10KSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-KSB

[ X ]    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended             December 31, 2002                

[    ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number         000-30885                                                 

Retractable Technologies, Inc.

(Name of small business issuer 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)

Issuer’s telephone number                      (972) 294-1010                             

Securities registered under Section 12(b) of the Exchange Act:

Title of each class	Name of each exchange on which registered
Common	The American Stock Exchange

Securities registered under Section 12(g) of the Exchange Act:

Preferred Stock

(Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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     .

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [            ]

State issuer’s revenues for its most recent fiscal year.    $20,316,299

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.) The aggregate market value of the common equity held by non-affiliates is $29,973,864, which was computed with reference to the closing price as of March 17, 2003.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [            ] No [            ]

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. As of March 17, 2003, there were 20,328,100 shares of our common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None except exhibits

Transitional Small Business Disclosure Format (check one): Yes         No     X    

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TABLE OF CONTENTS

		Page
PART I
Item 1.	Description of Business	1
Item 2.	Description of Property	9
Item 3.	Legal Proceedings	10
Item 4.	Submission of Matters to a Vote of Security Holders	10
PART II
Item 5.	Market for Common Equity and Related Stockholder Matters	11
Item 6.	Management’s Discussion and Analysis or Plan of Operation	12
Item 7.	Financial Statements	F-1
Item 8.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	20
PART III
Item 9.	Directors, Executive Officers, Promoters, and Control Persons; Compliance with Section 16(a) of the Exchange Act	20
Item 10.	Executive Compensation	25
Item 11.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	27
Item 12.	Certain Relationships and Related Transactions	29
Item 13.	Exhibits and Reports on Form 8-K	30
Item 14.	Controls and Procedures	32
SIGNATURES		33

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PART I

Item 1.    Description of Business

BUSINESS DEVELOPMENT

General Description

We design, develop, manufacture, and market innovative patented safety needle devices for the healthcare industry. Our VanishPoint^® products utilize a unique friction ring mechanism patented by Thomas J. Shaw, our Founder, President, and Chief Executive Officer. VanishPoint^® products are designed specifically to prevent needlestick injuries and to prevent reuse. The friction ring mechanism permits the automated retraction of the syringe needle into the barrel of the syringe, directly from the patient, after delivery of the medication is completed. The VanishPoint^® blood collection tube holder utilizes the same mechanism to retract the needle after blood has been drawn from the patient. Closure of an attached end cap of the blood collection tube holder causes the needle to retract directly from the patient into the closed tube holder. Advantages of our products include protection from needlestick injuries, prevention of cross contamination through reuse, and reduction of disposal and other associated costs. Federal regulation now requires the use of safe needle devices.

We and Thomas J. Shaw entered into a Technology License Agreement dated effective as of the 23rd day of June 1995, whereby Mr. Shaw granted us a worldwide exclusive license to manufacture, market, sell, and distribute ‘Licensed Products’ and ‘Improvements’ until the expiration of the last to expire of the last ‘Licensed Patents’ unless sooner terminated under certain conditions without right to sublicense. ‘Licensed Products’, ‘Improvements’, and ‘Licensed Patents’ are all terms that are extensively defined in the Technology License Agreement. In exchange, we paid Mr. Shaw a $500,000 initial licensing fee and a 5 percent royalty on gross sales after returns of ‘Licensed Products’. See “Patents and Proprietary Rights” for a more detailed discussion. Our goal is to become a leading provider of automated retraction safety devices.

Development of the Company

While owning and operating Checkmate Engineering, a sole proprietorship, Thomas J. Shaw, our President and Chief Executive Officer, developed and patented the idea and early prototypes of the syringe that were to become the VanishPoint^® safety syringe. On May 9, 1994, the Company was incorporated in Texas to design, develop, manufacture, and market medical safety devices for the healthcare industry. In April 1995, Mr. Shaw, who owned all 1,000 of the then issued and outstanding shares of the Common Stock, exchanged all 1,000 shares then outstanding for 14,000,000 shares of Common Stock. In May 1996, Mr. Shaw transferred 2,800,000 shares of the 14,000,000 then issued and outstanding Common Stock to Lillian E. Salerno, a former Director.

We received our ISO 9001 Certificate in July 1998, and the VanishPoint^® syringe received its CE Mark Certificate on July 31, 1998. In July 2001, the Company received re-certification of the ISO 9001 and CE Mark. ISO 9001 standard is a model created by the International Organization for Standardization (“ISO”), an international agency consisting of almost 100 member countries that provides guidance in the development and implementation of an effective quality management system through a series of five international standards. This model is used by organizations to certify their quality system from initial design and development of a desired product or service through production, installation, and servicing. The CE mark allows us to sell our products in Europe.

On May 4, 2000, we entered into an agreement with Abbott Laboratories for an initial five-year term for the marketing and distribution of the Company’s products into the U.S. acute care market. See Dependence on Certain Customers.

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We installed our 1cc assembly equipment in the fourth quarter of 2000 and began production in the first quarter of 2001.

We continue to attempt to gain access to the market through our sales efforts and through our litigation against Becton Dickinson and Company (“B-D”), Tyco International (U.S.), Inc. and Tyco Healthcare Group, L.P. (“Tyco”), Premier, Inc. and Premier Purchasing Partners, L.P. (“Premier”), and Novation, L.L.C. (“Novation”). We believe that if we are successful in getting market access for our products, it would have a significant favorable impact on the Company. See Item 3 Legal Proceedings.

We have not been involved in any bankruptcy or similar proceedings and have not merged or consolidated a significant amount of assets other than in the ordinary course of business except as discussed above.

BUSINESS OF RTI

Principal Products

Our products with Notice of Substantial Equivalence to the FDA include 1cc tuberculin, insulin, and allergy antigen VanishPoint^® syringes; 3cc, 5cc, and 10cc VanishPoint^® syringes; and the VanishPoint^® blood collection tube holder and small tube adapter. Our products (without Notice of Substantial Equivalence to the FDA) also include a dental syringe, a full displacement syringe, a butterfly IV, and a self retracting IV catheter introducer. In 1999, 2000, and 2001, ECRI (formerly known as the Emergency Care Research Institute), a recognized authority in evaluating medical devices, awarded the VanishPoint^® syringe and blood collection tube holder its highest possible rating. The VanishPoint^® blood collection tube holder received Risk and Insurance magazine’s 1997 “Top of the Line” Award for excellence.

Our 1cc VanishPoint^® tuberculin, insulin, and allergy antigen syringes are being produced in various needle lengths and gauges and packaging styles. We began automated assembly of 1cc syringes in the first quarter of 2001 and they are available in commercial quantities. The 3cc VanishPoint^® syringe reached the market in the first quarter of 1997. It is available in various needle lengths and gauges. The 5cc and 10cc VanishPoint^® syringes are being produced in various needle lengths and gauges and are currently being sold in limited quantities. Sales of the VanishPoint^® blood collection tube holder and a small tube adapter for use with small sample collection tubes began in the third quarter of 1998.

The manufacture and sale of medical devices entails an inherent risk of liability in the event of product failure or claim of harm caused by the product’s operation. In March, 1998, the Journal of Healthcare Safety, Compliance and Infection Control published a survey of 26 medical facilities having used a total of 86,000 3cc syringes, during which no needlestick injuries from using the VanishPoint^® syringes were reported.

Market Overview

The VanishPoint^® syringe and needle device products are sold to and used by healthcare providers (primarily in the United States with limited sales outside the United States), which include, but are not limited to, acute care hospitals, alternate care facilities, doctors’ offices, clinics, emergency centers, surgical centers, convalescent hospitals, Veterans Administration facilities, military organizations, public health facilities, and prisons.

The syringe and needle device market is a market in transition. The nature of the products comprising the market is changing from standard to safety devices. The impetus for the change to safety devices is the risk that is carried with each needlestick injury which includes the transmission of over 20 bloodborne pathogens, including the human immunodeficiency virus (“HIV,” which causes AIDS), hepatitis B, and hepatitis C. Because of the occupational and public health hazards posed by conventional disposable syringes, public health policy makers and the following domestic organizations and government

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agencies are involved in the current effort to get more effective safety needle products to healthcare workers:

National Institute of Occupational Safety and Health issued a safety alert calling on employers to adopt safer needles to reduce needlestick injuries. The federal agency is a division of the Centers for Disease Control and Prevention. In its alert, “Preventing Needlestick Injuries in Health Care Settings,” the National Institute of Occupational Safety and Health provides scientific information about the risk of needlestick injuries. This alert adds momentum to the growing safety movement and supports the rules issued by OSHA, on November 5, 1999.

OSHA issued a Compliance Directive, which instructs OSHA inspectors to cite employers who fail to evaluate and buy the safest needle devices available on the market. The directive states that where engineering controls will reduce employee exposure either by removing, eliminating, or isolating the hazard, they must be used. OSHA has published a revised Bloodborne Pathogens Standard.

The Service Employees International Union (“SEIU”) has taken a proactive stance with regard to promoting the use of automated retraction needle devices in member hospitals. Events, including introduction of state and federal legislation and protests by SEIU members at San Francisco General Hospital, attest to the type of support from the community that the safety products and VanishPoint^® product line, in particular, attract. Members of the SEIU have specifically requested VanishPoint^® products in order to make their members aware of the availability of VanishPoint^® technology and the need for it at other facilities with union membership. Unionized healthcare workers provide healthcare staffing for 12.5 percent of United States hospital facilities.

Under California’s groundbreaking legislation, Cal OSHA mandates healthcare employers to provide their workers with safe needle devices. This action was taken in response to events that transpired at San Francisco General Hospital and pressure from the SEIU and various federal, state, and local elected officials in California who demanded change. Our representatives served on the Advisory Committee for developing the amendments. California was the first state to successfully pass legislation mandating the use of safety needle products. The 1998 California legislation directed Cal OSHA to amend California’s bloodborne pathogens standard. This regulation requires the use of needle products that effectively eliminate or reduce injury rates. Employers are also required to create and maintain a log of all needlestick injuries by the type of device and the manufacturer’s brand. Noncompliance with this Cal OSHA standard can result in misdemeanor and/or felony charges that carry penalties of up to three years in prison and fines up to $250,000.

Numerous states have now enacted safety needle laws including California, Tennessee, Maryland, Texas, New Jersey, Ohio, West Virginia, Minnesota, Maine, Georgia, New Hampshire, Iowa, Alaska, Connecticut, Oklahoma, Massachusetts, New York, Missouri, Rhode Island, Pennsylvania, and Arkansas. Federal legislation was signed into law on November 6, 2000, by former President Clinton. Federal legislation which became effective for most states on April 12, 2001,

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now requires safety needle products be used for the vast majority of procedures.

Marketing and Distribution

Under the current supply chain system in the U.S. acute care market, the vast majority of decisions relating to the contracting for and purchase of medical supplies are made by the representatives of group purchasing organizations (“GPOs”) rather than the end-users of the product (nurses, doctors, and testing personnel). The GPOs and manufacturers often enter into long-term exclusive contracts which can prohibit entry in the marketplace by competitors. According to “The Role of Group Purchasing Organizations in the US Health Care System,” a report prepared by Muse & Associates for the Health Industry Group Purchasing Association (“HIGPA”), the potential hospital marketplace for medical/surgical equipment and supplies in 1998 and 1999 was $32.8 billion and $34.1 billion, respectively. HIGPA and other industry representatives estimate that 80 percent of these hospital expenditures were channeled through GPOs. In the needle and syringe market, the market share leader, B-D, has utilized long-term exclusive contracts which have restricted our entry into the market.

We distribute our products in the United States and its territories through general line and specialty distributors. We also utilize international distributors. We entered into an agreement with Abbott Laboratories whereby Abbott agreed to act as a nonexclusive marketer and distributor of our 1cc, 3cc, 5cc, and 10cc syringes, blood collection tube holders, and small tube adapters to acute care facilities in the United States. See Dependence on Certain Customers. The Abbott agreement is for an initial five-year term that began in May 2000. We continue to utilize our current general line and specialty distributors in other market segments, such as primary care and alternate care facilities.

We have developed a national direct marketing network in order to market our products to health care customers and their purchaser representatives. We have seven employees located across Texas, Georgia, California, Tennessee, New Jersey, Wisconsin, and Arizona. Our marketers make calls on target markets that are users of syringes and blood collection tube holders. Our marketers make contact with all of the departments that affect the decision-making process for safety products, including the purchasing agents. They call on alternate care sites and talk directly with the decision-makers of the facility. We employ registered nurses that educate healthcare providers and healthcare workers through accredited continuing education units for in-service training, exhibits at related trade shows, and publications of relevant articles in trade journals and magazines. These nurses provide clinical support to customers. In addition to marketing our products, the network demonstrates the safety and cost effectiveness of the VanishPoint^® automated retraction products to customers.

We have numerous agreements with organizations for the distribution of our products in foreign markets. Sales to these markets are limited at this time, as the marketing efforts are in their early stages. The total population of Western Europe exceeds 310 million, and the recognition for the urgency of safe needle devices in parts of Europe has echoed the United States model. In France, England, Germany, and Italy, organized healthcare worker unions have taken action to force hospitals and government agencies to place safety as a priority. France has led Western Europe in its recognition of safety and has implemented VanishPoint^® blood collection tube holders in several hospitals and clinical laboratories.

Key components of our strategy to increase our market share are to: (a) continue marketing emphasis in states that have implemented safe needle legislation; (b) continue to add Veterans Administration facilities, health departments, emergency medical services, federal prisons, and home healthcare facilities as customers; (c) educate healthcare providers, insurers, healthcare workers, government agencies, government officials, and the general public on the reduction of risk and the cost effectiveness afforded by our VanishPoint^® products; (d) supply product through Integrated Delivery Networks where possible; (e) explore possibilities for future licensing agreements and joint venture agreements for the manufacture and distribution of safety products in the United States and abroad; (f) introduce new products; and (g) continue to increase international sales, particularly in Europe, where safety legislation appears to be moving parallel to the United States, with a one to two-year lag time.

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Several factors could materially affect the marketability of our products. Demand could be dramatically increased by current legislation encouraging the use of safety syringes. Demand could also be increased if we were successful in the antitrust lawsuit we have filed against B-D and others. See Item 3 Legal Proceedings. Marketability of our products could depend, in part, on our ability to meet a dramatic and sudden increase in demand and on our ability to quickly find additional production capacity through licensing agreements and joint ventures, the purchase of appropriate facilities, or manufacturing and storage services.

Status of Publicly Announced Products

We have patented and are in the process of developing additional safety needle products. Such products include a dental syringe, winged butterfly IV, and a catheter introducer. Our inability to access the market and lack of adequate capitalization has slowed the introduction of these products into the market.

Competition

We believe VanishPoint^® syringes continue to be the most effective safety syringes in today’s market. Our syringes include passive safety activation, require less disposal space, and are activated while in the patient.

Founded in 1897, B-D is headquartered in New Jersey. B-D’s safety-engineered syringe and needle products sales accounted for approximately 14.2 percent of B-D’s total 2002 sales. B-D currently manufactures the SafetyLok^™, a syringe that utilizes a tubular plastic sheath that must be manually slid over the needle after an injection, and the SafetyGlide^™, a syringe which utilizes a hinged lever to cover the needle tip. B-D also manufactures a safety blood collection tube holder that utilizes the SafetyLok^™ sheath. B-D’s “Vacutainer^®” blood collection tube holder is commonly used as industry jargon to refer to blood collection tube holders in general. B-D has begun manufacture of a 3cc retracting needle product. The impact of B-D’s new Integra syringe is yet to be determined. However, at this time, it does not offer a 1cc size and when used with highly viscous medication may leak (as described in their instructions for use). B-D’s marketing practice is currently the subject of our litigation. See Item 3 Legal Proceedings.

Sherwood was acquired by Tyco International Ltd., a company headquartered in Bermuda. Sherwood manufactures the Monoject^®, a safety syringe that utilizes a sheath similar to the B-D SafetyLok^™ syringe and the Magellan^®, a safety syringe that utilizes a hinged lever to cover the needle tip.

Founded in 1974, Terumo was the first company to sell disposable syringes in Japan. Today Terumo manufactures standard syringes and blood collection tube holders, operates internationally, and has sales in some 120 countries.

Both B-D’s SafetyLok^™ and Sherwood’s Monoject^® safety syringes require the use of two hands and several extra steps to activate the tubular plastic shield which must be slid and locked into place to protect the needle. In contrast, use of the VanishPoint^® syringe is identical to that of a standard syringe until the end of an injection, when the automated retraction mechanism retracts the needle directly from the patient safely into the barrel of the syringe. This allows both hands to remain safely out of harm’s way.

B-D and Sherwood have controlling market share, greater financial resources, larger and more established sales and marketing and distribution organizations, and greater market influence, including the long-term and/or exclusive contracts with GPOs described earlier. The current conditions have restricted competition in the needle and syringe market. As a result, the Company filed a lawsuit in the United States District Court for the Eastern District of Texas against B-D; Tyco International (U.S.), Inc.; Tyco Healthcare Group, L.P.; Premier, Inc.; Premier Purchasing Partners, L.P.; V.H.A., Inc.; and Novation L.L.C. The suit alleges violations of state and federal antitrust laws, tortious interference, business disparagement, and common law conspiracy. See Item 3 - Legal Proceedings. These competitors may be

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able to use their resources to improve their products through research or acquisitions or develop new products, which may compete more effectively with our products.

In addition to B-D and Sherwood, there are companies that manufacture needlestick injury prevention products that our products will compete against for market share. Among those companies are: Bio-Plexus, Inc. (“Bio-Plexus”), Smiths Industries Medical Systems (“SIMS”), Sterimatic, Ltd., and New Medical Technologies, Inc. (“NMT”). Bio-Plexus utilizes a recessed internal hollow blunt safety technology where the internal blunt is advanced and locked into place beyond the sharp outer tip of the needle. SIMS utilizes a patented sheath whereupon completion of the procedure, the healthcare worker presses the sheath against a hard surface to lock the needle into the sheath. Sterimatic, Ltd. manufactures a syringe with a plastic sleeve that covers the needle after injection. NMT manufactures a syringe that utilizes automated retraction of the used needle within the barrel of the syringe. See Item 3 - Legal Proceedings.

Other events that could have an impact on our competitiveness include class action lawsuits by healthcare workers. Class action suits on behalf of healthcare workers have been filed in several states against B-D and Sherwood, et al. The success of such lawsuits could, obviously, be materially beneficial to any company that provides a safer alternative technology to the standard needle products, which cause as many as 800,000 reported needlestick injuries each year.

Our competitive strengths include that the VanishPoint^® syringe is one of four syringes given the highest possible rating by ECRI (formerly Emergency Care Research Institute). Our blood collection tube holder is one of only two safety products given the highest possible rating. Our products also have an advantage over non-retracting safety needles because minimal training and changes to practitioners’ normal routines are required. Our products include design features which prohibit unfortunate and improper reuse.

Our competitive weaknesses include our current lack of market share (less than 1 percent) because three well-established companies control most of the market. Our competitive position is also weakened by the method that providers use for making purchasing decisions and the fact that our initial price per unit is, in some instances, higher. However, our price per unit is competitive or even lower than the competition once all the costs incurred during the life cycle of a syringe are considered. Such life cycle costs include disposal costs, testing and treatment costs for needlestick injuries, and treatment for contracted illnesses through needlestick injuries.

Principal Suppliers and Sources of Raw Materials

We purchase most of our product components from single suppliers, including needle adhesives, and packaging materials. There are multiple sources of these materials. We own the molds that are used to manufacture the plastic components of our products. Our suppliers include Magor Mold, Inc., APEC, Multivac, Inc., Exacto Spring Corporation, Ion Beam Applications, Inc. (“IBA,” formerly Sterigenics), Nipro Corporation and ISPG.

Dependence on Major Customers

Abbott purchases comprised 47.4 percent and 43.8 percent of our unit sales in 2001 and 2002, respectively. Unit sales to Abbott increased 14.1 percent from 2001 to 2002. Abbott distributes and markets our products into the acute care market. While the 14.1 percent increase in our sales to Abbott is significant, inconsistencies in sales growth and timing of orders have made it difficult to plan production requirements in an efficient and cost effective manner.

McKesson accounted for 11.8 percent of unit sales in 2002.

Unit sales to others were 52.6 percent and 56.2 percent of sales in 2001 and 2002, respectively. Unit sales to others increased 31.9 percent from 2001 to 2002. Sales to others consist primarily of sales into the alternate care market.

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Patents and Proprietary Rights

Thomas J. Shaw and the Company entered into a Technology License Agreement dated effective as of the 23^rd day of June, 1995, whereby Mr. Shaw granted us “… a worldwide exclusive license and right under the ‘Licensed Patents’ and ‘Information’, to manufacture, market, sell and distribute ‘Licensed Products’ and ‘Improvements’ without right to sublicense and subject to such nonexclusive rights as may be possessed by the Federal Government…” ‘Licensed Patents’, ‘Information’, ‘Licensed Products’, and ‘Improvements’ are all defined extensively in the Technology License Agreement. We may enter into sublicensing arrangements with Mr. Shaw’s written approval of the terms and conditions of the licensing agreement. The ‘Licensed Products’ include all retractable syringes and retractable fluid sampling devices and components thereof, assembled or unassembled, which comprise an invention described in ‘Licensed Patents’, and improvements thereof including any and all ‘Products’ which employ the inventive concept disclosed or claimed in the ‘Licensed Patents’.

In exchange, we paid Mr. Shaw a $500,000 initial licensing fee which was fully paid in 1997. Furthermore, we agreed to pay a 5 percent royalty on gross sales after returns. The license terminates upon expiration of the last licensed patents unless sooner terminated under certain circumstances. The licensing fee has been paid in accordance with this agreement. Pursuant to a Royalty Waiver Agreement effective as of January 18, 2002, among the Company, Thomas J. Shaw and his wife, Suzanne M. August, Mr. Shaw and his wife agreed to waive payment of royalties in the amount of $1 million payable for sales of ‘Licensed Products’ during the year 2001. On June 21, 2002, Thomas J. Shaw and his wife, Suzanne M. August, forgave an additional $500,000 of the royalties payable under the licensing agreement. All prior royalties have been paid.

We have the right and obligation to obtain protection of the invention, including prosecution of patent properties. The license unilaterally changes to a nonexclusive license in the event of a hostile takeover. Also, if Mr. Shaw involuntarily loses control of the Company, the license becomes a nonexclusive license and a right to information which is detailed in the June 1995 license agreement.

We have sought foreign patent protection through the Patent Cooperation Treaty and have filed applications for regional and national patent protection in selective countries. In addition, we have filed applications for national patents in selective countries where we believe the VanishPoint^® syringe can be utilized most.

We hold numerous United States patents related to our automated retraction technology, including patents for dental syringes, catheter introducers, winged IV sets, syringes, and blood collection tube holders. In addition, we have multiple applications for patents currently pending.

We have also registered the following trade names and trademarks: VanishPoint^®, VanishPoint^® logos, RT with a circle mark, the Spiral Logo used in packaging our products, and the color coded spots on the ends of our syringes. We also have applications pending for trademark protection for the phrase “the new standard for safety.”

There are currently no patent infringement claims pending against the VanishPoint^® retraction technology. We have decided, on the advice of patent counsel, not to purchase patent insurance because it would require inappropriate disclosure of information that is currently proprietary and confidential. See Item 3 - Legal Proceedings.

Regulatory Status and Effect of Regulation

We and our products are regulated by the FDA. The syringe is a Class II medical device which requires assurance by the manufacturer that the device is safe and effective and that it meets certain performance standards. The FDA issued its Notice of Substantial Equivalence declaring the VanishPoint^® syringe products to be substantially equivalent to a legally marketed predicate device (i.e., granted us permission to market our safety syringes in interstate commerce) for the 3cc VanishPoint^® syringe in December 1995; for the 5cc and 10cc VanishPoint^® syringes in May 1997; for the 1cc allergy and insulin

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syringes in November 1997; for the 1cc VanishPoint^® tuberculin syringe in February 1998; and for the VanishPoint^® blood collection tube holder and small tube adapter in August 1997.

In addition to Notice of Substantial Equivalence, we must register with the FDA on an annual basis and provide the FDA with a list of commercially distributed products. Texas has similar registration requirements. The FDA tries to inspect all medical device manufacturing facilities at least once every two years to determine the extent to which they are complying with Quality System Regulation. The most recent inspection occurred in April 2000, after which the auditor determined “No Action Indicated.”

TUV Essen, a subsidiary of RWTÜV Germany, certified our quality system for ISO 9001: 1994. Since the original certification in 1997, we have undergone annual surveillance audits with no major noncompliances noted. In addition, the VanishPoint^® product line was certified for a CE Mark. The CE Mark authorizes us to sell in 18 different countries.

In June 2001, TUV Essen performed a re-certification audit of our quality system and CE Mark (ISO 9001, EN 46001, 93/42/EEC Annex II). We received re-certification in July 2001. The last surveillance audit was performed in March 2002 with no major noncompliances noted.

Government Funding of Research and Right to License

Thomas J. Shaw developed his initial version of a safety syringe with the aid of grants by the National Institute of Drug Abuse, a subsidiary of the National Institutes of Health. As a result, the federal government has the right, where the public interest justifies it, to disperse the technology to multiple manufacturers so that the safety syringe can be made widely available to the public. However, the funding was only used to develop and patent the earlier syringe design as of 1991. That syringe was a bulkier, less effective, and more expensive version of the current product. Accordingly and on the advice of counsel, Management believes that the risk of the government demanding manufacture of this alternative product is minimal.

Research and Development

We spent $899,149, $756,542 and $337,930 in fiscal 2000, 2001, and 2002, respectively, on research and development, primarily on development of prototype molds and manufacturing processes for the following products: 1cc syringe, 3cc syringe, 5cc syringe, 10cc syringe, and the blood collection tube holder. Our ongoing research and development activities are performed by an internal research and development staff. This team of engineers developed automated line assembly for the syringe and blood collection tube holder and established processes to meet regulatory requirements. Products currently in development by our internal team include the winged butterfly IV, the catheter introducer, and the dental syringe. Our inability to access the market and lack of adequate capitalization has slowed the introduction of these products into the market. Possible future products include all needle medical devices to which the automated retraction mechanism can be applied.

Environmental Compliance

We believe that we do not incur material costs in connection with compliance with environmental laws. We are considered a Conditionally Exempt Small Quantity Generator because we generate less than 100 kilograms (220 lbs.) of hazardous waste per month. Therefore, we are exempt from the reporting requirements set forth by the Texas Commission on Environmental Quality. The waste that is generated at our facility is primarily made up of flammable liquids and is sent for fuel blending by Safety Kleen. This fuel blending process completely destroys our waste and satisfies our “cradle-to-grave” responsibility.

Other nonhazardous production waste includes clean polypropylene regrind that is sold to Penn Tex Plastics for recycling. The Company also grinds dirty plastics, syringes, and needles for disposal by Waste Management. All other nonhazardous waste produced is considered municipal solid waste and sent to a sanitary landfill by Waste Management.

We also produce small amounts of regulated biohazardous waste from contaminated sharps and laboratory wastes. This waste is sent for incineration by American 3CI.

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Employees

As of March 17, 2003, we had 164 full-time employees, two part-time employees, and one independently contracted consultant. Of the 164 full-time employees, four persons were engaged in research and development activities, 82 persons were engaged in manufacturing and engineering, 35 persons were engaged in quality assurance and regulatory affairs, 14 persons were engaged in sales and marketing, 26 persons were engaged in general and administrative functions, and three persons in facilities. No employees are covered by collective bargaining agreements. We are dependent upon a number of key Management and technical personnel, and the loss of services of one or more key employees could have a material adverse effect on us. Our President and Chief Executive Officer, Thomas J. Shaw, has an employment contract that ended on September 2002 with an automatic and continuous renewal for consecutive two-year periods.

Item 2.    Description of Property

Our 22,500 square foot headquarters is located at 511 Lobo Lane, on 35 acres, which we own, overlooking Lake Lewisville in Little Elm, Texas. The building is a modular portion of a larger planned building for which the engineering design has been finalized. The headquarters are in good condition and house our administrative offices and manufacturing facility. Our current expansion plans do not include going outside the 35 acres on which the headquarters is located. We anticipate that any future development of facilities beyond those 35 acres will be in areas closer to the east and west coast customer bases. The land and building on which the headquarters is located are the subject of a lien by Katie Petroleum, Inc. (“Katie Petroleum”) as collateral for a loan in the aggregate current principal amount of $250,003 (the “Katie Petroleum Loan”). The Katie Petroleum Loan provides for monthly payments of accrued interest and a February 18, 2005, maturity date. The interest rate on the Katie Petroleum Loan is prime plus 1 percent. The Katie Petroleum Loan agreement further provides that, as long as preferred stock dividend arrearages exist, the maturity date will be extended on a year to year basis until such time as no arrearages exist. Pursuant to the Katie Petroleum Loan Agreement, the Deed of Trust for this property and a related Assignment of Rents cannot be pledged until the loan is repaid. The loan cannot be prepaid before the preferred stock dividends are paid.

We also lease Suites 618, 620, 622, and 628 S. Mill Street, Lewisville, Texas, as well as storage stalls located at 102 E. Purnell, Lewisville, Texas, from Mill Street Enterprises, a sole proprietorship owned by Lillian E. Salerno, a shareholder and consultant for the Company. This lease is for over 4,000 square feet of office space in good condition. The lease is for a five-year period beginning in July 2002 at a monthly rate of $2,900. This space is used to store office documents and for general office and marketing purposes.

We do not hold any real estate or related securities for investment purposes or engage in real estate activities.

In the opinion of Management, all the properties and equipment are suitable for their intended use and are adequately covered by an insurance policy which lists Balboa Capital, American Express, GE Capital Modular Space, Fleet Capital, Texas Bank, and Katie Petroleum as the loss payees.

Assuming we are able to access the market, we would need to receive additional capital to fund capital expenditures which could include additional assembly lines, manufacturing space, warehousing, and related infrastructure. The expansion could include expanding manufacturing capacity for existing products. The amount of capital required would be dependent on our analysis of the extent of the potential market penetration if we are able to compete in a free market environment.

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Item 3.    Legal Proceedings

On January 29, 2001, we filed a lawsuit in the United States District Court for the Eastern District of Texas, Texarkana Division (the “Federal Court Case”) styled Retractable Technologies, Inc. v. Becton Dickinson and Company, Tyco International (U.S.), Inc., Tyco Healthcare Group, L.P., Novation, L.L.C., VHA, Inc., Premier, Inc. and Premier Purchasing Partners, L.P., Cause No. 501CV036. We allege violations of state and federal antitrust acts, tortious interference with prospective business relationships, business disparagement, and common law conspiracy. These violations are based on our belief that the defendants combined or conspired to eliminate or lessen competition and to acquire and maintain monopoly power among hospitals and healthcare technology providers. We are seeking the following damages: an injunction enjoining each defendant from continuing the unlawful conduct alleged and from entering into any other combination, conspiracy, or agreement having similar purposes or effect and for actual damages, punitive damages, treble damages, costs of suit including reasonable attorneys’ fees, pre-judgment and post-judgment interest at the maximum possible rate, and such other relief as we may be entitled. The case was scheduled for an April 2003 trial but has been rescheduled for a February 3, 2004, trial date. We have filed a Motion to Reconsider Trial Date requesting the trial be reset on a date beginning in August or September 2003.

On February 1, 2002, the Company filed a patent infringement lawsuit alleging willful and intentional infringement of two patents directed to syringes having retractable needles in the United States District Court for the Eastern District of Texas, Sherman Division, styled Retractable Technologies, Inc. v. New Medical Technology, Inc.; New Medical Technology, Ltd.; and NMT Group PLC, Cause No. 4:02-CV-34 (the “NMT Defendants”). Thomas J. Shaw was subsequently added as a plaintiff in the suit. The defendants counterclaimed, alleging noninfringement and invalidity of the patents. Discovery is underway and trial is set for November 3, 2003. On February 18, 2003, the Company and Thomas J. Shaw filed an additional complaint against the same defendants in this Court, alleging infringement of a third syringe patent. The Company is presently trying to consolidate the two actions. The Company is seeking monetary damages and permanent injunctive relief in both actions.

We are not a party to any other material legal proceeding.

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

The business of the Series II Class B Convertible Preferred (“Series II”) Stockholders intended to be addressed at the 2002 Annual Meeting (the “Annual Meeting”) of Retractable Technologies, Inc., originally scheduled for September 20, 2002, was adjourned and rescheduled for November 8, 2002, because quorum requirements were not met on September 20, 2002. The purpose of the meeting was the election by the Series II shareholders of three Series II Directors. Of the 431,000 shares of Series II Stock of RTI entitled to vote, less than the 215,500 required to constitute a quorum were represented in person or by proxy at the rescheduled November 8, 2002, meeting. Accordingly, no business of the Series II shareholders could be transacted except for the rescheduling of the Series II shareholder meeting. The Series II shareholders voted in favor of January 24, 2003, as the rescheduled date for the Series II business of the Annual Meeting.

At the January 24, 2003, meeting, 242,000 shares of the 431,000 shares of Series II Stock of the Company entitled to vote were represented in person or by proxy at the Series II Meeting, which was more than the 215,500 required for quorum. The election of three Series II Directors was put to a vote by the holders of the Series II stock present in person or by proxy and the results were as follows:

NOMINEE	FOR	AGAINST
Kenneth W. Biermacher	232,000	10,000
Timothy G. Greene	232,000	10,000
John J. McDonald	232,000	10,000

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Accordingly, Kenneth W. Biermacher, Timothy G. Greene, and John J. McDonald were elected as Series II Directors to serve until the 2003 annual meeting. As of their election, the Board of Directors consists of:

Thomas J. Shaw	Class 2 Director
Steven R. Wisner	Class 2 Director
Russell B. Kuhlman	Class 1 Director
Douglas W. Cowan	Class 2 Director
Clarence Zierhut	Class 2 Director
Marwan Saker	Class 2 Director
Kenneth W. Biermacher	Series II Director
Timothy G. Greene	Series II Director
John J. McDonald	Series II Director

No other matters were voted on at the January 24, 2003, meeting.

PART II

Item 5.    Market for Common Equity and Related Stockholder Matters

MARKET INFORMATION

Our Common Stock has been listed on The American Stock Exchange (the “AMEX”) since May 4, 2001. Shown below is the closing high and closing low sales price of our Common Stock as reported by the AMEX for each quarter of the last two fiscal years since the Common Stock began trading on the AMEX:

	Common Stock
	High		Low
2002
Fourth Quarter	$	4.75	$	3.60
Third Quarter	$	5.35	$	3.65
Second Quarter	$	6.69	$	3.70
First Quarter	$	5.95	$	4.10
2001
Fourth Quarter	$	7.40	$	5.34
Third Quarter	$	7.00	$	3.40
Second Quarter	$	12.75	$	5.80

SHAREHOLDERS

As of March 17, 2003, there were 20,328,100 shares of Common Stock held by 403 shareholders of record not including shareholders who beneficially own Common Stock held in nominee or “street name.”

DIVIDENDS

We have not ever declared or paid any dividends on the Common Stock. We have no current plans to pay any cash dividends on the Common Stock. We intend to retain all earnings, except those required to be paid to the holders of the Preferred Stock, to support operations and future growth. As of the date of this Report, approximately $403,000 in dividends are in arrears on Series A Stock and $12,013,000 in dividends are in arrears on the Class B Preferred Stock. Dividends may not be paid on the Common Stock until all dividends on the Preferred Stock have been paid. Pursuant to the requirements of a loan from

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Texas Bank, we have agreed not to return capital to the shareholders or redeem outstanding shares without the bank’s prior consent. We had permission from the bank where necessary, namely, the redemption of Series A Stock and payment of Series A dividends.

EQUITY COMPENSATION PLAN INFORMATION

See Item 11 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters for a chart describing compensation plans under which equity securities are authorized.

RECENT SALES OF UNREGISTERED SECURITIES

The following discussion outlines all securities sold by us for cash or services rendered during the fourth quarter of 2002. All of the shares sold or granted were issued pursuant to the authority granted by the private offering exemption outlined in Section 4(2) and Rule 506 of Regulation D under the Securities Act to a limited number of persons and without a view toward distribution.

We sold 27,500 shares of Series V Class B Convertible Preferred Stock (“Series V Stock”) at $4.00 per share to 3 accredited investors for an aggregate amount of $110,000 in cash. Series V Stock is convertible immediately on a one-to-one basis into shares of Common Stock for no additional consideration.

Sales of unregistered securities in the first three quarters of 2002 were reported in the Company’s Form 10-QSB quarterly reports filed with the Commission and are available online via Edgar.

Item 6.    Management’s Discussion and Analysis or Plan of Operation

FORWARD-LOOKING STATEMENT WARNING

Certain statements included by reference in this filing containing the words “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 production capacity in the event of a dramatic increase in demand, our ability to access the market, our ability to successfully resolve our litigation with B-D, among others, our ability to finance research and development as well as operations and expansion of production through equity and debt financing, as well as sales, and the increased interest of larger market players in providing safety needle devices. Given these uncertainties, undue reliance should not be placed on forward-looking statements.

SELECTED FINANCIAL DATA

The following selected financial data for fiscal years ended December 31, 2002, and 2001, is derived from financial statements, which were audited by independent accountants. The data should be read in conjunction with the audited financial statements and selected notes and the following discussion of results of operations.

CONDENSED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2002		2001
Sales, net	$	20,316,299	$	16,145,635
Cost of sales		14,990,932		13,322,965
Product recall and recovery		481,637		—
Gross margin		4,843,730		2,822,670
Operating Expenses

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Sales and marketing		4,042,081			4,066,433
Research and development		337,930			756,542
General and administrative		4,534,217			4,149,389
Debt conversion expense		2,319,073			—
Deferred IPO Costs		—			563,912
Total operating expenses		11,233,301			9,536,276
Loss from operations		(6,389,571	)		(6,713,606	)
Interest income (expense), net		(436,357	)		(501,674	)
Net Loss		(6,825,928	)		(7,215,280	)
Preferred stock dividend requirement		(2,266,250	)		(2,023,954	)
Net loss applicable to common stockholders	$	(9,092,178	)	$	(9,239,234	)
Net loss per share (basic and diluted)	$	(0.45	)	$	(0.47	)
Weighted average common shares outstanding		20,300,454			19,774,006

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. All period references are to our fiscal year ended December 2002 or 2001. Variances have been rounded for ease of reading.

Comparison of Year Ended

December 31, 2002, and Year Ended December 31, 2001

Net sales were $20,316,299 and $16,145,635 for the years ended December 31, 2002, and December 31, 2001, respectively. The increase of $4,170,664 or 25.8 percent, was due principally to an increase in the sales of $4,200,000 and $2,000,000 for the 1cc syringe and 3cc syringe, respectively. These increases were offset by a decrease in revenues of $1,900,000 for the 5cc syringes, 10cc syringes, and blood collection tube holders. Sales under the Abbott agreement accounted for 49.0 percent of 2002 revenues and 55.2 percent of 2001 revenues. Sales to other distributors in 2002 increased 43.3 percent compared to 2001. Syringe revenues increased $4,800,000, or 32.0 percent, and blood collection tube holder revenues decreased $636,000, or 57.0 percent.

Cost of sales increased from $13,322,965 in 2001 to $14,990,932 in 2002, or an increase of $1,667,967, or 12.5 percent. Cost of sales as a percentage of revenues decreased from 82.5 percent to 73.9 percent. The improvement of Cost of sales as a percentage of revenue is attributable to better operating efficiencies achieved at higher production volumes. Other factors included in Cost of sales are increases in royalty expense of $304,000 and depreciation of $144,000. Decreases include a reduction in repairs of $271,000, product testing of $70,000, and consulting of $41,000.

The Company recorded an expense of $481,637 in the second quarter of 2002 related to a recall and recovery of certain lots of blood collection tube holders. The Company found that, in limited lots, upon testing some blood collection tube holders retracted prior to activation. The premature retraction occurred during use as well as during shipping and handling. The Company has addressed the premature retraction through the manufacturing and design process.

Research and development expense decreased from $756,542 in 2001 to $337,930 in 2002. Reductions in labor costs of $194,000, consulting of $154,000, and experimental parts of $48,000 account for most of the decrease. The reduction was due to costs associated with the 1cc syringe incurred when production began in 2001.

Sales and marketing expenses decreased to $4,042,081 in 2002 from $4,066,433 in 2001, a de minimus change. As a percentage of revenues, sales and marketing expenses decreased from 25.2 percent in 2001 to 19.9 percent in 2002. Marketing fees to distributors increased $247,000 due to the increase in

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revenues. The increased marketing fees were offset by decreases in travel and entertainment expense of $97,000, office expense of $24,000, telephone expense of $26,000, and trade show expense of $31,000.

General and administrative costs increased $384,828, or 9.3 percent, from 2001 to 2002. Increases include increased legal fees of $525,000, insurance costs of $96,000, option expense of $49,000 and property tax of $38,000. These increases were offset by reduction in accounting fees of $137,000, wages of $123,000, office expense of $89,000, and advertising of $51,000.

In 2002, the Company converted a $2,500,000 note and $1,179,284 of the real estate note, to shares of Series V Stock of the Company. The Company recorded an expense of $2,319,073. This expense consisted of $1,821,246 attributable to the value of the shares issued in addition to the original conversion terms of the note, $440,000 is attributable to stock options issued in connection with the conversion of the debt, and the write-off of unamortized debt expense of $57,827. The expense associated with the additional shares issued and the stock options were increases to additional paid-in-capital. See Note 7 to the financial statements for additional information.

Interest income decreased by $41,908, due to lower invested cash balances. Interest expense net decreased $107,225, due to a decrease in interest expense of $234,000 due principally to lower loan balances. The decrease in interest expense was offset by a decrease in capitalized interest of $127,000.

Preferred stock dividend requirements were $2,266,250 for 2002 compared to $2,023,954 in 2001, an increase of $242,296. The increase is due to the issuance of Series V Stock in 2002.

Net loss per share decreased 4.3 percent, from $0.47 per share in 2001 to $0.45 per share in 2002. Of the decrease, $0.01 is due to the increase in average common shares outstanding and $0.02 is due to the decrease in net loss. The increase in preferred dividend requirements increased loss per share by $0.01.

Weighted average common shares outstanding increased principally due to conversion of preferred stock into common stock.

Cash flow from operating activities improved from a negative $3,672,828 to a negative $1,543,466, an improvement of $2,129,362. The Company’s net loss was $389,351 less than the previous year, but the loss for 2002 included a noncash charge for debt conversion expense of $2,319,073. Other positive factors affecting cash flow include an increase in payables of $1,909,280, an increase in other accrued liabilities of $1,000,163, and a decrease in inventories of $439,232. Negative factors include an increase in accounts receivable of $1,094,338 and a decrease in marketing fees of $642,770. The Company spent $131,217 for capital items.

Finance activities provided significant changes to the Company’s balance sheet, including the sale of the Series V Stock offering, providing approximately $9,700,000 in equity. We used $2,000,000 of the proceeds of the Series V Stock offering and the proceeds from a $3,000,000 loan from Katie Petroleum to retire the $5,000,000 note from Abbott. We exchanged 919,821 shares of Series V Stock to retire $3,679,284 of long-term debt. We exchanged 387,500 shares of Series V Stock to reduce payables by $1,550,000. Thomas Shaw and his wife, Suzanne August, forgave $1,500,000 in royalties in 2002.

Comparison of Year Ended

December 31, 2001, and Year Ended December 31, 2000

Net sales were $16,145,635 and $9,641,451 for the years ended December 31, 2001, and 2000, respectively. The increase of $6,504,184, or 67.5 percent, was due to increased capacity, particularly with the production of the 1cc syringe which began in the first quarter of 2001. Sales to Abbott as a percentage of units sold declined from 53 percent to 47 percent of total units sold. Sales to Abbott increased about 51 percent whereas sales to other distributors increased 89 percent. No other distributor accounted for more than 10 percent of units sold.

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Cost of sales increased from $8,815,939 in 2000 to $13,322,965 in 2001, an increase of $4,507,026 or 51.1 percent. Of this increase, $2.08 million was due to material costs, $260,000 due to direct labor costs, and $310,000 in indirect labor costs. Additionally, depreciation increased $250,000 principally due to the 1cc equipment coming on line. Repairs and maintenance increased $340,000 due to additional equipment being brought on line. Sterilization costs increased $170,000 due to increased volume and royalty costs increased $640,000 due to higher sales levels. In January 2002, Thomas J. Shaw and his wife, Suzanne M. August, announced they had forgone $1 million in royalties attributable to 2001 activity. This was recorded in the first quarter of 2002. The remaining increase of $460,000 consists principally of increased labor costs in Regulatory Affairs and Facilities, offset by reductions in consulting expense and travel.

Preproduction manufacturing expenses decreased from $627,200 in 2000 to zero in 2001. As we completed development stage activities in the second quarter of 2000, we no longer classify any manufacturing costs as preproduction manufacturing expense.

Research and development costs decreased from $899,149 in 2000 to $756,542 in 2001. The reduction is principally due to a decrease in labor costs of $100,000 attributable to employees that are now engaged in operating the 1cc assembly equipment which came on line in the first quarter of 2001. There were also development costs of $60,000 incurred in 2000 while we were a development stage company. All similar costs are now reported as cost of sales. There was a reduction of $70,000 in experimental parts expense also related to the 1cc syringe. The decrease is somewhat offset by increased expense of $120,000 for consulting costs for new products. The remaining decrease is attributable to other miscellaneous items.

Sales and marketing expense decreased from $4,955,456 in 2000 to $4,066,433 in 2001, a decrease of $889,023. The largest portion of the decrease is $830,000 for fees to distributors. As our distributor contracts were renewed, any portion of chargebacks to distributors not specifically identified as marketing fees are offset against revenues rather than shown as marketing fees. The majority of marketing fees in 2001 are attributable to Abbott Laboratories. Compensation expense decreased $290,000 due to a reduction in force in 2001. Expense for samples increased $100,000.

General and administrative costs decreased from $4,788,735 in 2000 to $4,149,389 in 2001, a decrease of $639,346. The principal reason for the decrease was a charge of $760,000 in 2000 for stock options issued to non-employees for past service awards and no stock option expense in 2000. Accounting fees increased $130,000 and legal fees increased $30,000 principally due to our expense associated with public filings. Compensation expense in Human Resources increased $100,000 and compensation for the legal department increased $50,000 due principally to increased staffing requirements. Corporate compensation decreased $180,000 due to the reduction in force in May 2001. Travel expense decreased $130,000. Insurance cost for directors and officers and general liability increased $80,000. Advertising costs increased $85,000.

RTI incurred expenses of $563,912 in connection with its public offering which was filed on December 22, 2000, and which was declared effective by the Securities and Exchange Commission on May 3, 2001. On September 20, 2001, RTI filed a post-effective amendment to withdraw RTI’s offering of 2,000,000 shares of common stock. Effective with the decision to withdraw such offering, RTI expensed all deferred IPO costs resulting in a charge in 2001 of $563,912.

Interest income decreased $152,252 due to lower invested cash balances. Net interest expense increased $349,841 due to higher outstanding debt and $121,714 due to a reduction in capitalized interest.

Preferred stock dividend requirements were $2,023,954 for 2001 compared to $3,719,839 in 2000, a decrease of $1,695,885. The decrease is due to reduction in the outstanding preferred stock as a result of conversion to common stock.

Net loss per share decreased 51 percent, from $0.96 per share in 2000 to $0.47 per share in 2001. Of the decrease, $0.16 is due to the increase in average common shares outstanding, $0.22 is due to the decrease in net loss, and $0.11 is due to the decrease in preferred dividend requirements.

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Weighted average common shares outstanding increased principally due to conversion of preferred stock into common stock.

Cash flow from operations improved from a negative $8,555,399 in 2000 to a negative $3,672,828 in 2001, an improvement of $4,882,571. The principal reason for this improvement was a decrease in net loss from $10,444,609 in 2000 to $7,215,280 in 2001, an improvement of $3,229,329. A decrease of $737,111 in accounts receivable net of allowance for bad debt in 2001 compared to an increase of $1,794,207 in 2000 resulted in a favorable variance of $2,531,318. Other major favorable variances to cash flow include depreciation and amortization, $257,550; reduction in other current assets, $635,612; and an increase in accounts payable resulting in a positive variance in 2001 of $1,025,101 principally due to increased provision for chargebacks and amounts payable to APEC. Negative variances for 2001 compared to 2000 include stock option expense of $811,670 in 2000 compared to none in 2001; increase of marketing fees payable of $580,269 in 2001 compared to $1,598,546 in 2000 resulting in a negative impact of $1,018,277; and an increase in the level of inventory resulting in a negative variance of $745,476. The Company spent $782,130 in purchase of equipment in 2001 compared to $2,413,191 in 2000. The Company raised $2,500,000 in debt in 2001 compared to $7,000,000 in 2000 of which $1,150,789 was used to pay off Western Bank. The Company also had an equity offering in 2000 which raised $11,338,000. The Company paid $2,971,976 in dividends in 2000 and paid no dividends in 2001.

