SkyAI, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS Page Index to financial statements Report of Independent Registered Public Accounting Firm (PCAOB ID: 127 ) Consolidated Balance Sheets as of December 31, 2025 and 2024 F-3 Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 F-4 Consolidated Statements of Comprehensive Loss for the years ended December 31, 2025 and 2024 F-5 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025 and 2024 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 F-7 F- 1 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Sharps Technology, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Sharps Technology, Inc. (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ PKF O’Connor Davies, LLP We have served as the Company’s auditor since 2023. New York, New York March 31, 2026 F- 2 SHARPS TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS December 31, 2025 December 31, 2024 Assets: Current Assets Cash $ 10,382,745 $ 754,802 Escrow deposit - 250,000 Accounts receivable – product trade 204,120 - Accounts receivable – digital currency, net 507,842 - Accounts receivable 507,842 - Prepaid expenses – related party 6,666,667 - Prepaid expenses and other assets 475,869 84,377 Inventories, net 645,268 538,830 Current Assets, Discontinued Operations - 1,545,931 Current Assets 18,882,511 3,173,940 Fixed assets, net 81,167 1,175,338 Digital assets, at fair value 250,111,125 - Other assets 370 72,195 Non-Current Assets, Discontinued Operations - 2,892,275 Total Assets $ 269,075,173 $ 7,313,748 Liabilities: Current Liabilities Accounts payable $ 590,692 $ 693,156 Accrued expenses and other 921,954 346,536 Margin loan 3,084,931 - Notes payable, net of discount - 3,763,622 Warrant liability 97,450 98,913 Current liabilities, Discontinued Operations - 283,392 Total Current Liabilities 4,695,027 5,185,619 Non-Current Liabilities, Discontinued Operations - 132,000 Total Liabilities 4,695,027 5,317,619 Stockholders’ Equity: Preferred stock, $ 0.0001 par value; 1,000,000 shares authorized; 0 shares issued and outstanding (2024: 0 ) - - Common stock, $ 0.0001 par value; 500,000,000 shares authorized (2024: 1,666,667 ); 28,995,402 shares issued and outstanding (2024: 6,827 ) 2,899 - Additional paid-in capital 581,324,579 36,418,042 Accumulated other comprehensive income - 23,293 Accumulated deficit ( 316,947,332 ) ( 34,445,206 ) Total Stockholders’ Equity 264,380,146 1,996,129 Total Liabilities and Stockholders’ Equity $ 269,075,173 $ 7,313,748 The accompanying notes are an integral part of these financial statements. F- 3 SHARPS TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS 2025 2024 YEAR ENDED DECEMBER 31, 2025 2024 Net Revenue $ 204,120 $ - Cost of goods sold 198,576 - Cost of goods sold - inventory reserve 418,869 - Total Cost of Goods Sold 617,445 - Gross Margin (Loss) ( 413,325 ) - Staking Revenue, net 6,805,009 - Operating expenses: Warrant issuance – related party 101,331,513 - Consulting fees – related parties 3,433,333 Selling, general and administrative 16,052,069 5,036,366 Research and development 198,762 531,233 Unrealized loss on digital assets 152,952,163 - Realized loss on digital assets 1,286,284 - Digital asset transaction expenses 872,934 - Total Operating Expenses 276,127,058 5,567,599 Loss from Operations ( 269,735,374 ) ( 5,567,599 ) Other Income (Expense): Interest expense, net ( 416,660 ) ( 1,664,712 ) Fair market value adjustment on warrants 4,803,098 3,016,936 Realized loss on derivatives ( 4,986,500 ) - Other expense - ( 1,009,891 ) Total Other Income (Expense) ( 600,062 ) 342,333 Net Loss Before Provision for Taxes ( 270,335,436 ) ( 5,225,266 ) Tax Provision - - Net Loss from Continuing Operations ( 270,335,436 ) ( 5,225,266 ) Discontinued Operations: Loss from discontinued operations ( 11,220,342 ) ( 4,100,935 ) Loss on disposal ( 1,078,348 ) - Income tax benefit 132,000 30,000 Loss from Discontinued Operations ( 12,166,690 ) ( 4,070,935 ) Net Loss $ ( 282,502,126 ) $ ( 9,296,201 ) Net loss per share from Continuing Operations, basic and diluted $ ( 10.68 ) $ ( 1,247.79 ) Net loss per share from Discontinued Operations, basic and diluted ( 0.48 ) ( 972.13 ) Net loss per share, basic and diluted $ ( 11.16 ) $ ( 2,219.92 ) Weighted average shares used to compute net loss per share, basic and diluted 25,305,644 4,188 The accompanying notes are an integral part of these financial statements. F- 4 SHARPS TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS For the year ended For the year ended December 31, 2025 December 31, 2024 Net loss $ ( 282,502,126 ) $ ( 9,296,201 ) Other comprehensive income: Foreign currency translation adjustments ( 23,293 ) ( 568,519 ) Comprehensive loss $ ( 282,525,419 ) $ ( 9,864,720 ) The accompanying notes are an integral part of these financial statements. F- 5 SHARPS TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 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 1 $ - 2,314 $ - $ 32,491,477 $ 591,812 $ ( 25,149,004 ) $ 7,934,285 Net loss for the year ended December 31, 2024 - ( 9,296,201 ) ( 9,296,201 ) Cancellation of preferred share ( 1 ) Share-based compensation charges 520,830 520,830 Issuance of common stock 1,759 1,126,538 - 1,126,538 Registration A offering 636 - 1,296,922 1,296,922 Warrant inducements 869 - 978,982 978,982 Warrant exercise 1,249 - 3,293 3,293 Foreign currency translation ( 568,519 ) ( 568,519 ) Balance – December 31, 2024 - $ - 6,827 $ - $ 36,418,042 $ 23,293 $ ( 34,445,206 ) $ 1,996,129 Net loss for the year ended December 31, 2025 - - ( 282,502,126 ) ( 282,502,126 ) Share-based compensation charges - 107,468,174 107,468,174 Equity offering – August 2025 PIPE 24,338,649 2,434 403,232,255 403,234,689 Exercise of Series A warrants 315,805 32 4,954,515 4,954,547 Exercise of Series B warrants 1,016,387 102 10,373,307 10,373,409 Exercise of prefunded warrants - 1,157,711 115 115 Shelf offering - ATM 2,160,023 216 18,878,286 18,878,502 Foreign currency translation - - ( 23,293 ) ( 23,293 ) Balance – December 31, 2025 - $ - 28,995,402 $ 2,899 $ 581,324,579 $ - $ ( 316,947,332 ) $ 264,380,146 The accompanying notes are an integral part of these financial statements. F- 6 SHARPS TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the year ended December 31, 2025 For the year ended December 31, 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Consolidated net loss ( 282,502,126 ) ( 9,296,201 ) Less: Loss from discontinued operations 12,166,690 4,070,935 Loss from continuing operations ( 270,335,436 ) ( 5,225,266 ) Adjustments to reconcile net from continuing operations to net cash used in operating activities: Depreciation and amortization 132,540 37,524 Stock-based compensation - related party 101,331,513 520,830 Stock-based compensation - other 6,136,661 - Accretion of debt discount 708,390 1,705,014 FMV adjustment for warrants ( 4,803,098 ) ( 3,016,936 ) Digital assets received as staking revenues, net ( 6,801,179 ) - Realized loss on digital assets 1,286,284 - Unrealized loss on digital assets 152,952,163 - Realized loss on derivatives 4,986,500 - Escrow forfeited 250,000 1,000,000 Foreign exchange impact 378,410 516,905 Changes in operating assets: Accounts receivable - trade ( 204,120 ) - Prepaid expenses - related party 3,333,333 - Prepaid expenses and other ( 322,781 ) ( 12,686 ) Inventory ( 298,235 ) - Other assets 39,958 ( 25,170 ) Accounts payable and accrued liabilities 238,446 98,394 Net cash used in operating activities ( 10,990,651 ) ( 4,401,392 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of digital assets ( 170,519,290 ) - Purchase of USDC ( 17,003,451 ) - Escrow payment forfeited - ( 1,000,000 ) Net cash used in investing activities ( 187,522,741 ) ( 1,000,000 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from offerings and warrant exercises 212,102,902 3,372,449 Proceeds from debt financing - 2,534,958 Repayment of debt financing ( 4,222,012 ) - Proceeds from margin loan 7,628,888 - Net cash provided by financing activities 215,509,778 5,907,407 NET INCREASE IN CASH – CONTINUING OPERATIONS 16,996,386 506,015 Cash Flows from Discontinued Operations Beginning cash - discontinued operations 109,239 22,976 Operating Activities ( 5,837,401 ) ( 2,525,104 ) Investing Activities ( 1,640,281 ) ( 129,778 ) Financing Activities - - Ending cash - discontinued operations - ( 109,239 ) NET DECREASE IN CASH - DISCONTINUED OPERATIONS ( 7,368,443 ) ( 2,741,145 ) CASH — BEGINNING OF PERIOD 754,802 2,989,932 CASH — END OF PERIOD 10,382,745 754,802 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for taxes - - Digital assets received from common stock issuance 144,035,494 - USDC/USDT received from common stock issuance 86,104,501 - USDC/USDT used for purchases of digital assets ( 83,501,452 ) - USDC transferred to related party ( 10,000,000 ) - USDC repayment of margin loan ( 4,620,000 ) - USDC payments for realized derivatives losses ( 4,986,500 ) - OID interest 875,000 - The accompanying notes are an integral part of these financial statements. F- 7 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 1. Description of Business Nature of Business Sharps Technology, Inc. (“Sharps” or the “Company”) is a medical device sales and distribution enterprise engaged in the marketing and distribution of syringe products and related drug-delivery systems. Prior to August 24, 2025, the Company was also focused on design and manufacture of a portfolio of conventional and safety syringes. On August 24, 2025, the Company adopted a digital asset treasury strategy focused on accumulating Solana (“SOL”), the native digital asset of the Solana blockchain. On August 28, 2025, the Company (“Buyer”) acquired the shares of SOL Equity Limited, a Cayman Islands exempt company from Catan Holdings LP, a Cayman Islands corporation (“Seller”) which was a non-operating company. The Seller, assigned, transferred and conveyed to Buyer, and Buyer hereby purchased and accepted from Seller, all of the issued and outstanding shares free and clear of all liens, claims and encumbrances, for nominal consideration of $ 1.00 . The assets acquired included several digital asset custodian accounts with no balance and a ticker reservation account. The Seller further represented that, as of August 28, 2025, no other assets and no liabilities of any kind existed. The purpose of the acquisition was the Company’s intent to have SOL Equity Limited be the entity that holds the digital asset treasury segment. On October 6, 2025, the Company entered into definitive agreements, including a bill of sale, assignment and assumption agreement providing for the transfer by the Company 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, the Hungarian subsidiary, which is reflected in the accompanying financial statements as a discontinued operation. The accompanying consolidated financial statements include the accounts of Sharps Technology, Inc. and its wholly owned subsidiary, SOL Equity Limited, collectively referred to as the “Company.” All intercompany transactions and balances have been eliminated. 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. 