Retractable Technologies, Inc. (NYSE AMEX: RVP), a leading maker of safety medical devices, reported an operating loss of $1.1 million for the nine months ended September 30, 2011, compared to an operating loss of $4.2 million for the same period last year.

Comparison of Three Months Ended September 30, 2011 and September 30, 2010

Domestic sales accounted for 96.2% and 80.1% of the revenues for the three months ended September 30, 2011 and 2010, respectively. Domestic revenues decreased 18.8% principally due to lower sales volumes and lower average sales prices. Domestic unit sales decreased 7.8%. Domestic unit sales were 94.7% of total unit sales for the three months ended September 30, 2011. International unit sales and revenues decreased 89.5% and 87.1%, respectively. Overall, unit sales decreased 34.7%.

Gross profit decreased 34.8% primarily due to lower revenues. The average cost of manufactured product sold per unit increased by 6.1%. 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 sales mix. Royalty expense decreased 29.5% due to lower gross sales.

Operating expenses decreased 18.4% or $769 thousand. The decrease in General and administrative expense was the most significant. The decrease of $420 thousand in General and administrative expense was due mainly to bonuses paid in 2010. Sales and marketing expense decreased 17.7% due principally to bonuses paid in 2010 and lower fee expenses. Research and development costs decreased 46.4% due to lower validation and sampling costs.

Our operating loss was $26 thousand compared to an operating income for the same period last year of $1.0 million due primarily to lower revenues, mitigated by a reduction in operating expenses.

Litigation settlements, net reflects cash proceeds of $2.0 million from Hospira less royalty expense of $100,000 for the three months ended September 30, 2011. Litigation settlements, net for the three months ended September 30, 2010 reflects our settlement with Abbott and Hospira, including a payment of $6.0 million, a waiver of an invoice due to us of $144,000, and a $1.4 million marketing fee payable to Abbott.

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