What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-25 · 128 added, 65 removed, 126 unchanged (61% of the section changed)

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the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our”

refer to Sharps Technology, Inc .and its consolidated subsidiaries.

refer to Sharps Technology, Inc.

our inception in 2017, we have devoted substantially all of our resources to the research and development of our safety syringe products.

To date, we have generated no revenue.

We have incurred net losses in each year since our inception and, as of March 31, 2022, we had

an accumulated deficit of $12,537,425 Our net loss was $1,869,721 for the three months ended March 31, 2022.

Substantially all of our

net loss 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.

See below Initial Public Offering, Liquidty and Capital Resources

and Notes to Unaudited Financial Statements.

We have incurred net losses in each year since our inception and, as of June 30, 2022, we had

an accumulated deficit of $ 12,059,672.

Our net income (loss) was $477,754 and $(1,391,967) for the three and six months ended June 30,

Substantially all of our net loss resulted from costs incurred in connection with our research and development efforts, payroll

and consulting fees, stock compensation, general and administrative costs associated with our operations, including costs incurred for

being a public company since April 14, 2022.

See below Initial Public Offering, Liquidity and Capital Resources and Notes to Unaudited

Condensed Financial Statements.

classify our operating expenses as research and development, and general and administrative expenses.

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In June 2020, in

connection with the agreement to acquire Safegard, a former syringe manufacturing facility in Hungary, by June 30, 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.

connection with the agreement to acquire Safegard, a former syringe manufacturing facility in Hungary, which was completed on July 8,

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.

During the quarter ended June 30, 2022, we transferred an additional $2,350,000 to an Escrow Account for a total of $2,500,000 in advance

of final government approval of the Acquistion.

order to compete in the market, we must build inventory.

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and testing costs and related supplies and materials;

fees paid for our Chief Technology Officer;

fees paid and stock compensation expense for our Chief Technology Officer;

costs paid to Safegard, including among others, for use of Safegard’s work force, utilities and other services, relating to

the facility being utilized;

the facility being utilized and materials purchased on our behalf;

costs, including engineering incurred for development and design.

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Our IPO closed on April 19, 2022.

As a result, our unaudited consolidated financial statements as of March 31, 2022 do not reflect

the impact of our IPO.

Net proceeds from the IPO were approximately $14.2 million.

In connection with the closing of the IPO, the Company

used net proceeds to repay the Note Payable of $2 million.

In connection with the closing of

the IPO, the Company used net proceeds to repay the Note Payable of $2 million.

Accounting Policies and Estimates and Recent Accounting Standards

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estimates under different assumptions or conditions.

of Operations

The FMV adjustments, based on the trading price of outstanding warrants classified

as liabilities, could impact the operating results in the reporting periods.

of Operations – three months ended June 30, 2022

Research and development

General and administrative

Interest expense (income)

FMV (income) expense adjustment

for Contingent Stock & Warrants

Net income (loss)

Company has not generated any revenue to date.

and Development

the three months ended March 31, 2022, Research and Development (“R&D”) expenses increased to $506,375 compared to $467,564

for the three months ended March 31 2021.

the three months ended June 30, 2022, Research and Development (“R&D”) expenses increased to $556,868 compared to $375,511

for the three months ended June 30 2021.

The increase of $181,357 was primarily due to increased R&D costs of approximately $71,000

from $150,000 in 2021 to $275,000 in 2022 paid to Safegard for operating costs to use their facility.

The use of the facility, which

commenced in June 2020, has been used for further development, production of current prototype samples and related testing.

The operating

costs primarily related to use of Safegard’s workforce, utility costs incurred and other services.

In addition, we had increases

in depreciation related to R&D equipment of $71,000 acquired and that commenced use later in 2021.

from $266,000 in 2021 to $337,000 in 2022 paid to Safegard for operating costs to use their facility and the purchase of raw materials.

The facility, since June 2020, has been used for further development, production of current prototype samples and related testing.

operating costs primarily related to use of Safegard’s workforce, utility costs incurred and other services.

In addition, we had

increases in depreciation related to R&D equipment of $81,000 and that commenced in the quarters in 2021.

We had an approximate $29,000

increase in stock compensation as grants fully vested.

and Administrative

the three months ended June 30, 2022, General and Administrative (“G&A”) expenses were $2,230,801 as compared to $435,376

for the three months ended June 30, 2021.

The increase of $1,795,425 was primarily attributable to increases in:

i) payroll and consulting

fees of $314,000 from $202,000 in 2021 to $516,000 in 2022, primarily due to increased amounts of payroll and increased staffing, ii)

increases in stock compensation expense, due to new option awards and increases in vesting of previously issued options, of approximately

$231,000 from $94,000 in 2021 to $326,000 in 2022, relating to employees and consultants.