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. 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 contingent assets and 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 December 31, 2025, the most significant estimates relate to inventory reserves, digital assets, 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 December 31, 2025 and 2024, the Company had cash of $ 10.4 million and $ 0.8 million, respectively, and no cash equivalents. F- 8 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) Concentration of Credit Risk The Company’s cash, USDC, certain digital assets held, accounts receivable, and deposits are potentially subject to concentration of credit risk. Cash is primarily placed with financial institutions which are of high credit quality. The Company does have corporate deposit balances with financial institutions which exceed the Federal Deposit Insurance Corporation insurance limit of $ 250,000 . The Company has not experienced losses on these accounts and does not believe it is exposed to any significant credit risk with respect to these accounts. The Company holds USDC periodically as a liquidity resource facilitating transactions such as purchases, dispositions and payments. USDC is a payment stablecoin redeemable on a one-to-one basis for U.S. dollars and issued by Circle Internet Financial, LLC. (“Circle”). Circle’s the underlying reserves were held in cash, short-duration U.S. Treasuries, and overnight U.S. Treasury repurchase agreements within segregated accounts for the benefit of USDC holders. USDC is a current financial asset in the Consolidated Financial Statements as of December 31, 2025. The Company holds SOL, a digital commodity, as part of its Treasury Strategy. SOL is a digital asset in the Consolidated Financial Statements as of December 31, 2025. Our concentration in a single digital commodity exposes the Company to unique liquidity risks that may prevent the conversion of SOL into fiat currency or other assets when desired, particularly during periods of market stress. 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 December 31, 2024, inventory was comprised of raw materials, components and finished goods and following the Company’s sale of its Hungarian subsidiary and based on a current corporate strategy to operate as a distributor and terminate manufacturing operations, the inventory at December 31, 2025 is comprised of only finished goods. Classification of Digital Commodities & Payment Stablecoin Management assessed SOL, USDC, & USDT under ASU 2023-08. For new asset classes that are out of ASU 2023-08’s scope, the Company considered the assets underlying characteristics within the GENIUS Act, ASC 825, and ASC 350 for assignment as a cash equivalent, financial or intangible asset respectively. The Company also evaluated if each new asset type should be presented as long-term or current under ASC 210. SOL meets the criteria of ASU 2023-08 and would be considered an in-scope digital asset. This is because it meets the definition of an intangible asset per the FASB codification, does not provide enforceable rights or claims to underlying goods, services, or other assets. Furthermore, SOL resides on a distributed ledger, is secured through cryptography, is fungible, and is not created or issued by the Company or its related parties. Both USDC and USDT (“payment stablecoins”) provide the holder with enforceable rights to or claims on underlying goods, services or other assets. Therefore, they would not be considered an in-scope crypto asset under ASU 2023-08, but instead the same factor meets the criteria as a financial asset under ASC 825. While both Circle (USDC) and Tether (USDT) have applied as payment stablecoins to be cash equivalent under the Genius Act since it came into effect, neither has achieved that designation. Therefore, management does not consider either to be cash equivalent but based on guidance under ASC 210, does classify payment stablecoins as current assets expected to be converted to cash within one year from the balance sheet date. The Company will report payment stablecoins as a current financial asset on the balance sheet adjusted to fair market value. Digital Assets Pursuant to ASU 2023-08, Intangibles — Goodwill and Other — Crypto Assets: Accounting for and Disclosure of Crypto Assets, codified into ASC subtopic 350-60, in-scope crypto assets are required to be measured at fair value in the consolidated balance sheet, with gains and losses from changes in the fair value of such digital assets recognized in the consolidated statement of operations each reporting period. Under ASU 2023-08 in-scope crypto assets are considered to be indefinite-lived intangible assets. The in-scope crypto assets are initially measured at cost based on existing GAAP guidance per ASC 350-30. ASU 2023-08 also requires certain interim and annual disclosures for digital assets within the scope of the standard. Sales and purchases of digital assets are reflected as cash flows from investing activities in the consolidated statements of cash flows. The Company adopted this guidance effective August 25, 2025, the date of the Company’s first holding in digital assets. SOL is measured using Level 1 inputs under ASC 820, based on quoted prices from the principal market unless otherwise restricted. ASC 820 defines “principal market” as the market with the greatest volume and level of activity for the asset or liability. The determination of the principal market (and, as a result, the market participants in the principal market) is made from the perspective of the reporting entity. The digital assets held by the Company are traded on a number of active markets globally. The Company determines Coinbase as its principal market. The Company recognizes staking revenue by utilizing daily prices obtained from Coinbase at the end of the treasury operations day at 5pm ET (“Spot Price”). A portion of the in-kind SOL invested as part of the Company’s August 2025 equity offering includes restrictions. These locked SOL will unlock over a period of time and once unlocked can be sold on several SOL exchanges. While the tokens remain restricted, the locked SOL fair value will include a discount to the Spot Price for SOL for which the unrealized gain or loss is recognized. After reviewing the changes in the market price for these and similar locked SOL transactions, and the discount for in-kind SOL invested at the August 25, 2025 offering, the Company has elected to use 10% as the discount and considers this a Level 2 input. Once the SOL is unlocked, the fair value is measured at the end of the period at the market value without a discount. F- 9 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) 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. Certain assets and liabilities of the Company’s including digital assets and warrants are fair valued on a recurring basis with the trading price or FMV using Black Scholes which could cause fluctuations in operating results at the reporting periods. The Company’s outstanding liability classified 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. 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 – 20 years, Machinery and Equipment – 3 - 10 years and Computer systems and Website – 30 years. The expected life for Molds is based on the lesser of the number of parts that will be produced based on the expected mold capability or 5 years. 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. F- 10 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) 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. The Company recognizes forfeitures of stock-based awards as they occur. 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. 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”) treated as level 2 assets, 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 December 31, 2025, certain warrants (see Note 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. The Company enters into derivative contracts from time to time to manage its exposure to fluctuations in the price of SOL and not for any other purpose. In addition, the Company evaluates its financing and service arrangements to determine whether certain arrangements contain features that qualify as embedded derivatives requiring bifurcation in accordance with ASC 815 - Derivatives and Hedging. Embedded derivatives that are required to be bifurcated from the host instrument or arrangement are accounted for and valued as separate financial instruments. There were no embedded derivatives requiring separation from the host instrument as of December 31, 2025 and December 31, 2024. F- 11 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) The Company does not elect to designate derivatives as hedges for accounting purposes and, as such, records derivatives at fair value, with subsequent changes in fair value and settlements recognized in earnings. The Company classifies derivative assets or liabilities on the Consolidated Balance Sheets as current or non-current based on whether settlement of the instrument could be required within 12 months of the balance sheet date and for derivatives with multiple settlements, based on the term of the contract. While the option positions have SOL as the underlying asset, none of the Company’s SOL holdings are transacted as part of settlement. Realized and unrealized gains for purchased and written derivative positions are valued using their closing premium, at the earlier of their maturity date or the reporting date as the basis for a fair value adjustment. There were no open derivative contracts as of December 31, 2025 or 2024. Market Risk The Company is exposed to SOL market risk related to our digital asset holdings, which are impacted by the market value of the respective digital asset held. We performed a sensitivity analysis assuming a hypothetical 10% change in the fair value of these digital assets to demonstrate the potential impact on our financial results. A hypothetical 10% increase or decrease in market prices would have positively or negatively impacted our Income (loss) before income taxes by approximately $ 25 M for the year ended December 31, 2025. 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 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 December 31, 2025 and 2024. Accumulated other comprehensive income (loss) is a separate component of stockholders’ equity and consists of the cumulative foreign currency translation adjustments. Basic and Diluted Loss Per Share 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 during the year ended December 31, 2025 included 37,717,312 in pre-funded warrants and 6,321,367 in related party warrants exercisable at par value (see Note 10). 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 December 31, 2025 and 2024, there were 65,191,383 and 2,843 (reverse split effected), respectively of 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- 12 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) Revenue Medical Device Packaging Products The Company generates revenue from the sale of single use medical device packaging products, primarily syringe or as packaging components for a customer’s product. Revenue is recorded, net of sales tax, if applicable. The Company considers revenue to be earned when all the following criteria are met: the Company has a contract with a customer that creates enforceable rights and obligations, promised products are identified, the transaction price is determinable and the Company has transferred control of the promised items to the customer. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the contract. The transaction price for the contract is measured as the amount of consideration the Company expects to receive in exchange for the goods expected to be transferred. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as control of the distinct good or service is transferred. The Company’s products typically have one performance obligation, which is the sale of a single product. Transfer of control for the Company’s products is generally at shipment or delivery, depending on contractual terms, but occurs when title and risk of loss transfers to the customer. As such, the Company’s performance obligation related to product sales is satisfied at a point in time. The Company recognizes a receivable when it has an unconditional right to payment, which represents the amount the Company expects to collect in a transaction and is most often equal to the transaction price in the contract. Payment terms for shipments to end-user and distributor customers may range from 30 to 90 days. Amounts billed to customers for shipping and handling are included in revenue, while the related shipping and handling costs are reflected in cost of goods sold. Digital Assets Revenue, Realized and Unrealized Gains and Losses Acquisition of Digital Assets We acquire liquid SOL tokens through purchases and delegated staking. In the case of liquid bulk purchases, we recognize for cost basis the actual price paid. In the case of liquid TWAP (time-weighted average price) over multiple hour or days, we recognize for cost basis the average price paid for all tokens purchases. The Company is able to acquire additional locked SOL through direct negotiations with the owner or third-party custodians at a discounted price from the SOL market value price. With the purchase of locked SOL, we recognize the cost basis as the actual price paid after the discount applied from the SOL price. The unlocking of newly purchased locked SOL occurs over a series of dates as prescribed by the purchase agreement. We acquire other digital assets through purchases and record the average price paid as the cost basis. Per ASC 350-60-45-2, gains and losses from the remeasurement of digital assets shall be included in net income and presented separately from changes in the carrying value of other intangible assets. Pursuant to this guidance, changes in fair value are reflected on the income statement in the line item “Realized and unrealized (gain) loss on digital assets” in the operations section of the consolidated statements of operations. We measure changes in fair value as the difference between the cost basis and the prevailing market price of the digital asset at the date of measurement, multiplied by the quantity held of the digital asset. These prices are independently analyzed, including comparisons to other exchanges and potential cut-off times. For the derivative positions, the Custodians provide a period-end spot price for the open positions based on valuation models applied based on various inputs. Remeasurement on a recurring basis Subsequent to the acquisitions of SOL, remeasurement of change in fair value is done by taking the spot price as defined above on the last day of the period. Tokens are bifurcated between liquid and locked tokens. In the case of liquid tokens, the aggregate fair value is computed by taking the number of liquid and locked tokens and multiplying by the period-end spot price. As locked tokens become unlocked over time, they will be added to the count of liquid tokens and accordingly, make up less of that discount percentage over time when computing aggregate fair value on locked tokens. In the case of locked tokens, the aggregate fair value is computed by taking the number of locked tokens, discounted by 10%. F- 13 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) The 10% discount for December 31, 2025 used by management is based on the initial investor discount in the August 2025 Offering and other quoted data, as well as historical purchases of locked SOL that management has made on behalf of the Company. Management monitors this discount percentage and adjusts when appropriate. We performed a sensitivity analysis assuming a hypothetical 10% change in the discount to fair value of these digital assets to demonstrate the potential impact on our financial results. A hypothetical 10% increase or decrease in the discount would have positively or negatively impacted our Income (loss) before income taxes by approximately $8M for the year ended December 31, 2025. Staking revenue We earn staking rewards by delegating our digital assets to third-party validators on proof-of-stake blockchain networks. These tokens remain under the Company’s control and are not derecognized, as the delegation does not constitute a transfer of control under ASC 610-20 or ASC 350-60. While there is no explicit guidance under U.S. GAAP for staking activities, the Company applies the principles of ASC 606, Revenue from Contracts with Customers, by analogy. Management evaluates whether a contract exists, identifies the performance obligations, and determines whether the Company acts as a principal or agent in the transaction. The transaction price is measured at the fair value of the digital assets received at the time control is obtained. Due to the evolving nature of blockchain protocols and limited regulatory guidance, management exercises significant judgment in evaluating validator reliability and the risk of slashing or forfeiture. Changes in protocol rules or accounting interpretations may materially impact how staking revenue is recognized and measured. SOL tokens held by the Company, whether liquid or locked, are eligible for staking. The Company evaluation has determined that it is the delegator and the Custodians, via agreements with validators, are the validators. Therefore, the Company recognizes the staking rewards on a net basis unless it is the validator. The Company believes that the Staking rewards variable revenue should be recognized when the staking rewards are received from the validator in the Company’s staking account. Rewards are recognized as revenue as is earned at the end of each epoch (just under two day periods for SOL). The FMV of the revenue is calculated using the spot price of SOL at the end of the epoch. For locked SOL where the staking rewards inherit the maturity of their underlying token, the 10% discount is applied. This revenue is reported on the Statements of consolidated statement of operations under the line item “Staking Revenue.” Changes in fair market value of the staking revenue after the initial staking revenue is recognized are reflected on the consolidated statement of operations as “realized and unrealized (gain) loss on digital assets”. Realized disposition of the digital assets To the extent such digital assets may be disposed, unrealized gain or (losses) shall be reversed and realized gains or (losses) shall be recorded for the difference between FMV price at disposition and its cost. For sales of digital assets, this would be the net transaction price. In the case of transfers of custody to third parties this is the spot price of the asset on the day of the transfer. Product Warranties The Company provides product warranties that: i) the products meet the terms of the customer order, ii) the products are not defective and iii) the products will conform to the descriptions set forth in their respective labeling, provided that they are used in accordance with such labeling and the Company’s written directions for use. The Company has not incurred warranty claims. The Company’s return policy provides that a customer may return incorrect shipments or defective products within specified days following arrival at the customer’s facility. In all such cases, the customer must obtain an prior authorization from the Company. The Company has not incurred returns. F- 14 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 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 is 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. Segment Reporting During the year ended 2025, as a result of the previously mentioned treasury policy, management re-evaluated its segment reporting structure and determined that is now operates in two reportable segments other than its corporate activities. Prior to 2025, the Company operated as a single operating segment focused on its medical device packaging platform. The change in reportable segments had no effect on previously reported results. The Company’s chief operating decision makers (“CODM”) are its Principal Executive Officer, Chief Investment Officer and Chief Financial Officer. The CODM manage operations and business as two operating segments for the purposes of allocating resources, making operating decisions and evaluating financial performance (See Note 18). 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 can be reasonably estimated. Legal fees related to contingencies are expensed as incurred. Gain contingencies are not recognized until the gain is realizable or realized. Discontinued Operations The Company accounts for discontinued operations in accordance with ASC 205-20. A discontinued operation is a component of the Company that has been disposed of or classified as held for sale and represents a strategic shift that has (or will have) a major effect on the Company’s operations and financial results. Discontinued operations are reported separately net of taxes for all periods presented from continuing operations in the consolidated statements of income for all periods presented. Assets and liabilities of discontinued operations are presented separately for all periods presented in the consolidated balance sheets. The Company provides additional disclosures in the notes, including major classes of assets and liabilities, results of operations, and cash flows related to discontinued operations. Unless otherwise indicated, the information in the notes to the consolidated financial statements refers only to the Company’s continuing operations. The information related to the discontinued operations has been reclassified for 2024 to conform with the 2025 presentation Recent Accounting Pronouncements In December 2023, the FASB issued ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) , which establishes accounting guidance for crypto assets meeting certain criteria. SOL meets these criteria. The amendments require crypto assets meeting the criteria to be recognized at fair value with changes recognized in net income each reporting period. Upon adoption, a cumulative-effect adjustment is made to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption. ASU 2023-08 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted. The Company elected to early adopt ASU 2023-08 for the year ended December 31, 2025, effective as of August 25, 2025. As a result of the adoption, the Company did not have a cumulative-effect adjustment as the Company did not have any Crypto Assets prior to August 25, 2025. Effective with the year ended December 31, 2025, SOL, the token of Solana blockchain, is recognized at fair value. F- 15 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) 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 adopted the new standard prospectively for the year ended December 31, 2025. 