ASSESSMENT OF FAS 146, ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES

On July 30, 2002, the FASB issued Statement No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“FAS 146”). FAS 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of commitment to an exit or disposal plan. FAS 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002.

The adoption of FAS 146 is not expected to have a material impact on the Company as there are no exit or disposal activities planned.

ASSESSMENT OF FAS 148, ACCOUNTING FOR STOCK-BASED COMPENSATION-TRANSITION AND DISCLOSURE - AN AMENDMENT OF FASB STATEMENT NO. 123

In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure-an Amendment of FASB Statement No. 123. This Statement amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of FASB Statement No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method on reported results. The Company’s adoption of this statement is discussed in Note 3 to the Financial Statements under the caption “Stock-based Compensation.”

SIGNIFICANT ACCOUNTING POLICIES

The Company considers the following to be its most significant accounting policies. Careful consideration and Company review is given to these and all accounting policies on a routine basis to ensure that they are accurately and consistently applied.

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. Revenues on sales to distributors are recorded net of contractual pricing allowances. 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.

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Marketing Fees

The Company pays its distributors marketing fees for services provided by distributors. These services include participation in promotional activities, development of educational and promotional materials, representation at trade shows, clinical demonstrations, inservicing and training, and tracking reports detailing the placement of the Company’s products to end-users. Marketing fees are accrued at the time of the sale of product to the distributor. These fees are paid after the distributor provides the Company a tracking report of product sales to end-users. These costs are included in sales and marketing expense in the Statements of Operations.

Stock-Based Compensation

Prior to 2002, the Company accounted for stock-based compensation under the recognition and measurement provisions (intrinsic value method) of APB Opinion No. 25, 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, prospectively to all director, officer, and employee awards granted, modified, or settled after December 31, 2001. The prospective method is one of the alternative transition methods provided in FAS 148. Awards under the Company’s plans vest over periods up to three years. Therefore, the cost related to stock-based compensation included in the determination of net income for 2002 is less than would have been recognized if the fair value method had been applied to all awards since the original effective date of SFAS No. 123. SFAS No. 123 indicates that the fair value method is the preferable method of accounting.

LIQUIDITY AND FUTURE CAPITAL REQUIREMENTS

Historical Sources of Liquidity

We have historically funded operations primarily from proceeds from private placements and bank loans. We were capitalized with approximately $52,600,000 raised from six separate private placement offerings. As of September 30, 1995, we sold 5,000,000 shares of Series A Stock at $1 per share, for an aggregate of $5,000,000. As of October 31, 1996, we sold 1,000,000 shares of Series I Class B Stock at $5 per share for an aggregate of $5,000,000. As of January 31, 1998, we sold 1,000,000 shares of Series II Class B Stock at $10 per share for an aggregate of $10,000,000. As of September 30, 1999, we sold 1,160,200 shares of Series III Class B Stock at $10 per share for an aggregate of $11,602,000. As of May 4, 2000, we sold 1,133,800 shares of Series IV Class B Stock at $10 per share for an aggregate of $11,338,000. As of December 31, 2002, we sold 2,416,221 of Series V Class B Stock at $4 per share. Of the $12,802,396 raised in this offering, $4,435,600 was in cash; $3,679,284 was in exchange for loans payable to Katie Petroleum; $1,550,000 was in exchange of accounts payable; $1,821,245 of debt conversion cost; and recognized a beneficial conversion feature aggregating $1,316,267.

We obtained $1,200,000, $710,000, and $2,000,000 in 1996, 1997, and 2000, respectively, from bank loans. Additionally, we received a Small Business Administration loan of $1,000,000 in 1996 to pay for portions of automated assembly equipment, multi-cavity molds, and other equipment. Furthermore, we borrowed $5,000,000 in 2000 under our Credit Agreement with Abbott. In October 2002 we repaid the Abbott note with proceeds from a new note from Katie Petroleum for $3,000,000 and a portion of the proceeds from an offering of Series V stock. See Notes to Financial Statements for a discussion of the terms of the new note.

Current Liquidity

We believe we can achieve our break even quarter utilizing our existing equipment. 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 is the subject of our lawsuit discussed in greater detail in Item 3 - Legal Proceedings. In the event our lawsuit is successfully resolved, it will likely have a beneficial and material impact on our liquidity and demand for our products.

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At the present time Management intends to raise additional equity capital in 2003. There can be no assurances that such efforts to raise equity capital will be successful. In the event we are not successful in raising capital and we continue to have only limited market access, the Company 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.

Unit sales increased 23.4 percent from 2001 to 2002. Abbott purchases comprised 47.4 percent and 43.8 percent of our unit sales in 2001 and 2002, respectively. Unit sales to Abbott increased 14.1 percent from 2001 to 2002. Abbott distributes and markets our products into the acute care market. While the 14.1 percent increase in our sales to Abbott is significant, inconsistencies in sales growth and timing of orders have made it difficult to plan production requirements in an efficient and cost effective manner.

McKesson accounted for 11.8 percent of unit sales in 2002.

Unit sales to customers other than Abbott were 52.6 percent and 56.2 percent of sales in 2001 and 2002, respectively. Unit sales to others increased 31.9 percent from 2001 to 2002. Sales to others consist primarily of sales into the alternate care market.

External Sources of Liquidity

We have obtained several loans over the past six years, which have, together with 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, we have 676,634 shares of Series V Class B stock and the shareholders have authorized an additional 5,000,000 shares of a Class C stock that could, if necessary, be used to raise equity funds.

Contractual Obligations and Commercial Commitments

The following charts summarize all of our material obligations and commitments to make future payments under contracts such as debt and lease agreements as of December 31, 2002:

	Payments Due by Period
Contractual Obligations	Total		Less Than 1 Year		1-3 Years		4-5 Years		After 5 Years
Long-Term Debt	$	3,211,676	$	673,519	$	907,374	$	512,458	$	1,118,325
Capital Lease Obligations		229,521		167,380		62,141		0		0
Total Contractual Cash Obligations	$	3,441,197	$	840,899	$	969,515	$	512,458	$	1,118,325

Material Commitments for Expenditures

Assuming we are able to access the market, through our lawsuit or otherwise, we would need to receive additional capital to fund capital expenditures and working capital needs. Management would fund these expenditures through debt and equity offerings. Capital expenditures could include additional assembly lines, manufacturing space, warehousing, and related infrastructure. The expansion could include those products that have been developed but not yet marketed, as well as expanding manufacturing capacity for existing products. The amount of capital required would be dependent on our analysis of the extent of the potential market penetration if we are able to compete in a free market environment.

We had $131,217 in capital expenditures in 2002.

18

PLAN OF OPERATION ASSUMING LIMITED ACCESS TO MARKETS

At the present time Management intends to raise additional equity capital in 2003. In the event we are not successful in raising capital and we continue to have only limited market access, the Company would take cost cutting measures to reduce cash requirements. Such measures could result in reduction of units being produced, reduction of workforce, and reduction of salaries of officers and other nonhourly employees and deferral of royalty payments to Thomas Shaw.

19

Item 7.    Financial Statements

RETRACTABLE TECHNOLOGIES, INC.

FINANCIAL STATEMENTS AND

REPORTS OF INDEPENDENT ACCOUNTANTS

DECEMBER 31, 2002 AND 2001

F-1

RETRACTABLE TECHNOLOGIES, INC.

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Cheshier & Fuller, L.L.P., Independent Accountants	F-3
Report of PricewaterhouseCoopers LLP, Independent Accountants	F-4
Financial Statements:
Balance Sheets as of December 31, 2002 and 2001	F-5
Statements of Operations for the years ended December 31, 2002, 2001 and 2000	F-6
Statements of Changes in Stockholders’ Equity for the years ended December 31, 2002, 2001 and 2000	F-7
Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000	F-9
Notes to Financial Statements	F-10

F-2

Report of Independent Accountants

To the Board of Directors and Stockholders

of Retractable Technologies, Inc.

We have audited the accompanying balance sheet of Retractable Technologies, Inc. as of December 31, 2002, and the related statements of operations, stockholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Retractable Technologies, Inc. as of December 31, 2001 and for each of the two years in the period ended December 31, 2001, were audited by other auditors whose report dated March 28, 2002 expressed an unqualified opinion on those statements.

We conducted our audit in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Retractable Technologies, Inc. as of December 31, 2002, and the results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2, the Company has limited access to the hospital market. The Company’s plans with respect to market access and liquidity are also set forth in Note 2.

/s/ CHESHIER & FULLER, L.L.P.

Cheshier & Fuller, L.L.P.

Dallas, Texas

February 12, 2003

F-3

Report of Independent Accountants

To the Board of Directors and

the Stockholders of Retractable Technologies, Inc.

In our opinion, the balance sheet as of December 31, 2001 and the related statements of operations, of changes in stockholders’ equity and of cash flows for each of the two years in the period ended December 31, 2001 present fairly, in all material respects, the financial position, results of operations and cash flows of Retractable Technologies, Inc. at December 31, 2001 and for each of the two years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2, the Company has had limited access to the hospital market. The Company’s plans with respect to market access and liquidity are also set forth in Note 2. Also, see Note 7 for discussion of classification of note payable to Abbott Laboratories (Note references are to 2001 Annual Report on Form 10-KSB).

/s/    PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Dallas, Texas

March 28, 2002

F-4

RETRACTABLE TECHNOLOGIES, INC.

BALANCE SHEETS

	December 31,
	2002			2001
ASSETS
Current assets:
Cash and cash equivalents	$	1,342,117		$	1,220,244
Accounts receivable, net of allowance for doubtful accounts of $73,294 and $69,521, respectively		2,666,866			1,585,024
Inventories, net		2,779,554			3,218,786
Other current assets		276,524			245,555
Total current assets		7,065,061			6,269,609
Property, plant, and equipment, net		10,515,480			11,740,464
Intangible assets, net		405,641			450,426
Other assets		72,671			79,952
Total assets	$	18,058,853		$	18,540,451
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,229,396		$	3,917,650
Current portion of long-term debt		840,899			686,402
Accrued compensation		328,717			399,149
Marketing fees payable		1,874,571			2,517,341
Accrued royalties		602,777			1,019,050
Other accrued liabilities		145,116			259,184
Total current liabilities		8,021,476			8,798,776
Long-term debt, net of current maturities		2,600,298			9,579,053
Commitments and Contingencies (See Note 8)
Stockholders’ equity:
Preferred stock $1 par value:
Class A; authorized and issued: 5,000,000 shares; outstanding: 1,056,000 and 1,101,500 shares, respectively (liquidation preference of $1,584,000 and $1,652,250, respectively)		1,056,000			1,101,500
Class B; authorized: 5,000,000 shares
Series I, Class B; issued: 1,000,000 shares; outstanding: 259,400 and 261,900 shares, respectively (liquidation preference of $1,621,250 and $1,636,875, respectively)		259,400			261,900
Series II, Class B; issued: 1,000,000 shares; outstanding 431,000 shares (liquidation preference of $5,387,500)		431,000			431,000
Series III, Class B; issued: 1,160,445 shares; outstanding: 150,745 and 158,245 shares, respectively (liquidation preference of $1,884,313 and $1,978,063, respectively)		150,745			158,245
Series IV, Class B; issued: 1,133,800 shares; outstanding 1,066,000 shares (liquidation preference of $11,726,000)		1,066,000			1,066,000
Series V, Class B; issued 2,416,221 shares; outstanding: 2,416,221 shares (liquidation preference of $10,631,372)		2,416,221			—
Common Stock, no par value; authorized: 100,000,000 shares; issued and outstanding: 20,318,100 and 20,262,600, respectively		—			—
Additional paid-in capital		49,411,177			37,671,513
Accumulated deficit		(47,353,464	)		(40,527,536	)
Total stockholders’ equity		7,437,079			162,622
Total liabilities and stockholders’ equity	$	18,058,853		$	18,540,451

See accompanying notes to the financial statements.

F-5

RETRACTABLE TECHNOLOGIES, INC.

STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2002			2001			2000
Sales, net	$	20,316,299		$	16,145,635		$	9,641,451
Cost of sales		14,990,932			13,322,965			8,815,939
Product recall and recovery		481,637			—			—
Gross margin		4,843,730			2,822,670			825,512
Operating expenses:
Preproduction manufacturing		—			—			627,200
Sales and marketing		4,042,081			4,066,433			4,955,456
Research and development		337,930			756,542			899,149
General and administrative		4,534,217			4,149,389			4,788,735
Debt conversion expense		2,319,073			—			—
Deferred IPO expenses		—			563,912			—
Total operating expenses		11,233,301			9,536,276			11,270,540
Loss from operations		(6,389,571	)		(6,713,606	)		(10,445,028	)
Interest income		10,035			51,943			204,195
Interest expense, net		(446,392	)		(553,617	)		(203,776	)
Net loss		(6,825,928	)		(7,215,280	)		(10,444,609	)
Preferred stock dividend requirements		(2,266,250	)		(2,023,954	)		(3,719,839	)
Net loss applicable to common shareholders	$	(9,092,178	)	$	(9,239,234	)	$	(14,164,448	)
Net loss per share (basic and diluted)	$	(0.45	)	$	(0.47	)	$	(.96	)
Weighted average common shares outstanding		20,300,454			19,774,006			14,716,190

See accompanying notes to the financial statements.

F-6

RETRACTABLE TECHNOLOGIES, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Class A					Series I Class B					Series II Class B					Series III Class B					Series IV Class B					Series V, Class B			Common
	Shares		Amount			Shares		Amount			Shares		Amount			Shares		Amount			Shares		Amount			Shares	Amount		Shares	Amount
Balance as of December 31, 1999	5,000,000		$	5,000,000		1,000,000		$	1,000,000		1,000,000		$	1,000,000		1,160,200		$	1,160,200		—		$	—		—	$	—	14,000,000	$	—
Issued Preferred Series III, Class B shares, 245 shares, $1 par																245			245
Issued Preferred Series IV, Class B shares, 1,133,800 shares, $1 par																					1,133,800			1,133,800
Recognition of stock option compensation
Forfeitures of stock options
Conversion of preferred stock into common stock	(3,151,500	)		(3,151,500	)	(633,600	)		(633,600	)	(510,750	)		(510,750	)	(1,002,200	)		(1,002,200	)	(67,800	)		(67,800	)				5,365,850
Redemption of Preferred stock	(22,000	)		(22,000	)
Dividends declared
Net loss
Balance as of December 31, 2000	1,826,500		$	1,826,500		366,400		$	366,400		489,250		$	489,250		158,245		$	158,245		1,066,000		$	1,066,000		—	$	—	19,365,850	$	—
Conversion of preferred stock into common stock	(725,000	)		(725,000	)	(104,500	)		(104,500	)	(58,250	)		(58,250	)														887,750
Exercise of stock options																													9,000
Net loss
Balance as of December 31, 2001	1,101,500		$	1,101,500		261,900		$	261,900		431,000		$	431,000		158,245		$	158,245		1,066,000		$	1,066,000		—	$	—	20,262,600	$	—
Issued Preferred Series V, Class B shares 2,022,012 shares, $1 par (net of stock issuance costs of $296,088)																										2,022,012		2,022,012
Conversion of preferred stock into common stock	(45,500	)		(45,500	)	(2,500	)		(2,500	)						(7,500	)		(7,500	)									55,500
Recognition of stock option compensation
Stock options given in connection with issuance of $3,000,000 note payable
Stock options given in connection with issuance of 525,000 Preferred Series V, Class B shares
Stock options given in connection with conversion of $3,679,284 of debt
Issued 394,209 additional shares of Preferred Series V, Class B shares in connection with conversion of $3,679,284 of debt																										394,209		394,209
Beneficial conversion feature of $3,000,000 note payable
Implied dividend for beneficial conversion feature of Preferred Series V, Class B shares
Forgiveness of royalties due to an officer
Net loss
Balance as of December 31, 2002	1,056,000		$	1,056,000		259,400		$	259,400		431,000		$	431,000		150,745		$	150,745		1,066,000		$	1,066,000		2,416,221	$	2,416,221	20,318,100	$	—

See accompanying notes to the financial statements.

F-7

RETRACTABLE TECHNOLOGIES, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Additional Paid-in Capital			Unearned Compen-sation			Accumulated Deficit			Total
Balance as of December 31, 1999	$	23,565,235		$	(185,635	)	$	(22,852,247	)	$	8,687,553
Issued Preferred Series III, Class B shares, 245 shares, $1 par		2,205									2,450
Issued Preferred Series IV, Class B shares, 1,133,800 shares, $1 par		10,187,414									11,321,214
Recognition of stock option compensation		631,801			179,869						811,670
Forfeitures of stock options		(5,766	)		5,766						—
Conversion of preferred stock into common stock		5,365,850
Redemption of Preferred stock								(15,400	)		(37,400	)
Dividends declared		(2,971,976	)								(2,971,976	)
Net loss								(10,444,609	)		(10,444,609	)
Balance as of December 31, 2000	$	36,774,763		$	—		$	(33,312,256	)	$	7,368,902
Conversion of preferred stock into common stock		887,750
Exercise of stock options		9,000									9,000
Net loss								(7,215,280	)		(7,215,280	)
Balance as of December 31, 2001	$	37,671,513		$	—		$	(40,527,536	)	$	162,622
Issued Preferred Series V, Class B shares 2,022,012 shares, $1 par (net of stock issuance costs of $296,088)		8,663,051									10,685,063
Conversion of preferred stock into common stock		55,500
Recognition of stock option compensation		48,926									48,926
Stock options given in connection with issuance of $3,000,000 note payable		299,346									299,346
Stock options given in connection with issuance of 525,000 Preferred Series V, Class B shares		209,572									209,572
Stock options given in connection with conversion of $3,679,284 of debt		440,000									440,000
Issued 394,209 additional shares of Preferred Series V, Class B shares in connection with conversion of $3,679,284 of debt		1,427,036									1,821,245
Beneficial conversion feature of $3,000,000 note payable		412,500									412,500
Implied dividend for beneficial conversion feature of Preferred Series V, Class B shares		(1,316,267	)								(1,316,267	)
Forgiveness of royalties due to an officer		1,500,000									1,500,000
Net loss								(6,825,928	)		(6,825,928	)
Balance as of December 31, 2002	$	49,411,177		$	—		$	(47,353,464	)	$	7,437,079

See accompanying notes to the financial statements.

F-8

RETRACTABLE TECHNOLOGIES, INC.

STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2002			2001			2000
Cash flows from operating activities:
Net loss	$	(6,825,928	)	$	(7,215,280	)	$	(10,444,609	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Depreciation and amortization		1,328,700			1,196,120			938,570
Provision for doubtful accounts		12,498			3,117			68,379
Capitalized interest		(25,796	)		(152,559	)		(274,273	)
Waiver of accrued vacation		(100,937	)		—			—
Debt conversion expense		2,319,073			—			—
Stock option compensation		48,927			—			811,670
Change in assets and liabilities:
(Increase) decrease in inventories		439,232			(1,643,150	)		(897,674	)
(Increase) decrease in accounts receivable		(1,094,338	)		737,111			(1,794,207	)
(Increase) decrease in other current assets		88,430			256,654			(378,958	)
Increase (decrease) in accounts payable		1,909,280			2,049,293			1,024,192
Increase (decrease) in marketing fees payable		(642,770	)		580,269			1,598,546
Increase (decrease) in other accrued liabilities		1,000,163			515,597			792,965
Net cash used by operating activities		(1,543,466	)		(3,672,828	)		(8,555,399	)
Cash flows from investing activities:
Purchase of property, plant and equipment		(71,314	)		(782,130	)		(2,413,191	)
Acquisition of patents, trademarks, licenses and other assets		(59,903	)		(54,678	)		(46,163	)
Sale of restricted certificates of deposit		—			—			600,000
Net cash used by investing activities		(131,217	)		(836,808	)		(1,859,354	)
Cash flows from financing activities:
Proceeds from sale of preferred stock		4,435,600			—			11,338,000
Proceeds from long-term debt		3,000,000			2,500,000			7,000,000
Repayments of long-term debt and notes payable		(5,552,527	)		(506,802	)		(1,817,858	)
Payment on redemption of preferred stock		—			—			(37,400	)
Payment of preferred dividends		—			—			(2,971,976	)
Proceeds from exercise of stock options		—			9,000			—
Offering expenses related to preferred stock issuances		(86,517	)		—			(14,336	)
Net cash provided by financing activities		1,796,556			2,002,198			13,496,430
Net increase (decrease) in cash		121,873			(2,507,438	)		3,081,677
Cash and cash equivalents at:
Beginning of period		1,220,244			3,727,682			646,005
End of period	$	1,342,117		$	1,220,244		$	3,727,682
Supplemental disclosures of cash flow information:
Interest paid	$	460,159		$	747,452		$	337,745
Supplemental schedule of noncash investing and financing activities:
Forgiveness of royalties by an officer	$	1,500,000		$	—		$	—
Conversion of accounts payable into preferred stock	$	1,550,000		$	—		$	—
Conversion of long-term debt into preferred stock	$	3,679,284		$	—		$	—
Equipment acquired through capital lease obligation	$	—		$	45,000		$	—
Assets acquired through debt	$	—		$	75,451		$	—
Stock issuance costs paid in stock options	$	209,572		$	—		$	—
Beneficial conversion feature of preferred stock issued	$	1,316,267		$	—		$	—
Beneficial conversion feature of a $3,000,000 note payable	$	412,500		$	—		$	—
Implied dividends from beneficial conversion feature	$	(1,316,267	)	$	—		$	—
Loan origination fee paid in stock options	$	299,346		$	—		$	—

See accompanying notes to the financial statements.

F-9

NOTES TO FINANCIAL STATEMENTS

1.    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 syringes to the VanishPoint^® syringe.

Prior to the year 2000, the Company was considered a development stage enterprise for financial reporting purposes as significant efforts were devoted to raising capital, financial planning, research and development, acquiring equipment, training personnel, developing markets and starting up production. The Company completed its development stage activities in the second quarter of 2000.

On May 4, 2000, the Company entered into a National Marketing and Distribution Agreement with Abbott Laboratories (“Abbott”), which provides that Abbott will purchase and market the Company’s VanishPoint^® automated retraction syringes and blood collection devices to its U.S. acute care hospital customers. The agreement is for a five-year term.

2.    LIQUIDITY, CAPITAL RESOURCES AND MANAGEMENT’S PLANS

The Company has been successful in raising funds through private equity financing totaling approximately $52.6 million, including approximately $5.2 million in conversion of debt and accounts payable, over the last seven and one-half years.

Positive factors that affected the Company in 2002 were:

• An offering of Series V, Class B convertible preferred stock (“Series V Stock”) that raised $4.4 million in cash

• $3.65 million of debt was converted into Series V Stock

• Series V Stock issued in exchange for $1.55 million of accounts payable

• The $5 million note to Abbott Laboratories, Inc. was paid in full

• An officer of the Company forgave $1.5 million in accrued royalties (See Note 6)

• Stockholders’ equity increased from $162,000 at December 31, 2001 to $7.4 million at December 31, 2002

• Working capital improved from a negative $2.5 million at December 31, 2001 to a negative $1.0 million at December 31, 2002

However, the environment facing the Company continued to be difficult in 2002. Noteworthy conditions are:

F-10

• Although sales continued to increase, sales growth was at a slower pace than expected by the Company.

• Because the Company’s efforts to penetrate the market have been severely restricted, the Company filed a lawsuit in 2001 in the United States District Court for the Eastern District of Texas against B-D, Tyco International Ltd., and two group purchasing organizations, Premier and Novation. The suit alleges violation of state and federal antitrust laws, tortious interference, business disparagement and common law conspiracy.

• The Company has incurred substantial losses from operations in every fiscal year since inception. For the years ended December 31, 2002, 2001, and 2000, the Company incurred a loss from operations of approximately $6.4 million, $6.7 million, and $10.4 million, respectively.

• The Company had negative cash flows from operating activities of approximately $1.5 million, $3.7 million, and $8.6 million for the years ended December 31, 2002, 2001, and 2000, respectively.

• As of December 31, 2002, and 2001, the Company had accumulated deficits of approximately $47.4 million and $40.5 million, respectively.

As discussed in Note 1, the Company was considered a development stage enterprise for financial reporting purposes until May of the second quarter of 2000. The Company has a high concentration of sales with one significant customer. Management expects to reach a break-even point when the Company has more access to the market. Management plans to raise equity capital in 2003. There are no assurances that such efforts to raise equity capital will be successful. Failure to generate sufficient revenues or raise additional capital could have a material adverse effect on the Company’s ability to continue as a going concern and to achieve its intended business objectives. In the event the Company cannot generate sufficient revenues or raise additional capital, management has committed to undertake actions to preserve liquidity including, but not limited to, eliminating research and development expenditures, deferral of royalty payments to a Company officer (Note 6) and salary reductions.

3.    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

F-11

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 useful lives or increase capacity and interest cost associated with significant capital additions. For the years ended December 31, 2002, 2001, and 2000, the Company capitalized interest of approximately $26,000, $153,000, and $274,000, respectively. 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

When events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable, the Company will review the net realizable value of the long-lived assets through an assessment of the estimated 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 year’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 market 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

F-12

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. The Company has a high concentration of sales with one significant customer. For the year ended December 31, 2002, the aforementioned customer accounted for $9,976,500, or 49.0%, of net sales, and their accounts receivable balance at December 31, 2002, was $2,160,900.

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. Revenues on sales to distributors are recorded net of contractual pricing allowances. 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.

Marketing fees

The Company pays its distributors marketing fees for services provided by distributors. These services include participation in promotional activities, development of educational and promotional materials, representation at trade shows, clinical demonstrations, inservicing and training, and tracking reports detailing the placement of the Company’s products to end-users. Marketing fees are accrued at the time of the sale of product to the distributor. These fees are paid after the distributor provides the Company a tracking report of product sales to end-users. These costs are included in sales and marketing expense in the Statements of Operations.

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 is computed by dividing net earnings for the period (adjusted for any cumulative dividends for the period) by the weighted average number of common shares outstanding during the period. The weighted average number of shares outstanding was 20,300,454, 19,774,006, and 14,716,190 for the periods ended December 31, 2002, 2001 and 2000, respectively. The Company’s potentially dilutive common stock equivalents including warrants, options and convertible debt are all antidilutive as the Company is in a loss position. Accordingly, basic loss per share is equal to diluted loss per share and is presented on the same line for income statement presentation. Cumulative preferred dividends of approximately $2,300,000, $2,000,000, and $3,700,000 have been added to net losses for the years ended December 31, 2002, 2001 and 2000, respectively, to arrive at net loss per share.

Research and development costs

Research and development costs are expensed as incurred.

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Stock-based compensation

At December 31, 2002, the Company had three stock-based director, officer and employee compensation plans which are described more fully in Note 12. Prior to 2002, the Company accounted for those plans under the recognition and measurement provisions (intrinsic value method) of APB Opinion No. 25, 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, prospectively to all director, officer and employee awards granted, modified, or settled after December 31, 2001. Awards under the Company’s plans vest over periods up to three years. Therefore, the cost related to stock-based compensation included in the determination of net income for 2002 is less than what would have been recognized if the fair value method had been applied to all awards since the original effective date of SFAS No. 123. SFAS No. 123 indicates that the fair value method is the preferable method of accounting. The following table indicates the effect on net income and earnings per share if the fair value method had been applied to all outstanding and unvested awards in each period.

	Year Ended December 31,
	2002			2001			2000
Net loss, as reported	$	(6,825,928	)	$	(7,215,280	)	$	(10,444,609	)
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		38,323
Deduct: Total stock-based employee compensation expense determined by fair value based method for all awards, net of related tax effects		(185,072	)		(205,692	)		(70,559	)
Pro forma net income	$	(6,972,677	)	$	(7,420,972	)	$	(10,515,168	)
Net loss per share (basic and diluted)-as reported	$	(0.45	)	$	(0.47	)	$	(0.96	)
Net loss per share (basic and diluted)-pro forma	$	(0.46	)	$	(0.48	)	$	(0.97	)

This information has been derived as if the Company had accounted for its directors, officers, and employee stock options under the fair value method in accordance with SFAS 123. The fair value of each option grant is estimated on the date of grant using Black-Scholes option pricing model. The following weighted average assumptions were used for grants in 2002 and 2000: no dividend yield; expected volatility of 1.57% and 0%; risk-free interest rates of 4.0% and 5.9%, respectively; and expected lives of 10.0 years and 5.8 years, respectively. There were no director, officer, or employee options granted in 2001. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the option vesting periods.

Recent Pronouncements

On July 30, 2002, the FASB issued Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“FAS 146”). FAS 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of commitment to an exit or disposal plan. FAS 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002.

The adoption of FAS 146 is not expected to have a material impact on the Company as there are no exit or disposal activities planned.

In December, 2002, the FASB issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure – an Amendment of FASB Statement No. 123. This statement amends FASB Statement No. 123, Accounting for Stock-Based

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Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of FASB Statement No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method on reported results. The Company’s adoption of this statement is discussed above in this note under the caption “Stock-based compensation.”

4.    INVENTORIES

Inventories consist of the following:

	December 31,
	2002			2001
Raw materials	$	941,512		$	1,307,983
Work in process		—			137,930
Finished goods		1,935,361			1,827,072
		2,876,873			3,272,985
Inventory reserve		(97,319	)		(54,199	)
	$	2,779,554		$	3,218,786

5.    PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	December 31,
	2002			2001
Land	$	261,893		$	261,893
Building and building improvements		1,879,027			1,874,484
Production equipment		13,150,258			13,109,319
Office furniture and equipment		671,304			641,603
Construction in progress		237,427			263,033
Automobiles		21,858			21,858
		16,221,767			16,172,190
Accumulated depreciation and amortization		(5,706,287	)		(4,431,726	)
	$	10,515,480		$	11,740,464

Acquisition costs of production equipment financed through capital leases were $1,257,307 and $1,257,307 at December 31, 2002 and 2001, respectively. Accumulated amortization on these leases was $961,525 and $602,481 at December 31, 2002 and 2001, respectively.

Depreciation expense and capital lease amortization expense for the years ended December 31, 2002, 2001 and 2000 was $1,275,594, $1,142,017, and $886,196 respectively.

6.    INTANGIBLE ASSETS

Intangible assets consist of the following:

	December 31,
	2002		2001
License agreement	$	500,000	$	500,000
Trademarks and patents		216,151		194,628

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		716,151			694,628
Accumulated amortization		(310,510	)		(244,202	)
	$	405,641		$	450,426

In 1995, the Company entered into the license agreement with an officer of the Company for the exclusive right to manufacture, market and distribute products utilizing automated retraction technology. This technology is the subject of various patents and patent applications owned by an officer of the Company. The initial licensing fee of $500,000 is being amortized over 17 years. The license agreement also provides for quarterly payments of a 5% royalty fee to the officer on gross sales. The royalty fee expense is recognized in the period in which it is earned. Royalty fees of $1,483,727, $1,179,657, and $543,968 are included in cost of sales for the years ended December 31, 2002, 2001 and 2000, respectively. Accrued royalties under this agreement aggregated $602,777 and $1,019,050 at December 31, 2002 and 2001, respectively.

During 2002, the officer and his wife forgave $1.5 million of the royalties payable under a licensing agreement.

Amortization expense for the years ended December 31, 2002, 2001 and 2000, was $54,142, $54,103, and $52,374, respectively.

7.    LONG-TERM DEBT

	December 31,
	2002		2001
Long-term debt consists of the following:
Small Business Administration note payable to Texas Bank for a maximum of $1,000,000, all of which was drawn during 1997. Payable in monthly principal and interest installments of approximately $16,000. Interest at prime plus 1.5%; 5.75% and 6.25% on December 31, 2002 and 2001; adjustable quarterly. Matures on July 1, 2003. Collateralized by equipment. Guaranteed by an officer.	$	106,406	$	276,022
Note payable to 1st International Bank. $1,179,284 converted into 294,821 shares of Series V, Class B, Convertible Preferred Stock (“Series V Stock”) in 2002. Loan modified in 2002 to interest only payments. Interest adjustable annually, prime plus 1%; 5.25% and 5.75% on December 31, 2002 and 2001. Collateralized by land and building, matures with balloon payment on February 18, 2005. As long as preferred stock dividend arrearages exist, the maturity date will be extended on a year to year basis until such time as no arrearages exist. Guaranteed by an officer. This note was purchased by Katie Petroleum, Inc. on November 12, 2001 and is convertible into common stock at $7 per share.		250,003		1,452,888
Note payable to 1st International Bank. Interest only payments, matures February 18, 2002. Interest at prime plus 2%; 6.25% and 6.75% on December 31, 2002 and 2001. Collateralized by accounts receivable. Guaranteed by an officer. Subsequent to December 31, 2001, the agreement was renewed with a due date of August 18, 2003 with an interest rate of prime plus 2%.		500,000		500,000
Note payable to Katie Petroleum. Interest accrues at prime plus 1%, 5.25% at December 31, 2002. Interest only is payable monthly through February 1, 2004. The original amount of the note was $3,000,000 and has been reduced for presentation purposes by $299,346 which is unamortized loan discount related to options issued in connection with the loan and $412,500 for a beneficial conversion feature. Beginning March 1, 2004, the loan is payable in equal installments of principal and interest payments (except for changes in the interest rate) beginning March 1, 2004 and being fully paid on September 30, 2012. Guaranteed by an officer. Not otherwise collateralized. Convertible into common stock at $4.00 per share.		2,288,154		—
Note payable to Abbott Laboratories. Interest accrues at prime plus 1%; 5.75% on December 31, 2001. Interest only was payable quarterly beginning June 30, 2001. Loan was prepaid in full in 2002.		—		5,000,000

F-16

Note payable to Katie Petroleum, Inc. Interest accrued at prime plus 1%; 5.75% on December 31, 2001 and was payable quarterly. The loan was converted into 625,000 shares of Series V Stock in 2002. Guaranteed by an officer. Convertible into common stock at $7 per share.	—			2,500,000
Note payable to Legacy Bank of Texas. Payable in monthly installments of approximately $8,000 plus interest. Interest at prime plus 1%; 5.75% on December 31, 2001; adjustable daily. Collateralized by certain machinery and equipment and restrictions on the transfer of certain patents. Guaranteed by an officer. Paid in full in 2002.	—			62,024
Note payable to AFCO. Payable in monthly principal and interest installments of approximately $13,700. Interest at 7.084%. Matures in May 2003.	67,113
Note payable to AFCO. Payable in monthly principal and interest installments of approximately $8,600. Interest at 8.5%. Paid off in 2002.	—			41,917
Capital lease obligations payable in monthly installments ranging from approximately $1,000 to $15,000 through June, 2006. Interest at rates from 9.93% to 14.87%. Collateralized by certain machinery and equipment. Covenants require the Company to maintain a minimum tangible net worth and a specific ratio of total liabilities to tangible net worth. Guaranteed by an officer.	229,521			432,604
	3,441,197			10,265,455
Less: current portion	(840,899	)		(686,402	)
	$2,600,298		$	9,579,053

The aggregate maturities of long-term debt as of December 31, 2002 are as follows:

2003	$	840,899
2004		240,416
2005		485,695
2006		243,404
2007		249,519
Thereafter		1,381,264
	$	3,441,197

The debt held by Katie Petroleum, Inc. prior to December 31, 2001 has a stated conversion feature of $7 per share of Common Stock. All but $250,003 of the debt was converted into Series V Stock at a rate of $4 per share. The Series V Stock can be immediately convertible to Common Stock. Therefore, the additional shares issued for the conversion have been valued at the market price of the Common Stock at the time of the conversion and recorded as debt conversion expense of $1,821,246. The remaining debt conversion expense consists of $440,000 for options issued to purchase 100,000 shares of Common Stock issued in connection with the conversion and $57,827 attributable to the write-off of unamoritzed debt expense. Both the expense of additional shares of stock issued and the stock options were increases to stockholders’ equity.

The Company entered into an agreement in 2002 with Katie Petroleum, Inc. and its affiliates whereby they agreed to purchase 525,000 shares of Series V Stock at a price of $2.1 million and committed to lending the Company $3.0 million. The Company used $5 million of the proceeds to retire the Abbott Laboratories (“Abbott”) note in full on October 7, 2002. The Company also authorized options to purchase 136,439 shares of its Common Stock in connection with these transactions.

8.    COMMITMENTS AND CONTINGENCIES

The Company is involved in various legal proceedings which have arisen in the ordinary course of business. Management believes that any liabilities arising from these claims and contingencies would not have a material adverse effect on the Company’s annual results of operations or financial condition.

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9.    INCOME TAXES

The Company did not provide any current or deferred income tax provision or benefit for any of the periods presented because it has experienced net operating losses since its inception. At December 31, 2002, the Company had available federal and state net operating loss carry forwards of approximately $43.3 million and $34.4 million, respectively. The federal net operating loss carry forwards will begin to expire in 2010. The state net operating loss carry forwards began expiring in 2000.

Deferred taxes are provided for those items reported in different periods for income tax and financial reporting purposes. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

	December 31,
	2002			2001
Deferred tax assets:
Net operating loss carry forwards	$	16,434,304		$	15,055,158
Non-employee option expense		495,042			309,616
Inventory		99,457			147,838
Intangible assets		2,328			6,969
Accrued expenses and reserves		1,084,871			1,076,092
Total deferred tax assets		18,116,002			16,595,673
Deferred tax liabilities:
Property and equipment		(1,214,271	)		(1,419,301	)
Valuation allowance		(16,901,731	)		(15,176,372	)
Net deferred tax assets	$	—		$	—

Management believes that, based on the history of the losses and other factors, the weight of available evidence indicates that it is more likely than not that the Company will not be able to realize its net deferred tax assets, therefore a full valuation reserve has been recorded. Management evaluates on a periodic basis the recoverability of deferred tax assets and the valuation allowance. At such time as it is determined that it is more likely than not that deferred tax assets are realizable the valuation allowance will be reduced.

A reconciliation of income taxes based on the federal statutory rate and the provision for income taxes, had one been provided, is summarized as follows:

	December 31,
	2002		2001		2000
Income tax (benefit) at the federal statutory rate	(35.0	)%	(35.0	)%	(35.0	)%
State tax (benefit), net of federal (benefit)	(2.9	)	(2.8	)	(2.9	)
Increase in valuation allowance	25.3		39.1		38.9
Permanent differences	10.2		0.2		0.1
Other	2.4		(1.5	)	(1.1	)
Effective tax (benefit) rate	—		—		—

10.    STOCKHOLDERS’ EQUITY

Preferred stock

The Company has three classes of preferred stock, Class A, Class B and Class C. The Class B Preferred Stock has five series: Series I, Series II, Series III, Series IV, and Series V. None of the Class C Stock has been issued.

F-18

In September 2000, the Company redeemed 541,500 shares of the Class A Stock pursuant to its rights under the Class A certificate of designation. Under the provisions of the Class A certificate of designation, the Company redeemed 22,000 shares of the Class A Stock for an aggregate price of $37,624 which was equal to the redemption price of $1.70 per share plus accrued and unpaid dividends through the redemption date. Pursuant to the certificate of designation, shareholders owning any of the certificates selected for redemption were entitled to convert their shares into common stock on a one for one share basis and payment of accrued and unpaid dividends in lieu of being paid the redemption price. Accordingly, 519,500 shares of Class A Stock were converted into 519,500 shares of common stock.

In October 2000, the Company issued an Important Notice of Registration of Public Sale of Common Stock to all holders of the preferred stock in accordance with the requirements of each of the certificates of designation. A follow up notice entitled Extension of Deadline for Response to Important Notice of Public Sale of Common Stock of Retractable Technologies, Inc. was sent in November 2000. Pursuant to the rights set forth in the various certificates of designation, the preferred stockholders had the right to give notice of their desire to have the shares of common stock (attained through conversion of their preferred stock) participate in the registration. Pursuant to these rights, 128 Class A shareholders, 152 Series I shareholders, 119 Series II shareholders, 236 Series III shareholders, and 21 Series IV shareholders converted their preferred shares into shares of common stock on a one for one basis. The Class A shareholders originally purchased their preferred stock for $1 per share. The Series I, II, III and IV shareholders originally purchased their shares for $5, $10, $10 and $10 per share, respectively. In exchange for each share of the preferred stock, the shareholders were entitled to one share of common stock plus all dividends accrued through the dates of conversion, which amounts to an aggregate amount of $4,518,335. These accrued dividends will be paid if and when declared by the board of directors. An aggregate of 4,846,350 shares of common stock were issued as a result of converting preferred shareholders.

Class A

The Company authorized 5,000,000 shares of $1 par value Class A Convertible Preferred Stock (“Class A Stock”) in April 1995. There were 1,056,000 and 1,101,500 shares outstanding at December 31, 2002 and 2001, respectively. Holders of Class A Stock are entitled to receive a cumulative annual cash dividend of $.12 per share, payable quarterly if declared by the board of directors. Holders of Class A Stock generally have no voting rights until dividends are in arrears and unpaid for twelve consecutive quarters. In such case, the holders of Class A Stock have the right to elect one-third of the board of directors of the Company. At December 31, 2002 and 2001, approximately $403,000 and $275,000, respectively, of dividends which have not been declared were in arrears.

Class A Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $1.70 per share, plus all accrued and unpaid dividends. Each share of Class A Stock may be converted to one share of common stock after three years from the date of issuance at the option of the shareholder. Pursuant to these terms, a total of 45,500 shares of Class A Stock were converted into common stock in 2002. In the event of voluntary or involuntary dissolution, liquidation or winding up of the Company, holders of Class A Stock then outstanding are entitled to $1.50 per share plus all accrued and unpaid dividends, prior to any distributions to holders of Class B preferred stock or of common stock.

Class B

The Company has authorized 5,000,000 shares of $1 par value Convertible Preferred Stock which have been allocated among Series I, II, III, IV and V in the amounts of 259,400, 431,000, 150,745, 1,066,000 and 2,416,221 shares, respectively. The remaining 676,634 authorized shares have not been assigned a series.

F-19

Series I Class B

There were 1,000,000 shares of $1 par value Series I Class B Convertible Preferred Stock (“Series I Class B Stock”) issued and 259,400 and 261,900 shares outstanding at December 31, 2002 and 2001, respectively. Holders of Series I Class B Stock are entitled to receive a cumulative annual dividend of $.50 per share, payable quarterly if declared by the board of directors. At December 31, 2002 and 2001 approximately $2,435,000 and $2,305,000, respectively, of dividends which have not been declared were in arrears.

Series I Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $7.50 per share, plus all accrued and unpaid dividends. Each share of Series I Class B Stock may, at the option of the stockholder, be converted to one share of common stock after three years from the date of issuance or in the event the Company files an initial registration statement under the Securities Act of 1933. Pursuant to these terms, a total of 2,500 shares of Series I Class B Stock were converted into common stock in 2002. In the event of voluntary or involuntary dissolution, liquidation or winding up of the Company, holders of Series I Class B Stock then outstanding are entitled to $6.25 per share, plus all accrued and unpaid dividends, after distribution obligations to Class A Stock have been satisfied and prior to any distributions to holders of Series II Class B Convertible Preferred Stock (“Series II Class B Stock”), Series III Class B Convertible Preferred Stock (“Series III Class B Stock”), Series IV Class B Convertible Preferred Stock (“Series IV Class B Stock”), Series V Class B Convertible Preferred Stock (“Series V Class B Stock”) or common stock.

Series II Class B

There were 1,000,000 shares of $1 par value Series II Class B Stock issued and there were 431,000 shares outstanding at December 31, 2002 and 2001. Holders of Series II Class B Stock are entitled to receive a cumulative annual dividend of $1.00 per share, payable quarterly if declared by the board of directors. Holders of Series II Class B Stock generally have no voting rights until dividends are in arrears and unpaid for twelve consecutive quarters. In such case, the holders of Series II Class B Stock have the right to elect one-third of the board of directors of the Company. As of December 31, 2000, dividends were in arrears for twelve consecutive quarters. Accordingly, the Series II shareholders had the right to enforce the aforementioned voting rights at meetings held during the year ended December 31, 2002. However, a quorum was never reached at these meetings. On January 24, 2003, a quorum was reached and three board members were elected. At December 31, 2002 and 2001, approximately $4,063,000 and $3,632,000, respectively, of dividends which have not been declared were in arrears.

Series II Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $15.00 per share plus all accrued and unpaid dividends. Each share of Series II Class B Stock may, at the option of the stockholder, be converted to one share of common stock after three years from the date of issuance or in the event the Company files an initial registration statement under the Securities Act of 1933. Pursuant to these terms, no shares of Series II Class B Stock were converted into common stock in 2002. In the event of voluntary or involuntary dissolution, liquidation or winding up of the Company, holders of Series II Class B Stock then outstanding are entitled to $12.50 per share, plus all accrued and unpaid dividends, after distribution obligations to holders of Class A Stock and Series I Class B Stock have been satisfied and prior to any distributions to holders of Series III Class B Stock, Series IV Class B Stock, Series V Class B Stock or common stock.

Series III Class B

There were 1,160,445 shares of $1 par value Series III Class B Stock issued and 150,745 and 158,245 shares outstanding at December 31, 2002 and 2001, respectively. Holders of Series III Class B Stock are entitled to receive a cumulative annual dividend of $1.00 per share, payable quarterly if declared

F-20

by the board of directors. At December 31, 2002 and 2001, approximately $2,292,000 and $2,138,000, respectively, of dividends which have not been declared were in arrears.

Series III Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $15.00 per share, plus all accrued and unpaid dividends. Each share of Series III Class B Stock may, at the option of the stockholder, be converted to one share of common stock after three years from the date of issuance or in the event the Company files an initial registration statement under the Securities Act of 1933. Pursuant to these terms, 7,500 shares of Series III Class B Stock were converted into common stock in 2002. In the event of voluntary or involuntary dissolution, liquidation or winding up of the Company, holders of Series III Class B Stock then outstanding are entitled to $12.50 per share, plus all accrued and unpaid dividends, after distribution obligations to Class A Stock, Series I Class B Stock and Series II Class B Stock have been satisfied and prior to any distributions to holders of Series IV Class B Stock, Series V Class B Stock or common stock.

Series IV Class B

On January 11, 2000, the Company issued a Private Placement Memorandum offering up to 1,300,000 shares of its $1 par value Series IV Class B Stock at $10 per share. There were 1,133,800 shares issued and 1,066,000 shares outstanding at December 31, 2001 and 2000.

Series IV Class B Stock ranks senior to the Company’s common stock with respect to dividends and upon liquidation, dissolution or winding up, but secondary to the Company’s Class A Stock; and Series I Class B, Series II Class B and Series III Class B Stock. Holders of Series IV Class B Stock will be entitled to receive a cumulative annual dividend of $1.00 per share, payable quarterly, if declared by the board of directors. Holders of Series IV Class B Stock generally have no voting rights. At December 31, 2002 and 2001, approximately $2,866,000 and $1,800,000, respectively of dividends which have not been declared were in arrears.

Series IV Class B Stock is redeemable after three years from the date of issuance at the option of the Company at a price of $11.00 per share plus all accrued and unpaid dividends. Each share of Series IV Class B Stock may, at the option of the stockholder any time subsequent to three years from date of issuance, be converted into common stock at a conversion price of $10 per share, or in the event the Company files an initial registration statement under the Securities Act of 1933. In the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, holders of Series IV Class B Stock then outstanding are entitled to receive liquidating distributions of $11.00 per share, plus accrued and unpaid dividends after distribution obligations to Class A Stock, Series I Class B Stock, Series II Class B Stock, and Series III Class B Stock have been satisfied and prior to any distribution to holders of Series V Class B Stock or common stock.

Series V Class B

On April 17, 2002 the Company issued two Private Placement Memoranda offering up to 1,250,000 shares of its $1.00 par value Series V Class B Stock at $4.00 per share. A Regulation D offering comprised 1,000,000 of the shares and a Regulation S offering made up the remaining 250,000 shares. The terms of both offerings were similar. The Regulation D offering was amended to increase the shares being offered from 1,000,000 shares to 1,403,034 shares. The Company sold 583,900 shares for $2,335,600 in cash and 387,500 shares for $1,550,000 in cancelled accounts payable. No shares were sold in the Regulation S offering.