We had an average of two employees in 2021

and through September 2021 which increased to four in the last quarter of 2021.

We engaged an average of 3 consultants in 2022 and 2021,

for varying amounts of services.

In addition, we had increases in G&A in the three months ended June 30, 2022 of approximately $1,250,000,

principally from increased marketing and promotion ($67,000), professional fees ($82,000), travel ($81,000), board fees ($83,000), insurance

($154,000), public company and investor relations related ($211,000), issuance costs relating to warrants ($550,000) and other expenses

expense (income)

expense, net of interest income of $1,061 was $1,100,507 for the three months ended June 30, 2022, compared to interest income of $240

for the three months ended June 30, 2021.

Interest expense increased, by $1,100,747 due to the financing entered into in December 2021

which resulted in interest payable at the 8% face amount of $8,000 plus accreted interest of $1,092,747 on the $2,000,000 Notes Payable

which were repaid with proceeds from IPO.

Adjustment for Contingent Stock and Warrants

value of the Contingent Stock and Contingent Warrants (“Note Warrants”) required the Fair Market Value (“FMV”)

to be remeasured at each reporting date while outstanding with recognition of the changes in fair value to other income or expense in

the statement of operations and comprehensive income (loss).

For the three months ended June 30, 2022, the Company recorded a $351,000,

fair market fair (FMV) benefit to reflect the decrease in the Contingent Stock through the date the shares were issued.

For the three

months ended June 30, 2022, the Company recorded a $4,014,000 FMV income to reflect the decrease in the Note Warrants and Warrants issued

with the IPO.

(See Note 6, 7 and 9 to the Unaudited Condensed Financial Statements)

of Operations – six months ended June 30, 2022

Research and development

General and administrative

Interest expense / (income)

FMV (income) expense

adjustment for Contingent Stock & Warrants

Company has not generated any revenue to date.

and Development

the six months ended June 30, 2022, Research and Development (“R&D”) expenses increased to $1,063,243 compared to $843,075

for the six months ended June 30, 2021.

The increase of $220,168 was primarily due to increased R&D costs of approximately $80,000

from $691,000 in 2021 to $771,000 in 2022 paid to Safegard for operating costs to use their facility and the purchase of R&D materials.

The facility, since June 2020, has been used for further development, production of current prototype samples and related testing.

operating costs primarily related to use of Safegard’s workforce, utility costs incurred and other services.

In addition, we had

increases in depreciation related to R&D equipment of $152,000 that commenced in the later quarters in 2021.

We had decreases in

compensation expense relating to our Chief Technology Officer of $41,000 from $52,000 in 2021 to $10,000 in 2022 and ii) decreases in

materials costs for testing of $116,000 from $167,000 in 2021 to $51,000 in 2022.

stock compensation expense of approximately $12,000 from $62,000 for the first six months ended June 30, 2021 to $50,000 for the six

months ended June 30, 2022.

The decline was primarily due to the timing of vested awards.

and Administrative

the three months ended March 31, 2022, General and Administrative (“G&A”) expenses were $830,900 as compared to $447,576

for the three months ended March 31, 2021.

the six months ended June 30, 2022, General and Administrative (“G&A”) expenses were $3,061,710 as compared to $882,953

for the six months ended June 30, 2021.

The increase of $2,178,757 was primarily attributable to increases in:

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in 2022 and 2021, for varying amounts of services.

In addition, we had increases in G&A in the three months ended March 31, 2022

of approximately $222,000, principally from increased marketing and promotion ($36,000), patent fees and registrations ($32,000), professional

fees ($76,000), travel ($47,000), board fees ($15,000), insurance ($11,000) and other expenses ($5,000).

In addition, we had increases in G&A in the six months ended June 30, 2022 of

approximately $1,471,1,000, principally from increased marketing and promotion ($103,000), patent fees and registrations ($20,000), professional

fees ($159,000), travel ($109,000), board fees ($98,000), insurance ($165,000), public company related expenses and investor relations

($218,000), issuance costs relating to the warrants ($550,000), rent expense ($19,000) and other expenses ($30,000).

expense (income)

(expense), net of interest income of $91, was $245,437 for the three months ended March 31, 2022, compared to interest income of $452

for the three months ended March 31, 2021.

Interest expense increased as of March 31, 2022, by $245,889 due to the financing entered

into in December 2021 which resulted in interest payable at the 8% face amount of $39,111 plus accreted interest of $206,417 on the $2,000,000

Note Payable.

Adjustment for Contingent Stock and Contingent Warrants

value of the Contingent Stock and Contingent Warrants requires the Fair Market Value (“FMV”) to be remeasured at each reporting

date while outstanding with recognition of the changes in fair value to other income or expense in the statement of operations and comprehensive

income (loss).

