SkyAI, Inc. 10-K

Item 8. Financial Statements and Supplementary Data 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, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for the each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Going Concern Uncertainty The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has not generated revenue or cash flow from operations since inception, and does not have an established source of funding sufficient to cover its operating costs. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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 financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the Company’s auditor since 2023. New York, New York March 27, 2025 PCAOB ID No. 127 * * * * * PKF O’CONNOR DAVIES LLP 245 Park Avenue, New York, NY 10167 I Tel: 212.867.8000 or 212.286.2600 I Fax: 212.286.4080 I www.pkfod.com PKF O’Connor Davies LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. F- 1 SHARPS TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS December 31, 2024 December 31, 2023 Assets: Current Assets Cash $ 864,041 $ 3,012,908 Tax Receivable - VAT 102,493 47,949 Escrow Deposit ( Note 7 ) 250,000 - Prepaid expenses and other current assets 89,735 68,559 Inventories, Net ( Note 3 ) 1,867,671 1,709,135 Current Assets 3,173,940 4,838,551 Fixed Assets, net of accumulated depreciation (Notes 4 and 5) 4,035,110 6,822,142 Other Assets (Notes 5 and 6) 104,698 128,575 TOTAL ASSETS $ 7,313,748 $ 11,789,268 Liabilities: Current Liabilities Accounts payable $ 976,548 $ 794,107 Accrued expenses and other 346,536 476,090 Notes Payable, net of discount (Note 7) 3,763,622 - Warrant liability (Notes 8 and 10) 98,913 2,422,785 Total Current Liabilities 5,185,619 3,692,982 Deferred Tax Liability ( Note 12 ) 132,000 162,000 Total Liabilities 5,317,619 3,854,982 Commitments and Contingencies (Note 15) - - Subsequent Events (Note 16) - - Stockholders’ Equity: Preferred stock, $ .0001 par value; 1,000,000 shares authorized; 0 shares issued and outstanding in 2024 (2023: 1 ) - - Common stock, $ 0.0001 par value; 500,000,000 shares authorized; 2,048,183 shares issued and outstanding in 2024 (2023: 694,294 ) 205 69 Additional paid-in capital 36,417,837 32,491,409 Accumulated other comprehensive income 23,293 591,812 Accumulated deficit ( 34,445,206 ) ( 25,149,004 ) Total Stockholders’ Equity 1,996,129 7,934,286 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 7,313,748 $ 11,789,268 The accompanying notes are an integral part of these financial statements. F- 2 SHARPS TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the year ended For the year ended December 31, 2024 December 31, 2023 Revenue, net $ - $ - Operating expenses: Research and development, including impairment of $ 1,770,000 and $ 560,000 in 2024 and 2023 respectively (Note 5) 2,471,762 1,605,547 General and administrative 7,154,948 8,521,103 Total operating expenses 9,626,710 10,126,650 Loss from operations ( 9,626,710 ) ( 10,126,650 ) Other income (expense) Interest income (expense) ( 1,664,712 ) 138,118 FMV adjustment on warrants 3,016,936 169,583 Other (expense) ( 1,009,891 ) - Foreign currency and other ( 41,825 ) ( 52,689 ) Net loss Before Provision for Taxes $ ( 9,326,202 ) $ ( 9,871,638 ) Deferred Tax Benefit 30,000 30,000 Net Loss ( 9,296,202 ) ( 9,841,638 ) Net loss per share, basic and diluted $ ( 7.40 ) $ ( 16.61 ) Weighted average shares used to compute net loss per share, basic and diluted 1,256,217 592,396 The accompanying notes are an integral part of these financial statements. F- 3 SHARPS TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS For the year ended For the year ended December 31, 2024 December 31, 2023 Net loss $ ( 9,296,202 ) $ ( 9,841,638 ) Other comprehensive income: Foreign currency translation adjustments ( 568,519 ) 377,559 Comprehensive loss $ ( 9,864,721 ) $ ( 9,464,079 ) The accompanying notes are an integral part of these financial statements. F- 4 SHARPS TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Shares Amount Shares Amount Receivable Capital Income Deficit Equity Preferred Stock Common Stock Common Stock Subscription Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Shares Amount Receivable Capital Income Deficit Equity Balance – December 31, 2022 1 $ - 427,610 $ 43 $ - $ 24,734,204 $ 214,253 $ ( 15,307,366 ) $ 9,641,134 Net loss for the year ended December 31, 2023 - - ( 9,841,638 ) ( 9,841,638 ) Share-based compensation charges 963,023 963,023 Shares issued in Offering 102,206 10 2,783,375 2,783,385 Shelf Registration Offering – see Note 8 164,478 16 2,457,988 2,458,004 Private Placement Offering – see Note 8 1,552,819 1,552,819 Foreign currency translation 377,559 377,559 Balance – December 31, 2023 1 $ - 694,294 $ 69 $ - $ 32,491,409 $ 591,812 $ ( 25,149,004 ) $ 7,934,286 Balance 1 $ - 694,294 69 $ - $ 32,491,409 $ 591,812 $ ( 25,149,004 ) $ 7,934,286 Net loss for the year ended December 31, 2024 - - ( 9,296,202 ) ( 9,296,202 ) Net loss - - ( 9,296,202 ) ( 9,296,202 ) Share-based compensation charges 520,830 520,830 Issuance of Common Stock 259,091 26 726,324 726,350 Exercise of Pre-Funded Warrants 153,703 15 3,365 3,380 Warrant Inducements 260,799 27 978,955 978,982 Cancellation of Preferred Share ( 1 ) Registration A Offering 439,203 44 1,696,670 1,696,714 Share Round-up from Reverse 1,958 - - - Warrant exercise 239,135 24 284 308 Foreign currency translation ( 568,519 ) ( 568,519 ) Balance – December 31, 2024 0 $ - 2,048,183 $ 205 $ - $ 36,417,837 $ 23,293 $ ( 34,445,206 ) $ 1,996,129 Balance 0 $ - 2,048,183 $ 205 $ - $ 36,417,837 $ 23,293 $ ( 34,445,206 ) $ 1,996,129 The accompanying notes are an integral part of these financial statements. F- 5 SHARPS TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the year ended For the year ended December 31, 2024 December 31, 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 9,296,202 ) $ ( 9,841,638 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 773,904 882,177 Stock-based compensation 520,830 963,023 Accretion of debt discount 1,705,014 - FMV adjustment for warrants ( 3,016,936 ) ( 169,583 ) Fixed asset impairment 1,770,000 560,000 Deferred tax benefit ( 30,000 ) ( 30,000 ) Other Asset Adjustment 28,200 - IPO issuance costs relating to warrants - 205,112 Escrow forfeited 1,000,000 - Foreign exchange (gain)/loss 41,825 44,463 Changes in operating assets: Prepaid expenses and other current assets ( 87,557 ) ( 82,169 ) Inventory ( 350,557 ) ( 1,441,462 ) Other assets - ( 12,735 ) Accounts payable and accrued liabilities 11,935 415,512 Net cash used in operating activities ( 6,929,544 ) ( 8,507,300 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets ( 138,804 ) ( 698,277 ) Other Assets ( 24,333 ) - Escrow payment forfeited under agreement ( 1,000,000 ) - Net cash used in investing activities ( 1,163,137 ) ( 698,277 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from offerings and warrant exercises 3,372,449 8,029,628 Net proceeds from Debt financing 2,735,300 - Repayment of Debt ( 200,342 ) - Net cash provided by financing activities 5,907,407 8,029,628 Effect of exchange rate changes on cash 36,407 17,960 NET INCREASE (DECREASE) IN CASH ( 2,148,867 ) ( 1,157,989 ) CASH — BEGINNING OF YEAR 3,012,908 4,170,897 CASH — END OF YEAR $ 864,041 $ 3,012,908 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ - - Cash paid for taxes - - The accompanying notes are an integral part of these financial statements. F- 6 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 1. Description of Business Nature of Business Sharps Technology, Inc. (“Sharps” or the “Company”) is a pre-revenue medical device company that has designed and patented various safety syringes and is seeking commercialization by manufacturing and distribution of its products. The accompanying consolidated financial statements include the accounts of Sharps Technology, Inc. and its wholly owned subsidiaries, Safegard Medical (Hungary) KFT, collectively referred to as the “Company.” All intercompany transactions and balances have been eliminated. The Company’s fiscal year ends on December 31. On April 13, 2022, the Company’s Initial Public Offering was deemed effective with trading commencing on April 14, 2022. The Company received net proceeds of $ 14.2 million on April 19, 2022 (See Note 8). Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) and are expressed in U.S. dollars. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not generated revenue or cash flow from operations since inception. As of December 31, 2024, the Company used cash in operations of $ 6,929,544 and has cash of $ 864,041 which is not sufficient to fund the Company’s planned operations for the next 12 months. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise sufficient financing to acquire or commercialize its products into a profitable business. The Company intends to finance its future development and commercialization activities and its working capital needs largely from the sale of equity securities and/or with additional funding from other traditional financing sources until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. 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, 2024, the most significant estimates relate to derivative liabilities and stock-based compensation. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are maintained with various financial institutions. At December 31, 2024 and 2023, the Company had no cash equivalents. F- 7 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 2. Summary of Significant Accounting Policies (continued) Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, which is placed with high-credit-quality financial institutions and at times exceeds federally insured limits. To date, the Company has not experienced any losses on its deposits of cash. Inventories The Company values inventory at the lower of cost (average cost) or net realizable value. Work-in-process and finished goods inventories consist of material, labor, and manufacturing overhead. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. A reserve is established for any excess or obsolete inventories or they may be written off. At December 31, 2024 and 2023, inventory is comprised of raw materials, components and finished goods. Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures, require an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value. The Company’s outstanding warrants are fair valued on a recurring basis with the trading price or FMV using Black Sholes which could cause fluctuations in operating results at the reporting periods. Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Valuations are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree of judgment. Level 2 Level 2 applied to assets or liabilities for which there are other than Level 1 observable inputs such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 2 instruments require more management judgment and subjectivity as compared to Level 1 instruments. For instance: determining which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer credit rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced; and determining whether a market is considered active requires management judgment. Level 3 Level 3 applied to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The determination for Level 3 instruments requires the most management judgment and subjectivity. F- 8 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 2. Summary of Significant Accounting Policies (continued) Fixed Assets Fixed assets are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred. The Company’s fixed assets consist of land, building, machinery and equipment, molds, computer system and website. Depreciation is calculated using the straight-line method commencing on the date the asset is operating in the way intended by management over the following useful lives: Building – 20 years, Machinery and Equipment – 3 - 10 years and Computer systems and Website – 3 years. The expected life for Molds is based 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. The Company recorded an impairment of $ 1,770,000 during the year ended December 31, 2024 and $ 560,000 impairment during the year ended December 31, 2023. Purchased Identified Intangible Assets Identified Intangible Assets The Company’s identified intangible assets are amortized on a straight-line basis over their estimated useful lives of 5 years. The Company makes judgments about the recoverability of finite-lived intangible assets whenever facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, the Company assesses recoverability by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, the Company would accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life. The Company evaluates the carrying value of finite-lived intangible assets on an annual basis, and an impairment charge would be recognized to the extent that the carrying amount of such assets exceeds their estimated fair value. Stock-based Compensation Expense The Company measures its stock-based awards made to employees based on the estimated fair values of the awards as of the grant date. For stock option awards, the Company uses the Black-Scholes option-pricing model. For restricted stock awards, the estimated fair value is generally the fair market value of the underlying stock on the grant date. Stock-based compensation expense is recognized over the requisite service period and is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. The Company recognizes forfeitures of stock-based awards as they occur on a prospective basis. Stock-based compensation expense for awards granted to non-employees as consideration for services received is measured on the date of performance at the fair value of the consideration received or the fair value of the equity instruments issued, whichever can be more reliably measured. F- 9 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 2. Summary of Significant Accounting Policies (continued) Derivative Instruments The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC 480”), Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own stock and whether the holders of the warrants could potentially require net cash settlement in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. At their issuance date and as of December 31, 2024, certain warrants (see Notes 8 and 10) are accounted for as liabilities as these instruments did not meet all of