                                                                                            |  |                               
|Cash and cash equivalents at:                                                               |  |                                |            |   |                               |   |            |  
|Beginning of period                                                                         |  |                                | 55,868,526 |   |                               |   | 8,155,621  |  
|                                                                                            |  |                                |            |   |                               |   |            |  
|End of period                                                                               |  | $                              | 51,911,786 |   |                               | $ | 11,511,819 |  
|                                                                                            |  |                                |            |   |                               |   |            |  
|Supplemental disclosures of cash flow information:                                          |  |                                |            |   |                               |   |            |  
|Interest paid                                                                               |  | $                              | 163,292    |   |                               | $ | 103,822    |  
|Income taxes paid                                                                           |  | $                              | 244,809    |   |                               | $ | 80,387     |  
|                                                                                            |  |                               
|Supplemental schedule of noncash investing and financing activities:                        |  |                                |            |   |                               |   |            |  
|Debt assumed to acquire assets                                                              |  | $                              | 52,856     |   |                               | $ |           |  
|Closing costs rolled into long-term debt                                                    |  | $                              |           |   |                               | $ | 24,154     |  
|Conversion of long-term debt into Common Stock                                              |  | $                              |           |   |                               | $ | 92,968     |  



See accompanying notes
to condensed financial statements



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##### Table of Contents

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, to design, develop, manufacture, and market 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 primary products are the VanishPoint® syringe in the 1cc, 3cc, 5cc, and 10cc sizes and blood collection tube holders. The Company has conducted preliminary clinical evaluations and worked with national distributors to encourage healthcare facilities to
transition from the use of standard needle products to the VanishPoint® 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 of 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 condensed financial statements should be read in conjunction with the financial statement
disclosures contained in the Companys audited financial statements for the year ended December 31, 2004.



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Accounting estimates



The preparation of financial statements in conformity with United States generally accepted accounting principles 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
unrestricted cash 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. An additional allowance has been established based on a percentage of receivables outstanding. These provisions are 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.



Inventories



Inventories are valued at the lower of cost or market, with cost being
determined using a standard cost method, which approximates average cost. Provision is made for any excess or obsolete inventories.



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



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useful lives or increase capacity and interest cost associated with significant capital additions. Gains or losses from property disposals are included in
income.



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
|Building                       |  | 39 years     
|Building improvements          |  | 15 years     
|Automobiles                    |  | 7 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 a discounted cash flow analysis of the underlying assets.



Reclassifications



Certain prior year amounts have been reclassified to conform with the current periods presentation.



Intangible assets



Intangible assets are stated at cost and consist primarily of patents, a
license agreement granting exclusive rights to use patented technology, and trademarks which are amortized using the straight-line method over 17 years.



Financial instruments



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



Concentrations of credit risk



The Companys financial instruments exposed to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. Cash balances, some of which exceed the federally insured limits, are maintained in
financial institutions; however, management believes the institutions are of high credit quality. 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.



Revenue
recognition



Revenue is recognized for sales to
distributors when title and risk of ownership passes to the distributor, generally upon shipment. 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 that the Company has not received
tracking reports. Rebates are recorded when issued and are applied against the customers receivable balance. The provision for contractual pricing allowances 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 netted against individual
distributors accounts receivable balances for financial reporting purposes. The



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resulting net balance is reflected in accounts receivable or accrued liabilities, as appropriate. 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 passes from the Company. Any product shipped or distributed for evaluation purposes is
expensed.



Reimbursed discounts



The Company receives reimbursed discounts from one of the settlement
agreements reached in its federal antitrust lawsuit, Retractable Technologies, Inc. v. Becton Dickinson & Co. et al. Payments under the discount reimbursement program are recognized upon delivery of the product, provided collection is reasonably
assured. Such amounts are presented in the Condensed Statements of Operations as a separate component of revenues.



Income taxes



The Company provides for deferred income taxes in accordance with Statement of Financial Accounting Standard No. 109, Accounting for Income Taxes
(SFAS 109). SFAS 109 requires an asset and liability approach for financial accounting and reporting for income taxes 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 basis differences reverse in future periods. Deferred tax assets are periodically reviewed for realizability. Valuation allowances are recorded when realizability of deferred tax assets is not
likely.



Earnings per share



The Company has adopted Statement of Financial Accounting Standards No. 128,
Earnings Per Share, which establishes standards for computing and presenting earnings per share. Basic earnings per share are computed by dividing net earnings for the period (adjusted for any cumulative preferred dividends for
the period) by the weighted average number of common shares outstanding during the period. The Company has potentially dilutive Common Stock equivalents consisting of convertible preferred stock, stock options, and convertible debt. The potential
dilution, if any, is shown on the following schedule.



|                                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|-------------------------------------------------------------------------- |  | -------------------------------- | ---------- | - | -------------------------------- | - | ---------- | ------------------------------ |  | - | ------------------------------ | - |  | - | ---------- | -
|                                                                           |  | Three Months Ended June 30, 2005 |            |   | Three Months Ended June 30, 2004 |   |            | Six Months Ended June 30, 2005 |  |   | Six Months Ended June 30, 2004 |  
|Net income (loss)                                                          |  | $                                | (1,060,497 | ) |                                  | $ | 6,372,070  |                                |  | $ | (1,583,432                     | ) |  | $ | 4,265,179  |  
|Preferred dividend requirements                                            |  |                                  | (376,770   | ) |                                  |   | (562,574   | )                              |  |   | (758,115                       | ) |  |   | (1,132,217 | )
|                                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Earnings (loss) available to common shareholders                           |  |                                  | (1,437,267 | ) |                                  |   | 5,809,496  |                                |  |   | (2,341,547                     | ) |  |   | 3,132,962  |  
|                                                                           |  |                                  |            |  
|Effect of dilutive securities:                                             |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Preferred stock dividend requirements                                      |  |                                  |           |   |                                  |   | 562,574    |                                |  |   |                               |   |  |   |            |  
|Convertible debt interest and loan fees                                    |  |                                  |           |   |                                  |   | (523,830   | )                              |  |   |                               |   |  |   | (487,492   | )
|                                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Earnings (loss) available to common shareholders after assumed conversions |  | $                                | (1,437,267 | ) |                                  | $ | 5,848,240  |                                |  | $ | (2,341,547                     | ) |  | $ | 2,645,470  |  
|                                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Average common shares outstanding                                          |  |                                  | 23,251,998 |   |                                  |   | 22,226,454 |                                |  |   | 23,227,831                     |   |  |   | 22,197,607 |  
|                                                                           |  |                                  |            |  
|Dilutive stock equivalents from stock options                              |  |                                  |           |   |                                  |   | 327,295    |                                |  |   |                               |   |  |   | 324,357    |  
|Shares issuable upon conversion of preferred stock                         |  |                                  |           |   |                                  |   | 3,486,216  |                                |  |   |                               |   |  |   |           |  
|Shares issuable upon conversion of convertible debt                        |  |                                  |           |   |                                  |   | 726,749    |                                |  |   |                               |   |  |   | 726,749    |  
|                                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Average common and common equivalent shares outstandingassuming dilution  |  |                                  | 23,251,998 |   |                                  |   | 26,766,714 |                                |  |   | 23,227,831                     |   |  |   | 23,248,713 |  
|                                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Basic earnings per share                                                   |  | $                                | (0.06      | ) |                                  | $ | 0.26       |                                |  | $ | (0.10                          | ) |  | $ | 0.14       |  
|                                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  
|Diluted earnings per share                                                 |  | $                                | (0.06      | ) |                                  | $ | 0.22       |                                |  | $ | (0.10                          | ) |  | $ | 0.11       |  
|                                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                |   |  |   |            |  



Research and
development costs



Research and development costs are
expensed as incurred.