For the three months ended March 31, 2022, the Company recorded a $287,000 fair market fair (FMV) charge to reflect the

increase in the Contingent Stock and Contingent Warrant liability.

See Note 6 to the Unaudited Financial Statements.

expense, net of interest income of $1,152, was $1,345,944 for the six months ended June 30, 2022, compared to interest income of $692

for the six months ended June 30, 2021.

Interest expense increased by $1,346,636 due to the financing entered into in December 2021 which

resulted in interest payable at the 8% face amount of $47,111 plus accreted interest of $1,299,985 on the $2,000,000 Note Payable which

was repaid at the IPO closing with net proceeds.

Adjustment for Contingent Stock and Warrants

value of the Contingent Stock, Note Warrants and other Warrants requires the Fair Market Value (“FMV”) to be remeasured at

each reporting date while outstanding with recognition of the changes in fair value to other (income) expense in the statement of operations

and comprehensive income (loss).

For the six months ended June 30, 2022, the Company recorded a $181,000 fair market value (FMV) benefit

to reflect the decrease in the Contingent Stock liability through the date the shares were issued.

For the six months ended June 30,

2022, the Company recorded a $3,898,000 FMV income adjustment to reflect the decrease in Note Warrants and Warrants issued with the IPO.

6 and 7 to the Unaudited Condensed Financial Statements)

and Capital Resources

March 31, 2022 and December 31, 2021, we had a cash balance of $255,615, and $1,479,166, respectively.

The Company had working capital

deficiency of $2,923,222 as of March 31, 2022 vs working capital deficiency of $1,156,998, as of December 31, 2021.

The increase in our

working capital deficiency was primarily related to use of cash in operations and investing in fixed asset purchased or deposits and

the impact of the increased FMV and Note of 493,417

April 13, 2022, the Company completed its initial public offering (“IPO”) which was declared effective by the Security and

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April 14, 2022 and which closed on April 19, 2022.

As a result, the unaudited consolidated financial statements as of March 31, 2022

do not reflect the impact of the IPO.

The net proceeds from the IPO were approximately $14.2 million.

In connection with the closing

of the IPO, the Company used net proceeds to repay the Note Payable of $2 million.

See Note 14(a) to the unaudited financial

The net proceeds from the IPO were approximately $14.2 million of which $5,779,000

was attributed to the Warrant liability.

(See Note 7 and 9 to the Unaudited Condensed Financial Statements)

June 30, 2022 and December 31, 2021, we had a cash balance of $7,808,181, and $1,479,166, respectively.

The Company has working capital

of $4,947,040as of June 30, 2022 vs working capital deficiency of $1,156,998, as of December 31, 2021.

The increase in our working capital

was primarily related to net proceeds from our initial public offering of approximately $14.2 million prior to the effect of recording

the liability attributed to the warrants from the IPO, less use of cash in operations, investing in fixed assets purchased, repayment

of the Note Payable of $2.0 million and $2.4 in additional escrow paid relating to the Safegard acquisition agreement.

Cash Used in Operating Activities

Company used cash of $1,216,051 and $716,071 in operating activities for the period ended March 31, 2022 and 2021, respectively.

increase in cash used was principally due to the Company incurring additional R&D activities during March 31, 2022, attributed to

completing product design and product and production validation, and additional business related General and Administrative costs.

Company used cash of $3,093,105 and $1,412,332 in operating activities for the six months ended June 30, 2022 and 2021, respectively.

The increase in cash used was principally due to the Company incurring additional SG&A expenses and R&D activities as described

above during six months ended June 30, 2022.

Cash Used in Investing Activities

the three months ended March 31, 2022, and March 31, 2021, the Company used cash in investing activities of $40,000 and $925,000,

respectively.

the six months ended June 30, 2022 and 2021, the Company used cash in investing activities of $2,813,355 and $1,558,512, respectively.

In both periods, the cash was used to acquire or pay deposits for machinery and equipment of $463,355 and $1,473,250, respectively.

Further, in the three

months ended March 31, 2021 the Company used $75,000 for an escrow payment relating to the Safegard acquisition.

in the six months ended June 30, 2022 and 2021 the Company used $2,350,000 and $75,000, respectively for escrow payments relating to

the Safegard acquisition.

Cash Provided by Financing Activities

the six months ended June 30, 2022 and 2021, the Company provided cash from financing activities of $12,235,475 and $1,660,000, respectively.

In the 2022 period, the cash provided was primarily from the IPO net proceeds of $14,202,975,prior to the effect of recording the liability

attributed to the warrants from the IPO, less the Notes repayment of $2,000,000.

In 2021, the cash provided was from stock subscriptions

from a private placement.

Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis