SkyAI, Inc. 10-Q

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 condensed 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 condensed 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. We commenced generating syringe revenues in the second quarter of 2025 and staking revenue in the third quarter of 2025. We have reported net loss of $105.3M, primarily related to stock compensation charges and asset impairments for the three months ended September 30, 2025, and incurred a net loss of $99.8M and $ 4.8M for the period nine months ended September 30, 2025 and 2024, respectively. During the three months ended September 30, 2025 we recognized the results from our Digital Assets platform. See Liquidity and Capital Resources and Notes to Condensed Consolidated Financial Statements. The accompanying consolidated financial statements had been prepared assuming that the Company will continue as a going concern. The Company has not generated any cash flow from operations since inception but commenced generating revenues in the second quarter of 2025. As of and for the nine months ended September 30, 2025, the Company used cash in operations of $11.7M. The Company’s addition of the business strategy with digital assets resulting in current investment in Digital Assets of $404.2M primarily from August 2025 and current cash of $10.5M and USDC of $14.7M the Company determined it had sufficient liquidity to fund the Company’s planned operations for the next twelve months. The current liquidity no longer raises substantial doubt regarding the Company’s ability to continue as a going concern. We classify our revenues as 1) net revenues, cost of goods manufactured and gross margin/loss from our Medical Device packaging segment and 2) Staking revenue from Digital Assets segment. Operating expenses include a) transaction costs relating to digital asset activities, research and development from medical device packaging and selling, general and administrative expenses related to both of our segments and our corporate office.. We maintain a corporate office located in Melville, New York, US and foreign employees and consultants work remotely and will continue to do so indefinitely. 3 Products, Marketing and Sales We continue to be in discussions with healthcare companies and distributors for sales of our existing inventory of disposable syringe and prefillable syringe products. We continue to market these products to the customers and foreign governments, as well as, 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). Pursuant to the Settlement Agreement, the Company entered into certain definitive agreements, (See Recent Developments),under which the Company will no longer own the Provensa product line and the related intellectual property relating to the Provensa technology. Research and Development Research and development expense through September 30, 2025 consisted of expenses incurred while performing research and development activities for our various syringe products. We had recognized 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. As a result of the Settlement Agreement (See Recent Developments), the Company will no longer be engaging in research and development activities. Recent Developments Our Solana Treasury Strategy We have adopted a treasury policy (the “Treasury Policy”) under which the principal holding in our treasury reserve on the balance sheet will be allocated to digital assets, starting with Solana (“SOL”). Our Board of Directors (the “Board”) approved our new Treasury Policy on August 23, 2025, authorizing long-term accumulation of SOL. As of October 31, 2025, the Company holds over 2.0M SOL. Other In addition to the Company’s medical device sales and distribution enterprise and management of its SOL treasury, the Company has recently begun to explore strategic acquisitions and/or investments globally. To this goal, the Company has hired a Head of Innovation and the first members of its engineering team to help analyze these opportunities and develop its own digital products. The Company has been and will continue to prioritize long term growth with regards to its treasury management strategy, potentially using proceeds from the sale of SOL to fund its expansion plans described above.” Settlement of Outstanding Litigations and Spinoff of Hungarian Subsidiary Subsequent to the announcement of the Settlement Agreement terms on August 21, 2025, the Company adopted a new strategy as a medical device sales and distribution enterprise engaged in the marketing and distribution of syringe products and related drug-delivery systems and would no longer be performing research, design, and manufacturing activities. On October 6, 2025, the Company entered into a confidential settlement agreement and release (the “Settlement Agreement”) whereby the Company and the Parties have agreed to unconditionally and irrevocably release and discharge each other and their respective representatives from and against any and all claims alleged in the Litigation (the “Settlement”). Pursuant to the Settlement Agreement, the Company entered into definitive agreements, including a bill of sale, assignment and assumption agreement providing for the transfer by the Company to the other party of certain assets, and a contract for the transfer of business share providing for the assignment by the Company of all of the Company’s right, title and interest in and to the issued and outstanding shares of Safegard Medical Kft, our Hungarian subsidiary. In addition, the Company executed agreements for the transfer of certain patents and registered trademarks, along with the related goodwill associated therewith. The Settlement Agreement and other definitive agreements closed on October 14, 2025 (see Note 19- Subsequent Events). Share Repurchase Program On October 2, 2025, the Board approved a share repurchase program (the “2025 Repurchase Program”) providing for the repurchase of up to $100,000,000 of the Company’s outstanding shares of Common Stock. The 2025 Repurchase Program enables the Company to repurchase its shares in the open market and in negotiated transactions. The Repurchase Program does not obligate the Company to repurchase shares of Common Stock and the specific timing and amount of repurchases will vary based on available capital resources and other financial and operational performance metrics, market conditions, securities law limitations, and other factors. In connection with the 2025 Repurchase Program, on October 6, 2025, the Company entered into an Open Market Share Repurchase Agreement (the “Repurchase Agreement”) with Cantor (the “Broker”) whereby the Broker has agreed to act as a non-exclusive agent on behalf of the Company to repurchase shares of Common Stock in the open market pursuant to Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The Repurchase Agreement will continue in effect until terminated by either the Company or the Broker, with or without cause, upon written notice to the other party. The Company will pay Broker a commission at a rate of $0.02 for each share of Common Stock repurchased pursuant to the Repurchase Agreement. August 2025 Offering On August 25, 2025, Sharps Technology, Inc. (the “Company”) entered into securities purchase agreements (the “Cash Securities Purchase Agreements”) with certain accredited investors (the “Cash Purchasers”) pursuant to which the Company sold to the Cash Purchasers in a private placement offering (the “Cash Offering”) an aggregate offering of (i) 24,338,649 “Cash Shares”) of common stock of the Company, par value $0.0001 per share (the “Common Stock”), at an offering price of $6.50 per share (ii) and 14,038,463 pre-funded warrants (the “Cash Pre-Funded Warrants”) to purchase shares of Common Stock (the “Cash Pre-Funded Warrant Shares,”) at an offering price of $6.4999 per Pre-Funded Warrant, and (ii) stapled warrants (the “Cash Stapled Warrants,” and together with the Common Stock and Cash Pre-Funded Warrants, the “Cash Securities”) to purchase 41,054,034 shares of Common Stock (the “Cash Stapled Warrant Shares,”) at an exercise price of $9.75 per Cash Stapled Warrant. In the Cash Offering, the Cash Purchasers will tender any of U.S. dollars, USDC or USDT (or a combination thereof) to the Company as consideration for the Cash Shares, Cash Stapled Warrants and Cash Pre-Funded Warrants. Each of the Cash Pre-Funded Warrants is immediately exercisable for one share of Common Stock at the exercise price of $0.0001 per Cash Pre-Funded Warrant Share, and may be exercised at any time until all of the Cash Pre-Funded Warrants issued in the Offerings (as defined below) are exercised in full. Each Cash Purchaser’s ability to exercise its Cash Pre-Funded Warrants in exchange for shares of Common Stock is subject to certain beneficial ownership limitations set forth therein. Each of the Cash Stapled Warrants is immediately exercisable for one share of Common Stock at the exercise price of $9.75 per Cash Stapled Warrant Share, and may be exercised at any time until the earlier of (i) 36 months after the closing of the Offerings or (ii) all of the Cash Stapled Warrants issued in the Offerings are exercised in full. On August 25, 2025, the Company also entered into securities purchase agreements (the “Cryptocurrency Securities Purchase Agreements,” and together with the Cash Securities Purchase Agreements, the “Securities Purchase Agreements”) with certain accredited investors (the “Cryptocurrency Purchasers,” and together with the Cash Purchasers, the “Purchasers”) pursuant to which the Company sold and issued to the Cryptocurrency Purchasers in a private placement offering (the “Cryptocurrency Offering” and together with the Cash Offering, the “Offerings”) (i) 24,836,560 pre-funded warrants (the “Cryptocurrency Pre-Funded Warrants” and together with the Cash Pre-Funded Warrants, the “Pre-Funded Warrants”) to purchase shares of Common Stock (the “Cryptocurrency Pre-Funded Warrant Shares,” and together with the Cash Pre-Funded Warrant Share, the “Pre-Funded Warrant Shares”) at an offering price of $6.4999 per Pre-Funded Warrant, and (ii) 24,836,560 stapled warrants (the “Cryptocurrency Stapled Warrants,” and together with the Cash Stapled Warrants, the “Stapled Warrants” to purchase shares of Common Stock (the “Cryptocurrency Stapled Warrant Shares,” and together with the Cash Stapled Warrant Share, the “Stapled Warrant Shares”) at an exercise price of $9.75 per Cryptocurrency Stapled Warrant. In the Cryptocurrency Offering, the Cryptocurrency Purchasers will tender either Unlocked SOL tokens or Locked SOL tokens to the Company as consideration for the Cryptocurrency Pre-Funded Warrants and Cryptocurrency Stapled Warrants. The gross proceeds from the Cash Securities Purchase Agreements and Cryptocurrency Securities Purchase Agreements aggregated $4110M, which investors paid using the following currency: cash of $181M, locked SOL of $137M, unlocked SOL of $7M and stable coin of $86M. The net proceeds of $403M reflect placement agent fees, legal fees, and expenses of $7.5M with net proceeds, after reflecting par value, have been recorded in Additional Paid in Capital of $403M. The exercise of the Cryptocurrency Pre-Funded Warrants and Cryptocurrency Stapled Warrants into Cryptocurrency Pre-Funded Warrant Shares and Cryptocurrency Stapled Warrant Shares, respectively, is subject to stockholder approval (“Stockholder Approval”) which was approved at the Special Shareholder meeting on October 14, 20 Each of the Cryptocurrency Pre-Funded Warrants is exercisable for one share of Common Stock at the exercise price of $0.0001 per Cryptocurrency Pre-Funded Warrant Share, immediately exercisable following Stockholder Approval (the “Effective Date”), and may be exercised at any time on or after the Effective Date until all of the Cryptocurrency Pre-Funded Warrants issued in the Offerings are exercised in full. Each Cryptocurrency Purchaser’s ability to exercise its Cryptocurrency Pre-Funded Warrants in exchange for shares of Common Stock is subject to certain beneficial ownership limitations set forth therein. Each of the Cryptocurrency Stapled Warrants is exercisable for one share of Common Stock at the exercise price of $9.75 per Cryptocurrency Stapled Warrant Share, immediately exercisable on or after the Effective Date, and may be exercised at any time on or after the Effective Date until the earlier of (i) 36 months after the closing of the Offerings or (ii) all of the Cryptocurrency Stapled Warrants issued in the Offerings are exercised in full. At the Market Offering On September 2, 2025, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with each of Cantor and Aegis Capital Corp. and Aegis (each, an “Agent” and together, the “Agents”), pursuant to which the Company, from time to time, at its option may offer and sell shares (the “ATM Shares”) of its Common Stock, to or through Cantor, acting as principal and/or the sole designated sales agent having an aggregate sales price of up to $236,605,575 (the “ATM Offering”). During the period September 2, 2025 through September 30, 2025, the Company issued 1.5M shares of common stock under the Sales Agreement and received net proceeds from the Sales Agreement of $14.7M after fees paid to the Agents and other offering expenses of $711,000. 4 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 (See Note 10 to the Condensed Consolidated Financial Statements). 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 September 30, 2024. The Company and Seller are no longer engaged in any further discussions relating to the Asset Purchase Agreement. 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. During the quarter ended June 30, 2025, the Company commenced shipments and recorded revenues under the Agreement. On August 8, 2025, the Company assigned the Agreement to Safegard Medical to fulfill the remaining requirements of the outstanding purchase order from Stericare, as the Company is no longer manufacturing products. 5 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, for those classified as liabilities, could impact the operating results in the reporting periods. Further, the market volatility of our Investments could impact the operating results in the reporting periods Nature of Business Sharps Technology, Inc. is a medical device sales and distribution enterprise focused on the marketing and distribution of syringe products, including the Securgard syringe product line, and related drug-delivery systems. The Company previously designed and manufactured a portfolio of conventional and safety syringes for clinical, pharmaceutical, and specialty applications and continues to market certain remaining inventory to hospitals, clinics, healthcare providers, and medical supply organizations in both domestic and international markets. The Company commenced generating initial revenue in the quarter ended June 30 2025. The Company intends to explore plans to expand its distribution platform by representing established third-party manufacturers of complementary and synergistic medical products serving a common customer base. Sharps Technology is committed to maintaining compliance with all applicable regulatory and quality standards governing the marketing and distribution of medical devices, including those established by the U.S. Food and Drug Administration (FDA) and comparable international authorities. Further, on August 24, 2025, the Company adopted a digital asset treasury strategy focused on accumulating SOL, the native digital asset of the Solana blockchain. 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 10 to the Consolidated Financial Statements) Summary of Significant Accounting Policies Our significant accounting policies are described in Note 2 of the accompanying condensed consolidated financial statements including additional accounting policies relating to our Digital Asset platform and other accounting policies further discussed in our annual financial statements included in our annual report on Form 10-K for the year ended December 31, 2024. 6 Results of Operations Comparison of the Three Months Ended September 30, 2025 and 2024. Three Months Ended September 30, 2025 September 30, 2024 Change Change % Product Revenue - net $ 83,622 - $ 83,622 100 % Total cost of goods manufactured and inventory reserve (1,253,278 ) - (1,253,278 ) 100 % Gross Margin (Loss) (1,169,656 ) - (1,169,656 ) 100 % Staking Revenue - net 2,205,423 - 2,205,423 100 % Operations: Transaction costs – digital asset related (810,861 ) - (810,861 ) 100 % Research and development (152,109 ) (145,611 ) (6,498 ) 4 % Selling, General and administrative (110,719,156 ) (1,869,598 ) (108,849,558 ) 5,822 % Realized and unrealized gain (loss) on digital assets 15,499,742 - 15,499,742 100 % Impairment of long-lived fixed assets (7,497,669 ) - (7,497,669 ) 100 % Net Interest income (expense) 68,488 (70,815 ) 139,393 100 % FMV gain / (loss) adjustment on warrants 1,208,142 416,560 791,582 190 % Derivative gain (loss), net (4,378,749 ) - (4,378,749 ) 100 % Other income (expense) - (90 ) 90 100 % Foreign currency gain / (loss) 413,112 (15,506 ) 428,618 2,764 % Net gain (loss) $ (105,333,293 ) $ (1,685,060 ) $ (103,648,233 ) 6,151 % Product Net Revenue/Gross Margin For the three months ended September 30, 2025, we recognized revenues of $83,622 principally related to the Sologard syringes sold under the supply agreement with Stericare (See Recent Developments – Supply Agreement). During the three months ended September 30, 2025, an inventory reserve for the net realizable value was recorded of $924,010 based on a current corporate strategy to operate as a distributor and terminate manufacturing operations. The remaining negative gross margin of $245,646 is principally reflective of excess manufacturing costs incurred. Staking Revenue – net For the three months ended September 30, 2025, the Company recognized net staking revenue of $2,205,423 resulting from the digital treasury platform implemented during the quarter. Transaction expense – digital assets For the three months ended September 30, 2025, $810,861 in transaction expenses relate to exchange and custodian fees for digital asset investments. Research and Development For the three months ended September 30, 2025, Research and Development (“R&D”) expenses, which relate to the Medical Device packaging segment, increased to $152,109 compared to $145,611 for the three months ended September 30, 2024. The increase of $6,498 was due to various changes. Selling, General and Administrative For the three months ended September 30, 2025, Selling, General and Administrative expenses were $110,719,156 as compared to $1,869,598 for the three months ended September 30, 2024. The increase of $108,849,558 was primarily related to: a) Stock compensation of $104,518,000 from $116,000 in 2024 to $104,634,000 in 2025 primarily due to a charge of $101,331,000 relating to warrants issued to the strategic advisor and the balance relating to options vesting; b) Payroll and consulting increased $2,876,600 from $847,645 to $3,724,272 primarily due to increased staffing levels for the Digital Asset Treasury build out, severance paid to for the former Chief Executive Officer ($1.2M), increased consulting fees related to the August 2025 Offering ($1.0M) and bonus payments; c) Professional services increased $1,074,700 from $178,971 to $1,253,730 primarily due to $892,000 in fees paid to a Digital Asset Treasury advisor. Realized and unrealized gain (loss) on digital assets During the three months ended September 30, 2025 the Company recognized $15,499,742 in realized and unrealized gains in investments in digital assets. Impairment of long-lived fixed assets During the three months ended September 30, 2025 the Company recorded an net asset impairment of $7,497,669 based on the fair market value of the fixed assets related to the pending sale of the Safegard subsidiary completed on October 14, 2025 (See Notes 4 and 19 to the Condensed Consolidated Financial Statements). Net Interest income (expense) Net Interest income, was $68,488 for the three months ended September 30, 2025, compared to interest income of $0 for the three months ended September 30, 2024. Net interest increased due to higher average cash balances in the current period directly related to the net proceeds from the August 2025 and the January 2025 offering. 7 FMV Adjustment for Warrants The value of certain 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 or it terms of the warrants are modified, with recognition of the changes in fair value to other income or expense in the Unaudited Condensed Consolidated Statement of Operations. For the three months ended September 30, 2025, the Company recorded a FMV gain adjustment of $1,208,142, which is net of a modification charge of $642,805 related to a warrant inducement, to reflect the net effect of the remeasurement adjustment based on the change in market value and the decrease in number of Warrants outstanding as of September 30, 2025 (See Notes 10 and 12 to the Condensed Consolidated Financial Statements). Results of Operations – Nine Months Ended September 30, 2025 and 2024. September 30, 2025 September 30, 2024 Change Change % Net revenue $ 306,344 - $ 306,344 100 % Total cost of goods manufactured and inventory reserve (2,508,027 ) - (2,508,027 ) 100 % Gross margin (loss) (2,201,683 ) - (2,201,683 ) 100 % Staking Revenue - net 2,205,423 2,205,423 100 % Operations: Transaction expense – digital assets (810,861 ) - (810,861 ) 100 % Research and development (295,579 ) (523,347 ) 227,768 44 % Selling, general and administrative (114,571,809 ) (5,257,015 ) (109,314,794 ) 2,079 % Realized and Unrealized gains on digital assets 15,499,742 - 15,499,742 100 % Impairment of long-lived fixed assets (7,497,669 ) - (7,497,669 ) 100 % Net interest income (expense) (461,551 ) (46,503 ) (415,048) 8,925 % Other income (expense) - (1,000,090 ) 1,046,593 100 % FMV gain / (loss) adjustment for warrants 12,295,842 2,088,747 10,207,095 489 % Derivate gain (loss), net (4,378,749) - (4,378,749) 100 % Foreign currency gain / (loss) 371,741 (31,566 ) 403,307 1,278 % Net gain (loss) $ (99,845,153 ) (4,769,774 ) (95,075,379 ) 1,993 % Net Revenue / Gross Margin For the nine months ended September 30, 2025, Sharps Technology recognized sale of Securegard and Sologard syringes for $306,344, principally related to the supply agreement with Stericare (See Recent Developments – Supply Agreement). During the nine months ended September 30, 2025, inventory reserves for the net realizable value was recorded of $1,654,096 based on a current corporate strategy to operate as a distributor and terminate manufacturing operations and recent market factors, including the uncertainty of the global tariffs. The remaining negative gross margin of $853,930 is principally reflective of excess manufacturing costs incurred. Staking Revenue – net For the nine months ended September 30, 2025, the Company recognized net staking revenue of $2,205,423 resulting from the digital treasury platform implemented. Transaction expense-digital assets For the nine months ended September 30, 2025, $810,861 in transaction expenses relate to exchange and custodian fees for digital asset transactions. Research and Development For the nine months ended September 30, 2025, Research and Development (“R&D”) expenses, which relate to the Medical Device packaging segment decreased to $295,479 compared to $523,347 for the nine months ended September 30, 2024. The decrease of $227,768 was primarily due to a shift to increased manufacturing and reduced R&D activities in 2025 as compared to the 2024 period, which amounted to lower expenses. 8 Selling, General and Administrative For the nine months ended September 30, 2025, Selling, General and Administrative (“G&A”) expenses were $114,571,809 as compared to $5,257,015 for the nine months ended September 30, 2024. The increase of $109,314,795 was primarily related to: a) Stock compensation of $104,559,000 from $441,000 in 2024 to $105,000,000 in 2025 primarily due to a charge of $101,331,000 relating to warrants issued to strategic advisor and the balance relating to options vesting; b) Payroll and consulting increased $2,980,000 from $2,514,502 to $5,301,862 primarily due to increased staffing levels for the Digital Asset Treasury build out, severance paid tothe former Chief Executive Officer ($1.2M), increased consulting fees related to the August 2025 Offering ($1.0M) and bonus payments.($0.7M) c) Professional services increased $1,438,000 from $456,866 to $1,895,261 primarily due to $892,000 in fees paid to a Digital Asset Treasury advisor and increased legal fees. Realized and unrealized gain (loss) on digital assets During the nine months ended September 30, 2025 the Company recognized $15,499,742 in realized and unrealized gains in investments in digital assets. Impairment of long-lived fixed assets During the nine months ended September 30, 2025, the Company recorded a net asset impairment of $7,497,669 based on the fair market value of the fixed assets related to the pending sale of the Safegard subsidiary completed on October 14, 2025 (See Notes 4 and 19 to the Condensed Consolidated Financial Statements). Net Interest income (expense) Net Interest expense, was an expense of $461,551 for the nine months ended September 30, 2025, compared to interest expense of $46,503 for the nine months ended September 30, 2024. Net interest changed, by $415,048 due to the interest on debt. Other income (expense) Other was an expense of $0 for the nine months ended September 30, 2025, and $1,000,090 for the nine months ended September 30, 2024. In 2024, the expense was primarily due to an escrow deposit of $1M, relating to the Asset Purchase Agreement with Nephron, which was released to the Seller on July 19, 2024, under the terms of the agreement and recorded as a forfeited agreement cost (See Note 15 to the Condensed Consolidated Financial Statements). FMV Adjustment for Warrants Certain Warrants require 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 unaudited condensed consolidated statement of operations. For the nine months ended September 30, 2025, and 2024, the Company recorded a $12,295,842 and $2,088,747, respectively as an FMV gain to reflect adjustments required for outstanding Warrants liabilities. (See Notes 10 and 12 to the Condensed Consolidated Financial Statements) Liquidity and Capital Resources As of September 30, 2025, the Company had a cash balance of $10,521,706 and USDC of $8,996,002, net of restricted USDC of $5,700,000 as collateral. As of December 31, 2024, the Company held $864,041 in cash. The Company had working capital of $29,045,025 at September 30, 2025, as compared to a working capital deficiency of $2,011,679 as of December 31, 2024. The increase in our working capital of $31,056,703, was directly impacted by the cash provided by investment financing proceeds and cash used for investing and operations (See below). The following offering details during the third quarter of 2025 provided liquidity and capital to the Company: a) Gross proceeds from the Cash Securities Purchase Agreements and Cryptocurrency Securities Purchase Agreements in August 2025 aggregated $411.0M, which investors paid using the following currency: USD cash of $181.0M, locked SOL of $137.0M, unlocked SOL of $7.0M and USDC of $86.0M. The net proceeds of $403.0M, reported in Additional Paid in Capital, reflect placement agent fees, legal fees, and expenses of $7.5M. b) the Company issued 1.5M shares of common stock under the Sales Agreement and received net proceeds from the Sales Agreement of $14.7M after fees paid to the Agents and other offering expenses of $711,000, reflected in Additional Paid in Capital. 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. Cash Flows Net Cash Used in Operating Activities The Company used cash of $11,743,528 and $5,172,135 in operating activities for the nine months ended September 30, 2025 and 2024, respectively. The change in cash used was principally due to the Company incurring transaction fees relating to digital assets, higher G&A expenses primarily due to the initiation of the digital asset strategy and an increase in manufacturing costs partially offset by lower R&D activities, excluding non-cash items, as described above during the nine months ended September 30, 2025. Net Cash Used in Investing Activities For the nine months ended September 30, 2025 and 2024, the Company used cash in investing activities of $189,506,025 and $1,069,659, respectively. In 2025, the primary increase related to the purchase of digital assets of $186,104,214 because of the August 2025 offering. In both periods, cash was used to acquire or pay deposits for fixed assets. 9 Net Cash Provided by Financing Activities For the nine months ended September 30, 2025, and 2024, the Company provided cash from financing activities of $210,726,915 and $5,707,946, respectively. In the 2025 period, the net proceeds of $207,320,039, was from the Offerings in August and January 2025 and the proceeds from the margin loan of $7,628,888 offset by the debt repayment of $4,222,012. In the 2024 period, the cash provided was from the exercise of warrants for $2,972,646 and the debt offering of $2,735,300. 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. 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.