Stock-based compensation



The Company has three stock-based director, officer, and
employee compensation plans. The Company uses the fair value recognition provisions of SFAS No. 123 Accounting for Stock Issued to Employees,and related Interpretations. Effective January 1, 2002, the Company adopted the fair
value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation,for all director, officer, and employee awards granted, modified, or settled after December 31, 2001.



3. RECENT PRONOUNCEMENTS



In December 2004, the Financial Accounting Standards Board
(FASB) issued SFAS No. 123 (revised 2004), Share Based Payment (SFAS No. 123(R)). SFAS No. 123(R) supercedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS
No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. SFAS No. 123(R) must be adopted by the Company by the first quarter of 2006. Currently, the Company
uses the Black-Scholes model to estimate the value of stock options granted to employees and is evaluating option valuation models, including the Black-Scholes model, to determine which model the Company will utilize upon adoption of SFAS No.
123(R). The Company plans to adopt SFAS No. 123(R) using the modified-prospective method. Management does not anticipate that adoption of SFAS No. 123(R) will have a material impact on the Companys stock-based compensation expense.



8



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##### Table of Contents

In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of ARB No.
43, Chapter 4, Inventory Pricing, to clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage), should be expensed as incurred and not included in overhead. In addition, this Statement
requires the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions in SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning
after June 15, 2005. The Company is currently assessing the impact of SFAS No. 151 on its financial statements.



4. INVENTORIES



Inventories consist of the following:



|                  |  |               |           |   |                   |   |           |  
|----------------- |  | ------------- | --------- | - | ----------------- | - | --------- | -
|                  |  | June 30, 2005 |           |   | December 31, 2004 |  
|Raw materials     |  | $             | 866,237   |   |                   | $ | 763,664   |  
|Finished goods    |  |               | 3,745,140 |   |                   |   | 3,112,604 |  
|                  |  |               |           |   |                   |   |           |  
|                  |  |               | 4,611,377 |   |                   |   | 3,876,268 |  
|Inventory reserve |  |               | (111,296  | ) |                   |   | (97,319   | )
|                  |  |               |           |   |                   |   |           |  
|                  |  | $             | 4,500,081 |   |                   | $ | 3,778,949 |  
|                  |  |               |           |   |                   |   |           |  



5. INCOME TAX



The income tax benefit for the three and six month periods ended June 30,
2005, is primarily due to the carry back of net operating losses. The provision for income taxes for the three and six month periods ended June 30, 2004 consists of state income taxes, net of the benefit of net operating losses carried forward.
Federal income taxes for the three and six month periods ended June 30, 2004 were fully offset by the benefit of net operating losses carried forward.



6. SUBSEQUENT EVENTS



Effective August 1, 2005 the Company entered into a License Agreement with Baiyin Tonsun Medical Device Co., Ltd. (BTMD). The Company has
granted to BTMD a limited exclusive license to manufacture and a limited exclusive right to sell syringes in the Peoples Republic of China (PRC) having retractable needles that incorporate the Companys technology for a term
of three years. This License Agreement is subject to the Technology License Agreement dated June 23, 1995 between Mr. Thomas J. Shaw, the Companys founder and CEO, as licensor and the Company, as licensee. Mr. Shaw will receive 5% of the
licensing proceeds received by the Company.



BTMD has agreed
to manufacture and sell these products in the PRC and to pay the Company a quarterly royalty of two and one-half cents per unit on 1/2 cc, 3 cc, and 5 cc syringes and a royalty of three and one-half cents per unit on 1 cc and 10 cc syringes. The
Company anticipates the receipt of royalties beginning no later than the first contract year. The obligation to pay the royalties continues even if any and all of the patent rights in the PRC are found to be invalid or unenforceable for any reason.



The Company has the right, but not the obligation, to
terminate the agreement if it has not received royalty payments for at least 25,000,000 units during 2006, 50,000,000 units in 2007 and 100,000,000 units per year for each year thereafter.



The Company had a reduction in staff of 18 employees effective August 11,
2005. In connection with the reduction in staff, terminated employees are eligible to receive severance benefits in the form of a one-time lump sum payment. The total amount of the severance benefits will not exceed $65,000.



