SkyAI, Inc 10-Q for FY2025 Q1
SkyAI, Inc. (SKYA)
About this 10-Q
SkyAI, Inc filed this 10-Q on May 15, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net income
- $1.93M
- compared with a net loss of $982.39K a year earlier
- Diluted EPS
- $38.62
- compared with -$347.50 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number
| (Exact name of registrant as specified in its charter) |
|
State or other jurisdiction of incorporation or organization |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
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 ☐
No
As of May 15, 2025, shares of the registrant’s common stock, par value $ per share, were issued and outstanding.
TABLE OF CONTENTS
| 2 |
Item 1. Financial Statements:
SHARPS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2025 | December 31, 2024 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets: | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Tax Receivable - VAT | ||||||||
| Escrow Deposit (Note 7) | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Inventories, Net (Note 3) | ||||||||
| Current Assets | ||||||||
| Fixed Assets, net of accumulated depreciation (Notes 4 and 5) | ||||||||
| Other Assets (Notes 5 and 6) | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| Liabilities: | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other | ||||||||
| Notes Payable, net of discount (Note 7) | ||||||||
| Warrant liability (Notes 8 and 10) | ||||||||
| Total Current Liabilities | ||||||||
| Deferred Tax Liability (Note 12) | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 15) | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock, $ par value; shares authorized; shares issued and outstanding (2024: ) | ||||||||
| Common stock, $ par value; shares authorized; shares issued and outstanding in (2024: ) | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ( | ) | |||||
| Total Stockholders’ Equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-1 |
SHARPS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31
(UNAUDITED)
| 2025 | 2024 | |||||||
| Revenue, net | $ | $ | ||||||
| Operating expenses: | ||||||||
| Research and development | ( | ) | ( | ) | ||||
| General and administrative | ( | ) | ( | ) | ||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Interest income (expense) | ( | ) | ||||||
| FMV adjustment on warrants | ||||||||
| Foreign currency and other | ( | ( | ) | |||||
| Net Income (loss) Before Provision for Taxes | $ | $ | ( | ) | ||||
| Deferred Tax Benefit | ||||||||
| Net Income (Loss) | ( | ) | ||||||
| Net income (loss) per share, basic and diluted | $ | $ | ) | |||||
| Weighted average shares used to compute net income (loss) per share, basic and diluted | ||||||||
The accompanying notes are an integral part of these financial statements.
| F-2 |
SHARPS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31
(UNAUDITED)
| 2025 | 2024 | |||||||
| Net Income (Loss) | $ | $ | ( | ) | ||||
| Other comprehensive income: | ||||||||
| Foreign currency translation adjustments | ( | ) | ||||||
| Comprehensive Income (loss) | $ | $ | ( | ) | ||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
SHARPS TECHNOLOGY, INC.
CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2024
(Unaudited)
| Shares | Amount | Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid in | Accumulated Other Comprehensive | Accumulated | Total Stockholders | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||||||||
| Balance -December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2024 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Share-based compensation charges | - | - | ||||||||||||||||||||||||||||||
| Exercise of Pre-Funded Warrants | - | |||||||||||||||||||||||||||||||
| Foreign Currency Translation | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance - March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
SHARPS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2025
(Unaudited)
| Shares | Amount | Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||||||||
| Balance – December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | | |||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | | |||||||||||||||||||||||
| Net income for the three months ended March 31, 2025 | - | - | ||||||||||||||||||||||||||||||
| Net income (loss) | - | - | ||||||||||||||||||||||||||||||
| Share-based compensation charges | - | - | ||||||||||||||||||||||||||||||
| Equity Offering - January 2025 – see Note 8 | - | |||||||||||||||||||||||||||||||
| Warrant Exercise – Series B Cashless – see Note 8 | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ||||||||||||||||||||||||||||||
| Balance – March 31, 2025 | $ | 485,841 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||
| Balance | $ | 485,841 | $ | | $ | $ | | $ | ( | ) | $ | | ||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
SHARPS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(UNAUDITED)
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Accretion of debt discount | ||||||||
| FMV adjustment for warrants | ( | ) | ( | ) | ||||
| Foreign exchange loss | ( | ) | ( | ) | ||||
| Changes in operating assets: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of fixed assets | ( | ) | ( | ) | ||||
| Other Assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Net proceeds from offerings and warrant exercises | ||||||||
| Repayment of Debt | ( | ) | ||||||
| Exercise of Pre-Funded warrants | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash | ||||||||
| NET INCREASE (DECREASE) IN CASH | ( | ) | ||||||
| CASH — BEGINNING OF PERIOD | ||||||||
| CASH — END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash Interest (OID) paid, attributed to Note (see Note 7) | $ | |||||||
| Cash paid for taxes | ||||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 1. Description of Business
Nature of Business
Sharps Technology, Inc. (“Sharps” or the “Company”) is a pre-revenue medical device and pharmaceutical packaging company that has acquired and designed and patented various safety syringes and is seeking commercialization by manufacturing and distribution of its products.
The accompanying consolidated financial statements include the accounts of Sharps Technology, Inc. and its wholly owned subsidiaries, Safegard Medical (Hungary) KFT, collectively referred to as the “Company.” All intercompany transactions and balances have been eliminated.
The Company’s fiscal year ends on December 31.
On April 13, 2022, the Company’s Initial Public
Offering was deemed effective with trading commencing on April 14, 2022. The Company received net proceeds of $
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) and are expressed in U.S. dollars.
The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. The Company has not generated revenue or
cash flow from operations since inception. As of March 31, 2025, the Company used cash in operations of $
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of derivative liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. As of March 31, 2025, the most significant estimates relate to derivative liabilities and stock-based compensation.
Cash and Cash Equivalents
The Company considers all highly liquid investments
purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash
equivalents are maintained with various financial institutions. At March 31, 2025 and December 31, 2024, the Company had
| F-6 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 2. Summary of Significant Accounting Policies (continued)
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, which is placed with high-credit-quality financial institutions and at times exceeds federally insured limits. To date, the Company has not experienced any losses on its deposits of cash.
Inventories
The Company values inventory at the lower of cost (average cost) or net realizable value. Work-in-process and finished goods inventories consist of material, labor, and manufacturing overhead. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. A reserve is established for any excess or obsolete inventories or they may be written off. At March 31, 2025 and December 31, 2024, inventory is comprised of raw materials, components and finished goods.
Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, require an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value.
The Company’s outstanding warrants are fair valued on a recurring basis with the trading price or FMV using Black Sholes which could cause fluctuations in operating results at the reporting periods.
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Valuations are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree of judgment.
Level 2
Level 2 applied to assets or liabilities for which there are other than Level 1 observable inputs such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 2 instruments require more management judgment and subjectivity as compared to Level 1 instruments. For instance: determining which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer credit rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced; and determining whether a market is considered active requires management judgment.
Level 3
Level 3 applied to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The determination for Level 3 instruments requires the most management judgment and subjectivity.
| F-7 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 2. Summary of Significant Accounting Policies (continued)
Fixed Assets
Fixed assets are stated at cost. Expenditures for
maintenance and repairs are charged to operations as incurred. The Company’s fixed assets consist of land, building, machinery and
equipment, molds, computer system and website. Depreciation is calculated using the straight-line method commencing on the date the asset
is operating in the way intended by management over the following useful lives: Building –
Impairment of Long-Lived Assets
Long-lived assets are reviewed annually for impairment or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount of an asset group to the future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset.