In a separate private offering the Company issued 919,821 shares to Katie Petroleum (“Katie”) in exchange for cancellation of $2,500,000 in debt under a working capital loan and $1,179,284 of the outstanding amount payable on a real estate note.

In another private offering with Katie the Company sold 525,000 shares of Series V Stock at $4.00 per share for total proceeds of $2,100,000.

F-21

In total the Company raised $4,435,600 in cash, exchanged stock for $1,550,000 in accounts payable, exchanged stock for $3,679,284 in debt and $1,821,245 of debt conversion cost, and recognized beneficial conversion features aggregating $1,316,267. The Company sold or exchanged 2,416,221 shares of Series V Stock for gross proceeds of $12,802,396. As of December 31, 2002 there were 2,416,221 shares issued and outstanding.

Series V Class B Stock ranks senior to the Company’s common stock with respect to dividends and upon liquidation, dissolution, or winding up, but secondary to the Company’s Class A Stock; and Series I Class B, Series II Class B, Series III Class B Stock, and Series IV Class B Stock. Holders of Series V Class B Stock will be entitled to receive a cumulative annual dividend of $0.32 per share, payable quarterly, if declared by the board of directors. Holders of Series V Class B Stock generally have no voting rights. At December 31, 2002, approximately $357,000 of dividends which have not been declared were in arrears.

Series V Class B Stock is redeemable after two years from the date of issuance at the option of the Company at a price of $4.40 per share plus all accrued and unpaid dividends. Each share of Series V Class B Stock may, at the option of the stockholder any time subsequent to the date of issuance, be converted into common stock at a conversion price of $4 per share. In the event of voluntary or involuntary liquidation, dissolution, or winding up of the Company, holders of Series V Class B Stock then outstanding are entitled to receive liquidating distributions of $4.40 per share, plus accrued and unpaid dividends.

Common stock

The Company is authorized to issue 100,000,000 shares of no par value common stock, of which 20,318,100 and 20,262,600 shares are issued and outstanding at December 31, 2002 and 2001, respectively.

On May 4, 2001, the Company began trading on the American Stock Exchange under the symbol “RVP”. The Company offered 2,000,000 shares of common stock for sale and selling shareholders offered 5,293,350 shares.

On September 20, 2001, the Company filed a post-effective amendment to its May 3, 2001 registration statement withdrawing from registration and terminating the offer of 2,000,000 shares of common stock the Company intended to sell in its initial public offering. The post-effective amendment did not affect the registration or offering of the remaining 5,293,350 shares of common stock offered by the Company’s selling shareholders which terminated on November 3, 2001. Accordingly, the Company expensed deferred costs of approximately $540,000 related to the public offering during the third quarter of 2001.

11.    RELATED PARTY TRANSACTIONS

The Company has a lease with Mill Street Enterprises (“Mill Street”), a sole proprietorship owned by a former Board member, for sales and marketing offices in Lewisville, Texas. During the years ended December 31, 2002, 2001 and 2000, the Company paid $34,800, $34,800, and $33,400, respectively, under this lease. The future lease commitment is $34,800 per year through December 31, 2006 and $17,400 for the year ended December 31, 2007.

During the years ended December 31, 2002, 2001 and 2000, the Company paid $10,412, $12,070, and $14,006, respectively, to family members of its chief executive officer for various consulting services. During the years ended December 31, 2002, 2001 and 2000, the Company paid $0, $0, and $129,817, respectively, to a former director for various consulting services.

F-22

The Company has a consulting agreement with MediTrade International Corporation, a company controlled by Lillian E. Salerno, a former Director. The contract was amended on August 23, 2000 and expired on May 31, 2001. The contract is now on a month-to-month basis. MediTrade has agreed to establish contacts with major European entities to develop marketing and distribution channels as well as licensing agreements. Ms. Salerno will be paid $16,667 per month and reimbursed for business expenses incurred on behalf of the Company, not to exceed $5,000 per month without prior approval for the term of the contract. During the years ended December 31, 2002, 2001, and 2000 the Company paid $201,120, $304,812, and $183,226, respectively, under this agreement.

The Company entered into a Consulting Agreement on March 15, 2000, with International Export and Consulting where International Export and Consulting agreed to advise the Company with respect to selection of an international distribution network, potential strategic partners, and future licensing for VanishPoint^® technology in the Middle East. In exchange, the Company agreed to pay a consulting fee in the amount of $2,000 a month for ten months as well as issue nonqualified stock options to Marwan Saker for 61,000 shares of common stock at an exercise price of $10 per share. The Company expensed approximately $115,000 related to the options issued. Marwan Saker, a principal in International Export and Consulting, is a director of the Company. During the years ended December 31, 2002, 2001, and 2000, the Company paid $0, $2,000, and $18,000, respectively, under this agreement.

The Company has a license agreement with an officer of the Company. See Note 6.

12.    STOCK OPTIONS AND WARRANTS

Stock options

The Company has three stock option plans that provide for the granting of stock options to officers, employees and other individuals. During 1999, the Company approved the 1999 Stock Option Plan. The 1999 Plan is the only plan with stock options currently being awarded. The Company has reserved 4,000,000 shares of common stock for use upon the exercise of options under this plan.

The Company also has options for common shares outstanding under the 1996 Incentive Stock Option Plan and the 1996 Stock Option Plan for Directors and Other Individuals. A committee appointed by the Board of Directors administers all plans and determines exercise prices at which options are granted. Shares exercised come from the Company’s authorized but unissued common stock. The options vest over periods up to three years from the date of grant and generally expire ten years after the date of grant. All unvested options issued under the plans expire three months after termination of employment or service to the Company.

A summary of director, officer and employee options granted and outstanding under the Plans is presented below:

	Years Ended December 31,
	2002			2001			2000
	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
Outstanding at beginning of period	1,191,280	$	8.90	1,390,705	$	8.91	996,605	$	8.38
Granted at prices in excess of fair market value	589,580		6.90	—		—	460,575		10.00
Granted at prices below fair market value	—		—	—		—	—		—

F-23

	Years Ended December 31,
	2002					2001					2000
	Shares		Weighted Average Exercise Price			Shares		Weighted Average Exercise Price			Shares		Weighted Average Exercise Price
Exercised	—			—		(2,500	)		(1.00	)	—			—
Forfeited	(32,080	)		(9.71	)	(196,925	)		(9.05	)	(66,475	)		(8.57	)
Outstanding at end of period	1,748,780		$	8.21		1,191,280		$	8.90		1,390,705		$	8.91
Exercisable at end of period	901,505		$	8.44		650,780		$	7.99		295,655		$	4.87
Weighted average fair value of options granted during period	—		$	0.07		—		$	—		—		$	1.55

The following table summarizes information about director, officer and employee options outstanding under the aforementioned plans at December 31, 2002:

Exercise Prices	Shares Outstanding	Weighted Average Remaining Contractual Life	Shares Exercisable
$   1.00	60,280	3.31	60,280
$   5.00	152,300	4.31	152,300
$ 10.00	948,850	6.91	656,925
$   6.90	587,350	9.76	32,000

There were no options granted in 2000 or 2002 with exercise prices less than the fair market value of common stock at the date of grant. There were no options granted in 2001.

Non-employee options

Options were granted to non-employees during the years ended December 31 as follows:

	Years Ended December 31,
	2002			2001					2000
	Shares	Weighted Average Exercise Price		Shares		Weighted Average Exercise Price			Shares		Weighted Average Exercise Price
Outstanding at beginning of period	378,200	$	8.95	381,200		$	8.80		185,500		$	7.54
Granted	468,939		3.93	3,500			10.00		203,200			10.00
Exercised	—		—	(6,500	)		(1.00	)	—			—
Forfeited	—		—	—			—		(7,500	)		(10.00	)
Outstanding at end of period	847,139	$	7.54	378,200		$	8.95		381,200		$	8.80
Exercisable at end of period	799,137	$	5.94	234,700		$	8.31		74,000		$	3.84
Weighted average fair value of options granted during period	—	$	1.94	—		$	.89		—		$	3.19

Included in the outstanding options at December 31, 2001 are 15,000 options that were granted to a non-employee for prior services performed. This individual became an employee of the Company during 2001.

F-24

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 2002, 2001, and 2000: no dividend yield; expected volatility of 1.64%, 30% and 30%, respectively; risk-free interest rates of 3.5%, 4.4%, and 5.9%, respectively; and expected lives of 8.5 years, 2 years, and 10 years, respectively.

The following table summarizes information about non-employee options outstanding under the aforementioned plan at December 31, 2002:

Exercise Prices	Shares Outstanding	Weighted Average Remaining Contractual Life	Shares Exercisable
$   1.00	263,939	2.97	263,939
$   5.00	30,000	4.36	30,000
$ 10.00	320,700	6.71	272,698
$   6.90	232,500	9.76	232,500

Warrants

The Company has issued 75,000 warrants in connection with the placement of the Series II Class B Stock sales. Ten warrants entitle the holder to purchase one share of Series IV Class B Stock at an exercise price of $1.00 per warrant. This warrant expired on March 15, 2002.

In 2000, the Company issued 225 warrants to certain brokers for sales of Series IV Class B Stock. One warrant entitles the holder to purchase one share of Series IV Class B Stock at an exercise price of $10.00 per warrant. The warrant expired on July 1, 2002.

F-25

Item 8.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

The Company dismissed PricewaterhouseCoopers LLP (“PWC”) as its independent accountants effective as of June 24, 2002, upon the recommendation of the Audit Committee and the approval of the Board of Directors. The Board of Directors has authorized and the Company has appointed the firm of Cheshier & Fuller, L.L.P. (“Cheshier & Fuller”) to serve as the Company’s independent accountants for the year ended December 31, 2002. Our common stockholders ratified the appointment on September 20, 2002. Cheshier & Fuller’s engagement commenced effective as of June 24, 2002. The Company’s selection of Cheshier & Fuller was based on their having been the Company’s independent accountants prior to PWC and their excellent service during the prior engagement with the Company.

PART III

Item 9.    Directors, Executive Officers, Promoters, and Control Persons; Compliance with Section 16(a) of the Exchange Act

The following table sets forth information concerning our Directors, executive officers, and certain of our significant employees as of the date of this Report. Our Board of Directors consists of a total of nine members, four members of which are generally Class 1 Directors and five of which are generally Class 2 Directors which serve for two-year terms. Because of dividend default rights, Series II Class B shareholders have the right to fill one-third of the Board seats. Series II Directors serve from election until the next annual meeting. Accordingly, the Board currently consists of five Class 2 Directors elected in 2002 serving until the 2004 annual meeting, three Series II Directors elected February 24, 2003, serving until the 2003 annual meeting, and one Class 1 Director elected in 2001 serving until the 2003 annual meeting.

Name	Age	Position	Term as Director Expires
EXECUTIVES
Thomas J. Shaw	52	Chairman, President, Chief Executive Officer, and Class 2 Director	2004
Steven R. Wisner	45	Executive Vice President, Engineering & Production and Class 2 Director	2004
Lawrence G. Salerno	43	Director of Operations	N/A
James A. Hoover	55	Production Manager	N/A
Russell B. Kuhlman	49	Vice President, New Markets and Class 1 Director	2003
Kathryn M. Duesman	40	Director of Clinical Services	N/A
Douglas W. Cowan	59	Chief Financial Officer, Treasurer, and Class 2 Director	2004
Michele M. Larios	36	Director of Legal and Legislative Policy and Secretary	N/A
INDEPENDENT DIRECTORS
Kenneth W. Biermacher	49	Series II Director	2003
Timothy G. Greene	63	Series II Director	2003
John J. McDonald, Jr.	52	Series II Director	2003
Clarence Zierhut	74	Class 2 Director	2004
Marwan Saker	47	Class 2 Director	2004
SIGNIFICANT EMPLOYEES
Phillip L. Zweig	56	Communications Director	N/A
Judy Ni Zhu	44	Research and Development Manager	N/A
Weldon G. Evans	61	Manager of Manufacturing Engineering	N/A
Roni Diaz	32	Manager of Regulatory Affairs	N/A
Timothy E. Poquette	48	Quality Assurance Manager	N/A

EXECUTIVES

Thomas J. Shaw, the Founder of the Company, has served as Chairman of the Board, President, Chief Executive Officer, and Director since the Company’s inception. In addition to his duties overseeing the management of the Company, he continues to lead our design team in product development of other medical safety devices that utilize his unique patented friction ring technology. Mr. Shaw has over 20 years

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of experience in industrial product design and has developed several solutions to complicated mechanical engineering challenges. He has been granted multiple patents and has additional patents pending. Mr. Shaw received a Bachelor of Science in Civil Engineering from the University of Arizona and a Master of Science in Accounting from the University of North Texas.

Steven R. Wisner joined us in October 1999 as Executive Vice President, Engineering and Production and Director. Mr. Wisner’s responsibilities include the management of engineering, production, regulatory affairs, quality assurance, and human resources. Mr. Wisner has over 25 years of experience in product design and development. Before joining us, Mr. Wisner was the Director of Operations for Flextronics International in Richardson, Texas, an electronic manufacturing services company, from May 1998 to October 1999, where he had complete responsibility for taking product ideas from the concept stage through full design and into the manufacturing process. Mr. Wisner worked as Design Services Manager at Altatron Technologies, an electronic manufacturing service company, from August 1997 to May 1998, and as Director of Engineering with Responsive Terminal Systems, a medical reporting device manufacturing company, from 1984 to 1997. While working at Texas Instruments, a leading electronics manufacturing company, from 1982 to 1984, Mr. Wisner was the team leader of a product development that successfully integrated several thousand personal computers into the worldwide Texas Instruments data network. As a project leader with Mostek Corporation, a semiconductor manufacturing company, from 1980 to 1982, he oversaw the development of automated manufacturing control systems for semiconductor assembly. Mr. Wisner began his engineering career with Rockwell-Collins, an avionics division of Rockwell International, in 1977, where he was involved in the design of flight navigation equipment, including the first GPS (Global Positioning System). Mr. Wisner holds a Bachelor of Science in Computer Engineering from Iowa State University.

Lawrence G. Salerno has served as Director of Operations for us since 1995 and is responsible for the manufacture of all VanishPoint^® products, as well as all product development and process development projects. Mr. Salerno is our Management Representative, assuring that the Quality Systems are established and implemented according to ISO 9001, MDD, and FDA mandated standards. In addition, he supervised all aspects of the construction of our facilities in Little Elm, Texas. Prior to joining us, Mr. Salerno worked for Checkmate Engineering, an engineering firm, from 1991 to 1995 and was responsible for engineering site design and supervision of structural engineering products. Mr. Salerno is the brother of Lillian E. Salerno, a shareholder holding more than 5% of the Common Stock, former Director and current consultant to RTI.

James A. Hoover joined us in February 1996 and is our Production Manager. He is responsible for supervision of the production of our products. Mr. Hoover has also developed and implemented FDA required procedures and has been involved in the FDA inspection process. Mr. Hoover joined us after working for Sherwood for 26 years. During his tenure with Sherwood, a medical device manufacturing company, he gained hands-on experience in all aspects of the medical device manufacturing process. Mr. Hoover began his career with Sherwood as a materials handler and worked his way up through a series of positions with added responsibilities to his final position there as Production Manager of Off-Line Molding, Operating Room/Critical Care. In this capacity, he managed several departments, ran several product lines, and hired and supervised over 200 employees. While at Sherwood, he also gained experience with one of the country’s first safety syringes, the Monoject^®.

Russell B. Kuhlman joined us in February 1997 and is our Vice President, New Markets and Director. Mr. Kuhlman joined the Board of Directors in 2001. Mr. Kuhlman is responsible for developing new markets and product training for our sales organization, as well as distribution. Mr. Kuhlman’s efforts with us have resulted in bringing onboard Specialty Distributors, influencing legislation, and educating influential healthcare representatives about the benefits of the VanishPoint^® product line. Mr. Kuhlman is respected throughout the industry and is a main contributor to the safety effort in this country. He has a sales background in the medical service industry that includes his most recent work for Bio-Plexus, a medical device manufacturing company, from 1994 to 1997, where he developed strategic marketing plans for new safety products. Prior to his work there, Mr. Kuhlman worked as Director of Sales and Marketing for Winfield Medical, Inc., a medical device manufacturing company, from 1989 to 1994, where he launched several new products, developed strategic sales territories, and was the trainer for Sales and

21

Regional Managers. Mr. Kuhlman also worked for B-D Vacutainer^® Systems, a medical products company, in the Houston Territory from 1980 to 1989, where he was recognized as the National Sales Representative for the year 1987. Mr. Kuhlman holds a Bachelor of Science in Finance from the University of Tennessee.

Kathryn M. Duesman, RN, joined us in 1996 as the Director of Clinical Services and provides clinical expertise on existing VanishPoint^® products as well as those in development. She has assisted in the development of training and marketing materials. Ms. Duesman has also contributed to the design of two new products. Ms. Duesman is well recognized as one of the key authorities on the prevention of needlestick injuries and has spoken and been published on this issue. In 1996, Ms. Duesman served as a Registered Nurse (“RN”) at Denton Community Hospital. From 1995 to part of 1996, Ms. Duesman served as a RN at Pilot Point Home Health, an agency for home healthcare. From 1992 to 1995, Ms. Duesman served as a RN for Denton Community Hospital. Ms. Duesman is a 1985 graduate of Texas Woman’s University with a Bachelor of Science in Nursing.

Douglas W. Cowan is our Chief Financial Officer, Treasurer, and Director. Mr. Cowan was elected to the Board of Directors in 1999. He is responsible for the financial, accounting, and forecasting functions of the Company. Prior to joining us in 1999, Mr. Cowan served as a consultant to other companies and us from 1996 to 1999 on various accounting and other business matters. Before becoming a consultant, he served as the Chief Financial Officer of Wedge-Dialog Company, an oil field services company, from 1995 to 1996. In addition, Mr. Cowan served in various capacities, including Vice President and Controller at El Paso Natural Gas Company, an interstate pipeline company. After leaving El Paso Natural Gas, Mr. Cowan formed a public accounting practice that provided tax and accounting services, as well as litigation support. Mr. Cowan has a Bachelor of Business Administration from Texas Technological College. He is a CPA licensed in Texas.

Michele M. Larios joined us in February 1998 as an attorney and now serves as the Director of Legal and Legislative Policy and as Secretary of the Company. Ms. Larios is responsible for the legal and legislative functions of the Company. In addition to working on legal matters and with outside counsel, Ms. Larios works with legislators on pertinent issues and relevant legislation. Prior to joining us, Ms. Larios served as the Legal Analyst for Applied Risk Management Inc., a third party claims administration company, from 1995 through 1997. Ms. Larios received a Bachelor of Arts in Political Science from Saint Mary’s College in Moraga, California, and a Juris Doctorate from Pepperdine University School of Law in Malibu, California.

INDEPENDENT DIRECTORS

Kenneth W. Biermacher, Esq. has served as a Series II Director since February 2002. Mr. Biermacher has also served as a shareholder, director, and Vice President of Kane, Russell, Coleman & Logan, a Dallas based law firm, since February 1993. Mr. Biermacher received a Bachelor of Science, summa cum laude in 1976 from the University of New Haven and a Juris Doctorate, with honors, in 1979 from Drake University.

Timothy G. Greene, Esq. has served as a Series II Director since February 2002. Mr. Greene also has served as co-founder and principal of Stuart Mill Capital, Inc., an investment company in McLean, Virginia, since 1997. Mr. Greene is responsible for reviewing investment opportunities on a continuing basis principally in the financial services sector. From 1999 to September 2001, Mr. Greene served as Vice President and General Counsel for Sato Travel Holding Co. Inc. in Virginia where, in addition to serving as a member of the executive team, he supervised the Legal and Corporate Secretary, Administration, Human Resources, and Internal Audit. Mr. Greene also served on their Board of Directors. From 1990 to 1997, Mr. Greene served as Executive Vice President and General Counsel to Sallie Mae-Student Loan Marketing Association. Mr. Greene received his Bachelor of Science in Economics (cum laude) from the University of Idaho in 1961 and his LLB from George Washington University Law School in 1965. Mr. Greene was a Ford Foundation Fellow at Brown University Graduate School from 1961 to 1962.

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John J. McDonald, Jr., has served as a Series II Director since January 2003. Mr. McDonald is currently providing consulting services to various businesses throughout the United States. Previously, he served as the Chairman of the Board, President, Chief Executive Officer, and Chief Financial Officer for Wireless Web Connect!, Inc., formerly Intellicall, Inc. (“Wireless Web Connect!”), a public company, since 1987. He has served as the Chief Executive Officer for Wireless Web Connect! since March 1998. Since August 1997, he served as Wireless Web Connect!’s President and Chief Operating Officer. From February 1997 to August 1997, he served Wireless Web Connect! as the Senior Vice President, Sales and Marketing. He was first elected to the Board of Directors of Wireless Web Connect! in November of 1997. He currently serves on the Board of Directors of Wireless Web Connect!. He was further elected to the Board of Directors of ILD Telecommunications, a former affiliate of Wireless Web Connect!, in April of 1998. Mr. McDonald continues his service on the ILD Board. He was responsible for managing Wireless Web Connect! (Intellicall) through major change and decline in its historical industry and restructuring its manufacturing operations to reduce its long-term financial exposure. Prior to working with Wireless Web Connect!, Mr. McDonald served as the Senior Vice President of Intecom from June 1994 to February 1997 where he was responsible for all field operations, including Customer Service, Sales, Sales engineering, Distributor programs, Contract administration, and Market development. He also served on the executive committee for the Incite division of Intecom. Prior to Intecom, Mr. McDonald served from 1986 to 1994 as a Vice President with Ericsson and 1969 to 1986 in various management and executive positions with Northern Telecom. Mr. McDonald’s education includes several AMA study courses and numerous industry management courses as well as an electronics curriculum at Sylvania Technical School. In 1968, Mr. McDonald was involved in a start-up telecommunications company later sold to Northern telecom.

Clarence Zierhut has served on our Board of Directors since April 1996. Since 1955, Mr. Zierhut has operated an industrial design firm, Zierhut Design now Origin Design that develops new products from concept through final prototypes. During his professional career, Mr. Zierhut has created over 3,000 product designs for more than 350 companies worldwide, in virtually every field of manufacturing, and has won many international awards for design excellence. His clients have included Johnson & Johnson, Abbott Laboratories, Gould, and McDonnell Douglas. He received a Bachelor of Arts from Art Center College of Design in Los Angeles, California.

Marwan Saker joined our Board of Directors in June 2000. Since 1983, Mr. Saker has served as Chief Executive Officer of Sovana, Inc., an export management company that supplies agriculture equipment and supplies to overseas markets. Since 2000, he has served as a Director of Consolidated Food Concepts Inc. From 1991 to 2001, Mr. Saker served as a director of Meridien Marketing & Logistics Inc., an international transportation and home furnishing distribution company. Since 1986, he has served as President of International Exports & Consulting Inc., an export management, consulting and distribution company. Since 2000, he has served as Vice President of Hanneke Corp., an overseas sourcing company. From 1998 to 2001, he served as a Member of My Investments, LLC, an equity investment company. Since 1999, he has served as President of Saker Investments Inc., a company that manages an investment portfolio. Since 1998, he has served as a General Partner of Maya Investments, Ltd., an investment management limited partnership. He also serves as a Member of MMDA, LLC, a real estate development company. Mr. Saker has acted as a representative for United States companies seeking distribution, licensing, and franchising in the Middle East, Europe, and North Africa. Mr. Saker was instrumental in developing successful partnerships in more than 15 countries. He offices in Dallas, Texas.

SIGNIFICANT EMPLOYEES

Phillip L. Zweig joined us in December 1999 as Communications Director. Mr. Zweig is a prize winning financial journalist who has worked as a staff reporter at The American Banker, The Wall Street Journal, and Bloomberg Business News and other media organizations. From 1993 to 1998, he served as Corporate Finance Editor at Business Week where he wrote a major article on the Company. Before joining us, he worked as a freelance financial writer and editorial consultant. His clients included Andersen Consulting and Boston Consulting Group. Mr. Zweig received a Bachelor of Arts in Behavioral Psychology from Hamilton College and a Master of Business Administration from the Baruch College Graduate School of Business.

Judy Ni Zhu joined us in 1995 and is our Research and Development Manager. Her primary focus is on new product development and improvement of current products. Prior to joining us, Ms. Zhu worked with Checkmate Engineering, an engineering firm, as a design engineer on the original 3cc syringe and other SBIR grant projects. Ms. Zhu received her Bachelor of Science from Northwest Polytechnic University in Xian, China, and her Master of Engineering from University of Texas at Arlington. Ms. Zhu has assisted in design modifications for the 3cc syringe, which have maximized both product reliability and production efficiency. She also designed and developed a manual needle assembly machine and an automatic lubricating and capping system for the 3cc syringe and developed and assisted in the design of automated blood collection tube holder assembly equipment. Ms. Zhu has collaborated with Ms. Duesman

23

and Mr. Shaw in the filing of several patent applications. Prior to joining Checkmate Engineering in 1991, Ms. Zhu worked for Shenyang Airplane Corporation, an airplane design company, in Shenyang, China, where she was responsible for airplane control system design and its stress computation and analysis. Ms. Zhu also worked for Mactronix, Inc., an assembly equipment manufacturing semiconductor company, in Dallas, Texas, where she was responsible for the design, modification, and production drawing of an automatic wafer transfer system.

Weldon G. Evans joined us in October 2000 as Manager of Manufacturing Engineering. His responsibilities include the support of new product development and current production, as well as the creation of new and improved manufacturing processes. Prior to joining us, he served as a senior project engineer with B-D, a medical technology company, since 1974. He received a Bachelor of Science degree in Mechanical Engineering and a Master of Science degree in Engineering Administration from Southern Methodist University. Mr. Evans is a member of Pi Tau Sigma National Honorary Mechanical Engineering Society and the American Society of Mechanical Engineering.

Roni Diaz joined us in March 2001 as Manager of Regulatory Affairs. Her responsibilities include development and implementation of company regulatory and quality policies, communication with FDA, European and other medical regulatory authorities, implementation of ISO 9001 and other necessary quality system certifications, obtaining CE mark approvals, generating and maintaining technical files, routine regulatory reports, and regulatory licensures applications and renewals. Prior to joining us, Ms. Diaz served as a Regulatory/Clinical Project Manager for MedTrials, a medical device and pharmaceutical consulting firm. From 1996–1999, she worked for Arthrocare, a medical device manufacturer, as a regulatory/clinical affairs associate. She received a Bachelor of Science degree in Health Sciences from San Jose State University. Ms. Diaz is a member of the Regulatory Affairs Professional Society and holds a Regulatory Affairs Certification.

Timothy E. Poquette joined us in May 2000 as Quality Engineer. In this capacity, his responsibilities included development and improvement of our statistical sampling programs; failure investigations and risk assessment; and test method validation. In July 2001, Mr. Poquette assumed the responsibilities of Quality Assurance (“QA”) Manager and is now responsible for the Quality Engineering and QA Inspection functions. Mr. Poquette holds an AS in Chemical Technologies from Hartford State Technical College (now Central Connecticut Community College) and was certified as a Quality Engineer by the American Society for Quality in 1986. His professional experience includes over 20 years of employment in the specialty chemical and pharmaceutical industries. From October 1993 to February 2000, he served as supervisor of the QA Chemistry and Microbiology laboratories for the Oral Pharmaceuticals division of Colgate Palmolive, a manufacturer of dental pharmaceutical products. He was responsible for supervising analytical chemistry and microbiology testing activities.

FAMILY RELATIONSHIPS

There are no family relationships among the above persons except as set forth above.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

None of the above persons or any business in which such person was an executive officer have been involved in a bankruptcy petition, been subject to a criminal proceeding (excluding traffic violations and other minor offenses), been subject to any order enjoining or suspending their involvement in any type of business, or been found to have violated a securities law.

DIRECTORSHIPS IN OTHER COMPANIES

No Directors hold Directorships in reporting companies other than as set forth above.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16 of the Exchange Act requires our Directors, executive officers, and persons who own more than 10 percent of a registered class of our voting equity securities to file with the Commission initial reports of beneficial ownership (Form 3) and reports of changes in beneficial ownership (Forms 4 and 5) of our Common Stock and our other equity securities. Officers, Directors, and greater than 10 percent shareholders are required by the Commission’s regulations to furnish us with copies of all Section 16(a) reports they file.

To our knowledge based solely on a review of Forms 3 and 4 provided to us, all Directors, Officers, and holders of more than 10 percent of our voting equity securities registered pursuant to Section 12 of the Securities Exchange Act filed reports required by Section 16(a) of the Exchange Act as of December 31, 2002, with the exception of Marwan Saker, a Director. Saker Investments, a company controlled by Mr. Saker, failed to file a Form 4 in July 2002 regarding the purchase of 25,000 shares of Series V Class B Convertible Preferred Stock. The Form 4 was filed in March 2003.

Item 10.    Executive Compensation

The following summary compensation table sets forth the total annual compensation paid or accrued by us to or for the account of the Chief Executive Officer and four additional executive officers whose total cash compensation exceeded $100,000 for any of the past three fiscal years:

SUMMARY COMPENSATION TABLE

		Annual Compensation			Long-Term Compensation
					Awards		Payout(s)
Name and Principal Position	Year	Salary($)	Bonus($)	Other Annual Compensation($)	Restricted Stock Award(s)($)	Securities Underlying Options/SARs (#)	LTIP Payouts ($)	All Other Compensation ($)
Thomas J. Shaw,	2000	198,084	0	0	0	0	0	0
President and CEO	2001	250,016	0			0
	2002	250,016	0			0
Steven R. Wisner,	2000	137,023	0	0	0	15,000	0	0
Executive Vice	2001	150,010	0			0
President,	2002	150,010	0			20,000
Engineering and Production
Douglas W. Cowan,	2000	130,818	0	0	0	25,000	0	0
Chief Financial	2001	142,501	5,000			0
Officer and Treasurer	2002	142,501	0			25,000
Michele M. Larios,	2000	88,225	0	0	0	25,000	0	0
Director of Legal and	2001	120,016	0			0
Legislative Policy and Secretary	2002	122,437	28,500			25,000
Russell B. Kuhlman,	2000	102,411	3,000	0	0	10,000	0	0
Vice President, New	2001	105,019	0			0
Markets	2002	105,019	1,000			20,000

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The following sets forth the total individual grants of stock options and freestanding stock appreciation rights (“SARs”) made by us to persons listed in the above Summary Compensation Table during the last completed fiscal year:

Option/SAR Grants in Last Fiscal Year*
Individual Grants
Name	Number of Securities Underlying Options/SARs Granted (#)	% of Total Options/SARs Granted to Employees in Fiscal Year	Exercise or Base Price ($/Sh)	Expiration Date
Thomas J. Shaw	0	N/A	N/A	N/A
Steven R. Wisner	20,000	3.6%	$6.90	9/30/12
Douglas W. Cowan	25,000	4.5%	$6.90	9/30/12
Michele M. Larios	25,000	4.5%	$6.90	9/30/12
Russell B Kuhlman	20,000	3.6%	$6.90	9/30/12

*     The options were issued under the 1999 Stock Option Plan as amended which is incorporated herein by reference to Exhibit Nos. 10.12 and 10.13.

The following sets forth information regarding the exercise of options by the above executives and the year-end value of their unexercised options:

Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Name	Shares Acquired on Exercise (#)	Value Realized ($)	Number of Securities Underlying Unexercised Options/SARs at FY-End (#) Exercisable/Unexercisable	Value of Unexercised in-the- Money Options/SARs at FY- End ($) Exercisable/Unexercisable
Thomas J. Shaw	0	0	0	0
Steven R. Wisner	0	0	152,500/35,000	$7,000/0
Douglas W. Cowan	0	0	25,000/50,000	0
Michele M. Larios	0	0	25,400/50,000	0
Russell B. Kuhlman	0	0	40,600/30,000	0

COMPENSATION OF DIRECTORS

We pay each non-employee Director a meeting fee of $250 for each Board meeting attended. In the past, the Company has granted to each Director (except Mr. Shaw) stock options for Common Stock. We do not pay any additional amounts for committee participation or special assignment.

EMPLOYMENT AGREEMENT

There are no other employment agreements in place involving other Officers or Directors, except as set forth below:

Thomas J. Shaw

We have a written employment agreement with Thomas J. Shaw, our President and Chief Executive Officer, for an initial period of three years which ended September 2002 that automatically and continuously renews for consecutive two-year periods. The agreement is terminable either by us or Thomas J. Shaw upon 30 days’ written notice. The agreement provides for an annual salary of at least $150,000 with an annual salary increase equal to no less than the percentage increase in the Consumer Price Index during the previous calendar year. Thomas J. Shaw’s salary shall be reviewed by the Board of Directors each January, which shall make such increases as it considers appropriate. Thomas J. Shaw is also entitled to participate in all executive bonuses as the Board of Directors, in its sole discretion, shall determine.

26

Under the employment agreement, we will also provide certain fringe benefits, including, but not limited to, participation in pension plans, profit-sharing plans, employee stock ownership plans, stock appreciation rights, hospitalization and health insurance, disability and life insurance, paid vacation, and sick leave. We also reimburse him for any reasonable and necessary business expenses, including travel and entertainment expenses, necessary to carry on his duties. Pursuant to the employment agreement, we have agreed to indemnify Thomas J. Shaw for all legal expenses and liabilities incurred with any proceeding involving him by reason of his being an officer or agent. We have further agreed to pay reasonable attorney fees and expenses in the event that, in Thomas J. Shaw’s sole judgment, he needs to retain counsel or otherwise expend his personal funds for his defense.

Thomas J. Shaw has agreed to a one-year non-compete, not to hire or attempt to hire employees for one year, and to not make known our customers or accounts or to call on or solicit our accounts or customers in the event of termination of his employment for one year unless the termination is without cause or pursuant to a change of control of the Company. Furthermore, Mr. Shaw has the right to resign in the event that there is a change in control which is defined as a change in the majority of directors within any 12 month period without two-thirds approval of the shares outstanding and entitled to vote, or a merger where less than 50 percent of the outstanding stock survives and a majority of the Board of Directors remains, or the sale of substantially all of our assets, or any other person acquires more than 50 percent of the voting capital. Mr. Shaw retained the right to participate in other businesses as long as they do not compete with us and so long as he devotes the necessary working time to the company.

Item 11.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information relating to our equity compensation plans as of December 31, 2002:

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants, and rights	Weighted average exercise price of outstanding options, warrants, and rights	Number of securities remaining available for future issuance
Equity compensation plans approved by security holders	2,134,480	$8.34	2,865,520
Equity compensation plans not approved by security holders*	522,439	$3.88	N/A
Total	2,656,919	N/A	2,865,520

*    Effective as of September 30, 2002, the Company issued non-qualified stock options for the purchase of Common Stock to nine persons as follows:

In conjunction with a $3 million Loan Agreement and the purchase of 525,000 Series V shares by Katie Petroleum, we issued options for the purchase of 136,439 shares of Common Stock of the Company at an exercise price of $1 per share to Katie Petroleum and two affiliates. The options were exercisable immediately and expire on September 30, 2005.

In conjunction with a $2.5 million working capital loan, purchase of our real estate note and a $1,000,000 construction loan (which was never drawn on) we issued options to Katie Petroleum for the purchase of 100,000 shares of Common Stock of the Company at an exercise price of $1 per share. The options were exercisable immediately and expire on June 21, 2005.

We authorized the issuance of an option for the purchase of 200,000 shares of Common Stock to Jimmie Shiu, M.D., for his past services in introducing the Company to purchasers of various series of Preferred Stock as well as for introducing the Company to Katie Petroleum. The option is exercisable at $6.90 per share and will terminate in 10 years.

27

We authorized the issuance of an option for the purchase of 25,000 shares of Common Stock to Harry Watson for his past services in assisting the Company in protecting its intellectual property. The option is exercisable at $6.90 per share and will terminate in 10 years.

In connection with a Consulting Agreement with International Export and Consulting, we issued options for the purchase of 61,000 shares of Common Stock to Marwan Saker, a Director.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information regarding the beneficial ownership of our capital stock as of March 17, 2003 for (a) each person known by us to own beneficially 5 percent or more of the voting capital stock, and (b) each Director and executive officer (earning in excess of $100,000 annually) who owns capital stock. Except pursuant to applicable community property laws and except as otherwise indicated, each shareholder identified in the table possesses sole voting and investment power with respect to his or her shares.

Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Owner	Percent of Class(1)
Common Stock
As a Group	Officers and Directors 511 Lobo Lane, P.O. Box 9 Little Elm, TX 75068-0009	14,499,500	69.6%
As Individuals	Thomas J. Shaw2	11,280,000	54.2%
	Lillian E. Salerno3	2,804,500	13.5%
	Michele M. Larios4	35,400	Less than 1%
	Steven R. Wisner5	155,000	Less than 1%
	Marwan Saker6	80,500	Less than 1%
	John J. McDonald7	2,500	Less than 1%
	Kenneth W. Biermacher8	25,000	Less than 1%
	Timothy G. Greene9	15,000	Less than 1%
	Clarence Zierhut10	36,000	Less than 1%
	Douglas W. Cowan11	25,000	Less than 1%
	Russel B. Kuhlman12	40,600	Less than 1%
Series I-V Class B Stock
As a Group	Officers and Directors 511 Lobo Lane, P.O. Box 9 Little Elm, TX 75068-0009	180,000	4.2%
As Individuals	Thomas J. Shaw	80,000	1.9%
	Marwan Saker	55,000	1.3%
	Lillian E. Salerno	12,500	Less than 1%
	John J. McDonald	2,500	Less than 1%
	Kenneth W. Biermacher	20,000	Less than 1%
	Timothy G. Greene	10,000	Less than 1%

(1) The percentages of each class are based on 20,823,100 shares of Common Stock including shares of Common Stock obtainable within 60 days of the date of this Report (via conversion of preferred stock or exercise of options) and 4,323,366 shares of Series I through V Class B Stock outstanding as of March 17, 2003.

(2) 80,000 of the 11,280,000 shares identified as Common Stock are preferred shares which are eligible for conversion into Common Stock within 60 days.

(3) Lillian Salerno is a holder of more than 5% of the Company’s voting stock. All other persons listed in the table are officers or directors of the Company. Furthermore, 12,500 of the 2,804,500

28

shares identified as Common Stock are preferred shares which are eligible for conversion into Common Stock within 60 days.

(4) 25,400 of the 35,400 shares are options which are currently exercisable.

(5) 152,500 of the 155,000 shares are options which are currently exercisable.

(6) The 80,500 shares identified as Common Stock consist of 35,000 preferred shares which are eligible for conversion into Common Stock and options for the purchase of 45,500 shares which are exercisable within 60 days of this Report. The preferred shares are held as follows: Saker Investments holds 25,000 shares of Series V Stock and My Investments holds 10,000 shares of Series IV Stock. Mr. Saker is an officer or director and shareholder for these companies.

(7) These shares identified as Common Stock are preferred shares which are eligible for conversion into Common Stock within 60 days.

(8) 20,000 of the 25,000 shares identified as Common Stock are preferred shares which are eligible for conversion into Common Stock within 60 days. 5,000 are options which are exercisable.

(9) 10,000 of the 15,000 shares identified as Common Stock are preferred shares which are eligible for conversion into Common Stock within 60 days. 5,000 are options which are exercisable.

(10) These shares are options which are currently exercisable.

(11) These shares are options which are currently exercisable.

(12) These shares are options which are currently exercisable.

There are no arrangements the operation of which would result in a change in control of the Company.

Item 12.    Certain Relationships and Related Transactions

We believe that all of the transactions set forth below were made on terms no less favorable to us than could have been obtained from unaffiliated third parties.

Thomas J. Shaw, our President and Chief Executive Officer who beneficially owns approximately 55.1 percent of the Common Stock, was paid a licensing fee of $500,000 (amortized over 17 years) by us for the exclusive worldwide licensing rights to manufacture, market, sell, and distribute retractable medical safety products. In addition, Mr. Shaw receives a 5 percent royalty on gross sales of all licensed products sold to customers over the life of the technology licensing agreement. Mr. Shaw was paid a royalty of $359,548 and $400,000 for 2001 and 2002, respectively. Mr. Shaw waived royalties of $1.5 million in 2002.

Lillian E. Salerno, a consultant for the Company, a shareholder holding in excess of 5% of the shares of Common Stock, and former Director, d/b/a Mill Street Enterprises (“Mill Street”), a sole proprietorship, leases offices at 618, 620, 622, and 628 S. Mill Street, in Lewisville, Texas, to us for our marketing and sales department. This lease is for a five-year period beginning in July 2002 at a monthly rate of $2,900. Lease payments for $34,800 and $34,800 were paid in 2001 and 2002, respectively.

The Company has a consulting agreement with MediTrade International Corporation, a company controlled by Lillian E. Salerno. The contract was amended on August 23, 2000 and expired on May 31, 2001. The contract is now on a month-to-month basis. MediTrade has agreed to establish contacts with major European entities to develop marketing and distribution channels as well as licensing agreements. Ms. Salerno will be paid $16,667 per month and reimbursed for business expenses incurred on behalf of the Company, not to exceed $5,000 per month without prior approval for the term of the contract. During the years ended December 31, 2002 and 2001 the Company paid $201,120 and $304,812, respectively, under this agreement.

We entered into a Consulting Agreement on March 15, 2000, with International Export and Consulting where International Export and Consulting agreed to advise us with respect to selection of an international distribution network, potential strategic partners, and future licensing for our technology in the Middle East. In exchange we agreed to pay a consulting fee in the amount of $2,000 a month for ten

29

months as well as issue nonqualified stock options to Marwan Saker for 61,000 shares of common stock at an exercise price of $10 per share. Marwan Saker, a principal in International Export and Consulting, is a Director of the Company. During the years ended December 31, 2001 and 2002, the Company paid $2,000 and $0, respectively, under this agreement.

Item 13.    Exhibits and Reports on Form 8-K

(a) EXHIBITS

Exhibit No.	Description of Document
3(i)	Second Amended and Restated Articles of Incorporation of RTI filed August 14, 2000, as amended *
3(ii)	Amended and Restated Bylaws of RTI dated as of the 11th day of August 2000 **
10.1	National Marketing and Distribution Agreement between RTI and Abbott Laboratories dated as of May 4, 2000, and Registration Rights Agreement between RTI and Abbott Laboratories dated as of May 4, 2000 (Exhibits 3.1 [Purchase Forecast], 4.2 [Product Specifications], 5.4(b) [Profit Split Example] and Pledged Fixed Asset Listing are redacted for confidential treatment) ***
10.2	Sample United States Distribution Agreement ** **
10.3	Sample Foreign Distribution Agreement ** **
10.4	Employment Agreement between RTI and Thomas J. Shaw dated as of September 28, 1999 ** **
10.5	Technology License Agreement between Thomas J. Shaw and RTI dated the 23rd day of June 1995 ** **
10.6	Royalty Waiver Agreement entered into among RTI, Thomas J. Shaw, and Suzanne M. August effective as of January 18, 2002 *** **
10.7	Loan Agreement Between RTI and Katie Petroleum, Inc. dated November 12, 2001, with the following exhibits: “Note,” “Security Agreement,” “Construction Loan Agreement,” “Real Estate Lien Note,” “Guaranty,” and “Deed of Trust” *** *** (See Exhibit 4.21.)
10.8	Consulting Agreement entered into on August 23, 2000, between RTI and Lillian Salerno dba Medi-Trade International **
10.9	First Amendment to Loan Agreement and Loan Documents and Note Modification Agreement entered into Between Katie Petroleum and RTI effective as of the 21st day of June 2002 *** *** *
10.10	Loan Agreement Among RTI, Katie Petroleum and Thomas J. Shaw as of the 30th day of September, 2002 and Promissory Note **** **** *
10.11	Royalty Waiver Agreement entered into among Retractable Technologies, Inc., Thomas J. Shaw, and Suzanne M. August effective as of June 21, 2002 **** ****
10.12	RTI’s 1999 Stock Option Plan ** **
10.13	First Amendment to 1999 Stock Option Plan *

30

Exhibit No.	Description of Document
10.14	1996 Incentive Stock Option Plan of RTI ** **
10.15	1996 Stock Option Plan for Directors and Other Individuals ** **
20.1	Letter to Shareholders Re: Three New York Times Articles Addressing the Healthcare Purchasing System dated April 3, 2002 *
20.2	Letter to Shareholders Delivering the Form 10-KSB Annual Report dated April 15, 2002 *
20.3	Letter to Shareholders Regarding Competition ***** *****
20.4	Letter to Shareholders Re: the Latest New York Times Investigatory Series on Hospital Group Purchasing Organizations and Urging Shareholders to Contact Their Legislators dated July 23 2002 *
20.5	Letter to Shareholders Re: Factors Affecting the Stock Price and the Way to Prevent Possible Short Selling of the Common Stock dated July 31, 2002 *
99	Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
*	Filed herewith
**	Incorporated herein by reference to RTI’s Registration Statement on Form 10SB-A filed on October 25, 2000
***	Incorporated herein by reference to RTI’s Registration Statement on Form SB2-A4 filed on May 2, 2001
** **	Incorporated herein by reference to RTI’s Registration Statement on Form 10-SB filed on June 23, 2000
*** **	Incorporated herein by reference to RTI’s Form 8-K filed on January 18, 2002
*** ***	Incorporated herein by reference to RTI’s Form 10-QSB filed on November 14, 2001
*** *** *	Incorporated herein by reference to RTI’s Form 8-K filed on July 10, 2002
**** ****	Incorporated herein by reference to RTI’s Form 10-QSB filed on August 14, 2002
**** **** *	Incorporated herein by reference to RTI’s Form 8-K filed on October 10, 2002
***** *****	Incorporated herein by reference to RTI’s Form 8-K filed on May 31, 2002

31

(b) REPORTS ON FORM 8-K

On October 10, 2002, we filed a Form 8-K with an item 5 disclosure that we issued a press release entitled “Retractable Technologies, Inc. Announces Additional Strengthening of its Balance Sheet,” together with exhibits relating thereto.

On November 21, 2002, we filed a Form 8-K with an item 5 disclosure that we issued a press release entitled “Retractable Technologies, Inc. Announces Third Quarter Results, Record Sales in Alternate Care.” This filing contained the Condensed Balance Sheet as of September 30, 2002, and December 31, 2001, as well as the Condensed Statements of Operations for the three-month and nine-month periods ended September 30, 2002 and 2001.

Item 14.    Controls and Procedures

On March 27, 2003, our President, Chairman, and Chief Executive Officer, Thomas J. Shaw (the “CEO”), and our 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 and determined that there were no significant deficiencies in these procedures. The CEO and CFO determined that our disclosure controls and procedures are effective.

Also, the CEO and CFO did not identify any deficiencies or material weaknesses in our internal controls, nor did they identify fraud that involved our management or any other employee who had a significant role in our internal controls. They did not find any deficiencies or weaknesses which would require changes to be made or corrective actions to be taken related to our internal controls. There have been no significant changes in RTI’s internal controls or in any other factor that could significantly affect these controls subsequent to March 27, 2003.

32

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RETRACTABLE TECHNOLOGIES, INC. (Registrant)
By:	/S/Thomas J. Shaw
	THOMAS J. SHAW CHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER
Date:	March 31, 2003

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE

/S/Steven R. Wisner

Steven R. Wisner

Executive Vice President, Engineering &

Production and Director

03/31/03

/S/Russell B. Kuhlman

Russell B. Kuhlman

Vice President, New Markets and Director

03/27/03

/S/Douglas W. Cowan

Douglas W. Cowan

Chief Financial Officer, Treasurer, and Director

03/31/03

/S/Clarence Zierhut

Clarence Zierhut

Director

03/26/03

/S/Marwan Saker

Marwan Saker

Director

33

03/26/03

/S/John J. McDonald, Jr

John J. McDonald, Jr

Director

03/27/03

/S/Kenneth Biermacher

Kenneth Biermacher

Director

03/27/03

/S/Timothy G. Greene

Timothy G. Greene

Director

03/27/03

34

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Thomas J. Shaw, certify that:

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

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

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

4.    The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

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

b)    evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c)    presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

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

a)    all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize, and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.    The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 31, 2003

/S/ THOMAS J. SHAW

THOMAS J. SHAW

PRESIDENT, CHAIRMAN, AND

CHIEF EXECUTIVE OFFICER

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Douglas W. Cowan, certify that:

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

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

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

4.    The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

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

b)    evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c)    presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

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

a)    all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize, and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.    The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 31, 2003

/S/ DOUGLAS W. COWAN

DOUGLAS W. COWAN

CHIEF FINANCIAL OFFICER

EX-3.(I)

                                                                    EXHIBIT 3(i)

                                                                FILED
                                                         in the Office of the
                                                     Secretary of State of Texas
                                                              AUG 14 2000
                                                         Corporations Section
                                 SECOND AMENDED

                                       AND

                       RESTATED ARTICLES OF INCORPORATION

                                       OF

                         RETRACTABLE TECHNOLOGIES, INC.