On August 12, 2005, the Company filed a lawsuit styled, Retractable
Technologies, Inc. v. Abbott Laboratories Inc. in the United States District Court in the Eastern District of Texas, Texarkana Division. The Company is alleging fraud and breach of contract in connection with the National Marketing and Distribution
Agreement dated as of May 4, 2000 which was terminated on October 15, 2003. The Company is seeking damages which the Company estimates to be in millions of dollars in lost profits, out of pocket expenses and other damages. In addition, the Company
is seeking punitive damages, pre-judgment and post-judgment interest and attorneys fees. As of the date of the filing, the Company has accrued $1,419,760 in marketing fees payable to Abbott in connection with the above-mentioned National
Marketing and Distribution Agreement.



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, the impact of dramatic increases in demand, our ability to quickly increase capacity in the event of a dramatic increase in demand, our ability to access the market, our ability to decrease production costs, our
ability to continue to finance research and development as well as operations and expansion of production, and the increased interest of larger market players, specifically Becton Dickinson & Co. (BD), in providing safety needle
devices. Given these uncertainties, undue reliance should not be placed on forward-looking statements.



The following discussion contains 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 the forward-looking statements. Variances have been rounded for ease of reading. All period references are to the periods ended June 30, 2005 or
2004.



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##### Table of Contents

OVERVIEW



We have been manufacturing and marketing our retractable syringe products into the marketplace since 1997. Our products have been and continue to be
distributed nationally through numerous distributors. However, we have been blocked from access to the market by exclusive marketing practices engaged in by BD who dominates the market. We continue to attempt to gain access to the market through our
sales efforts and innovative technology.



We are focusing on
methods of upgrading our manufacturing capability and efficiency in order to enable us to offer our technology at a reduced price. Our agreement with Double Dove, a Chinese manufacturer, has enabled us to increase manufacturing capacity with little
or no capital outlay and provided a competitive manufactured cost. We believe our current capitalization provides the resources necessary to implement these changes and greatly improve our manufacturing capacity and efficiency, thereby reducing our
unit cost. We are also marketing more products internationally.



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



Comparison of Three Months Ended

June 30, 2005, and June 30, 2004



Total sales
were $5,015,818 for the three months ended June 30, 2005 compared to $4,293,537 for the same period last year, an increase of $722,281 or 16.8 percent. Domestic sales accounted for 96.9 percent and 96.1 percent of the revenues for the three months
ended June 30, 2005 and 2004, respectively. International sales accounted for the remaining revenues. Domestic revenues increased 17.8 percent and international revenues decreased 7.0 percent. Unit sales increased 17.2 percent. Domestic unit sales
increased 19.7 percent and international sales decreased 16.6 percent. Domestic unit sales were 95.0 percent of total unit sales.



Gross profit declined $584,241 due primarily to higher cost product coming out of inventory and being replaced by lower cost product. Profit margins can
fluctuate depending upon, among other things, the cost of product manufactured and the capitalized cost of product recorded in inventory. The lower unit cost in ending inventory at June 30, 2005 should have a positive effect on profit margins for
the third quarter.



Operating expenses declined by $1,342,847
due principally to the reduction in legal fees attributable to the Companys litigation with BD and NMT. Legal costs declined $1,638,630. Sales and marketing costs increased $114,000 due to hiring additional personnel in sales. The increase was
mitigated by a reduction in consulting fees of $79,000. Research and development costs increased $84,000 principally due to development work on a new product. General and administrative costs were also affected by additional travel expense of
$67,000.



Loss from operations decreased $758,606 or 29.5
percent due principally to the decreased litigation costs mitigated by lower profit margins.



Interest income increased $311,170 due to higher invested cash balances.



The tax benefit for the three months ended June 30, 2005 was attributable to the loss carry backs. The tax provision for the three months ended June 30,
2004, was attributable to the state income taxes, net of the benefit of operating loss carry forwards.