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 evaluating the impacts of the new guidance on its disclosures within the consolidated financial statements. In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses, which provides for all entities with the option to elect a practical expedient that assumes that current conditions as of the balance sheet do not change for the remaining life of an asset, with respect to estimates of expected credit losses. This guidance is effective for annual reporting periods beginning after December 15, 2025 and interim periods within those annual reporting periods, with early adoption permitted and application of guidance prospectively. We are currently evaluating the effect of this pronouncement. Reclassification of Prior Period Presentation Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported total revenues, operating income (loss), net income (loss), or stockholders’ equity. Note 3. Prepaid Expenses and Current Assets Prepaid expenses and other current assets consisted of the following at December 31, 2025 and December 31, 2024: Schedule of Prepaid Expenses and Other Current Assets 2025 2024 Insurance $ 394,854 $ 35,000 Related party consulting - Notes 15 and 17 6,666,667 - Other 81,015 49,377 Total $ 7,142,536 $ 84,377 Note 4. Inventories Inventories, net consisted of the following at December 31, 2025 and 2024: Schedule of Inventories December 31, 2025 December 31, 2024 Finished goods 645,268 538,830 During the period ended December 31, 2025, a net realizable value adjustment of $ 418,869 was recorded affecting raw material, work in process and finished goods. The Company also recognized an impairment as well as a net realizable value adjustment on the inventories of its Hungarian subsidiary that was sold on October 14, 2025, which is included in the loss on discontinued operations. See Note 19. F- 16 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 5. Fixed Assets Fixed assets, net, as of December 31, 2025 and 2024, are summarized as follows: Schedule of Fixed Assets, Net December 31, 2025 December 31, 2024 Machinery and equipment - 2,375,519 Computer systems and website & other 290,661 290,661 Total Fixed Assets 290,661 2,666,180 Less: accumulated depreciation ( 209,494 ) ( 1,490,842 ) Fixed Asset, net $ 81,167 $ 1,175,338 Depreciation expense of fixed assets for the year ended December 31, 2025 and 2024 was $ 132,540 and $ 472,605 , respectively. Asset impairment adjustments of approximately $ 7.5 million and $ 1.8 million respectively were recorded related to the Company’s manufacturing operations. These are included in the results of discontinued operations. See note 19. Note 6. - Investments in Digital Assets The following table summarizes Digital Assets held for investment: Schedule of Digital Assets Held for Investment December 31, 2025 Units Cost Basis Fair Value SOL 2,077,799 $ 403,063,288 $ 250,111,125 The Company recognizes digital assets at fair value. The aggregate fair value of our locked tokens is computed by taking the number of locked tokens and discounting the month-end spot price by 10%. The Company valued the SOL treasury at $124.26 per liquid token and $111.83 per locked token. The following table summarizes the Company’s digital asset purchases, losses (gains) on digital assets, and revenue from staking received for the year ended December 31, 2025. The year ended December 31, 2025 represents the initial period digital asset transactions that occurred. F- 17 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 6. - Investments in Digital Assets (continued) Schedule of Losses (Gains) On Digital Assets and Revenue from Staking Year Ending December 31, 2025 Digital Asset Units SOL Cost Basis $ USD Realized Loss Beginning Digital Assets - $ - In-Kind Digital Assets (PIPE) 792,176 $ 144,035,493 Dispositions of Digital Assets - $ (1,286,284 ) $ ( 1,286,284 ) Digital Asset Purchases 1,249,506 $ 254,020,742 Staking Rewards Received 36,117 $ 6,293,337 Ending Digital Assets 2,077,799 $ 403,063,288 Unrealized Gain / Loss - $ (152,952,163 ) Ending Digital Assets 2,077,799 $ 250,111,125 The following table summarizes the composition of SOL held broken out by liquid and locked as of December 31, 2025: Schedule of Solana Tokens Held Broken Out by Liquid and Locked Number of SOL units Liquid SOL 1,427,857 Locked SOL 649,942 Total 2,077,799 The Company has approximately 98 % of its SOL treasury staked at December 31, 2025. The Company maintains control over the delegated SOL tokens throughout the staking period. Although the tokens undergo a bonding process with validators, the Company retains the ability to initiate unbonding at any time for liquid SOL. Upon notification to the validator, the unbonding process begins, which typically takes up to two days. During this period, the tokens remain unavailable for transfer or sale on the open market. Validators do not gain control over the tokens in a manner that meets derecognition criteria. They cannot sell, pledge, or otherwise dispose of the tokens. As such, the Company continues to recognize the delegated SOL tokens as part of its digital asset holdings. The following table summarizes the unlocking schedule of SOL tokens currently locked as of December 31, 2025: Schedule of Crypto Asset Fiscal Year Maturity Through Year End 2026 307,728 Through Year End 2027 314,510 Through Year End 2028 27,704 Total 649,942 For the year ended December 31, 2025, the Company incurred $ 872,934 in transaction costs relating to custodian and exchange fees. The margin loan and related collateral are as follows: Schedule of Loan and Related Collateral December 31, 2025 Solana USD Solana collateral 40,000 - Margin loan - $ 3,084,931 Total 40,000 $ 3,084,931 Note 7. Derivatives During the periods presented, the Company’s derivatives were all embedded forward contracts to receive or deliver a fixed amount of crypto assets in the future and none were designated as hedging instruments. The following table summarizes the realized and unrealized losses for purchased and written derivative instruments as measured in U.S. dollar equivalents. SCHEDULE OF DERIVATIVE INSTRUMENT Purchased Derivatives Written Derivatives Total December 31, 2025 Purchased Derivatives Written Derivatives Total Realized Gain / (Loss) $ ( 6,221,500 ) $ 1,235,000 $ ( 4,986,500 ) Unrealized Gain / (Loss) - - $ - Total $ ( 6,221,500 ) $ 1,235,000 $ ( 4,986,500 ) F- 18 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 There were no open derivative contracts as of December 31, 2025 or 2024. Note 8. Other Assets Other assets as of December 31, 2025 and 2024 are summarized as follows: Schedule of Other Assets December 31, December 31, 2025 2024 Intangibles, net $ - $ 32,503 Fixed asset deposits 370 370 Other - 39,322 Total $ 370 $ 72,195 Intangibles were related to the Asset Acquisition in 2022 and consisted of an acquired workforce and permits. These were impaired and written down to $ 0 for the year ended December 31, 2025. Note 9. 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 $ 4,375,000 , including OID interest of $ 875,000 maturing on January 31, 2025 , with certain purchasers (the “Purchasers”), and the issuance of approximately 864 (pre-reverse - 259,091 ) unregistered shares of the Company’s Common Stock. The aggregate gross proceeds to the Company were approximately $ 3.5 million, before deducting fees to the placement agent and other offering expenses payable by the Company of $ 514,700 and an escrow deposit of $ 250,000 required until certain security liens were filed. The Note and the common stock were recorded at the relative fair values of $ 2.6 M and $ 852,000 , respectively, in accordance with ASC 470-20-25-2. The aforementioned expenses were allocated based on the aforementioned fair values as a reduction to the carrying amount of the debt and a reduction of the equity in accordance with ASC 505-10. For the years ended December 31, 2025 and 2024, the Company recorded accreted interest and fees of $ 708,390 and $ 1,705,014 , respectively. In connection with the Securities Purchase Agreement and Note, the Company entered into a Registration Rights Agreement with the Purchasers (the “Registration Rights Agreement”), requiring the Company to file a resale registration statement (the “Registration Statement”) with the U.S. Securities and Exchange Commission (the “Commission”) to register the unregistered shares of Common Stock. within forty-five (45) calendar days following the filing date, which is thirty (30) days after the closing date. The Company filed the required resale registration statement on October 23, 2024. The Note was repaid upon maturity. Note 10. Stockholders’ Equity Capital Structure On December 11, 2017, the Company was incorporated in Wyoming with 20,000,000 shares of common stock authorized with a $ 0.0001 par value. Effective April 18, 2019, the Company’s authorized common stock was increased to 50,000,000 shares of common stock. The articles of incorporation also authorized 10,000 preferred shares with a $ 0.001 par value. Effective March 22, 2022, the Company completed a plan and agreement of merger with Sharps Technology, Inc., a Nevada corporation (“Sharps Nevada”). Pursuant to the merger agreement, (i) the Company merged with and into Sharps Nevada, (ii) each 3.5 shares of common stock of the Company were converted into one share of common stock of Sharps Nevada and (iii) the articles of incorporation and bylaws of Sharps Nevada, became the articles of incorporation and bylaws of the surviving corporation. The Company’s authorized common stock and preferred stock increased from 50,000,000 to 100,000,000 and 10,000 to 1,000,000 shares, respectively. The par value of preferred stock decreased from $ 0.001 to $ 0.0001 per share. In July 2024, the shareholders approved the increase of the authorized common stock from 100,000,000 to 500,000,000 which was subsequently filed as an amendment to the articles of incorporation with the state of Nevada. F- 19 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 10. Stockholders’ Equity (continued) 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 500,000,000 to 1,666,667 . 