the requirements for equity classification under ASC 815-40 based on the terms of the aforementioned warrants. The resulting warrant liabilities are re-measured at each balance sheet date until their exercise or expiration, and any change in fair value is recognized in the Company’s consolidated statements of operations. Foreign Currency Translation/Transactions The Company has determined that the functional currency for its foreign subsidiary is the local currency. For financial reporting purposes, assets and liabilities denominated in foreign currencies are translated at current exchange rates and profit and loss accounts are translated at weighted average exchange rates. Resulting translation gains and losses are included as a separate component of stockholders’ equity as accumulated other comprehensive income or loss. Gains or losses resulting from transactions entered into in other than the functional currency are recorded as foreign exchange gains and losses in the consolidated statements of operations. Comprehensive income (loss) Comprehensive income (loss) consists of the Company’s consolidated net 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, 2024 and 2023. 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 loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the consolidated statements of operations. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Basic EPS in 2023 includes the 153,704 of pre-funded warrants (see Note 8). Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of December 31, 2024, there were 852,994 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- 10 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 2. Summary of Significant Accounting Policies (continued) Income Taxes The Company must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments are used in the calculation of tax credits, tax benefits, tax deductions, and in the calculation of certain deferred taxes and tax liabilities. Significant changes to these estimates may result in an increase or decrease to the Company’s tax provision in a subsequent period. The provision for income taxes was comprised of the Company’s current tax liability and changes in deferred income tax assets and liabilities. The calculation of the current tax liability involves dealing with uncertainties in the application of complex tax laws and regulations and in determining the liability for tax positions, if any, taken on the Company’s tax returns in accordance with authoritative guidance on accounting for uncertainty in income taxes. Deferred income taxes are determined based on the differences between the financial reporting and tax basis of assets and liabilities. The Company must assess the likelihood that it will be able to recover the Company’s deferred tax assets. If recovery is not likely on a more-likely-than-not basis, the Company must increase its provision for income taxes by recording a valuation allowance against the deferred tax assets that it estimates will not ultimately be recoverable. However, should there be a change in the Company’s ability to recover its deferred tax assets, the provision for income taxes would fluctuate in the period of such change. Research and Development Costs Research and development costs are expensed as incurred. Advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the related goods are delivered or the services are performed. Segment Reporting The Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer and Chief Financial Officer. The CODM manages operations and business as one operating segment for the purposes of allocating resources, making operating decisions and evaluating financial performance. Contingencies Liabilities for loss contingencies arising from claims, assessments, litigations, fines and penalties and other sources are recognized when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Gain contingencies are evaluated and not recognized until the gain is realizable or realized. Recent Accounting Pronouncements On August 5, 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) , which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. ASU 2020-06 simplifies the guidance in U.S. GAAP on the issuer’s accounting for convertible debt instruments, requires entities to provide expanded disclosures about “the terms and features of convertible instruments” and how the instruments have been reported in the entity’s financial statements. It also removes from ASC 815-40-25-10 certain conditions for equity classification and amends certain guidance in ASC 260, Earnings per Share , on the computation of EPS for convertible instruments and contracts on an entity’s own equity. An entity can use either a full or modified retrospective approach to adopt the ASU’s guidance. The ASU’s amendments are effective for smaller public business entities fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements and does not expect the adoption of this amended guidance to have a material impact on the Company’s consolidated financial statements when applicable. F- 11 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 2. Summary of Significant Accounting Policies (continued) In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources. The standard is effective for annual reporting periods beginning after December 15, 2023, and interim periods within years beginning after December 15, 2024. The Company adopted the standard. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) : Improvements to Income Tax Disclosures . The new guidance requires disaggregated information about the effective tax rate reconciliation and additional information on taxes paid that meet a quantitative threshold. The new guidance is effective for public companies for annual reporting periods beginning after December 15, 2024, and for non-public companies for annual reporting periods beginning after December 15, 2025, with early adoption permitted for both. The Company will adopt the new standard in the annual reporting period beginning after December 15, 2025 and is currently evaluating the impacts of the new guidance on its disclosures within the consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). The new guidance requires disaggregated information about the entity’s type of expenses into certain categories. The Company will adopt the new standard in the annual reporting period beginning after December 15, 2026 and is will evaluate the impacts of the new guidance on its disclosures within the consolidated financial statements. The Company does not expect the adoption of any accounting pronouncements to have a material impact on the consolidated financial statements. The Company reviewed all other recently issued accounting pronouncements and have concluded they are not applicable or not expected to be significant to the accounting for our operations. Note 3. Inventories Inventories, net consisted of the following at December 31, 2024 and 2023: Schedule of Inventories December 31, 2024 December 31, 2023 Raw materials $ 326,068 $ 254,461 Work in process 81,075 170,464 Finished goods 1,460,528 1,284,210 Total $ 1,867,671 $ 1,709,135 Note 4. Fixed Assets Fixed asset, net, as of December 31, 2024 and 2023, are summarized as follows: Schedule of Fixed Assets, Net December 31, 2024 December 31, 2023 Land $ 227,575 $ 260,460 Building 2,665,117 3,022,490 Machinery and Equipment 2,967,512 4,464,317 Computer Systems and Website & Other 290,661 290,661 Total Fixed Assets 6,150,865 8,037,928 Less: accumulated depreciation ( 2,115,755 ) ( 1,215,786 ) Fixed asset, net $ 4,035,110 $ 6,822,142 Depreciation expense of fixed assets for the year ended December 31, 2024 and 2023 was $ 736,381 and $ 876,064 , respectively. Substantially, all of the Company’s fixed assets are located at the Company’s Hungary location. In the fourth quarter of 2024, the Company recorded, in Research and Development expenses, an asset impairment of $ 1,770,000 relating to Assembly machines, which were included in Machinery and Equipment, due to a decision to discontinue additional capital to modify certain machinery in development for current product requirements. In the fourth quarter of 2023, the Company recorded, in Research and Development expenses, an asset impairment of $560,000 relating to Molds, which were included in Machinery and Equipment, due to a decision to discontinue usage of certain molds not used for current products in production. As of December 31, 2024, the Company has $ 100,000 in remaining payments for machinery purchased payment of which is subject to outstanding claims with the supplier (see Note 15), which is included in accounts payable. F- 12 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 5. Asset Acquisition In June 2020, the Company entered into a Share Purchase Agreement (“Agreement”) with Safegard Medical (“Safegard”) and amendments to the Agreement, collectively, the Agreements, to purchase either the stock or certain assets of a manufacturing facility for $ 2.5 M in cash, plus additional consideration of common stock and options with fair market values of $ 200,000 and $ 183,135 , respectively. Through the Closing Date, the Agreements provided the Company with the exclusive use of the facility in exchange for payment of the facility’s operating costs. The monthly fee (“Operating Costs”), which primarily covered the facility’s operating costs, was mainly comprised of the seller’s workforce costs, materials and other recurring monthly operating cost. The acquisition of Safegard, which closed on July 6, 2022, did not meet the definition of a business pursuant to ASC 805-10, and accordingly was