Preferred dividend requirements decreased $185,804, or 33.0 percent due to conversions of Preferred Stock into Common Stock.



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##### Table of Contents

Weighted average common shares outstanding increased 4.6 percent due to the conversions.



The Companys balance sheet remains strong with cash making up 69.7
percent of total assets. Working capital was $55,966,734 at June 30, 2005, a decrease of $1,225,997 from December 31, 2004. The current ratio improved from 8.3 at December 31, 2004 to 10.1 at June 30, 2005. The quick ratio also improved from 7.4 to
8.7 from December 31, 2004 to June 30, 2005. These all indicate a strong financial position.



Cash flows used by operating activities were $3,494,428, of which $2,089,000 was used for working capital items. Investing activities were primarily for the completion of the new building. Financing activities
consisted of the final draw down of the construction loan from 1stInternational Bank (1stInternational). The Company began principal and interest payments on this loan in the first quarter.



Comparison of Six Months Ended

June 30, 2005, and June 30, 2004



Total sales were $9,259,992 for the six months ended June 30, 2005 compared to $8,631,983 for the same period last year, an increase of $628,009 or 7.3
percent. Domestic sales accounted for 92.0 percent and 96.8 percent of the revenues for the six months ended June 30, 2005 and 2004, respectively. International sales accounted for the remaining revenues. Unit sales increased 20.4 percent. Domestic
unit sales were 85.9 percent of total unit sales six months ended June 30, 2005.



Gross profit declined $201,443 due primarily to higher cost product coming out of inventory and being replaced by lower cost product. Profit margins can fluctuate depending upon, among other things, the cost of
product manufactured and the capitalized cost of product recorded in inventory. The lower unit cost in ending inventory at June 30, 2005 should have a positive effect on profit margins for the third quarter.



Operating expenses declined by $2,002,260 due principally to the reduction in
legal fees attributable to the Companys litigation with BD and NMT. Legal costs declined $2,469,000. Sales and marketing costs increased $192,000 due to hiring additional personnel in sales and additional travel and entertainment costs of
$100,000. The increase was mitigated by a reduction in consulting fees of $108,000. Research and development costs increased $80,000 principally due to development work on a new product. General and administrative costs were also affected by
additional accounting fees of $67,000 and lower stock option expense of $55,000.



Loss from operations decreased $1,800,817, or 39.0 percent due principally to the decreased litigation costs mitigated by lower profit margins.



Interest income increased $544,210 due to higher invested cash balances.



The tax benefit for the six months ended June 30, 2005 was attributable to
the loss carry backs. The tax provision for the six months ended June 30, 2004, was attributable to the state income taxes, net of the benefit of operating loss carry forwards.



Preferred dividend requirements decreased $374,102, or 33.0 percent due to conversions of Preferred Stock into Common Stock.



Weighted average common shares outstanding increased 4.6
percent due to the conversions.



11



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##### Table of Contents

LIQUIDITY AND FUTURE CAPITAL REQUIREMENTS



Historical Sources of Liquidity



We have historically funded operations primarily from proceeds from private placements, loans, and litigation efforts. We were capitalized with
approximately $52,600,000 raised from six separate private placement offerings. We also funded operations through bank loans aggregating $12,910,000. We have received cash payments of $88,514,873 from litigation settlements through June 30, 2005.
Additionally, through June 30, 2005, we have received $579,812 in discount reimbursements in cash from a litigation settlement.



Internal Sources of Liquidity



Margins and Market Access



In early 2004 we began to receive shipment of product under our agreement with Double Dove. We believe as we receive greater quantities our profit margins
could increase provided we have market access. Margins tend to improve with additional sales and higher production levels. To achieve our break even quarter we would need minimal access to hospital markets which has been difficult to obtain
due to the monopolistic marketplace which was the subject of our lawsuit against BD. We will continue to attempt to gain access to the market through our sales efforts and innovative technology. We are focusing on methods of upgrading our
manufacturing capability and efficiency in order to enable us to offer our technology at a reduced price. We believe our current capitalization provides the resources necessary to implement these changes and greatly improve our manufacturing
capacity and efficiency, thereby reducing our unit cost.