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 one for three hundred ( 1-for-300 ). All share amounts, share prices and earnings per share have been adjusted in the accompanying consolidated financial statement and footnotes. On August 22, 2025, at the annual 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 increase the authorized shares of common stock from 1,666,667 shares to 500,000,000 shares. Common Stock Securities Purchase Agreements 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. F- 20 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 10. Stockholders’ Equity (continued) The exercise of the Cryptocurrency Pre-Funded Warrants and Cryptocurrency Stapled Warrants into Cryptocurrency Pre-Funded Warrant Shares and Cryptocurrency Stapled Warrant Shares, respectively, was subject to stockholder approval (“Stockholder Approval”) which was approved at the Special Shareholder meeting on October 14, 2025. 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. The gross proceeds from the Cash Securities Purchase Agreements and Cryptocurrency Securities Purchase Agreements aggregated $ 411 M, which investors paid using the following currency: cash of $ 181 M, locked SOL of $ 137 M, unlocked SOL of $ 7 M and stablecoin of $ 86 M. The net proceeds of $ 403 M reflect placement agent fees, legal fees, and expenses of $ 7.5 M with the net proceeds, after reflecting par value, recorded in Additional Paid in Capital of $ 403.0 M. During the year ended December 31, 2025, 1,157,711 Cash Prefunded warrants were exercised and proceeds of $ 116 were received. On September 26, 2025, the Company entered into Waiver and Consent (the “Waiver and Consent”) with certain holders of the Company’s securities (who collectively beneficially owned at least 50.1% of the then outstanding Registrable Securities, as defined in the Registration Rights Agreement dated August 25, 2025 (the “Registration Rights Agreement”). The Waiver and Consent waived the compliance of the September 29, 2025 filing date and extended the deadline for the Company to file the initial resale registration statement with the Securities and Exchange Commission to the 60th calendar day following the Closing Date, as defined in the Registration Rights Agreement. The initial resale registration statement was filed on October 23, 2025. Controlled Equity Offering On September 2, 2025, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with each of Cantor Fitzgerald & Co. (“Cantor”) and Aegis Capital Corp. (“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”). Subject to the terms and conditions of the Sales Agreement, Cantor will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell the ATM Shares from time to time, based upon the Company’s instructions. The Company has provided the Agents with customary indemnification and contribution rights in favor of the Agents, and the Agents will be entitled to a commission of 3.0% of the gross proceeds from each sale of the ATM Shares pursuant to the Sales Agreement. Sales of the ATM Shares, if any, under the Agreement may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act or by any other method permitted by law. The Company has no obligation to sell any of the ATM Shares and may at any time suspend offers under the Sales Agreement or terminate the Sales Agreement. The Common Stock to be sold under the Sales Agreement, if any, will be issued and sold pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-274146), which was filed with the SEC on August 22, 2023, as amended on August 29, 2023 and declared effective by the SEC on September 5, 2023 and a registration statement on Form S-3 (File No. 333-289980) filed pursuant to Rule 462(b) under the Securities Act for the purpose of registering additional securities available to be sold under the registration statement on Form S-3 (File No. 333-274146) (collectively, the “Registration Statement”), including a base prospectus as part of the Registration Statement, and a prospectus supplement dated September 2, 2025 relating to the offer and sale of the ATM Shares pursuant to the Sales Agreement. During the year ended December 31, 2025, the Company issued approximately 2.2 M shares of common stock under the Sales Agreement and received net proceeds from the Sales Offering of approximately $ 18.9 M after fees paid to the Agents and other offering expenses of $ 998,000 . F- 21 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 10. Stockholders’ Equity (continued) 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 $ 18.2 M, of which $ 4.2 M was used to repay the outstanding Notes (see Note 9). 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 $ 12.6 M and 17,520 (pre-reverse – 5,255,900 ) Pre-Funded Units with gross proceeds of $ 7.4 M. 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 were immediately exercisable and could 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. 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 $ 87.60 (pre-reverse - $ 0.292 ) after Shareholder approval. Shareholder approval was obtained on March 28, 2025. On August 25, 2025, the Company entered into an amendment (the “Series A Amendment”) with certain warrant holders which references the Series A Warrants (the “Existing Warrants”) in the amount of 328,196 shares of Common Stock, reflective of the reverse stock split, underlying the Existing Warrants. Pursuant to the Series A Amendment, the holders of the Existing Warrants agreed to reduce the exercise price of their Existing Warrants from $ 87.60 per share to $ 6.50 per share. Subsequent to the Series A Amendment, 315,805 of the Series A warrants were exercised and the Company received net proceeds of 1,954,547 (see Note 12). 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 828 (pre-reverse – 248,430 ) shares (the “Shares”) of Common Stock, par value $ 0.0001 per share of the Company at a price of $ 585 per share (pre-reverse -$ 1.95 ) for gross proceeds to the Company of $ 484,438 before deducting placement agent fees and commissions of $ 84,671 with net proceeds, after reflecting par value, have been recorded in Additional Paid in Capital of $ 399,793 . The Shares issued in the offering were offered at-the-market under Nasdaq rules and pursuant to the Company’s Form 1-A (the “Offering Statement”), initially filed by the Company with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933 (the “Securities Act”), as most recently amended on November 18, 2024, and qualified on December 3, 2024. F- 22 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 10. Stockholders’ Equity (continued) On September 23, 2024, as noted in Note 9, in connection with the Securities Purchase Agreement and Note, the Company issued 864 (pre-reverses – 259,091 ) shares of unregistered common stock. The shares were subsequently registered by the Company with the Securities 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 636 (pre-reverse - 190,773 ) shares (the “Shares”) of Common Stock, par value $ 0.0001 per share of the Company at a price of $ 2,589 (pre-reverse -$ 8.63 ) and received gross proceeds to the Company of $ 1.6 M, before expenses to the placement agent and other offering expenses of $ 298,000 with net proceeds, after reflecting par value, have been recorded in Additional Paid in Capital of $ 1,296,903 . The shares issued in the offering were offered at-the-market under Nasdaq rules and pursuant to the Company’s Form 1-A (the “Offering Statement”), initially filed by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended on May 21, 2024, and qualified on May 30, 2024. 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 1,666 (pre-reverses - 499,932 ) warrants to purchase shares of the Company’s common stock, par value $ 0.0001 per share. Pursuant to the anti-dilution terms in the Inducement Agreement, the exercise price of the existing warrants was reduced from $ 4,224 (pre-reverse -$ 14.08 ) per share to $ 2,178 (pre-reverse -$ 7.26 ) per share. In addition, for each warrant that was exercised, as a result of the Inducement Agreement, the Company agreed to issue the Warrant Holders unregistered warrants with an exercise price of $ 2,970 (pre-reverse - $ 9.90 ) per share (“Inducement Warrants”). In the aggregate, 869 (pre-reverses - 260,799 ) warrants were exercised as a result of the Inducement Agreement and accordingly, 869 shares were issued. The Company received gross proceeds of $ 1.9 M before expenses to the placement agent and other expenses of $ 285,000 . The net proceeds, after reflecting par value, has been recorded in Additional Paid in Capital of $ 978,955 and with respect to the Inducement Warrants, a liability under ASC 815 was recorded in the amount of $ 693,064 . The Company recorded a fair value charge in 2024 to reflect the modification of the exercise price at the initial inducement date for the non-trading warrants relating to the February and September 2023 warrants below. 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 568 (pre-reverses - 170,454 ) units (“Units”), each consisting of one share of common stock and two warrants, to purchase one share of common stock for each whole warrant , with an initial exercise price of $ 28,050 (pre-reverse -$ 93.50 ) per share, adjusted to and with the effect of reverse splits in April 2025 and October 2024, $ 10,296 at February 3, 2023 and to $ 4,224 at September 29, 2023 and to $ 2,178 at May 30, 2024, based on anti-dilution terms in the warrants, and a term of five years . In addition, the Company granted Aegis Capital Corp., as underwriter a 45-day over-allotment option to purchase up to 15% of the number of shares included in the units sold in the offering, and/or additional warrants equal to 15% of the number of Warrants included in the units sold in the offering, in each case solely to cover over-allotments , which the Aegis Capital Corp. partially exercised with respect to 170 (pre-reverse - 51,136 ) warrants on April 19, 2022. 