Purchased Identified Intangible Assets
The Company’s identified intangible assets are
amortized on a straight-line basis over their estimated useful lives of
Stock-based Compensation Expense
The Company measures its stock-based awards made to employees based on the estimated fair values of the awards as of the grant date. For stock option awards, the Company uses the Black-Scholes option-pricing model. For restricted stock awards, the estimated fair value is generally the fair market value of the underlying stock on the grant date. Stock-based compensation expense is recognized over the requisite service period and is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. The Company recognizes forfeitures of stock-based awards as they occur on a prospective basis.
Stock-based compensation expense for awards granted to non-employees as consideration for services received is measured on the date of performance at the fair value of the consideration received or the fair value of the equity instruments issued, whichever can be more reliably measured.
| F-8 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 2. Summary of Significant Accounting Policies (continued)
Derivative Instruments
The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC 480”), Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own stock and whether the holders of the warrants could potentially require net cash settlement in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
At their issuance date and as of March 31, 2025, certain warrants (see Notes 8 and 10) are accounted for as liabilities as these instruments did not meet all of the requirements for equity classification under ASC 815-40 based on the terms of the aforementioned warrants. The resulting warrant liabilities are re-measured at each balance sheet date until their exercise or expiration, and any change in fair value is recognized in the Company’s consolidated statements of operations.
Foreign Currency Translation/Transactions
The Company has determined that the functional currency for its foreign subsidiary is the local currency. For financial reporting purposes, assets and liabilities denominated in foreign currencies are translated at current exchange rates and profit and loss accounts are translated at weighted average exchange rates. Resulting translation gains and losses are included as a separate component of stockholders’ equity as accumulated other comprehensive income or loss. Gains or losses resulting from transactions entered into in other than the functional currency are recorded as foreign exchange gains and losses in the consolidated statements of operations.
Comprehensive income (loss)
Comprehensive income (loss) consists of the Company’s consolidated net income (loss) and foreign currency translation adjustments related to its subsidiary. Foreign currency translation adjustments included in comprehensive loss were not tax effected as the Company has a full valuation allowance at March 31, 2025 and December 31, 2024. Accumulated other comprehensive income (loss) is a separate component of stockholders’ equity and consists of the cumulative foreign currency translation adjustments.
The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the consolidated statements of operations. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Basic EPS in March 2024 included pre-funded warrants (reverse effected) (see Note 8). Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of March 31, 2025, there were stock options and warrants that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented.
| F-9 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 2. Summary of Significant Accounting Policies (continued)
Income Taxes
The Company must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments are used in the calculation of tax credits, tax benefits, tax deductions, and in the calculation of certain deferred taxes and tax liabilities. Significant changes to these estimates may result in an increase or decrease to the Company’s tax provision in a subsequent period.
The provision for income taxes was comprised of the Company’s current tax liability and changes in deferred income tax assets and liabilities. The calculation of the current tax liability involves dealing with uncertainties in the application of complex tax laws and regulations and in determining the liability for tax positions, if any, taken on the Company’s tax returns in accordance with authoritative guidance on accounting for uncertainty in income taxes. Deferred income taxes are determined based on the differences between the financial reporting and tax basis of assets and liabilities. The Company must assess the likelihood that it will be able to recover the Company’s deferred tax assets. If recovery is not likely on a more-likely-than-not basis, the Company must increase its provision for income taxes by recording a valuation allowance against the deferred tax assets that it estimates will not ultimately be recoverable. However, should there be a change in the Company’s ability to recover its deferred tax assets, the provision for income taxes would fluctuate in the period of such change.
Research and Development Costs
Research and development costs are expensed as incurred.
Advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the related goods are delivered or the services are performed.
Segment Reporting
The Company operates as
Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigations, fines and penalties and other sources are recognized when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Gain contingencies are evaluated and not recognized until the gain is realizable or realized.
Recent Accounting Pronouncements
On August 5, 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. ASU 2020-06 simplifies the guidance in U.S. GAAP on the issuer’s accounting for convertible debt instruments, requires entities to provide expanded disclosures about “the terms and features of convertible instruments” and how the instruments have been reported in the entity’s financial statements. It also removes from ASC 815-40-25-10 certain conditions for equity classification and amends certain guidance in ASC 260, Earnings per Share, on the computation of EPS for convertible instruments and contracts on an entity’s own equity. An entity can use either a full or modified retrospective approach to adopt the ASU’s guidance. The ASU’s amendments are effective for smaller public business entities fiscal years beginning after December 15, 2023. The Company does not expect the adoption of this amended guidance to have a material impact on the Company’s consolidated financial statements when applicable.
| F-10 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 2. Summary of Significant Accounting Policies (continued)
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources. The standard is effective for annual reporting periods beginning after December 15, 2023, and interim periods within years beginning after December 15, 2024. The Company adopted the standard.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new guidance requires disaggregated information about the effective tax rate reconciliation and additional information on taxes paid that meet a quantitative threshold. The new guidance is effective for public companies for annual reporting periods beginning after December 15, 2024, and for non-public companies for annual reporting periods beginning after December 15, 2025, with early adoption permitted for both. The Company will adopt the new standard in the annual reporting period beginning after December 15, 2025 and is currently evaluating the impacts of the new guidance on its disclosures within the consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). The new guidance requires disaggregated information about the entity’s type of expenses into certain categories. The Company will adopt the new standard in the annual reporting period beginning after December 15, 2026 and is will evaluate the impacts of the new guidance on its disclosures within the consolidated financial statements.
The Company does not expect the adoption of any accounting pronouncements to have a material impact on the consolidated financial statements.
The Company reviewed all other recently issued accounting pronouncements and have concluded they are not applicable or not expected to be significant to the accounting for our operations.
Note 3. Inventories
Inventories, net consisted of the following at March 31, 2025 and December 31, 2024:
Schedule of Inventories
| March 31, 2025 | December 31, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
| F-11 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 4. Fixed Assets
Fixed asset, net, as of March 31, 2025 and December 31, 2024, are summarized as follows:
Schedule of Fixed Assets, Net
| March 31, 2025 | December 31, 2024 | |||||||
| Land | $ | $ | ||||||
| Building | ||||||||
| Machinery and Equipment | ||||||||
| Computer Systems and Website & Other | ||||||||
| Total Fixed Assets | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Fixed asset, net | $ | $ | ||||||
Depreciation expense of fixed assets
for the three months ended March 31, 2025 and 2024 was $
Note 5. Asset Acquisition
In June 2020, the Company entered into a Share Purchase Agreement (“Agreement”) with Safegard Medical (“Safegard”) and amendments to the Agreement, collectively, the Agreements, to purchase either the stock or certain assets of a manufacturing facility for $M in cash, plus additional consideration of common stock and options with fair market values of $ and $, respectively. Through the Closing Date, the Agreements provided the Company with the exclusive use of the facility in exchange for payment of the facility’s operating costs. The monthly fee (“Operating Costs”), which primarily covered the facility’s operating costs, was mainly comprised of the seller’s workforce costs, materials and other recurring monthly operating cost.