The
mix of domestic and international sales affects the average sales price of our products. The higher the ratio of domestic sales to international sales, the higher the average sales price will be. Typically international sales are shipped directly
from China. Purchases of product manufactured in China will usually decrease the average cost of manufacture for all units as domestic costs, such as indirect labor and overhead, remain relatively constant. The number of units produced by the
Company and manufactured in China can have a significant effect on the carrying costs of inventory as well as cost of sales. The average unit cost in the second quarter of 2005 is lower than the average unit cost in inventory at March 31, 2005. This
is due to more units, in the aggregate, purchased and produced in the second quarter of 2005. Inventory was higher at June 30, 2005, compared to December 31, 2004, due to higher average costs mitigated by fewer units on hand. The Company will
continue to evaluate the appropriate mix of products manufactured domestically and those manufactured in China to achieve economic benefits as well as maintaining our domestic manufacturing capability.



We had a reduction in staff of 18 employees effective August 11, 2005. In
connection with the reduction in staff, terminated employees are eligible to receive severance benefits in the form of a one-time lump sum payment. The total amount of the severance benefits will not exceed $65,000. Annual savings attributable to
this staff reduction will be approximately $380,000.



Seasonality



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



New Licensing Agreement



We entered into a
License Agreement with Baiyin Tonsun Medical Device Co., Ltd. (BTMD) as of May 13, 2005, which was approved 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 a limited exclusive right to sell syringes in the PRC having retractable needles that incorporate our technology for a term of three years. This License Agreement is subject to the Technology License Agreement dated June
23, 1995 between Mr. Thomas J. Shaw, our founder and CEO, as licensor and the Company, as licensee. Accordingly, Mr. Shaw will receive 5% of the licensing proceeds we receive. BTMD has agreed to manufacture and sell these products in the PRC and to
pay us a quarterly royalty of two and one-half cents per unit on 1/2 cc, 3 cc, and 5 cc syringes and a royalty of three and one-half cents per unit on 1 cc and 10 cc syringes. We anticipate the receipt of royalties beginning no later than the first
contract year. The obligation to pay the royalties continues even if any and all of our patent rights in the PRC are found to be invalid or unenforceable for any reason. We have the right, but not the obligation, to terminate the agreement if we
have not received royalty payments for at least 25,000,000 units during 2006, 50,000,000 units in 2007 and 100,000,000 units per year for each year thereafter.



Cash Requirements



Due to prior litigation settlements, we have sufficient cash reserves and intend to rely on operations, cash reserves, and debt financing as the primary
ongoing sources of cash. In the event we continue to have only limited market access and cash generated from operations becomes insufficient to support operations, we would take cost cutting measures to reduce cash requirements. Such measures could
result in reduction of units being produced, reduction of workforce, reduction of salaries of officers and other nonhourly employees, and deferral of royalty payments to Thomas Shaw.



External Sources of Liquidity



We executed a loan from 1stInternational for $2,500,000 for financing of the warehouse. Principal and interest payments began in the first part of 2005. We have obtained several loans over the past six years, which have, together with the proceeds from sales
of equities, enabled us to pursue development and production of our products. Currently we believe we could obtain additional funds through loans if needed. Furthermore, the shareholders previously authorized an additional 5,000,000 shares of a
Class C Preferred Stock that could, if necessary, be authorized and used to raise funds through the sale of equity.



12



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##### Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk.



We previously filed our periodic reports as a small business issuer through the period ended December 31, 2004. The information required by Item 305 of
Regulation S-K was not required under the disclosure requirements for small business issuers. Pursuant to Item 305 of Regulation S-K, disclosure of quantitative and qualitative information about market risk is required in the first annual report.
Information relating to interim financial statements is not required until after the first fiscal year end in which Item 305 is applicable. Accordingly, we anticipate providing a quantitative and qualitative analysis regarding market risk in our
Form 10-K for the year ending December 31, 2005.