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 $ 14.2 million. The net proceeds, after reflecting par value, has been recorded in Additional Paid in Capital of $ 9.0 million and with respect to the Warrants an initial liability under ASC 815 of $ 5.2 M (See Note 12). Warrants a) In connection with the strategic advisory consulting agreement entered into on August 28, 2025, with Sol Markets, a Cayman Islands exempt company, the Company issued warrants to purchase 6,321,367 shares of the Company’s Common Stock. The warrants have an exercise price of $ 0.0001 , a ten-year term and were fully vested on issuance. The FMV of the warrants recorded for the year ended December 31, 2025, which was computed based on the market value of the underlying common stock, was $ 101,331,513 (See Notes 12 and 15). F- 23 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 10. Stockholders’ Equity (continued) b) 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. Subsequent to Shareholder approval of the price adjustment on March 28, 2025 and through December 31, 2025, 54,762 (pre-reverse- 16,258,571 ) Series B warrants were exercised under the alternative cashless feature. At March 31, 2025, Fair Value was determined as follows: Series A at $ 8.52 (pre-reverse - $ 0.0284 ) using the Black Scholes valuation method and Series B at the contracted value for the alternative cashless value of $ 9.00 (pre – reverse - $ 0.03 ) (See Note 12 for the Black Scholes assumptions). At December 31, 2025, 5,307 (pre-reverse 1,595,100 ) Series B warrants remain outstanding. As noted, as a result of the Series A Amendment, at December 31, 2025, the outstanding 12,391 Series A warrants no longer meet the liability classification under accordance with ASC 480 “Distinguishing Liabilities from Equity”. For the year ended December 31, 2025, the Fair Value adjustments relating to the Series A, through the date accounted for as liability treatment and Series B warrants, aggregated $4.7M. c) In September 2024, the Company reduced the exercise price of the 767 (pre-reverse – 230,091 ) outstanding warrants issued in February 2023 and September 2023 offerings (see below) to $ 2,178 (pre-reverse - $ 7.26 ). As noted below, all the February 2023 and September 2023 warrants are fully exercised. d) In connection with the Inducement Warrants in the second quarter of 2024, the Company issued 869 (pre-reverse - 260,799 ) 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. As of December 31, 2025, 453 warrants are outstanding. The Inducement Warrants are recorded at the FMV, computed using the Black Scholes valuation method and, recorded a FMV gain adjustment of $ 82,351 for the year ended December 31, 2025. For the year ended December 31, 2024, the Company recorded a FMV gain (loss) adjustment of $ 707,684 including the modification charge of $( 637,316 ). e) In connection with an advisory agreement dated February 27, 2025, whereby the advisor and the Company agreed 72,094 warrants would be issued May 5, 2025, for services rendered beyond a cash fee of $ 45,000 paid at date of the agreement. The warrants have an exercise price of $ 5.02 , a three-year term and were fully vested on issuance. The FMV of the warrants recorded for the year ended December 31, 2025, was computed using the Black Scholes valuation model was $ 260,566 . The assumptions for warrants were: a) volatility of 139.593 %, risk free interest rate of 3.71 % and 0 % dividend rate. In connection with a one-year advisory services arrangement with the above third-party entered into in April 2023, the Company issued an aggregate of 95 (pre-reverse - 28,636 ) warrants over the one-year term, at an exercise price of $ 10,296 (pre-reverse -$ 34.32 ) The warrants had a three-year term and were fully vested on issuance. The Company issued 6,136 (Pre- reverse – 135,000 ) during the year ended December 31, 2024. The FMV of the warrants recorded for the year ended December 31, 2024, computed using the Black Scholes valuation model was $ 8,590 . The assumptions for the year ended December 31, 2024, were: a) expected volatility – 33.46 % to 81.62 %, c) risk free rate- 4.2 % to 4.25 % and d) dividend rate – 0 %. The warrant holder forfeited the warrants on June 1, 2025 for no further consideration. F- 24 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 10. Stockholders’ Equity (continued) f) In connection with the Private Placement in September 2023, the Company issued 1,326 (pre-reverse - 397,727 ) 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 Scholes 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 year ended December 31, 2024, the Company recorded a FMV gain (loss) adjustment of $ 707,684 including the modification charge of $ ( 637,316 ) . The warrants were fully exercised in 2024. g) In connection with the Offering in February 2023, the Company issued 341 (pre-reverse - 102,206 ) 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 Scholes valuation method. The Offering Warrants are classified as a liability based on ASC 815. For the year ended December 31, 2024, the Company recorded FMV gain (loss) adjustments of $ 214,019 , including a modification charge of $ ( 153,640 ) referred to in Note 12. The warrants were fully exercised in 2024. h) In connection with the IPO in April 2022, the Company issued 1,136 (pre-reverse - 340,900 ) 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 years ended December 31, 2025 and 2024, the Company recorded a FMV gain adjustment of $ 15,645 and 1,135,728 respectively. i) The Company has issued 36 (pre-reverse – 10,695 ) Warrants (“Note Warrants”) to the Purchasers of the Notes on April 19, 2022. The Note Warrants have an exercise price of $ 28,050 (pre-reverse - $ 93.50 ) and a term of five years. During the years ended December 31, 2025 and 2024, the Company recorded a FMV gain of $ 429 and $ 30,159 , respectively. j) The underwriter received 28 (pre-reverse - 8,523 ) warrants in connection with the IPO for a nominal cost of $ 11,250 . The Warrants have an exercise price of $ 35,112 (Pre-reverse - $ 117.04 ) and are exercisable after October 9, 2022. The FMV at the date of issuance was $ 228,750 computed using the Black Scholes valuation model with the following assumptions: a) volatility of 93.47 %, 5 five-year term, risk free interest rate 2.77 % and 0 % dividend rate. These warrants were recorded in Equity at the estimated FMV and classified as additional issuance costs. Share Repurchase Program On October 2, 2025, the Board of Directors of the Company 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. See note 20. F- 25 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 11. Preferred Stock In February 2018, Board of Directors of the Company issued one share of Series A Preferred Stock to Alan Blackman, the Company’s co-founder and Director. The Series A Preferred Stock entitled the holder to vote on any matters related to the election of directors. The Series A Preferred Stock had no right to dividends, or distributions in the event of a liquidation and is not convertible into common stock. The two year provision after the IPO that if the price per share was more than 500% of the initial offering price per Unit in the IPO, the Series A Preferred Stock, as in effect upon completion of the IPO, will entitle the holder to 10 % of the total purchase price was not met and no longer in effect as of April 2024. In connection with final settlement with Mr. Blackman on August 2024, the Series A Preferred Stock was 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). On July 15, 2025, the Company executed a Subscription and Investment Agreement (the “Subscription Agreement”) with Paul Danner (“Subscriber”), the Company’s Principal Executive Officer, formally Executive Chairperson, whereby the Subscriber purchased five shares of the Company’s Series B Preferred Stock, par value $ .0001 per share (“Securities”), which Securities shall have the rights, preferences, privileges and restrictions set forth in the Certificate of Designation. Subscriber hereby acknowledged and agreed to the entire terms of the Certificate of Designation, including, without limitation, the voting rights, the restrictions on transfer of the Securities and the redemption of the Securities pursuant of the Certificate of Designation. The purchase price paid by the Subscriber to the Company was $ 20.00 per share. The outstanding shares of Preferred Stock were redeemed in whole automatically upon the effectiveness of the amendment to the articles of incorporation implementing an increase in the number of authorized shares of common stock of the Company. Note 12. Warrants The following denotes, as of December 31, 2025 and 2024, the Warrants outstanding and related Warrant Liability for warrants accounted for under ASC 480 “Distinguishing Liabilities from Equity”. 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 were remeasured based on the Black Scholes method, with changes in fair value presented within the consolidated statement of operations through August 25, 2025, the date of the Series A Amendment agreement, using the following assumptions for the 2025 period outstanding (See Note 10). Schedule of Fair Value of Warrant Expected term (years) 4.08 to 4.83 Expected volatility 148 % to 207 % Risk-free interest rate 3.59 % to 3.80 % 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 December 31, 2025 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 May 2024 offering, were valued using the Black-Scholes pricing model. The assumptions as of the years ended December 31, 2025, relate to the May 2024 warrants were as follows (See Note 10): December 31, 2025 December 31, 2024 Expected term (years) 4.08 to 4.83 3.37 to 5.99 Expected volatility 148 % to 207 % 59 % to 121 % Risk-free interest rate 3.59 % to 3.88 % 3.41 to 4.56 % Dividend rate - - The Warrant liability at December 31, 2025 and 2024 was as follows: Schedule of Warrant Liability 2025 2024 Trading and Overallotment Warrants $ 37 $ 15,681 Note Warrants 1 428 Offering Warrants – May 2024 453 82,804 Offering Warrants – January 2025 - Series B 96,952 - Total Warrant Liability $ 97,443 $ 98,913 F- 26 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 12. Warrant Liability (continued) The Warrants outstanding at December 31, 2025 and December 31, 2024, reflective of the reverse split that occurred on April 28, 2025, were as follows: Schedule of Warrant Outstanding December 31, 2025 December 31, 2024 Trading and Overallotment Warrants 1,335 1,335 Note Warrants 36 36 Offering Warrants – May 2024 453 869 Offering Warrants -January 2025 -Series A 12,391 - Offering Warrants – January 2025 – Series B 5,307 - Prefunded – cash and in kind 37,717,312 - Cash and stapled warrants 63,213,672 - Warrants issued to strategic advisor 6,321,367 - Warrants issued for services arrangement 72,094 95 Total Warrants Outstanding 107,343,967 2,335 For the year ended December 31, 2025, the FMV gain adjustment, which is reflected in the FMV adjustment on Warrants in the Consolidated Statements of Operations was $ 4,803,098 , including the net effect for the loss on the January 2025 Offering date (See Note 10), a modification charge of $ 642,805 in connection with the Inducement Agreement relating to the Series A warrants and remeasurement adjustments based on the fair market values or through the exercise dates or date the warrants ceased being treated as liabilities (See Note 10). For the year ended December 31, 2024, the FMV gain adjustment, which is reflected in the FMV adjustment on Warrants in the Consolidated Statements of Operations was $ 3,016,936 (See Note 10). Note 13. Stock Options On August 22, 2025, subsequent to the Board approval on July 15, 2025, the shareholders approved the Sharps Technology, Inc. 2025 Equity Incentive Plan (the “2025 Plan”), to provide for the issuance of up to 2,000,000 options and/or shares of restricted stock be available for issuance to officers, directors, employees and consultants. 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 883 (pre-reverse – 260,000 ) options and/or shares of restricted stock be available for issuance to officers, directors, employees and consultants. 