     Pursuant to the provisions of Article 4.07 of the Texas Business
Corporation Act, Retractable Technologies, Inc. (hereinafter called the
"Corporation") hereby adopts the following amendments and restates the Articles
of Incorporation of the Corporation as previously amended or supplemented and as
further amended by these Second Amended and Restated Articles of Incorporation
of the Corporation as follows:

                                    ARTICLE I
                                    ---------

     The name of the Corporation is Retractable Technologies, Inc.

                                   ARTICLE II
                                   ----------

     The following amendment to the Articles of Incorporation was adopted by the
Board of Directors of the Corporation on August 1, 2000, and by the shareholders
of the Corporation effective as of August 11, 2000, for the purpose of changing
the registered agent and office of the Corporation. The Amendment alters
Artictle VII of the Restated Articles of Incorporation filed on April 13, 2000,
and the full text of Article VII, as hereby amended, is as follows:

          The street address of its registered office is 2001 Bryan Tower, Ste.
          2700, Dallas, Texas 75201 and the name of its registered agent is
          Ralph S. Janvey.

                                   ARTICLE III
                                   -----------

     The following amendment to the Articles of Incorporation was adopted by the
Board of Directors of the Corporation on August 1, 2000, and by the shareholders
of the Corporation effective as of August 11, 2000, for the purpose of changing
the term of office of directors from three to two years in order to comply with
Section 2.33 of the Texas Business Corporation Act. The Amendment alters Section
(a) of Article X of the Restated Articles of Incorporation filed on April 13,
2000, and the full text of Section (a) of Article X, as hereby amended, is as
follows:

     a)   Number, Election, and Terms of Directors. The business and affairs of
          the Corporation shall be managed by



                                        1




          a Board of Directors, which, subject to the rights of holders of
          shares of any class of series of Preferred Stock of the Corporation
          then outstanding to elect additional directors under specified
          circumstances, shall consist of not less than three nor more than
          twenty-one persons. The exact number of directors within the minimum
          and maximum limitations specified in the preceding sentence shall be
          fixed from time to time by either (i) the Board of Directors pursuant
          to a resolution adopted by the majority of the entire Board of
          Directors, or (ii) the affirmative vote of the holders of 66-2/3% or
          more of the voting power of all of the shares of the Corporation
          entitled to vote generally in the election of directors voting
          together as a single class. No decrease in the number of directors
          constituting the Board of Directors shall shorten the term of any
          incumbent director; provided, however, that the term of existing
          Directors may be shortened to comply with this Article X and/or the
          Texas Business Corporation Act. The directors shall be divided into
          two classes as nearly equal in number as possible, with the term of
          office of the first class to expire at the 2001 annual meeting of
          stockholders, and the term of office of the second class to expire at
          the 2002 annual meeting of stockholders, and with the members of each
          class to hold office until their successors shall have been elected
          and qualified. At each annual meeting of stockholders following such
          initial classification and election, directors elected to succeed
          those directors shall be elected for a term of office to expire at the
          second succeeding annual meeting of stockholders after their election.

                                   ARTICLE IV
                                   ----------

     The following amendment to the Articles of Incorporation was adopted by the
Board of Directors of the Corporation on August 1, 2000 and by the shareholders
of the Corporation effective as of August 11, 2000, for the purpose of changing
the number of days of advance notice of stockholder nominations of directors
from 60 days to at least 5 days prior to the scheduled date for the next annual
meeting of stockholders. The Amendment alters Section (b) of Article X of the
Restated Articles of Incorporation filed on April 13, 2000, and the full text of
Section (b) of Article X, as hereby amended, is as follows:

     b)   Stockholder Nomination of Director Candidates. Advance notice of
          stockholder nominations for the election of directors shall be
          submitted to the Board of Directors at least five days prior to the
          scheduled date for the next annual meeting of stockholders.

                                        2



                                    ARTICLE V
                                    ---------

     Each amendment made by these Restated Articles of Incorporation, which
amendments are set forth in Articles II through IV above, has been effected in
conformity with the provisions of the Texas Business Corporation Act.


                                   ARTICLE VI
                                   ----------

     This Restatement of the Articles of Incorporation of the Corporation
accurately copies the Articles of Incorporation and all amendments thereto that
are in effect to date and as further amended by these Restated Articles of
Incorporation of the Corporation and there are no other changes in any provision
thereof except that the number of directors now constituting the Board of
Directors and the names and addresses of the persons now serving as directors
have been inserted in lieu of similar information concerning the initial Board
of Directors and the names and addresses of each incorporator has been omitted
pursuant to Article 4.07 of the Texas Business Corporation Act. These restated
Articles of Incorporation and the amendments contained herein supersede the
original Articles of Incorporation and all amendments thereto.

                                   ARTICLE VII
                                   -----------

     The Articles of Incorporation of the Corporation as amended and
supplemented by all certificates of amendment previously issued by the Secretary
of State and as further amended by these Restated Articles of Incorporation of
the Corporation is hereby restated in its entirety as follows:

                            ARTICLES OF INCORPORATION

                                       OF

                         RETRACTABLE TECHNOLOGIES, INC.

     I, the undersigned natural person of the age of eighteen (18) years or
more, acting as an Incorporator of a corporation under the Texas Business
Corporation Act, do hereby adopt the following Articles of Incorporation for
such Corporation:

                                        3



                                    ARTICLE I

     The name of the Corporation is Retractable Technologies, Inc.

                                   ARTICLE II

     The period of its duration is perpetual.

                                   ARTICLE III

     The purpose for which the Corporation is organized is the transaction of
any or all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.

                                   ARTICLE IV

     4.01  The aggregate number of shares which the Corporation shall have the
           authority to issue is 100,000,000 shares of Common Stock, no par
           value, 5,000,000 shares of Preferred Stock Class A with a par value
           of One Dollar ($1.00) per share and 5,000,000 shares of Preferred
           Stock Class B with a par value of One Dollar ($1.00) per share.

     4.02  The Corporation is authorized to issue three classes of stock, one
           designated as Common Stock, no par value, one designated as Preferred
           Stock Class A, par value One Dollar ($1.00) per share, and one
           designated as Preferred Stock Class B, par value One Dollar ($1.00)
           per share, each as described in this Article IV above. Provided,
           however, that none of the shares of Preferred Stock of either class
           shall carry any voting rights for the election of Directors or for
           any other matters, except where specifically designated or required
           by the applicable provisions of the Texas Business Corporation Act.

     4.03  The Directors shall have the authority to divide each class of the
           Preferred Stock into series and to set the relative rights and
           preferences as to and between series, including dividends, issuance
           of Preferred Stock, redemption of such shares and the conversion of
           any shares of Preferred Stock to other or common shares. Prior to the
           issuance of any Preferred Stock of a series established by resolution
           adopted by the Directors, the Corporation shall file with the
           Secretary of State the notice required by Article 2.13 of the Texas
           Business Corporation Act.

     4.04  The relative rights and preferences of the shares of Preferred Stock
           Class A are set forth in the Certificate of Designation, Preferences,
           Rights, and Limitations of Series A Convertible Preferred Stock of
           the Corporation filed on October 13, 1995, which certificate is
           attached hereto and incorporated herein for all purposes as Exhibit
           A.

                                        4



     4.05  The relative rights and preferences of the shares of the Series I
           Preferred Stock Class B are set forth in the Certificate of
           Designation, Preferences, Rights, and Limitations of Class B
           Convertible Preferred Stock of the Corporation filed on May 11, 1996,
           which certificate is attached hereto and incorporated herein for all
           purposes as Exhibit B.

     4.06  The relative rights and preferences of the shares of the Series II
           Preferred Stock Class B are set forth in the Certificate of
           Designation, Preferences, Rights, and Limitations of Series II Class
           B Convertible Preferred Stock of the Corporation filed on May 27,
           1997, which certificate is attached hereto and incorporated herein
           for all purposes as Exhibit C.

     4.07  The relative rights and preferences of the shares of the Series III
           Preferred Stock Class B are set forth in the Certificate of
           Designation, Preferences, Rights, and Limitations of Series III Class
           B Convertible Preferred Stock of the Corporation filed on July 29,
           1998, which certificate is attached hereto and incorporated herein
           for all purposes as Exhibit D.

     4.08  The relative rights and preferences of the shares of the Series IV
           Preferred Stock Class B are set forth in the Certificate of
           Designation, Preferences, Rights, and Limitations of Series IV Class
           B Convertible Preferred Stock of the Corporation filed on January 24,
           2000, which certificate is attached hereto and incorporated herein
           for all purposes as Exhibit E.

                                    ARTICLE V

     The Corporation will not commence business until it has received, for the
issuance of its shares, consideration of the value of One Thousand Dollars
($1,000.00), consisting of money, labor done, or property actually received. The
manner in which any exchange, reclassification, cancellation of issued shares is
as follows: The present holder of 1,000 shares of no par value common stock may
exchange such shares for 14,000,000 shares of no par value Common Stock.

                                   ARTICLE VI

     Cumulative voting is expressly prohibited.

                                        5



                                   ARTICLE VII

     The street address of its registered office is 2001 Bryan Tower, Ste. 2700,
Dallas, Texas 75201 and the name of its registered agent is Ralph S. Janvey.

                                  ARTICLE VIII

     The Directors of the Corporation shall be not less than three (3) nor more
than twenty-one (21) in number and the name and address of the directors who are
to serve until the annual meeting of year indicated or until their successors
are elected and qualified or until their term is terminated are as follows:

     Director                        Address                    Term expires
     ------------------------------  -------------------------  ------------
     Thomas J. Shaw                  511 Lobo Lane                      2000
                                     PO Box 9
                                     Little Elm, TX 75068-0009

     Steve Wisner                    511 Lobo Lane                      2000
                                     PO Box 9
                                     Little Elm, TX 75068-0009

     Lillian E. Salerno              511 Lobo Lane                      2000
                                     PO Box 9
                                     Little Elm, TX 75068-0009

     Douglas W. Cowan                511 Lobo Lane                      2000
                                     PO Box 9
                                     Little Elm, TX 75068-0009

     Clarence Zierhut                511 Lobo Lane                      2002
                                     PO Box 9
                                     Little Elm, TX 75068-0009

     Marwan Saker                    511 Lobo Lane                      2000
                                     PO Box 9
                                     Little Elm, TX 75068-0009

     Dr. Jimmie Shiu                 511 Lobo Lane                      2000
                                     PO Box 9
                                     Little Elm, TX 75068-0009

     Edith Zagona                    511 Lobo Lane                      2000
                                     PO Box 9
                                     Little Elm, TX 75068-0009

     Russell B. Kuhlman              511 Lobo Lane                      2000
                                     PO Box 9
                                     Little Elm, TX 75068-0009

                                        6



                                   ARTICLE IX

     The name and address of the incorporator is intentionally omitted.

                                    ARTICLE X

     Corporate Governance

     a)   Number, Election, and Terms of Directors. The business and affairs of
          the Corporation shall be managed by a Board of Directors, which,
          subject to the rights of holders of shares of any class of series of
          Preferred Stock of the Corporation then outstanding to elect
          additional directors under specified circumstances, shall consist of
          not less than three nor more than twenty-one persons. The exact number
          of directors within the minimum and maximum limitations specified in
          the preceding sentence shall be fixed from time to time by either (i)
          the Board of Directors pursuant to a resolution adopted by the
          majority of the entire Board of Directors, or (ii) the affirmative
          vote of the holders of 66-2/3% or more of the voting power of all of
          the shares of the Corporation entitled to vote generally in the
          election of directors voting together as a single class. No decrease
          in the number of directors constituting the Board of Directors shall
          shorten the term of any incumbent director; provided, however, that
          the term of existing Directors may be shortened to comply with this
          Article X and/or the Texas Business Corporation Act. The directors
          shall be divided into two classes as nearly equal in number as
          possible, with the term of office of the first class to expire at the
          2001 annual meeting of stockholders, and the term of office of the
          second class to expire at the 2002 annual meeting of stockholders, and
          with the members of each class to hold office until their successors
          shall have been elected and qualified. At each annual meeting of
          stockholders following such initial classification and election,
          directors elected to succeed those directors shall be elected for a
          term of office to expire at the second succeeding annual meeting of
          stockholders after their election.

     b)   Stockholder Nomination of Director Candidates. Advance notice of
          stockholder nominations for the election of directors shall be
          submitted to the Board of Directors at least five days prior to the
          scheduled date for the next annual meeting of stockholders.

     c)   Newly Created Directorships and Vacancies. Vacancies of generally
          elected directors may be filled by a majority vote of the remaining
          generally elected directors, though less than a quorum,

                                        7



          or by a sole remaining generally elected director. Vacancies of
          directors elected pursuant to a dividend default election by preferred
          shareholders shall be filled by the remaining directors so elected or
          by a sole remaining director elected by such shareholders, if any. In
          the event that no directors elected pursuant to a dividend default
          election remain, the vacancy may be filled by a vote of those
          shareholders that originally elected the director whose office is
          vacant.

     d)   Removal. Any director, or the entire Board of Directors, may be
          removed from office at any annual or special meeting called for such
          purpose, and then only for cause and only by the affirmative vote of
          the holders of 66-2/3% or more of the voting power of all of the
          shares of the Corporation entitled to vote in the election of such
          director(s) being removed. As used herein, cause shall mean only the
          following: proof that a director has been convicted of a felony,
          committed a grossly negligent or willful misconduct resulting in a
          material detriment to the Corporation, or committed a material breach
          of his or her fiduciary duty to the Corporation resulting in a
          material detriment to the Corporation.

     e)   Amendment, Repeal, etc. Notwithstanding anything contained in these
          Articles of Incorporation to the contrary and subject to the rights of
          the holders of any Preferred Stock outstanding, the affirmative vote
          of the holders of 66-2/3% or more of the voting power of all of the
          shares of the Corporation entitled to vote in the election of
          Directors, voting together as a single class, shall be required to
          alter, amend, or adopt any provision inconsistent with or repeal this
          Article X or to alter, amend, adopt any provision inconsistent with or
          repeal comparable sections of the Amended and Restated Bylaws of the
          Corporation.

     f)   Call of Special Meeting to Alter Article X. Notwithstanding anything
          contained in these Articles of Incorporation to the contrary, the
          affirmative vote of the holders of 66-2/3% or more of the voting power
          of all of the shares of the Corporation entitled to vote generally in
          the election of directors, voting together as a single class, shall be
          required to call a special meeting of the shareholders in order to
          alter, amend, adopt any provision inconsistent with or repeal this
          Article X, or to alter, amend, or adopt any provision inconsistent
          with comparable sections of the Amended and Restated Bylaws.

                                        8



                                   ARTICLE XI

     The Board of Directors is hereby authorized to create and issue, whether or
not in connection with the issuance and sale of any of its stock or other
securities, rights (the "Rights") entitling the holders thereof to purchase from
the Corporation shares of capital stock or other securities. The times at which
and the terms upon which the Rights are to be issued will be determined by the
Board of Directors and set forth in the contracts or instruments that evidence
the Rights. The authority of the Board of Directors with respect to the Rights
shall include, but not be limited to, determination of the following:

     a)   The initial purchase price per share of the capital stock or other
          securities of the Corporation to be purchased upon exercise of the
          Rights.

     b)   Provisions relating to the times at which and the circumstances under
          which the Rights may be exercised or sold or otherwise transferred,
          either together with or separately from, any other securities of the
          Corporation.

     c)   Provisions that adjust the number or exercise price of the Rights or
          amount or nature of the securities or other property receivable upon
          exercise of the Rights in the event of a combination, split, or
          recapitalization of any capital stock of the Corporation, a change in
          ownership of the Corporation's securities, or a reorganization,
          merger, consolidation, sale of assets, or other occurrence relating to
          the Corporation or any capital stock of the Corporation, and
          provisions restricting the ability of the Corporation to enter into
          any such transaction absent an assumption by the other party or
          parties thereto of the obligations of the Corporation under such
          Rights.

     d)   Provisions that deny the holder of a specified percentage of the
          outstanding securities of the Corporation the right to exercise the
          Rights and/or cause the Rights held by such holder to become void.

     e)   Provisions that permit the Corporation to redeem the Rights.

     f)   The appointment of a Rights agent with respect to the Rights.

                                        9



                                   ARTICLE XII
                                   -----------

     No holder of any shares of the Corporation shall have any preemptive right
to subscribe or acquire any additional, unissued or treasury shares of the
Corporation or any securities of the Corporation which are convertible into or
which carry a right to subscribe for or acquire shares of the Corporation.

                                  ARTICLE VIII
                                  ------------

     The number of shares of the Corporation that were issued and outstanding
and entitled to vote at the time of the adoption of the amendments was Fourteen
Million (14,000,000) shares of Common Stock having no par value per share.
Fourteen Million shares were voted in favor of the Restated Articles of
Incorporation as amended and no shares were voted against the Restated Articles
of Incorporation as amended.

     IN WITNESS WHEREOF, Thomas J. Shaw, the President of the Corporation, has
executed these Restated Articles of Incorporation of Retractable Technologies,
Inc. effective as of the 11th day of August, 2000.

                                         RETRACTABLE TECHNOLOGIES, INC.


                                         BY: /s/ Thomas J. Shaw
                                             ----------------------------
                                             THOMAS J. SHAW
                                             PRESIDENT



                                                                       EXHIBIT A

                                                                FILED
                                                         In the Office of the
                                                     Secretary of State of Texas
                                                             OCT 13 1995
                                                         Corporations Section

                     CERTIFICATE OF DESIGNATION, PREFERENCES
                       RIGHTS AND LIMITATIONS OF SERIES A
                           CONVERTIBLE PREFERRED STOCK
                                       OF
                         RETRACTABLE TECHNOLOGIES, INC.

     Pursuant to Article 2.13 of the Texas Business Corporation Act and Article
Five of its Articles of Incorporation, Retractable Technologies, Inc., a
corporation organized and existing under the laws of the State of Texas (the
Corporation),

     DOES HEREBY CERTIFY that pursuant to the authority conferred upon the Board
of Directors of the Corporation by the Articles of Incorporation, as amended,
and pursuant to Article 2.13 of the Texas Business Corporation Act, said Board
of Directors, by unanimous written consent executed May 10, 1995, adopted a
resolution providing for the creation of a series of Preferred Stock consisting
of not more than five million (5,000,000) shares of Class A Convertible
Preferred Stock, which resolution is and reads as follows:

     RESOLVED that, pursuant to the authority provided in the Corporation's
Articles of Incorporation and expressly granted to and vested in the Board of
Directors of Retractable Technologies, Inc. (the "Corporation"), the Board of
Directors hereby creates out of the Class A Preferred Stock, par value one
dollar per share, of the Corporation a series of Series A Preferred Stock
consisting of not more than five million (5,000,000) shares, and the Board of
Directors hereby fixes the designation and the powers, preference and rights,
and the qualifications, limitations and restrictions thereof, to the extent not
otherwise provided in the Corporation's qualifications, limitations and
restrictions thereof, to the extent not otherwise provided in the Corporation's
Articles of Incorporation, as follows:

     1. Designation of series. The designation of the series of Class A
        ---------------------
Preferred Stock created by this resolution shall be "Series A Convertible
Preferred Stock" (the "Series A Preferred Stock").

     2. Dividends on Series A Preferred Stock.
        -------------------------------------

        a. Dividend Amount. The holders of the Series A Preferred Stock
           ---------------
shall be entitled to receive, in any calendar year, if when and as declared by
the Board of Directors, out of any assets at the time legally available therefor
and subject to the further limitations set out herein, dividends at the per
annum rate of $0.12 per share, all such dividends due quarterly in arrears as of
the last day of each March, June, September and December of each year, the first
dividend being declarable on September 1, 1995. On each



date which a dividend may be declared is hereafter called the "Dividend Date,"
and each quarterly period ending with a Dividend Date is hereinafter referred to
as the "Dividend Period." Dividends shall be payable fifteen calendar days after
the Dividend Due Date, provided however, that if such date on which a dividend
is payable is a Saturday, Sunday or legal holiday, such dividend shall be
payable on the next following business day to the holders of record (whether
singular or plural, the "Holder").

          b. Dividends Cumulative. Dividends upon the Series A Preferred
             --------------------
Stock shall be accrued and be cumulative, whether or not in any Dividend Period
or Periods there shall be funds of the Corporation legally available for the
payment of such dividends.

          c. Dividend Accrual. On each Dividend Due Date all dividends which
             ----------------
shall have accrued since the last Dividend Due Date on each share of Series A
Preferred Stock outstanding on such Dividend Due Date shall accumulate and be
deemed to become "due." Any dividend which shall not be paid on the Dividend Due
Date on which it shall become due shall be deemed to be "past due" until such
dividend shall be paid or until the share of Series A Preferred Stock with
respect to which such dividend became due shall no longer be outstanding,
whichever is the earlier to occur. No interest, sum of money in lieu of interest
or other property or securities shall be payable in respect of any dividend
payment or payments which are past due. Dividends paid on shares of Series A
Preferred Stock in an amount less that the total amount of such dividends at the
time accumulated and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. Dividend
payments made with respect to a Dividend Due Date shall be deemed to be made in
payment of the dividends which became due on that Dividend Due Date.

          d. Dividend Arrearage. If a dividend upon any shares of Series
             ------------------
A Preferred Stock is in arrears, all dividends or other distributions declared
upon shares of the Series A Preferred Stock (other than dividends paid in stock
of the Corporation ranking junior to the Series A Preferred Stock as to
dividends and upon liquidation, dissolution or winding up) may only be declared
pro rata. Except as set forth above, if a dividend upon any shares of Series A
Preferred Stock is in arrears: (i) no dividends (in cash, stock or other
property) may be paid or declared and set aside for payment or any other
distribution made upon any stock of the Corporation ranking junior to the Series
A Preferred Stock as to dividends (other than dividends of distributions in
stock of the Corporation ranking junior to the Series A Preferred Stock as to
dividends and upon liquidation, dissolution or winding up); and (ii) no stock of
the Corporation ranking junior to the Series A Preferred Stock as to dividends
may be (A) redeemed pursuant to a sinking fund of otherwise, except (1) by means
of redemption pursuant to which all outstanding shares of the Series A Preferred
Stock are redeemed, or (2) by conversion of any such junior stock into, or
exchange of any such junior stock into, or exchange of any such junior stock for
stock of the Corporation ranking junior to the Series A Preferred Stock as to
dividends and upon liquidation, dissolution or winding

                                        2



up, or (B) purchased or otherwise acquired for any consideration by the
Corporation except (1) pursuant to an acquisition made pursuant to the terms of
one or more offers to purchase all of the outstanding shares of the Series A
Preferred Stock, which offers shall each have been accepted by the holders of at
least 50% of the shares of the Series A Preferred Stock receiving such offer
outstanding at the commencement of the first of such purchase offers, or (2) by
conversion into or exchange for stock of the Corporation ranking junior to the
Series A Preferred Stock as to dividends and upon liquidation, dissolution or
winding up.

     3. General, Class and Series Voting Rights. Except as provided in this
        ---------------------------------------
Section 3 and in Section 4 hereof or as otherwise from time to time required by
law, the Series A Preferred Stock shall have no voting rights.

     So long as any shares of Series A Preferred Stock remain outstanding, the
consent of the holders of at least fifty-one (51%) percent of the shares of
Series A Preferred Stock outstanding at the time voting separately as a class,
given in person or by proxy, either in writing at any special or annual meeting
called for the purpose, shall be necessary to permit, effect or validate any one
or more of the following:

          (i)  The authorization, creation or issuance, or any increase in the
     authorized or issued amount, of any class or series of stock (including any
     class or series of Preferred Stock) ranking equal or prior (as the terms
     are hereinafter defined in this Section 3) to the Series A Preferred Stock;
     or

          (ii) The amendment, alteration or repeal, whether by merger,
     consolidation or otherwise, of any of the provisions of the Articles of
     Incorporation or of this resolution which would alter or change the powers,
     preferences or special rights of the shares of the Series A Preferred Stock
     so as to affect them adversely; provided, however, that any increase in the
     amount of authorized Preferred Stock, or the creation and issuance of other
     series of Preferred Stock ranking junior to the Series A Preferred Stock
     with respect to the payment of dividends and the distribution of assets
     upon liquidation, dissolution or winding up, shall not be deemed to
     adversely affect such powers, preferences or special rights.

     The foregoing voting provisions shall not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of Series A Preferred Stock shall have been
redeemed or sufficient funds shall have been deposited in trust to effect such
redemption.

     4. Default Voting Rights. Whenever, at any time or times, dividends
        ---------------------
payable on the shares of Series A Preferred Stock shall be in arrears for twelve
(12) consecutive quarterly dividend periods, the holders of a majority of the
outstanding shares of Series A

                                        3



Preferred Stock shall have the exclusive right (voting separately as a class) to
elect one-third of the Board of Directors of the Corporation at the
Corporation's next annual meeting of stockholders (to serve until the next
annual meeting of stockholders, and until their successors are duly elected and
qualified) and at each subsequent annual meeting of stockholders so long as such
arrearage shall continue, and the Common Stock voting separately as a class,
shall be entitled to elect the remainder of the Board of Directors of the
Corporation. At elections for such directors, each holder of Series A Preferred
Stock shall be entitled to one vote for each share of Preferred Stock held. The
right of the holders of Series A Preferred Stock, voting separately as a class,
to elect members of the Board of Directors of the Corporation as aforesaid shall
continue until such time as all dividends accumulated on the Series A Preferred
Stock shall have been paid in full, at which time such right shall terminate,
except as herein or by law expressly provided, subject to revesting in the event
of each and every subsequent default of the character above mentioned.

     Directors elected by the holders of Series A Preferred Stock shall continue
to serve as such directors until such time as all dividends accumulated on the
Series A Preferred Stock shall have been paid in full, at which time the term of
office of all persons elected as directors by the holders of shares of Series A
Preferred Stock shall forthwith terminate. In the case of any vacancy in the
office of a director occurring among the directors elected by the holder of a
class (with the Series A Preferred Stock and Common Stock being treated as
separate classes) of stock, the remaining directors so elected by that class may
by affirmative vote of a majority thereof (or the remaining director so elected
if there be but one) elect a successor or successors to hold office for the
unexpired term of the director or directors whose place or places shall be
vacant. Any director who shall have been elected by the holders of a class of
stock or by any directors so elected as provided in the next preceding sentence
hereof may be removed during the aforesaid term of office, either for or without
cause, by, and only by, the affirmative vote of the holders of a majority of the
shares of the class of stock who elected such director or directors, given
either at a special meeting of such shareholders duly called for that purpose or
pursuant to a written consent of shareholders, and any vacancy thereby created
may be filled by the holders of that class of stock represented at such meeting
or pursuant to such written consent. Whenever the term of office of the
directors elected by the holders of Series A Preferred Stock voting as a class
shall end and the special voting powers vested in the holders of Series A
Preferred Stock voting as a class shall end and the special voting powers vested
in the holders of Series A Preferred Stock as provided in this Section 4 shall
have expired, the number of directors shall be such number as may be provided
for in the Articles of Incorporation or Bylaws irrespective of any increase made
pursuant to the provisions of this Section 4.

     5. Redemption. The outstanding shares of Series A Preferred Stock shall
        ----------
be nonredeemable prior to the lapse of three (3) years from the date of
issuance. On and after such date, the Series A Preferred Stock may be redeemed
at the option of the Corporation, as a whole at any time or in part from time to
time, at the Redemption Price of $1.70 per share plus all dividends (whether or
not declared or due) accrued and unpaid to the date of redemption (subject to
the right of the holder of record of shares of Series A Preferred Stock

                                        4



on a record date for the payment of a dividend on the Series A Preferred Stock
to receive the dividend due on such shares of Series A Preferred Stock on the
corresponding Dividend Due Date.)

     No sinking fund shall be established for the Series A Preferred Stock.

     Notice of any proposed redemption of shares of Series A Preferred Stock
shall be mailed by means of first class mail, postage paid, addressed to the
holders of record of the shares of Series A Preferred Stock to be redeemed, at
their respective addresses then appearing on the books of the Corporation, at
least thirty (30) but not more than sixty (60) days prior to the date fixed for
such redemption (herein referred to as the "Redemption Date"). Each such notice
shall specify (i) the Redemption Date; (ii) the Redemption Price; (iii) the
place for payment and for delivering the stock certificate(s) and transfer
instrument(s) in order to collect the Redemption Price; (iv) the shares of
Series A Preferred Stock to be redeemed; and (v) the then effective Conversion
Price (as defined below) and that the right of holders of shares of Series A
Preferred Stock being redeemed to exercise their conversion right shall
terminate as to such shares at the close of business on the fifth day before the
Redemption Date (provided that no default by the Corporation in the payment of
the applicable Redemption Price (including any accrued and unpaid dividends)
shall have occurred and be continuing). Any notice mailed in such manner shall
be conclusively deemed to have been duly given whether or not such notice is in
fact received. If less than all the outstanding shares of Series A Preferred
Stock are to be redeemed, the Corporation will select those to be redeemed by
lot or by a substantially equivalent method. In order to facilitate the
redemption of Series A Preferred Stock to be redeemed, which shall not be more
than sixty (60) days prior to the Redemption Date with respect thereto.

     The holder of any shares of Series A Preferred Stock redeemed upon any
exercise of the Corporation's redemption right shall not be entitled to receive
payment of the Redemption Price for such shares until such holder shall cause to
be delivered to the place specified in the notice given with respect to such
redemption (i) the certificate(s) representing such shares of Series A Preferred
Stock; and (ii) transfer instrument(s) satisfactory to the Corporation and
sufficient to transfer such shares of Series A Preferred Stock to the
Corporation free of any adverse interest. No interest shall accrue on the
Redemption Price of any share of Series A Preferred Stock after its Redemption
Date.

     Subject to Section 2 hereof, the Corporation shall have the right to
purchase shares of Series A Preferred Stock from the owner of such shares on
such terms as may be agreeable to such owner. Shares of Series A Preferred Stock
may be acquired by the Corporation from any stockholder pursuant to this
paragraph without offering any other stockholder an equal opportunity to sell
his stock to the Corporation, and no purchase by the Corporation from any
stockholder pursuant to this paragraph shall be deemed to create any right on
the part of any stockholder to sell any shares of Series A Preferred Stock (or
any other stock) to the Corporation.

                                        5



     Notwithstanding the foregoing provisions of this Section 5, and subject to
the provisions of Section 2 hereof, if a dividend upon any shares of Series A
Preferred Stock is past due, (i) no shares of the Series A Preferred Stock may
be redeemed, except (A) by means of a redemption pursuant to which all
outstanding shares of the Series A Preferred Stock are simultaneously redeemed
(or offered to be so redeemed) or pursuant to which the outstanding shares of
the Series A Preferred Stock are redeemed on a pro rata basis (or offered to be
so redeemed), or (B) by conversion of shares of Series A Preferred Stock into,
or exchange of such shares for, Common Stock or any other stock of the
Corporation ranking junior to the Series A Preferred Stock as to dividends and
upon liquidation, dissolution or winding up.

     6. Liquidation. In the event of any voluntary or involuntary dissolution,
        -----------
liquidation or winding up of the Corporation (for the purposes of this Section
6, a "Liquidation"), before any distribution of assets shall be made to the
holders of the Common Stock or the holders of any other stock that ranks junior
to the Series A Preferred Stock in respect of distributions upon the Liquidation
of the Corporation, the holder of each share of Series A Preferred Stock then
outstanding shall be entitled to $1.50 per share plus all dividends (whether or
not declared or due) accrued and unpaid on such share on the date fixed for the
distribution of assets of the Corporation to the holders of Series A Preferred
Stock.

     If upon any Liquidation of the Corporation, the assets available for
distribution to the holder of Series A Preferred Stock which shall then be
outstanding (hereinafter in this paragraph called the "Total Amount Available")
shall be insufficient to pay the holders of all outstanding shares of Series A
Preferred Stock the full amounts (including all dividends accrued and unpaid) to
which they shall be entitled by reason of such Liquidation of the Corporation,
then there shall be paid ratably to the holders of the Series A Preferred Stock
in connection with such Liquidation of the Corporation, an amount equal to each
holder's pro rata share of the Total Amount Available.

     The voluntary sale, conveyance, lease, exchange or transfer of all or
substantially all the property or assets of the Corporation, or the merger or
consolidation of the Corporation into the Corporation, or any purchase or
redemption of some or all of the shares of any class or series of stock of the
Corporation, shall not be deemed to be a Liquidation of the Corporation for the
purposes of this Section 6 (unless in connection therewith the Liquidation of
the Corporation is specifically approved).

     7. Conversion Privilege. At any time subsequent to three years after
        --------------------
issuance of any share of Series A Preferred Stock, the holder of any share of
Series A Preferred Stock ("Holder") shall have the right, at such Holder's
option (but if such share is called for redemption or exchange at the election
of the Corporation, then in respect of such share only to and including but not
after the close of business on (i) the fifth calendar day before the

                                        6



date fixed for such redemption; or (ii) the date fixed for such exchange,
provided that the Corporation has set aside funds sufficient to effect such
redemption to convert such share into that number of fully paid and non-
assessable shares of Common Stock (calculated as to each conversion to the
nearest 1/100th of a share) obtained by dividing $1.00 by the Conversion Rate
then in effect.

          a. Conversion Rate. Each share of Series A Preferred Stock may be
             ---------------
converted, subject to the terms and provisions of this paragraph 2 into one (1)
share of the Corporation's Common Stock, which is a price equal to one share of
Common Stock for each $1.00 of Series A Preferred Stock or, in case an
adjustment of such rate has taken place pursuant to the provisions of
subdivision (f.) of this paragraph (7), then at the Conversion Rate as last
adjusted (such rate or adjusted rate, shall be expressed as the number of shares
of Common Stock to be acquired upon conversion of one share of Series A
Preferred Stock, and shall be referred to herein as the "Conversion Rate"). Each
share of Series A Preferred Stock shall be Convertible into Common Stock by
surrender to the corporation of the certificate representing such shares of
Series A Preferred Stock to be converted by the Holder and by giving written
notice to the Corporation of the Holder's election to convert.

     The Corporation shall, as soon as practicable after receipt of such written
notice and the proper surrender to the Corporation of the certificate or
certificates representing shares of Series A Preferred Stock to be converted in
accordance with the above provisions, issue and deliver for the benefit of the
Holder at the office of the Corporation's duly appointed transfer agent (the
"Transfer Agent") to the Holder for whose account such shares of Series A
Preferred Stock were so surrendered or to such Holder's nominee or nominees,
certificates for the number of shares of Common Stock to which the Holder shall
be entitled. The certificates of Common Stock of the Corporation issued upon
conversion shall bear such legends as may be required by state or federal laws.
Such conversion shall be deemed to have been effective immediately prior to the
close of business on the date on which the Corporation shall have received both
such written notice and the properly surrendered certificates for shares of
Series A Preferred Stock to be converted (the "Conversion Date"), and at such
time the rights of the Holder shall cease and the person or persons entitled to
receive the shares of Common Stock issuable upon the conversion of such shares
of Series A Preferred Stock shall be deemed to be, and shall be treated for all
purposes as, the record Holder or Holders of such Common Stock on the Conversion
Date. The Corporation shall not be required to convert, and no surrender of
shares of Series A Preferred Stock or written notice of conversion with respect
thereto shall be effected for that purpose, while the stock transfer books of
the Corporation are closed for any reasonable business purpose for any
reasonable period of time, but the proper surrender of shares of Series A
Preferred Stock for conversion immediately upon the reopening of such books.
During the period in which the stock transfer books of the Corporation are
closed, the Corporation may neither declare a dividend, declare a record date
for payment of dividends nor make any payment of dividends.

                                        7



          b. Dividends. If any shares of Series A Preferred Stock shall be
             ---------
converted during any dividend payment period, the Holder shall be entitled to
all dividends accrued up to and through such Conversion Date, at the rate set
forth herein, whether or not there has been a dividend date, as set forth in
paragraph 2 hereof.

          c. Cancellation. Series A Preferred Stock converted into Common
             ------------
Stock pursuant to the provisions of this paragraph (7), shall be retired and
cancelled by the Corporation and given the status of authorized and unissued
preferred stock.

          d. Reissuance if Conversion is Partial. In the case of any
             ------------------------------------
certificate representing shares of Series A Preferred Stock which is surrendered
for conversion only in part, the Corporation shall issue and deliver to the
Holder a new certificate or certificates for Series A Preferred Stock of such
denominations as requested by the Holder in the amount of Series A Preferred
Stock equal to the unconverted shares of the Series A Preferred Stock
represented by the certificate so surrendered.

          e. Reservations of Shares. The Corporation shall at all times
             ----------------------
during which shares of Series A Preferred Stock may be converted into Common
Stock as provided in this paragraph (e), reserve and keep available, out of any
Common Stock held as treasury stock or out of its authorized and unissued Common
Stock, or both, solely for the purpose of delivery upon conversion of the shares
of Series A Preferred Stock as herein provided, such number of shares of Common
Stock as shall then be sufficient to effect the conversion of all shares of
Series A Preferred Stock from time to time outstanding, and shall take such
action as may from time to time be necessary to ensure that such shares of
Common Stock will, when issued upon conversion of Series A Preferred Stock, be
fully paid and nonassessable.

          f. Adjustment of Conversion Rate. The Conversion Rate provided in
             -----------------------------
subdivision (a) of this paragraph (7), in respect of Series A Preferred Stock,
shall be subject to adjustments from time to time as follows:

     (i) While any shares of Series A Preferred Stock shall be outstanding, in
   case the Corporation shall subdivide the outstanding shares of Common Stock
   into a greater number of shares of Common Stock or combine the outstanding
   shares of Common Stock into a smaller number of shares of Common Stock, or
   issue, by reclassification of its shares of Common Stock, any shares of the
   Corporation, the Conversion Rate in effect immediately prior thereto shall be
   adjusted so that the Holder shall be entitled to receive the number of shares
   which it would have owned or been entitled to receive after the happening of
   any of the events described above, had such shares of Series A Preferred
   Stock been converted immediately prior to the happening of such event, such
   adjustment to become effective immediately after the opening of business on
   the day following the day upon which such subdivision or combination or
   reclassification, as the case may be, becomes effective.

                                        8



     (ii) In case the Corporation shall be consolidated with, or merge into, any
   other corporation, and the Corporation does not survive, proper provisions
   shall be made as a part of the terms of such consolidation or merger, whereby
   the Holder shall thereafter be entitled, upon exercise of such Holder's
   conversion rights, to receive the kind and amount of shares of stock or other
   securities of the Corporation resulting from such consolidation or merger, or
   such other property, as the Holder would have received if such conversion
   rights were exercised immediately prior to the effectiveness of such merger
   of consolidation.

     (iii) In the event the Corporation at any time, or from time to time after
   June 15, 1995 makes or issues, or fixes a record date for the determination
   of holders of Common Stock entitled to receive, a dividend or other
   distribution payable in additional shares of Common Stock or Common Stock
   Equivalents (as defined herein) which does not provide for the payment of any
   consideration upon the issuance, conversion or exercise thereof, without a
   corresponding dividend or other distribution to the Holder, based upon the
   number of shares of Common Stock into which the Series A Preferred Stock is
   convertible, then and in each such event the Conversion Rate then in effect
   will be increased as of the time of such issuance or, in the event such a
   record date shall have been fixed, as of the close of business on such record
   date, by multiplying such Conversion Rate by a fraction:

                (A) The number of which will be the total number of shares of
           Common Stock issues and outstanding immediately prior to the time of
           such issuance or the close of business on such record date plus the
           number of shares of Common Stock issuable in payment of such dividend
           or distribution (which, in the case of Common Stock Equivalents,
           shall mean the maximum number of shares of Common Stock issuable with
           respect thereto, as set forth in the instrument relative thereto
           without regard to any provision for subsequent adjustment); and

                (B) The denominator of which will be the total number of shares
           of Common Stock issued and outstanding immediately prior to the time
           of such issuance or the close of business on such record date;

   provided, however, that if such record date is fixed and such dividend is not
   fully paid or if such distribution is not fully made on the date fixed
   therefor, the Conversion Rate will be recomputed accordingly as of the close
   of business on such record date, and thereafter such Conversion Rate will be
   adjusted pursuant to this subparagraph (iii) as of the time of actual payment
   of such dividends of distributions.

     (iv) In the event the Corporation at any time or from time to time after
   June 15, 1995 makes or issues, or fixes a record date for the determination
   of holders of

                                        9



   Common Stock entitled to receive a dividend or other distribution payable to
   all holders of Common Stock in securities of the Corporation Stock
   Equivalents, then, upon making such dividend or distribution provisions will
   be made so that the Holder will receive the amount of securities of the
   Corporation which it would have received had its Series A Preferred Stock
   been converted into Common Stock on the date of such event.

     (v) In the event the Corporation sells or issues any Common Stock, or sells
   or issues Common Stock Equivalents which can be converted into Common Stock
   at a per share consideration (as defined below in this subparagraph (v) of
   paragraph 7(B) less than the Stipulated Price then in effect, then the Holder
   shall be entitled to purchase from the Corporation in cash (for the same per
   share consideration at which such Common Stock was issued or the per share
   price at which a share of Common Stock is acquirable upon exercise or
   conversion of Common Stock Equivalents) that additional number of shares of
   Common Stock which, when added to the number of shares of Common Stock
   acquirable by the Holder upon conversion of any shares of Series A Preferred
   Stock outstanding and held by such Holder immediately before such issue or
   sale (the "Acquirable Shares"), will equal a percentage of the number of
   shares of Common Stock Deemed Outstanding (as defined herein) immediately
   after such sale or issuance that is the same as the percentage of the number
   of shares of Common Stock Deemed Outstanding immediately before such issuance
   or sale represented by the Acquirable Shares. This right shall exist for a
   forty-five-day period following the sale or issuance of shares of Common
   Stock or Common Stock Equivalents, and thereafter shall cease to exist.

   For the above purposes, the per share consideration with respect to the sale
   or issuance of Common Stock will be the price per share received by the
   Corporation, prior to the payment of any expenses, commissions, discounts and
   other applicable costs. With respect to the sale or issuance of Common Stock
   Equivalents which are convertible into or exchangeable for Common Stock
   without further consider, the per share consideration will be determined by
   dividing the maximum number of shares of Common Stock issuable with respect
   to such Common Stock Equivalents (as set forth in the instrument relating
   thereto without regard to any provisions contained therein for subsequent
   adjustment of such number) into the aggregate consideration receivable by the
   Corporation upon the sale or issuance of such Common Stock Equivalents. With
   respect to the issuance of other Common Stock Equivalents, the per share
   consideration will be determined by dividing the maximum number of shares of
   Common Stock issuable with respect to such Common Stock Equivalents into the
   total aggregate consideration received by the Corporation upon the sale or
   issuance of such Common Stock Equivalents plus the minimum aggregate amount
   of additional consideration received by the Corporation upon the conversion
   or exercise of such Common Stock Equivalents. In connection with the sale or
   issuance of Common

                                       10



   Stock and/or Common Stock Equivalents for non-cash consideration, the amount
   of consideration will be the fair market value of such consideration as
   determined in good faith by the Board of Directors of the Corporation.

     (vi) As used herein, the term "Stipulated Price" means initial price of
   $1.00 per share of Common Stock, as adjusted from time to time pursuant to
   subparagraph (viii) of this paragraph 7(f); and the term "Common Stock
   Equivalent" means any securities (whether debt or equity securities) or
   rights issued by the Corporation convertible into or entitling the holder
   thereof to receive shares of, or securities convertible into, Common Stock.
   The number of shares of "Common Stock Deemed Outstanding" at any date shall
   equal the sum of the number of shares of Common Stock then outstanding plus
   the number of shares of Common Stock then obtainable pursuant to Common Stock
   Equivalents.

     (vii) In the event the Corporation declares any dividend or distribution
   payable to holders of its Common Stock (other than dividends payable out of
   the Corporation's retained earnings or earned surplus and dividends payable
   in shares of Common Stock or in securities convertible into or exchangeable
   for shares of Common Stock or rights or warrants to purchase Common Stock or
   securities convertible into or exchangeable for shares of Common Stock or any
   other securities issued by the Corporation), the Conversion Rate in effect
   immediately prior to the record date for such dividend or distribution shall
   be proportionately adjusted so that the Holder shall be entitled to receive
   the number of shares of Common Stock into which such shares of Common Stock
   or Preferred Stock was convertible immediately prior to such record date
   multiplied by a fraction, the numerator of which is the fair market value of
   a share of Common Stock on such record date and the denominator of which is
   such per share fair market value of a share of Common Stock on such record
   date less the fair market value on such record date of the securities or
   other property which are distributed as a dividend or other distribution. The
   term "fair market value" of a share of Common Stock or of any other security
   or other type of property on any date means (A) in the case of Common Stock
   or any other security (I) if the principal trading market for such Common
   Stock of other security is an exchange or the NASDAQ national market on such
   date, the closing price on such exchange or the NASDAQ national market on
   such date, provided, if trading of such Common Stock or other security is
   listed on any consolidated tape, the fair market value shall be the closing
   price set forth on such consolidated tape on such date, or (II) if the
   principal market for such Common Stock or other security is the over-the-
   counter market (other than the NASDAQ national market) the mean between the
   closing bid and asked prices on such date as set forth by NASDAQ or (B) in
   the case of Common Stock or any other security for which the fair market
   value cannot be determined pursuant to clause (A) above or of any other
   security or type of property, fair market value thereof on such date as
   determined in good faith by the Board of Directors.

                                       11



       (viii) Whenever the Conversion Rate is adjusted pursuant to this
     paragraph (7)(f), the Stipulated Price shall also be adjusted by
     multiplying it by a fraction that is the reciprocal of the fraction used to
     adjust the Conversion Rate.

       (ix) The Corporation will not, by amendment of its Articles of
     Incorporation or through any dissolution, issuance or sale of securities or
     any other voluntary action, avoid or seek to avoid the observance or
     performance of any of the terms to be observed or performed hereunder by
     the Corporation, but at all times in good faith will assist in the carrying
     out of all the provisions of this paragraph and in the taking of all such
     action as may be necessary or appropriate in order to protect the
     conversion rights of the Holder against impairment.

       (x) No adjustment in the Conversion Rate shall be required, unless such
     adjustment would require an increase or decrease of at least one (1) share
     of Common Stock in the Conversion Rate of one share of Series A Preferred
     Stock, provided that all adjustments which do not meet this minimum
     requirement shall be cumulated and the adjustment will be made when the
     cumulated total is sufficient to require an adjustment. All calculations
     made pursuant to this subparagraph (x) of paragraph (7)(f) shall be made to
     the nearest one hundredth (1/100th) of a share of Common Stock.

     g. Fractional Shares. No fractional shares of Common Stock or scrip
        -----------------
representing fractional shares of Common Stock shall be issued upon any
conversion of shares of Series A Preferred Stock but, in lieu thereof, there
shall be paid an amount in cash equal to the same fraction of the current market
price of a whole share of Common Stock on the day preceding the day of
conversion.

     h. Statement to Transfer Agent. Whenever the Conversion Rate for
        ---------------------------
shares of Series A Preferred Stock shall be adjusted pursuant to the provisions
of paragraph (7)(f) hereof, the Corporation shall forthwith maintain at its
office and, if applicable, file with the Transfer Agent for shares of Series A
Preferred Stock and for shares of Common Stock, a statement signed by the
President or a Vice President of the Corporation and by its Treasurer or an
Assistant Treasurer, stating the adjusted Conversion Rate and setting forth in
reasonable detail the method of calculation and the facts requiring such
adjustment, such calculations to be confirmed by the Corporation's independent
auditors, and stating the faces on which the calculation is based. Each
adjustment shall remain in effect until a subsequent adjustment hereunder is
required.

