0001104659-17-068421.txt : 20171114 0001104659-17-068421.hdr.sgml : 20171114 20171114134610 ACCESSION NUMBER: 0001104659-17-068421 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 49 CONFORMED PERIOD OF REPORT: 20170930 FILED AS OF DATE: 20171114 DATE AS OF CHANGE: 20171114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RETRACTABLE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000946563 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 752599762 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-16465 FILM NUMBER: 171200289 BUSINESS ADDRESS: STREET 1: 511 LOBO LANE CITY: LITTLE ELM STATE: TX ZIP: 75068-0009 BUSINESS PHONE: 9722941010 MAIL ADDRESS: STREET 1: 511 LOBO LANE CITY: LITTLE ELM STATE: TX ZIP: 75068-0009 10-Q 1 a17-20586_110q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2017

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-16465

Retractable Technologies, Inc.

(Exact name of registrant as specified in its charter)

Texas		75-2599762
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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

(972) 294-1010

(Registrant’s telephone number, including area code)

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

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

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

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

Large accelerated filer o		Accelerated filer o

Non-accelerated filer o		Smaller reporting company x
(Do not check if a smaller reporting company)		Emerging growth company o

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

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

APPLICABLE ONLY TO CORPORATE ISSUERS

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

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RETRACTABLE TECHNOLOGIES, INC.

FORM 10-Q

For the Quarterly Period Ended September 30, 2017

TABLE OF CONTENTS

	PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	1

CONDENSED BALANCE SHEETS		1
CONDENSED STATEMENTS OF OPERATIONS		2
CONDENSED STATEMENTS OF CASH FLOWS		3
NOTES TO CONDENSED FINANCIAL STATEMENTS		4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	16

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	17

Item 1A.	Risk Factors	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

Item 3.	Defaults Upon Senior Securities	17

Item 6.	Exhibits	18

SIGNATURES		19

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

RETRACTABLE TECHNOLOGIES, INC.

CONDENSED BALANCE SHEETS

(unaudited)

		September 30, 2017		December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	15,866,458	$	16,199,043
Accounts receivable, net		5,246,322		3,267,838
Inventories, net		7,353,247		7,017,224
Other current assets		505,656		192,548
Total current assets		28,971,683		26,676,653

Property, plant, and equipment, net		11,663,988		12,092,037
Other assets		7,063		10,289
Total assets	$	40,642,734	$	38,778,979

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,046,014	$	4,471,756
Current portion of long-term debt		430,089		430,393
Accrued compensation		924,879		536,456
Dividends payable		55,113		55,113
Accrued royalties to shareholder		847,301		659,443
Insurance proceeds		876,250		—
Other accrued liabilities		950,770		1,019,283
Total current liabilities		9,130,416		7,172,444

Long-term debt, net of current maturities		3,172,321		3,498,244
Total liabilities		12,302,737		10,670,688

Commitments and contingencies — see Note 6

Stockholders’ equity:
Preferred stock, $1 par value:
Series I, Class B		98,500		98,500
Series II, Class B		171,200		171,200
Series III, Class B		129,245		129,245
Series IV, Class B		342,500		342,500
Series V, Class B		40,000		40,000
Common stock, no par value		—		—
Additional paid-in capital		62,127,956		59,290,333
Accumulated deficit		(34,569,404	)	(31,963,487	)
Total stockholders’ equity		28,339,997		28,108,291
Total liabilities and stockholders’ equity	$	40,642,734	$	38,778,979

See accompanying notes to condensed unaudited financial statements

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RETRACTABLE TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

		Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016

Sales, net	$	10,412,036		$	8,840,134		$	24,981,833		$	22,337,169
Cost of sales
Cost of manufactured product		6,304,397			4,900,072			15,116,805			12,400,679
Royalty expense to shareholder		847,301			680,287			2,070,699			1,868,064
Total cost of sales		7,151,698			5,580,359			17,187,504			14,268,743
Gross profit		3,260,338			3,259,775			7,794,329			8,068,426

Operating expenses:
Sales and marketing		1,220,451			1,058,029			3,472,004			2,953,773
Research and development		159,921			117,939			465,765			389,712
General and administrative		1,912,824			2,165,246			6,346,731			6,306,085
Total operating expenses		3,293,196			3,341,214			10,284,500			9,649,570
Loss from operations		(32,858	)		(81,439	)		(2,490,171	)		(1,581,144	)

Interest and other income		19,477			8,609			44,155			19,822
Interest expense, net		(52,962	)		(51,994	)		(159,053	)		(158,327	)
Net loss before income taxes		(66,343	)		(124,824	)		(2,605,069	)		(1,719,649	)
Provision for income taxes		283			480			848			1,440
Net loss		(66,626	)		(125,304	)		(2,605,917	)		(1,721,089	)
Preferred stock dividend requirements		(176,249	)		(176,249	)		(528,747	)		(528,747	)
Loss applicable to common shareholders	$	(242,875	)	$	(301,553	)	$	(3,134,664	)	$	(2,249,836	)

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

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

Weighted average common shares outstanding:
Basic		32,166,454			29,649,874			31,722,010			29,252,652
Diluted		32,166,454			29,649,874			31,722,010			29,252,652

See accompanying notes to condensed unaudited financial statements

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RETRACTABLE TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

		Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Cash flows from operating activities
Net loss	$	(2,605,917	)	$	(1,721,089	)
Adjustments to reconcile net loss to net cash used by operating activities:
Provision for doubtful accounts		(81,152	)		92,000
Share-based compensation		652,860			84,651
Depreciation and amortization		603,582			672,000
(Increase) decrease in assets:
Accounts receivable		(1,897,332	)		(352,444	)
Inventories		(336,023	)		(908,099	)
Other current assets		(313,108	)		1,338,622
Other assets		—			(750	)
Increase (decrease) in liabilities:
Accounts payable		574,258			(988,248	)
Other accrued liabilities		507,768			139,817
Income taxes payable		—			2,717
Insurance proceeds		876,250			—
Net cash used by operating activities		(2,018,814	)		(1,640,823	)

Cash flows from investing activities
Purchase of property, plant, and equipment		(172,305	)		(1,671,649	)
Net cash used by investing activities		(172,305	)		(1,671,649	)

Cash flows from financing activities
Repayments of long-term debt and notes payable		(326,227	)		(187,418	)
Proceeds from the sale of common stock		2,350,100			—
Proceeds from the exercise of stock options		—			839,200
Payment of Preferred Stock dividends		(165,339	)		(165,640	)
Net cash provided by financing activities		1,858,534			486,142

Net decrease in cash and cash equivalents		(332,585	)		(2,826,330	)

Cash and cash equivalents at:
Beginning of period		16,199,043			18,045,044
End of period	$	15,866,458		$	15,218,714

Supplemental schedule of cash flow information:
Interest paid	$	159,053		$	158,325
Income taxes paid	$	—		$	2,025

Supplemental schedule of noncash investing and financing activities:
Preferred dividends declared, not paid	$	55,113		$	55,113

See accompanying notes to condensed unaudited financial statements

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RETRACTABLE TECHNOLOGIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

Business of the Company

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

Basis of presentation

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

Cash and cash equivalents

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

Accounts receivable

The Company records trade receivables when revenue is recognized. No product has been consigned to customers. The Company’s allowance for doubtful accounts is primarily determined by review of specific trade receivables. Those accounts that are doubtful of collection are included in the allowance. This provision is reviewed to determine the adequacy of the allowance for doubtful accounts. Trade receivables are charged off when there is certainty as to their being uncollectible. Trade receivables are considered delinquent when payment has not been made within contract terms.

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

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

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Inventories

Inventories are valued at the lower of cost or net realizable value, with cost being determined using actual average cost. The Company compares the average cost to the net realizable value and records the lower value. Management considers such factors as the amount of inventory on hand and in the distribution channel, estimated time to sell such inventory, the shelf life of inventory, and current market conditions when determining excess or obsolete inventories. A reserve is established for any excess or obsolete inventories or they may be written off.

Property, plant, and equipment

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

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

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

Long-lived assets

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

Financial instruments

The Company estimates the fair value of financial instruments through the use of public market prices, quotes from financial institutions, and other available information. Judgment is required in interpreting data to develop estimates of fair value and, accordingly, amounts are not necessarily indicative of the amounts that could be realized in a current market exchange. Short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and other liabilities, consist primarily of instruments without extended maturities, the fair value of which, based on Management’s estimates, equals their recorded values. The fair value of long-term liabilities, based on Management’s estimates, approximates their reported values.

Concentration risks

The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. Cash balances, some of which exceed federally insured limits, are maintained in financial institutions; however, Management believes the institutions are of high credit quality. The majority of accounts receivable are due from companies which are well-established entities. As a consequence, Management considers any exposure from concentrations of credit risks to be limited.

The following table reflects our significant customers for the three and nine months ended September 30, 2017 and 2016:

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	Three Months ended September 30, 2017	Three Months ended September 30, 2016	Nine Months ended September 30, 2017	Nine Months ended September 30, 2016
Number of significant customers	3	2	2	1
Aggregate dollar amount of net sales to significant customers	$5.1 million	$3.5 million	$9.4 million	$7.1 million
Percentage of net sales to significant customers	49.1%	39.3%	37.5%	31.6%

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

Revenue recognition

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

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

The Company’s domestic return policy also generally provides that a customer may return product that is overstocked. Overstocking returns are limited to two times in each 12-month period up to 1% of distributor’s total purchase of products for the prior 12-month period. All product overstocks and returns are subject to inspection and acceptance by the Company.

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

Income taxes

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

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

Earnings per share

The Company computes basic earnings per share (“EPS”) by dividing net earnings for the period (adjusted for any cumulative dividends for the period) by the weighted average number of common shares outstanding during the period. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect, if any, of the common stock deliverable pursuant to stock options or common stock issuable upon the conversion of convertible preferred stock. The calculation of diluted EPS excluded 93,125 and 670,338 shares of Common Stock underlying issued and outstanding stock options for the three months ended September 30, 2017 and September 30, 2016, respectively, as their effect was antidilutive. The calculation of diluted EPS excluded 128,540 and 674,042 shares of Common Stock underlying issued and outstanding stock options for the nine months ended September 30, 2017 and September 30, 2016, respectively, as their effect was antidilutive. The potential dilution, if any, is shown on the following schedule:

		Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Net loss	$	(66,626	)	$	(125,304	)	$	(2,605,917	)	$	(1,721,089	)
Preferred dividend requirements		(176,249	)		(176,249	)		(528,747	)		(528,747	)
Loss applicable to common shareholders after assumed conversions	$	(242,875	)	$	(301,553	)	$	(3,134,664	)	$	(2,249,836	)
Average common shares outstanding		32,166,454			29,649,874			31,722,010			29,252,652
Average common and common equivalent shares outstanding – assuming dilution		32,166,454			29,649,874			31,722,010			29,252,652
Basic loss per share	$	(0.01	)	$	(0.01	)	$	(0.10	)	$	(0.08	)
Diluted loss per share	$	(0.01	)	$	(0.01	)	$	(0.10	)	$	(0.08	)

Shipping and handling costs

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

Research and development costs

Research and development costs are expensed as incurred.

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Share-based compensation

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

		Three Months Ended September 30, 2017		Three Months Ended September 30, 2016		Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016

Cost of sales	$	74,683	$	37,995	$	270,800	$	37,995
Sales and marketing		38,578		20,723		143,255		20,723
Research and development		12,458		6,310		45,174		6,310
General and administrative		56,832		19,623		193,631		19,623
	$	182,551	$	84,651	$	652,860	$	84,651

Insurance Proceeds

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

Recent pronouncements

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory,” which is part of the FASB’s Simplification Initiative. Inventory, including inventory measured at average cost, would be valued at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for the Company’s annual periods and interim periods within those annual periods beginning January 1, 2017. Amendments in this ASU should be applied prospectively with earlier application permitted at the beginning of an interim or annual reporting period. The adoption of this pronouncement had no impact on the Company’s Balance Sheet, Results of Operations, or Cash Flows in the period of adoption.

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

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

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retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. This ASU is effective for the Company’s quarter ending March 31, 2019, with early adoption permitted. The Company is currently evaluating the impact of this standard.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. This ASU’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects consideration to which the company expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption. In July 2015, the FASB voted to delay the effective date of this ASU by one year. The ASU will now be effective commencing with the Company’s quarter ending March 31, 2018. Early adoption of this ASU is allowed no sooner than the original effective date. Management’s preliminary assessment is that the implementation of the amended guidance will not have a material impact on the Company’s balance sheet, statements of operations, changes in stockholders’ equity and cash flows. The Company’s revenue is generated from sales of finished goods (disposable medical devices). Revenue from these sales will continue to be recognized when title of the products is passed to the customer. Management expects materially similar results under the amended guidance as compared to the Company’s current policies and procedures regarding revenue recognition. This preliminary assessment may change prior to adoption. Additionally, Management anticipates adopting this amended guidance on a Modified Retrospective basis in the first quarter of 2018.

3. INVENTORIES

Inventories consist of the following:

		September 30, 2017			December 31, 2016
Raw materials	$	1,543,972		$	1,303,278
Finished goods		6,404,798			6,309,469
		7,948,770			7,612,747
Inventory reserve		(595,523	)		(595,523	)
	$	7,353,247		$	7,017,224

4. INCOME TAXES

The Company’s effective tax rate on the net earnings (loss) before income taxes was 0.0% and (0.1)% for the nine months ended September 30, 2017 and September 30, 2016, respectively. For the three months ended September 30, 2017 and September 30, 2016, the Company’s effective tax rate on the net earnings (loss) before income taxes was (0.4)% and (0.4)%, respectively.

5. OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:

		September 30, 2017		December 31, 2016
Prepayments from customers	$	376,984	$	692,922
Accrued property taxes		363,075		—
Accrued professional fees		159,526		266,747
Other accrued expenses		51,185		59,614
	$	950,770	$	1,019,283

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6. COMMITMENTS AND CONTINGENCIES

In May 2010, the Company and an officer’s suit against Becton, Dickinson and Company (“BD”) in the U.S. District Court for the Eastern District of Texas, Marshall Division alleging violations of antitrust acts, false advertising, product disparagement, tortious interference, and unfair competition was reopened. The trial commenced on September 9, 2013, in the U.S. District Court for the Eastern District of Texas, Tyler Division, and the jury found that BD illegally engaged in anticompetitive conduct with the intent to acquire or maintain monopoly power in the safety syringe market and engaged in false advertising under the Lanham Act. The jury awarded the Company $113,508,014 in damages, which was trebled pursuant to statute. The Court granted injunctive relief to take effect January 15, 2015. In doing so, the Court found that BD’s business practices limited innovation, including false advertisements that suppressed sales of the VanishPoint® syringes. The specific injunctive relief includes: (1) enjoining BD’s use of “World’s Sharpest Needle” or any similar assertion of superior sharpness; (2) requiring notification to all customers who purchased BD syringe products from July 2, 2004 to date that BD wrongfully claimed that its syringe needles were sharper and that its statement that it had “data on file” was false and misleading; (3) requiring notification to employees, customers, distributors, GPOs, and government agencies that the deadspace of the VanishPoint® has been within ISO standards since 2004 and that BD overstated the deadspace of the VanishPoint® to represent that it was higher than some of BD’s syringes when it was actually less, and that BD’s statement that it had “data on file” was false and misleading, and, in addition, posting this notice on its website for a period of three years; (4) enjoining BD from advertising that its syringe products save medication as compared to VanishPoint® products for a period of three years; (5) requiring notification to all employees, customers, distributors, GPOs, and government agencies that BD’s website, cost calculator, printed materials, and oral representations alleging BD’s syringes save medication as compared to the VanishPoint® were based on false and inaccurate measurement of the VanishPoint®, and, in addition, posting this notice on its website for a period of three years; and (6) requiring the implementation of a comprehensive training program for BD employees and distributors that specifically instructs them not to use old marketing materials and not to make false representations regarding VanishPoint® syringes. Final judgment was entered on January 15, 2015, awarding the Company $340,524,042 in damages and $11,722,823 in attorneys’ fees, as well as granting injunctive relief consistent with the orders as indicated above. The parties stipulated that the amount of litigation costs recoverable by the Company is $295,000. On January 14, 2015, the District Court stayed the portion of the injunctive relief that requires BD to notify end-user customers but also ordered BD to comply with internal correction activities as well as mandatory disclosures as set out above to its employees, customers, distributors and Group Purchasing Organizations. BD filed an appeal of that ruling with the 5th Circuit Court of Appeals and that appeal was denied on February 3, 2015. On February 12, 2015, BD filed a motion to amend the judgment directed most specifically to the issue of award of prejudgment interest. On April 23, 2015, the Court entered an Amended Final Judgment that removed prejudgment interest but kept all other monetary and injunctive relief the same as was granted in the original Final Judgment. BD filed its brief in the appeal on July 20, 2015. Oral argument occurred on Monday, February 29, 2016. On December 2, 2016, the 5th Circuit Court of Appeals overturned the antitrust damages. The finding of false advertising liability was affirmed and the case was remanded to the Eastern District of Texas for a redetermination as to the amount of damages to which the Company is entitled. The Company’s petition for certiorari to the U.S. Supreme Court was denied on March 20, 2017. The Eastern District of Texas trial date was May 11, 2017. On August 17, 2017, District Court for the Eastern District of Texas issued the Court’s Final Judgment ordering that the Company take nothing in its suit against BD and dismissing the case. On September 13, 2017, the Company filed a Motion to Alter or Amend the Judgment and on September 14, 2017, the Company filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit. On October 27, 2017, the Eastern District denied the Company’s Motion to Alter or Amend the Judgment. As a result of the District Court’s denial of the Motion to Amend, an amended Notice of Appeal was filed with the United States Court of Appeals for the Fifth Circuit on November 3, 2017.

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

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

7. BUSINESS SEGMENT

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

		Three Months Ended September 30, 2017		Three Months Ended September 30, 2016		Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016
U.S. sales	$	8,358,847	$	7,303,015	$	20,361,847	$	19,750,504
North and South America sales (excluding U.S.)		1,900,892		1,406,720		3,728,452		2,058,594
Other international sales		152,297		130,399		891,534		528,071
Total sales	$	10,412,036	$	8,840,134	$	24,981,833	$	22,337,169

Long -lived assets by geography are as follows:

	September 30, 2017		December 31, 2016

Long-lived assets
U.S.	$	11,520,337	$	11,930,293
International	$	143,651	$	161,744

8. DIVIDENDS

The Company declared dividends in the first quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on April 21, 2016. The Company declared dividends in the second quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on July 28, 2016. The Company declared dividends in the third quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on October 20, 2016. The Company declared dividends in the first quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on April 27, 2017. The Company declared dividends in the second quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on July 20, 2017. The Company declared dividends in the third quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on October 20, 2017.

9. PRIVATE PURCHASE

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

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10. BONUSES

In February of 2017, Mr. Cowan and Ms. Larios were each granted cash bonuses of $250,000. Ms. Larios received her bonus in the first quarter of 2017. Mr. Cowan will receive his bonus later this year.

11. STORM DAMAGE AND INSURANCE PROCEEDS

On March 26, 2017, a hail storm passed through Little Elm, TX, resulting in damage to the Company’s two buildings. During April 2017, the Company performed an inspection of its facilities and determined that possible roof damage had been sustained. In late April 2017, the Company’s insurance carrier inspected the two buildings and confirmed that damage occurred from the hail storm. This damage was principally to the roofs of the buildings but also many of the HVAC units and a wall alongside one of the buildings.

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

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

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

FORWARD-LOOKING STATEMENT WARNING

Certain statements included by reference in this filing containing the words “could,” “may,” “believes,” “anticipates,” “intends,” “expects,” and similar such words constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Any forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, our ability to maintain liquidity, our maintenance of patent protection, the impact of current and future Court decisions regarding current litigation, our ability to maintain favorable third party manufacturing and supplier arrangements and relationships, our ability to quickly increase capacity in response to an increase in demand, our ability to access the market, our ability to maintain or lower production costs, our ability to continue to finance research and development as well as operations and expansion of production, the continuing interest of larger market players, specifically Becton, Dickinson and Company (“BD”), in providing devices to the safety market, and other factors referenced in Item 1A. Risk Factors in Part II. Given these uncertainties, undue reliance should not be placed on forward-looking statements.

MATERIAL CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

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

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

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

Our products have been and continue to be distributed nationally and internationally through numerous distributors. Although we have made limited progress in some areas, such as the alternate care market, our volumes are not as high as they should be given the nature and quality of our products and the federal and state legislation requiring the use of safe needle devices. The alternate care market is composed of facilities that provide long-term nursing and out-patient surgery, emergency care, physician services, health clinics, and retail pharmacies.

We continue to pursue various strategies to have better access to the hospital market, as well as other markets, including attempting to gain access to the market through our sales efforts, our innovative technology, introduction of new products, and, when necessary, litigation.

We have reported in the past that our progress is limited principally due to the practices engaged in by BD, the dominant maker and seller of disposable syringes. We initiated a lawsuit in 2007 against BD which was dismissed on August 17, 2017. We have filed for appeal.

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

Our remaining stock option expense for grants in 2016 will be expensed in the fourth quarter of 2017.

The Consolidated Appropriations Act, 2016 (Pub. L. 114-113), signed into law on December 18, 2015, includes a two year moratorium on the 2.3% medical device excise tax imposed by Internal Revenue Code section 4191. Thus, the medical device excise tax was suspended beginning on January 1, 2016 and ending on December 31, 2017.

We reevaluated several compensation strategies in late 2016 and early 2017. We also approved three of our executive officers to purchase shares directly from the Company. Thomas J. Shaw exercised his purchase rights on January 12, 2017, buying two million shares at market price for an aggregate purchase price of $1.78 million, and he exercised the remainder of his purchase rights on August 23, 2017 by purchasing one million shares at market price for aggregate consideration of $570,100.

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

Product purchases from our Chinese manufacturers have enabled us to increase manufacturing capacity with little capital outlay and have provided a competitive manufacturing cost. In the first nine months of 2017, our primary Chinese manufacturer produced approximately 90.4% of our VanishPoint® syringes. In the event that we become unable to purchase products from our Chinese manufacturers, we would need to find an alternate manufacturer for the blood collection set, IV catheter, Patient Safe® syringe, 0.5mL insulin syringe, 0.5mL autodisable syringe, and 2mL, 5mL, and 10mL syringes and we would increase domestic production for the 1mL and 3mL syringes.

In 1995, we entered into a license agreement with Thomas J. Shaw 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 Mr. Shaw. The license agreement generally provides for quarterly payments of a 5% royalty fee on gross sales.

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

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

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

RESULTS OF OPERATIONS

Comparison of Three Months Ended September 30, 2017 and September 30, 2016

Domestic sales accounted for 80.3% and 82.6% of the revenues for the three months ended September 30, 2017 and 2016, respectively. Domestic revenues increased 14.5% principally due to higher volumes mitigated by lower average prices. Domestic unit sales increased 23.9%. Domestic unit sales were 71.8% of total unit sales for the three months ended September 30, 2017. International revenue and unit sales increased 33.6% and 29.8%, respectively, due to the timing of significant international sales. Our international orders may be subject to significant fluctuation over time. Overall unit sales increased 25.5%.

The Cost of manufactured product increased by 28.7% due to higher volumes and higher manufacturing costs. Profit margins can fluctuate depending upon, among other things, the cost of manufactured product and the capitalized cost of product recorded in inventory, as well as product mix. Royalty expense increased 24.6% due to higher gross sales.

Gross profit was flat primarily due to higher manufacturing costs.

Operating expenses decreased 1.4% or $48.0 thousand. The decrease was principally due to lower legal cost, and reduced bad debt expense in General and administrative expense, offset by an increase in Sales and marketing personnel.

Our operating loss was $32.9 thousand compared to an operating loss for the same period last year of $81 thousand due primarily to lower operating expenses.

Our effective tax rate on the net loss before income taxes was (0.4)% and (0.4)% for the three months ended September 30, 2017 and September 30, 2016, respectively.

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

Domestic sales accounted for 81.5% and 88.4% of the revenues for the nine months ended September 30, 2017 and 2016, respectively. Domestic revenues increased 3.1% principally due to higher volume. Domestic unit sales increased 5.1%. Domestic unit sales were 73.8% of total unit sales for the nine months ended September 30, 2017. International revenue and unit sales increased 78.6% and 82.5%, respectively, due to the timing of significant international sales. Our international orders may be subject to significant fluctuation over time. Overall unit sales increased 18.3%.

The Cost of manufactured product increased 21.9% due to higher volumes and higher manufacturing costs. Profit margins can fluctuate depending upon, among other things, the cost of manufactured product and the capitalized cost of product recorded in inventory, as well as product mix. Royalty expense increased 10.8% due to higher gross sales.

Gross profit decreased 3.4% primarily due to lower average price and higher manufacturing costs.

Operating expenses increased 6.6% or $635 thousand. The increase was due to stock option expense, an increase in Sales and marketing personnel, travel expenses for Sales and marketing, higher payroll costs in Research and development, and bonuses paid to two officers. These increased expenses were offset by lower legal costs and reduced bad debt expense.

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Our operating loss was $2.5 million compared to an operating loss for the same period last year of $1.6 million due primarily to lower gross profit and higher operating expenses.

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

Discussion of Balance Sheet and Statement of Cash Flow Items

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

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

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

LIQUIDITY

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

Historical Sources of Liquidity

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

Internal Sources of Liquidity

Margins and Market Access

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

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

Fluctuations in the cost and availability of raw materials and inventory and our ability to maintain favorable manufacturing arrangements and relationships could result in the need to manufacture all (as opposed to 18.3%) of our products in the U.S. This could temporarily increase unit costs as we ramp up domestic production.

The mix of domestic and international sales, as well as product mix, affects the average sales price of our products. Generally, the higher the ratio of domestic sales to international sales, the higher the average sales price will be. Some international sales of our products are shipped directly from China to the customer. The number of units produced by us versus manufactured in China can have a significant effect on the carrying costs of inventory as well as Cost of sales. We will continue to evaluate the appropriate mix of products manufactured domestically and those manufactured in China to achieve economic benefits as well as to maintain our domestic manufacturing capability.

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Fluctuations in the cost of oil (since our products are petroleum based) and transportation and the volume of units purchased from our Chinese manufacturers may have an impact on the unit costs of our product. Increases in such costs may not be recoverable through price increases of our products. Reductions in oil prices may not quickly affect petroleum product prices.

Seasonality

Historically, unit sales have increased during the flu season.

Cash Requirements

Due to funds received from prior litigation and direct purchases of stock, we have sufficient cash reserves and intend to rely on operations, cash reserves, and debt financing, when available, as the primary ongoing sources of cash. We have taken steps to decrease our legal costs and we continue to evaluate these costs. In the future, if we need to take cost cutting measures, we may reduce the number of units being produced, reduce the workforce, reduce the salaries of officers and other employees, and/or defer royalty payments. Some increases in compensation were made in 2016 and 2017.

External Sources of Liquidity

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

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

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

CAPITAL RESOURCES

We have committed to make necessary repairs to our building from storm damage using insurance proceeds, as discussed herein.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

No update.

Item 4. Controls and Procedures.

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

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

Changes in Internal Control Over Financial Reporting

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

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Please refer to Note 6 to the financial statements for a complete description of all legal proceedings.

Item 1A. Risk Factors.

There were no material changes in the Risk Factors applicable to the Company as set forth in our Form 10-K annual report for 2016.

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

There were no unregistered sales of equity securities, other than as previously disclosed in a Current Report on Form 8-K filed August 24, 2017.

Item 3. Defaults Upon Senior Securities.

Working Capital Restrictions and Limitations on the Payment of Dividends

The Company declared a dividend to the Series I Class B and Series II Class B Convertible Preferred Shareholders in the aggregate amount of $55,113. This dividend was paid on October 20, 2017.

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

Series I Class B Convertible Preferred Stock

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

Series II Class B Convertible Preferred Stock

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

Series III Class B Convertible Preferred Stock

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

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Series IV Class B Convertible Preferred Stock

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

Series V Class B Convertible Preferred Stock

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

Item 6. Exhibits.

Exhibit No.		Description of Document

31.1		Certification of Principal Executive Officer

31.2		Certification of Principal Financial Officer

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

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

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SIGNATURES

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

DATE: November 14, 2017	RETRACTABLE TECHNOLOGIES, INC.
	(Registrant)



	BY:	/s/ Douglas W. Cowan
		DOUGLAS W. COWAN VICE PRESIDENT, CHIEF FINANCIAL OFFICER, AND CHIEF ACCOUNTING OFFICER

EX-31.1 2 a17-20586_1ex31d1.htm EX-31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Exhibit 31.1

I, Thomas J. Shaw, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: November 14, 2017

/s/ Thomas J. Shaw
THOMAS J. SHAW
PRESIDENT, CHAIRMAN, AND
CHIEF EXECUTIVE OFFICER

EX-31.2 3 a17-20586_1ex31d2.htm EX-31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Exhibit 31.2

I, Douglas W. Cowan, certify that:

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

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

Date: November 14, 2017

/s/ Douglas W. Cowan
DOUGLAS W. COWAN
VICE PRESIDENT,
CHIEF FINANCIAL OFFICER,
AND CHIEF ACCOUNTING OFFICER

EX-32 4 a17-20586_1ex32.htm EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Solely in connection with the filing of the Quarterly Report of Retractable Technologies, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2017, 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 fairly presents, in all material respects, the financial condition and results of operations of the issuer.

Date: November 14, 2017

	/s/ Thomas J. Shaw
	THOMAS J. SHAW
	PRESIDENT, CHAIRMAN, AND
	CHIEF EXECUTIVE OFFICER


	/s/ Douglas W. Cowan
	DOUGLAS W. COWAN
	VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
	AND CHIEF ACCOUNTING OFFICER

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Series I Class B and Series II Class B Preferred Stockholders, respectively, on April 21, 2016.  The Company declared dividends in the second quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on July 28, 2016.  The Company declared dividends in the third quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on October 20, 2016. The Company declared dividends in the first quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on April 27, 2017. The Company declared dividends in the second quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on July 20, 2017. The Company declared dividends in the third quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on October 20, 2017. <div /></div> </div> 876250 P3Y P3Y 295000 2 2 3 0 1 2 2 3 0.01 2 P12M P10D 128710 <div> <div>   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 90.00%;margin-left:54pt;"> <tr> <td valign="top" style="width:67.56%;padding:0pt;"> Production equipment </td> <td valign="top" style="width:32.44%;padding:0pt;"> 3 to 13 years </td> </tr> <tr> <td valign="top" style="width:67.56%;padding:0pt;"> Office furniture and equipment </td> <td valign="top" style="width:32.44%;padding:0pt;"> 3 to 10 years </td> </tr> <tr> <td valign="top" style="width:67.56%;padding:0pt;"> Buildings </td> <td valign="top" style="width:32.44%;padding:0pt;"> 39 years </td> </tr> <tr> <td valign="top" style="width:67.56%;padding:0pt;"> Building improvements </td> <td valign="top" style="width:32.44%;padding:0pt;"> 15 years </td> </tr> </table></div>   <div /></div> </div>

<div> <div> 5.       OTHER ACCRUED LIABILITIES   Other accrued liabilities consist of the following:   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 94.00%;margin-left:24.5pt;"> <tr> <td valign="bottom" style="width:50.90%;padding:0pt;">   </td> <td valign="bottom" style="width:02.82%;padding:0pt;">   </td> <td valign="top" style="width:21.34%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> September 30, 2017 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="top" style="width:21.26%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> December 31, 2016 </td> <td valign="bottom" style="width:01.04%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:50.90%;padding:0pt;"> Prepayments from customers </td> <td valign="bottom" style="width:02.82%;padding:0pt;"> $ </td> <td valign="bottom" style="width:21.34%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>376,984 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;"> $ </td> <td valign="bottom" style="width:21.26%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>692,922 </td> <td valign="bottom" style="width:01.04%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:50.90%;padding:0pt;"> Accrued property taxes </td> <td valign="bottom" style="width:02.82%;padding:0pt;">   </td> <td valign="bottom" style="width:21.34%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>363,075 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:21.26%;padding:0pt;"> — </td> <td valign="bottom" style="width:01.04%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:50.90%;padding:0pt;"> Accrued professional fees </td> <td valign="bottom" style="width:02.82%;padding:0pt;">   </td> <td valign="bottom" style="width:21.34%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>159,526 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:21.26%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>266,747 </td> <td valign="bottom" style="width:01.04%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:50.90%;padding:0pt;"> Other accrued expenses </td> <td valign="bottom" style="width:02.82%;padding:0pt;">   </td> <td valign="top" style="width:21.34%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>51,185 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:21.26%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>59,614 </td> <td valign="bottom" style="width:01.04%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:50.90%;padding:0pt;">   </td> <td valign="bottom" style="width:02.82%;padding:0pt;">   </td> <td valign="top" style="width:21.34%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:21.26%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.04%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:50.90%;padding:0pt;">   </td> <td valign="bottom" style="width:02.82%;padding:0pt;"> $ </td> <td valign="top" style="width:21.34%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>950,770 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;"> $ </td> <td valign="bottom" style="width:21.26%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,019,283 </td> <td valign="bottom" style="width:01.04%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:50.90%;padding:0pt;">   </td> <td valign="bottom" style="width:02.82%;padding:0pt;">   </td> <td valign="top" style="width:21.34%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> <td valign="bottom" style="width:21.26%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.04%;padding:0pt;">   </td> </tr> </table></div>   <div /></div> </div>

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<div> <div> 6.       COMMITMENTS AND CONTINGENCIES   In May 2010, the Company and an officer’s suit against Becton, Dickinson and Company (“BD”) in the U.S. District Court for the Eastern District of Texas, Marshall Division alleging violations of antitrust acts, false advertising, product disparagement, tortious interference, and unfair competition was reopened.  The trial commenced on September 9, 2013, in the U.S. District Court for the Eastern District of Texas, Tyler Division, and the jury found that BD illegally engaged in anticompetitive conduct with the intent to acquire or maintain monopoly power in the safety syringe market and engaged in false advertising under the Lanham Act.  The jury awarded the Company $113,508,014 in damages, which was trebled pursuant to statute.  The Court granted injunctive relief to take effect January 15, 2015.  In doing so, the Court found that BD’s business practices limited innovation, including false advertisements that suppressed sales of the VanishPoint®  syringes.  The specific injunctive relief includes: (1) enjoining BD’s use of “World’s Sharpest Needle” or any similar assertion of superior sharpness; (2) requiring notification to all customers who purchased BD syringe products from July 2, 2004 to date that BD wrongfully claimed that its syringe needles were sharper and that its statement that it had “data on file” was false and misleading; (3) requiring notification to employees, customers, distributors, GPOs, and government agencies that the deadspace of the VanishPoint® has been within ISO standards since 2004 and that BD overstated the deadspace of the VanishPoint® to represent that it was higher than some of BD’s syringes when it was actually less, and that BD’s statement that it had “data on file” was false and misleading, and, in addition, posting this notice on its website for a period of three years; (4) enjoining BD from advertising that its syringe products save medication as compared to VanishPoint® products for a period of three years; (5) requiring notification to all employees, customers, distributors, GPOs, and government agencies that BD’s website, cost calculator, printed materials, and oral representations alleging BD’s syringes save medication as compared to the VanishPoint® were based on false and inaccurate measurement of the VanishPoint®, and, in addition, posting this notice on its website for a period of three years; and (6) requiring the implementation of a comprehensive training program for BD employees and distributors that specifically instructs them not to use old marketing materials and not to make false representations regarding VanishPoint® syringes.  Final judgment was entered on January 15, 2015, awarding the Company $340,524,042 in damages and $11,722,823 in attorneys’ fees, as well as granting injunctive relief consistent with the orders as indicated above.  The parties stipulated that the amount of litigation costs recoverable by the Company is $295,000.  On January 14, 2015, the District Court stayed the portion of the injunctive relief that requires BD to notify end-user customers but also ordered BD to comply with internal correction activities as well as mandatory disclosures as set out above to its employees, customers, distributors and Group Purchasing Organizations.  BD filed an appeal of that ruling with the 5th Circuit Court of Appeals and that appeal was denied on February 3, 2015.  On February 12, 2015, BD filed a motion to amend the judgment directed most specifically to the issue of award of prejudgment interest.  On April 23, 2015, the Court entered an Amended Final Judgment that removed prejudgment interest but kept all other monetary and injunctive relief the same as was granted in the original Final Judgment.  BD filed its brief in the appeal on July 20, 2015.  Oral argument occurred on Monday, February 29, 2016.  On December 2, 2016, the 5th Circuit Court of Appeals overturned the antitrust damages.  The finding of false advertising liability was affirmed and the case was remanded to the Eastern District of Texas for a redetermination as to the amount of damages to which the Company is entitled.  The Company’s petition for certiorari to the U.S. Supreme Court was denied on March 20, 2017.  The Eastern District of Texas trial date was May 11, 2017. On August 17, 2017, District Court for the Eastern District of Texas issued the Court’s Final Judgment ordering that the Company take nothing in its suit against BD and dismissing the case.  On September 13, 2017, the Company filed a Motion to Alter or Amend the Judgment and on September 14, 2017, the Company filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit. On October 27, 2017, the Eastern District denied the Company’s Motion to Alter or Amend the Judgment.  As a result of the District Court’s denial of the Motion to Amend, an amended Notice of Appeal was filed with the United States Court of Appeals for the Fifth Circuit on November 3, 2017.   In September 2007, BD and MDC Investment Holdings, Inc. (“MDC”) sued the Company in the United States District Court for the Eastern District of Texas, Texarkana Division, initially alleging that the Company is infringing two U.S. patents of MDC (6,179,812 and 7,090,656) that are licensed to BD.  BD and MDC seek injunctive relief and unspecified damages.  The Company counterclaimed for declarations of non-infringement, invalidity, and unenforceability of the asserted patents.  The plaintiffs subsequently dropped allegations with regard to patent no. 7,090,656 and the Company subsequently dropped its counterclaims for unenforceability of the asserted patents.  On June 30, 2015, the Court ordered that further proceedings in this matter be stayed and that this case remain administratively closed until resolution of all appeals in the case detailed in the preceding paragraph.  The case remains stayed as a result of the ongoing proceedings regarding the Lanham Act claims in the separate proceeding described above. <div /></div> </div>

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<div> <div>   Earnings per share   The Company computes basic earnings per share (“EPS”) by dividing net earnings for the period (adjusted for any cumulative dividends for the period) by the weighted average number of common shares outstanding during the period.  Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect, if any, of the common stock deliverable pursuant to stock options or common stock issuable upon the conversion of convertible preferred stock.  The calculation of diluted EPS excluded 93,125 and 670,338 shares of Common Stock underlying issued and outstanding stock options for the three months ended September 30, 2017 and September 30, 2016, respectively, as their effect was antidilutive.  The calculation of diluted EPS excluded 128,540 and 674,042 shares of Common Stock underlying issued and outstanding stock options for the nine months ended September 30, 2017 and September 30, 2016, respectively, as their effect was antidilutive.  The potential dilution, if any, is shown on the following schedule:   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 94.00%;margin-left:27.35pt;"> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended September 30, 2017 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended September 30, 2016 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months Ended September 30, 2017 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months Ended September 30, 2016 </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Net loss </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(66,626 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(125,304 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(2,605,917 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(1,721,089 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Preferred dividend requirements </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(176,249 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(176,249 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(528,747 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(528,747 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Loss applicable to common shareholders after assumed conversions </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(242,875 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(301,553 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(3,134,664 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(2,249,836 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Average common shares outstanding </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>32,166,454 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,649,874 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>31,722,010 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,252,652 </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Average common and common equivalent shares outstanding – assuming dilution </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>32,166,454 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,649,874 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>31,722,010 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,252,652 </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Basic loss per share </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="top" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.10 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.08 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="top" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Diluted loss per share </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="top" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.10 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.08 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="top" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> </table></div>   <div /></div> </div>

-0.001

-0.004

0.000

-0.004

536456

924879

6306085

2165246

6346731

1912824

8068426

3259775

7794329

3260338

-1719649

-124824

-2605069

-66343

<div> <div> 4.        INCOME TAXES   The Company’s effective tax rate on the net earnings (loss) before income taxes was 0.0% and (0.1)% for the nine months ended September 30, 2017 and September 30, 2016, respectively.  For the three months ended September 30, 2017 and September 30, 2016, the Company’s effective tax rate on the net earnings (loss) before income taxes was (0.4)% and (0.4)%, respectively. <div /></div> </div>

2025

1440

480

848

283

-988248

574258

352444

1897332

2717

139817

507768

876250

908099

336023

-1338622

313108

750

158327

51994

159053

52962

158325

159053

<div> <div> 3.       INVENTORIES   Inventories consist of the following:   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 94.00%;margin-left:24.5pt;"> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> September 30, 2017 </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> December 31, 2016 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;"> Raw materials </td> <td valign="bottom" style="width:02.76%;padding:0pt;"> $ </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,543,972 </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;"> $ </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,303,278 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;"> Finished goods </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6,404,798 </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6,309,469 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>7,948,770 </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>7,612,747 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;"> Inventory reserve </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(595,523 </td> <td valign="bottom" style="width:01.38%;"> ) </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(595,523 </td> <td valign="bottom" style="width:01.06%;"> ) </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;"> $ </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>7,353,247 </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;"> $ </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>7,017,224 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> </table></div>   <div /></div> </div>

6309469

6404798

7612747

7948770

7017224

7353247

1303278

1543972

595523

19822

8609

44155

19477

11722823

10670688

12302737

38778979

40642734

7172444

9130416

430393

430089

3498244

3172321

113508014

340524042

486142

1858534

-1671649

-172305

-1640823

-2018814

-1721089

-125304

-2605917

-66626

-2249836

-301553

-3134664

-242875

<div> <div>   Recent pronouncements   In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory,” which is part of the FASB’s Simplification Initiative.  Inventory, including inventory measured at average cost, would be valued at the lower of cost or net realizable value.  Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.  ASU 2015-11 is effective for the Company’s annual periods and interim periods within those annual periods beginning January 1, 2017.  Amendments in this ASU should be applied prospectively with earlier application permitted at the beginning of an interim or annual reporting period.  The adoption of this pronouncement had no impact on the Company’s Balance Sheet, Results of Operations, or Cash Flows in the period of adoption.   In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”.  These amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The updated guidance is effective for the Company’s quarter ending March 31, 2018, with early adoption permitted.  The Company does not expect ASU 2016-18 to have a material effect on its financial statements as the Company currently holds no restricted cash or restricted cash equivalents.   In June 2016, the FASB issued Accounting Standards Update 2016-13, “Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”.  Among other things, these amendments require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.  Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses.  This ASU is effective for the Company’s quarter ending March 31, 2020 with early application permitted for the Company’s quarter ending March 31, 2019.  The Company is currently assessing the impact that adoption of this guidance will have on its financial statements and related disclosures.   In February 2016, the FASB issued ASU No. 2016-02, Leases (topic 842). Under the new ASU, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance lessor accounting is largely unchanged. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. This ASU is effective for the Company’s quarter ending March 31, 2019, with early adoption permitted. The Company is currently evaluating the impact of this standard.   In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition.  This ASU’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects consideration to which the company expects to be entitled in exchange for those goods or services.  This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract.  ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption.  In July 2015, the FASB voted to delay the effective date of this ASU by one year.  The ASU will now be effective commencing with the Company’s quarter ending March 31, 2018.  Early adoption of this ASU is allowed no sooner than the original effective date.  Management’s preliminary assessment is that the implementation of the amended guidance will not have a material impact on the Company’s balance sheet, statements of operations, changes in stockholders’ equity and cash flows.  The Company’s revenue is generated from sales of finished goods (disposable medical devices).  Revenue from these sales will continue to be recognized when title of the products is passed to the customer.  Management expects materially similar results under the amended guidance as compared to the Company’s current policies and procedures regarding revenue recognition.  This preliminary assessment may change prior to adoption.  Additionally, Management anticipates adopting this amended guidance on a Modified Retrospective basis in the first quarter of 2018. <div /></div> </div>