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 212 (pre -reverse - 63,636 ) 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 530 (pre-reverse – 159,090 ) options and/or shares of restricted stock. The 2023 Plan was approved by shareholders at the annual meeting. In August 2025, 1,585,000 stock options were granted to directors, executives and other employees and consultants with an exercise price of $ 6.41 , a term of 10 years and vesting 25% upon grant and the remainder 25% per quarter over the following nine months. Also in August 2025, 200,000 options were granted to former employees and directors with immediate vesting and a term of 10 years. In October 2025, an additional 150,000 options were granted to a director and certain employees with a term of 10 years and vesting 25% upon grant and the remainder 25% per quarter over the following nine months. The above options to purchase shares of the Company’s common stock, par value $ 0.0001 per share, which were granted pursuant to the Company’s 2025 Equity Inventive Plan, have grant prices based on the closing price on the respective grant dates. During the year ended December 31, 2024, the Company granted five-year options to purchase a total of 211 shares of the Company’s common stock, par value $ 0.0001 per share to its directors, executive officers, employees and consultants pursuant to the Company’s 2023 Equity Incentive Plan. The options are exercisable at an average price of $ 6.27 per share which was based on the closing price on the respective grant dates. A summary of options granted and outstanding is presented below and the table following reflecting effect of the reverse split of 1 for 300 in 2025: Schedule of Stock Options Granted and Outstanding 2025 2024 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Outstanding at beginning of year 507 $ 12,561 365 $ 20,136 Granted 1,935,000 6.35 211 1,881 Forfeited/cancelled ( 60,025 ) $ 6.88 ( 69 ) $ 20,700 Outstanding at end of year 1,875,482 $ 9.76 507 $ 12,561 Exercisable at end of year 1,050,480 $ 12.39 438 $ 13,980 F- 27 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 13. Stock Options (continued) As of December 31, 2025 and December 31, 2024, there was $ 4,564,610 and $ 134,807 , respectively, of unrecognized stock-based compensation related to unvested stock options, which is expected to be recognized over a weighted-average period of six months as of December 31, 2025. The following table summarizes information about options outstanding at December 31, 2025: 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 $ 5.78 to 6.41 1,875,000 - 9.67 1,050,000 - $ 1,782 to 1,881 188 - 2.75 186 - $ 5,412 to 6,072 6 - 2.58 6 - $ 7,986 to 9,174 162 - 1.33 162 - $ 11,550 8 - .24 8 - $ 18,480 21 - .30 21 - $ 25,875 31 - 0 31 - $ 19,750 66 - 0 66 - For the years ended December 31, 2025, and 2024 the Company recognized stock-based compensation expense of $ 5,876,095 and $ 512,240 related to stock options. The fair value of stock option awards accounted for under ASC 718 was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions for the options granted during the years ended December 31, 2025 and 2024. Schedule of Fair Value of Stock Option Awards 2025 2024 Expected term (years) 5.00 to 5.19 2.66 to 3.06 Expected volatility 125.19 % to 125.39 % 81.15 % to 83.04 % Risk-free interest rate 3.56 % to 3.72 % 4.71 % to 4.76 % Dividend rate - - F- 28 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 14. Income Taxes The company has adopted Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” on a prospective basis for the year ended December 31, 2025. A reconciliation of the Federal statutory rate of 21 % for the year ended December 31, 2025 to the total effective rate applicable to income (loss) is as follows: Schedule of Reconciliation of Federal Statutory Rate to Total Effective Rate Year Ended December 31, 2025 Amount Percent Income tax expense/(benefit) at federal statutory rate $ ( 56,770,441 ) 21.00 % State and local income tax, net of federal benefit - 0.00 % Foreign tax effects Cayman Islands - 0.00 % Foreign rate differential 33,010,332 - 12.21 % Others 1,177 0.00 % Changes in tax laws or rates enacted - 0.00 % Effects of cross-border tax laws U.S. impact of branch income ( 33,011,509 ) 12.21 % Tax credits - 0.00 % Changes in valuation allowance 59,342,616 - 21.95 % Nontaxable or nondeductible items US impact from sale of Hungary entity ( 2,232,678 ) 0.83 % FMV adjustment for derivatives ( 1,008,652 ) 0.37 % Others 669,154 - 0.25 % Income tax expense (benefit) $ - 0.00 % As previously disclosed for the year ended December 31, 2024, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows: Year Ended December 31, 2024 Amount Percent Expected benefit at statutory federal tax rate $ ( 1,097,306 ) 21.00 % Permanent differences - net ( 633,540 ) 12.12 % State and local taxes, net of federal tax benefit - 0.00 % Other - 0.00 % Change in valuation allowance 1,730,846 - 33.12 % Income tax expense (benefit) $ - 0.00 % The components of the Company’s deferred tax assets (liabilities) are as follows – Schedule of Components of Deferred tax Assets Year Ended December 31, 2025 Year Ended December 31, 2024 Deferred tax assets (liabilities): Fixed assets, net of impairments $ - $ 136,529 Interest 35,178 35,178 Research and development expenses - 446,811 Stock-based compensation 2,292,881 1,004,182 Charitable contributions 420 420 Net operating losses - federal 13,511,867 6,253,513 Net operating losses – state and local 528,982 543,264 Net operating losses - foreign - - Research credit 28,985 28,985 Digital Assets – SOL basis differences 12,609,073 - Digital Assets – inflationary rewards ( 999,277 ) - Capital loss carryover 2,232,678 - Compensatory warrants 17,548,397 - Others 87,963 - Less valuation allowance ( 47,877,147 ) ( 8,448,882 ) Net deferred tax assets (liabilities) $ - $ - The authoritative guidance requires the asset and liability method of accounting for deferred income taxes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities. Deferred tax assets or liabilities at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. The guidance also requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. A review of all available positive and negative evidence needs to be considered, including a company’s current and past performance, the market environment in which the company operates, length of carryback and carryforward periods and existing contracts that will result in future profits. After reviewing all the evidence, the company has recorded a full valuation allowance. As of December 31, 2025, the Company had U.S. federal net operating loss carryforwards of approximately $ 64,342,000 of which $ 241,000 , if not fully utilized, expires by 2038 and of which $ 64,101,000 do not expire. Also, the Company had U.S. federal capital loss carryforwards of approximately $ 10,632,000 all of which, if not fully utilized, expires by 2031. Utilization is dependent on generating sufficient taxable income prior to expiration of the tax loss carryforwards and capital loss carryforward is only utilizable against future capital gains. Utilization of the U.S. net operating losses may be subject to substantial limitations in the event of a change of ownership under the provisions of Section 382 of the Internal Revenue Code. The Company has not performed an analysis, but the potential impact of any limitation would not be material to the financial statements due to the fact that the respective deferred taxes assets are fully offset by a valuation allowance. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company has concluded OBBBA will have an immaterial impact on its income tax provision. As of December 31, 2025, the liability for uncertain tax positions is zero and the Company believes that no liability for unrecognized tax benefits is required in relation to the potential for additional assessments. The geographical components of loss before income taxes consisted of the following for the years ended December 31: Schedule of Geographical Components of Loss Before Income Taxes Year Ended Year Ended December 31, December 31, 2025 2024 United States operations $ ( 113,137,182 ) $ ( 5,225,266 ) International operations ( 157,198,254 ) - Loss before taxes $ ( 270,335,436 ) $ ( 5,225,266 ) For the years ended December 31, 2025 and December 31, 2024, cash paid for taxes, net of refunds, are as follows – Schedule of Cash Paid for Taxes, Net of Refunds Year Ended Year Ended December 31, December 31, 2025 2024 Federal $ - $ - State - - Foreign - - Total tax payments $ - $ - F- 29 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 15. Related Party Transactions and Balances As of December 31, 2025 and December 31, 2024, accounts payable and accrued liabilities include $ 26,572 and $ 99,500 , respectively, payable to officers and directors of the Company. The amounts are unsecured, non-interest bearing and are due on demand, including both director fees and reimbursable expenses. Consulting services provided by Sol Edge Limited (“Consultant”) during the year ended December 31, 2025 was $ 3,333,333 . At December 31, 2025, the Company recorded a prepaid expense of $ 6,666,667 relating the annual payment under the Consulting Agreement (See Notes 3 and 17). In connection with a strategic advisory consulting agreement entered into on August 28, 2025, with Sol Markets, (the “Strategic Advisor”) a related party, the Company issued warrants to purchase 6,321,367 shares of the Company’s Common Stock. The FMV of the warrants recorded for the year ended December 31, 2025, which was computed based on the market value of the underlying common stock, was $ 101,331,513 (See Notes 10 and 20). The Company also incurred an expense of $ 100,000 in 2025 pursuant to a consulting agreement with Sol Markets for marketing services. Both the Consultant and the Strategic Advisor are wholly-owned and controlled by James Zhang, the brother of Alice Zhang, our Chief Investment Officer and director. Note 16. Fair Value Measurements The Company’s financial instruments include cash, digital assets, accounts payable, loans and notes payable and warrant liability. Cash, digital assets and warrant liability are measured at fair value. Accounts payable and loans and notes payable are measured at amortized cost and approximate fair value due to their short duration and market rate for similar instruments, respectively. As of December 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 $ 10,382,745 $ - $ - $ 10,382,745 USDC 1 - - 1 USDT 1 - - 1 Digital assets 177,425,549 - - 177,425,549 Digital assets, Locked SOL - 72,685,576 - 72,685,576 Total assets measured at fair value $ 187,808,296 $ 72,685,576 $ - $ 260,493,872 Liabilities Derivative liability, net $ - $ - $ - $ - Warrant liability - 97,450 - 97,450 Total liabilities measured at fair value $ - $ 97,450 $ - $ 97,450 F- 30 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 16. 