accounted for as an asset acquisition in accordance with ASC 805-50. The cost of the acquisition was $ 2,936,712 , including transaction costs of $ 53,576 , with the allocation to the assets acquired on a relative fair value basis. The intangibles relate to permits and a limited workforce acquired. Under ASC 805-50, no goodwill is recognized. The operating results for Safegard are included in the consolidated balance sheet and consolidated statements of operations for the period beginning after the closing on July 6, 2022. The relative fair value of the assets acquired and related deferred tax liability is as follows: Schedule of Fair Value of Assets Acquisition Land $ 226,000 Building and affixed assets 2,648,000 Machinery 158,000 Inventory 32,000 Intangibles 64,712 Deferred tax liability ( 192,000 ) Total $ 2,936,712 The useful lives for the acquired assets is Building - 20 years; Machinery – 5 to 10 years; Intangibles – 5 years. The related depreciation and amortization is being recorded on a straight-line basis. F- 13 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 6. Other Assets Other assets as of December 31, 2024 and 2023 are summarized as follows: Schedule of Other Assets December 31, December 31, 2024 2023 Intangibles, net $ 32,503 $ 52,513 Other 72,195 76,062 Total Other assets $ 104,698 $ 128,575 Intangibles are related to the Asset Acquisition (see Note 5) and consist of an acquired workforce and permits. Amortization for the years ended December 31, 2024 and 2023 was $ 14,117 and $ 15,184 , respectively. The remaining life of the unamortized intangibles is approximately 2.5 years. Note 7. Debt Financing On September 20, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) and a Senior Secured Note (the “Note”) for an aggregate principal amount of $ 4,375,000 , including OID interest of $ 875,000 maturing on January 31, 2025 , with certain purchasers (the “Purchasers”), and the issuance of approximately 259,091 (pre reverse - 5,700,006 ) 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 are 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 year ended December 31, 0 , 2024, the Company recorded accreted interest and fees of 1,705,014 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. (See Note 16) Note 8. 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. 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 have been adjusted to reflect the approved reverse stock split. F- 14 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 8. Stockholders’ Equity (continued) Common Stock 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 248,430 shares (the “Shares”) of Common Stock, par value $ 0.0001 per share of the Company at a price of $ 1.95 per share 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 $ 399,742 . 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. On September 23, 2024, as noted in Note 7, in connection with the Securities Purchase Agreement and Note, the Company issued 259,091 (pre-reverse – 5,700,006 ) shares of unregistered common stock. The shares were subsequently registered by the Company with the Security and Exchange Commission. On May 31 and June 13, 2024, the Company entered into subscription agreements with certain institutional investors, pursuant to which the Company agreed to issue and sell to the investors 190,773 (pre reverse - 4,197,000 ) shares (the “Shares”) of Common Stock, par value $ 0.0001 per share of the Company at a price of $ 8.36 (pre reverse -$ 0.38 ) 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 499,932 (pre reverse - 10,998,524 ) warrants to purchase shares of the Company’s common stock, par value $ 0.0001 per share. Pursuant to the Inducement Agreement, the exercise price of the existing warrants was reduced from $ 14.08 (pre reverse -$ 0.64 ) per share to $ 7.26 (pre reverse -$ 0.33 ) 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 $ 9.90 (pre reverse - $ 0.45 ) per share (“Inducement Warrants”). In the aggregate, 260,799 (pre reverse - 5,737,573 ) warrants were exercised as a result of the Inducement Agreement and accordingly, 260,799 Inducement Warrants 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 . Certain outstanding warrants, with an exercise price of $ 14.08 (pre reverse -$ 0.64 ), were reduced to $ 7.26 (pre reverse -$ 0.33 ) based on anti-dilution terms in the respective warrant agreements. 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. (See Note 10) On September 29, 2023, the Company completed two simultaneous offerings and received aggregate gross proceeds of approximately $ 5.6 million, before expenses to the placement agent and other offering expenses of $ 716,000 . a. The first offering, the securities purchase agreement offering (the “Shelf Offering”) with institutional investors and the Company resulted in the Company receiving net proceeds from the Shelf Offering and the sale of pre-funded of approximately $ 2.5 million, includes the value of the pre-funded warrants recorded in APIC, net of $ 362,000 in fees relating to the placement agent and other offering expenses. The Shelf Offering was priced at the market under Nasdaq rules. In connection with the Shelf Offering, the Company issued 164,478 (pre reverse - 3,618,521 ) shares of common at a purchase price of $ 14.08 per unit, adjusted to $ 7.26 (reverse effected) at May 30, 2024, based on anti-dilution terms in the warrants and 36,636 (pre reverse - 800,000 ) pre-funded warrants at $ 14.058 (pre reverse -$ 0.639 ) per pre-funded warrants. The exercise price of the pre-funded warrants was $ 0.001 per share. b. The second offering, the securities purchase agreement offering (“Private Placement”) with institutional investors and the Company received net proceeds from the Private Placement of approximately $ 2.4 million, net of $ 354,000 in fees relating to the placement agent and other offering expense. In connection with the Private Placement, the Company issued: (i) 117,340 (pre reverse - 2,581,479 ) PIPE Shares (or PIPE Pre-Funded Warrants in lieu thereof) and (ii) PIPE Warrants (non-trading) to purchase 397,727 (pre reverse - 8,750,003 ) shares of our common stock, at a combined purchase price of $ 23.63 (pre reverse -$ 1.074 ) per unit or $ 23.606 (pre reverse - $ 1.073 ) per pre-funded unit. The PIPE Warrants had a term of five and one-half ( 5.5 ) years from the issuance date and were exercisable for one share of common stock at an exercise price, after effect of the October 2024 reverse split, of $ 14.08 adjusted to $ 7.26 at May 30, 2024, based on anti-dilution terms in the warrants. See Note 8(a) Warrants below for further adjustment. The net proceeds, after reflecting par value, has been recorded in Additional Paid in Capital of $ 1.6 million and with respect to the PIPE Warrants recorded as a liability under ASC 815 of $ 985,204 . On October 16, 2023, the Company filed an S-1 (Resale) Registration Statement in connection with the Private Placement and on October 26, 2023 the S-1 went effective The PIPE Warrants were fully exercised in 2024. (See Note 10). On February 3, 2023, the Company completed a securities purchase agreement (“Offering”) with institutional investors and received net proceeds from the Offering of approximately $ 3.2 million, net of $ 600,000 in fees relating to the placement agent and other offering expenses. The Offering was priced at the market under Nasdaq rules. In connection with the Offering, the Company issued 102,206 (pre reverse - 2,248,521 ) units at a purchase price of $ 37.18 (pre reverse - $ 1.69 ) per unit. Each unit consisted of one share of common stock and one non-tradable warrant (“Offering Warrants”) exercisable for one share of common stock at a price, after effect of the October 2024 reverse split, of $ 34.32 , adjusted to $ 14.08 at September 29, 2023 and to $ 7.26 at May 30, 2024, based on anti-dilution terms in the warrants and a term of five years . See Note 8(a) for further adjustment. The Offering Warrants have a term of five years from the issuance date. On February 13, 2023, the Company filed an S-1 (Resale) Registration Statement in connection with the Offering and on April 14, 2023, an Amendment to the S-1 was filed and went effective. (See Note 10) 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 170,454 ( pre reverse - 3,750,000 ) 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 $ 93.50 (pre reverse -$ 4.25 ) per share, adjusted to and with the effect of reverse split October 2024, $ 34.32 at February 3, 2023 and to $ 14.08 at September 29, 2023 and to $ 7.26 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 51,136 ( pre reverse - 1,125,000 ) warrants on April 19, 2022. F- 15 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 8. Stockholders’ Equity (continued) 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 as a liability under ASC 815 of $ 5.2 M. (See Note 10) Warrants a) In September 2024, the Company reduced the exercise price of the 230,091 (pre reverse – 5,260,000 ) outstanding warrants issued in February 2023 and September 2023 offerings (see below) from $ 7.26 (pre reverse - $ 0.33 ) to $ 0.0001 . In connection with the reduction in the exercise price the Company recorded a modification charge of $ 155,703 in the year ended December 31, 2024. As noted below, all the February 2023 and September 2023 warrants are fully exercised. b) In connection with the Inducement Warrants in the second quarter of 2024, the Company issued 260,799 (pre reverse - 5,737,573 ) non-trading Inducement Warrants as noted in Common Stock above. The Inducement Warrants are classified as a liability based on ASC 815 and require remeasurement at each reporting