11930293

161744

11520337

143651

9649570

3341214

10284500

3293196

-1581144

-81439

-2490171

-32858

<div> <div> 1.       BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION   Business of the Company   Retractable Technologies, Inc. (the “Company”) was incorporated in Texas on May 9, 1994, and designs, develops, manufactures, and markets safety syringes and other safety medical products for the healthcare profession.  The Company began to develop its manufacturing operations in 1995.  The Company’s manufacturing and administrative facilities are located in Little Elm, Texas.  The Company’s products are the VanishPoint® 0.5mL insulin syringe; 1mL tuberculin, insulin, and allergy antigen syringes; 0.5mL, 1mL, 2mL, 3mL, 5mL, and 10mL syringes; the blood collection tube holder; the small diameter tube adapter; the allergy tray; the IV safety catheter; the Patient Safe® syringes; the Patient Safe® Luer Cap; the VanishPoint®  Blood Collection Set; and the EasyPoint® needle.  The Company also sells VanishPoint®  autodisable syringes in the international market in addition to the Company’s other products.   Basis of presentation   The accompanying condensed financial statements are unaudited and, in the opinion of Management, reflect all adjustments that are necessary for a fair presentation of the financial position and results of operations for the periods presented.  All such adjustments are of a normal and recurring nature.  The results of operations for the periods presented are not necessarily indicative of the results to be expected for the entire year.  The unaudited condensed financial statements should be read in conjunction with the financial statement disclosures contained in the Company’s audited financial statements incorporated into its Form 10-K filed on March 31, 2017 for the year ended December 31, 2016. <div /></div> </div>

1019283

950770

10289

7063

192548

505656

59614

51185

165640

165339

1671649

172305

528747

176249

528747

176249

40000

342500

98500

129245

171200

40000

342500

98500

129245

171200

2350100

-187418

-326227

839200

-1721089

-2605917

12092037

11663988

P15Y

P39Y

P13Y

P3Y

P10Y

P3Y

92000

<div> <div> 9.       PRIVATE PURCHASE   The Company approved three of its executive officers to purchase shares directly from the Company.  Thomas J. Shaw, CEO, exercised his purchase rights on January 12, 2017, buying two million shares at market price for an aggregate purchase price of $1.78 million, and he exercised the remainder of his purchase rights on August 23, 2017 by purchasing one million shares at market price for aggregate consideration of $570,100.  Mr. Cowan, CFO, and Ms. Larios, Vice President and General Counsel, are authorized to purchase 500,000 shares each at market price any time prior to September 9, 2018.  The approximate dollar value of these potential future purchases cannot be predicted. <div /></div> </div>

389712

117939

465765

159921

-31963487

-34569404

22337169

19750504

2058594

528071

7100000

8840134

7303015

1406720

130399

3500000

24981833

20361847

3728452

891534

9400000

10412036

8358847

1900892

152297

5100000

<div> <div>   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 94.00%;margin-left:27.35pt;"> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended September 30, 2017 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended September 30, 2016 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months Ended September 30, 2017 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months Ended September 30, 2016 </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Net loss </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(66,626 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(125,304 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(2,605,917 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(1,721,089 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Preferred dividend requirements </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(176,249 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(176,249 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(528,747 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(528,747 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Loss applicable to common shareholders after assumed conversions </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(242,875 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(301,553 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(3,134,664 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(2,249,836 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Average common shares outstanding </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>32,166,454 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,649,874 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>31,722,010 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,252,652 </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Average common and common equivalent shares outstanding – assuming dilution </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>32,166,454 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,649,874 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>31,722,010 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,252,652 </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Basic loss per share </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="top" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.10 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.08 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="top" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Diluted loss per share </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="top" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.10 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.08 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="top" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> </table></div>   <div /></div> </div>

<div> <div>   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 94.00%;margin-left:24.5pt;"> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> September 30, 2017 </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> December 31, 2016 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;"> Raw materials </td> <td valign="bottom" style="width:02.76%;padding:0pt;"> $ </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,543,972 </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;"> $ </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,303,278 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;"> Finished goods </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6,404,798 </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6,309,469 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>7,948,770 </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>7,612,747 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;"> Inventory reserve </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(595,523 </td> <td valign="bottom" style="width:01.38%;"> ) </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(595,523 </td> <td valign="bottom" style="width:01.06%;"> ) </td> </tr> <tr> <td valign="bottom" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;"> $ </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>7,353,247 </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;"> $ </td> <td valign="bottom" style="width:21.24%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>7,017,224 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:50.94%;padding:0pt;">   </td> <td valign="bottom" style="width:02.76%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:01.38%;padding:0pt;">   </td> <td valign="bottom" style="width:21.24%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> </table></div>   <div /></div> </div>

<div> <div> 7.       BUSINESS SEGMENT   The Company does not operate in separate reportable segments.  Shipments to international customers generally require a prepayment either by wire transfer or an irrevocable confirmed letter of credit.  The Company does extend credit to international customers on some occasions depending upon certain criteria, including, but not limited to, the credit worthiness of the customer, the stability of the country, banking restrictions, and the size of the order.  All transactions are in U.S. currency.  Revenues by geography are as follows:   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 94.00%;margin-left:27.45pt;"> <tr> <td valign="bottom" style="width:20.96%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended September 30, 2017 </td> <td valign="top" style="width:02.62%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended September 30, 2016 </td> <td valign="top" style="width:02.62%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months Ended September 30, 2017 </td> <td valign="top" style="width:02.62%;padding:0pt;">   </td> <td valign="bottom" style="width:16.88%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months Ended September 30, 2016 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:20.96%;padding:0pt;"> U.S. sales </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>8,358,847 </td> <td valign="bottom" style="width:02.62%;padding:0pt;"> $ </td> <td valign="bottom" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>7,303,015 </td> <td valign="bottom" style="width:02.62%;padding:0pt;"> $ </td> <td valign="top" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>20,361,847 </td> <td valign="bottom" style="width:02.62%;padding:0pt;"> $ </td> <td valign="top" style="width:16.88%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>19,750,504 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:20.96%;padding:0pt;"> North and South America sales (excluding U.S.) </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,900,892 </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1,406,720 </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>3,728,452 </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="bottom" style="width:16.88%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>2,058,594 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:20.96%;padding:0pt;"> Other international sales </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>152,297 </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>130,399 </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="top" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>891,534 </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="top" style="width:16.88%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>528,071 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:20.96%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="top" style="width:16.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="top" style="width:16.88%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:20.96%;padding:0pt;"> Total sales </td> <td valign="top" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>10,412,036 </td> <td valign="bottom" style="width:02.62%;padding:0pt;"> $ </td> <td valign="bottom" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>8,840,134 </td> <td valign="bottom" style="width:02.62%;padding:0pt;"> $ </td> <td valign="top" style="width:16.86%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>24,981,833 </td> <td valign="bottom" style="width:02.62%;padding:0pt;"> $ </td> <td valign="top" style="width:16.88%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>22,337,169 </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:20.96%;padding:0pt;">   </td> <td valign="top" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="bottom" style="width:16.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="top" style="width:16.86%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:02.62%;padding:0pt;">   </td> <td valign="top" style="width:16.88%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.06%;padding:0pt;">   </td> </tr> </table></div>   Long -lived assets by geography are as follows:   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 93.00%;margin-left:27.35pt;"> <tr> <td valign="bottom" style="width:57.26%;padding:0pt;">   </td> <td valign="bottom" style="width:02.12%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:18.62%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> September 30, 2017 </td> <td valign="bottom" style="width:02.40%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:18.64%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> December 31, 2016 </td> <td valign="bottom" style="width:00.94%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:57.26%;padding:0pt;">   </td> <td valign="bottom" style="width:02.12%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:18.62%;padding:0pt;">   </td> <td valign="bottom" style="width:02.40%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:18.64%;padding:0pt;">   </td> <td valign="bottom" style="width:00.94%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:57.26%;padding:0pt;"> Long-lived assets </td> <td valign="bottom" style="width:02.12%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:18.62%;padding:0pt;">   </td> <td valign="bottom" style="width:02.40%;padding:0pt;">   </td> <td colspan="2" valign="bottom" style="width:18.64%;padding:0pt;">   </td> <td valign="bottom" style="width:00.94%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:57.26%;padding:0pt;"> U.S. </td> <td valign="bottom" style="width:02.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.50%;padding:0pt;"> $ </td> <td valign="bottom" style="width:16.12%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>11,520,337 </td> <td valign="bottom" style="width:02.40%;padding:0pt;">   </td> <td valign="bottom" style="width:02.30%;padding:0pt;"> $ </td> <td valign="bottom" style="width:16.34%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>11,930,293 </td> <td valign="bottom" style="width:00.94%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:57.26%;padding:0pt;"> International </td> <td valign="bottom" style="width:02.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.50%;padding:0pt;"> $ </td> <td valign="bottom" style="width:16.12%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>143,651 </td> <td valign="bottom" style="width:02.40%;padding:0pt;">   </td> <td valign="bottom" style="width:02.30%;padding:0pt;"> $ </td> <td valign="bottom" style="width:16.34%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>161,744 </td> <td valign="bottom" style="width:00.94%;padding:0pt;">   </td> </tr> </table></div>   <div /></div> </div>