Item 4. Controls and Procedures.



Pursuant to paragraph (b) of Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 (the Exchange Act) and on August 11, 2005, our President, 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, as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act, and concluded that, as of June 30, 2005, and based on the evaluation of these controls and procedures as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under
the Exchange Act, there were no significant deficiencies in these procedures. The CEO and CFO concluded that our disclosure controls and procedures are effective.



There have been no material changes during the second quarter of 2005 in our internal controls over financial reporting
identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the last fiscal quarter or in any other factor that has materially affected, or is reasonably likely to
materially affect, our internal controls over financial reporting.



PART II-OTHER INFORMATION



Item 1. Legal Proceedings.



On
August 12, 2005, we filed a lawsuit cause no. 5:05 CV 157 styled, Retractable Technologies, Inc. v. Abbott Laboratories Inc. in the United States District Court in the Eastern District of Texas, Texarkana Division. We are alleging fraud and breach
of contract in connection with the National Marketing and Distribution Agreement dated as of May 4, 2000 which was terminated on October 15, 2003. We are seeking damages which we estimate to be in millions of dollars of lost profits, out of pocket
expenses and other damages. In addition, we are seeking punitive damages, pre-judgment and post-judgment interest and attorneys fees.



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



Sale of Equity Securities and Use of Proceeds



Katie Petroleum, Inc. purchased 100,000 shares of Common Stock through the exercise of options at a price of $1 per share for total consideration of $100,000.



Working Capital Restrictions and Limitations on the Payment of Dividends



We maintain cash for use as collateral for letters of credit we provide
from time to time to enable, among other things, the purchase of product from China. As of June 30, 2005, we had no funds held as restricted cash for such purposes. The Board of Directors has authorized management to borrow and incur indebtedness in
the form of letters of credit in an aggregate amount, at any one time, of $3,000,000.



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



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##### Table of Contents

Item 3. Defaults Upon Senior Securities.



Series I Class B Convertible Preferred Stock



As of the six
months ended June 30, 2005, the amount in arrears is $47,996 and the total arrearage is $98,209.



Series II Class B Convertible Preferred Stock



As of the six months ended June 30, 2005, the amount in arrears is $141,597 and the total arrearage is $308,579.



Series III Class B Convertible Preferred Stock



As of the six months ended June 30, 2005, the amount in arrears is $68,378 and the total arrearage is $2,650,032.



Series IV Class B Convertible Preferred Stock



As of the six months ended June 30, 2005, the amount in arrears is $278,000 and the total
arrearage is $5,090,471.



Series V Class B Convertible Preferred Stock



As of the six months ended June 30, 2005, the amount in arrears is
$222,145 and the total arrearage is $1,819,510.



Item 4. Submission of Matters to a Vote of Security Holders.



None



Item 5. Other Information.



We
will hold our annual meeting at 10:00 a.m. CST on September 16, 2005, at the Community Center of Little Elm located at 107 Hardwicke Lane, Little Elm, Texas 75068.



Item 6. Exhibits.



|            |  |                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Document                                                                                   
|10          |  | License Agreement Between the Company and Baiyin Tonsun Medical Device Co., Ltd. dated as of May 13, 2005.
|            | 
|31.1        |  | Certification of Principal Executive Officer                                                              
|            | 
|31.2        |  | Certification of Principal Financial Officer                                                              
|            | 
|32          |  | Certification Pursuant to 18 U.S.C. Section 1350                                                          



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##### Table of Contents

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: August 15, 2005 |  | RETRACTABLE TECHNOLOGIES, INC. (Registrant)
|                      |  |                                            
|                      |  | BY:                                         |  | /s/ Douglas W. Cowan   
|                      |  |                                             |  | DOUGLAS W. COWAN       
|                      |  |                                             |  | VICE PRESIDENT AND     
|                      |  |                                             |  | CHIEF FINANCIAL OFFICER



15