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 $ 864,041 - - $ 864,041 Total assets measured at fair value $ 864,041 - - $ 864,041 Liabilities Warrant liability $ - $ 98,913 - $ 98,913 Total liabilities measured at fair value $ - $ 98,913 - $ 98,913 Note 17. Commitments and Contingencies 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. Fixed Assets and Other At December 31, 2025, the Company had outstanding orders to purchase manufacturing equipment, including injection molds, with a total remaining balance of approximately $ 1.6 M (See Note 20). Consulting Agreement On August 28, 2025 (the Effective Date”), the Company entered into (i) a consulting agreement (the “Consulting Agreement”) with Sol Edge Limited (the “Consultant”) pursuant to which the Consultant will provide consulting and related services to us with respect to our Treasury Policy and (ii) a strategic advisor agreement (the “Strategic Advisor Agreement”) with Sol Markets, a Cayman Islands exempt company (“Strategic Advisor”) pursuant to which the Strategic Advisor will provide strategic advice and guidance relating to our business, operations, growth initiatives and industry trends in the crypto technology sector. Based on terms of the Consulting Agreement the Company transferred stablecoin valued at $10M for the initial annual period. For the year ended December 31, 2025, the Company recorded an expense of $3.3 million for the services provided, as described above, from August 28, 2025 through December 31, 2025 with a remaining prepaid expense of $6.7M. For all future periods, we have agreed to pay the Consultant a monthly fee equal to 2% in the aggregate on amounts up to and including $1,000,000,000 in Account value, 1.75% in the aggregate on amounts above $1,000,000,000 up to and including $1,500,000,000 in Account value, and 1.5% in the aggregate on amounts above $1,500,000,000 in Account value as of such measurement date divided by 12, beginning on August 27, 2026. We have agreed to pay to the Consultant such fee, at its option, in the form of USDC, USDT, SOL, or some combination thereof. Under the Strategic Advisor Agreement, the Strategic Advisor was issued warrants (See Note 12). Both the Consultant and the Strategic Advisor are wholly-owned and controlled by James Zhang, the brother of Alice Zhang, our Chief Investment Officer and Director. This Consulting Agreement commenced on the Effective Date and shall continue in full force and effect for a term of 20 years (the “Term”), unless earlier terminated in accordance with Section 13(c). Thereafter, the Consulting Agreement may be renewed for additional periods as mutually agreed in writing by the Parties. If this Consulting Agreement is terminated by the Company for any reason during the Term, or if the Consultant terminates this Consulting Agreement due to a material breach by the Company, the Company shall pay to the Consultant, as liquidated damages and not as a penalty, an amount equal to all fees and other compensation that would have accrued to the Consultant under this Agreement from the date of termination through the end of the Term, paid monthly throughout the Term in accordance with the payment provisions herein. Note 18. Segment Reporting We determine operating segments based on metrics that our Chief Operating Decision Makers (“CODM”) review internally to manage our business, including resource allocation and performance assessment. In 2025, as a result of the previously mentioned treasury policy, management re-evaluated our segment reporting structure and determined that we now operate in two reportable segments other than our corporate activities. Our CODM regularly review financial results based on the two operating segments consisting of Medical Device Packaging and Digital Asset Treasury. Medical Device: This segment is responsible for executing and managing the Company’s medical device sales and distribution business. Digital Asset Treasury: This segment is responsible for executing and managing the Company’s treasury platform. The CODM uses segment operating income (loss) to evaluate operating segment performance and allocate resources. F- 31 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 18. Segment Reporting (continued) Segment income (loss) excludes the impact of income taxes, interest expense, and certain other income (expense) items, as these are managed at the corporate level. We do not prepare separate balance sheets by operating segment for the CODM, as assets are not evaluated as part of operating segment performance and resource allocation. We provide the CODM depreciation and amortization expense and impairment charges that are generated from operating segment-specific assets, as these are included in segment net (loss). The accounting policies for the segment information are the same as described in Note 2 - Summary of Significant Accounting Transactions. Transactions between segments are reported as if each were a stand-alone business and are eliminated in consolidation. Historically, the Medical Device segment has included manufacturing. Accordingly, for the years ending December 31, 2025 and 2024 respectively, approximately $ 1.5 million and $ 2.3 million medical device segment expenses were included as part of discontinued operations. Certain payroll and consultant expenses were allocated among segments on the basis of the estimated percentage of time spent on each segment. The following table presents the Company’s segment results for the year ended: Schedule of Company’s Segment Medical Device Packaging Digital Assets Corporate Consolidated Medical Device Packaging Corporate Consolidated TWELVE MONTHS ENDED DECEMBER 31, TWELVE MONTHS ENDED DECEMBER 31, 2025 2025 2025 2025 2024 2024 2024 Medical Device Packaging Digital Assets Corporate Consolidated Medical Device Packaging Corporate Consolidated Net Revenue $ 204,120 - - 204,120 $ - - - Cost of goods sold 198,576 - - 198,576 - - - Cost of goods - inventory reserve 418,869 - - 418,869 - - - Total cost of goods sold 617,445 - - 617,445 - - - Gross Margin (Loss) ( 413,325 ) - - ( 413,325 ) - - - Staking Revenue - 6,805,009 - 6,805,009 - - - Operations: Warrant issuance – related party - 101,331,513 - 101,331,513 - - - Consulting fees – related parties - 3,433,333 - 3,433,333 Selling, general and administrative 132,539 1,079,853 14,839,676 16,052,069 472,604 4,563,763 5,036,367 Research and development 198,762 - - 198,762 531,233 - 531,233 Unrealized loss on digital assets - 152,952,163 - 152,952,163 - - - Realized loss on digital assets - 1,286,284 - 1,286,284 Digital asset transaction expenses - 872,934 - 872,934 - - - Total operating expenses 331,301 260,956,081 14,839,676 276,127,058 1,003,837 4,563,763 5,567,600 Loss from operations ( 744,626 ) ( 254,151,072 ) ( 14,839,676 ) ( 269,735,373 ) ( 1,003,837 ) ( 4,563,763 ) ( 5,567,600 ) Other income (expense): Interest income (expense) - ( 20,556 ) ( 396,105 ) ( 416,660 ) - ( 1,664,712 ) ( 1,664,712 ) FMV adjustment on warrants - - 4,803,098 4,803,098 - 3,016,936 3,016,936 Realized loss on derivatives - ( 4,986,500 ) - ( 4,986,500 ) - - - Other income (expense): - - - - - ( 1,009,891 ) ( 1,009,891 ) Total Other income (expense) - ( 5,007,056 ) 4,406,993 ( 600,063 ) - 342,333 342,333 Loss from Continuing Operations ( 744,626 ) ( 259,158,127 ) ( 10,432,683 ) ( 270,335,436 ) ( 1,003,838 ) ( 4,221,429 ) ( 5,225,266 ) Discontinued Operations: Loss from discontinued operations ( 11,220,342 ) - - ( 11,220,342 ) ( 4,100,935 ) - ( 4,100,935 ) Loss on disposal ( 1,078,348 ) - - ( 1,078,348 ) - - - Income tax benefit 132,000 - - 132,000 30,000 - 30,000 Loss from Discontinued Operations ( 12,166,690 ) - - ( 12,166,690 ) ( 4,070,935 ) - ( 4,070,935 ) Net Loss ( 12,911,316 ) ( 259,158,127 ) ( 10,432,683 ) ( 282,502,126 ) ( 5,074,772 ) ( 4,221,429 ) ( 9,296,201 ) Total Consolidated Assets $ 849,388 $ 257,253,661 $ 10,972,124 $ 269,075,173 $ 564,029 $ 2,311,513 $ 2,875,542 Note: Net Loss by Segment includes Corporate, although not a reportable segment, only for reconciliation to the consolidated statement of operations. F- 32 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 19. Discontinued Operations On October 6, 2025, the Company entered into definitive agreements, including a bill of sale, assignment and assumption agreement providing for the transfer by the Company 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, the Hungarian subsidiary, which is reflected in the accompanying financial statements as a discontinued operation. Loss from discontinued operations for 2025 and 2024 was as follows: Schedule of Discontinued Operations December 31, December 31, 2025 2024 Net revenue $ 102,224 $ - Cost of goods sold $ 758,664 $ - Cost of goods - inventory reserve $ 1,532,813 $ - Gross Margin (Loss) $ ( 2,189,253 ) $ - OPERATING EXPENSES: Selling, general and administrative $ 2,004,097 $ 2,118,581 Research and development $ 53,376 $ 170,529 Fixed asset impairment $ 7,497,669 $ 1,770,000 Total Operating Expenses $ 9,555,142 $ 4,059,110 OTHER INCOME (EXPENSE): Foreign currency and other $ 524,052 $ ( 41,825 ) Loss on disposal $ ( 1,078,347 ) - Total Other Income (Expense) $ ( 554,295 ) $ ( 41,825 ) Loss before income taxes (benefit) $ ( 12,298,690 ) $ ( 4,100,935 ) Income tax benefit $ 132,000 $ 30,000 Net loss from Discontinued Operations $ ( 12,166,690 ) $ ( 4,070,935 ) The major components of assets and liabilities related to discontinued operations are summarized below: December 31, December 31, 2025 2024 Cash and cash equivalents $ - $ 109,239 VAT receivable - 102,493 Inventory, net - 1,328,841 Prepaid expenses and other current assets - 5,358 Fixed assets, net - 2,859,772 Other assets - 32,503 Total assets related to discontinued operations - 4,438,206 Accounts payable - 283,392 Deferred tax liability - 132,000 Total liabilities related to discontinued operations - 415,392 The following table provides information for loss on disposal of discontinued operation for the year ended December 31, 2025: Total consideration $ - $ - Net assets of discontinued operations ( 1,078,347 ) - Loss on disposal ( 1,078,347 ) - Also related to the discontinued operation, as of December 31, 2025, the Company had approximately $ 1.6 M in remaining commitments for machinery purchases. These commitments were subsequently assumed by a third party in March 2026 (See Notes 17 and 20). F- 33 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Note 20. Subsequent Events Share Repurchases Pursuant to the 2025 Repurchase Program, from January to March 2026, the Company repurchased a total of 867,678 shares of its common stock at a cost of $ 1,571,507 , not including fees of $ 17,354 . Lock-up Agreement On January 15, 2026, the “Company entered into a lock-up agreement with the Strategic Advisor, pursuant to which, for a period of 90 days from the date thereof, the Strategic Advisor has agreed not to offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of any shares of common stock of the Company or securities convertible, exchangeable or exercisable into, shares of common stock of the Company beneficially owned, held or hereafter acquired by the Strategic Advisor. Transfer of Purchase Commitments During March 2026, the Company entered into novation agreements with several parties for the transfer of the remaining equipment purchase commitments related to the discontinued operation totaling approximately $ 1.6 M to a third party, with a full release of the Company from any and all obligations. Margin Loan Repayment The margin loan of $ 3,084,931 outstanding at December 31, 2025 was repaid on February 17, 2026 and the related collateral of 40,000 SOL was released. F- 34 Item 9. Changes in and Disagreements with Accountants None.