2953773

1058029

3472004

1220451

84651

652860

<div> <div> 2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Accounting estimates   The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ significantly from those estimates.   Cash and cash equivalents   For purposes of reporting cash flows, cash and cash equivalents include cash, money market accounts, and investments with original maturities of three months or less.   Accounts receivable   The Company records trade receivables when revenue is recognized.  No product has been consigned to customers.  The Company’s allowance for doubtful accounts is primarily determined by review of specific trade receivables.  Those accounts that are doubtful of collection are included in the allowance.  This provision is reviewed to determine the adequacy of the allowance for doubtful accounts.  Trade receivables are charged off when there is certainty as to their being uncollectible.  Trade receivables are considered delinquent when payment has not been made within contract terms.   The Company requires certain customers to make a prepayment prior to beginning production or shipment of their order.  Customers may apply such prepayments to their outstanding invoices or pay the invoice and continue to carry forward the deposit for future orders.  Such amounts are included in Other accrued liabilities on the Condensed Balance Sheets and are shown in Note 5, Other Accrued Liabilities.   The Company records an allowance for estimated returns as a reduction to Accounts receivable and Gross sales.  Historically, returns have been immaterial.   Inventories   Inventories are valued at the lower of cost or net realizable value, with cost being determined using actual average cost.  The Company compares the average cost to the net realizable value and records the lower value.  Management considers such factors as the amount of inventory on hand and in the distribution channel, estimated time to sell such inventory, the shelf life of inventory, and current market conditions when determining excess or obsolete inventories.  A reserve is established for any excess or obsolete inventories or they may be written off.   Property, plant, and equipment   Property, plant, and equipment are stated at cost.  Expenditures for maintenance and repairs are charged to operations as incurred.  Cost includes major expenditures for improvements and replacements which extend useful lives or increase capacity and interest cost associated with significant capital additions.  Gains or losses from property disposals are included in income.   The Company’s property, plant, and equipment primarily consist of buildings and improvements, land, assembly equipment, molding machines, molds, office equipment, furniture, and fixtures.  Depreciation and amortization are calculated using the straight-line method over the following useful lives:   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 90.00%;margin-left:54pt;"> <tr> <td valign="top" style="width:67.56%;padding:0pt;"> Production equipment </td> <td valign="top" style="width:32.44%;padding:0pt;"> 3 to 13 years </td> </tr> <tr> <td valign="top" style="width:67.56%;padding:0pt;"> Office furniture and equipment </td> <td valign="top" style="width:32.44%;padding:0pt;"> 3 to 10 years </td> </tr> <tr> <td valign="top" style="width:67.56%;padding:0pt;"> Buildings </td> <td valign="top" style="width:32.44%;padding:0pt;"> 39 years </td> </tr> <tr> <td valign="top" style="width:67.56%;padding:0pt;"> Building improvements </td> <td valign="top" style="width:32.44%;padding:0pt;"> 15 years </td> </tr> </table></div>   Long-lived assets   The Company assesses the recoverability of long-lived assets using an assessment of the estimated undiscounted future cash flows related to such assets.  In the event that assets are found to be carried at amounts which are in excess of estimated gross future cash flows, the assets will be adjusted for impairment to a level commensurate with fair value determined using a discounted cash flow analysis of the underlying assets.   Financial instruments   The Company estimates the fair value of financial instruments through the use of public market prices, quotes from financial institutions, and other available information.  Judgment is required in interpreting data to develop estimates of fair value and, accordingly, amounts are not necessarily indicative of the amounts that could be realized in a current market exchange.  Short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and other liabilities, consist primarily of instruments without extended maturities, the fair value of which, based on Management’s estimates, equals their recorded values.  The fair value of long-term liabilities, based on Management’s estimates, approximates their reported values.   Concentration risks   The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable.  Cash balances, some of which exceed federally insured limits, are maintained in financial institutions; however, Management believes the institutions are of high credit quality.  The majority of accounts receivable are due from companies which are well-established entities.  As a consequence, Management considers any exposure from concentrations of credit risks to be limited.   The following table reflects our significant customers for the three and nine months ended September 30, 2017 and 2016:   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 95.00%;margin-left:24.5pt;"> <tr> <td valign="top" style="width:28.98%;padding:0pt;">   </td> <td valign="bottom" style="width:02.52%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months ended September 30, 2017 </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months ended September 30, 2016 </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months ended September 30, 2017 </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months ended September 30, 2016 </td> <td valign="bottom" style="width:01.00%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:28.98%;padding:0pt;"> Number of significant customers </td> <td valign="bottom" style="width:02.52%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>3 </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>2 </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>2 </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>1 </td> <td valign="bottom" style="width:01.00%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:28.98%;padding:0pt;"> Aggregate dollar amount of net sales to significant customers </td> <td valign="bottom" style="width:02.52%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;padding:0pt;"> $5.1 million </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;padding:0pt;"> $3.5 million </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;padding:0pt;"> $9.4 million </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;padding:0pt;"> $7.1 million </td> <td valign="bottom" style="width:01.00%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:28.98%;padding:0pt;"> Percentage of net sales to significant customers </td> <td valign="bottom" style="width:02.52%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>49.1% </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>39.3% </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>37.5% </td> <td valign="bottom" style="width:02.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.00%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>31.6% </td> <td valign="bottom" style="width:01.00%;padding:0pt;">   </td> </tr> </table></div>   The Company manufactures some of its products in Little Elm, Texas as well as utilizing manufacturers in China.  The Company purchases most of its product components from single suppliers, including needle adhesives and packaging materials.  There are multiple sources of these materials.  The Company obtained roughly 90.4% and 85.1% of its VanishPoint®  syringes in the first nine months of 2017 and 2016, respectively, from its primary Chinese manufacturer.  Purchases from this Chinese manufacturer aggregated 93.0% and 92.7% of VanishPoint®  syringes in the three month periods ended September 30, 2017 and 2016, respectively.  In the event that the Company becomes unable to purchase products from its Chinese manufacturers, the Company would need to find an alternate manufacturer for its blood collection set, IV catheter, Patient Safe® syringe, 0.5mL insulin syringe, 0.5mL autodisable syringe, and 2mL, 5mL, and 10mL syringes and would increase domestic production for the 1mL and 3mL syringes.   Revenue recognition   Revenue is recognized for sales when title and risk of ownership passes to the customer, generally upon shipment.  Under certain contracts, revenue is recorded on the basis of sales price to distributors, less contractual pricing allowances.  Contractual pricing allowances consist of: (i) rebates granted to distributors who provide tracking reports which show, among other things, the facility that purchased the products, and (ii) a provision for estimated contractual pricing allowances for products for which the Company has not received tracking reports.  Rebates are recorded when issued and are applied against the customer’s receivable balance.  Distributors receive a rebate for the difference between the Wholesale Acquisition Cost and the appropriate contract price as reflected on a tracking report provided by the distributor to the Company. If product is sold by a distributor to an entity that has no contract, there is a standard rebate (lower than a contracted rebate) given to the distributor.  One of the purposes of the rebate is to encourage distributors to submit tracking reports to the Company. The provision for contractual pricing allowances is reviewed at the end of each quarter and adjusted for changes in levels of products for which there is no tracking report.  Additionally, if it becomes clear that tracking reports will not be provided by individual distributors, the provision is further adjusted.  The estimated contractual allowance is included in Accounts payable in the Condensed Balance Sheets and deducted from revenues in the Condensed Statements of Operations.  Accounts payable included estimated contractual allowances for $3,714,733 and $3,591,534 as of September 30, 2017 and December 31, 2016, respectively.  The terms and conditions of contractual pricing allowances are governed by contracts between the Company and its distributors.  Revenue for shipments directly to end-users is recognized when title and risk of ownership pass from the Company.  Any product shipped or distributed for evaluation purposes is expensed.   The Company’s domestic return policy is set forth in its standard Distribution Agreement.  This policy provides that a customer may return incorrect shipments within 10 days following arrival at the distributor’s facility.  In all such cases, the distributor must obtain an authorization code from the Company and affix the code to the returned product.  The Company will not accept returned goods without a returned goods authorization number.  The Company may refund the customer’s money or replace the product.   The Company’s domestic return policy also generally provides that a customer may return product that is overstocked.  Overstocking returns are limited to two times in each 12-month period up to 1% of distributor’s total purchase of products for the prior 12-month period.  All product overstocks and returns are subject to inspection and acceptance by the Company.   The Company’s international distribution agreements generally do not provide for any returns.   Income taxes   The Company evaluates tax positions taken or expected to be taken in a tax return for recognition in the financial statements based on whether it is “more-likely-than-not” that a tax position will be sustained based upon the technical merits of the position.  Measurement of the tax position is based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.   The Company provides for deferred income taxes through utilizing an asset and liability approach for financial accounting and reporting based on the tax effects of differences between the financial statement and tax bases of assets and liabilities, based on enacted rates expected to be in effect when such differences reverse in future periods.  Deferred tax assets are periodically reviewed for realizability.  The Company has established a valuation allowance for its net deferred tax asset as future taxable income cannot be reasonably assured.  Penalties and interest related to income tax are classified as General and administrative expense and Interest expense, respectively, in the Condensed Statements of Operations.  Such expenses are not material.   Earnings per share   The Company computes basic earnings per share (“EPS”) by dividing net earnings for the period (adjusted for any cumulative dividends for the period) by the weighted average number of common shares outstanding during the period.  Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect, if any, of the common stock deliverable pursuant to stock options or common stock issuable upon the conversion of convertible preferred stock.  The calculation of diluted EPS excluded 93,125 and 670,338 shares of Common Stock underlying issued and outstanding stock options for the three months ended September 30, 2017 and September 30, 2016, respectively, as their effect was antidilutive.  The calculation of diluted EPS excluded 128,540 and 674,042 shares of Common Stock underlying issued and outstanding stock options for the nine months ended September 30, 2017 and September 30, 2016, respectively, as their effect was antidilutive.  The potential dilution, if any, is shown on the following schedule:   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 94.00%;margin-left:27.35pt;"> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended September 30, 2017 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended September 30, 2016 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months Ended September 30, 2017 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months Ended September 30, 2016 </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Net loss </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(66,626 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(125,304 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(2,605,917 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(1,721,089 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Preferred dividend requirements </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(176,249 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(176,249 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(528,747 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(528,747 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Loss applicable to common shareholders after assumed conversions </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(242,875 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(301,553 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(3,134,664 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(2,249,836 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Average common shares outstanding </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>32,166,454 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,649,874 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>31,722,010 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,252,652 </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Average common and common equivalent shares outstanding – assuming dilution </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>32,166,454 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,649,874 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>31,722,010 </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>29,252,652 </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Basic loss per share </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="top" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.10 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.08 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="top" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;"> Diluted loss per share </td> <td valign="bottom" style="width:02.64%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="top" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.01 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.10 </td> <td valign="bottom" style="width:01.50%;"> ) </td> <td valign="bottom" style="width:01.50%;padding:0pt;">  $ </td> <td valign="bottom" style="width:15.80%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>(0.08 </td> <td valign="bottom" style="width:01.02%;"> ) </td> </tr> <tr> <td valign="top" style="width:24.12%;padding:0pt;">   </td> <td valign="bottom" style="width:02.64%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="top" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:01.50%;padding:0pt;">   </td> <td valign="bottom" style="width:15.80%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.02%;padding:0pt;">   </td> </tr> </table></div>   Shipping and handling costs   The Company classifies shipping and handling costs as part of Cost of sales in the Condensed Statements of Operations.   Research and development costs   Research and development costs are expensed as incurred.   Share-based compensation   The Company’s share-based payments are accounted for using the fair value method.  The Company records share-based compensation expense on a straight-line basis over the requisite service period.  The Company incurred the following share-based compensation costs:   <div style="width:100%;"><table cellpadding="0" cellspacing="0" style="border-collapse:collapse;width: 94.00%;margin-left:27.35pt;"> <tr> <td valign="bottom" style="width:21.88%;padding:0pt;">   </td> <td valign="bottom" style="width:03.30%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended September 30, 2017 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Three Months Ended September 30, 2016 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months Ended September 30, 2017 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;"> Nine Months Ended September 30, 2016 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:21.88%;padding:0pt;">   </td> <td valign="bottom" style="width:03.30%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;padding:0pt;">   </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;padding:0pt;">   </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;padding:0pt;">   </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:21.88%;padding:0pt;"> Cost of sales </td> <td valign="bottom" style="width:03.30%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>74,683 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>37,995 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>270,800 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>37,995 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:21.88%;padding:0pt;"> Sales and marketing </td> <td valign="bottom" style="width:03.30%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>38,578 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>20,723 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>143,255 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>20,723 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:21.88%;padding:0pt;"> Research and development </td> <td valign="bottom" style="width:03.30%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>12,458 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6,310 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>45,174 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>6,310 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:21.88%;padding:0pt;"> General and administrative </td> <td valign="bottom" style="width:03.30%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>56,832 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>19,623 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>193,631 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>19,623 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:21.88%;padding:0pt;">   </td> <td valign="bottom" style="width:03.30%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:1pt solid #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:21.88%;padding:0pt;">   </td> <td valign="bottom" style="width:03.30%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>182,551 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>84,651 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>652,860 </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;"> $ </td> <td valign="bottom" style="width:15.90%;;font-family:Times New Roman,Times,serif;font-size:10pt;text-align:right;" nowrap="nowrap"><div style="float:left"></div>84,651 </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> </tr> <tr> <td valign="top" style="width:21.88%;padding:0pt;">   </td> <td valign="bottom" style="width:03.30%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.64%;padding:0pt;">   </td> <td valign="bottom" style="width:01.66%;padding:0pt;">   </td> <td valign="bottom" style="width:15.90%;border-top:1pt none #D9D9D9 ;border-left:1pt none #D9D9D9 ;border-bottom:2pt double #000000 ;border-right:1pt none #D9D9D9 ;padding:0pt;">   </td> <td valign="bottom" style="width:01.32%;padding:0pt;">   </td> </tr> </table></div>   Insurance Proceeds   Receipts from insurance up to the amount of any loss recognized by the Company are considered recoveries. Any such recoveries are recorded when they are received. Insurance recoveries are not recognized as a component of earnings (loss) from operations until all repairs are made.   Recent pronouncements   In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory,” which is part of the FASB’s Simplification Initiative.  Inventory, including inventory measured at average cost, would be valued at the lower of cost or net realizable value.  Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.  ASU 2015-11 is effective for the Company’s annual periods and interim periods within those annual periods beginning January 1, 2017.  Amendments in this ASU should be applied prospectively with earlier application permitted at the beginning of an interim or annual reporting period.  The adoption of this pronouncement had no impact on the Company’s Balance Sheet, Results of Operations, or Cash Flows in the period of adoption.   In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”.  These amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The updated guidance is effective for the Company’s quarter ending March 31, 2018, with early adoption permitted.  The Company does not expect ASU 2016-18 to have a material effect on its financial statements as the Company currently holds no restricted cash or restricted cash equivalents.   In June 2016, the FASB issued Accounting Standards Update 2016-13, “Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”.  Among other things, these amendments require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.  Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses.  This ASU is effective for the Company’s quarter ending March 31, 2020 with early application permitted for the Company’s quarter ending March 31, 2019.  The Company is currently assessing the impact that adoption of this guidance will have on its financial statements and related disclosures.   In February 2016, the FASB issued ASU No. 2016-02, Leases (topic 842). Under the new ASU, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance lessor accounting is largely unchanged. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. This ASU is effective for the Company’s quarter ending March 31, 2019, with early adoption permitted. The Company is currently evaluating the impact of this standard.   In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition.  This ASU’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects consideration to which the company expects to be entitled in exchange for those goods or services.  This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract.  ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption.  In July 2015, the FASB voted to delay the effective date of this ASU by one year.  The ASU will now be effective commencing with the Company’s quarter ending March 31, 2018.  Early adoption of this ASU is allowed no sooner than the original effective date.  Management’s preliminary assessment is that the implementation of the amended guidance will not have a material impact on the Company’s balance sheet, statements of operations, changes in stockholders’ equity and cash flows.  The Company’s revenue is generated from sales of finished goods (disposable medical devices).  Revenue from these sales will continue to be recognized when title of the products is passed to the customer.  Management expects materially similar results under the amended guidance as compared to the Company’s current policies and procedures regarding revenue recognition.  This preliminary assessment may change prior to adoption.  Additionally, Management anticipates adopting this amended guidance on a Modified Retrospective basis in the first quarter of 2018. <div /></div> </div>

28108291

28339997

2000000

1000000

1780000

570100

1009960

<div> <div> 11.      STORM DAMAGE AND INSURANCE PROCEEDS   On March 26, 2017, a hail storm passed through Little Elm, TX, resulting in damage to the Company’s two buildings.  During April 2017, the Company performed an inspection of its facilities and determined that possible roof damage had been sustained.  In late April 2017, the Company’s insurance carrier inspected the two buildings and confirmed that damage occurred from the hail storm.  This damage was principally to the roofs of the buildings but also many of the HVAC units and a wall alongside one of the buildings.   The Company’s insurance carrier has assessed damages of $1,009,960 and the Company’s deductible is $5,000.  The Company has received these funds from its carrier.  At this time, the Company does not expect the cost of repairs to the roofs, the wall, and to the HVAC units to exceed its coverage.  Repairs commenced during the third quarter of 2017 and are expected to be completed by the end of the year.  The Company does not currently anticipate that these repairs will result any significant disruption to its operations or interruption to its production.  The Company expects that all repairs will be covered by the insurance proceeds.   During the third quarter of 2017, the Company incurred and recognized $128,710 in repairs due to the storm damage.  There is $876,250 of remaining insurance proceeds.  This repair expense was offset by the insurance proceeds, resulting in no impact to the Statement of Operations.  These costs and offsets are included in General and administrative expense in the Statement of Operations. <div /></div> </div>

<div> <div>   Accounting estimates   The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ significantly from those estimates. <div /></div> </div>

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Insurance Proceeds Not Subject to Utilization Insurance proceeds Remaining insurance proceeds Other Accrued Liabilities, Current Other accrued liabilities Other accrued liabilities Liabilities, Current Total current liabilities Long-term Debt, Excluding Current Maturities Long-term debt, net of current maturities Liabilities Total liabilities Commitments and Contingencies. Commitments and contingencies - see Note 6 Stockholders' Equity Attributable to Parent [Abstract] Stockholders' equity: Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] Preferred stock, $1 par value: Preferred Stock, Value, Issued Preferred stock Additional Paid in Capital, Preferred Stock Additional paid-in capital Retained Earnings (Accumulated Deficit) Accumulated deficit Stockholders' Equity Attributable to Parent Total stockholders' equity Liabilities and Equity Total liabilities and stockholders' equity Preferred Stock, Par or Stated Value Per Share Preferred stock, par value (in dollars per share) Common Stock, Par or Stated Value Per Share Common stock, par value (in dollars per share) CONDENSED STATEMENTS OF OPERATIONS Revenue, Net Aggregate dollar amount of net sales to significant customers Sales, net Total sales Cost of Goods and Services Sold [Abstract] Cost of sales Cost of Goods Sold Cost of manufactured product Direct Operating Cost, Royalty Expense Royalty expense to shareholder Cost of Goods and Services Sold Total cost of sales Gross Profit Gross profit Operating Expenses [Abstract] Operating expenses: Selling and Marketing Expense Sales and marketing Research and Development Expense Research and development General and Administrative Expense General and administrative Operating Expenses Total operating expenses Operating Income (Loss) Loss from operations Investment Income, Interest and Dividend Interest and other income Interest Expense Interest expense, net Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest Net loss before income taxes Income Tax Expense (Benefit) Provision for income taxes Net Income (Loss) Attributable to Parent Net loss Net loss Preferred Stock Dividends, Income Statement Impact Preferred stock dividend requirements Preferred dividend requirements Net Income (Loss) Available to Common Stockholders, Basic Loss applicable to common shareholders Earnings Per Share, Basic Basic loss per share (in dollars per share) Basic loss per share (in dollars per share) Earnings Per Share, Diluted Diluted loss per share (in dollars per share) Diluted loss per share (in dollars per share) Weighted Average Number of Shares Outstanding, Diluted [Abstract] Weighted average common shares outstanding: Weighted Average Number of Shares Outstanding, Basic Basic (in shares) Average common shares outstanding Weighted Average Number of Shares Outstanding, Diluted Diluted (in shares) Average common and common equivalent shares outstanding - assuming dilution CONDENSED STATEMENTS OF CASH FLOWS Net Cash Provided by (Used in) Operating Activities [Abstract] Cash flows from operating activities Net Income (Loss), Including Portion Attributable to Noncontrolling Interest Net loss Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] Adjustments to reconcile net loss to net cash used by operating activities: Allowance for Doubtful Accounts Receivable, Recoveries Recoveries for doubtful accounts Provision for Doubtful Accounts Provision for doubtful accounts Share-based Compensation Share-based compensation Depreciation, Depletion and Amortization Depreciation and amortization Increase (Decrease) in Operating Assets [Abstract] (Increase) decrease in assets: Increase (Decrease) in Accounts Receivable Accounts receivable Increase (Decrease) in Inventories Inventories Increase (Decrease) in Other Current Assets Other current assets Increase (Decrease) in Other Operating Assets Other assets Increase (Decrease) in Operating Liabilities [Abstract] Increase (decrease) in liabilities: Increase (Decrease) in Accounts Payable Accounts payable Increase (Decrease) in Accrued Liabilities Other accrued liabilities Increase (Decrease) in Income Taxes Payable Income taxes payable Increase (Decrease) in Insurance Liabilities Insurance proceeds Net Cash Provided by (Used in) Operating Activities Net cash used by operating activities Net Cash Provided by (Used in) Investing Activities [Abstract] Cash flows from investing activities Payments to Acquire Property, Plant, and Equipment Purchase of property, plant, and equipment Net Cash Provided by (Used in) Investing Activities Net cash used by investing activities Net Cash Provided by (Used in) Financing Activities [Abstract] Cash flows from financing activities Proceeds from (Repayments of) Long-term Debt and Capital Securities Repayments of long-term debt and notes payable Proceeds from Issuance of Common Stock Proceeds from the sale of common stock Proceeds from Stock Options Exercised Proceeds from the exercise of stock options Payments of Ordinary Dividends, Preferred Stock and Preference Stock Payment of Preferred Stock dividends Net Cash Provided by (Used in) Financing Activities Net cash provided by financing activities Cash and Cash Equivalents, Period Increase (Decrease) Net decrease in cash and cash equivalents Effect of Exchange Rate on Cash and Cash Equivalents [Abstract] Cash and cash equivalents at: Supplemental Cash Flow Information [Abstract] Supplemental schedule of cash flow information: Interest Paid Net Interest paid Income Taxes Paid Income taxes paid Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] Supplemental schedule of noncash investing and financing activities: Dividends, Preferred Stock, Cash Preferred dividends declared, not paid Preferred dividends declared BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant Accounting Policies [Text Block] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVENTORIES Inventory Disclosure [Text Block] INVENTORIES INCOME TAXES Income Tax Disclosure [Text Block] INCOME TAXES OTHER ACCRUED LIABILITIES Accounts Payable and Accrued Liabilities Disclosure [Text Block] OTHER ACCRUED LIABILITIES COMMITMENTS AND CONTINGENCIES Commitments and Contingencies Disclosure [Text Block] COMMITMENTS AND CONTINGENCIES BUSINESS SEGMENT Segment Reporting Disclosure [Text Block] BUSINESS SEGMENT DIVIDENDS Represents the entire disclosure of dividends declared and paid by the entity. Dividends Disclosure [Text Block] DIVIDENDS PRIVATE PURCHASE Related Party Transactions Disclosure [Text Block] PRIVATE PURCHASE Represents the information pertains to cash bonus BONUSES Represents the information pertains to amount of cash bonus granted Cash Bonuses disclosure text block BONUSES STORM DAMAGE AND INSURANCE PROCEEDS Unusual or Infrequent Items, or Both, Disclosure [Text Block] STORM DAMAGE AND INSURANCE PROCEEDS Use of Estimates, Policy [Policy Text Block] Accounting estimates Cash and Cash Equivalents, Policy [Policy Text Block] Cash and cash equivalents Receivables, Policy [Policy Text Block] Accounts receivable Inventory, Policy [Policy Text Block] Inventories Property, Plant and Equipment, Policy [Policy Text Block] Property, plant, and equipment Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] Long-lived assets Fair Value of Financial Instruments, Policy [Policy Text Block] Financial instruments Concentration Risk, Credit Risk, Policy [Policy Text Block] Concentration risks Revenue Recognition, Policy [Policy Text Block] Revenue recognition Income Tax, Policy [Policy Text Block] Income taxes Earnings Per Share, Policy [Policy Text Block] Earnings per share Shipping and Handling Cost, Policy [Policy Text Block] Shipping and handling costs Research and Development Expense, Policy [Policy Text Block] Research and development costs Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] Share-based compensation Insurance Premiums Revenue Recognition, Policy [Policy Text Block] Insurance Proceeds New Accounting Pronouncements, Policy [Policy Text Block] Recent pronouncements Tabular disclosure of the useful life of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Useful Life of Property Plant and Equipment [Table Text Block] Schedule of estimated useful lives of property, plant and equipment Schedules of Concentration of Risk, by Risk Factor [Table Text Block] Schedule of significant customers Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] Schedule of earnings per share Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] Schedule of share-based compensation costs Schedule of Inventory, Current [Table Text Block] Schedule of inventories Schedule of Accrued Liabilities [Table Text Block] Schedule of other accrued liabilities Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block] Schedule of sales and long-lived assets by geography Schedule of Property, Plant and Equipment [Table] Property, Plant and Equipment, Type [Axis] Property Plant And Equipment Type [Domain] Property, Plant and Equipment, Type [Domain] Equipment [Member] Production equipment Furniture And Fixtures [Member] Office furniture and equipment Building [Member] Buildings Building Improvements [Member] Building improvements Range [Axis] Range [Member] Range [Domain] Minimum [Member] Minimum Maximum [Member] Maximum Property, Plant and Equipment [Line Items] Property, plant, and equipment Property, Plant and Equipment, Useful Life Useful lives Accounts Receivable Additional Disclosures [Abstract] Accounts receivable Represents the number of products which have been consigned to the customers. Number of Products Consigned to Customers Number of products consigned to customers Concentration Risk [Table] Concentration Risk Benchmark [Axis] Concentration Risk Benchmark [Domain] Concentration Risk Benchmark [Domain] Sales [Member] Sales Cost Of Goods Product Line [Member] Syringes Concentration Risk Type [Axis] Concentration Risk Type [Domain] Concentration Risk Type [Domain] Customer Concentration Risk [Member] Customer Concentration Risk Supplier Concentration Risk [Member] Supplier Concentration Risk Concentration Risk [Line Items] Concentration risks Represents the number of significant customers. Number of Significant Customers Number of significant customers Concentration Risk, Percentage Percentage of net sales to significant customers (as a percent) Revenue Recognition [Abstract] Revenue recognition For an unclassified balance sheet, a valuation allowance for payables due by the company that are expected to be not payable. Allowance for Contractual Pricing Estimated contractual allowance Represents the period for return of incorrect shipments, following arrival at the distributor's facility. Revenue Recognition Period for Return of Incorrect Shipments Period for return of incorrect shipments The number of overstock returns available to a customer within a specified period of time. Revenue Recognition Overstock Return Limit Number Number of times overstocking returns are limited The period of time specified for overstock returns. Revenue Recognition Overstock Return Period Period for return of product due to overstock Represents the maximum percentage of distributor's total purchase in prior 12-month period for overstock return. Revenue Recognition, Maximum Percentage of Distributors, Total Purchase in Prior Twelve Month Period for Overstock Return Maximum percentage of distributor's total purchase for the prior 12-month period Loss Contingencies [Table] EX-101.PRE 10 rvp-20170930_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT XML 11 R1.htm IDEA: XBRL DOCUMENT

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2017	Nov. 01, 2017
Document and Entity Information
Entity Registrant Name	RETRACTABLE TECHNOLOGIES INC
Entity Central Index Key	0000946563
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		32,666,454
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3

XML 12 R2.htm IDEA: XBRL DOCUMENT

CONDENSED BALANCE SHEETS - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 15,866,458	$ 16,199,043
Accounts receivable, net	5,246,322	3,267,838
Inventories, net	7,353,247	7,017,224
Other current assets	505,656	192,548
Total current assets	28,971,683	26,676,653
Property, plant, and equipment, net	11,663,988	12,092,037
Other assets	7,063	10,289
Total assets	40,642,734	38,778,979
Current liabilities:
Accounts payable	5,046,014	4,471,756
Current portion of long-term debt	430,089	430,393
Accrued compensation	924,879	536,456
Dividends payable	55,113	55,113
Accrued royalties to shareholder	847,301	659,443
Insurance proceeds	876,250
Other accrued liabilities	950,770	1,019,283
Total current liabilities	9,130,416	7,172,444
Long-term debt, net of current maturities	3,172,321	3,498,244
Total liabilities	12,302,737	10,670,688
Commitments and contingencies - see Note 6
Preferred stock, $1 par value:
Additional paid-in capital	62,127,956	59,290,333
Accumulated deficit	(34,569,404)	(31,963,487)
Total stockholders' equity	28,339,997	28,108,291
Total liabilities and stockholders' equity	40,642,734	38,778,979
Series I, Class B
Preferred stock, $1 par value:
Preferred stock	98,500	98,500
Series II, Class B
Preferred stock, $1 par value:
Preferred stock	171,200	171,200
Series III, Class B
Preferred stock, $1 par value:
Preferred stock	129,245	129,245
Series IV, Class B
Preferred stock, $1 par value:
Preferred stock	342,500	342,500
Series V, Class B
Preferred stock, $1 par value:
Preferred stock	$ 40,000	$ 40,000

XML 13 R3.htm IDEA: XBRL DOCUMENT

CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
CONDENSED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Common stock, par value (in dollars per share)	$ 0	$ 0

XML 14 R4.htm IDEA: XBRL DOCUMENT

CONDENSED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
CONDENSED STATEMENTS OF OPERATIONS - USD ($)	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
CONDENSED STATEMENTS OF OPERATIONS
Sales, net	$ 10,412,036	$ 8,840,134	$ 24,981,833	$ 22,337,169
Cost of sales
Cost of manufactured product	6,304,397	4,900,072	15,116,805	12,400,679
Royalty expense to shareholder	847,301	680,287	2,070,699	1,868,064
Total cost of sales	7,151,698	5,580,359	17,187,504	14,268,743
Gross profit	3,260,338	3,259,775	7,794,329	8,068,426
Operating expenses:
Sales and marketing	1,220,451	1,058,029	3,472,004	2,953,773
Research and development	159,921	117,939	465,765	389,712
General and administrative	1,912,824	2,165,246	6,346,731	6,306,085
Total operating expenses	3,293,196	3,341,214	10,284,500	9,649,570
Loss from operations	(32,858)	(81,439)	(2,490,171)	(1,581,144)
Interest and other income	19,477	8,609	44,155	19,822
Interest expense, net	(52,962)	(51,994)	(159,053)	(158,327)
Net loss before income taxes	(66,343)	(124,824)	(2,605,069)	(1,719,649)
Provision for income taxes	283	480	848	1,440
Net loss	(66,626)	(125,304)	(2,605,917)	(1,721,089)
Preferred stock dividend requirements	(176,249)	(176,249)	(528,747)	(528,747)
Loss applicable to common shareholders	$ (242,875)	$ (301,553)	$ (3,134,664)	$ (2,249,836)
Basic loss per share (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.10)	$ (0.08)
Diluted loss per share (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.10)	$ (0.08)
Weighted average common shares outstanding:
Basic (in shares)	32,166,454	29,649,874	31,722,010	29,252,652
Diluted (in shares)	32,166,454	29,649,874	31,722,010	29,252,652

XML 15 R5.htm IDEA: XBRL DOCUMENT

CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities
Net loss	$ (2,605,917)	$ (1,721,089)
Adjustments to reconcile net loss to net cash used by operating activities:
Recoveries for doubtful accounts	(81,152)
Provision for doubtful accounts		92,000
Share-based compensation	652,860	84,651
Depreciation and amortization	603,582	672,000
(Increase) decrease in assets:
Accounts receivable	(1,897,332)	(352,444)
Inventories	(336,023)	(908,099)
Other current assets	(313,108)	1,338,622
Other assets		(750)
Increase (decrease) in liabilities:
Accounts payable	574,258	(988,248)
Other accrued liabilities	507,768	139,817
Income taxes payable		2,717
Insurance proceeds	876,250
Net cash used by operating activities	(2,018,814)	(1,640,823)
Cash flows from investing activities
Purchase of property, plant, and equipment	(172,305)	(1,671,649)
Net cash used by investing activities	(172,305)	(1,671,649)
Cash flows from financing activities
Repayments of long-term debt and notes payable	(326,227)	(187,418)
Proceeds from the sale of common stock	2,350,100
Proceeds from the exercise of stock options		839,200
Payment of Preferred Stock dividends	(165,339)	(165,640)
Net cash provided by financing activities	1,858,534	486,142
Net decrease in cash and cash equivalents	(332,585)	(2,826,330)
Cash and cash equivalents at:
Beginning of period	16,199,043	18,045,044
End of period	15,866,458	15,218,714
Supplemental schedule of cash flow information:
Interest paid	159,053	158,325
Income taxes paid		2,025
Supplemental schedule of noncash investing and financing activities:
Preferred dividends declared, not paid	$ 55,113	$ 55,113

XML 16 R6.htm IDEA: XBRL DOCUMENT

BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION	9 Months Ended
BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION	Sep. 30, 2017
BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION
BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION	1. BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION Business of the Company Retractable Technologies, Inc. (the “Company”) was incorporated in Texas on May 9, 1994, and designs, develops, manufactures, and markets safety syringes and other safety medical products for the healthcare profession. The Company began to develop its manufacturing operations in 1995. The Company’s manufacturing and administrative facilities are located in Little Elm, Texas. The Company’s products are the VanishPoint® 0.5mL insulin syringe; 1mL tuberculin, insulin, and allergy antigen syringes; 0.5mL, 1mL, 2mL, 3mL, 5mL, and 10mL syringes; the blood collection tube holder; the small diameter tube adapter; the allergy tray; the IV safety catheter; the Patient Safe® syringes; the Patient Safe® Luer Cap; the VanishPoint® Blood Collection Set; and the EasyPoint® needle. The Company also sells VanishPoint® autodisable syringes in the international market in addition to the Company’s other products. Basis of presentation The accompanying condensed financial statements are unaudited and, in the opinion of Management, reflect all adjustments that are necessary for a fair presentation of the financial position and results of operations for the periods presented. All such adjustments are of a normal and recurring nature. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the entire year. The unaudited condensed financial statements should be read in conjunction with the financial statement disclosures contained in the Company’s audited financial statements incorporated into its Form 10-K filed on March 31, 2017 for the year ended December 31, 2016.

XML 17 R7.htm IDEA: XBRL DOCUMENT

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting estimates

Cash and cash equivalents

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

Accounts receivable

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

Inventories

Property, plant, and equipment

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

Long-lived assets

Financial instruments

Concentration risks

The following table reflects our significant customers for the three and nine months ended September 30, 2017 and 2016:

	Three Months ended September 30, 2017	Three Months ended September 30, 2016	Nine Months ended September 30, 2017	Nine Months ended September 30, 2016
Number of significant customers	3	2	2	1
Aggregate dollar amount of net sales to significant customers	$5.1 million	$3.5 million	$9.4 million	$7.1 million
Percentage of net sales to significant customers	49.1%	39.3%	37.5%	31.6%

Revenue recognition

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

Income taxes

Earnings per share

		Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Net loss	$	(66,626	)	$	(125,304	)	$	(2,605,917	)	$	(1,721,089	)
Preferred dividend requirements		(176,249	)		(176,249	)		(528,747	)		(528,747	)

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

Average common shares outstanding		32,166,454			29,649,874			31,722,010			29,252,652

Average common and common equivalent shares outstanding – assuming dilution		32,166,454			29,649,874			31,722,010			29,252,652

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

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

Shipping and handling costs

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

Research and development costs

Research and development costs are expensed as incurred.

Share-based compensation

		Three Months Ended September 30, 2017		Three Months Ended September 30, 2016		Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016

Cost of sales	$	74,683	$	37,995	$	270,800	$	37,995
Sales and marketing		38,578		20,723		143,255		20,723
Research and development		12,458		6,310		45,174		6,310
General and administrative		56,832		19,623		193,631		19,623

	$	182,551	$	84,651	$	652,860	$	84,651

Insurance Proceeds

Recent pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (topic 842). Under the new ASU, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance lessor accounting is largely unchanged. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. This ASU is effective for the Company’s quarter ending March 31, 2019, with early adoption permitted. The Company is currently evaluating the impact of this standard.

XML 18 R8.htm IDEA: XBRL DOCUMENT

INVENTORIES

9 Months Ended

Sep. 30, 2017

INVENTORIES

INVENTORIES

3. INVENTORIES

Inventories consist of the following:

		September 30, 2017			December 31, 2016
Raw materials	$	1,543,972		$	1,303,278
Finished goods		6,404,798			6,309,469

		7,948,770			7,612,747
Inventory reserve		(595,523	)		(595,523	)

	$	7,353,247		$	7,017,224

XML 19 R9.htm IDEA: XBRL DOCUMENT

INCOME TAXES	9 Months Ended
INCOME TAXES	Sep. 30, 2017
INCOME TAXES
INCOME TAXES	4. INCOME TAXES The Company’s effective tax rate on the net earnings (loss) before income taxes was 0.0% and (0.1)% for the nine months ended September 30, 2017 and September 30, 2016, respectively. For the three months ended September 30, 2017 and September 30, 2016, the Company’s effective tax rate on the net earnings (loss) before income taxes was (0.4)% and (0.4)%, respectively.

XML 20 R10.htm IDEA: XBRL DOCUMENT

OTHER ACCRUED LIABILITIES

9 Months Ended

Sep. 30, 2017

OTHER ACCRUED LIABILITIES

OTHER ACCRUED LIABILITIES

5. OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:

		September 30, 2017		December 31, 2016
Prepayments from customers	$	376,984	$	692,922
Accrued property taxes		363,075		—
Accrued professional fees		159,526		266,747
Other accrued expenses		51,185		59,614

	$	950,770	$	1,019,283

XML 21 R11.htm IDEA: XBRL DOCUMENT

COMMITMENTS AND CONTINGENCIES	9 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2017
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	6. COMMITMENTS AND CONTINGENCIES In May 2010, the Company and an officer’s suit against Becton, Dickinson and Company (“BD”) in the U.S. District Court for the Eastern District of Texas, Marshall Division alleging violations of antitrust acts, false advertising, product disparagement, tortious interference, and unfair competition was reopened. The trial commenced on September 9, 2013, in the U.S. District Court for the Eastern District of Texas, Tyler Division, and the jury found that BD illegally engaged in anticompetitive conduct with the intent to acquire or maintain monopoly power in the safety syringe market and engaged in false advertising under the Lanham Act. The jury awarded the Company $113,508,014 in damages, which was trebled pursuant to statute. The Court granted injunctive relief to take effect January 15, 2015. In doing so, the Court found that BD’s business practices limited innovation, including false advertisements that suppressed sales of the VanishPoint® syringes. The specific injunctive relief includes: (1) enjoining BD’s use of “World’s Sharpest Needle” or any similar assertion of superior sharpness; (2) requiring notification to all customers who purchased BD syringe products from July 2, 2004 to date that BD wrongfully claimed that its syringe needles were sharper and that its statement that it had “data on file” was false and misleading; (3) requiring notification to employees, customers, distributors, GPOs, and government agencies that the deadspace of the VanishPoint® has been within ISO standards since 2004 and that BD overstated the deadspace of the VanishPoint® to represent that it was higher than some of BD’s syringes when it was actually less, and that BD’s statement that it had “data on file” was false and misleading, and, in addition, posting this notice on its website for a period of three years; (4) enjoining BD from advertising that its syringe products save medication as compared to VanishPoint® products for a period of three years; (5) requiring notification to all employees, customers, distributors, GPOs, and government agencies that BD’s website, cost calculator, printed materials, and oral representations alleging BD’s syringes save medication as compared to the VanishPoint® were based on false and inaccurate measurement of the VanishPoint®, and, in addition, posting this notice on its website for a period of three years; and (6) requiring the implementation of a comprehensive training program for BD employees and distributors that specifically instructs them not to use old marketing materials and not to make false representations regarding VanishPoint® syringes. Final judgment was entered on January 15, 2015, awarding the Company $340,524,042 in damages and $11,722,823 in attorneys’ fees, as well as granting injunctive relief consistent with the orders as indicated above. The parties stipulated that the amount of litigation costs recoverable by the Company is $295,000. On January 14, 2015, the District Court stayed the portion of the injunctive relief that requires BD to notify end-user customers but also ordered BD to comply with internal correction activities as well as mandatory disclosures as set out above to its employees, customers, distributors and Group Purchasing Organizations. BD filed an appeal of that ruling with the 5th Circuit Court of Appeals and that appeal was denied on February 3, 2015. On February 12, 2015, BD filed a motion to amend the judgment directed most specifically to the issue of award of prejudgment interest. On April 23, 2015, the Court entered an Amended Final Judgment that removed prejudgment interest but kept all other monetary and injunctive relief the same as was granted in the original Final Judgment. BD filed its brief in the appeal on July 20, 2015. Oral argument occurred on Monday, February 29, 2016. On December 2, 2016, the 5th Circuit Court of Appeals overturned the antitrust damages. The finding of false advertising liability was affirmed and the case was remanded to the Eastern District of Texas for a redetermination as to the amount of damages to which the Company is entitled. The Company’s petition for certiorari to the U.S. Supreme Court was denied on March 20, 2017. The Eastern District of Texas trial date was May 11, 2017. On August 17, 2017, District Court for the Eastern District of Texas issued the Court’s Final Judgment ordering that the Company take nothing in its suit against BD and dismissing the case. On September 13, 2017, the Company filed a Motion to Alter or Amend the Judgment and on September 14, 2017, the Company filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit. On October 27, 2017, the Eastern District denied the Company’s Motion to Alter or Amend the Judgment. As a result of the District Court’s denial of the Motion to Amend, an amended Notice of Appeal was filed with the United States Court of Appeals for the Fifth Circuit on November 3, 2017. In September 2007, BD and MDC Investment Holdings, Inc. (“MDC”) sued the Company in the United States District Court for the Eastern District of Texas, Texarkana Division, initially alleging that the Company is infringing two U.S. patents of MDC (6,179,812 and 7,090,656) that are licensed to BD. BD and MDC seek injunctive relief and unspecified damages. The Company counterclaimed for declarations of non-infringement, invalidity, and unenforceability of the asserted patents. The plaintiffs subsequently dropped allegations with regard to patent no. 7,090,656 and the Company subsequently dropped its counterclaims for unenforceability of the asserted patents. On June 30, 2015, the Court ordered that further proceedings in this matter be stayed and that this case remain administratively closed until resolution of all appeals in the case detailed in the preceding paragraph. The case remains stayed as a result of the ongoing proceedings regarding the Lanham Act claims in the separate proceeding described above.

XML 22 R12.htm IDEA: XBRL DOCUMENT

BUSINESS SEGMENT

9 Months Ended

Sep. 30, 2017

BUSINESS SEGMENT

BUSINESS SEGMENT

7. BUSINESS SEGMENT

		Three Months Ended September 30, 2017		Three Months Ended September 30, 2016		Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016
U.S. sales	$	8,358,847	$	7,303,015	$	20,361,847	$	19,750,504
North and South America sales (excluding U.S.)		1,900,892		1,406,720		3,728,452		2,058,594
Other international sales		152,297		130,399		891,534		528,071

Total sales	$	10,412,036	$	8,840,134	$	24,981,833	$	22,337,169

Long -lived assets by geography are as follows:

	September 30, 2017		December 31, 2016

Long-lived assets
U.S.	$	11,520,337	$	11,930,293
International	$	143,651	$	161,744

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 35
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599

+ Details

XML 23 R13.htm IDEA: XBRL DOCUMENT

DIVIDENDS	9 Months Ended
DIVIDENDS	Sep. 30, 2017
DIVIDENDS
DIVIDENDS	8. DIVIDENDS The Company declared dividends in the first quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on April 21, 2016. The Company declared dividends in the second quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on July 28, 2016. The Company declared dividends in the third quarter of 2016 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on October 20, 2016. The Company declared dividends in the first quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on April 27, 2017. The Company declared dividends in the second quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on July 20, 2017. The Company declared dividends in the third quarter of 2017 in the amounts of $12,313 and $42,800 paid to Series I Class B and Series II Class B Preferred Stockholders, respectively, on October 20, 2017.

XML 24 R14.htm IDEA: XBRL DOCUMENT

PRIVATE PURCHASE	9 Months Ended
PRIVATE PURCHASE	Sep. 30, 2017
PRIVATE PURCHASE
PRIVATE PURCHASE	9. PRIVATE PURCHASE The Company approved three of its executive officers to purchase shares directly from the Company. Thomas J. Shaw, CEO, exercised his purchase rights on January 12, 2017, buying two million shares at market price for an aggregate purchase price of $1.78 million, and he exercised the remainder of his purchase rights on August 23, 2017 by purchasing one million shares at market price for aggregate consideration of $570,100. Mr. Cowan, CFO, and Ms. Larios, Vice President and General Counsel, are authorized to purchase 500,000 shares each at market price any time prior to September 9, 2018. The approximate dollar value of these potential future purchases cannot be predicted.

XML 25 R15.htm IDEA: XBRL DOCUMENT

BONUSES	9 Months Ended
BONUSES	Sep. 30, 2017
BONUSES
BONUSES	10. BONUSES In February of 2017, Mr. Cowan and Ms. Larios were each granted cash bonuses of $250,000. Ms. Larios received her bonus in the first quarter of 2017. Mr. Cowan will receive his bonus later this year.