     8. Registration Rights.
        -------------------

        a. Piggyback Registration. The Corporation, for a period ending six
           ----------------------
months after the last share of Series A Preferred Stock is redeemed, retired,
converted or otherwise no longer outstanding, will give written notice to the
Holder not less than 20 days in advance of the initial filing of any
registration statement under the Securities Act of 1933

                                       12



(other than a registration Statement pertaining to securities issuable pursuant
to employee stock option, stock purchase, or similar plans or a registration
statement pertaining to securities issuable in connection with the acquisition
of a business, whether through merger, consolidation, acquisition of assets, or
exchange of securities) covering any Common Stock or other securities of the
Corporation, and will afford the Holder the opportunity to have included in such
registration all or such part of the shares of Common Stock acquired upon
conversion of Series A Preferred Stock, as may be designated by written notice
to the Corporation not later than 10 days following receipt of such notice from
the Corporation. The Corporation shall be entitled to exclude the shares of
Common Stock held by the Holder from any one, but not more than one, such
registration if the Corporation is advised by its investment banking firm that
the inclusion of such shares will, in the opinion of such investment banking
firm, materially interfere with the orderly sale and distribution of the
securities being offered under such registration statement by the Corporation.
Notwithstanding the foregoing, the Corporation shall not be entitled to exclude
the shares of Common Stock held by the Holder if shares of other shareholders
are being included in any such registration statement and, in such
circumstances, the Holder shall be entitled to include the shares of Common
Stock held by them on a pro rata basis in the proportion that the number of
shares of Common Stock held by the Holder bears to the shares of Common Stock
held by all other shareholders, including shares in such registration statement.
The Holder shall not be entitled to include shares in more than two registration
statement pursuant to the provisions of this subdivision a of paragraph (8), and
all rights of the Holder under this subdivision a of paragraph (8) shall
terminate after the Holder has included shares of Common Stock in two
registration statements pursuant to this subdivision a of paragraph (8).

        b. Expenses. The Corporation will pay all out-of-pocket costs and
           --------
expenses of any registration effected pursuant to the provisions of subdivision
(a) of this paragraph 8, including registration fees, legal fees, accounting
fees, printing expenses (including such number of any preliminary and the final
prospectus as may be reasonably requested), blue sky qualification fees and
expenses, and all other expenses, except for underwriting commissions or
discounts applicable to the shares of Common Stock being sold by the Holder and
the fees of counsel for the Holder, all of which shall be paid by the Holder.

     9. Reports.
        -------

     So long as any of the Series A Preferred Stock shall be outstanding, the
Corporation shall submit to the Holder financial reports no less frequently than
annually.

     10. Miscellaneous.
         -------------

          a. As used herein, the term "Common Stock" shall mean the
Corporation's Common Stock, $1.00 per share, or, in the case of any
reclassification or change of outstanding shares of Common Stock, the stock or
securities issued in exchange

                                       13



for such Common Stock. The term "Common Stock" shall also include any capital
stock of the Corporation authorized after June 15, 1995 which shall not be
limited to a fixed sum or sums or percentage or percentages of par value in
respect of the rights of the holders thereof to participate in dividends or in
the distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.

          b. The shares of Series A Preferred Stock shall be fully transferrable
by the Holder thereof, subject to compliance with the applicable provisions of
federal and state securities laws.

     IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate
seal to be hereunto affixed and this Certificate to be signed by its President
and Secretary this _______ day of May, 1995.


                                        /s/ Thomas J. Shaw
                                        ----------------------------------------
                                        President

ATTEST:

/s/ Lillian E. Salerno
- ----------------------------------
Secretary

                                       14



                                                                       EXHIBIT B

                                                                FILED
                                                         In the Office of the
                                                     Secretary of State of Texas
                                                             MAY 15 1996
                                                        Corporations Section

                     CERTIFICATE OF DESIGNATION, PREFERENCES
                        RIGHTS AND LIMITATIONS OF Class B
                           CONVERTIBLE PREFERRED STOCK
                                       OF
                         RETRACTABLE TECHNOLOGIES, INC.

     Pursuant to Article 2.13 of the Texas Business Corporation Act and Article
Five of its Articles of Incorporation, Retractable Technologies, Inc., a
corporation organized and existing under the laws of the State of Texas (the
Corporation),

     DOES HEREBY CERTIFY that pursuant to the authority conferred upon the Board
of Directors of the Corporation by the Articles of Incorporation, as amended,
and pursuant to Article 2.13 of the Texas Business Corporation Act, said Board
of Directors, by unanimous written consent executed May 10, 1995, adopted a
resolution providing for the creation of a series of Preferred Stock consisting
of not more than five million (5,000,000) shares of Class B Convertible
Preferred Stock, which resolution is and reads as follows:

     RESOLVED that, pursuant to the authority provided in the Corporation's
Articles of Incorporation and expressly granted to and vested in the Board of
Directors of Retractable Technologies, Inc. (the "Corporation"), the Board of
Directors hereby creates out of the Preferred Stock, par value one dollar per
share, of the Corporation a series of Class B Preferred Stock consisting of not
more than five million (5,000,000) shares, and the Board of Directors hereby
fixes the designation and the powers, preference and rights, and the
qualifications, limitations and restrictions thereof, to the extent not
otherwise provided in the Corporation's qualifications, limitations and
restrictions thereof, to the extent not otherwise provided in the Corporation's
Articles of Incorporation, as follows:

     1. Designation of series. The designation of the series of Preferred
        ---------------------
Stock created by this resolution shall be "Class B Convertible Preferred Stock"
(the "Class B Preferred Stock").

     2. Dividends on Class B Preferred Stock.
        ------------------------------------

          a. Dividend Amount. The holders of the Class B Preferred Stock
             ---------------
shall be entitled to receive, in any calendar year, if when and as declared by
the Board of Directors, out of any assets at the time legally available therefor
and subject to the further limitations set out herein, dividends at the per
annum rate of $0.50 per share, all such dividends due quarterly in arrears as of
the last day of each March, June, September and December of each year, the first
dividend being declarable on December 31, 1996. On each

                                   1



date which a dividend may be declared is hereafter called the "Dividend Date,"
and each quarterly period ending with a Dividend Date is hereinafter referred to
as the "Dividend Period." Dividends shall be payable fifteen calendar days after
the Dividend Due Date, provided however, that if such date on which a dividend
is payable is a Saturday, Sunday or legal holiday, such dividend shall be
payable on the next following business day to the holders of record (whether
singular or plural, the "Holder").

          b. Dividends Cumulative. Dividends upon the Class B Preferred Stock
             --------------------
shall be accrued and be cumulative, whether or not in any Dividend Period or
Periods there shall be funds of the Corporation legally available for the
payment of such dividends.

          c. Dividend Accrual. On each Dividend Due Date all dividends which
             ----------------
shall have accrued since the last Dividend Due Date on each share of Class B
Preferred Stock outstanding on such Dividend Due Date shall accumulate and be
deemed to become "due." Any dividend which shall not be paid on the Dividend Due
Date on which it shall become due shall be deemed to be "past due" until such
dividend shall be paid or until the share of Class B Preferred Stock with
respect to which such dividend became due shall no longer be outstanding,
whichever is the earlier to occur. No interest, sum of money in lieu of interest
or other property or securities shall be payable in respect of any dividend
payment or payments which are past due. Dividends paid on shares of Class B
Preferred Stock in an amount less that the total amount of such dividends at the
time accumulated and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. Dividend
payments made with respect to a Dividend Due Date shall be deemed to be made in
payment of the dividends which became due on that Dividend Due Date.

          d. Dividend Arrearage. If a dividend upon any shares of Class B
             ------------------
Preferred Stock is in arrears, all dividends or other distributions declared
upon shares of the Class B Preferred Stock (other than dividends paid in stock
of the Corporation ranking junior to the Class B Preferred Stock as to dividends
and upon liquidation, dissolution or winding up) may only be declared pro rata.
Except as set forth above, if a dividend upon any shares of Class B Preferred
Stock is in arrears: (i) no dividends (in cash, stock or other property) may be
paid or declared and set aside for payment or any other distribution made upon
any stock of the Corporation ranking junior to the Class B Preferred Stock as to
dividends (other than dividends of distributions in stock of the Corporation
ranking junior to the Class B Preferred Stock as to dividends and upon
liquidation, dissolution or winding up); and (ii) no stock of the Corporation
ranking junior to the Class B Preferred Stock as to dividends may be (A)
redeemed pursuant to a sinking fund of otherwise, except (1) by means of
redemption pursuant to which all outstanding shares of the Class B Preferred
Stock are redeemed, or (2) by conversion of any such junior stock into, or
exchange of any such junior stock into, or exchange of any such junior stock for
stock of the Corporation ranking junior to the Class B Preferred Stock as to
dividends and upon liquidation, dissolution or winding

                                        2



up, or (B) purchased or otherwise acquired for any consideration by the
Corporation except (1) pursuant to an acquisition made pursuant to the terms of
one or more offers to purchase all of the outstanding shares of the Class B
Preferred Stock, which offers shall each have been accepted by the holders of at
least 50% of the shares of the Class B Preferred Stock receiving such offer
outstanding at the commencement of the first of such purchase offers, or (2) by
conversion into or exchange for stock of the Corporation ranking junior to the
Class B Preferred Stock as to dividends and upon liquidation, dissolution or
winding up.

     3. General, Class and Series Voting Rights. Except as provided in this
        ---------------------------------------
Section 3 and in Section 4 hereof or as otherwise from time to time required by
law, the Class B Preferred Stock shall have no voting rights.

     So long as any shares of Class B Preferred Stock remain outstanding, the
consent of the holders of at least fifty-one (51%) percent of the shares of
Class B Preferred Stock outstanding at the time voting separately as a class,
given in person or by proxy, either in writing at any special or annual meeting
called for the purpose, shall be necessary to permit, effect or validate any one
or more of the following:

        (i) The authorization, creation or issuance, or any increase in the
     authorized or issued amount, of any class or series of stock (including any
     class or series of Preferred Stock) ranking equal or prior (as the terms
     are hereinafter defined in this Section 3) to the Class B Preferred Stock;
     or

        (ii) The amendment, alteration or repeal, whether by merger,
     consolidation or otherwise, of any of the provisions of the Articles of
     Incorporation or of this resolution which would alter or change the powers,
     preferences or special rights of the shares of the Class B Preferred Stock
     so as to affect them adversely; provided, however, that any increase in the
     amount of authorized Preferred Stock, or the creation and issuance of other
     series of Preferred Stock ranking junior to the Class B Preferred Stock
     with respect to the payment of dividends and the distribution of assets
     upon liquidation, dissolution or winding up, shall not be deemed to
     adversely affect such powers, preferences or special rights.

     The foregoing voting provisions shall not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of Class B Preferred Stock shall have been
redeemed or sufficient funds shall have been deposited in trust to effect such
redemption.

     4. Redemption. The outstanding shares of Class B Preferred Stock shall
        ----------
be nonredeemable prior to the lapse of three (3) years from the date of
issuance. On and after such date, the Class B Preferred Stock may be redeemed at
the option of the Corporation, as a whole at any time or in part from time to
time, at the Redemption Price of $7.50 per share plus all dividends (whether or
not declared or due) accrued and unpaid to the date of

                                        3



redemption (subject to the right of the holder of record of shares of Class B
Preferred Stock on a record date for the payment of a dividend on the Class B
Preferred Stock to receive the dividend due on such shares of Class B Preferred
Stock on the corresponding Dividend Due Date.)

     No sinking fund shall be established for the Class B Preferred Stock.

     Notice of any proposed redemption of shares of Class B Preferred Stock
shall be mailed by means of first class mail, postage paid, addressed to the
holders of record of the shares of Class B Preferred Stock to be redeemed, at
their respective addresses then appearing on the books of the Corporation, at
least thirty (30) but not more than sixty (60) days prior to the date fixed for
such redemption (herein referred to as the "Redemption Date"). Each such notice
shall specify (i) the Redemption Date; (ii) the Redemption Price; (iii) the
place for payment and for delivering the stock certificate(s) and transfer
instrument(s) in order to collect the Redemption Price; (iv) the shares of Class
B Preferred Stock to be redeemed; and (v) the then effective Conversion Price
(as defined below) and that the right of holders of shares of Class B Preferred
Stock being redeemed to exercise their conversion right shall terminate as to
such shares at the close of business on the fifth day before the Redemption Date
(provided that no default by the Corporation in the payment of the applicable
Redemption Price (including any accrued and unpaid dividends) shall have
occurred and be continuing. Any notice mailed in such manner shall be
conclusively deemed to have been duly given whether or not such notice is in
fact received. If less than all the outstanding shares of Class B Preferred
Stock are to be redeemed, the Corporation will select those to be redeemed by
lot or by a substantially equivalent method. In order to facilitate the
redemption of Class B Preferred Stock to be redeemed, which shall not be more
than sixty (60) days prior to the Redemption Date with respect thereto.

     The holder of any shares of Class B Preferred Stock redeemed upon any
exercise of the Corporation's redemption right shall not be entitled to receive
payment of the Redemption Price for such shares until such holder shall cause to
be delivered to the place specified in the notice given with respect to such
redemption (i) the certificate(s) representing such shares of Class B Preferred
Stock; and (ii) transfer instrument(s) satisfactory to the Corporation and
sufficient to transfer such shares of Class B Preferred Stock to the Corporation
free of any adverse interest. No interest shall accrue on the Redemption Price
of any share of Class B Preferred Stock after its Redemption Date.

     Subject to Section 2 hereof, the Corporation shall have the right to
purchase shares of Class B Preferred Stock from the owner of such shares on such
terms as may be agreeable to such owner. Shares of Class B Preferred Stock may
be acquired by the Corporation from any stockholder pursuant to this paragraph
without offering any other stockholder an equal opportunity to sell his stock to
the Corporation, and no purchase by the Corporation from any stockholder
pursuant to this paragraph shall be deemed to create any right on the part of
any stockholder to sell any shares of Class B Preferred Stock (or any other
stock) to the Corporation.

                                        4



     Notwithstanding the foregoing provisions of this Section 4, and subject to
the provisions of Section 2 hereof, if a dividend upon any shares of Class B
Preferred Stock is past due, (i) no shares of the Class B Preferred Stock may be
redeemed, except (A) by means of a redemption pursuant to which all outstanding
shares of the Class B Preferred Stock are simultaneously redeemed (or offered to
be so redeemed) or pursuant to which the outstanding shares of the Class B
Preferred Stock are redeemed on a pro rata basis (or offered to be so redeemed),
or (B) by conversion of shares of Class B Preferred Stock into, or exchange of
such shares for, Common Stock or any other stock of the Corporation ranking
junior to the Class B Preferred Stock as to dividends and upon liquidation,
dissolution or winding up.

     5. Liquidation. In the event of any voluntary or involuntary
        -----------
dissolution, liquidation or winding up of the Corporation (for the purposes of
this Section 5, a "Liquidation"), before any distribution of assets shall be
made to the holders of the Common Stock or the holders of any other stock that
ranks junior to the Class B Preferred Stock in respect of distributions upon the
Liquidation of the Corporation, the holder of each share of Class B Preferred
Stock then outstanding shall be entitled to $6.25 per share plus all dividends
(whether or not declared or due) accrued and unpaid on such share on the date
fixed for the distribution of assets of the Corporation to the holders of Class
B Preferred Stock.

     If upon any Liquidation of the Corporation, the assets available for
distribution to the holder of Class B Preferred Stock which shall then be
outstanding (hereinafter in this paragraph called the "Total Amount Available")
shall be insufficient to pay the holders of all outstanding shares of Class B
Preferred Stock the full amounts (including all dividends accrued and unpaid) to
which they shall be entitled by reason of such Liquidation of the Corporation,
then there shall be paid ratably to the holders of the Class B Preferred Stock
in connection with such Liquidation of the Corporation, an amount equal to each
holder's pro rata share of the Total Amount Available.

     The voluntary sale, conveyance, lease, exchange or transfer of all or
substantially all the property or assets of the Corporation, or the merger or
consolidation of the Corporation into the Corporation, or any purchase or
redemption of some or all of the shares of any class or series of stock of the
Corporation, shall not be deemed to be a Liquidation of the Corporation for the
purposes of this Section 5 (unless in connection therewith the Liquidation of
the Corporation is specifically approved).

     6. Conversion Privilege. At any time subsequent to three years after
        --------------------
issuance of any share of Class B Preferred Stock, the holder of any share of
Class B Preferred Stock ("Holder") shall have the right, at such Holder's option
(but if such share is called for redemption or exchange at the election of the
Corporation, then in respect of such share only to and including but not after
the close of business on (i) the fifth calendar day before the

                                        5



date fixed for such redemption; or (ii) the date fixed for such exchange,
provided that the Corporation has set aside funds sufficient to effect such
redemption to convert such share into that number of fully paid and non-
assessable shares of Common Stock (calculated as to each conversion to the
nearest 1/100th of a share) obtained by dividing $5.00 by the Conversion Rate
then in effect.

          a. Conversion Rate. Each share of Class B Preferred Stock may be
             ---------------
converted, subject to the terms and provisions of this paragraph 6 into one (1)
share of the Corporation's Common Stock, which is a price equal to one share of
Common Stock for each $5.00 of Class B Preferred Stock or, in case an adjustment
of such rate has taken place pursuant to the provisions of subdivision (f.) of
this paragraph (6), then at the Conversion Rate as last adjusted (such rate or
adjusted rate, shall be expressed as the number of shares of Common Stock to be
acquired upon conversion of one share of Class B Preferred Stock, and shall be
referred to herein as the "Conversion Rate"). Each share of Class B Preferred
Stock shall be Convertible into Common Stock by surrender to the corporation of
the certificate representing such shares of Class B Preferred Stock to be
converted by the Holder and by giving written notice to the Corporation of the
Holder's election to convert.

     The Corporation shall, as soon as practicable after receipt of such written
notice and the proper surrender to the Corporation of the certificate or
certificates representing shares of Class B Preferred Stock to be converted in
accordance with the above provisions, issue and deliver for the benefit of the
Holder at the office of the Corporation's duly appointed transfer agent (the
"Transfer Agent") to the Holder for whose account such shares of Class B
Preferred Stock were so surrendered or to such Holder's nominee or nominees,
certificates for the number of shares of Common Stock to which the Holder shall
be entitled. The certificates of Common Stock of the Corporation issued upon
conversion shall bear such legends as may be required by state or federal laws.
Such conversion shall be deemed to have been effective immediately prior to the
close of business on the date on which the Corporation shall have received both
such written notice and the properly surrendered certificates for shares of
Class B Preferred Stock to be converted (the "Conversion Date"), and at such
time the rights of the Holder shall cease and the person or persons entitled to
receive the shares of Common Stock issuable upon the conversion of such shares
of Class B Preferred Stock shall be deemed to be, and shall be treated for all
purposes as, the record Holder or Holders of such Common Stock on the Conversion
Date. The Corporation shall not be required to convert, and no surrender of
shares of Class B Preferred Stock or written notice of conversion with respect
thereto shall be effected for that purpose, while the stock transfer books of
the Corporation are closed for any reasonable business purpose for any
reasonable period of time, but the proper surrender of shares of Class B
Preferred Stock for conversion immediately upon the reopening of such books.
During the period in which the stock transfer books of the Corporation are
closed, the Corporation may neither declare a dividend, declare a record date
for payment of dividends nor make any payment of dividends.

                                        6



          b. Dividends. If any shares of Class B Preferred Stock shall be
             ---------
converted during any dividend payment period, the Holder shall be entitled to
all dividends accrued up to and through such Conversion Date, at the rate set
forth herein, whether or not there has been a dividend date, as set forth in
paragraph 2 hereof.

          c. Cancellation. Class B Preferred Stock converted into Common
             ------------
Stock pursuant to the provisions of this paragraph (6), shall be retired and
cancelled by the Corporation and given the status of authorized and unissued
preferred stock.

          d. Reissuance if Conversion is Partial. In the case of any
             -----------------------------------
certificate representing shares of Class B Preferred Stock which is surrendered
for conversion only in part, the Corporation shall issue and deliver to the
Holder a new certificate or certificates for Class B Preferred Stock of such
denominations as requested by the Holder in the amount of Class B Preferred
Stock equal to the unconverted shares of the Class B Preferred Stock represented
by the certificate so surrendered.

          e. Reservations of Shares. The Corporation shall at all times
             ----------------------
during which shares of Class B Preferred Stock may be converted into Common
Stock as provided in this paragraph (e), reserve and keep available, out of any
Common Stock held as treasury stock or out of its authorized and unissued Common
Stock, or both, solely for the purpose of delivery upon conversion of the shares
of Class B Preferred Stock as herein provided, such number of shares of Common
Stock as shall then be sufficient to effect the conversion of all shares of
Class B Preferred Stock from time to time outstanding, and shall take such
action as may from time to time be necessary to ensure that such shares of
Common Stock will, when issued upon conversion of Class B Preferred Stock, be
fully paid and nonassessable.

          f. Adjustment of Conversion Rate. The Conversion Rate provided in
             -----------------------------
subdivision (a) of this paragraph (6), in respect of Class B Preferred Stock,
shall be subject to adjustments from time to time as follows:

     (i) While any shares of Class B Preferred Stock shall be outstanding, in
   case the Corporation shall subdivide the outstanding shares of Common Stock
   into a greater number of shares of Common Stock or combine the outstanding
   shares of Common Stock into a smaller number of shares of Common Stock, or
   issue, by reclassification of its shares of Common Stock, any shares of the
   Corporation, the Conversion Rate in effect immediately prior thereto shall be
   adjusted so that the Holder shall be entitled to receive the number of shares
   which it would have owned or been entitled to receive after the happening of
   any of the events described above, had such shares of Class B Preferred Stock
   been converted immediately prior to the happening of such event, such
   adjustment to become effective immediately after the opening of business on
   the day following the day upon which such subdivision or combination or
   reclassification, as the case may be, becomes effective.

                                        7



     (ii) In case the Corporation shall be consolidated with, or merge into, any
   other corporation, and the Corporation does not survive, proper provisions
   shall be made as a part of the terms of such consolidation or merger, whereby
   the Holder shall thereafter be entitled, upon exercise of such Holder's
   conversion rights, to receive the kind and amount of shares of stock or other
   securities of the Corporation resulting from such consolidation or merger, or
   such other property, as the Holder would have received if such conversion
   rights were exercised immediately prior to the effectiveness of such merger
   of consolidation.

     (iii) In the event the Corporation at any time, or from time to time after
   June 15, 1996 makes or issues, or fixes a record date for the determination
   of holders of Common Stock entitled to receive, a dividend or other
   distribution payable in additional shares of Common Stock or Common Stock
   Equivalents (as defined herein) which does not provide for the payment of any
   consideration upon the issuance, conversion or exercise thereof, without a
   corresponding dividend or other distribution to the Holder, based upon the
   number of shares of Common Stock into which the Class B Preferred Stock is
   convertible, then and in each such event the Conversion Rate then in effect
   will be increased as of the time of such issuance or, in the event such a
   record date shall have been fixed, as of the close of business on such record
   date, by multiplying such Conversion Rate by a fraction:

               (A) The number of which will be the total number of shares of
           Common Stock issues and outstanding immediately prior to the time of
           such issuance or the close of business on such record date plus the
           number of shares of Common Stock issuable in payment of such dividend
           or distribution (which, in the case of Common Stock Equivalents,
           shall mean the maximum number of shares of Common Stock issuable with
           respect thereto, as set forth in the instrument relative thereto
           without regard to any provision for subsequent adjustment); and

               (B) The denominator of which will be the total number of shares
           of Common Stock issued and outstanding immediately prior to the time
           of such issuance or the close of business on such record date;

   provided, however, that if such record date is fixed and such dividend is not
   fully paid or if such distribution is not fully made on the date fixed
   therefor, the Conversion Rate will be recomputed accordingly as of the close
   of business on such record date, and thereafter such Conversion Rate will be
   adjusted pursuant to this subparagraph (iii) as of the time of actual payment
   of such dividends of distributions.

     (iv) In the event the Corporation at any time or from time to time after
   June 15, 1996 makes or issues, or fixes a record date for the determination
   of holders of

                                        8



   Common Stock entitled to receive a dividend or other distribution payable to
   all holders of Common Stock in securities of the Corporation Stock
   Equivalents, then, upon making such dividend or distribution provisions will
   be made so that the Holder will receive the amount of securities of the
   Corporation which it would have received had its Class B Preferred Stock been
   converted into Common Stock on the date of such event.

     (v) In the event the Corporation sells or issues any Common Stock, or sells
   or issues Common Stock Equivalents which can be converted into Common Stock
   at a per share consideration (as defined below in this subparagraph (v) of
   paragraph 7(B) less than the Stipulated Price then in effect, then the Holder
   shall be entitled to purchase from the Corporation in cash (for the same per
   share consideration at which such Common Stock was issued or the per share
   price at which a share of Common Stock is acquirable upon exercise or
   conversion of Common Stock Equivalents) that additional number of shares of
   Common Stock which, when added to the number of shares of Common Stock
   acquirable by the Holder upon conversion of any shares of Class B Preferred
   Stock outstanding and held by such Holder immediately before such issue or
   sale (the "Acquirable Shares"), will equal a percentage of the number of
   shares of Common Stock Deemed Outstanding (as defined herein) immediately
   after such sale or issuance that is the same as the percentage of the number
   of shares of Common Stock Deemed Outstanding immediately before such issuance
   or sale represented by the Acquirable Shares. This right shall exist for a
   forty-five-day period following the sale or issuance of shares of Common
   Stock or Common Stock Equivalents, and thereafter shall cease to exist.

   For the above purposes, the per share consideration with respect to the sale
   or issuance of Common Stock will be the price per share received by the
   Corporation, prior to the payment of any expenses, commissions, discounts and
   other applicable costs. With respect to the sale or issuance of Common Stock
   Equivalents which are convertible into or exchangeable for Common Stock
   without further consider, the per share consideration will be determined by
   dividing the maximum number of shares of Common Stock issuable with respect
   to such Common Stock Equivalents (as set forth in the instrument relating
   thereto without regard to any provisions contained therein for subsequent
   adjustment of such number) into the aggregate consideration receivable by the
   Corporation upon the sale or issuance of such Common Stock Equivalents. With
   respect to the issuance of other Common Stock Equivalents, the per share
   consideration will be determined by dividing the maximum number of shares of
   Common Stock issuable with respect to such Common Stock Equivalents into the
   total aggregate consideration received by the Corporation upon the sale or
   issuance of such Common Stock Equivalents plus the minimum aggregate amount
   of additional consideration received by the Corporation upon the conversion
   or exercise of such Common Stock Equivalents. In connection with the sale or
   issuance of Common

                                        9



   Stock and/or Common Stock Equivalents for non-cash consideration, the amount
   of consideration will be the fair market value of such consideration as
   determined in good faith by the Board of Directors of the Corporation.

     (vi) As used herein, the term "Stipulated Price" means initial price of
   $5.00 per share of Common Stock, as adjusted from time to time pursuant to
   subparagraph (viii) of this paragraph 7(f); and the term "Common Stock
   Equivalent" means any securities (whether debt or equity securities) or
   rights issued by the Corporation convertible into or entitling the holder
   thereof to receive shares of, or securities convertible into, Common Stock.
   The number of shares of "Common Stock Deemed Outstanding" at any date shall
   equal the sum of the number of shares of Common Stock then outstanding plus
   the number of shares of Common Stock then obtainable pursuant to Common Stock
   Equivalents.

     (vii) In the event the Corporation declares any dividend or distribution
   payable to holders of its Common Stock (other than dividends payable out of
   the Corporation's retained earnings or earned surplus and dividends payable
   in shares of Common Stock or in securities convertible into or exchangeable
   for shares of Common Stock or rights or warrants to purchase Common Stock or
   securities convertible into or exchangeable for shares of Common Stock or any
   other securities issued by the Corporation), the Conversion Rate in effect
   immediately prior to the record date for such dividend or distribution shall
   be proportionately adjusted so that the Holder shall be entitled to receive
   the number of shares of Common Stock into which such shares of Common Stock
   or Preferred Stock was convertible immediately prior to such record date
   multiplied by a fraction, the numerator of which is the fair market value of
   a share of Common Stock on such record date and the denominator of which is
   such per share fair market value of a share of Common Stock on such record
   date less the fair market value on such record date of the securities or
   other property which are distributed as a dividend or other distribution. The
   term "fair market value" of a share of Common Stock or of any other security
   or other type of property on any date means (A) in the case of Common Stock
   or any other security (I) if the principal trading market for such Common
   Stock of other security is an exchange or the NASDAQ national market on such
   date, the closing price on such exchange or the NASDAQ national market on
   such date, provided, if trading of such Common Stock or other security is
   listed on any consolidated tape, the fair market value shall be the closing
   price set forth on such consolidated tape on such date, or (II) if the
   principal market for such Common Stock or other security is the over-the-
   counter market (other than the NASDAQ national market) the mean between the
   closing bid and asked prices on such date as set forth by NASDAQ or (B) in
   the case of Common Stock or any other security for which the fair market
   value cannot be determined pursuant to clause (A) above or of any other
   security or type of property, fair market value thereof on such date as
   determined in good faith by the Board of Directors.

                                       10



       (viii) Whenever the Conversion Rate is adjusted pursuant to this
     paragraph (6)(f), the Stipulated Price shall also be adjusted by
     multiplying it by a fraction that is the reciprocal of the fraction used to
     adjust the Conversion Rate.

       (ix) The Corporation will not, by amendment of its Articles of
     Incorporation or through any dissolution, issuance or sale of securities or
     any other voluntary action, avoid or seek to avoid the observance or
     performance of any of the terms to be observed or performed hereunder by
     the Corporation, but at all times in good faith will assist in the carrying
     out of all the provisions of this paragraph and in the taking of all such
     action as may be necessary or appropriate in order to protect the
     conversion rights of the Holder against impairment.

       (x) No adjustment in the Conversion Rate shall be required, unless such
     adjustment would require an increase or decrease of at least one (1) share
     of Common Stock in the Conversion Rate of one share of Class B Preferred
     Stock, provided that all adjustments which do not meet this minimum
     requirement shall be cumulated and the adjustment will be made when the
     cumulated total is sufficient to require an adjustment. All calculations
     made pursuant to this subparagraph (x) of paragraph (6)(f) shall be made to
     the nearest one hundredth (1/100th) of a share of Common Stock.

     g. Fractional Shares. No fractional shares of Common Stock or scrip
        -----------------
representing fractional shares of Common Stock shall be issued upon any
conversion of shares of Class B Preferred Stock but, in lieu thereof, there
shall be paid an amount in cash equal to the same fraction of the current market
price of a whole share of Common Stock on the day preceding the day of
conversion.

     h. Statement to Transfer Agent. Whenever the Conversion Rate for
        ---------------------------
shares of Class B Preferred Stock shall be adjusted pursuant to the provisions
of paragraph (6)(f) hereof, the Corporation shall forthwith maintain at its
office and, if applicable, file with the Transfer Agent for shares of Class B
Preferred Stock and for shares of Common Stock, a statement signed by the
President or a Vice President of the Corporation and by its Treasurer or an
Assistant Treasurer, stating the adjusted Conversion Rate and setting forth in
reasonable detail the method of calculation and the facts requiring such
adjustment, such calculations to be confirmed by the Corporation's independent
auditors, and stating the faces on which the calculation is based. Each
adjustment shall remain in effect until a subsequent adjustment hereunder is
required.

     7.   Registration Rights.
          -------------------

          a. Piggyback Registration. The Corporation, for a period ending
             ----------------------
six months after the last share of Class B Preferred Stock is redeemed, retired,
converted or otherwise no longer outstanding, will give written notice to the
Holder not less than 20 days in advance of the initial filing of any
registration statement under the Securities Act of 1933

                                       11



(other than a registration Statement pertaining to securities issuable pursuant
to employee stock option, stock purchase, or similar plans or a registration
statement pertaining to securities issuable in connection with the acquisition
of a business, whether through merger, consolidation, acquisition of assets, or
exchange of securities) covering any Common Stock or other securities of the
Corporation, and will afford the Holder the opportunity to have included in such
registration all or such part of the shares of Common Stock acquired upon
conversion of Class B Preferred Stock, as may be designated by written notice to
the Corporation not later than 10 days following receipt of such notice from the
Corporation. The Corporation shall be entitled to exclude the shares of Common
Stock held by the Holder from any one, but not more than one, such registration
if the Corporation is advised by its investment banking firm that the inclusion
of such shares will, in the opinion of such investment banking firm, materially
interfere with the orderly sale and distribution of the securities being offered
under such registration statement by the Corporation. Notwithstanding the
foregoing, the Corporation shall not be entitled to exclude the shares of Common
Stock held by the Holder if shares of other shareholders are being included in
any such registration statement and, in such circumstances, the Holder shall be
entitled to include the shares of Common Stock held by them on a pro rata basis
in the proportion that the number of shares of Common Stock held by the Holder
bears to the shares of Common Stock held by all other shareholders, including
shares in such registration statement. The Holder shall not be entitled to
include shares in more than two registration statement pursuant to the
provisions of this subdivision a of paragraph (7), and all rights of the Holder
under this subdivision a of paragraph (7) shall terminate after the Holder has
included shares of Common Stock in two registration statements pursuant to this
subdivision a of paragraph (7).

          b. Expenses. The Corporation will pay all out-of-pocket costs and
             --------
expenses of any registration effected pursuant to the provisions of subdivision
(a) of this paragraph 7, including registration fees, legal fees, accounting
fees, printing expenses (including such number of any preliminary and the final
prospectus as may be reasonably requested), blue sky qualification fees and
expenses, and all other expenses, except for underwriting commissions or
discounts applicable to the shares of Common Stock being sold by the Holder and
the fees of counsel for the Holder, all of which shall be paid by the Holder.

     8. Reports.
        -------

        So long as any of the Class B Preferred Stock shall be outstanding,
the Corporation shall submit to the Holder financial reports no less frequently
than annually.

     9. Miscellaneous.
        -------------

        a. As used herein, the term "Common Stock" shall mean the
Corporation's Common Stock, no par value, or, in the case of any
reclassification or change of outstanding shares of Common Stock, the stock or
securities issued in exchange for such Common Stock. The term "Common Stock"
shall also include any capital stock of the

                                       12



Corporation authorized after June 15, 1995 which shall not be limited to a fixed
sum or sums or percentage or percentages of par value in respect of the rights
of the holders thereof to participate in dividends or in the distribution of
assets upon the voluntary or involuntary liquidation, dissolution or winding up
of the Corporation.

          b. The shares of Class B Preferred Stock shall be fully transferrable
by the Holder thereof, subject to compliance with the applicable provisions of
federal and state securities laws.

     IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate
seal to be hereunto affixed and this Certificate to be signed by its President
and Secretary this 30 day of April, 1996.




                                        /s/ Thomas J. Shaw
                                        ----------------------------------
                                        President

ATTEST:

/s/ Lillian E. Salerno
- --------------------------------
Secretary

                                       13



                                                                       EXHIBIT C

                                                               FILED
                                                        In the Office of the
                                                     Secretary of State of Texas
                                                            MAY 27 1997
                                                       Corporations Section

                    CERTIFICATE OF DESIGNATION, PREFERENCES
                RIGHTS AND LIMITATIONS OF THE SERIES II CLASS B
                           CONVERTIBLE PREFERRED STOCK
                                       OF
                         RETRACTABLE TECHNOLOGIES, INC.

     Pursuant to Article 2.13 of the Texas Business Corporation Act and Article
Five of its Articles of Incorporation, Retractable Technologies, Inc., a
corporation organized and existing under the laws of the State of Texas (the
Corporation),

     DOES HEREBY CERTIFY that pursuant to the authority conferred upon the Board
of Directors of the Corporation by the Articles of Incorporation, as amended,
and pursuant to Article 2.13 of the Texas Business Corporation Act, said Board
of Directors, by unanimous written consent executed May 10, 1995, adopted a
resolution providing for the creation of a series of Preferred Stock consisting
of not more than five million (5,000,000) shares of Series II Class B
Convertible Preferred Stock, which resolution is and reads as follows:

     RESOLVED that, pursuant to the authority provided in the Corporation's
Articles of Incorporation and expressly granted to and vested in the Board of
Directors of Retractable Technologies, Inc. (the "Corporation"), the Board of
Directors hereby creates out of the Preferred Stock, par value one dollar per
share, of the Corporation a series of Series II Class B Preferred Stock
consisting of not more than five million (5,000,000) shares, and the Board of
Directors hereby fixes the designation and the powers, preference and rights,
and the qualifications, limitations and restrictions thereof, to the extent not
otherwise provided in the Corporation's qualifications, limitations and
restrictions thereof, to the extent not otherwise provided in the Corporation's
Articles of Incorporation, as follows:

     1. Designation of Series. The designation of the series of Preferred
        ---------------------
Stock created by this resolution shall be "Series II Class B Convertible
Preferred Stock" (the "Series II Class B Preferred Stock").

     2. Dividends on Series II Class B Preferred Stock.
        ----------------------------------------------

        a. Dividend Amount. The holders of the Series II Class B Preferred
           ---------------
Stock shall be entitled to receive, in any calendar year, if when and as
declared by the Board of Directors, out of any assets at the time legally
available therefor and subject to the further limitations set out herein,
dividends at the per annum rate of $1.00 per share, all such dividends due
quarterly in arrears as of the last day of each March, June, September and
December of each year, the first dividend being declarable on December 31, 1997.
On each


                                        1



date which a dividend may be declared is hereafter called the "Dividend Date,"
and each quarterly period ending with a Dividend Date is hereinafter referred to
as the "Dividend Period." Dividends shall be payable fifteen calendar days after
the Dividend Due Date, provided however, that if such date on which a dividend
is payable is a Saturday, Sunday or legal holiday, such dividend shall be
payable on the next following business day to the holders of record (whether
singular or plural, the "Holder").

          b. Dividends Cumulative. Dividends upon the Series II Class B
             --------------------
Preferred Stock shall be accrued and be cumulative, whether or not in any
Dividend Period or Periods there shall be funds of the Corporation legally
available for the payment of such dividends.

          c. Dividend Accrual. On each Dividend Due Date all dividends which
             ----------------
shall have accrued since the last Dividend Due Date on each share of Series II
Class B Preferred Stock outstanding on such Dividend Due Date shall accumulate
and be deemed to become "due." Any dividend which shall not be paid on the
Dividend Due Date on which it shall become due shall be deemed to be "past due"
until such dividend shall be paid or until the share of Series II Class B
Preferred Stock with respect to which such dividend became due shall no longer
be outstanding, whichever is the earlier to occur. No interest, sum of money in
lieu of interest or other property or securities shall be payable in respect of
any dividend payment or payments which are past due. Dividends paid on shares of
Series II Class B Preferred Stock in an amount less that the total amount of
such dividends at the time accumulated and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. Dividend payments made with respect to a Dividend Due Date shall be
deemed to be made in payment of the dividends which became due on that Dividend
Due Date.

          d. Dividend Arrearage. If a dividend upon any shares of Series II
             ------------------
Class B Preferred Stock is in arrears, all dividends or other distributions
declared upon shares of the Series II Class B Preferred Stock (other than
dividends paid in stock of the Corporation ranking junior to the Series II Class
B Preferred Stock as to dividends and upon liquidation, dissolution or winding
up) may only be declared pro rata. Except as set forth above, if a dividend upon
any shares of Series II Class B Preferred Stock is in arrears: (i) no dividends
(in cash, stock or other property) may be paid or declared and set aside for
payment or any other distribution made upon any stock of the Corporation ranking
junior to the Series II Class B Preferred Stock as to dividends (other than
dividends of distributions in stock of the Corporation ranking junior to the
Series II Class B Preferred Stock as to dividends and upon liquidation,
dissolution or winding up); and (ii) no stock of the Corporation ranking junior
to the Series II Class B Preferred Stock as to dividends may be (A) redeemed
pursuant to a sinking fund of otherwise, except (1) by means of redemption
pursuant to which all outstanding shares of the Series II Class B Preferred
Stock are redeemed, or (2) by conversion of any such junior stock into, or
exchange of any such junior stock into, or exchange of any such junior stock for
stock of the Corporation ranking junior to the Series II Class B Preferred Stock
as to dividends and upon liquidation, dissolution or winding up, or (B)
purchased or

                                        2



otherwise acquired for any consideration by the Corporation except (1) pursuant
to an acquisition made pursuant to the terms of one or more offers to purchase
all of the outstanding shares of the Series II Class B Preferred Stock, which
offers shall each have been accepted by the holders of at least 50% of the
shares of the Series II Class B Preferred Stock receiving such offer outstanding
at the commencement of the first of such purchase offers, or (2) by conversion
into or exchange for stock of the Corporation ranking junior to the Series II
Class B Preferred Stock as to dividends and upon liquidation, dissolution or
winding up.

     3. General, Class and Series Voting Rights. Except as provided in this
        ---------------------------------------
Section 3 and in Section 4 hereof or as otherwise from time to time required by
law, the Series II Class B Preferred Stock shall have no voting rights.

     So long as any shares of Series II Class B Preferred Stock remain
outstanding, the consent of the holders of at least fifty-one (51%) percent of
the shares of Series II Class B Preferred Stock outstanding at the time voting
separately as a class, given in person or by proxy, either in writing at any
special or annual meeting called for the purpose, shall be necessary to permit,
effect or validate any one or more of the following:

        (i) The authorization, creation or issuance, or any increase in the
     authorized or issued amount, of any class or series of stock (including any
     class or series of Preferred Stock) ranking equal or prior (as the terms
     are hereinafter defined in this Section 3) to the Series II Class B
     Preferred Stock; or

        (ii) The amendment, alteration or repeal, whether by merger,
     consolidation or otherwise, of any of the provisions of the Articles of
     Incorporation or of this resolution which would alter or change the powers,
     preferences or special rights of the shares of the Series II Class B
     Preferred Stock so as to affect them adversely; provided, however, that any
     increase in the amount of authorized Preferred Stock, or the creation and
     issuance of other series of Preferred Stock ranking junior to the Series II
     Class B Preferred Stock with respect to the payment of dividends and the
     distribution of assets upon liquidation, dissolution or winding up, shall
     not be deemed to adversely affect such powers, preferences or special
     rights.

     The foregoing voting provisions shall not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of Series II Class B Preferred Stock shall
have been redeemed or sufficient funds shall have been deposited in trust to
effect such redemption.

     4. Default Voting Rights. Whenever, at any time or times, dividends
        ---------------------
payable on the shares of Series II Class B Preferred Stock shall be in arrears
for twelve (12) consecutive quarterly dividend periods, the holders of a
majority of the outstanding shares of Series II Class B Preferred Stock shall
have the exclusive right (voting separately as a class) to elect one-third of
the Board of Directors of the Corporation at the Corporation's next annual

                                        3



meeting of stockholders (to serve until the next annual meeting of shareholders,
and until their successors are duly elected and qualified) and at each
subsequent annual meeting of stockholders so long as such arrearage shall
continue, and the Common Stock voting separately as a class, shall be entitled
to elect the remainder of the Board of Directors of the Corporation. At
elections for such directors, each holder of Series II Class B Preferred Stock
shall be entitled to one vote for each share of Preferred Stock held. The right
of the holders of Series II Class B Preferred Stock, voting separately as a
class, to elect members of the Board of the Directors of the Corporation as
aforesaid shall continue until such time as all dividends accumulated on the
Series II Class B Preferred Stock shall have been paid in full, at which time
such right shall terminate, except as herein or by law expressly provided,
subject to revesting in the event of each and every subsequent default of the
character above mentioned.

     Directors elected by the holders of Series II Class B Preferred Stock shall
continue to serve as such directors until such time as all dividends accumulated
on the Series II Class B Preferred Stock shall have been paid in full, at which
time the term of office of all persons elected as directors by the holders of
shares of Series II Class B Preferred Stock shall forthwith terminate. In the
case of any vacancy in the office of a director occurring among the directors
elected by the holder of a class (with the Series II Class B Preferred Stock and
Common Stock being treated as separate classes) of stock, the remaining
directors so elected by that class may by affirmative vote of a majority thereof
(or the remaining director so elected if there be but one) elect a successor or
successors to hold office for the unexpired term of the director or directors
whose place or places shall be vacant. Any director who shall have been elected
by the holders of a class of stock or by an directors so elected as provided in
the next preceding sentence hereof may be removed during the aforesaid term of
office, either for or without cause, by, and only by, the affirmative vote of
the holders of a majority of the shares of the class of stock who elected such
director or directors, given either at a special meeting of such shareholders
duly called for that purpose or pursuant to a written consent of shareholders,
and any vacancy thereby created may be filled by the holders of that class of
stock represented at such meeting or pursuant to such written consent. Whenever
the term of office of the directors elected by the holders of Series II Class B
Preferred Stock voting as a class shall end and the special voting powers vested
in the holders of Series II Class B Preferred Stock voting as a class shall end
and the special voting powers vested in the holders of Series II Class B
Preferred Stock as provided in this Section 4 shall have expired, the number of
directors shall be such number as may be provided for in the Articles of
Incorporation or Bylaws irrespective of any increase made pursuant to the
provisions of this Section 4.

     5. Redemption. The outstanding shares of Series II Class B Preferred
        ----------
Stock shall be nonredeemable prior to the lapse of three (3) years from the date
of issuance. On and after such date, the Series II Class B Preferred Stock may
be redeemed at the option of the Corporation, as a whole at any time or in part
from time to time, at the Redemption Price of $15.00 per share plus all
dividends (whether or not declared or due) accrued and unpaid to the date of
redemption (subject to the right of the holder of record of shares of Series II
Class B Preferred Stock on a record date for the payment of a dividend on the
Series II Class B

                                        4



Preferred Stock to receive the dividend due on such shares of Series II Class B
Preferred Stock on the corresponding Dividend Due Date.)

     No sinking fund shall be established for the Series II Class B Preferred
Stock.

     Notice of any proposed redemption of shares of Series II Class B Preferred
Stock shall be mailed by means of first class mail, postage paid, addressed to
the holders of record of the shares of Series II Class B Preferred Stock to be
redeemed, at their respective addresses then appearing on the books of the
Corporation, at least thirty (30) but not more than sixty (60) days prior to the
date fixed for such redemption (herein referred to as the "Redemption Date").
Each such notice shall specify (i) the Redemption Date; (ii) the Redemption
Price; (iii) the place for payment and for delivering the stock certificate(s)
and transfer instrument(s) in order to collect the Redemption Price; (iv) the
shares of Series II Class B Preferred Stock to be redeemed; and (v) the then
effective Conversion Price (as defined below) and that the right of holders of
shares of Series II Class B Preferred Stock being redeemed to exercise their
conversion right shall terminate as to such shares at the close of business on
the fifth day before the Redemption Date (provided that no default by the
Corporation in the payment of the applicable Redemption Price (including any
accrued and unpaid dividends) shall have occurred and be continuing). Any notice
mailed in such manner shall be conclusively deemed to have been duly given
whether or not such notice is in fact received. If less than all the outstanding
shares of Series II Class B Preferred Stock are to be redeemed, the Corporation
will select those to be redeemed by lot or by a substantially equivalent method.
In order to facilitate the redemption of Series II Class B Preferred Stock to be
redeemed, which shall not be more than sixty (60) days prior to the Redemption
Date with respect thereto.

     The holder of any shares of Series II Class B Preferred Stock redeemed upon
any exercise of the Corporation's redemption right shall not be entitled to
receive payment of the Redemption Price for such shares until such holder shall
cause to be delivered to the place specified in the notice given with respect to
such redemption (i) the certificate(s) representing such shares of Series II
Class B Preferred Stock; and (ii) transfer instrument(s) satisfactory to the
Corporation and sufficient to transfer such shares of Series II Class B
Preferred Stock to the Corporation free of any adverse interest. No interest
shall accrue on the Redemption Price of any share of Series II Class B Preferred
Stock after its Redemption Date.

     Subject to Section 2 hereof, the Corporation shall have the right to
purchase shares of Series II Class B Preferred Stock from the owner of such
shares on such terms as may be agreeable to such owner. Shares of Series II
Class B Preferred Stock may be acquired by the Corporation from any stockholder
pursuant to this paragraph without offering any other stockholder an equal
opportunity to sell his stock to the Corporation, and no purchase by the
Corporation from any stockholder pursuant to this paragraph shall be deemed to
create any right on the part of any stockholder to sell any shares of Series II
Class B Preferred Stock (or any other stock) to the Corporation.

                                        5



     Notwithstanding the foregoing provisions of this Section 5, and subject to
the provisions of Section 2 hereof, if a dividend upon any shares of Series II
Class B Preferred Stock is past due, (i) no shares of the Series II Class B
Preferred Stock may be redeemed, except (A) by means of a redemption pursuant to
which all outstanding shares of the Series II Class B Preferred Stock are
simultaneously redeemed (or offered to be so redeemed) or pursuant to which the
outstanding shares of the Series II Class B Preferred Stock are redeemed on a
pro rata basis (or offered to be so redeemed), or (B) by conversion of shares of
Series II Class B Preferred Stock into, or exchange of such shares for, Common
Stock or any other stock of the Corporation ranking junior to the Series II
Class B Preferred Stock as to dividends and upon liquidation, dissolution or
winding up.

     6. Liquidation. In the event of any voluntary or involuntary
        -----------
dissolution, liquidation or winding up of the Corporation (for the purposes of
this Section 6, a "Liquidation"), before any distribution of assets shall be
made to the holders of the Common Stock or the holders of any other stock that
ranks junior to the Series II Class B Preferred Stock in respect of
distributions upon the Liquidation of the Corporation, the holder of each share
of Series II Class B Preferred Stock then outstanding shall be entitled to
$12.50 per share plus all dividends (whether or not declared or due) accrued and
unpaid on such share on the date fixed for the distribution of assets of the
Corporation to the holders of Series II Class B Preferred Stock.

     If upon any Liquidation of the Corporation, the assets available for
distribution to the holder of Series II Class B Preferred Stock which shall then
be outstanding (hereinafter in this paragraph called the "Total Amount
Available") shall be insufficient to pay the holders of all outstanding shares
of Series II Class B Preferred Stock the full amounts (including all dividends
accrued and unpaid) to which they shall be entitled by reason of such
Liquidation of the Corporation, then there shall be paid ratably to the holders
of the Series II Class B Preferred Stock in connection with such Liquidation of
the Corporation, an amount equal to each holder's pro rata share of the Total
Amount Available.

     The voluntary sale, conveyance, lease, exchange or transfer of all or
substantially all the property or assets of the Corporation, or the merger or
consolidation of the Corporation into the Corporation, or any purchase or
redemption of some or all of the shares of any class or series of stock of the
Corporation, shall not be deemed to be a Liquidation of the corporation for the
purposes of this Section 6 (unless in connection therewith the Liquidation of
the Corporation is specifically approved).

     7. Conversion Privilege. At any time subsequent to three years after
        --------------------
issuance of any share of Series II Class B Preferred Stock, the holder of any
share of Series II Class B Preferred Stock ("Holder") shall have the right, at
such Holder's option (but if such share is called for redemption or exchange at
the election of the Corporation, then in respect of such share only to and
including but not after the close of business on (i) the fifth calendar day
before the date fixed for such redemption; or (ii) the date fixed for such
exchange, provided

                                        6



that the Corporation has set aside funds sufficient to effect such redemption to
convert such share into that number of fully paid and non-assessable shares of
Common Stock (calculated as to each conversion to the nearest 1/100th of a
share) obtained by dividing $10.00 by the Conversion Rate then in effect.

          a. Conversion Rate. Each share of Series II Class B Preferred Stock
             ---------------
     may be converted, subject to the terms and provisions of this paragraph 2
     into one (1) share of the Corporation's Common Stock, which is a price
     equal to one share of Common Stock for each $10.00 of Series II Class B
     Preferred Stock or, in case an adjustment of such rate has taken place
     pursuant to the provisions of subdivision (f.) of this paragraph (7), then
     at the Conversion Rate as last adjusted (such rate or adjusted rate, shall
     be expressed as the number of shares of Common Stock to be acquired upon
     conversion of one share of Series II Class B Preferred Stock, and shall be
     referred to herein as the "Conversion Rate"). Each share of Series II Class
     B Preferred Stock shall be Convertible into Common Stock by surrender to
     the corporation of the certificate representing such shares of Series II
     Class B Preferred Stock to be converted by the Holder and by giving written
     notice to the Corporation of the Holder's election to convert.

          The Corporation shall, as soon as practicable after receipt of such
     written notice and the proper surrender to the Corporation of the
     certificate or certificates representing shares of Series II Class B
     Preferred Stock to be converted in accordance with the above provisions,
     issue and deliver for the benefit of the Holder at the office of the
     Corporation's duly appointed transfer agent (the "Transfer Agent") to the
     Holder for whose account such shares of Series II Class B Preferred Stock
     were so surrendered or to such Holder's nominee or nominees, certificates
     for the number of shares of Common Stock to which the Holder shall be
     entitled. The certificates of Common Stock of the Corporation issued upon
     conversion shall bear such legends as may be required by state or federal
     laws. Such conversion shall be deemed to have been effective immediately
     prior to the close of business on the date on which the Corporation shall
     have received both such written notice and the properly surrendered
     certificates for shares of Series II Class B Preferred Stock to be
     converted (the "Conversion Date"), and at such time the rights of the
     Holder shall cease and the person or persons entitled to receive the shares
     of Common Stock issuable upon the conversion of such shares of Series II
     Class B Preferred Stock shall be deemed to be, and shall be treated for all
     purposes as, the record Holder or Holders of such Common Stock on the
     Conversion Date. The Corporation shall not be required to convert, and no
     surrender of shares of Series II Class B Preferred Stock or written notice
     of conversion with respect thereto shall be effected for that purpose,
     while the stock transfer books of the Corporation are closed for any
     reasonable business purpose for any reasonable period of time, but the
     proper surrender of shares of Series II Class B Preferred Stock for
     conversion immediately upon the reopening of such books. During the period
     in which the stock transfer books of the Corporation are closed, the

                                        7



     Corporation may neither declare a dividend, declare a record date for
     payment of dividends nor make any payment of dividends.

          b. Dividends. If any shares of Class B Preferred Stock shall be
             ---------
     converted during any dividend payment period, the Holder shall be entitled
     to all dividends accrued up to and through such Conversion Date, at the
     rate set forth herein, whether or not there has been a dividend date, as
     set forth in paragraph 2 hereof.

          c. Cancellation. Class B Preferred Stock converted into Common
             ------------
     Stock pursuant to the provisions of this paragraph (7) shall be retired and
     cancelled by the Corporation and given the status of authorized and
     unissued preferred stock.

          d. Reissuance if Conversion is Partial. In the case of any
             -----------------------------------
     certificate representing shares of Series II Class B Preferred Stock which
     is surrendered for conversion only in part, the Corporation shall issue and
     deliver to the Holder a new certificate or certificates for Series II Class
     B Preferred Stock of such denominations as requested by the Holder in the
     amount of Series II Class B Preferred Stock equal to the unconverted shares
     of the Series II Class B Preferred Stock represented by the certificate so
     surrendered.

          e. Reservations of Shares. The Corporation shall at all times
             ----------------------
     during which shares of Series II Class B Preferred Stock may be converted
     into Common Stock as provided in this paragraph (e), reserve and keep
     available, out of any Common Stock held as treasury stock or out of its
     authorized and unissued Common Stock, or both, solely for the purpose of
     delivery upon conversion of the shares of Series II Class B Preferred Stock
     as herein provided, such number of shares of Common Stock as shall then be
     sufficient to effect the conversion of all shares of Series II Class B
     Preferred Stock from time to time outstanding, and shall take such action
     as may from time to time be necessary to ensure that such shares of Common
     Stock will, when issued upon conversion of Series II Class B Preferred
     Stock, be fully paid and nonassessable.

          f. Adjustment of Conversion Rate. The Conversion Rate provided in
             -----------------------------
     subdivision (a) of this paragraph (7), in respect of Class B Preferred
     Stock, shall be subject to adjustments from time to time as follows:

            (i) While any shares of Series II Class B Preferred Stock shall be
          outstanding, in case the Corporation shall subdivide the outstanding
          shares of Common Stock into a greater number of shares of Common Stock
          or combine the outstanding shares of Common Stock into a smaller
          number of shares of Common Stock, or issue, by reclassification of its
          shares of Common Stock any shares of the Corporation, the Conversion
          Rate in effect immediately prior thereto shall be adjusted so that the
          Holder shall be entitled to receive the number of shares which it
          would have owned or been entitled to receive after

                                        8



          the happening of any of the events described above, had such shares of
          Series II Class B Preferred Stock been converted immediately prior to
          the happening of such event, such adjustment to become effective
          immediately after the opening of business on the day following the day
          upon which such subdivision or combination or reclassification, as the
          case may be, becomes effective.

            (ii) In case the Corporation shall be consolidated with, or merge
          into, any other corporation, and the Corporation does not survive,
          proper provisions shall be made as a part of the terms of such
          consolidation or merger, whereby the Holder shall thereafter be
          entitled, upon exercise of such Holder's conversion rights, to receive
          the kind and amount of shares of stock or other securities of the
          Corporation resulting from such consolidation or merger, or such other
          property, as the Holder would have received if such conversion rights
          were exercised immediately prior to the effectiveness of such merger
          of consolidation.

            (iii) In the event the Corporation at any time, or from time to time
          after June 15, 1997 makes or issues, or fixes a record date for the
          determination of holders of Common Stock entitled to receive, a
          dividend or other distribution payable in additional shares of Common
          Stock or Common Stock Equivalents (as defined herein) which does not
          provide for the payment of any consideration upon the issuance,
          conversion or exercise thereof, without a corresponding dividend or
          other distribution to the Holder, based upon the number of shares of
          Common Stock into which the Series II Class B Preferred Stock is
          convertible, then and in each such event the Conversion Rate then in
          effect will be increased as of the time of such issuance or, in the
          event such a record date shall have been fixed, as of the close of
          business on such record date, by multiplying such Conversion Rate by a
          fraction:

                  (A) The numerator of which will be the total number of shares
            of Common Stock issues and outstanding immediately prior to the time
            of such issuance or the close of business on such record date plus
            the number of shares of Common Stock issuable in payment of such
            dividend or distribution (which, in the case of Common Stock
            Equivalents, shall mean the maximum number of shares of Common Stock
            issuable with respect thereto, as set forth in the instrument
            relative thereto without regard to any provision for subsequent
            adjustment); and

                  (B) The denominator of which will be the total number of
            shares of Common Stock issued and outstanding immediately prior to
            the time of such issuance or the close of business on such record
            date;

                                        9



            provided, however, that if such record date is fixed and such
            dividend is not fully paid or if such distribution is not fully made
            on the date fixed therefor, the Conversion Rate will be recomputed
            accordingly as of the close of business on such record date, and
            thereafter such Conversion Rate will be adjusted pursuant to this
            subparagraph (iii) as of the time of actual payment of such
            dividends or distributions.

               (iv) In the event the Corporation at any time or from time to
            time after June 15, 1997 makes or issues, or fixes a record date for
            the determination of holders of Common Stock entitled to receive a
            dividend or other distribution payable to all holders of Common
            Stock in securities of the Corporation or Common Stock Equivalents,
            then, upon making such dividend or distribution provisions will be
            made so that the Holder will receive the amount of securities of the
            Corporation which it would have received had its Series II Class B
            Preferred Stock been converted into Common Stock on the date of such
            event.

               (v) In the event the Corporation sells or issues any Common
            Stock, or sells or issues Common Stock Equivalents which can be
            converted into Common Stock at a per share consideration (as defined
            below in this subparagraph (v) of paragraph 7(f) less than the
            Stipulated Price then in effect, then the Holder shall be entitled
            to purchase from the Corporation in cash (for the same per share
            consideration at which such Common Stock was issued or the per share
            price at which a share of Common Stock is acquirable upon exercise
            or conversion of Common Stock Equivalents) that additional number of
            shares of Common Stock which, when added to the number of shares of
            Common Stock acquirable by the Holder upon conversion of any shares
            of Series II Class B Preferred Stock outstanding and held by such
            Holder immediately before such issue or sale (the "Acquirable
            Shares"), will equal a percentage of the number of shares of Common
            Stock Deemed Outstanding (as defined herein) immediately after such
            sale or issuance that is the same as the percentage of the number of
            shares of Common Stock Deemed Outstanding immediately before such
            issuance or sale represented by the Acquirable Shares. This right
            shall exist for a forty-five-day period following the sale or
            issuance of shares of Common Stock or Common Stock Equivalents, and
            thereafter shall cease to exist.

               For the above purposes, the per share consideration with respect
            to the sale or issuance of Common Stock will be the price per share
            received by the Corporation, prior to the payment of any expenses,
            commissions, discounts and other applicable costs. With respect to
            the sale or issuance of Common Stock Equivalents which are
            convertible into or exchangeable for Common Stock without further
            consideration, the per share consideration will be determined by
            dividing the maximum number of shares of Common Stock issuable with
            respect

                                       10



            to such Common Stock Equivalents (as set forth in the instrument
            relating thereto without regard to any provisions contained therein
            for subsequent adjustment of such number) into the aggregate
            consideration receivable by the Corporation upon the sale or
            issuance of such Common Stock Equivalents. With respect to the
            issuance of other Common Stock Equivalents, the per share
            consideration will be determined by dividing the maximum number of
            shares of Common Stock issuable with respect to such Common Stock
            Equivalents into the total aggregate consideration received by the
            Corporation upon the sale or issuance of such Common Stock
            Equivalents plus the minimum aggregate amount of additional
            consideration received by the Corporation upon the conversion or
            exercise of such Common Stock Equivalents. In connection with the
            sale or issuance of Common Stock and/or Common Stock Equivalents for
            non-cash consideration, the amount of consideration will be the fair
            market value of such consideration as determined in good faith by
            the Board of Directors of the Corporation.

               (vi) As used herein, the term "Stipulated Price" means initial
            price of $10.00 per share of Common Stock, as adjusted from time to
            time pursuant to subparagraph (viii) of this paragraph 7(f); and the
            term "Common Stock Equivalent" means any securities (whether debt or
            equity securities) or rights issued by the Corporation convertible
            into or entitling the holder thereof to receive shares of, or
            securities convertible into, Common Stock. The number of shares of
            "Common Stock Deemed Outstanding" at any date shall equal the sum of
            the number of shares of Common Stock then outstanding plus the
            number of shares of Common Stock then obtainable pursuant to Common
            Stock Equivalents.

               (vii) In the event the Corporation declares any dividend or
            distribution payable to holders of its Common Stock (other than
            dividends payable out of the Corporation's retained earnings or
            earned surplus and dividends payable in shares of Common Stock or in
            securities convertible into or exchangeable for shares of Common
            Stock or rights or warrants to purchase Common Stock or securities
            convertible into or exchangeable for shares of Common Stock or any
            other securities issued by the Corporation), the Conversion Rate in
            effect immediately prior to the record date for such dividend or
            distribution shall be proportionately adjusted so that the Holder
            shall be entitled to receive the number of shares of Common Stock
            into which such shares of Common Stock or Preferred Stock was
            convertible immediately prior to such record date multiplied by a
            fraction, the numerator of which is the fair market value of a share
            of Common Stock on such record date and the denominator of which is
            such per share fair market value of a share of Common Stock on such
            record date less the fair market value on such record date of the
            securities or other property which are distributed as a dividend or
            other distribution. The term

                                       11



            "fair market value" of a share of Common Stock or of any other
            security or other type of property on any date means (A) in the case
            of Common Stock or any other security (I) if the principal trading
            market for such Common Stock or other security is an exchange or the
            NASDAQ national market on such date, the closing price on such
            exchange or the NASDAQ national market on such date, provided, if
            trading of such Common Stock or other security is listed on any
            consolidated tape, the fair market value shall be the closing price
            set forth on such consolidated tape on such date, or (II) if the
            principal market for such Common Stock or other security is the
            over-the-counter market (other than the NASDAQ national market) the
            mean between the closing bid and asked prices on such date as set
            forth by NASDAQ or (B) in the case of Common Stock or any other
            security for which the fair market value cannot be determined
            pursuant to clause (A) above or of any other security or type of
            property, fair market value thereof on such date as determined in
            good faith by the Board of Directors.

               (viii) Whenever the Conversion Rate is adjusted pursuant to this
            paragraph (7)(f), the Stipulated Price shall also be adjusted by
            multiplying it by a fraction that is the reciprocal of the fraction
            used to adjust the Conversion Rate.

               (ix)   The Corporation will not, by amendment of its Articles of
            Incorporation or through any dissolution, issuance or sale of
            securities or any other voluntary action, avoid or seek to avoid the
            observance or performance of any of the terms to be observed or
            performed hereunder by the Corporation, but at all times in good
            faith will assist in the carrying out of all the provisions of this
            paragraph and in the taking of all such action as may be necessary
            or appropriate in order to protect the conversion rights of the
            Holder against impairment.

               (x)    No adjustment in the Conversion Rate shall be required,
            unless such adjustment would require an increase or decrease of at
            least one (1) share of Common Stock in the Conversion Rate of one
            share of Series II Class B Preferred Stock, provided that all
            adjustments which do not meet this minimum requirement shall be
            cumulated and the adjustment will be made when the cumulated total
            is sufficient to require an adjustment. All calculations made
            pursuant to this subparagraph (x) of paragraph (7)(f) shall be made
            to the nearest one-hundredth (1/100th) of a share of Common Stock.

     g. Fractional Shares. No fractional shares of Common Stock or scrip
        -----------------
representing fractional shares of Common Stock shall be issued upon any
conversion of shares of Series II Class B Preferred Stock but, in lieu thereof,
there shall be paid an amount in cash equal to the same fraction of the current
market price of a whole share of Common Stock on the day

                                       12



preceding the day of conversion.

     h. Statement to Transfer Agent. Whenever the Conversion Rate for shares
        ---------------------------
of Series II Class B Preferred Stock shall be adjusted pursuant to the
provisions of paragraph (7)(f) hereof, the Corporation shall forthwith maintain
at its office and, if applicable, file with the Transfer Agent for shares of
Series II Class B Preferred Stock and for shares of Common Stock, a statement
signed by the President or a Vice President of the Corporation and by its
Treasurer or an Assistant Treasurer, stating the adjusted Conversion Rate and
setting forth in reasonable detail the method of calculation and the facts
requiring such adjustment, such calculations to be confirmed by the
Corporation's independent auditors, and stating the faces on which the
calculation is based. Each adjustment shall remain in effect until a subsequent
adjustment hereunder is required.

     8. Registration Rights.
        -------------------

        a. Piggyback Registration. The Corporation, for a period ending six
           ----------------------
months after the last share of Series II Class B Preferred Stock is redeemed,
retired, converted or otherwise no longer outstanding, will give written notice
to the Holder not less than 20 days in advance of the initial filing of any
registration statement under the Securities Act of 1933 (other than a
registration Statement pertaining to securities issuable pursuant to employee
stock option, stock purchase, or similar plans or a registration statement
pertaining to securities issuable in connection with the acquisition of a
business, whether through merger, consolidation, acquisition of assets, or
exchange of securities) covering any Common Stock or other securities of the
Corporation, and will afford the Holder the opportunity to have included in such
registration all or such part of the shares of Common Stock acquired upon
conversion of Series II Class B Preferred Stock, as may be designated by written
notice to the Corporation not later than 10 days following receipt of such
notice from the Corporation. The Corporation shall be entitled to exclude the
shares of Common Stock held by the Holder from any one, but not more than one,
such registration if the Corporation is advised by its investment banking firm
that the inclusion of such shares will, in the opinion of such investment
banking firm, materially interfere with the orderly sale and distribution of the
securities being offered under such registration statement by the Corporation.
Notwithstanding the foregoing, the Corporation shall not be entitled to exclude
the shares of Common Stock held by the Holder if shares of other shareholders
are being included in any such registration statement and, in such
circumstances, the Holder shall be entitled to include the shares of Common
Stock held by them on a pro rata basis in the proportion that the number of
shares of Common Stock held by the Holder bears to the shares of Common Stock
held by all other shareholders, including shares in such registration statement.
The Holder shall not be entitled to include shares in more than two registration
statement pursuant to the provisions of this subdivision a of paragraph (8), and
all rights of the Holder under this subdivision a of paragraph (8) shall
terminate after the Holder has included shares of Common Stock in two
registration statements pursuant to this subdivision a of paragraph (8).

                                       13



     b. Expenses. The Corporation will pay all out-of-pocket costs and
        --------
expenses of any registration effected pursuant to the provisions of subdivision
(a) of this paragraph 8, including registration fees, legal fees, accounting
fees, printing expenses (including such number of any preliminary and the final
prospectus as may be reasonably requested), blue sky qualification fees and
expenses, and all other expenses, except for underwriting commissions or
discounts applicable to the shares of Common Stock being sold by the Holder and
the fees of counsel for the Holder, all of which shall be paid by the Holder.

     c. Notwithstanding anything to the contrary contained herein, in the event
that the Corporation files an initial registration statement under the
Securities Act of 1933, as amended (other than a registration statement
pertaining to securities issuable in connection with the acquisition of a
business, whether through merger, consolidation, acquisition of assets or
exchange of securities) concerning any Common Stock of the Corporation, it will
afford the Holder the opportunity to convert his shares into that number of
fully paid and non-assessable shares of Common Stock prior to the three year
holding period stated in paragraph 7 above. The Corporation may also, at its
option, accelerate its redemption rights pursuant to paragraph 4 above in the
event that the Corporation files an initial registration statement under the
Securities Act of 1933, as amended.

     9. Reports.
        -------

     So long as any of the Series II Class B Preferred Stock shall be
outstanding, the Corporation shall submit to the Holder financial reports no
less frequently than annually.

     10. Miscellaneous.
         -------------

         a. As used herein, the term "Common Stock" shall mean the
Corporation's Common Stock, no par value, or, in the case of any
reclassification or change of outstanding shares of Common Stock, the stock or
securities issued in exchange for such Common Stock. The term "Common Stock"
shall also include any capital stock of the Corporation authorized after June
15, 1995 which shall not be limited to a fixed sum or sums or percentage or
percentages of par value in respect of the rights of the holders thereof to
participate in dividends or in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation.

         b. The shares of Series II Class B Preferred Stock shall be fully
transferable by the Holder thereof, subject to compliance with the applicable
provisions of federal and state securities laws.

                                       14



     IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate
seal to be hereunto affixed and this Certificate to be signed by its President
and Secretary this 10th day of May, 1997.



                                        /s/ Thomas J. Shaw
                                        ----------------------------------------
                                        President

ATTEST:

/s/ Shayne Blythe
- ----------------------------
Secretary

                                       15



                                                                       EXHIBIT D

                                                                FILED
                                                         In the Office of the
                                                     Secretary of State of Texas
                                                             JUL 29 1998
                                                        Corporations Section


        CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND LIMITATIONS
             OF THE SERIES III CLASS B CONVERTIBLE PREFERRED STOCK
                                       OF
                         RETRACTABLE TECHNOLOGIES, INC.

Pursuant to the Article 2.13 of the Texas Business Corporation Act and Article
Four of its Articles of Incorporation, Retractable Technologies, Inc., a
corporation organized and existing under the laws of the State of Texas (the
Corporation),

DOES HEREBY CERTIFY that pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Articles of Incorporation, as amended, and
pursuant to the Texas Business Corporation Act, said Board of Directors, by
unanimous written consent executed July 2, 1998, adopted a resolution providing
for the creation of a series of Preferred Stock consisting of not more than two
million (2,000,000) shares of Series III Class B Convertible Preferred Stock,
which resolution is and reads as follows:

RESOLVED that, pursuant to the authority provided in the Corporation's Articles
of Incorporation and expressly granted to and vested in the Board of Directors
of Retractable Technologies, Inc. (the "Corporation"), the Board of Directors
hereby creates out of the Preferred Stock, par value one ($1.00) dollar per
share, of the Corporation a series of Preferred Stock called the Series III
Class B Preferred Stock, consisting of not more than two million (2,000,000)
shares, and the Board of Directors hereby fixes the designation and the powers,
preference and rights, and the qualifications, limitations and restrictions
thereof, to the extent not otherwise provided in the Corporation's
qualifications, limitations and restrictions thereof, to the extent not
otherwise provided in the Corporation's Articles of Incorporation, as follows:

1.   Designation of series. The designation of the series of Preferred Stock
     created by this resolution shall be "Series III Class B Convertible
     Preferred Stock" (the "Series III Class B Preferred Stock").

2.   Dividends on Series III Class B Preferred Stock.

     a.   Dividend Amount. The holders of the Series III Class B Preferred Stock
          shall be entitled to receive, in any calendar year, if when and as
          declared by the Board of Directors, out of any assets at the time
          legally available therefor and subject to the further limitations set
          out herein, dividends at the per annum rate of $1.00 per share, all
          such dividends due quarterly in arrears as of the last day of each
          March, June, September and December of each year, the first dividend
          being declarable on December 31, 1998. On each date which a dividend
          may be declared is hereafter called the "Dividend Date," and each
          quarterly period ending with a Dividend Date is hereinafter referred
          to as the "Dividend Period." Dividends shall be payable fifteen
          calendar days after the Dividend Due Date, provided however, that
          if such date on which a dividend is payable is a Saturday, Sunday or
          legal holiday, such dividend shall be payable on the next following
          business day to the holders of record (whether singular or plural, the
          "Holder").

     b.   Dividends Cumulative. Dividends upon the Series III Class B Preferred
          Stock shall be accrued and be cumulative, whether or not in any
          Dividend Period or Periods there shall be funds of the Corporation
          legally available for the payment of such dividends.

     c.   Dividend Accrual. On each Dividend Due Date all dividends which shall
          have accrued since the last Dividend Due Date on each share of Series
          III Class B Preferred Stock outstanding on such Dividend Due Date
          shall accumulate and be deemed to become "due." Any dividend which
          shall not be paid on the Dividend Due Date on which it shall become
          due shall be deemed to be "past due" until such dividend shall be paid
          or until the share of Series III Class B Preferred Stock with respect
          to which such dividend became due shall no longer be outstanding,
          whichever is the earlier to occur. No interest, sum of money in lieu
          of interest or other property or securities shall be payable in
          respect of any dividend payment or payments which are past due.
          Dividends paid on shares of Series III Class B Preferred Stock in an
          amount less that the total amount of such dividends at the time
          accumulated and payable on such shares shall be allocated pro rata on
          a share-by-share basis among all such shares

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          at the time outstanding. Dividend payments made with respect to a
          Dividend Due Date shall be deemed to be made in payment of the
          dividends which became due on that Dividend Due Date.

     d.   Dividend Arrearage. If a dividend upon any shares of Series III Class
          B Preferred Stock is in arrears, all dividends or other distributions
          declared upon shares of the Series III Class B Preferred Stock (other
          than dividends paid in stock of the Corporation ranking junior to the
          Series III Class B Preferred Stock as to dividends and upon
          liquidation, dissolution or winding up) may only be declared pro rata.
          Except as set forth above, if a dividend upon any shares of Series III
          Class B Preferred Stock is in arrears: (i) no dividends (in cash,
          stock or other property) may be paid or declared and set aside for
          payment or any other distribution made upon any stock of the
          Corporation ranking junior to the Series III Class B Preferred Stock
          as to dividends (other than dividends of distributions in stock of the
          Corporation ranking junior to the Series III Class B Preferred Stock
          as to dividends and upon liquidation, dissolution or winding up); and
          (ii) no stock of the Corporation ranking junior to the Series III
          Class B Preferred Stock as to dividends may be (A) redeemed pursuant
          to a sinking fund or otherwise, except (1) by means of redemption
          pursuant to which all outstanding shares of the Series III Class B
          Preferred Stock are redeemed, or (2) by conversion of any such junior
          stock into, or exchange of any such junior stock into, or exchange of
          any such junior stock for stock of the Corporation ranking junior to
          the Series III Class B Preferred Stock as to dividends and upon
          liquidation, dissolution or winding up, or (B) purchased or otherwise
          acquired for any consideration by the Corporation except (1) pursuant
          to an acquisition made pursuant to the terms of one or more offers to
          purchase all of the outstanding shares of the Series III Class B
          Preferred Stock, which offers shall each have been accepted by the
          holders of at least 50% of the shares of the Series III Class B
          Preferred Stock receiving such offer outstanding at the commencement
          of the first of such purchase offers, or (2) by conversion into or
          exchange for stock of the Corporation ranking junior to the Series III
          Class B Preferred Stock as to dividends and upon liquidation or
          winding up.

3.   General, Class and Series Voting Rights. Except as provided in this Section
     3, or as otherwise from time to time required by law, the Series III Class
     B Preferred Stock shall have no voting rights.

     So long as any shares of Series III Class B Preferred Stock remain
     outstanding, the consent of the holders of at least fifty-one (51%) percent
     of the shares of Series III Class B Preferred Stock outstanding at the time
     voting separately as a class, given in person or by proxy, either in
     writing at any special or annual meeting called for the purpose, shall be
     necessary to permit, effect or validate any one or more of the following:

     (i)  The authorization, creation or issuance, or any increase in the
          authorized or issued amount, of any class or series of stock
          (including any class or series of Preferred Stock) ranking equal or
          prior (as the terms are hereinafter defined in this Section 3) to the
          Series III Class B Preferred Stock; or

     (ii) The amendment, alteration, or repeal, whether by merger, consolidation
          or otherwise, of any of the provisions of the Articles of
          Incorporation or of this resolution which would alter or change the
          powers, preferences or special rights of the shares of the Series III
          Class B Preferred Stock so as to affect them adversely; provided,
          however, that any increase in the amount of authorized Preferred
          Stock, or the creation and issuance of other series of Preferred stock
          ranking junior to the Series III Class B Preferred Stock with respect
          to the payment of dividends and the distribution of assets upon
          liquidation, dissolution or winding up, shall not be deemed to
          adversely affect such powers, preferences or special rights.

     The foregoing voting provisions shall not apply if, at or prior to the time
     when the act with respect to which such vote would otherwise be required
     shall be effected, all outstanding shares of Series III Class B Preferred
     Stock shall have been redeemed or sufficient funds shall have been
     deposited in trust to effect such redemption.

4.   Redemption. The outstanding shares of Series III Class B Preferred Stock
     shall be nonredeemable prior to the lapse of three (3) years from the date
     of issuance. On and after such date, the Series III Class B Preferred Stock
     may be redeemed at the option of the Corporation, as a whole at any time or
     in part from time to time, at the Redemption Price of $15.00 per share plus
     all dividends (whether or not declared or due) accrued and unpaid to the
     date of redemption

PRIVATE PLACEMENT MEMORANDUM
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     (subject to the right of the holder of record of shares of Series III Class
     B Preferred Stock on a record date for the payment of a dividend on the
     Series III Class B Preferred Stock to receive the dividend due on such
     shares of Series III Class B Preferred Stock on the corresponding Dividend
     Due Date).

     No sinking fund shall be established for the Series III Class B Preferred
     Stock.

     Notice of any proposed redemption of shares of Series III Class B Preferred
     Stock shall be mailed by means of first class mail, postage paid, addressed
     to the holders of record of the shares of Series III Class B Preferred
     Stock to be redeemed, at their respective addresses then appearing on the
     books of the Corporation, at least thirty (30) days but not more than sixty
     (60) days prior to the date fixed for such redemption (herein referred to
     as the "Redemption Date"). Each such notice shall specify (i) the
     Redemption Date; (ii) the Redemption Price; (iii) the place for payment and
     for delivering the stock certificate(s) and transfer instrument(s) in order
     to collect the Redemption Price; (iv) the shares of Series III Class B
     Preferred Stock to be redeemed; and (v) the then effective Conversion Price
     (as defined below) and that the right of holders of shares of Series III
     Class B Preferred Stock being redeemed to exercise their Conversion right
     shall terminate as to such shares at the close of business on the fifth day
     before the Redemption Date, provided that no default by the Corporation in
     the payment of the applicable Redemption Price (including any accrued and
     unpaid dividends) shall have occurred and be continuing. Any notice mailed
     in such manner shall be conclusively deemed to have been duly given whether
     or not such notice is, in fact, received. If less than all the outstanding
     shares of Series III Class B Preferred Stock are to be redeemed, the
     Corporation will select those to be redeemed by lot or by a substantially
     equivalent method. In order to facilitate the redemption of Series III
     Class B Preferred Stock to be redeemed, notice of any such proposed
     redemption, shall not be more than sixty (60) days prior to the Redemption
     Date with respect thereto.

     The holder of any shares of Series III Class B Preferred Stock redeemed
     upon any exercise of the Corporation's redemption right shall not be
     entitled to receive payment of the Redemption Price for such shares until
     such holder shall cause to be delivered to the place specified in the
     notice given with respect to such redemption (i) the certificate(s)
     representing such shares of Series III Class B Preferred Stock; and (ii)
     transfer instrument(s) satisfactory to the Corporation and sufficient to
     transfer such shares free of any adverse interest. No interest shall accrue
     on the Redemption Price of any share of Series III Class B Preferred Stock
     after its Redemption Date.

     Subject to Section 2 hereof, the Corporation shall have the right to
     purchase shares of Series III Class B Preferred Stock from the owner of
     such shares on such terms as may be agreeable to such owner. Shares of
     Series III Class B Preferred Stock may be acquired by the Corporation from
     any stockholder pursuant to this paragraph without offering any other
     stockholder an equal opportunity to sell his stock to the Corporation, and
     no purchase by the Corporation from any stockholder pursuant to this
     paragraph shall be deemed to create any right on the part of any
     stockholder to sell any shares of Series III Class B Preferred Stock (or
     any other stock) to the Corporation.

     Notwithstanding the foregoing provisions of this Section 4, and subject to
     the provisions of Section 2 hereof, if a dividend upon any shares of Series
     III Class B Preferred Stock is past due, (i) no shares of the Series III
     Class B Preferred Stock may be redeemed, except (A) by means of a
     redemption pursuant to which all outstanding shares of the Series III Class
     B Preferred Stock are simultaneously redeemed (or offered to be so
     redeemed) or pursuant to which the outstanding shares of the Series III
     Class B Preferred Stock are redeemed on a pro rata basis (or offered to be
     so redeemed), or (B) by conversion of shares of Series III Class B
     Preferred Stock into, or exchange of such shares for, Common Stock or any
     other stock of the Corporation ranking junior to the Series III Class B
     Preferred Stock as to dividends and upon liquidation, dissolution or
     winding up.

5.   Liquidation. In the event of any voluntary or involuntary dissolution,
     liquidation or winding up of the Corporation (for the purposes of this
     Section 5, a "Liquidation"), before any distribution of assets shall be
     made to the holders of the Common Stock or the holders of any other stock
     that ranks junior to the Series III Class B Preferred Stock in respect
     of distributions upon the Liquidation of the Corporation, the holder of
     each share of Series III Class B Preferred Stock then outstanding shall be
     entitled to $12.50 per share plus all dividends (whether or not declared or
     due) accrued

PRIVATE PLACEMENT MEMORANDUM
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RETRACTABLE TECHNOLOGIES, INC.
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RTIPVTPL. July 10, 1998                   65



     and unpaid on such share on the date fixed for the distribution of assets
     of the Corporation to the holders of Series III Class B Preferred Stock.

     If upon any Liquidation of the Corporation, the assets available for
     distribution to the holder of Series III Class B Preferred Stock which
     shall then be outstanding (hereinafter in this paragraph called the "Total
     Amount Available") shall be insufficient to pay the holders of all
     outstanding shares of Series III Class B Preferred Stock the full amounts
     (including all dividends accrued and unpaid) to which they shall be
     entitled by reason of such Liquidation of the Corporation, then there shall
     be paid ratably to the holders of the Series III Class B Preferred Stock in
     connection with such Liquidation of the Corporation, an amount equal to
     each holder's pro rata share of the Total Amount Available.

     The voluntary sale, conveyance, lease, exchange or transfer of all or
     substantially all the property or assets of the Corporation, or the merger
     or consolidation of the Corporation into another Corporation, or any
     purchase or redemption of some or all of the shares of any class or series
     of stock of the Corporation, shall not be deemed to be a Liquidation of the
     Corporation for the purposes of this Section 6 (unless in connection
     therewith the Liquidation of the Corporation is specifically approved).

6.   Conversion Privilege. At any time subsequent to three years after issuance
     of any share of Series III Class B Preferred Stock, the holder of any share
     of Series III Class B Preferred Stock ("Holder") shall have the right, at
     such Holder's option (but if such share is called for redemption or
     exchange at the election of the Corporation, then in respect of such share
     only to and including but not after the close of business on (i) the fifth
     calendar day before the date fixed for such redemption; or (ii) the date
     fixed for such exchange, provided that the Corporation has set aside funds
     sufficient to effect such redemption) to convert such share into that
     number of fully paid and non-assessable shares of Common Stock (calculated
     as to each conversion to the nearest 1/100th of a share) obtained by
     dividing $10.00 by the Conversion Rate then in effect.

     a.   Conversion Rate. Each share of Series III Class B Preferred Stock may
          be converted, subject to the terms and provisions of this paragraph 6
          into one (1) share of the Corporation's Common Stock, which is a price
          equal to one share of Common Stock for each $10.00 of Series III Class
          B Preferred Stock or, in case an adjustment of such rate has taken
          place pursuant to the provisions of subdivision (f) of this paragraph
          6, then at the Conversion Rate as last adjusted (such rate or adjusted
          rate, shall be expressed as the number of shares of Common Stock to be
          acquired upon conversion of one share of Series III Class B Preferred
          Stock, and shall be referred to herein as the "Conversion Rate"). Each
          share of Series III Class B Preferred Stock shall be Convertible into
          Common Stock by surrender to the Corporation of the certificate
          representing such shares of Series III Class B Preferred Stock to be
          converted by the Holder and by giving written notice to the
          Corporation of the Holder's election to convert.

          The Corporation shall, as soon as practicable after receipt of such
          written notice and the proper surrender to the Corporation of the
          certificate or certificates representing shares of Series III Class B
          Preferred Stock to be converted in accordance with the above
          provisions, issue and deliver for the benefit of the Holder at the
          office of the Corporation's duly appointed transfer agent (the
          "Transfer Agent") to the Holder for whose account such shares of
          Series III Class B Preferred Stock were so surrendered or to such
          Holder's nominee or nominees, certificates for the number of shares of
          Common Stock to which the Holder shall be entitled. The certificates
          of Common Stock of the Corporation issued upon conversion shall bear
          such legends as may be required by state or federal laws. Such
          conversion shall be deemed to have been effective immediately prior to
          the close of business on the date on which the Corporation shall have
          received both such written notice and the properly surrendered
          certificates for shares of Series III Class B Preferred Stock to be
          converted (the "Conversion Date"), and at such time the rights of the
          Holder shall cease and the person or persons entitled to receive the
          shares of Common Stock issuable upon the conversion of such shares of
          Series III Class B Preferred Stock shall be deemed to be, and shall be
          treated for all purposes as, the record Holder or Holders of such
          Common Stock on the Conversion Date. The Corporation shall not be
          required to convert, and no surrender of shares of Series III Class B
          Preferred Stock or written notice of conversion with respect thereto
          shall be effected for that purpose, while the stock transfer books of
          the Corporation are closed for any reasonable business purpose for any
          reasonable period of time, but shall be required to convert upon the
          proper surrender of shares of Series III Class B Preferred Stock for
          conversion

PRIVATE PLACEMENT MEMORANDUM
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RTIPVTPL. July 10, 1998                   66



          immediately upon the reopening of such books. During the period in
          which the stock transfer books of the Corporation are closed, the
          Corporation may neither declare a dividend, declare a record date for
          payment of dividends nor make any payment of dividends.

     b.   Dividends. If any shares of Series III Class B Preferred Stock shall
          be converted during any dividend payment period, the Holder shall be
          entitled to all dividends accrued up to and through such Conversion
          Date, at the rate set forth herein, whether or not there has been a
          dividend date, as set forth in paragraph 2 hereof.

     c.   Cancellation. Series III Class B Preferred Stock converted into Common
          stock pursuant to the provisions of this paragraph 6 shall be retired
          and cancelled by the Corporation and given the status of authorized
          and unissued preferred stock.

     d.   Reissuance if Conversion is Partial. In the case of any certificate
          representing shares of Series III Class B Preferred Stock which is
          surrendered for conversion only in part, the Corporation shall issue
          and deliver to the Holder a new certificate or certificates for Series
          III Class B Preferred Stock of such denominations as requested by the
          Holder in the amount of Series III Class B Preferred Stock equal to
          the unconverted shares of the Series III Class B Preferred Stock
          represented by the certificate so surrendered.

     e.   Reservations of Shares. The Corporation shall at all times during
          which shares of Series III Class B Preferred Stock may be converted
          into Common Stock as provided in this paragraph (e), reserve and keep
          available, out of any Common Stock held as treasury stock or out of
          its authorized and unissued Common Stock, or both, solely for the
          purpose of delivery upon conversion of the shares of Series III Class
          B Preferred Stock as herein provided, such number of shares of Common
          Stock as shall then be sufficient to effect the conversion of all
          shares of Series III Class B Preferred Stock from time to time
          outstanding, and shall take such action as may from time to time be
          necessary to ensure that such shares of Common Stock will, when issued
          upon conversion of Series III Class B Preferred Stock, be fully paid
          and nonassessable.

     f.   Adjustment of Conversion Rate. The Conversion Rate provided in
          subdivision (a) of this paragraph 6, in respect of Series III Class B
          Preferred Stock, shall be subject to adjustments from time to time as
          follows:

          (i)   While any shares of Series III Class B Preferred Stock shall be
                outstanding, in case the Corporation shall subdivide the
                outstanding shares of Common Stock into a greater number of
                shares of Common Stock or combine the outstanding shares of
                Common Stock into a smaller number of shares of Common Stock, or
                issue, by reclassification of its shares of Common Stock, any
                shares of the Corporation, the Conversion Rate in effect
                immediately prior thereto shall be adjusted so that the Holder
                shall be entitled to receive the number of shares which it would
                have owned or been entitled to receive after the happening of
                any of the events described above, had such shares of Series III
                Class B Preferred Stock been converted immediately prior to the
                happening of such event, such adjustment to become effective
                immediately after the opening of business on the day following
                the day upon which such subdivision or combination or
                reclassification, as the case may be, becomes effective.

          (ii)  In case the Corporation shall be consolidated with, or merge
                into, any other corporation, and the Corporation does not
                survive, proper provisions shall be made as a part of the terms
                of such consolidation or merger, whereby the Holder shall
                thereafter be entitled, upon exercise of such Holder's
                conversion rights, to receive the kind and amount of shares of
                stock or other securities of the Corporation resulting from such
                consolidation or merger, or such other property, as the Holder
                would have received if such conversion rights were exercised
                immediately prior to the effectiveness of such merger or
                consolidation.

          (iii) In the event the Corporation at any time, or from time to time
                after August 1, 1998 makes or issues, or fixes a record date for
                the determination of holders of Common Stock entitled to
                receive, a dividend or other distribution payable in additional
                shares of Common Stock or Common Stock Equivalents (as defined
                herein) which does not provide for the payment of any
                consideration upon the issuance, conversion or exercise

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               thereof, without a corresponding dividend or other distribution
               to the Holder, based upon the number of shares of Common Stock
               into which the Series III Class B Preferred Stock is convertible,
               then and in each such event the Conversion Rate then in effect
               will be increased as of the time of such issuance or, in the
               event such a record date shall have been fixed, as of the close
               of business on such record date, by multiplying such Conversion
               rate by a fraction:

               (A)  The numerator of which will be the total number of shares of
                    Common Stock issued and Outstanding immediately prior to the
                    time of such issuance or the close of business on such
                    record date plus the number of shares of Common Stock
                    issuable in payment of such dividend or distribution (which,
                    in the case of Common Stock Equivalents, shall mean the
                    maximum number of shares of Common Stock issuable with
                    respect thereto, as set forth in the instrument relative
                    thereto without regard to any provision for subsequent
                    adjustment); and

               (B)  The denominator of which will be the total number of shares
                    of Common Stock issued and outstanding immediately prior to
                    the time of such issuance or the close of business on such
                    record date; provided, however, that if such record date is
                    fixed and such dividend is not fully paid or if such
                    distribution is not fully made on the date fixed therefor,
                    the Conversion Rate will be recomputed accordingly as of the
                    close of business on such record date, and thereafter such
                    Conversion Rate will be adjusted pursuant to this
                    subparagraph (iii) as of the time of actual payment of such
                    dividends or distributions.

          (iv)  In the event the Corporation at any time or from time to time
                after August 1, 1998 makes or issues, or fixes a record date for
                the determination of holders of Common Stock entitled to receive
                a dividend or other distribution payable to all holders of
                Common Stock in securities of the Corporation or Common Stock
                Equivalents, then, upon making such dividend or distribution
                provisions will be made so that the Holder will receive the
                amount of securities of the Corporation which it would have
                received had its Series III Class B Preferred Stock been
                converted into Common Stock on the date of such event.

          (v)   In the event the Corporation sells or issues any Common Stock,
                or sells or issues Common Stock Equivalents which can be
                converted into Common Stock at a per share consideration (as
                defined below in this subparagraph (v) of paragraph 6(f) less
                than the Stipulated Price then in effect, then the Holder shall
                be entitled to purchase from the Corporation in cash (for the
                same per share consideration at which such Common Stock was
                issued or the per share price at which a share of Common Stock
                is acquirable upon exercise or conversion of Common Stock
                Equivalents) that additional number of shares of Common Stock
                which, when added to the number of shares of Common Stock
                acquirable by the Holder upon conversion of any shares of Series
                III Class B Preferred Stock outstanding and held by such Holder
                immediately before such issue or sale (the "Acquirable Shares"),
                will equal a percentage of the number of shares of Common Stock
                Deemed Outstanding (as defined herein) immediately after such
                sale or issuance that is the same as the percentage of the
                number of shares of Common Stock Deemed Outstanding immediately
                before such issuance or sale represented by the Acquirable
                Shares. This right shall exist for a forty-five-day period
                following the sale or issuance of shares of Common Stock or
                Common Stock Equivalents, and thereafter shall cease to exist.

                For the above purposes, the per share consideration with respect
                to the sale or issuance of Common Stock will be the price per
                share received by the Corporation, prior to the payment of any
                expenses, commissions, discounts and other applicable costs.
                With respect to the sale or issuance of Common Stock Equivalents
                which are convertible into or exchangeable for Common Stock
                without further consideration, the per share consideration will
                be determined by dividing the maximum number of shares of Common
                Stock issuable with respect to such Common Stock Equivalents (as
                set forth in the instrument relating thereto without regarding
                to any provisions contained therein for subsequent adjustment of
                such number) into the aggregate consideration receivable by the
                Corporation upon the sale or issuance of such Common Stock
                Equivalents. With respect to the issuance of other Common Stock
                Equivalents, the per share consideration will be determined by
                dividing the maximum number of shares of Common Stock issuable
                with respect to such Common Stock Equivalents into the total
                aggregate consideration received by the Corporation upon the
                sale

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RTIPVTPL. July 10, 1998                68



            or issuance of such Common Stock Equivalents plus the minimum
            aggregate amount of additional consideration received by the
            Corporation upon the conversion or exercise of such Common Stock
            Equivalents. In connection with the sale or issuance of Common Stock
            and/or Common Stock Equivalents for non-cash consideration, the
            amount of consideration will be the fair market value of such
            consideration as determined in good faith by the Board of Directors
            of the Corporation.

     (vi)   As used herein, the term "Stipulated Price" means initial price of
            $10.00 per share of Common Stock, as adjusted from time to time
            pursuant to subparagraph (viii) of this paragraph 6(f); and the term
            "Common Stock Equivalent" means any securities (whether debt or
            equity securities) or rights issued by the Corporation convertible
            into or entitling the holder thereof to receive shares of, or
            securities convertible into, Common Stock. The number of shares of
            "Common Stock Deemed Outstanding" at any date shall equal the sum of
            the number of shares of Common Stock then outstanding plus the
            number of shares of Common Stock then obtainable pursuant to Common
            Stock Equivalents.

     (vii)  In the event the Corporation declares any dividend or distribution
            payable to holders of its Common Stock (other than dividends payable
            out of the Corporation's retained earnings or earned surplus and
            dividends payable in shares of Common Stock or in securities
            convertible into or exchangeable for shares of Common Stock or
            rights or warrants to purchase Common Stock or securities
            convertible into or exchangeable for shares of Common Stock or
            securities convertible into or exchangeable for shares of Common
            Stock or any other securities issued by the Corporation), the
            Conversion Rate in effect immediately prior to the record date for
            such dividend or distribution shall be proportionately adjusted so
            that the Holder shall be entitled to receive the number of shares of
            Common Stock into which such shares of Common Stock or Preferred
            Stock was convertible immediately prior to such record date
            multiplied by a fraction, the numerator of which is the fair market
            value of a share of Common Stock on such record date and the
            denominator of which is such per share fair market value of a share
            of Common Stock on such record date less the fair market value on
            such record date of the securities or other property which are
            distributed as a dividend or other distribution. The term "fair
            market value" of a share of Common Stock or of any other security or
            other type of property on any date means (A) in the case of Common
            Stock or any other security (I) if the principal trading market for
            such Common Stock or other security is an exchange or the NASDAQ
            national market on such date, the closing price on such exchange or
            the NASDAQ national market on such date, provided, if trading of
            such Common Stock or other security is listed on any consolidated
            tape, the fair market value shall be the closing price set forth on
            such consolidated tape on such date, or (II) if the principal market
            for such Common Stock or other security is the over-the-counter
            market (other than the NASDAQ national market) the mean between the
            closing bid and asked prices on such date as set forth by NASDAQ or
            (B) in the case of Common Stock or any other security for which the
            fair market value cannot be determined pursuant to clause (A) above
            or of any other security or type of property, fair market value
            thereof on such date as determined in good faith by the Board of
            Directors.

     (viii) Whenever the Conversion Rate is adjusted pursuant to this paragraph
            6(f), the Stipulated Price shall also be adjusted by multiplying it
            by a fraction that is the reciprocal of the fraction used to adjust
            the Conversion Rate.

     (ix)   The Corporation will not, by amendment of its Articles of
            Incorporation or through any dissolution, issuance or sale of
            securities or any other voluntary action, avoid or seek to avoid the
            observance or performance of any of the terms to be observed or
            performed hereunder by the Corporation, but at all times in good
            faith will assist in the carrying out of all the provisions of this
            paragraph and in the taking of all such action as may be necessary
            or appropriate in order to protect the conversion rights of the
            Holder against impairment.

     (x)    No adjustment in the Conversion Rate shall be required, unless such
            adjustment would require an increase or decrease of at least one (1)
            share of Common Stock in the Conversion Rate of one share of Series
            III Class B Preferred Stock, provided that all adjustments which do
            not meet this minimum requirement shall be cumulated and the
            adjustment will be made when the cumulated total is sufficient to
            require an adjustment.

PRIVATE PLACEMENT MEMORANDUM
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RETRACTABLE TECHNOLOGIES, INC.
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RTIPVTPL. July 10, 1998                   69



              All calculations made pursuant to this subparagraph (x) of
              paragraph 6(f) shall be made to the nearest one-hundredth
              (1/100th) of a share of Common Stock.

     g.   Fractional Shares. No fractional shares of Common Stock or scrip
          representing fractional shares of Common Stock shall be issued upon
          any conversion of shares of Series III Class B Preferred Stock but, in
          lieu thereof, there shall be paid an amount in cash equal to the same
          fraction of the current market price of a whole share of Common Stock
          on the day preceding the day of conversion.

     h.   Statement to Transfer Agent. Whenever the Conversion Rate for shares
          of Series III Class B Preferred Stock shall be adjusted pursuant to
          the provisions of paragraph 6(f) hereof, the Corporation shall
          forthwith maintain at its office and, if applicable, file with the
          Transfer Agent for shares of Series III Class B Preferred Stock and
          for shares of Common Stock, a statement signed by the President or a
          Vice President of the Corporation and by its Treasurer or an Assistant
          Treasurer, stating the adjusted Conversion Rate and setting forth in
          reasonable detail the method of calculation and the facts requiring
          such adjustment, such calculations to be confirmed by the
          Corporation's independent auditors, and stating the facts on which the
          calculation is based. Each adjustment shall remain in effect until a
          subsequent adjustment hereunder is required.

7.   Registration Rights.

     a.   Piggyback Registration. The Corporation, for a period ending six
          months after the last share of Series III Class B Preferred Stock is
          redeemed, retired, converted or otherwise no longer outstanding, will
          give written notice to the Holder not less than 20 days in advance of
          the initial filing of any registration statement under the Securities
          Act of 1933 (other than a registration Statement pertaining to
          securities issuable pursuant to employee stock option, stock purchase,
          or similar plans or a registration statement pertaining to securities
          issuable in connection with the acquisition of a business, whether
          through merger, consolidation, acquisition of assets, or exchange of
          securities) covering any Common Stock or other securities of the
          Corporation, and will afford the Holder the opportunity to have
          included in such registration all or such part of the shares of Common
          Stock acquired upon conversion of Series III Class B Preferred Stock,
          as may be designated by written notice to the Corporation not later
          than 10 days following receipt of such notice from the Corporation.
          The Corporation shall be entitled to exclude the shares of Common
          Stock held by the Holder from any one, but not more than one, such
          registration if the Corporation in its sole discretion decides that
          the inclusion of such shares will materially interfere with the
          orderly sale and distribution of the securities being offered under
          such registration statement by the Corporation. Notwithstanding the
          foregoing, the Corporation shall not be entitled to exclude the shares
          of Common Stock held by the Holder if shares of other shareholders are
          being included in any such registration statement and, in such
          circumstances, the Holder shall be entitled to include the shares of
          Common Stock held by them on a pro rata basis in the proportion that
          the number of shares of Common Stock held by the Holder bears to the
          shares of Common Stock held by all other shareholders, including
          shares in such registration statement. The Holder shall not be
          entitled to include shares in more than two registration statement
          pursuant to the provisions of this subdivision (a) of paragraph 7, and
          all rights of the Holder under this subdivision (a) of paragraph 7
          shall terminate after the Holder has included shares of Common Stock
          in two registration statements pursuant to this subdivision A of
          paragraph 7.

     b.   Expenses. The Corporation will pay all out-of-pocket costs and
          expenses of any registration effected pursuant to the provisions of
          subdivision (a) of this paragraph 7, including registration fees,
          legal fees, accounting fees, printing expenses (including such number
          of any preliminary and the final prospectus as may be reasonably
          requested), blue sky qualification fees and expenses, and all other
          expenses, except for underwriting commissions or discounts applicable
          to the shares of Common Stock being sold by the Holder and the fees of
          counsel for the Holder, all of which shall be paid by the Holder.

     c.   Notwithstanding anything to the contrary contained herein, in the
          event that the Corporation files an initial registration statement
          under the Securities Act of 1933, as amended (other than a
          registration statement pertaining to securities issuable in connection
          with the acquisition of a business, whether through merger,
          consolidation,

PRIVATE PLACEMENT MEMORANDUM
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RETRACTABLE TECHNOLOGIES, INC.
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RTIPVTPL. July 10, 1998                   70



          acquisition of assets or exchange of securities) concerning any Common
          Stock of the Corporation, it will afford the Holder the opportunity to
          convert his shares into that number of fully paid and non-assessable
          shares of Common Stock prior to the three year holding period stated
          in paragraph 6 above. The Corporation may also, at its option at any
          time within one-hundred and eighty (180) days after an initial
          registration statement is deemed effective, demand the conversion of
          the Series III Class B Preferred Stock into that number of fully paid
          and non-assessable shares of Common Stock as provided herein.

8.   Reports.

     So long as any of the Series III Class B Preferred Stock shall be
     outstanding, the Corporation shall submit to the Holder financial reports
     no less frequently than annually.

9.   Miscellaneous.

     a.   As used herein, the term "Common Stock" shall mean the Corporation's
          Common Stock, no par value, or, in the case of any reclassification or
          change of outstanding shares of Common Stock, the stock or securities
          issued in exchange for such Common Stock. The term "Common Stock"
          shall also include any capital stock of the Corporation authorized
          after March 31, 1998 which shall not be limited to a fixed sum or
          sums or percentage or percentages of par value in respect of the
          rights of the holders thereof to participate in dividends or in the
          distribution of assets upon the voluntary or involuntary liquidation,
          dissolution or winding up of the Corporation.

     b.   The shares of Series III Class B Preferred Stock shall be fully
          transferable by the Holder thereof, subject to compliance with the
          applicable provisions of federal and state securities laws.

IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate seal
to be hereunto affixed and this Certificate to be signed by its Chief Executive
Officer Secretary this 10 day of July, 1998.

                                       /s/ Thomas J. Shaw
                                     -------------------------------------
                                     THOMAS J. SHAW,
                                     Its: Chief Executive Officer

ATTEST:

  /s/ Lillian E. Salerno
- -----------------------------
LILLIAN E. SALERNO
Secretary

PRIVATE PLACEMENT MEMORANDUM
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RETRACTABLE TECHNOLOGIES, INC.
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RTIPVTPL. July 10, 1998                   71



                                                                       EXHIBIT E

                                                                FILED
                                                         In the Office of the
                                                     Secretary of State of Texas
                                                             JAN 24 2000
                                                        Corporations Section


        CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND LIMITATIONS
             OF THE SERIES IV CLASS B CONVERTIBLE PREFERRED STOCK
                                       OF

                         RETRACTABLE TECHNOLOGIES, INC.

Pursuant to Article 2.13 of the Texas Business Corporation Act and Article Four
of its Articles of Incorporation, Retractable Technologies, Inc., a corporation
organized and existing under the laws of the State of Texas (the "Corporation"),

DOES HEREBY CERTIFY that, pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Articles of Incorporation, as amended, and
pursuant to the Texas Business Corporation Act, said Board of Directors, by
unanimous written consent, executed December 20, 1999, adopted a resolution
providing for the creation of a series of Preferred Stock consisting of not more
than one million three hundred thousand (1,300,000) shares of Series IV Class B
Convertible Preferred Stock, which resolution is and reads as follows:

RESOLVED that pursuant to the authority provided in the Corporation's Articles
of Incorporation and expressly granted to and vested in the Board of Directors
of the Corporation, the Board of Directors hereby creates out of the Preferred
Stock, par value One Dollar ($1.00) per share, of the Corporation a series of
Preferred Stock called the Series IV Class B Preferred Stock, consisting of not
more than one million three hundred thousand (1,300,000) shares, and the Board
of Directors hereby fixes the designation and the powers, preference and rights,
and the qualifications, limitations and restrictions thereof, to the extent not
otherwise provided in the Corporation's qualifications, limitations and
restrictions thereof, to the extent not otherwise provided in the Corporation's
Articles of Incorporation, as follows:

1.        Designation of Series. The designation of the series of Preferred
          Stock created by this resolution shall be "Series IV Class B
          Convertible Preferred Stock" (the "Series IV Class B Preferred
          Stock").

2.        Dividends on Series IV Class B Preferred Stock.

          a.   Dividend Amount. The holders of the Series IV Class B Preferred
               Stock shall be entitled to receive, in any calendar year, if,
               when and as declared by the Board of Directors, out of any assets
               at the time legally available therefor and subject to the further
               limitations set out herein, dividends at the per annum rate of
               $1.00 per share, all such dividends due quarterly in arrears as
               of the last day of each March, June, September and December of
               each year, the first dividend being declarable on December 31,
               2000. On each date which a dividend may be declared is hereafter
               called the "Dividend Date," and each quarterly period ending with
               a Dividend Date is hereinafter referred to as the "Dividend
               Period." Dividends shall be payable fifteen calendar days after
               the Dividend Due Date, provided however, that if such date on
               which a dividend is payable is a Saturday, Sunday or legal
               holiday, such dividend shall be payable on the next following
               business day to the holders of record (whether singular or
               plural, the "Holder").

          b.   Dividends Cumulative. Dividends upon the Series IV Class B
               Preferred Stock shall be accrued and be cumulative, whether or
               not in any Dividend Period or Periods there shall be funds of the
               Corporation legally available for the payment of such dividends.

          c.   Dividend Accrual. On each Dividend Due Date all dividends which
               shall have accrued since the last Dividend Due Date on each share
               of Series IV Class B Preferred Stock outstanding on such Dividend
               Due Date shall accumulate and be deemed to become "due." Any
               dividend which shall not be paid on the Dividend Due Date on
               which it shall become due shall be deemed to be "past due" until
               such dividend shall be paid or until the share of Series IV Class
               B Preferred Stock with respect to which such dividend became due
               shall no longer be outstanding, whichever is the earlier to
               occur. No interest, sum of money in lieu of interest or other
               property or securities shall be payable in respect of any
               dividend payment or payments which are past due. Dividends paid
               on shares of Series IV Class B Preferred Stock in an amount less
               that the total amount of such

                                        1



               dividends at the time accumulated and payable on such shares
               shall be allocated pro rata on a share-by-share basis among all
               such shares at the time outstanding. Dividend payments made with
               respect to a Dividend Due Date shall be deemed to be made in
               payment of the dividends which became due on that Dividend Due
               Date.

          d.   Dividend Arrearage. If a dividend upon any shares of Series IV
               Class B Preferred Stock is in arrears, all dividends or other
               distributions declared upon shares of the Series IV Class B
               Preferred Stock (other than dividends paid in stock of the
               Corporation ranking junior to the Series IV Class B Preferred
               Stock as to dividends and upon liquidation, dissolution or
               winding up) may only be declared pro rata. Except as set forth
               above, if a dividend upon any shares of Series IV Class B
               Preferred Stock is in arrears: (i) no dividends (in cash, stock
               or other property) may be paid or declared and set aside for
               payment or any other distribution made upon any stock of the
               Corporation ranking junior to the Series IV Class B Preferred
               Stock as to dividends (other than dividends of distributions in
               stock of the Corporation ranking junior to the Series IV Class B
               Preferred Stock as to dividends and upon liquidation, dissolution
               or winding up); and (ii) no stock of the Corporation ranking
               junior to the Series IV Class B Preferred Stock as to dividends
               may be (A) redeemed pursuant to a sinking fund or otherwise,
               except (1) by means of redemption pursuant to which all
               outstanding shares of the Series IV Class B Preferred Stock are
               redeemed, or (2) by conversion of any such junior stock into, or
               exchange of any such junior stock into, or exchange of any such
               junior stock for stock of the Corporation ranking junior to the
               Series IV Class B Preferred Stock as to dividends and upon
               liquidation, dissolution or winding up, or (B) purchased or
               otherwise acquired for any consideration by the Corporation
               except (1) pursuant to an acquisition made pursuant to the terms
               of one or more offers to purchase all of the outstanding shares
               of the Series IV Class B Preferred Stock, which offers shall each
               have been accepted by the holders of at least 50% of the shares
               of the Series IV Class B Preferred Stock receiving such offer
               outstanding at the commencement of the first of such purchase
               offers, or (2) by conversion into or exchange for stock of the
               Corporation ranking junior to the Series IV Class B Preferred
               Stock as to dividends and upon liquidation or winding up.

3.        General, Class and Series Voting Rights. Except as provided in this
          Section 3, or as otherwise from time to time required by law, the
          Series IV Class B Preferred Stock shall have no voting rights.

          So long as any shares of Series IV Class B Preferred Stock remain
          outstanding, the consent of the holders of at least fifty-one percent
          (51%) of the shares of Series IV Class B Preferred Stock outstanding
          at the time voting separately as a class, given in person or by proxy,
          either in writing at any special or annual meeting called for the
          purpose, shall be necessary to permit, effect or validate any one or
          more of the following:

          (i)  The authorization, creation or issuance, or any increase in the
               authorized or issued amount, of any class or series of stock
               (including any class or series of Preferred Stock) ranking equal
               or prior to the Series IV Class B Preferred Stock; or

          (ii) The amendment, alteration, or repeal, whether by merger,
               consolidation or otherwise, of any of the provisions of the
               Articles of Incorporation or of this resolution which would alter
               or change the powers, preferences or special rights of the shares
               of the Series IV Class B Preferred Stock so as to affect them
               adversely; provided, however, that any increase in the amount of
               authorized Preferred Stock, or the creation and issuance of other
               series of Preferred stock ranking junior to the Series IV Class B
               Preferred Stock with respect to the payment of dividends and the
               distribution of assets upon liquidation, dissolution or winding
               up, shall not be deemed to adversely affect such powers,
               preferences or special rights.

          The foregoing voting provisions shall not apply if, at or prior to the
          time when the act with respect to which such vote would otherwise be
          required shall be effected, all outstanding shares of Series IV Class
          B Preferred Stock shall have been redeemed or sufficient funds shall
          have been deposited in trust to effect such redemption.

                                        2



4.   Redemption. The outstanding shares of Series IV Class B Preferred Stock
     shall be nonredeemable prior to the lapse of three (3) years from the date
     of issuance. On and after such date, the Series IV Class B Preferred Stock
     may be redeemed at the option of the Corporation, as a whole at any time or
     in part from time to time, at the Redemption Price of $11.00 per share plus
     all dividends (whether or not declared or due) accrued and unpaid to the
     date of redemption (subject to the right of the holder of record of shares
     of Series IV Class B Preferred Stock on a record date for the payment of a
     dividend on the Series IV Class B Preferred Stock to receive the dividend
     due on such shares of Series IV Class B Preferred Stock on the
     corresponding Dividend Due Date).

     No sinking fund shall be established for the Series IV Class B Preferred
     Stock.

     Notice of any proposed redemption of shares of Series IV Class B Preferred
     Stock shall be mailed by means of first class mail, postage paid, addressed
     to the holders of record of the shares of Series IV Class B Preferred Stock
     to be redeemed, at their respective addresses then appearing on the books
     of the Corporation, at least thirty (30) days but not more than sixty (60)
     days prior to the date fixed for such redemption (herein referred to as the
     "Redemption Date"). Each such notice shall specify (i) the Redemption Date;
     (ii) the Redemption Price; (iii) the place for payment and for delivering
     the stock certificate(s) and transfer instrument(s) in order to collect the
     Redemption Price; (iv) the shares of Series IV Class B Preferred Stock to
     be redeemed; and (v) the then effective Conversion Price (as defined below)
     and that the right of holders of shares of Series IV Class B Preferred
     Stock being redeemed to exercise their conversion right shall terminate as
     to such shares at the close of business on the fifth day before the
     Redemption Date, provided that no default by the Corporation in the payment
     of the applicable Redemption Price (including any accrued and unpaid
     dividends) shall have occurred and be continuing. Any notice mailed in such
     manner shall be conclusively deemed to have been duly given whether or not
     such notice is, in fact, received. If less than all the outstanding shares
     of Series IV Class B Preferred Stock are to be redeemed, the Corporation
     will select those to be redeemed by lot or by a substantially equivalent
     method. In order to facilitate the redemption of Series IV Class B
     Preferred Stock to be redeemed, notice of any such proposed redemption
     shall not be more than sixty (60) days prior to the Redemption Date with
     respect thereto.

     The holder of any shares of Series IV Class B Preferred Stock redeemed upon
     any exercise of the Corporation's redemption right shall not be entitled to
     receive payment of the Redemption Price for such shares until such holder
     shall cause to be delivered to the place specified in the notice given with
     respect to, such redemption (i) the certificate(s) representing such shares
     of Series IV Class B Preferred Stock; and (ii) transfer instrument(s)
     satisfactory to the Corporation and sufficient to transfer such shares free
     of any adverse interest. No interest shall accrue on the Redemption Price
     of any share of Series IV Class B Preferred Stock after its Redemption
     Date.

     Subject to Section 2 hereof, the Corporation shall have the right to
     purchase shares of Series IV Class B Preferred Stock from the owner of such
     shares on such term as may be agreeable to such owner. Shares of Series IV
     Class B Preferred Stock may be acquired by the Corporation from any
     stockholder pursuant to this paragraph without offering any other
     stockholder an equal opportunity to sell his stock to the Corporation, and
     no purchase by the Corporation from any stockholder pursuant to this
     paragraph shall be deemed to create any right on the part of any
     stockholder to sell any shares of Series IV Class B Preferred Stock (or any
     other stock) to the Corporation.

     Notwithstanding the foregoing provisions of this Section 4, and subject to
     the provisions of Section 2 hereof, if a dividend upon any shares of Series
     IV Class B Preferred Stock is past due, no shares of the Series IV Class B
     Preferred Stock may be redeemed, except (i) by means of a redemption
     pursuant to which all outstanding shares of the Series IV Class B Preferred
     Stock are simultaneously redeemed (or offered to be so redeemed) or
     pursuant to which the outstanding shares of the Series IV Class B Preferred
     Stock are redeemed on a pro rata basis (or offered to be so redeemed), or
     (ii) by conversion of shares of Series IV Class B Preferred Stock into, or
     exchange of such shares for, Common Stock or any other stock of the
     Corporation ranking junior to the Series IV Class B Preferred Stock as to
     dividends and upon liquidation, dissolution or winding up.

                                        3



5.   Liquidation. In the event of any voluntary or involuntary dissolution,
     liquidation or winding up of the Corporation (for the purposes of this
     Section 5, a "Liquidation"), before any distribution of assets shall be
     made to the holders of the Common Stock or the holders of any other stock
     that ranks junior to the Series IV Class B Preferred Stock in respect of
     distributions upon the Liquidation of the Corporation, the holder of each
     share of Series IV Class B Preferred Stock then outstanding shall be
     entitled to $11.00 per share plus all dividends (whether or not declared or
     due) accrued and unpaid on such share on the date fixed for the
     distribution of assets of the Corporation to the holders of Series IV Class
     B Preferred Stock.

     If upon any Liquidation of the Corporation, the assets available for
     distribution to the holder of Series IV Class B Preferred Stock which shall
     then be outstanding (hereinafter in this paragraph called the "Total Amount
     Available") shall be insufficient to pay the holders of all outstanding
     shares of Series IV Class B Preferred Stock the full amounts (including all
     dividends accrued and unpaid) to which they shall be entitled by reason of
     such Liquidation of the Corporation, then there shall be paid ratably to
     the holders of the Series IV Class B Preferred Stock in connection with
     such Liquidation of the Corporation, an amount equal to each holder's pro
     rata share of the Total Amount Available.

     The voluntary sale, conveyance, lease, exchange or transfer of all or
     substantially all the property or assets of the Corporation, or the merger
     or consolidation of the Corporation into another Corporation, or any
     purchase or redemption of some or all of the shares of any class or series
     of stock of the Corporation, shall not be deemed to be a Liquidation of the
     Corporation for the purposes of this Section 6 (unless in connection
     therewith the Liquidation of the Corporation is specifically approved).

6.   Conversion Privilege. At any time subsequent to three years after issuance
     of any share of Series IV Class B Preferred Stock, the holder of any share
     of Series IV Class B Preferred Stock ("Holder") shall have the right, at
     such Holder's option (but if such share is called for redemption or
     exchange at the election of the Corporation, then in respect of such share
     only to and including but not after the close of business on (i) the fifth
     calendar day before the date fixed for such redemption; or (ii) the date
     fixed for such exchange, provided that the Corporation has set aside funds
     sufficient to effect such redemption) to convert such share into that
     number of fully paid and non-assessable shares of Common Stock (calculated
     as to each conversion to the nearest 1/100th of a share) obtained by
     dividing $10.00 by the Conversion Rate then in effect.

     a.   Conversion Rate. Each share of Series IV Class B Preferred Stock may
          be converted, subject to the terms and provisions of this paragraph 6
          into one (1) share of the Corporation's Common Stock, which is a price
          equal to one share of Common Stock for each $10.00 of Series IV Class
          B Preferred Stock or, in case an adjustment of such rate has taken
          place pursuant to the provisions of subdivision (f) of this paragraph
          6, then at the Conversion Rate as last adjusted (such rate or adjusted
          rate, shall be expressed as the number of shares of Common Stock to be
          acquired upon conversion of one share of Series IV Class B Preferred
          Stock, and shall be referred to herein as the "Conversion Rate")
          ("Conversion Price"). Each share of Series IV Class B Preferred Stock
          shall be Convertible into Common Stock by surrender to the Corporation
          of the certificate representing such shares of Series IV Class B
          Preferred Stock to be converted by the Holder and by giving written
          notice to the Corporation of the Holder's election to convert.

          The Corporation shall, as soon as practicable after receipt of such
          written notice and the proper surrender to the Corporation of the
          certificate or certificates representing shares of Series IV Class B
          Preferred Stock to be converted in accordance with the above
          provisions, issue and deliver for the benefit of the Holder at the
          office of the Corporation's duly appointed transfer agent (the
          "Transfer Agent") to the Holder for whose account such shares of
          Series IV Class B Preferred Stock were so surrendered or to such
          Holder's nominee or nominees, certificates for the number of shares of
          Common Stock to which the Holder shall be entitled. The certificates
          of Common Stock of the Corporation issued upon conversion shall bear
          such legends as may be required by state or federal laws.

                                        4



          Such conversion shall be deemed to have been effective immediately
          prior to the close of business on the date on which the Corporation
          shall have received both such written notice and the properly
          surrendered certificates for shares of Series IV Class B Preferred
          Stock to be converted (the "Conversion Date"), and at such time the
          rights of the Holder shall cease and the person or persons entitled to
          receive the shares of Common Stock issuable upon the conversion of
          such shares of Series IV Class B Preferred Stock shall be deemed to
          be, and shall be treated for all purposes as, the record Holder or
          Holders of such Common Stock on the Conversion Date. The Corporation
          shall not be required to convert, and no surrender of shares of Series
          IV Class B Preferred Stock or written notice of conversion with
          respect thereto shall be effected for that purpose, while the stock
          transfer books of the Corporation are closed for any reasonable
          business purpose for any reasonable period of time, but shall be
          required to convert upon the proper surrender of shares of Series IV
          Class B Preferred Stock for conversion immediately upon the reopening
          of such books. During the period in which the stock transfer books of
          the Corporation are closed, the Corporation may neither declare a
          dividend, declare a record date for payment of dividends nor make any
          payment of dividends.

     b.   Dividends. If any shares of Series IV Class B Preferred Stock shall be
          converted during any dividend payment period, the Holder shall be
          entitled to all dividends accrued up to and through such Conversion
          Date, at the rate set forth herein, whether or not there has been a
          dividend date, as set forth in paragraph 2 hereof.

     c.   Cancellation. Series IV Class B Preferred Stock converted into Common
          stock pursuant to the provisions of this paragraph 6 shall be retired
          and cancelled by the Corporation and given the status of authorized
          and unissued preferred stock.

     d.   Reissuance if Conversion is Partial. In the case of any certificate
          representing shares of Series IV Class B Preferred Stock which is
          surrendered for conversion only in part, the Corporation shall issue
          and deliver to the Holder a new certificate or certificates for Series
          IV Class B Preferred Stock of such denominations as requested by the
          Holder in the amount of Series IV Class B Preferred Stock equal to the
          unconverted shares of the Series IV Class B Preferred Stock
          represented by the certificate so surrendered.

     e.   Reservations of Shares. The Corporation shall at all times during
          which shares of Series IV Class B Preferred Stock may be converted
          into Common Stock as provided in this paragraph (e), reserve and keep
          available, out of any Common Stock held as treasury stock or out of
          its authorized and unissued Common Stock, or both, solely for the
          purpose of delivery upon conversion of the shares of Series IV Class B
          Preferred Stock as herein provided, such number of shares of Common
          Stock as shall then be sufficient to effect the conversion of all
          shares of Series IV Class B Preferred Stock from time to time
          outstanding, and shall take such action as may from time to time be
          necessary to ensure that such shares of Common Stock will, when issued
          upon conversion of Series IV Class B Preferred Stock, be fully paid
          and nonassessable.

     f.   Adjustment of Conversion Rate. The Conversion Rate provided in
          subdivision (a) of this paragraph 6, in respect of Series IV Class B
          Preferred Stock, shall be subject to adjustments from time to time as
          follows:

          (i)  While any shares of Series IV Class B Preferred Stock shall be
               outstanding, in case the Corporation shall subdivide the
               outstanding shares of Common Stock into a greater number of
               shares of Common Stock or combine the outstanding shares of
               Common Stock into a smaller number of shares of Common Stock, or
               issue, by reclassification of its shares of Common Stock, any
               shares of the Corporation, the Conversion Rate in effect
               immediately prior thereto shall be adjusted so that the Holder
               shall be entitled to receive the number of shares which it would
               have owned or been entitled to receive after the happening of any
               of the events described above, had such shares of Series IV Class
               B Preferred Stock been converted immediately prior to the
               happening of such event, such

                                        5



                adjustment to become effective immediately after the opening of
                business on the day following the day upon which such
                subdivision or combination or reclassification, as the case may
                be, becomes effective.

          (ii)  In case the Corporation shall be consolidated with, or merge
                into, any other corporation, and the Corporation does not
                survive, proper provisions shall be made as a part of the terms
                of such consolidation or merger, whereby the Holder shall
                thereafter be entitled, upon exercise of such Holder's
                conversion rights, to receive the kind and amount of shares of
                stock or other securities of the Corporation resulting from such
                consolidation or merger, or such other property, as the Holder
                would have received if such conversion rights were exercised
                immediately prior to the effectiveness of such merger or
                consolidation.

          (iii) In the event the Corporation at any time, or from time to time
                after December 31, 1999, makes or issues, or fixes a record date
                for the determination of holders of Common Stock entitled to
                receive, a dividend distribution payable in additional shares of
                Common Stock or Common Stock Equivalents (as defined which does
                not provide for the payment of any consideration upon the
                issuance, conversion or thereof, without a corresponding
                dividend or other distribution to the Holder, based upon the
                number of shares of Common Stock into which the Series IV Class
                B Preferred Stock is convertible, then and in each such event
                the Conversion Rate then in effect will be increased as of the
                time of such issuance or, in the event such a record date shall
                have been fixed, as of the close of business on such record
                date, by multiplying such Conversion rate by a fraction:

                (A) The numerator of which will be the total number of shares of
                    Common Stock issued and outstanding immediately prior to the
                    time of such issuance or the close of business on such
                    record date plus the number of shares of Common Stock
                    issuable in payment of such dividend or distribution (which,
                    in the case of Common Stock Equivalents, shall mean the
                    maximum number of shares of Common Stock issuable with
                    respect thereto, as set forth in the instrument relative
                    thereto without regard to any provision for subsequent
                    adjustment); and

                (B) The denominator of which will be the total number of shares
                    of Common Stock issued and outstanding immediately prior to
                    the time of such issuance or the close of business on such
                    record date; provided, however, that if such record date is
                    fixed and such dividend is not fully paid or if such
                    distribution is not fully made on the date fixed therefor,
                    the Conversion Rate will be recomputed accordingly as of the
                    close of business on such record date, and thereafter such
                    Conversion Rate will be adjusted pursuant to this
                    subparagraph (iii) as of the time of actual payment of such
                    dividends or distributions.

          (iv)  In the event the Corporation at any time or from time to time
                after December 31, 1999, makes or issues, or fixes a record date
                for the determination of holders of Common Stock entitled to
                receive a dividend or other distribution payable to all holders
                of Common Stock in securities of the Corporation or Common Stock
                Equivalents, then, upon making such dividend or distribution
                provisions will be made so that the Holder will receive the
                amount of securities of the Corporation which it would have
                received had its Series IV Class B Preferred Stock been
                converted into Common Stock on the date of such event.

          (v)   In the event the Corporation sells or issues any Common Stock,
                or sells or issues Common Stock Equivalents which can be
                converted into Common Stock at a per share consideration (as
                defined below in this subparagraph (v) of paragraph 6(f)) less
                than the Stipulated Price then in effect, then the Holder shall
                be entitled to purchase from the Corporation in cash (for the
                same per share consideration at

                                        6



                 which such Common Stock was issued or the per share price at
                 which a share of Common Stock is acquirable upon exercise or
                 conversion of Common Stock Equivalents) that additional number
                 of shares of Common Stock which, when added to the number of
                 shares of Common Stock acquirable by the Holder upon conversion
                 of any shares of Series IV Class B Preferred Stock outstanding
                 and held by such Holder immediately before such issue or sale
                 (the "Acquirable Shares"), will equal a percentage of the
                 number of shares of Common Stock Deemed Outstanding (as defined
                 herein) immediately after such sale or issuance that is the
                 same as the percentage of the number of shares of Common Stock
                 Deemed Outstanding immediately before such issuance or sale
                 represented by the Acquirable Shares. This right shall exist
                 for a 45-day period following the sale or issuance of shares of
                 Common Stock or Common Stock Equivalents, and thereafter shall
                 cease to exist.

                 For the above purposes, the per share consideration with
                 respect to the sale or issuance of Common Stock will be the
                 price per share received by the Corporation, prior to the
                 payment of any expenses, commissions, discounts and other
                 applicable costs. With respect to the sale or issuance of
                 Common Stock Equivalents which are convertible into or
                 exchangeable for Common Stock without further consideration,
                 the per share consideration will be determined by dividing the
                 maximum number of shares of Common Stock issuable with respect
                 to such Common Stock Equivalents (as set forth in the
                 instrument relating thereto without regarding to any provisions
                 contained therein for subsequent adjustment of such number)
                 into the aggregate consideration receivable by the Corporation
                 upon the sale or issuance of such Common Stock Equivalents.
                 With respect to the issuance of other Common Stock Equivalents,
                 the per share consideration will be determined by dividing the
                 maximum number of shares of Common Stock issuable with respect
                 to such Common Stock Equivalents into the total aggregate
                 consideration received by the Corporation upon the sale or
                 issuance of such Common Stock Equivalents plus the minimum
                 aggregate amount of additional consideration received by the
                 Corporation upon the conversion or exercise of such Common
                 Stock Equivalents. In connection with the sale or issuance of
                 Common Stock and/or Common Stock Equivalents for non-cash
                 consideration, the amount of consideration will be the fair
                 market value of such consideration as determined in good faith
                 by the Board of Directors of the Corporation.

          (vi)   As used herein, the term "Stipulated Price" means initial price
                 of $10.00 per share of Common Stock, as adjusted from time to
                 time pursuant to subparagraph (viii) of this paragraph 6(f);
                 and the term "Common Stock Equivalent" means any securities
                 (whether debt or equity securities) or rights issued by the
                 Corporation convertible into or entitling the holder thereof to
                 receive shares of, or securities convertible into, Common
                 Stock. The number of shares of "Common Stock Deemed
                 Outstanding" at any date shall equal the sum of the number of
                 shares of Common Stock then outstanding plus the number of
                 shares of Common Stock then obtainable pursuant to Common Stock
                 Equivalents.

          (vii)  In the event the Corporation declares any dividend or
                 distribution payable to holders of its Common Stock (other than
                 dividends payable out of the Corporation's retained earnings or
                 earned surplus and dividends payable in shares of Common Stock
                 or in securities convertible into or exchangeable for shares of
                 Common Stock or rights or warrants to purchase Common Stock or
                 securities convertible into or exchangeable for shares of
                 Common Stock or any other securities issued by the
                 Corporation), the Conversion Rate in effect immediately prior
                 to the record date for such dividend or distribution shall be
                 proportionately adjusted so that the Holder shall be entitled
                 to receive the number of shares of Common Stock into which such
                 shares of Common Stock or



                 Preferred Stock was convertible immediately prior to such
                 record date multiplied by a fraction, the numerator of which is
                 the fair market value of a share of Common Stock on such record
                 date and the denominator of which is such per share fair market
                 value of a share of Common Stock on such record date less the
                 fair market value on such record date of the securities or
                 other property which are distributed as a dividend or other
                 distribution. The term "fair market value" of a share of Common
                 Stock or of any other security or other type of property on any
                 date means (A) in the case of Common Stock or any other
                 security (I) if the principal trading market for such Common
                 Stock or other security is an exchange or the NASDAQ national
                 market on such date, the closing price on such exchange or the
                 NASDAQ national market on such date, provided, if trading of
                 such Common Stock or other security is listed on any
                 consolidated tape, the fair market value shall be the closing
                 price set forth on such consolidated tape on such date, or (II)
                 if the principal market for such Common Stock or other security
                 is the over-the-counter market (other than the NASDAQ national
                 market) the mean between the closing bid and asked prices on
                 such date as set forth by NASDAQ or (B) in the case of Common
                 Stock or any other security for which the fair market value
                 cannot be determined pursuant to clause (A) above or of any
                 other security or type of property, fair market value thereof
                 on such date as determined in good faith by the Board of
                 Directors.

          (viii) Whenever the Conversion Rate is adjusted pursuant to this
                 paragraph 6(f), the Stipulated Price shall also be adjusted by
                 multiplying it by a fraction that is the reciprocal of the
                 fraction used to adjust the Conversion Rate.

          (ix)   The Corporation will not, by amendment of its Articles of
                 Incorporation or through any dissolution, issuance or sale of
                 securities or any other voluntary action, avoid or seek to
                 avoid the observance or performance of any of the terms to be
                 observed or performed hereunder by the Corporation, but at all
                 times in good faith will assist in the carrying out of all the
                 provisions of this paragraph and in the taking of all such
                 action as may be necessary or appropriate in order to protect
                 the conversion rights of the Holder against impairment.

          (x)    No adjustment in the Conversion Rate shall be required, unless
                 such adjustment would require an increase or decrease of at
                 least one (1) share of Common Stock in the Conversion Rate of
                 one share of Series B Preferred Stock, provided that all
                 adjustments which do not meet this minimum requirement
                 cumulated and the adjustment will be made when the cumulated
                 total is sufficient to require an adjustment. All calculations
                 made pursuant to this subparagraph (x) of paragraph 6(f) shall
                 be made to the nearest one-hundredth (1/100th) of a share of
                 Common Stock.

     g.   Fractional Shares. No fractional shares of Common Stock or scrip
          representing fractional shares of Common Stock shall be issued upon
          any conversion of shares of Series IV Class B Preferred Stock but, in
          lieu thereof, there shall be paid an amount in cash equal to the same
          fraction of the current market price of a whole share of Common Stock
          on the day preceding the day of conversion.

     h.   Statement to Transfer Agent. Whenever the Conversion Rate for shares
          of Series IV Class B Preferred Stock shall be adjusted pursuant to the
          provisions of paragraph 6(f) hereof, the Corporation shall forthwith
          maintain at its office and, if applicable, file with the Transfer
          Agent for shares of Series IV Class B Preferred Stock and for shares
          of Common Stock, a statement signed by the President or a Vice
          President of the Corporation and by its Treasurer or an Assistant
          Treasurer, stating the adjusted Conversion Rate and setting forth in
          reasonable detail the method of calculation and the facts requiring
          such adjustment, such calculations to be confirmed by the
          Corporation's independent auditors, and stating the facts on which the
          calculation is based. Each adjustment shall remain in effect until a
          subsequent adjustment hereunder is required.

                                        8



7. Registration Rights.

     a.   Piggyback Registration. The Corporation, for a period ending six
          months after the last share of Series IV Class B Preferred Stock is
          redeemed, retired, converted or otherwise no longer outstanding, will
          give written notice to the Holder not less than 20 days in advance of
          the initial filing of any registration statement under the Securities
          Act of 1933, as amended (other than a registration statement
          pertaining to securities issuable pursuant to employee stock option,
          stock purchase, or similar plans or a registration statement
          pertaining to securities issuable in connection with the acquisition
          of a business, whether through merger, consolidation, acquisition of
          assets, or exchange of securities), covering any Common Stock or other
          securities of the Corporation, and will afford the Holder the
          opportunity to have included in such registration all or such part of
          the shares of Common Stock acquired upon conversion of Series IV Class
          B Preferred Stock, as may be designated by written notice to the
          Corporation not later than 10 days following receipt of such notice
          from the Corporation. The Corporation shall be entitled to exclude the
          shares of Common Stock held by the Holder from any one, but not more
          than one, such registration if the Corporation in its sole discretion
          decides that the inclusion of such shares will materially interfere
          with the orderly sale and distribution of the securities being offered
          under such registration statement by the Corporation. Notwithstanding
          the foregoing, the Corporation shall not be entitled to exclude the
          shares of Common Stock held by the Holder if shares of other
          shareholders are being included in any such registration statement
          and, in such circumstances, the Holder shall be entitled to include
          the shares of Common Stock held by them on a pro rata basis in the
          proportion that the number of shares of Common Stock held by the
          Holder bears to the shares of Common Stock held by all other
          shareholders, including shares in such registration statement. The
          Holder shall not be entitled to include shares in more than two
          registration statements pursuant to the provisions of this subdivision
          (a) of paragraph 7, and all rights of the Holder under this
          subdivision (a) of paragraph 7 shall terminate after the Holder has
          included shares of Common Stock in two registration statements
          pursuant to this subdivision (a) of paragraph 7.

     b.   Expenses. The Corporation will pay all out-of-pocket costs and
          expenses of any registration effected pursuant to the provisions of
          subdivision (a) of this paragraph 7, including registration fees,
          legal fees, accounting fees, printing expenses (including such number
          of any preliminary and the final prospectus as may be reasonably
          requested), blue sky qualification fees and expenses, and all other
          expenses, except for underwriting commissions or discounts applicable
          to the shares of Common Stock being sold by the Holder and the fees of
          counsel for the Holder, all of which shall be paid by the Holder.

     c.   Notwithstanding anything to the contrary contained herein, in the
          event that the Corporation files an initial registration statement
          under the Securities Act of 1933, as amended (other than a
          registration statement pertaining to securities issuable in connection
          with the acquisition of a business, whether through merger,
          consolidation, acquisition of assets or exchange of securities),
          concerning any Common Stock of the Corporation, it will afford the
          Holder the opportunity to convert his shares into that number of fully
          paid and non-assessable shares of Common Stock prior to the 3-year
          holding period stated in paragraph 6 above. The Corporation may also,
          at its option at any time within one-hundred eighty (180) days after
          an initial registration statement is deemed effective, demand the
          conversion of the Series IV Class B Preferred Stock into that number
          of fully paid and nonassessable shares of Common Stock as provided
          herein.

                                        9



8. Reports.

     So long as any of the Series IV Class B Preferred Stock shall be
     outstanding, the Corporation shall submit to the Holder financial reports
     no less frequently than annually.

9. Miscellaneous.

     a.   As used herein, the term "Common Stock" shall mean the Corporation's
          Common Stock, no par value, or, in the case of any reclassification or
          change of outstanding shares of Common Stock, the stock or securities
          issued in exchange for such Common Stock.

     b.   The shares of Series IV Class B Preferred Stock shall be fully
          transferable by the Holder thereof, subject to compliance with the
          applicable provisions of federal and state securities laws.

IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate seal
to be hereunto affixed and this Certificate to be signed by its Chief Executive
Officer and Secretary this 21/st/ day of January, 2000.

                                             /s/ Thomas J. Shaw
                                             ------------------------------
                                             THOMAS J. SHAW,
                                             Its: Chief Executive Officer

ATTEST:

/s/ Michele Larios
- --------------------------
MICHELE LARIOS
Secretary

                                       10



                                                                FILED
                                                         in the Office of the
                                                     Secretary of State of Texas

                                                             JUN 01 2001

                                                         Corporations Section



                         STATEMENT OF CHANGE OF ADDRESS

                               OF REGISTERED AGENT

                             BY A PROFIT CORPORATION

(1)  The name of the Corporation represented by the registered agent is
     Retractable Technologies, Inc.

(2)  The address, including street and number, at which such registered agent
     has maintained the registered office for the Corporation as shown in the
     records of the Secretary of State of Texas before filing this statement is
     2001 Bryan Tower, Suite 2700, Dallas, Texas 75201.

(3)  The new address, including street and number, at which such registered
     agent will thereafter maintain the registered office for said Corporation
     is 2600 San Jacinto Tower, 2121 San Jacinto Street, Dallas, Texas 75201.

(4)  Notice of the change has been given to the Corporation in writing at least
     ten (10) days prior to this filing.


Dated:  May 31, 2001.
                                            /s/ RALPH S. JANVEY
                                            ------------------------------------
                                            RALPH S. JANVEY
                                            REGISTERED AGENT


STATEMENT OF CHANGE OF ADDRESS OF
REGISTERED AGENT BY A PROFIT CORPORATION - Page Solo



                                                             FILED
                                                        In the Office of
                                                 the Secretary of State of Texas
                                                          APR 19 2002
                                                      Corporations Section

         CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND LIMITATIONS
               OF THE SERIES V CLASS B CONVERTIBLE PREFERRED STOCK
                                       OF
                         RETRACTABLE TECHNOLOGIES, INC.

Pursuant to Article 2.13 of the Texas Business Corporation Act and Article Four
of its Second Amended and Restated Articles of Incorporation (the "Articles of
Incorporation"), Retractable Technologies, Inc., a corporation organized and
existing under the laws of the State of Texas (the "Corporation"),

DOES HEREBY CERTIFY that, pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Articles of Incorporation, as amended, and
pursuant to the Texas Business Corporation Act, said Board of Directors, on
April 15, 2002, at a meeting duly called and noticed adopted a resolution by all
necessary action on the part of the Corporation providing for the creation of a
series of Preferred Stock consisting of not more than 1,500,000 shares of Series
V Class B Convertible Preferred Stock, which resolution is and reads as follows:

RESOLVED that, pursuant to the authority provided in the Corporation's Articles
of Incorporation and expressly granted to and vested in the Board of Directors
of the Corporation, the Board of Directors hereby creates out of the Preferred
Stock, par value One Dollar ($1.00) per share, of the Corporation a series of
Preferred Stock called the Series V Class B Preferred Stock, consisting of
1,500,000 shares, which shall be subordinate to the Series A Convertible
Preferred and Series I through IV Class B Convertible Preferred Stock, and the
Board of Directors hereby fixes the designation and the powers, preference and
rights, and the qualifications, limitations, and restrictions thereof, to the
extent not otherwise provided in the Corporation's qualifications, limitations,
and restrictions thereof, to the extent not otherwise provided in the
Corporation's Articles of Incorporation, as follows:

1.   Designation of Series. The designation of the series of Preferred Stock
     created by this resolution shall be "Series V Class B Convertible Preferred
     Stock" (the "Series V Class B Preferred Stock").

2.   Dividends on Series V Class B Preferred Stock

     a.   Dividend Amount. The holders of the Series V Class B Preferred Stock
          shall be entitled to receive, in any calendar year, if, when, and as
          declared by the Board of Directors, out of any assets at the time
          legally available therefor and subject to the further limitations set
          out herein, dividends at the per annum rate of $.32 per share, all
          such dividends due quarterly in arrears as of the last day of each
          March, June, September, and December of each year, the first dividend
          being declarable on December 31, 2002. On each date which a dividend
          may be declared is hereafter called the "Dividend Date," and each
          quarterly period ending with a Dividend Date is hereinafter referred
          to as the "Dividend Period." Dividends shall be payable 15 calendar
          days after the Dividend Due Date; provided, however, that if such date
          on which a dividend is payable is a Saturday, Sunday, or legal
          holiday, such dividend shall be payable on the next following business
          day to the holders of record (whether singular or plural, the
          "Holder").

     b.   Dividends Cumulative. Dividends upon the Series V Class B Preferred
          Stock shall be accrued and be cumulative, whether or not in any
          Dividend Period or Periods there shall be funds of the Corporation
          legally available for the payment of such dividends.

     c.   Dividend Accrual. On each Dividend Due Date all dividends which shall
          have accrued since the last Dividend Due Date on each share of Series
          V Class B Preferred Stock outstanding on such Dividend Due Date shall
          accumulate and be deemed to become "due." Any dividend which shall not
          be paid on the Dividend Due Date on which it shall become due shall be
          deemed to be "past due" until such dividend shall be paid or until the
          share of Series V Class B Preferred Stock with respect to which such
          dividend became due shall no longer be outstanding, whichever is the
          earlier to occur. No interest, sum of money in lieu of interest, or
          other property or securities shall be payable in respect of any
          dividend payment or payments which are past due. Dividends paid
          on shares of Series V Class B Preferred Stock in an amount less than
          the total amount of such

                                       1



          dividends at the time accumulated and payable on such shares shall be
          allocated pro rata on a share-by-share basis among all such shares at
          the time outstanding. Dividend payments made with respect to a
          Dividend Due Date shall be deemed to be made in payment of the
          dividends which became due on that Dividend Due Date.

     d.   Dividend Arrearage. If a dividend upon any shares of Series V Class B
          Preferred Stock is in arrears, all dividends or other distributions
          declared upon shares of the Series V Class B Preferred Stock (other
          than dividends paid in stock of the Corporation ranking junior to the
          Series V Class B Preferred Stock as to dividends and upon liquidation,
          dissolution, or winding up) may only be declared pro rata. Except as
          set forth above, if a dividend upon any shares of Series V Class B
          Preferred Stock is in arrears: (i) no dividends (in cash, stock, or
          other property) may be paid or declared and set aside for payment or
          any other distribution made upon any stock of the Corporation ranking
          junior to the Series V Class B Preferred Stock as to dividends (other
          than dividends of distributions in stock of the Corporation ranking
          junior to the Series V Class B Preferred Stock as to dividends and
          upon liquidation, dissolution, or winding up); and (ii) no stock of
          the Corporation ranking junior to the Series V Class B Preferred Stock
          as to dividends may be (A) redeemed pursuant to a sinking fund or
          otherwise, except (1) by means of redemption pursuant to which all
          outstanding shares of the Series V Class B Preferred Stock are
          redeemed, or (2) by conversion of any such junior stock into, or
          exchange of any such junior stock into, or exchange of any such junior
          stock for stock of the Corporation ranking junior to the Series V
          Class B Preferred Stock as to dividends and upon liquidation,
          dissolution, or winding up, or (B) purchased or otherwise acquired for
          any consideration by the Corporation except (1) pursuant to an
          acquisition made pursuant to the terms of one or more offers to
          purchase all of the outstanding shares of the Series V Class B
          Preferred Stock, which offers shall each have been accepted by the
          holders of at least 50% of the shares of the Series V Class B
          Preferred Stock receiving such offer outstanding at the commencement
          of the first of such purchase offers, or (2) by conversion into or
          exchange for stock of the Corporation ranking junior to the Series V
          Class B Preferred Stock as to dividends and upon liquidation or
          winding up.