The acquisition of Safegard, which closed on July
6, 2022, did not meet the definition of a business pursuant to ASC 805-10, and accordingly was accounted for as an asset acquisition in
accordance with ASC 805-50. The cost of the acquisition was $
| F-12 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 5. Asset Acquisition (continued)
The relative fair value of the assets acquired and related deferred tax liability is as follows:
Schedule of Fair Value of Assets Acquisition
| Land | $ | |||
| Building and affixed assets | ||||
| Machinery | ||||
| Inventory | ||||
| Intangibles | ||||
| Deferred tax liability | ( | ) | ||
| Total | $ |
The useful lives for the acquired assets is Building
-
Note 6. Other Assets
Other assets as of March 31, 2025 and December 31, 2024 are summarized as follows:
Schedule of Other Assets
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Intangibles, net | $ | | $ | |||||
| Other | ||||||||
| Total Other assets | $ | $ | ||||||
Intangibles are related to the Asset
Acquisition (see Note 5) and consist of an acquired workforce and permits. Amortization for the three months ended March 31, 2025
and 2024 was $
Note 7. Debt Financing
On September 20, 2024, the Company entered into a
securities purchase agreement (the “Securities Purchase Agreement”) and a Senior Secured Note (the “Note”) for
an aggregate principal amount of $
| F-13 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 8. Stockholders’ Equity
Capital Structure
On December 11, 2017, the Company was incorporated in Wyoming with shares of common stock authorized with a $ par value. Effective, April 18, 2019, the Company’s authorized common stock was increased to shares of common stock. The articles of incorporation also authorized preferred shares with a $ par value.
Effective March 22, 2022, the Company completed a
plan and agreement of merger with Sharps Technology, Inc., a Nevada corporation (“Sharps Nevada”).
In July 2024, the shareholders approved the increase of the authorized common stock from to which was subsequently filed as an amendment to the articles of incorporation with the state of Nevada.
On October 7, 2024, at a special meeting of shareholders, the shareholders approved a proposal to authorize Sharps’ Board of Directors in its sole and absolute discretion, to file a certificate of amendment (the “Amendment”) to Sharps’ amended and restated certificate of incorporation to effect the reverse split at a ratio to be determined by the Board, not to exceed a 1-for-22 reverse split. A 1 for 22 reverse split was approved by the Board and was effective October 15, 2024. All share amounts, share prices and earnings per share had been adjusted to reflect the approved reverse stock split.
On April 23, 2025, under the Nevada
Revised Statutes, the Board approved an Amendment to the Company’s Certificate of Incorporation with the State of Nevada to
reduce the authorized shares from
to .
The reduction in authorized shares, which was effective April 27, 2025, also effectuated a reverse stock split of the outstanding
common shares at a ratio of
Common Stock
On January
29, 2025, the Company closed on an offering (the “2025 Offering”) and received gross proceeds of approximately $
The
2025 Offering consisted of (pre reverse – ) units consisting of (pre reverse – ) Common
Units with gross proceeds of $
The Pre-Funded Warrants are immediately exercisable
and may be exercised at any time until exercised in full. Immediately after closing
The 2025 Offering was made pursuant to an effective registration statement on Form S-1 (No. 333-284237) previously filed with the U.S. Securities and Exchange Commission (SEC) and declared effective by the SEC on January 27, 2025.
| F-14 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
The 2025 Series A Warrants are
exercisable immediately and expire 60 months after stockholder approval. The 2025 Series B Warrants are exercisable immediately and
expire 30 months after stockholder approval. The exercise price of the 2025 Series A and B Warrants, were adjusted down to $
On December 5, 2024, the Company, entered into subscription
agreements with certain institutional investors, pursuant to which the Company agreed to issue and sell to the investors (pre reverse
– ) shares (the “Shares”) of Common Stock, par value $ per share of the Company at a price of $ per
share (pre reverse -$) for gross proceeds to the Company of $
On September 23, 2024, as noted in Note 7, in connection with the Securities Purchase Agreement and Note, the Company issued (pre-reverses – ) shares of unregistered common stock. The shares were subsequently registered by the Company with the Security and Exchange Commission.
On May 31 and June 13, 2024, the Company entered into
subscription agreements with certain institutional investors, pursuant to which the Company agreed to issue and sell to the investors
(pre reverse - ) shares (the “Shares”) of Common Stock, par value $ per share of the Company at a price of
$ (pre reverse -$) and received gross proceeds to the Company of $
| F-15 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 8. Stockholders’ Equity (continued)
On May 30, 2024, the Company offered
warrant inducements (the “Inducement Agreement”) to certain warrant holders (the “Warrant Holders”) which
references the warrants registered for sale under both the registration statements on Form S-1 (file No. 333-263715) and/or the
registration statement on Form S-1 (File No. 333-275011) (collectively, the “Registration Statements”) for up to a total
of
On September 29, 2023, the Company completed two simultaneous
offerings and received aggregate gross proceeds of approximately $
| a. | The first offering, the
securities purchase agreement offering (the “Shelf Offering”) with institutional investors and the Company resulted in
the Company receiving net proceeds from the Shelf Offering and the sale of pre-funded warrants of approximately $ | |
| b. | The second offering, the securities purchase agreement offering (“Private
Placement”) with institutional investors and the Company received net proceeds from the Private Placement of approximately $ |
| F-16 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 8. Stockholders’ Equity (continued)
On February 3, 2023, the Company completed a securities purchase agreement
(“Offering”) with institutional investors and received net proceeds from the Offering of approximately $
On April 13, 2022, the Company’s initial public offering (“IPO”)
was declared effective by the SEC pursuant to which the Company issued and sold an aggregate of ( pre reverses -) units (“Units”),
The Company’s common stock and warrants began
trading on the Nasdaq Capital Market or Nasdaq on April 14, 2022. The net proceeds from the IPO, prior to payments of certain listing
and professional fees were approximately $
Warrants
| a) | The
Company allocated the proceeds of the January 2025 Offering based on the fair values for the Series A, Series B warrants and Prefunded
Warrants. The Company determined the fair value of the Series A and Series B warrants at the Offering date using the Monte Carlo pricing
model and treated the valuation as a liability in consideration of the variable number of the issuer’s equity shares in the warrant
agreements. The fair value of the Prefunded warrants, also recorded as liability, was based on market price of the common shares. The
aggregate fair value at the Offering date was $ | |
The remaining
Subsequent to March 31, 2025, |
| F-17 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
| b) | In September 2024, the
Company reduced the exercise price of the | |
| c) | In connection with the Inducement Warrants in the second quarter of 2024, the Company issued (pre reverse - ) non-trading Inducement Warrants as noted in Common Stock above. The Inducement Warrants are classified as a liability based on ASC 815 and require remeasurement at each reporting period. The Inducement Warrants are recorded at the FMV, computed using the Black Scholes valuation method and, recorded a FMV gain adjustment of $ | |
| d) | In connection with one-year
advisory services arrangement entered into in April 2023, the Company issued an aggregate of | |
| e) | In connection with the Private
Placement in September 2023, the Company issued (pre-reverse -) non-trading PIPE Warrants as a component of the Unit as
noted in Common Stock above. The PIPE Warrants were recorded at the FMV, computed using the Black Sholes valuation method. The PIPE Warrant’s
liability required remeasurement at each reporting period. The PIPE Warrants were classified as a liability based on ASC 815. For the
three months ended March 31, 2024, the Company recorded a FMV gain (loss) adjustment of $ | |
| f) | In connection with the Offering in February 2023, the Company issued (pre-reverse -) non-trading warrants Offering Warrants as a component of the Unit as noted in Common Stock above. The Offering Warrant’s liability required remeasurement at each reporting period. The Offering Warrants were recorded at the FMV, computed using the Black Sholes valuation method. The Offering Warrants are classified as a liability based on ASC 815. During the three months ended March 31, 2024, the Company recorded a FMV gain adjustment of $ | |
| g) | In connection with the IPO in April 2022, the Company issued (pre-reverse - ) warrants (Trading Warrants) as a component of the Units and 170 (pre-reverse- 51,136) warrants to the underwriter (Overallotment Warrants), as noted in Common Stock above. The Trading and Overallotment Warrants were recorded at the FMV, being the trading price of the warrants, on the IPO effective date and the Warrants are classified as a Liability based on ASC 815. The Warrant liability requires remeasurement at each reporting period. During the three months ended March 31, 2025 and 2024, the Company recorded a FMV (loss) gain adjustment of | |
| h) | The Company has issued
(pre-reverse –)
Warrants (“Note Warrants”) to the Purchasers of the Notes on April 19, 2022. The Note Warrants have an exercise price of
$ | |
| i) | The underwriter received
(pre reverse -)
warrants in connection with the IPO for a nominal cost of $ | |
| F-18 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 9. Preferred Stock
In February 2018, the Company Board of Directors issued
one share of Series A Preferred Stock to Alan Blackman, the Company’s co-founder and Director.
In connection with final settlement with Mr. Blackman on August 2024, the Series A Preferred Stock were cancelled and forfeited without any further consideration. The Series A Preferred was returned to the status of an authorized but unissued share of preferred stock of the Company (See Note 15).
Note 10. Warrant Liability
As noted above, the 2025 Series A and 2025 Series B Warrants issued in connection with the 2025 Offering were accounted for as liabilities in accordance with ASC 815-40 and are presented as a Warrant liability in the accompanying consolidated balance sheet. The 2025 Series A and B warrants, were measured at fair value at inception. As of March 31, 2025, and thereafter, the Series A will be remeasured based on the Black Scholes method, with changes in fair value presented within the consolidated statement of operations. The Black Scholes valuation assumptions as of March 31, 2025 were as follows (See Note 8):
Schedule of Fair Value of Warrant
| March 31, 2025 | ||||
| Expected term (years) | ||||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Dividend rate | ||||
The Warrants, arising prior to 2025, accounted for as liabilities in accordance with ASC 815-40 are presented as a Warrant liability in the accompanying consolidated balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statement of operations, The non-trading warrants, related to the February 2023, September 2023 and May 2024 offerings, were valued using the Black-Scholes pricing model. The assumptions as of the three months ended March 31, 2025, which related to the May 2024 warrants only since the February and September 2023 warrants were fully exercised by December 31, 2024, and 2024 were as follows: (See Note 8)
| March 31, 2025 | March 31, 2024 | |||||||
| Expected term (years) | ||||||||
| Expected volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Dividend rate | ||||||||
The Warrant liability at March 31, 2025 and December 31, 2024 consists of the following:
Schedule of Warrant Liability
| 2025 | 2024 | |||||||
| Trading and Overallotment Warrants | $ | $ | ||||||
| Note Warrants | ||||||||
| Offering Warrants – May 2024 | ||||||||
| Offering Warrants– January 2025 – Series A | ||||||||
| Offering Warrants – January 2025 – Series B | ||||||||
| Total Warrant Liability | $ | $ | ||||||
| F-19 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
The Warrants outstanding at March 31, 2025 and December 31, 2024, reflective of the reverse split that occurred in on April 28, 2025, were as follows:
Schedule of Warrant Outstanding
March 31, 2025 | December 31, 2024 | |||||||
| Trading and Overallotment Warrants | ||||||||
| Note Warrants | ||||||||
| Offering Warrants – May 2024 | ||||||||
| Offering Warrants – January 2025 – Series A | ||||||||
| Offering Warrants – January 2025 – Series B | ||||||||
| Warrants issued for services arrangement | ||||||||
| Total Warrants Outstanding | ||||||||
For the three months ended March 31, 2025 and 2024 the FMV gain adjustment,
which is reflected in the FMV adjustment on Warrants in the Consolidated Statements of Operations was $
On December 19, 2024, the Company’s Shareholders approved and the Board of Directors adopted the 2024 Equity Incentive Plan (the “2024 Plan”), to provide for the issuance of up to (pre reverse – ) options and/or shares of restricted stock be available for issuance to officers, directors, employees and consultants.
| F-20 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 11. Stock Options (continued)
On January 24, 2023, the Company’s Board of Directors initially adopted the 2023 Equity Incentive Plan (the “2023 Plan”), to provide for the issuance of up to (pre -reverse - ) options and/or shares of restricted stock be available for issuance to officers, directors, employees and consultants. The 2023 Plan was subsequently updated to provide for the issuance of up to (pre-reverse – ) options and/or shares of restricted stock. The 2023 Plan was approved by shareholders at the annual meeting
Schedule of Stock Options Granted and Outstanding
| March 31, 2025 | ||||||||
| Options | Weighted Average Exercise Price | |||||||
| Outstanding at Beginning of year | $ | |||||||
| Granted | ||||||||
| Forfeited/cancelled | ||||||||
| Outstanding at end of period | $ | |||||||
| Exercisable at end of period | $ | |||||||
As of March 31, 2025 and December 31, 2024, there was $ and $, respectively, of unrecognized stock-based compensation related to unvested stock options with a weighted average fair value of $ (pre reverse - $ and $ (pre reverse - $) per share, respectively, which is expected to be recognized over a weighted-average period of thirteen months as of March 31, 2025.
| F-21 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 11. Stock Options (continued)
Schedule of Information About Options Outstanding
| Exercise Prices | Options Outstanding | Aggregate Intrinsic Value | Weighted Average Remaining Contractual Life | Options Exercisable | Aggregate Intrinsic Value on Exercisable Shares | |||||||||||||||||
| $ | to | |||||||||||||||||||||
| $ | to | |||||||||||||||||||||
| $ | to | |||||||||||||||||||||
| $ | ||||||||||||||||||||||
| $ | ||||||||||||||||||||||
| $ | - | |||||||||||||||||||||
| $ | ||||||||||||||||||||||
At March 31, 2025, the stock options outstanding and the options exercisable have exercise prices that exceed the stock market price at March 31, 2025 and as such, no intrinsic value exists. Intrinsic value is defined as the difference between the exercise price of the options and the market price of the Company’s common stock.
For the three months ended March 31, 2025, the Company recognized stock-based compensation expense of $, which was recorded in general and administrative expense.
For the three months ended March 31, 2024, the Company recognized stock-based compensation expense of $, of which $ and $ was recorded in general and administrative and research and development expenses, respectively.
Note 12. Income Taxes
At the end of each interim reporting
period, the Company estimates its effective tax rate expected to be applied for the full year. This estimate is used to determine
the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods. Accordingly, the
Company’s effective tax rate for the three months ended March 31, 2025 and 2024 was
| F-22 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 13. Related Party Transactions and Balances
As of March 31, 2025 and December 31, 2024, accounts
payable and accrued liabilities include $
Note 14. Fair Value Measurements
The Company’s financial instruments include cash, accounts payable, notes payable and warrant liability. Cash and warrant liability are measured at fair value. Accounts payable and notes payable are measured at amortized cost and approximates fair value due to their short duration and market rate for similar instruments, respectively.
As of March 31, 2025, the following financial assets and liabilities were measured at fair value on a recurring basis presented on the Company’s consolidated balance sheet:
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Fair Value Measurements Using | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Cash | $ | $ | ||||||||||||||
| Total assets measured at fair value | $ | $ | ||||||||||||||
| Liabilities | ||||||||||||||||
| Warrant liability | $ | $ | ||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | |||||||||||||
| F-23 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 14. Fair Value Measurements (continued)
As of December 31, 2024, the following financial assets and liabilities were measured at fair value on a recurring basis presented on the Company’s consolidated balance sheet:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Fair Value Measurements Using | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Cash | $ | $ | ||||||||||||||
| Total assets measured at fair value | $ | $ | ||||||||||||||
| Liabilities | ||||||||||||||||
| Warrant liability | $ | $ | ||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | |||||||||||||
| F-24 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 15. Commitments and Contingencies
Fixed Assets and Other
At March 31, 2025, the Company had outstanding
orders to purchase equipment, molds and other assets for $
Contingencies
At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.
On July 10, 2024, Barry Berler
(“Berler”), a co-founder and former Chief Technology Officer of the Company, commenced a lawsuit in the United States District
Court for the Eastern District of New York, Barry Berler v. Sharps Technology, Inc. and Alan Blackman, Case No. 2:24-cv-04787. In this
case, Berler asserts claims for damages of an aggregate of $
| F-25 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 15. Commitments and Contingencies (continued)
On June l7, 2024, Berler filed
a demand for arbitration and statement of claim under the commercial arbitration rules of the American Arbitration Association (“AAA”)
asserting claims for payment of $
On April 3, 2024, Plastomold
commenced a lawsuit against the Company in the United States District Court for the Eastern District of New York, Plastomold Industries
Ltd v. Sharps Technology, Inc., Case No. 2:24-CV-02580, asserting claims for damages in the amount of $
Royalty Agreement
In connection with the purchase of certain intellectual
property in July 2017, Barry Berler and Alan Blackman entered into a royalty agreement which provides that Barry Berler will be entitled
to a royalty of four percent (
In September 2018, the Royalty Agreement was amended
to reduce the royalty to
Employment Agreements
On August 1, 2022, the Company cancelled the consulting
agreement with Alan Blackman, Co- Chairman and Chief Operating Officer and entered into an Employment Agreement. The Company terminated
Mr. Blackman’s Employment Agreement effective May 1, 2023. Mr. Blackman continued to serve as the Co-Chairman and a member of the
Board of Directors. Subsequent to June 30, 2023, the Company and Mr. Blackman entered into a separation agreement whereby, Mr. Blackman
would be paid severance payments of approximately $
| F-26 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 15. Commitments and Contingencies (continued)
On September 30, 2022, the Company entered into a
formal employment agreement, effective on such date and will continue until terminated by either party, subject to the terms of the agreement,
with Andrew R. Crescenzo who has been serving as the Company’s Chief Financial Officer on a contract services basis for the last
three years. The agreement provided for annual compensation of $
On November 10, 2023, the Company
executed an Employment Agreement with Robert Hayes, its Chief Executive Officer amending the employment letter dated September 6,
2021. The agreement term automatically renews for successive one-year terms as of the commencement date unless prior written notice
by either party within ninety days prior to end of the current term. The agreement provides for termination of employment and
severance benefits under stated conditions and restrictive covenants. The agreement provided for annual compensation retroactive to
June 1, 2023 of $
On May 20, 2024, the Company entered into an Amendment
to the Asset Purchase Agreement dated September 22, 2023, with Nephron and Nephron’s InjectEZ, LLC, (collectively, the “Seller”).
The September 22, 2023 agreement superseded the manufacturing and supply agreement entered into in connection with the NPC Agreement on
September 29, 2022, and the Nephron Agreement entered into on September 29, 2022. The Amended Asset Purchase Agreement includes the purchase
of certain assets. In connection with the Asset Purchase agreement, the Company paid a non-refundable deposit of $
| F-27 |
SHARPS TECHNOLOGY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Note 16– Segment Reporting
The accounting policies for the segment information are the same as described in Note 2- Summary of Significant Accounting Policies.
To date, the Company has not generated any product revenue. The Company expects to continue to incur expenses and operating losses for the foreseeable future as marketing and sales of its products commence.
The CODM assesses the performance of and decides how to allocate resources for the one segment based on Consolidated Net Income (Loss)_ Further, EBITDA (earnings before interest, taxes, depreciation and amortization), which is not presented on the face of the Consolidated Statements of Operations, is used to assist with the measurement of segment performance and allocate resources. The CODM also uses Net Income (loss) and EBITDA, to decide the level of investment in various operating activities and other capital allocation activities.
The measure of segment assets is reported on the Consolidated Balance Sheets as Consolidated Total assets.
The following table presents the Company’s segment results for the three months ended:
Schedule of Company’s Segment
| March 31, 2025 | March 31, 2024 | |||||||
| Revenue, net | $ | $ | ||||||
| Expenses | ||||||||
| Research and development – Note A | ( | ) | ( | ) | ||||
| General and administrative – Note A | ( | ) | ( | ) | ||||
| Depreciation and amortization | ( | ) | ( | ) | ||||
| Interest income (expense) | ( | ) | ||||||
| FMV (gain) adjustment on warrants | ||||||||
| Foreign currency and other | ( | ) | ( | ) | ||||
| Segment and Consolidated Net Income (loss) | $ | $ | ( | ) | ||||
| March 31, 2025 | December 31, 2024 | |||||||
| Total Consolidated Assets | $ | $ | ||||||
| Capital Expenditures and deposits paid (2025 – Quarter ended; 2024 – Year Ended) | $ | $ | ||||||
Notes: (A)-net of depreciation and amortization
| F-28 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to Sharps Technology, Inc.
Forward-Looking Statements
The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.
Overview
Since our inception in 2017 and through the fourth quarter of 2022, we have devoted substantially all of our resources to the research and development of our safety syringe products Commencing in the fourth quarter of 2022 we started building inventory of syringe products. To date, we have generated no revenue. We have reported net income of $1,982,834 and incurred a net loss of $(982,386) for the period three months ended March 31, 2025 and 2024, respectively. Substantially all of our net operating losses and cash used in operations resulted from costs incurred in connection with our research and development efforts, payroll and consulting fees, stock compensation and general and administrative costs associated with our operations, including costs incurred for being a public company since April 14, 2022. See Liquidity and Capital Resources and Notes to Consolidated Financial Statements.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not generated any significant revenue from the sale of syringe products or cash flow from operations since inception. As of March 31, 2025, the Company had working capital of $5,598,222 which is not expected to be sufficient to fund the Company’s planned operations for the next 12 months. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to commercialize its products into a profitable business or raise sufficient financing. The Company intends to finance its commercialization activities and its working capital needs largely from the sale of equity securities and/or with additional funding from other traditional financing sources until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. As of the close of the January 2025 Offering and concurrent repayment of an outstanding Note, the Company is debt free.
We classify our operating expenses as research and development, and general and administrative expenses. We maintain a corporate office located in Melville, New York, but employees and consultants in the US work remotely and will continue to do so indefinitely. In June 2020, in connection with the agreement to acquire Safegard, a syringe manufacturing facility in Hungary, which was completed on July 6, 2022, we were contractually provided the exclusive use of the facility for research and development and testing in exchange for payment of the seller’s operating costs, including among others, use of Safegard’s work force, utility costs and other services.
| 3 |
To remain competitive, we have built inventory since to secure orders we require commercial quantities of inventory with delivery expected shortly after orders are placed.
Products, Marketing and Sales
We continue to be in discussions with healthcare companies and distributors for sales of our disposable syringe and prefillable syringe products. We intend to market these products to the U.S. and foreign governments. We will also look to sell our disposable syringe products to hospitals and healthcare groups as opportunities present themselves. We have received an initial purchase order under a supply agreement (See Supply Agreement in Recent Developments).
The Sharps Securegard and Sologard product lines continues to represent our disposable syringe platform to be commercially available to the market.. These platforms have advanced features and benefits to support the needs of the market along with a high level of readiness for manufacturing and the ability to provide large commercial quantities for customers.
As previously disclosed, there continues to be delays in the commercialization of the Sharps Provensa product line. The product’s specialized technology requires further design and assembly optimization as identified in our previous commercialization efforts. This on-going product refinement process is typical of the development of new technology for the healthcare market to ensure the products are safe and effective for use every time. At this time Sharps is not able to determine a timeline for final commercialization of the Provensa product.
Research and Development
Research and development expense consists of expenses incurred while performing research and development activities for our various syringe products. We recognize research and development expenses as they are incurred Substantially all of our research and development expenses to date have been incurred in connection with our syringe products. We expect our research and development expenses to increase for the foreseeable future as we continue to enhance our products to meet the market requirements for our Sharps syringe product line for its various intended uses throughout the world.
| 4 |
Recent Developments
January 2025 Offering
On January 29, 2025, the Company closed on an offering (the “2025 Offering”) and received gross proceeds of approximately $20.0 million, before deducting underwriting fees and other offering expenses payable by the Company. The net proceeds were approximately $18.2M, of which $4.2M was used to repay the outstanding Notes (see Note 7).
The 2025 Offering consisted of 47,619 (pre reverse – 14,285,714) units consisting of 30,089 (pre reverse – 9,029,814) Common Units with gross proceeds of $12.6M and 17,520 (pre reverse – 5,255,900) Pre-Funded Units with gross proceeds of $7.4M. The public offering price per Common Unit was $420 (pre reverse $1.40) or $419.97 (pre reverse $1.3999) for each Pre-Funded Unit, which is equal to the public offering price per Common Unit sold in the offering minus an exercise price of $0.0001 per Pre-Funded Warrant. Each Common Unit consisted of one share of Common Stock and each Pre-Funded Unit consisted of one pre-funded warrant to purchase one share of Common Stock. In addition, each Common Unit and Pre-Funded Unit included: (i) one Series A Registered Common Warrant to purchase one share of Common Stock per warrant at an exercise price of $87.60 (pre reverse - $1.75 and after floor price adjustment upon stockholder approval to $0.292), (“2025 Series A Warrant”) and (ii) one Series B Registered Common Warrant to purchase one share of Common Stock per warrant at an exercise price of $87.60 (pre reverse - $1.75 and after floor price adjustment upon stockholder approval to $0.292) (“2025 Series B Warrant”), collectively, the “2025 Warrants”. The 2025 Series B Warrant provides the holders with an alternative cashless exercise option, which if elected, each holder will receive three shares of Common Stock for each 2025 Series B Warrant cashless exercised. The 2025 Warrants provided for an adjustment of the original exercise price of $525 (pre reverse - $1.75) per warrant, down to an amount no less than a floor price of $87.60 (pre reverse - $0.292) per warrant upon stockholder approval. On March 28, 2025, the stockholders approved a reset and the exercise price of the 2025 Warrants was reduced to $87.60 (pre reverse - $0.292) per warrant and the number of warrants was increased so that the aggregate exercise price payable remains the same as the Offering date.
The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until exercised in full. Immediately after closing 16,603 (pre reverse – 4,980,900) of the Pre-Funded units were exercised and the Company received $498 in proceeds The underwriter, under an over- allotment option, purchased 7,143 (pre reverse- 2,142,857) 2025 Series A Warrants and 7,143 (pre reverse- 2,142,857) 2025 Series B Warrants for $0.0001 per Warrant
The 2025 Offering was made pursuant to an effective registration statement on Form S-1 (No. 333-284237) previously filed with the U.S. Securities and Exchange Commission (SEC) and declared effective by the SEC on January 27, 2025.
Asset Purchase Agreement
On May 20, 2024, the Company entered into an Amendment to the Asset Purchase Agreement dated September 22, 2023, with Nephron and Nephron’s InjectEZ, LLC, (collectively, the “Seller”). The September 22, 2023 agreement superseded the manufacturing and supply agreement entered into in connection with the NPC Agreement on September 29, 2022, and the Nephron Agreement entered into on September 29, 2022. The Amended Asset Purchase Agreement includes the purchase of certain assets. In connection with the Asset Purchase agreement, the Company paid a non-refundable deposit of $1M to be held in escrow as a deposit on the purchase price. The Asset Purchase agreement stipulated that the $1M deposit would be maintained until July 19, 2024, at which date, if the contemplated transaction was not consummated, through no fault of the Seller, the escrow would be released to the Seller by the escrow agent. The escrow deposit of $1M was released to the Seller and recorded in Other Expense as a forfeited agreement cost in the three months ended June 30, 2024. As stated above, The Company and Seller continue to work towards a further amendment of the Asset Purchase Agreement. The closing of the Asset Purchase Agreement is contingent on obtaining further amendments and the necessary financing. There can be no assurance that the closing of the asset sale will occur.
Supply Agreement
On July 24, 2024, the Company entered into a Supply Agreement (the “Agreement”) with Stericare Solutions, LLC, a Texas limited liability company (“Stericare”), pursuant to which Stericare agreed to purchase 520 million units of 10ml polypropylene (“PP”) Sologard syringes from the Company. The specific purchase price is confidential, but revenues are expected to exceed $50 million. Under the terms of the Agreement, Stericare has committed to purchasing 520 million units of 10ml PP Sologard syringes in the following increments: 40 million units in the first year, and 120 million units each year for the remainder of the Agreement’s term. The Agreement has an initial five (5)-year term, targeted to commence in November 2024 (the “Initial Term”). Upon expiration of the Initial Term, the Agreement will automatically renew for successive one (1)-year periods (each, a “Renewal Term”), unless either party provides written notice of termination at least ninety (90) days prior to the end of the Initial Term or any Renewal Term. To date, Sharps has used pilot tooling for initial material qualifications and concept product approvals. As part of the proceeds from the recent $20 million financing, the Company has placed orders for advanced production technology for Sologard and will soon begin installation and operational qualification for the next phase of the project with Stericare. On April 30, 2025, the Company received the initial purchase order under the Agreement for $400,000.
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The proceeds from the 2024 fundraising efforts were utilized to further increase production capacity, build inventory, and support working capital requirements. A portion of the proceeds from the January 2025 offering will be allocated to expanding production capacity in Hungary, including the purchase of advanced machinery and other facility upgrades. This expansion will facilitate the fulfillment of Securegard and Sologard orders in connection with recently announced order with Stericare and ongoing activities with other European companies.
The Company is committed to driving revenue growth from both the Securegard and Sologard projects in 2025, as well as securing manufacturing capacity for the Company’s next generation polymer-based prefillable syringes. With the recent financing secured, the Company believes that it is positioned to advance its growth strategy by utilizing it’s working capital to support essential operating expenses. Production is currently on track, with the Company preparing for a transition to revenue in the second half of 2025, subject to the successful execution of its plans.
Nasdaq Compliance
On March 12, 2025, Sharps Technology, Inc. (the “Company”), was notified by the staff (the “Staff”) of The Nasdaq Stock Market, LLC (“Nasdaq”) that it was not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market as the bid price of its securities had closed at less than $1.00 per share over the previous 30 consecutive business days. Normally, a company would be afforded a 180-calendar day period to demonstrate compliance with the rule. However, pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iv), the Company is not eligible for any compliance period due to the fact that the Company has effected a reverse stock split over the prior one-year period or has effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one. Further, on April 3, 2025, the Company”), was notified by the Staff of The Nasdaq that it was not in compliance with the $2,500,000 stockholders’ equity requirement for continued listing (the “Rule’) on The Nasdaq Capital Market. As reported in our Form 10-K for the fiscal year ended December 31, 2024, we reported stockholders’ equity of $1,996,129, at such time and the Company does not meet the alternatives of market value of listed securities or net income from continuing operations.
The Company presented its plan to regain compliance with the minimum bid price requirement and the net worth requirements at the Hearing on April 29. 2025. In the interim, the Company’s common stock and warrants will remain listed on Nasdaq under its existing symbols, “STSS” and “STSSW” while it awaits the hearing and Panel decision.
On March 31, 2025, the Company’s reported stockholders’ equity is $10,135,328 and meets the continued listing requirement of $2,500,000.
Critical Accounting Policies and Significant Judgments and Estimates
This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements, as well as the reported revenues and expenses during the reported periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The FMV adjustments, based on either the trading price or FMV of outstanding warrants classified as liabilities, could impact the operating results in the reporting periods.
Nature of Business
Sharps Technology, Inc. (“Sharps” or the “Company”) is a medical device and pharmaceutical packaging company that has designed and patented various safety syringes and has safety syringe products that were acquired and is seeking commercialization by manufacturing and distribution of its products. See Recent Developments for initial order received that will transition the Company to revenue.
The accompanying consolidated financial statements include the accounts of Sharps Technology, Inc. and its wholly owned subsidiary, Safegard Medical, Inc, collectively referred to as the “Company.” All intercompany transactions and balances have been eliminated.
The Company’s fiscal year ends on December 31.
On April 13, 2022, the Company’s Initial Public Offering was deemed effective with trading commencing on April 14, 2022. The Company received net proceeds of $14.2 million on April 19, 2022. (See Capital Structure and Note 8 to the Consolidated Financial Statements)
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Summary of Significant Accounting Policies
Our significant accounting policies are described in Note 2 of the accompanying condensed consolidated financial statements and further discussed in our annual financial statements included in our annual report on Form 10-K for the year ended December 31, 2024.
Results of Operations
Comparison of the Three Months Ended March 31, 2025 and 2024.
| Three Months Ended | ||||||||||||||||
| March 31, 2025 | March 31, 2024 | Change | Change % | |||||||||||||
| Research and development | $ | (82,016 | ) | $ | (197,439 | ) | $ | 115,423 | (58 | )% | ||||||
| General and administrative | (1,939,753 | ) | (1,646,613 | ) | 293,140 | 18 | % | |||||||||
| Net Interest income (expense) | (626,991 | ) | 19,023 | 646,014 | 3,396 | % | ||||||||||
| FMV gain adjustment for derivatives | 4,618,889 | 850,057 | 3,768,832 | 443 | % | |||||||||||
| Foreign currency gain (loss) | (41,295 | ) | (7,414 | ) | 33,881 | 457 | % | |||||||||
| Net Income (loss) | $ | 1,928,834 | $ | (982,386 | ) | $ | 2,911,220 | 296 | % | |||||||
Revenue
The Company has not generated any revenue to date.
Research and Development
For the three months ended March 31, 2025, Research and Development (“R&D”) expenses decreased to $82,016 compared to $197,439 for the three months ended March 31, 2024. The decrease of $115,423 was due to a) lower depreciation expense of $63,000 from the 2024 impairment of certain fixed assets used in R&D and b) lower R&D labor and consulting of $52,400 given the shift from R&D activities to manufacturing.
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General and Administrative
For the three months ended March 31, 2025, General and Administrative (“G&A”) expenses were $1,939,753 as compared to $1,646,613 for the three months ended March 31, 2024. The increase of $293,140 was primarily attributable to an increase of $53,000 in payroll and related costs of: i) higher payroll by $131,700 from $850,745 in 2024 to $982,442 in 2025, primarily due to CEO bonus, attributed to the completion of the January 2025 equity offering, partially offset by headcount adjustments and labor cost allocation offset by ii) a decrease in stock compensation expense, due to timing of option awards and vesting, of approximately $78,700 from $123,000 in 2024 to $44,300 in 2025. All other G&A expenses increased $240,100 primarily due to higher; professional & legal fees ($153,700), public company and investor relation costs ($119,300), computer costs ($18,100), general operating costs ($11,200) and rent ($15,700), partially offset by lower; marketing costs ($3,000), travel ($1,400), insurance costs ($60,800), and patent fees ($11,300).
Net Interest expense (income)
Net Interest expense, was $626,991 for the three months ended March 31, 2025, compared to interest income of $19,023 for the three months ended March 31, 2024. Net interest changed, by $646,014 due to a) interest earned on invested cash in 2025 of $81,399 as compared to $19,023 in 2024 b) interest expense of $708,390 for the accreted interest on the debt financing that originated in the third quarter of 2024 as compared to no interest expense during first quarter of 2024 (see Note 7 to the Consolidated Financial Statements).
FMV Adjustment for Derivatives
The value of the Note Warrants requires the Fair Market Value (“FMV”) to be recorded at the date warrants are issued and then be remeasured at each reporting date while outstanding with recognition of the changes in fair value to other income or expense in the Consolidated Statement of Operations. For the three months ended March 31, 2025, and 2024 the Company recorded a FMV gain adjustment of $4,618,889 to reflect the i) the net effect for the FMV loss on the January 2025 Offering date and remeasurement adjustments based on the change in FMV as of March 31, 2025 offset by ii) decrease in the Warrants liabilities outstanding as of December 31, 2024 due to change in FMV. At March 31, 2024, the FMV Gain was due to the change in FMV for the three months then ended (See Notes 7, 8 and 10 to the Consolidated Financial Statements).
Liquidity and Capital Resources
At March 31, 2025, and December 31, 2024, we had a cash balance of $11,894,937 and $864,041, respectively. The Company had working capital of $5,598,222 at March 31, 2025 as compared to a working capital deficiency of 2,011,679 as of December 31, 2024. The increase in our working capital of $7,609,901, after net proceeds from offerings in 2025 of $18.2M, was primarily related to the use of cash of $2,450,564 in operations, investing in fixed assets purchased or payments made under orders placed of $473,658 and cash used to repay the short-term Note of $4.2M. The Company intends to finance its future development and commercialization activities and its working capital needs with the recent offering proceeds and further with the sale of equity securities and/or with additional funding from other traditional financing sources until such time that funds provided by operations are sufficient to fund working capital requirements. The Company is debt free (See Note 7 and 8 to the Consolidated Financial Statements).
In 2024, the Company completed various offerings and private placements. (“Financings”) The proceeds from such Financings were used to fund working capital to build inventory, fund capital expenditure and operating costs.
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Cash Flows
Net Cash Used in Operating Activities
The Company used cash of $2,450,564 and $1,889,315 in operating activities for the three months ended March 31, 2025 and 2024, respectively. The change in cash used was principally due to the Company incurring higher G&A expenses, increase in inventory partially offset by lower R&D activities, excluding non-cash items, as described above during the three months ended March 31, 2025.
Net Cash Used in Investing Activities
For the three months ended March 31, 2025 and 2024, the Company used cash in investing activities of $473,658 and $2,852, respectively. In both periods cash was used to acquire or pay deposits for fixed assets. In 2025, the increase is directly attributed to the aforementioned capital requirements for fulfillment under the Stericare customer order and other future business opportunities.
Net Cash Provided by Financing Activities
For the three months ended March 31, 2025 and 2024, the Company provided cash from financing activities of $13,953,031 and $396 respectively. In the 2025 period, the cash provided was from the $18.2M in net proceeds from the Offerings in January 2025 offset by the debt repayment of $4.2M. In the 2024 period, the cash provided was from exercise of warrants.
Off-Balance Sheet Arrangements
During the periods presented, we did not have any off-balance sheet arrangements as defined under Regulation S-K Item 303(a)(4).
Emerging Growth Company Status
We are an “emerging-growth company”, as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company, we can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We intend to avail ourselves of these options. Once adopted, we must continue to report on that basis until we no longer qualify as an emerging growth company.
We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of the initial public offering; (ii) the first fiscal year after our annual gross revenue are $1.07 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If, as a result of our decision to reduce future disclosure, investors find our common shares less attractive, there may be a less active trading market for our common shares and the price of our common shares may be more volatile.
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We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the aggregate amount of gross proceeds to us as a result of the IPO is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time, we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation of internal controls that occurred during the period covered by this Quarterly Report on Form 10-Q 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
On July 10, 2024, Barry Berler (“Berler”), a co-founder and former Chief Technology Officer of the Company, commenced a lawsuit in the United States District Court for the Eastern District of New York, Barry Berler v. Sharps Technology, Inc. and Alan Blackman, Case No. 2:24-cv-04787. In this case, Berler asserts claims for damages of an aggregate of $456,000 for alleged (1) failure to make full payment of certain monthly payments under his consulting agreement with the Company (the “Consulting Agreement”) in the amount of $52,500, (2) failure to pay a bonus with a target of $216,000 under the Consulting Agreement, (3) $187,500, representing 50% of the severance payment paid by the Company to Mr. Blackman, the Company’s co-founder and former Chief Operating Officer and Co-Chairman and a declaration and injunctive relief establishing that Berler is the rightful owner of 50% of the Company’s Series A Preferred Stock (which preferred stock is no longer outstanding). The Company has accrued for the claim for aforementioned unpaid monthly consulting fees. The Company believes that Berler’s claims are without merit, intends to defend itself vigorously and has requested dismissal of these claims and no amounts have been reserved for the bonus and severance at his point. In addition, on September 17, 2024, the Company filed an answer and counterclaims with respect thereto, including for recoupment of certain compensation the Company has previously paid to Berler. and on February 27, 2025 the Company filed an amended answer and counterclaims against Berler, Plastomold Industries Ltd. (“Plastomold”), Plasto Design Ltd and Plasto Design Solutions.
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On June l7, 2024, Berler filed a demand for arbitration and statement of claim under the commercial arbitration rules of the American Arbitration Association (“AAA”) asserting claims for payment of $500,000 plus interest, under the Company’s royalty agreement with Berler, as amended, rescission thereof and reversion to Berler of the intellectual property rights subject thereto. The Company believes that Berler’s claims are without merit and intends to defend itself vigorously in connection with these claims. The Company filed an answer with counterclaims.
On April 3, 2024, Plastomold commenced a lawsuit against the Company in the United States District Court for the Eastern District of New York, Plastomold Industries Ltd v. Sharps Technology, Inc., Case No. 2:24-CV-02580, asserting claims for damages in the amount of $1.762 million for alleged (1) failure to pay invoices, of which approximately $1 million would relate to a maintenance agreement for units allegedly manufactured and sold using machinery that was defective and has never successfully produced any saleable products, (2) breach of the implied covenant of good faith and fair dealing, (3) unjust enrichment, and (4) conversion. Plastomold asserts it provided certain products and services to the Company for which its invoices were not fully paid. The Company believes that Plastomold’s claims are without merit and intends to defend itself vigorously and no amounts have been reserved at this point. On June 3, 2024, the Company filed an answer and affirmative defenses and counterclaim, which counterclaim is for damages that the Company believes would exceed the claims asserted by Plastomold, based on the insufficiency of Plastomold’s services and the results thereof, including the failure to provide machinery capable of reliably manufacturing the designated products in compliance with design specifications and functionality requirements, and with respect to which test results failed.
ITEM 1A. RISK FACTORS
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in the Form 10-K for the year ended December 31, 2024, any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the Form 10-K for the year ended December 31, 2024. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sale of Unregistered Equity Securities
During the quarter ended March 31, 2025 and 2024 no unregistered sales of equity securities occurred.
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OTHER ITEMS
ITEM 6. EXHIBITS
| * | Filed herewith. |
| ** | Furnished herewith. |
| + | Indicates management contract or compensatory plan. |
| 12 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on this 15th day of May 2025.
| SHARPS TECHNOLOGY, INC. | |
| May 15, 2025 | /s/ Robert M. Hayes |
| Robert M. Hayes | |
|
Chief Executive Officer and Director (Principal Executive Officer) | |
| May 15, 2025 | /s/ Andrew R. Crescenzo |
| Andrew R. Crescenzo | |
| Chief Financial Officer | |
| (Principal Financial Officer) |
| 13 |
Exhibit 14.1
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Robert M. Hayes, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Sharps Technology, Inc. (the Registrant); |
| 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 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)) for the Registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiary, is made known to me by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report my 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 | |
| c) | 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 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 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 function): |
| 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. |
| /s/ Robert M. Hayes | |
| Robert M. Hayes | |
| Chief Executive Officer (Principal Executive Officer) | |
| Date: May 15, 2025 |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Andrew R. Crescenzo, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Sharps Technology, Inc. (the Registrant); |
| 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 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)) for the Registrant and we 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 subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | 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 | |
| c) | 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 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 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 function): |
| 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. |
| /s/ Andrew R. Crescenzo | |
| Andrew R. Crescenzo | |
| Chief Financial Officer (Principal Financial Officer) | |
| Date: May 15, 2025 |
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Quarterly Report on Form 10-Q of Sharps Technology, Inc. for the period ended March 31, 2025, I, Robert M. Hayes, Chief Executive Officer of Sharps Technology, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
| (1) | Such Quarterly Report on Form 10-Q of Sharps Technology, Inc. for the period ended March 31, 2025, 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 such Quarterly Report on Form 10-Q of Sharps Technology, Inc. for the period ended March 31, 2025, fairly presents, in all material respects, the financial condition and results of operations of Sharps Technology, Inc. |
| /s/ Robert M. Hayes | |
| Robert M. Hayes | |
| Chief Executive Officer (Principal Executive Officer) | |
| Date: May 15, 2025 |
A signed original of the certification required by Section 906 has been provided to Sharps Technology, Inc. and will be retained by Sharps Technology, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Quarterly Report on Form 10-Q of Sharps Technology, Inc. for the period ended March 31, 2025 I, Andrew R. Crescenzo, Chief Financial Officer of Sharps Technology, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
| (1) | Such Quarterly Report on Form 10-Q of Sharps Technology, Inc. for the period ended March 31, 2025, 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 such Quarterly Report on Form 10-Q of Sharps Technology, Inc. for the period ended March 31, 2025, fairly presents, in all material respects, the financial condition and results of operations of Sharps Technology, Inc. |
| /s/ Andrew R. Crescenzo | |
| Andrew R. Crescenzo | |
| Chief Financial Officer (Principal Financial Officer) | |
| Date: May 15, 2025 |
A signed original of the certification required by Section 906 has been provided to Sharps Technology, Inc. and will be retained by Sharps Technology, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.