XML 26 R16.htm IDEA: XBRL DOCUMENT

STORM DAMAGE AND INSURANCE PROCEEDS	9 Months Ended
STORM DAMAGE AND INSURANCE PROCEEDS	Sep. 30, 2017
STORM DAMAGE AND INSURANCE PROCEEDS
STORM DAMAGE AND INSURANCE PROCEEDS	11. STORM DAMAGE AND INSURANCE PROCEEDS On March 26, 2017, a hail storm passed through Little Elm, TX, resulting in damage to the Company’s two buildings. During April 2017, the Company performed an inspection of its facilities and determined that possible roof damage had been sustained. In late April 2017, the Company’s insurance carrier inspected the two buildings and confirmed that damage occurred from the hail storm. This damage was principally to the roofs of the buildings but also many of the HVAC units and a wall alongside one of the buildings. The Company’s insurance carrier has assessed damages of $1,009,960 and the Company’s deductible is $5,000. The Company has received these funds from its carrier. At this time, the Company does not expect the cost of repairs to the roofs, the wall, and to the HVAC units to exceed its coverage. Repairs commenced during the third quarter of 2017 and are expected to be completed by the end of the year. The Company does not currently anticipate that these repairs will result any significant disruption to its operations or interruption to its production. The Company expects that all repairs will be covered by the insurance proceeds. During the third quarter of 2017, the Company incurred and recognized $128,710 in repairs due to the storm damage. There is $876,250 of remaining insurance proceeds. This repair expense was offset by the insurance proceeds, resulting in no impact to the Statement of Operations. These costs and offsets are included in General and administrative expense in the Statement of Operations.

XML 27 R17.htm IDEA: XBRL DOCUMENT

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting estimates

Cash and cash equivalents

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

Accounts receivable

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

Inventories

Property, plant, and equipment

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

Long-lived assets

Financial instruments

Concentration risks

The following table reflects our significant customers for the three and nine months ended September 30, 2017 and 2016:

	Three Months ended September 30, 2017	Three Months ended September 30, 2016	Nine Months ended September 30, 2017	Nine Months ended September 30, 2016
Number of significant customers	3	2	2	1
Aggregate dollar amount of net sales to significant customers	$5.1 million	$3.5 million	$9.4 million	$7.1 million
Percentage of net sales to significant customers	49.1%	39.3%	37.5%	31.6%

Revenue recognition

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

Income taxes

Earnings per share

		Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Net loss	$	(66,626	)	$	(125,304	)	$	(2,605,917	)	$	(1,721,089	)
Preferred dividend requirements		(176,249	)		(176,249	)		(528,747	)		(528,747	)

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

Average common shares outstanding		32,166,454			29,649,874			31,722,010			29,252,652

Average common and common equivalent shares outstanding – assuming dilution		32,166,454			29,649,874			31,722,010			29,252,652

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

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

Shipping and handling costs

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

Research and development costs

Research and development costs are expensed as incurred.

Share-based compensation

		Three Months Ended September 30, 2017		Three Months Ended September 30, 2016		Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016

Cost of sales	$	74,683	$	37,995	$	270,800	$	37,995
Sales and marketing		38,578		20,723		143,255		20,723
Research and development		12,458		6,310		45,174		6,310
General and administrative		56,832		19,623		193,631		19,623

	$	182,551	$	84,651	$	652,860	$	84,651

Insurance Proceeds

Recent pronouncements

XML 28 R18.htm IDEA: XBRL DOCUMENT

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of estimated useful lives of property, plant and equipment

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

Schedule of significant customers

	Three Months ended September 30, 2017	Three Months ended September 30, 2016	Nine Months ended September 30, 2017	Nine Months ended September 30, 2016
Number of significant customers	3	2	2	1
Aggregate dollar amount of net sales to significant customers	$5.1 million	$3.5 million	$9.4 million	$7.1 million
Percentage of net sales to significant customers	49.1%	39.3%	37.5%	31.6%

Schedule of earnings per share

		Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Net loss	$	(66,626	)	$	(125,304	)	$	(2,605,917	)	$	(1,721,089	)
Preferred dividend requirements		(176,249	)		(176,249	)		(528,747	)		(528,747	)

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

Average common shares outstanding		32,166,454			29,649,874			31,722,010			29,252,652

Average common and common equivalent shares outstanding – assuming dilution		32,166,454			29,649,874			31,722,010			29,252,652

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

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

Schedule of share-based compensation costs

		Three Months Ended September 30, 2017		Three Months Ended September 30, 2016		Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016

Cost of sales	$	74,683	$	37,995	$	270,800	$	37,995
Sales and marketing		38,578		20,723		143,255		20,723
Research and development		12,458		6,310		45,174		6,310
General and administrative		56,832		19,623		193,631		19,623

	$	182,551	$	84,651	$	652,860	$	84,651

XML 29 R19.htm IDEA: XBRL DOCUMENT

INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2017

INVENTORIES

Schedule of inventories

		September 30, 2017			December 31, 2016
Raw materials	$	1,543,972		$	1,303,278
Finished goods		6,404,798			6,309,469

		7,948,770			7,612,747
Inventory reserve		(595,523	)		(595,523	)

	$	7,353,247		$	7,017,224

XML 30 R20.htm IDEA: XBRL DOCUMENT

OTHER ACCRUED LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2017

OTHER ACCRUED LIABILITIES

Schedule of other accrued liabilities

		September 30, 2017		December 31, 2016
Prepayments from customers	$	376,984	$	692,922
Accrued property taxes		363,075		—
Accrued professional fees		159,526		266,747
Other accrued expenses		51,185		59,614

	$	950,770	$	1,019,283

XML 31 R21.htm IDEA: XBRL DOCUMENT

BUSINESS SEGMENT (Tables)

9 Months Ended

Sep. 30, 2017

BUSINESS SEGMENT

Schedule of sales and long-lived assets by geography

		Three Months Ended September 30, 2017		Three Months Ended September 30, 2016		Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016
U.S. sales	$	8,358,847	$	7,303,015	$	20,361,847	$	19,750,504
North and South America sales (excluding U.S.)		1,900,892		1,406,720		3,728,452		2,058,594
Other international sales		152,297		130,399		891,534		528,071

Total sales	$	10,412,036	$	8,840,134	$	24,981,833	$	22,337,169

	September 30, 2017		December 31, 2016

Long-lived assets
U.S.	$	11,520,337	$	11,930,293
International	$	143,651	$	161,744

XML 32 R22.htm IDEA: XBRL DOCUMENT

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts receivable, Property, plant and equipment and Long-lived assets (Details)	9 Months Ended
	Sep. 30, 2017 item
Accounts receivable
Number of products consigned to customers	0
Production equipment \| Minimum
Property, plant, and equipment
Useful lives	3 years
Production equipment \| Maximum
Property, plant, and equipment
Useful lives	13 years
Office furniture and equipment \| Minimum
Property, plant, and equipment
Useful lives	3 years
Office furniture and equipment \| Maximum
Property, plant, and equipment
Useful lives	10 years
Buildings
Property, plant, and equipment
Useful lives	39 years
Building improvements
Property, plant, and equipment
Useful lives	15 years

XML 33 R23.htm IDEA: XBRL DOCUMENT

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration risks, Revenue recognition, Litigation proceeds (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($) customer	Sep. 30, 2016 USD ($) customer	Sep. 30, 2017 USD ($) customer item	Sep. 30, 2016 USD ($) customer	Dec. 31, 2016 USD ($)
Concentration risks
Number of significant customers \| customer	3	2	2	1
Aggregate dollar amount of net sales to significant customers	$ 10,412,036	$ 8,840,134	$ 24,981,833	$ 22,337,169
Revenue recognition
Estimated contractual allowance	3,714,733		$ 3,714,733		$ 3,591,534
Period for return of incorrect shipments			10 days
Number of times overstocking returns are limited \| item			2
Period for return of product due to overstock			12 months
Maximum percentage of distributor's total purchase for the prior 12-month period			1.00%
Sales \| Customer Concentration Risk
Concentration risks
Aggregate dollar amount of net sales to significant customers	$ 5,100,000	$ 3,500,000	$ 9,400,000	$ 7,100,000
Percentage of net sales to significant customers (as a percent)	49.10%	39.30%	37.50%	31.60%
Syringes \| Supplier Concentration Risk
Concentration risks
Percentage of net sales to significant customers (as a percent)	93.00%	92.70%	90.40%	85.10%

XML 34 R24.htm IDEA: XBRL DOCUMENT

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings per share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings per share
Stock options excluded from calculation of diluted EPS	93,125	670,338	128,540	674,042
Net loss	$ (66,626)	$ (125,304)	$ (2,605,917)	$ (1,721,089)
Preferred dividend requirements	(176,249)	(176,249)	(528,747)	(528,747)
Loss applicable to common shareholders	$ (242,875)	$ (301,553)	$ (3,134,664)	$ (2,249,836)
Average common shares outstanding	32,166,454	29,649,874	31,722,010	29,252,652
Average common and common equivalent shares outstanding - assuming dilution	32,166,454	29,649,874	31,722,010	29,252,652
Basic loss per share (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.10)	$ (0.08)
Diluted loss per share (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.10)	$ (0.08)

XML 35 R25.htm IDEA: XBRL DOCUMENT

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share-based compensation (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Share-based compensation costs:
Share-based compensation expense	$ 182,551	$ 84,651	$ 652,860	$ 84,651
Cost of sales
Share-based compensation costs:
Share-based compensation expense	74,683	37,995	270,800	37,995
Sales and marketing
Share-based compensation costs:
Share-based compensation expense	38,578	20,723	143,255	20,723
Research and development
Share-based compensation costs:
Share-based compensation expense	12,458	6,310	45,174	6,310
General and administrative
Share-based compensation costs:
Share-based compensation expense	$ 56,832	$ 19,623	$ 193,631	$ 19,623

XML 36 R26.htm IDEA: XBRL DOCUMENT

INVENTORIES (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
INVENTORIES
Raw materials	$ 1,543,972	$ 1,303,278
Finished goods	6,404,798	6,309,469
Inventory, gross	7,948,770	7,612,747
Inventory reserve	(595,523)	(595,523)
Inventory, net	$ 7,353,247	$ 7,017,224

XML 37 R27.htm IDEA: XBRL DOCUMENT

INCOME TAXES (Details)	3 Months Ended		9 Months Ended
INCOME TAXES (Details)	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
INCOME TAXES
Effective tax rate (as a percent)	(0.40%)	(0.40%)	0.00%	(0.10%)

XML 38 R28.htm IDEA: XBRL DOCUMENT

OTHER ACCRUED LIABILITIES (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
OTHER ACCRUED LIABILITIES
Prepayments from customers	$ 376,984	$ 692,922
Accrued property taxes	363,075
Accrued professional fees	159,526	266,747
Other accrued expenses	51,185	59,614
Other accrued liabilities	$ 950,770	$ 1,019,283

XML 39 R29.htm IDEA: XBRL DOCUMENT

COMMITMENTS AND CONTINGENCIES (Details)			9 Months Ended
COMMITMENTS AND CONTINGENCIES (Details)	Jan. 15, 2015 USD ($)	Sep. 09, 2013 USD ($)	Sep. 30, 2017	Sep. 30, 2007 item
Becton Dickinson and Company Case
COMMITMENTS AND CONTINGENCIES
Value of damages awarded	$ 340,524,042	$ 113,508,014
Length of time required to post corrected product information on its website			3 years
Length of time required to modify its advertising messages			3 years
Attorney fees	11,722,823
Litigation costs recoverable	$ 295,000
BD and MDC Investment Holdings Inc Case
COMMITMENTS AND CONTINGENCIES
Number of U.S. patents infringed upon \| item				2

XML 40 R30.htm IDEA: XBRL DOCUMENT

BUSINESS SEGMENT (Details) - USD ($)	3 Months Ended		9 Months Ended
BUSINESS SEGMENT (Details) - USD ($)	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Sales by geography
Total sales	$ 10,412,036	$ 8,840,134	$ 24,981,833	$ 22,337,169
U.S.
Sales by geography
Total sales	8,358,847	7,303,015	20,361,847	19,750,504
Long-lived assets
Long-lived assets	11,520,337		11,520,337		$ 11,930,293
North and South America sales (excluding U.S.)
Sales by geography
Total sales	1,900,892	1,406,720	3,728,452	2,058,594
Other international sales
Sales by geography
Total sales	152,297	$ 130,399	891,534	$ 528,071
International
Long-lived assets
Long-lived assets	$ 143,651		$ 143,651		$ 161,744

XML 41 R31.htm IDEA: XBRL DOCUMENT

DIVIDENDS (Details) - USD ($)							9 Months Ended
DIVIDENDS (Details) - USD ($)	Oct. 20, 2017	Jul. 20, 2017	Apr. 27, 2017	Oct. 20, 2016	Jul. 28, 2016	Apr. 21, 2016	Sep. 30, 2017	Sep. 30, 2016
Dividends
Preferred dividends declared							$ 55,113	$ 55,113
Series I, Class B
Dividends
Preferred dividends declared	$ 12,313	$ 12,313	$ 12,313	$ 12,313	$ 12,313	$ 12,313
Series II, Class B
Dividends
Preferred dividends declared	$ 42,800	$ 42,800	$ 42,800	$ 42,800	$ 42,800	$ 42,800

XML 42 R32.htm IDEA: XBRL DOCUMENT

PRIVATE PURCHASE (Details)			9 Months Ended
PRIVATE PURCHASE (Details)	Aug. 23, 2017 USD ($) shares	Jan. 12, 2017 USD ($) shares	Sep. 30, 2017 item	Sep. 09, 2018 shares
PRIVATE PLACEMENT
Number of executive officers \| item			3
Executive officers \| Thomas J. Shaw \| Private Placement
PRIVATE PLACEMENT
Issuance of new Common stock (in shares)	1,000,000	2,000,000
Issuance of new Common stock \| $	$ 570,100	$ 1,780,000
Executive officers \| Mr. Cowan \| Private Placement
PRIVATE PLACEMENT
Number of shares authorized for purchase				500,000
Executive officers \| Ms. Larios \| Private Placement
PRIVATE PLACEMENT
Number of shares authorized for purchase				500,000

XML 43 R33.htm IDEA: XBRL DOCUMENT

BONUSES (Details) - Executive officers	Feb. 28, 2017 USD ($)
Mr. Cowan
Cash bonus granted	$ 250,000
Ms. Larios
Cash bonus granted	$ 250,000

XML 44 R34.htm IDEA: XBRL DOCUMENT

STORM DAMAGE AND INSURANCE PROCEEDS (Details)		3 Months Ended
STORM DAMAGE AND INSURANCE PROCEEDS (Details)	Mar. 26, 2017 USD ($) building	Sep. 30, 2017 USD ($)
STORM DAMAGE AND INSURANCE PROCEEDS
Number of buildings damaged due to storm \| building	2
Insurance proceeds for assessed damages	$ 1,009,960
Deduction of insurance proceeds for assessed damages	$ 5,000
Repair expenses due to the storm damage		$ 128,710
Remaining insurance proceeds		$ 876,250