3.   General, Class, and Series Voting Rights. Except as provided in this
     Section 3, or as otherwise from time to time required by law, the Series V
     Class B Preferred Stock shall have no voting rights.

     So long as any shares of Series V Class B Preferred Stock remain
     outstanding, the consent of the holders of at least 51% of the shares of
     Series V Class B Preferred Stock outstanding at the time voting separately
     as a class, given in person or by proxy, either in writing at any special
     or annual meeting called for the purpose, shall be necessary to permit,
     effect, or validate any one or more of the following:

     (i)  The authorization, creation, or issuance, or any increase in the
          authorized or issued amount, of any class or series of stock
          (including any class or series of Preferred Stock) ranking equal or
          prior to the Series V Class B Preferred Stock; or

     (ii) The amendment, alteration, or repeal, whether by merger,
          consolidation, or otherwise, of any of the provisions of the Articles
          of Incorporation or of this resolution which would alter or change the
          powers, preferences, or special rights of the shares of the Series V
          Class B Preferred Stock so as to affect them adversely; provided,
          however, that any increase in the amount of authorized Preferred
          Stock, or the creation and issuance of other series of Preferred Stock
          ranking junior to the Series V Class B Preferred Stock with respect to
          the payment of dividends and the distribution of assets upon
          liquidation, dissolution, or winding up, shall not be deemed to
          adversely affect such powers, preferences, or special rights.

     The foregoing voting provisions shall not apply if, at or prior to the time
     when the act with respect to which such vote would otherwise be required
     shall be effected, all outstanding shares of Series V Class B Preferred
     Stock shall have been redeemed or sufficient funds shall have been
     deposited in trust to effect such redemption.


                                       2



     4.   Redemption. The outstanding shares of Series V Class B Preferred Stock
          shall be nonredeemable prior to the lapse of two (2) years from the
          date of issuance. On and after such date, the Series V Class B
          Preferred Stock may be redeemed at the option of the Corporation, as a
          whole at any time or in part from time to time, at the Redemption
          Price of $4.40 per share plus all dividends (whether or not declared
          or due) accrued and unpaid to the date of redemption (subject to the
          right of the holder of record of shares of Series V Class B Preferred
          Stock on a record date for the payment of a dividend on the Series V
          Class B Preferred Stock to receive the dividend due on such shares of
          Series V Class B Preferred Stock on the corresponding Dividend Due
          Date).

          No sinking fund shall be established for the Series V Class B
          Preferred Stock.

          Notice of any proposed redemption of shares of Series V Class B
          Preferred Stock shall be mailed by means of first class mail, postage
          paid, addressed to the holders of record of the shares of Series V
          Class B Preferred Stock to be redeemed, at their respective addresses
          then appearing on the books of the Corporation, at least thirty (30)
          days but not more than sixty (60) days prior to the date fixed for
          such redemption (herein referred to as the "Redemption Date"). Each
          such notice shall specify (i) the Redemption Date; (ii) the Redemption
          Price; (iii) the place for payment and for delivering the stock
          certificate(s) and transfer instrument(s) in order to collect the
          Redemption Price; (iv) the shares of Series V Class B Preferred Stock
          to be redeemed; and (v) the then effective Conversion Price (as
          defined below) and that the right of holders of shares of Series V
          Class B Preferred Stock being redeemed to exercise their conversion
          right shall terminate as to such shares at the close of business on
          the fifth day before the Redemption Date, provided that no default by
          the Corporation in the payment of the applicable Redemption Price
          (including any accrued and unpaid dividends) shall have occurred and
          be continuing. Any notice mailed in such manner shall be conclusively
          deemed to have been duly given whether or not such notice is, in fact,
          received. If less than all the outstanding shares of Series V Class B
          Preferred Stock are to be redeemed, the Corporation will select those
          to be redeemed by lot or by a substantially equivalent method. In
          order to facilitate the redemption of Series V Class B Preferred Stock
          to be redeemed, notice of any such proposed redemption shall not be
          more than sixty (60) days prior to the Redemption Date with respect
          thereto.

          The holder of any shares of Series V Class B Preferred Stock redeemed
          upon any exercise of the Corporation's redemption right shall not be
          entitled to receive payment of the Redemption Price for such shares
          until such holder shall cause to be delivered to the place specified
          in the notice given with respect to such redemption (i) the
          certificate(s) representing such shares of Series V Class B Preferred
          Stock; and (ii) transfer instrument(s) satisfactory to the Corporation
          and sufficient to transfer such shares free of any adverse interest.
          No interest shall accrue on the Redemption Price of any share of
          Series V Class B Preferred Stock after its Redemption Date.

          Subject to Section 2 hereof, the Corporation shall have the right to
          purchase shares of Series V Class B Preferred Stock from the owner of
          such shares on such term as may be agreeable to such owner. Shares of
          Series V Class B Preferred Stock may be acquired by the Corporation
          from any stockholder pursuant to this paragraph without offering any
          other stockholder an equal opportunity to sell his stock to the
          Corporation, and no purchase by the Corporation from any stockholder
          pursuant to this paragraph shall be deemed to create any right on the
          part of any stockholder to sell any shares of Series V Class B
          Preferred Stock (or any other stock) to the Corporation.

          Notwithstanding the foregoing provisions of this Section 4, and
          subject to the provisions of Section 2 hereof, if a dividend upon any
          shares of Series V Class B Preferred Stock is past due, no shares of
          the Series V Class B Preferred Stock may be redeemed, except (i) by
          means of a redemption pursuant to which all outstanding shares of the
          Series V Class B Preferred Stock are simultaneously redeemed (or
          offered to be so redeemed) or pursuant to which the outstanding shares
          of the Series V Class B Preferred Stock are redeemed on a pro rata
          basis (or offered to be so redeemed), or (ii) by conversion of shares
          of Series V Class B Preferred Stock into, or exchange of such shares
          for, Common Stock or any other stock of the

                                       3



          Corporation ranking junior to the Series V Class B Preferred Stock as
          to dividends and upon liquidation, dissolution, or winding up.

     5.   Liquidation. In the event of any voluntary or involuntary dissolution,
          liquidation, or winding up of the Corporation (for the purposes of
          this Section 5, a "Liquidation"), before any distribution of assets
          shall be made to the holders of the Common Stock or the holders of any
          other stock that ranks junior to the Series V Class B Preferred Stock
          in respect of distributions upon the Liquidation of the Corporation,
          the holder of each share of Series V Class B Preferred Stock then
          outstanding shall be entitled to $4.40 per share plus all dividends
          (whether or not declared or due) accrued and unpaid on such share on
          the date fixed for the distribution of assets of the Corporation to
          the holders of Series V Class B Preferred Stock.

          If upon any Liquidation of the Corporation, the assets available for
          distribution to the holder of Series V Class B Preferred Stock which
          shall then be outstanding (hereinafter in this paragraph called the
          "Total Amount Available") shall be insufficient to pay the holders of
          all outstanding shares of Series V Class B Preferred Stock the full
          amounts (including all dividends accrued and unpaid) to which they
          shall be entitled by reason of such Liquidation of the Corporation,
          then there shall be paid ratably to the holders of the Series V Class
          B Preferred Stock in connection with such Liquidation of the
          Corporation, an amount equal to each holder's pro rata share of the
          Total Amount Available.

          The voluntary sale, conveyance, lease, exchange, or transfer of all or
          substantially all the property or assets of the Corporation, or the
          merger or consolidation of the Corporation into another Corporation,
          or any purchase or redemption of some or all of the shares of any
          class or series of stock of the Corporation, shall not be deemed to be
          a Liquidation of the Corporation for the purposes of this Section 5
          (unless in connection therewith the Liquidation of the Corporation is
          specifically approved).

     6.   Conversion Privilege. At any time after issuance of any share of
          Series V Class B Preferred Stock, the holder of any share of Series V
          Class B Preferred Stock ("Holder") shall have the right, at such
          Holder's option (but if such share is called for redemption or
          exchange at the election of the Corporation, then in respect of such
          share only to and including but not after the close of business on (i)
          the fifth calendar day before the date fixed for such redemption; or
          (ii) the date fixed for such exchange, provided that the Corporation
          has set aside funds sufficient to effect such redemption) to convert
          such share into that number of fully paid and nonassessable shares of
          Common Stock (calculated as to each conversion to the nearest 1/100th
          of a share) obtained by dividing $4.00 by the Conversion Rate then in
          effect.

          a.   Conversion Rate. Each share of Series V Class B Preferred Stock
               may be converted, subject to the terms and provisions of this
               paragraph 6 into one (1) share of the Corporation's Common Stock,
               which is a price equal to one share of Common Stock for each
               $4.00 of Series V Class B Preferred Stock or, in case an
               adjustment of such rate has taken place pursuant to the
               provisions of subdivision (f) of this paragraph 6, then at the
               Conversion Rate as last adjusted (such rate or adjusted rate,
               shall be expressed as the number of shares of Common Stock to be
               acquired upon conversion of one share of Series V Class B
               Preferred Stock, and shall be referred to herein as the
               "Conversion Rate") ("Conversion Price"). Each share of Series V
               Class B Preferred Stock shall be Convertible into Common Stock by
               surrender to the Corporation of the certificate representing such
               shares of Series V Class B Preferred Stock to be converted by the
               Holder and by giving written notice to the Corporation of the
               Holder's election to convert.

               The Corporation shall, as soon as practicable after receipt of
               such written notice and the proper surrender to the Corporation
               of the certificate or certificates representing shares of Series
               V Class B Preferred Stock to be converted in accordance with the
               above provisions, issue and deliver for the benefit of the Holder
               at the office of the Corporation's duly appointed transfer agent
               (the "Transfer Agent") to the Holder for whose account such
               shares of Series V Class B Preferred Stock were so surrendered or
               to such Holder's nominee or nominees, certificates for the number
               of shares of Common Stock to which the Holder shall be entitled.
               The certificates of Common Stock of the Corporation issued upon
               conversion shall bear such legends as may be required by state or

                                       4



               federal laws. Such conversion shall be deemed to have been
               effective immediately prior to the close of business on the date
               on which the Corporation shall have received both such written
               notice and the properly surrendered certificates for shares of
               Series V Class B Preferred Stock to be converted (the "Conversion
               Date"), and at such time the rights of the Holder shall cease and
               the person or persons entitled to receive the shares of Common
               Stock issuable upon the conversion of such shares of Series V
               Class B Preferred Stock shall be deemed to be, and shall be
               treated for all purposes as, the record Holder or Holders of such
               Common Stock on the Conversion Date. The Corporation shall not be
               required to convert, and no surrender of shares of Series V Class
               B Preferred Stock or written notice of conversion with respect
               thereto shall be effected for that purpose, while the stock
               transfer books of the Corporation are closed for any reasonable
               business purpose for any reasonable period of time, but shall be
               required to convert upon the proper surrender of shares of Series
               V Class B Preferred Stock for conversion immediately upon the
               reopening of such books. During the period in which the stock
               transfer books of the Corporation are closed, the Corporation may
               neither declare a dividend, declare a record date for payment of
               dividends, nor make any payment of dividends.

          b.   Dividends. If any shares of Series V Class B Preferred Stock
               shall be converted during any dividend payment period, the Holder
               shall be entitled to all dividends accrued up to and through such
               Conversion Date, at the rate set forth herein, whether or not
               there has been a dividend date, as set forth in paragraph 2
               hereof.

          c.   Cancellation. Series V Class B Preferred Stock converted into
               Common Stock pursuant to the provisions of this paragraph 6 shall
               be retired by the Corporation and given the status of authorized
               and unissued Preferred Stock.

          d.   Reissuance if Conversion is Partial. In the case of any
               certificate representing shares of Series V Class B Preferred
               Stock which is surrendered for conversion only in part, the
               Corporation shall issue and deliver to the Holder a new
               certificate or certificates for Series V Class B Preferred Stock
               in the amount of Series V Class B Preferred Stock equal to the
               unconverted shares of the Series V Class B Preferred Stock
               represented by the certificate so surrendered.

          e.   Reservations of Shares. The Corporation shall at all times during
               which shares of Series V Class B Preferred Stock may be converted
               into Common Stock as provided in this paragraph (e), reserve and
               keep available, out of any Common Stock held as treasury stock or
               out of its authorized and unissued Common Stock, or both, solely
               for the purpose of delivery upon conversion of the shares of
               Series V Class B Preferred Stock as herein provided, such number
               of shares of Common Stock as shall then be sufficient to effect
               the conversion of all shares of Series V Class B Preferred Stock
               from time to time outstanding, and shall take such action as may
               from time to time be necessary to ensure that such shares of
               Common Stock will, when issued upon conversion of Series V Class
               B Preferred Stock, be fully paid and nonassessable.

          f.   Adjustment of Conversion Rate. The Conversion Rate provided in
               subdivision (a) of this paragraph 6, in respect of Series V Class
               B Preferred Stock, shall be subject to adjustments from time to
               time as follows:

               (i)  While any shares of Series V Class B Preferred Stock shall
                    be outstanding, in case the Corporation shall subdivide the
                    outstanding shares of Common Stock into a greater number of
                    shares of Common Stock or combine the outstanding shares of
                    Common Stock into a smaller number of shares of Common
                    Stock, or issue, by reclassification of its shares of Common
                    Stock, any shares of the Corporation, the Conversion Rate in
                    effect immediately prior thereto shall be adjusted so that
                    the Holder shall be entitled to receive the number of shares
                    which it would have owned or been entitled to receive after
                    the happening of any of the events described above, had such
                    shares of Series V Class B Preferred Stock been converted
                    immediately prior to the happening of such event, such

                                       5



                    adjustment to become effective immediately after the opening
                    of business on the day following the day upon which such
                    subdivision or combination or reclassification, as the case
                    may be, becomes effective.

              (ii)  In case the Corporation shall be consolidated with, or merge
                    into, any other corporation, and the Corporation does not
                    survive, proper provisions shall be made as a part of the
                    terms of such consolidation or merger, whereby the Holder
                    shall thereafter be entitled, upon exercise of such Holder's
                    conversion rights, to receive the kind and amount of shares
                    of stock or other securities of the Corporation resulting
                    from such consolidation or merger, or such other property,
                    as the Holder would have received if such conversion rights
                    were exercised immediately prior to the effectiveness of
                    such merger or consolidation.

              (iii) In the event the Corporation at any time makes or issues, a
                    record date for the determination of holders of Common Stock
                    entitled to receive, a dividend distribution payable in
                    additional shares of Common Stock or Common Stock
                    Equivalents (as defined in subparagraph (iv) of this
                    paragraph 6(f)) which does not provide for the payment of
                    any consideration upon the issuance, conversion or thereof,
                    without a corresponding dividend or other distribution to
                    the Holder, based upon the number of shares of Common Stock
                    into which the Series V Class B Preferred Stock is
                    convertible, then and in each such event the Conversion Rate
                    then in effect will be increased as of the time of such
                    issuance or, in the event such a record date shall have been
                    fixed, as of the close of business on such record date, by
                    multiplying such Conversion rate by a fraction:

                    (A)  The numerator of which will be the total number of
                         shares of Common Stock issued and outstanding
                         immediately prior to the time of such issuance or the
                         close of business on such record date plus the number
                         of shares of Common Stock issuable in payment of such
                         dividend or distribution (which, in the case of Common
                         Stock Equivalents, shall mean the maximum number of
                         shares of Common Stock issuable with respect thereto,
                         as set forth in the instrument relative thereto without
                         regard to any provision for subsequent adjustment); and

                    (B)  The denominator of which will be the total number of
                         shares of Common Stock issued and outstanding
                         immediately prior to the time of such issuance or the
                         close of business on such record date; provided,
                         however, that if such record date is fixed and such
                         dividend is not fully paid or if such distribution is
                         not fully made on the date fixed therefor, the
                         Conversion Rate will be recomputed accordingly as of
                         the close of business on such record date, and
                         thereafter such Conversion Rate will be adjusted
                         pursuant to this subparagraph (iii) as of the time of
                         actual payment of such dividends or distributions.

              (iv)  In the event the Corporation at any time makes or issues, or
                    fixes a record date for the determination of holders of
                    Common Stock entitled to receive a dividend or other
                    distribution payable to all holders of Common Stock in
                    securities of the Corporation or Common Stock Equivalents,
                    then, upon making such dividend or distribution, provisions
                    will be made so that the Holder will receive the amount of
                    securities of the Corporation which it would have received
                    had its Series V Class B Preferred Stock been converted into
                    Common Stock on the date of such event.

              (v)   In the event the Corporation sells or issues any Common
                    Stock, or sells or issues Common Stock Equivalents which can
                    be converted into Common Stock at a per share consideration
                    (as defined below in this subparagraph (v) of paragraph
                    6(f)) less than the Stipulated Price then in effect, then
                    the Holder shall be entitled to purchase from the
                    Corporation in cash (for the same per share consideration at
                    which such Common Stock

                                        6



                    was issued or the per share price at which a share of Common
                    Stock is acquirable upon exercise or conversion of Common
                    Stock Equivalents) that additional number of shares of
                    Common Stock which, when added to the number of shares of
                    Common Stock acquirable by the Holder upon conversion of any
                    shares of Series V Class B Preferred Stock outstanding and
                    held by such Holder immediately before such issue or sale
                    (the "Acquirable Shares"), will equal a percentage of the
                    number of shares of Common Stock Deemed Outstanding (as
                    defined herein) immediately after such sale or issuance that
                    is the same as the percentage of the number of shares of
                    Common Stock Deemed Outstanding immediately before such
                    issuance or sale represented by the Acquirable Shares. This
                    right shall exist for a 45-day period following the sale or
                    issuance of shares of Common Stock or Common Stock
                    Equivalents, and thereafter shall cease to exist.

                    For the above purposes, the per share consideration with
                    respect to the sale or issuance of Common Stock will be the
                    price per share received by the Corporation, prior to the
                    payment of any expenses, commissions, discounts and other
                    applicable costs. With respect to the sale or issuance of
                    Common Stock Equivalents which are convertible into or
                    exchangeable for Common Stock without further consideration,
                    the per share consideration will be determined by dividing
                    the maximum number of shares of Common Stock issuable with
                    respect to such Common Stock Equivalents (as set forth in
                    the instrument relating thereto without regard to any
                    provisions contained therein for subsequent adjustment of
                    such number) into the aggregate consideration receivable by
                    the Corporation upon the sale or issuance of such Common
                    Stock Equivalents. With respect to the issuance of other
                    Common Stock Equivalents, the per share consideration will
                    be determined by dividing the maximum number of shares of
                    Common Stock issuable with respect to such Common Stock
                    Equivalents into the total aggregate consideration received
                    by the Corporation upon the sale or issuance of such Common
                    Stock Equivalents plus the minimum aggregate amount of
                    additional consideration received by the Corporation upon
                    the conversion or exercise of such Common Stock Equivalents.
                    In connection with the sale or issuance of Common Stock
                    and/or Common Stock Equivalents for noncash consideration,
                    the amount of consideration will be the fair market value of
                    such consideration as determined in good faith by the Board
                    of Directors of the Corporation.

              (vi)  As used herein, the term "Stipulated Price" means initial
                    price of $4.00 per share of Common Stock, as adjusted from
                    time to time pursuant to subparagraph (viii) of this
                    paragraph 6(f); and the term "Common Stock Equivalent" means
                    any securities (whether debt or equity securities) or rights
                    issued by the Corporation convertible into or entitling the
                    holder thereof to receive shares of, or securities
                    convertible into, Common Stock. The number of shares of
                    "Common Stock Deemed Outstanding" at any date shall equal
                    the sum of the number of shares of Common Stock then
                    outstanding plus the number of shares of Common Stock then
                    obtainable pursuant to Common Stock Equivalents.

              (vii) In the event the Corporation declares any dividend or
                    distribution payable to holders of its Common Stock (other
                    than dividends payable out of the Corporation's retained
                    earnings or earned surplus and dividends payable in shares
                    of Common Stock or in securities convertible into or
                    exchangeable for shares of Common Stock or rights or
                    warrants to purchase Common Stock or securities convertible
                    into or exchangeable for shares of Common Stock or any other
                    securities issued by the Corporation), the Conversion Rate
                    in effect immediately prior to the record date for such
                    dividend or distribution shall be proportionately adjusted
                    so that the Holder shall be entitled to receive the number
                    of shares of Common Stock into which such shares of Common
                    Stock or Preferred Stock was convertible immediately prior
                    to such record date multiplied by a fraction, the numerator
                    of which is the fair market value of a share of Common Stock
                    on such record date and the denominator of which is such per
                    share fair

                                        7



                    market value of a share of Common Stock on such record date
                    less the fair market value on such record date of the
                    securities or other property which are distributed as a
                    dividend or other distribution. The term "fair market value"
                    of a share of Common Stock or of any other security or other
                    type of property on any date means (A) in the case of Common
                    Stock or any other security (I) if the principal trading
                    market for such Common Stock or other security is an
                    exchange or the NASDAQ national market on such date, the
                    closing price on such exchange or the NASDAQ national market
                    on such date, provided, if trading of such Common Stock or
                    other security is listed on any consolidated tape, the fair
                    market value shall be the closing price set forth on such
                    consolidated tape on such date, or (II) if the principal
                    market for such Common Stock or other security is the
                    over-the-counter market (other than the NASDAQ national
                    market) the mean between the closing bid and asked prices on
                    such date as set forth by NASDAQ or (B) in the case of
                    Common Stock or any other security for which the fair market
                    value cannot be determined pursuant to clause (A) above or
                    of any other security or type of property, fair market value
                    thereof on such date as determined in good faith by the
                    Board of Directors.

             (viii) Whenever the Conversion Rate is adjusted pursuant to this
                    paragraph 6(f), the Stipulated Price shall also be adjusted
                    by multiplying it by a fraction that is the reciprocal of
                    the fraction used to adjust the Conversion Rate.

             (ix)   The Corporation will not, by amendment of its Articles of
                    Incorporation or through any dissolution, issuance, or sale
                    of securities or any other voluntary action, avoid or seek
                    to avoid the observance or performance of any of the terms
                    to be observed or performed hereunder by the Corporation,
                    but at all times in good faith will assist in the carrying
                    out of all the provisions of this paragraph and in the
                    taking of all such action as may be necessary or appropriate
                    in order to protect the conversion rights of the Holder
                    against impairment.

             (x)    No adjustment in the Conversion Rate shall be required,
                    unless such adjustment would require an increase or decrease
                    of at least one (1) share of Common Stock in the Conversion
                    Rate of one share of Series V Class B Preferred Stock,
                    provided that all adjustments which do not meet this minimum
                    requirement cumulated and the adjustment will be made when
                    the cumulated total is sufficient to require an adjustment.
                    All calculations made pursuant to this subparagraph (x) of
                    paragraph 6(f) shall be made to the nearest 1/100th of a
                    share of Common Stock.

     g.      Fractional Shares. No fractional shares of Common Stock or scrip
             representing fractional shares of Common Stock shall be issued upon
             any conversion of shares of Series V Class B Preferred Stock but,
             in lieu thereof, there shall be paid an amount in cash equal to the
             same fraction of the current market price of a whole share of
             Common Stock on the day preceding the day of conversion.

     h.      Statement to Transfer Agent. Whenever the Conversion Rate for
             shares of Series V Class B Preferred Stock shall be adjusted
             pursuant to the provisions of paragraph 6(f) hereof, the
             Corporation shall forthwith maintain at its office and, if
             applicable, file with the Transfer Agent for shares of Series V
             Class B Preferred Stock and for shares of Common Stock, a statement
             signed by the President of the Corporation and by its Treasurer,
             stating the adjusted Conversion Rate and setting forth in
             reasonable detail the method of calculation and the facts requiring
             such adjustment, such calculations to be confirmed by the
             Corporation's independent Accountants, and stating the facts on
             which the calculation is based. Each adjustment shall remain in
             effect until a subsequent adjustment hereunder is required.

7.   Registration Rights

                                        8



     a.   Piggyback Registration. The Corporation, for a period ending six
          months after the last share of Series V Class B Preferred Stock is
          redeemed, retired, converted, or otherwise no longer outstanding, will
          give written notice to the holder not less than 20 days in advance of
          the initial filing of any registration statement under the Securities
          Act of 1933, as amended (other than a registration statement
          pertaining to securities issuable pursuant to employee stock option,
          stock purchase, or similar plans or a registration statement
          pertaining to securities issuable in connection with the acquisition
          of a business, whether through a merger, consolidation, acquisition of
          assets, or exchange of securities), covering any Common Stock or other
          securities of the Corporation, and will afford the holder the
          opportunity to have included in such registration all or such part of
          the shares of Common Stock acquired upon conversion of Series V Class
          B Preferred Stock, as may be designated by written notice to the
          Corporation not later than ten days following receipt of such notice
          from the Corporation. The Corporation shall be entitled to exclude the
          shares of Common Stock held by the holder from any one, but not more
          than one, such registration if the Corporation in its sole discretion
          decides that the inclusion of such shares will materially interfere
          with the orderly sale and distribution of the securities being offered
          under such registration statement by the Corporation. Notwithstanding
          the foregoing, the Corporation shall not be entitled to exclude the
          shares of Common Stock held by the Holder if shares of other
          shareholders are being included in any such registration statement
          and, in such circumstances, the Holder shall be entitled to include
          the shares of Common Stock held by them on a pro-rata basis in the
          proportion that the number of shares of Common Stock held by the
          Holder bears to the shares of Common Stock held by all other
          shareholders, including shares in such registration statement. The
          Holder shall not be entitled to include shares in more than two
          registration statements pursuant to the provisions of this subdivision
          (a) of paragraph 7, and all rights of the Holder under this
          subdivision (a) of paragraph 7 shall terminate after the Holder has
          included shares of Common Stock in two registration statements
          pursuant to this subdivision (a) of paragraph 7.

     b.   Expenses. The Corporation will pay all out-of-pocket costs and
          expenses of any registration effected pursuant to the provisions of
          subdivision (a) of this paragraph 7, including registration fees,
          legal fees, accounting fees, printing expenses (including such number
          of any preliminary and the final prospectus as may be reasonably
          requested), blue sky qualification fees and expenses, and all other
          expenses, except for underwriting commissions or discounts applicable
          to the shares of Common Stock being sold by the Holder and the fees of
          counsel for the Holder, all of which shall be paid by the Holder.

     c.   Notwithstanding anything to the contrary contained herein, in the
          event that the Corporation files an initial registration statement
          under the Securities Act of 1933, as amended (other than a
          registration statement pertaining to securities issuable in connection
          with the acquisition of a business, whether through merger,
          consolidation, acquisition of assets, or exchange of securities),
          concerning any Common Stock of the Corporation, it may, at its option,
          at any time within 180 days after the initial registration statement
          is deemed effective, demand the conversion of the Series V Class B
          Convertible Preferred shares into that number of fully paid and
          nonassessable shares of Common Stock as provided herein.

8.   Reports

     So long as any of the Series V Class B Preferred Stock shall be
     outstanding, the Corporation shall submit to the Holder financial reports
     no less frequently than annually.

9.   Miscellaneous

     a.   As used herein, the term "Common Stock" shall mean the Corporation's
          Common Stock, no par value, or, in the case of any reclassification or
          change of outstanding shares of Common Stock, the stock or securities
          issued in exchange for such Common Stock.

                                        9



          b.   The shares of Series V Class B Preferred Stock shall be fully
               transferable by the Holder thereof, subject to compliance with
               the applicable provisions of federal and state securities laws.

                                       10



IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate seal
to be hereunto affixed and this Certificate to be signed by its Chief Executive
Officer and Secretary this 17 day of April, 2002.

                                             /s/ Thomas J. Shaw
                                             -----------------------------------
                                             THOMAS J. SHAW,
                                             Its: Chief Executive Officer

ATTEST:

/s/ Michelle M. Larios
- --------------------------
MICHELE M. LARIOS
Secretary

                                       11



                                     FILED
                              in the Office of the
                          Secretary of State of Texas

                   STATEMENT OF INCREASE IN AUTHORIZED SHARES

                 OF SERIES V CLASS B CONVERTIBLE PREFERRED STOCK

                                       OF

                         RETRACTABLE TECHNOLOGIES, INC.

Pursuant to Article 2.13 of the Texas Business Corporation Act and Article Four
of its Second Amended and Restated Articles of Incorporation (the "Articles of
Incorporation"), Retractable Technologies, Inc., a corporation organized and
existing under the laws of the State of Texas (the "Corporation"),

DOES HEREBY CERTIFY that, pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Articles of Incorporation, and pursuant to
the Texas Business Corporation Act, said Board of Directors, on June 20, 2002,
at a meeting duly called and noticed, adopted a resolution by all necessary
action on the part of the Corporation, providing for the increasing of the
authorized number of shares of Series V Class B Convertible Preferred Stock to
consist of not more than 3,097,855 shares, which resolution is and reads as
follows:

RESOLVED that the Officers are hereby authorized and directed to take all
actions necessary to increase the authorized number of shares of Series V Stock
of the Corporation to not more than 3,097,855 shares.

IN WITNESS WHEREOF, RETRACTABLE TECHNOLOGIES, INC. has caused its corporate seal
to be hereunto affixed and this Statement to be signed by its Chief Executive
Officer and Secretary this 20th day of June, 2002.


                                        /s/ THOMAS J. SHAW
                                        -------------------------------
                                        THOMAS J. SHAW,
                                        Its: Chief Executive Officer

ATTEST:

/s/ MICHELE M. LARIOS
- -------------------------
MICHELE M. LARIOS
Secretary

EX-10.13

                                                                   EXHIBIT 10.13

                                 FIRST AMENDMENT
                                     TO THE
                         RETRACTABLE TECHNOLOGIES, INC.
                             1999 STOCK OPTION PLAN

     This First Amendment to the RETRACTABLE TECHNOLOGIES, INC. 1999 STOCK
OPTION PLAN (the "Plan") is authorized by Thomas J. Shaw and Douglas W. Cowan,
the Chairman and Member of the Compensation and Benefits Committee (the
"Committee") of Retractable Technologies, Inc. ("Retractable"), respectively.

                                    RECITALS

     WHEREAS, Section 4 of the Plan provides that the "...Plan shall be
administered by the Committee or, in the absence of Committee, by the Board."
Section 4 further provides that "(t)he interpretation and construction of any
provision of (the) Plan by the Committee shall be final, unless otherwise
determined by the Board"; and

     WHEREAS, Section 18 of the Plan provides that "(t)he Board of Directors may
discontinue the Plan and the Committee may amend the Plan from time to time...";
and

     WHEREAS, the stockholders have authorized increasing the maximum number of
shares of stock that may be optioned or sold under this Plan from 2 million to 4
million shares effective September 20, 2002; and

     WHEREAS, federal tax laws require that incentive stock options ("ISOs") be
issued to persons not deemed to be ten percent shareholders at an exercise price
that is no less than 100% of fair market value and to be issued to persons
deemed to be ten percent shareholders at no less than 110% of fair market value;
and

     WHEREAS, the Plan currently authorizes the issuance of options to persons
not deemed to be ten percent shareholders and persons deemed to be ten percent
shareholders, respectively, at exercise prices equal to 100% and 110% of fair
market value, respectively; and

     WHEREAS, the Committee determined effective as of September 30, 2002, that
the best interests of Retractable would be served by the amendment of the Plan
to authorize the issuance of ISOs to persons not deemed to be ten percent
shareholders at an option price at least equal to 100% of fair market value of
each share and to authorize the issuance of ISOs to persons deemed to be ten
percent shareholders at an option price at least equal to 110% of the fair
market value of each share; and

     WHEREAS, Section 711 of the American Stock Exchange Company Guide provides
an exception to shareholder approval "...as a prerequisite to approval of
applications to list additional shares reserved for options granted to officers,
directors, or key employees..." where "...such options are to be granted:
....(ii) under a plan or



arrangement for officers, directors, or key employees provided such incentive
arrangements do not authorize the issuance of more than 5% of outstanding common
stock in any one year and provided that all arrangements adopted without
shareholder approval in any five-year period do not authorize, in the aggregate,
the issuance of more than 10% of such common stock. (For the purpose of
calculating the percentage of stock issued in the aggregate, stock to be issued
pursuant to options which have expired and/or been cancelled shall not be
included.)"; and

     WHEREAS, an amendment to authorize the issuance of ISOs at or above fair
market value does not require shareholder approval; now, therefore:

                                   AMENDMENTS

     1.   Section (3) of the Plan is hereby amended and restated in its
entirety, effective as of September 20, 2002, to read as follows:

          (3) STOCK TO BE OPTIONED; DESIGNATION OF INCENTIVE STOCK OPTIONS.
          Subject to the provisions of Section (11) of this Plan, the maximum
          number of shares of Stock that may be optioned or sold under this Plan
          is Four Million (4,000,000) shares, all of which may be designated as
          ISOs. The shares shall be either treasury or authorized but unissued
          shares of Stock of the Company. Options or portions of options granted
          under this Plan to key employees may, in the discretion of the
          Committee, be designated as ISOs or NQSOs. Options granted to
          non-employees must be NQSOs. In addition to any other term or
          provision of this Plan applicable to an ISO, any option designated as
          an ISO shall also be subject to the condition that the aggregate fair
          market value (determined at the time the options are granted) of the
          Company's Common Stock with respect to which incentive stock options
          are exercisable for the first time by any individual employee during
          any calendar year (under this Plan and all other similar plans of the
          Company and its subsidiaries hereafter adopted) shall not exceed One
          Hundred Thousand Dollars ($100,000.00).

     2.   Section (6) of the Plan is hereby amended and restated in its
entirety, effective as of September 30, 2002, to read as follows:

          (6) OPTION PRICE FOR ISOs AND NQSOs. For any Participant who is not
          deemed to be a Ten Percent (10%) Shareholder under the rules
          applicable to ISOs under 422 of the Code (a "10% Shareholder"), the
          Option Price for each share to be acquired pursuant to an ISO shall be
          at least One Hundred Percent (100%) of the fair market value of the
          share as determined by the Board of Common Stock on the date the ISO
          is granted. For any Participant who is deemed to be a 10% Shareholder
          under the rules applicable to ISOs under Section 422 of the Code, the
          Option Price for each share to be acquired pursuant to an ISO shall be
          at least One Hundred Ten Percent (110%) of the fair market value of
          the share. The



          Option Price for any NQSO shall be as determined by the Board of
          Common Stock on the date the NQSO is granted. In addition, the Board
          shall include in any NQSO granted pursuant to this Plan a condition
          that, upon exercise of the NQSO and prior to the issuance of any stock
          certificate to the Participant, the Participant shall remit to the
          Company the amount, if any, of any federal, state, or local employment
          taxes required to be withheld upon exercise of the NQSO. The
          Participant may (i) make a direct payment to the Company to satisfy
          this obligation, (ii) increase withholding on his cash compensation on
          the date the NQSO is exercised, and/or (iii) use the procedure
          described in the following provisions of this Section (6). One (1)
          month prior to exercise of a NQSO, the Participant may deliver a
          notice of withholding election to the Company. The notice shall state
          that the Company is to (i) calculate the amount of withholding tax due
          as if all shares for which a NQSO is to be exercised were delivered,
          (ii) reduce that number of shares made available for delivery so that
          the fair market value of the shares withheld on the exercise date
          approximates the Company's withholding tax obligation, and (iii) pay
          the cash to the Internal Revenue Service and other applicable taxing
          authorities on the Participant's behalf instead. No withholding
          obligation shall be imposed by this Section (6) unless also imposed by
          applicable law.


  /s/ Thomas J. Shaw                          /s/ Douglas W. Cowan
- --------------------------------------      ------------------------------------
Thomas J. Shaw, Chairman                    Douglas W. Cowan, Member
Compensation and Benefits Committee         Compensation and Benefits Committee

Executed this March 31, 2003, to reflect amendments to the 1999 Stock Option
Plan made in September, 2002.

EX-20.1

                                                                    EXHIBIT 20.1

[LETTERHEAD OF RETRACTABLE TECHNOLOGIES, INC.]

April 3, 2002


Dear Shareholder:

I would like to take this opportunity to share with you three articles that have
been published recently in The New York Times. These articles provide insight
into the U.S. healthcare purchasing system with which Retractable Technologies
Inc. has been grappling for some time.

As you may know, Becton Dickinson (BD) and Sherwood Medical (Sherwood) have
maintained an iron grip on the U.S. needle market in spite of their not having
viable safety syringes and blood collection needle products. The results have
been catastrophic for public health in that clinicians have sustained millions
of unnecessary life-threatening needle sticks during the five years that we have
been fighting for market entry, and our shareholders have been deprived of their
rightful investment potential.

Over the years we have received numerous requests from our shareholders about
ways in which they might assist us in our efforts to open the U.S. medical
syringe markets. This media coverage presents an opportunity for Retractable
Technologies shareholders to help with our efforts. Enclosed are the three
articles from The New York Times that relate to our challenges regarding market
entry.

The first two articles relate to some of the mechanisms which keep the
highly-rated VanishPoint(R) products from being clinically demonstrated in most
U.S. acute care facilities. These articles, which ran on page one of The New
York Times on March 4, 2002, and March 26, 2002, report on the relationship
between large medical manufacturers and hospital group purchasing organizations
(GPOs). The articles document in shocking detail some of the anticompetitive
practices utilized by the GPOs and market share leaders BD and Sherwood. The
third is an article regarding Dr. Schlager, who was the Medical Director for BD
for several years.

Thanks in part to the Times' investigation, the U.S. Senate Judiciary
Committee's Subcommittee on Antitrust is planning to hold hearings in April on
GPO contracting practices. I believe this is the first serious attempt on the
part of Congress to confront these powerful rascals regarding the leveraging of
the American medical device market to lockout competitors and ultimately raise
the costs of healthcare.

I urge you to contact your U. S. congressional representative and senator as
well as other key legislators and officials, to call their attention to these
articles and to ask them to take whatever steps are necessary to put a stop to
these unfair, monopolistic practices. If you share



our determination, concern for the company, and concern for the healthcare
professionals, please let your representatives know.

To quickly obtain the addresses, phone numbers, and email addresses of your
legislators, simply go to www.congress.org and type in your zip code number, or
you can call Retractable at (972) 294-1010; Shanna Warner would be happy to
provide you with the contact information for your representative. A letter to
your representative can be sent via email or fax. For your convenience, I have
enclosed a sample letter that you can use to get an idea of the points you might
want to include in your letter.

Feel free to contact me with any questions.

Sincerely,

/s/ Thomas J. Shaw

Thomas J. Shaw
President and CEO

Encl.



                                     SAMPLE

April 3, 2002

Senator/Representative
Office Building
Washington , D.C.

Dear Congressman/Senator/Administration official:

I'm writing to call your attention to the investigative articles on hospital
group purchasing organizations (GPOs) that appeared on page one of The New York
Times of March 4, and March 26, 2002. As a sometime patient [or physician or
                                                             ---------------
health care provider, if that is the case] and taxpayer, I am outraged by the
- -----------------------------------------
practices exposed in this article. Without doubt, this scandal is the Enron of
the health care industry.

At a time when hospitals are pleading for additional federal funding and forty
million Americans lack adequate health insurance coverage, it is truly
incredible that a small group of venal purchasing executives have been able to
bilk the American health care system with apparent impunity.

As a shareholder in Retractable Technologies, Inc., a maker of safety needle
devices cited in one of the articles, I am deeply troubled that our company's
efforts to market its life-saving automated retraction needle technology have
been blocked by these anti-competitive practices. Clearly, these activities have
harmed patients and health care workers by depriving them of the best available
medical devices and by discouraging innovation by entrepreneurs and small
companies in the medical device industry.

I respectfully urge you to call on administration officials and your fellow
legislators to take whatever steps are necessary to bring these reprehensible
practices to an immediate halt. Please feel free to contact me if you wish to
discuss this issue further.

Sincerely yours,

EX-20.2

                                                                    EXHIBIT 20.2

[LETTERHEAD OF RETRACTABLE TECHNOLOGIES, INC.]

April 15, 2002

Dear Shareholder:

Enclosed is Retractable Technologies, Inc.'s ("Retractable's") 10-KSB for 2001.
Some of the highlights for 2001 and thus far in 2002 include:

..    The 1cc assembly equipment came on line during the first quarter of 2001.
..    Retractable's SB-2 was declared effective on May 3, 2001.
..    Retractable began trading on the AMEX the following day; the first company
     to begin trading directly on the AMEX with a self-underwritten initial
     public offering.
..    Sales for 2001 increased 67.5% over 2000 sales.
..    Gross margins improved to 17.5% of sales in 2001 from 8.6% of sales in
     2000.
..    Retractable received a Loan Agreement from Katie Petroleum, Inc. for $5
     million.
..    Royalties for 2001 in the amount of one million dollars were foregone by my
     wife and me in the first quarter of 2002. This transaction will be recorded
     in the first quarter of 2002 and is more fully described in the 10-KSB.
..    In April 2002 Retractable retained Halliburton Investor Relations of
     Dallas, Texas to, among other things, assist with "getting our story out"
     to the investment community.

Thank you for your continued interest and support of Retractable Technologies,
Inc.

Sincerely,

/s/ Thomas J. Shaw

Thomas J. Shaw
President and CEO

EX-20.4

                                                                    EXHIBIT 20.4

[LETTERHEAD OF RETRACTABLE TECHNOLOGIES, INC.]

July 23, 2002

Dear Shareholder:

I'm writing to alert you to the latest article---"Questioning $1 Million Fee in
a Needle Deal"--- in The New York Times investigative series on hospital group
purchasing organizations (GPOs). This article, which ran July 19 on page one of
the business section, is especially significant because it documents apparently
illegal payments totaling $1.1 million made by Becton Dickinson to Novation, the
largest GPO. As you know, we have suspected for years that BD has paid bribes to
the big GPOs to deny us access to the U. S. acute care hospital market, and this
story strongly corroborates that view. In the article, assistant U. S. Attorney
James Sheehan, who specializes in health care fraud, is quoted as saying that he
had "serious questions" about the legality of these payments. [You can access
the story at www.nytimes.com.]

As I did when The Times' "Medicine's Middlemen" series began this spring, I
strongly urge you to express your concern about these abuses to your
representatives in the house and senate and other key legislators, notably
Senators Herbert Kohl (D-WI) and Mike DeWine (R-OH), Chairman and Ranking
Member, respectively, of the Senate Committee on the Judiciary Antitrust
Subcommittee, which has been investigating GPO activities. You might also
consider writing a letter praising the series and expressing your outrage of the
GPO's conduct to the Editor of The New York Times, 229 West 43rd St., New York,
NY 10036-3959. Email: letters@nytimes.com. FAX: (212) 556-3622.

To quickly obtain the addresses, phone numbers, and email addresses of your
legislators, simply go to www.congress.org and type in your zip code number.
Please feel free to contact me with any questions, and many thanks for your
continued loyalty and support.

Sincerely,

/s/ Thomas J. Shaw

Thomas J. Shaw
President & CEO

EX-20.5

                                                                    EXHIBIT 20.5

[LETTERHEAD OF RETRACTABLE TECHNOLOGIES, INC.]

July 31, 2002

To: The Common Stockholders of Record of Retractable Technologies, Inc.

Our records indicate that you are the registered owner of shares of common stock
of Retractable Technologies, Inc. (the "Company"). The market price for the
Company's common stock has remained low despite the Company's continual
improvement. All of us are disappointed, and Shareholders have asked the Company
whether there are non-fundamental (market-based) factors at work and what they
can do.

The Company believes that part of the reason for the continually depressed
prices may be short selling by powerful adversaries or their agents in an effort
to disrupt our business and financial objectives. In a typical short sale, a
brokerage customer will "borrow" shares and sell them into the market, in
expectation of declining share prices that will permit him to repurchase the
shares to "cover" his short sale and capture the price difference. Done
correctly, short selling is legal and provides an opportunity for significant
profit to sophisticated, pessimistic traders. Short sellers are reliant on their
ability to "borrow" shares; some will "borrow" from their own holdings or the
proprietary holdings of their broker (collateralized by cash or marketable
securities in a margin account) in a "short against the box." More typically,
short sellers' brokers rely on holdings of other brokerage customers at the same
firm or at a related broker who hold their shares in margin accounts. In
practice, the same shares can be borrowed and sold numerous times, so long as
the short seller has sufficient collateral to cover the price of the shares he
borrowed, and so long as a sufficient number of shares are available for
borrowing from his own or other customers' margin accounts.

Although the monthly short interest reports provided by domestic broker-dealers
do not reveal large short positions, short positions opened and closed within a
calendar month and certain short positions held by offshore interests might not
be reflected in these reports. Share ledgers identifying our shareholders
(including "street name" holdings and Non-Objecting Beneficial Owners ("NOBO")
listing suggests that if there are large unreported short positions they may be
"naked shorts," meaning that the short sellers or their brokers do not own the
Company's shares, but may be reliant on shares held in other customers' accounts
such as your own. Although average daily share volume is small relative to the
total number of tradable shares, there is sufficient volume so that a diligent
short seller could significantly depress the Company's share price. Our
shareholders should keep in mind that we are in major litigation with powerful
adversaries who would benefit by keeping our stock price sufficiently depressed
in order to make our efforts to raise capital very difficult.

A "short squeeze" is a defensive tactic in which a company and its shareholders,
working together, reduce the number of shares in the market available for
borrowing, forcing a short seller to "cover." The "squeeze" can be accomplished
in one of two ways:



          .    One way is for shareholders to contact their brokers and ask for
               physical delivery of certificates either by delivery to the
               shareholder or placed in the broker's vault. Obviously a transfer
               agent cannot issue more shares than have been issued and short
               sellers (or in the worst case, their brokers) may be forced to
               buy-in shares from the marketplace to replace borrowed shares. In
               a market where the true "float" is reduced by shares being taken
               off the market, short sellers may be faced with rapidly
               increasing share prices and "covering" can be both difficult and
               expensive.

          .    Another way is for shareholders to contact their brokers and ask
               that their shares be held in a cash account, as opposed to a
               margin account. Margin account agreements contain express
               permission for a broker to "borrow" shares for its own or a
               customer's use; cash account agreements generally require a
               broker to maintain the shares available for delivery. As in the
               circumstances of a physical delivery squeeze, short sellers may
               be forced to "cover" in an increasing market price environment.

There are risks to shareholders participating in a "squeeze." Certificate
delivery can take weeks, and a shareholder's ability to effect transactions in
the stock during that period will be compromised. Shares posted into a cash
account cannot be used as collateral for borrowing, which could deprive a
shareholder of valuable business opportunities. Furthermore, the "squeeze" might
not work if a sufficient number of shareholders do not participate, and
shareholders will have wasted valuable time and possibly missed opportunities
for profit.

If you believe that your Company is the victim of short selling pressure and are
willing to assume these risks to help yourself and us, contact your broker for
guidance in selection of which of the two alternatives set forth above is better
for your own personal circumstances. If you decide to select one of the methods
discussed above of thwarting short sellers, I have attached a letter that you
can complete and send to your broker.

If you have any questions about the content of this letter, call Douglas W.
Cowan, Chief Financial Officer. Thank you for your continued assistance in
supporting the Company.

Sincerely,

/s/ Thomas J. Shaw

Thomas J. Shaw
President and CEO



Date: ______________

Client Name: _______________________________________________________

Account number: ___________________________________

     Broker's name: _______________________________

     Brokerage firm: ______________________________

     Address:  ____________________________________

               ____________________________________

RE: Request for Retractable Technologies, Inc. Stock Certificates in my account


Dear _____________________:

The purpose of this letter is to request that one of the following actions to be
taken by your firm regarding my ___________ shares of RVP common stock. I have
initialed and filled in the appropriate blanks for the action indicated below
regarding my RVP stock holdings.

____ Physical delivery of all of my common stock certificates for Retractable
Technologies, Inc. (AMEX: RVP). I would like those certificates delivered to the
following address:

     ______________________________________________

     ______________________________________________

     ______________________________________________

     ______________________________________________

_____ Physical placement of my common stock certificates for RVP in your vault

_____ Transfer of my RVP common stock certificates to my cash account.

I expect for my request to be completed within 5 business days. Please give this
matter your prompt attention.

You may contact me if you have any questions or need additional information. I
can be contacted by phone at _____________ or _______________. I can be
contacted via e-mail at ____________________.

Thank you for your prompt attention to this matter.

Sincerely,

EX-99

Exhibit 99

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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

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

(2) The information contained in the Report as of the dates and for the periods covered by the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Thomas J. Shaw

THOMAS J. SHAW

PRESIDENT, CHAIRMAN, AND

CHIEF EXECUTIVE OFFICER

/s/ Douglas W. Cowan

DOUGLAS W. COWAN

CHIEF FINANCIAL OFFICER