I think they were a novelty item and not intended to actually be used.

"Then came the fine-print details. According to the Food and Drug Administration, I needed to include a "how to use" guide with each key chain. I realized I needed insurance in case some fool inadvertently Bobbittized himself with my product during a drunken tryst."

"When my inventory dropped below 500, I took the remainder to a local advocacy group for prostitutes."

Following the article, the condoms he sold in this way were actually bought from stores and placed in a keychain condom holder. Most likely the condoms stayed in their individual packaging.

My bad, I apparently missed that sentence.

You're talking about the second order. He got one order, found out when he tried to sell them that people wanted actual, usable condoms, and ordered another set.

The first run that were just novelty items were not meant to be used. The second run where he went to the drugstore and bought new ones to put in the cases were the ones that were to be used. This was after retailers told him what was really desired was a condom key-chain case.