period. The Inducement Warrants are recorded at the FMV, computed using the Black Scholes valuation method. and, recorded a FMV gain adjustment of $ 349,243 (See Note 10). c) In connection with one-year advisory services arrangement entered into in April 2023, the Company issued an aggregate of 28,636 (pre reverse - 630,000 ) warrants over the one-year term, at an exercise price of $ 34.32 (pre reverse -$ 1.56 ) The warrants have a three-year term and were fully vested on issuance. the Company issued 6,136 (Pre- reverse – 135,000 ) and 22,500 (Pre-reverse 495,000 ) warrants during the years ended December 31, 2024 and 2023, respectively, at an exercise price of $ 34.32 (pre-reverse - $ 1.56 ). The warrants have a three-year term and were fully vested on issuance. The FMV of the warrants recorded for the year end ended December 31, 2024 and 2023, was, computed using the Black Sholes valuation model was $ 8,590 and $ 42,915 respectively. 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 assumptions for the year ended December 31, 2023, were: a) expected term – 3 years, b) expected volatility – 24.49 % to 44.83 %, c) risk free rate- 3.58 % to 4.67 % and d) dividend rate – 0 %. d) In connection with the Private Placement in September 2023, the Company issued 397,727 (pre-reverse - 8,750,003 ) non-trading PIPE Warrants as a component of the Unit as noted in Common Stock above. The PIPE Warrants were recorded at the FMV, computed using the Black Sholes valuation method. The PIPE Warrant’s liability requires remeasurement at each reporting period. The PIPE Warrants are 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 ). For the year ended December 31, 2023, the Company recorded a FMV gain (loss) adjustment of $( 51,671 ), The warrants were fully exercised in 2024 (See Note 10). e) In connection with the Offering in February 2023, the Company issued 102,206 (pre-reverse - 2,248,521 ) non-trading warrants Offering Warrants as a component of the Unit as noted in Common Stock above. The Offering Warrant’s liability requires remeasurement at each reporting period. The Offering Warrants were recorded at the FMV, computed using the Black Sholes valuation method. The Offering Warrants are classified as a liability based on ASC 815. 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 10. During the year ended December 31, 2023, the Company recorded a FMV gain adjustment of $ 221,524 . The warrants are fully exercised in 2024. (See Note 10). f) In connection with the IPO in April 2022, the Company issued 340,900 (pre-reverse - 7,500,000 ) warrants (Trading Warrants) as a component of the Units and 51,136 (pre-reverse- 1,125,000 ) 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, 2024 and 2023, the Company recorded a FMV (loss) gain adjustment of 1,135,728 and $ 0 , respectively (See Note 10). F- 16 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 8. Stockholders’ Equity (continued) g) The Company has issued 10,695 (pre-reverse - 235,295 ) Warrants (“Note Warrants”) to the Purchasers of the Notes on April 19, 2022. The Note Warrants have an exercise price of $ 93.50 ( pre-reverse - $ 4.25 ) and a term of five years During the years ended December 31, 2024 and 2023, the Company recorded a FMV gain of 30,159 and $ 0 , respectively. (See Note 10) h) The underwriter received 8,523 (pre – reverse- 187,500 ) warrants in connection with the IPO for a nominal cost of $ 11,250 . The Warrants have an exercise price of $ 117.04 (Pree-reverse -$ 5.32 ) and are exercisable after October 9, 2022. The FMV at the date of issuance was $ 228,750 computed using the Black Sholes valuation model with the following assumptions: a) volatility of 93.47 %, 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. Note 9. Preferred Stock In February 2018, the Company Board of Directors issued one share of Series A Preferred Stock to Alan Blackman, the Company’s co-founder and Director. 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 were cancelled and forfeited without any further consideration. The Series A Preferred was returned to the status of an authorized but unissued share of preferred stock of the Company (See Note 15). Note 10. Warrant Liability The Warrants 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 warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statement of operations, The non-trading warrants, related to the February 2023, September 2023 and May 2024 offerings, were valued using the Black-Scholes pricing model. The assumptions for the year ended December 31, 2024 and 2023 were as follows: (See Notes 7 and 8) Schedule of Fair Value of Warrant December 31, 2024 December 31, 2023 Expected term (years) 3.37 to 5.99 4.10 to 5.5 Expected volatility 58.78 % to 121.32 % 45.30 % to 70.44 % Risk-free interest rate 3.41 % to 4.56 % 3.53 to 4.54 % Dividend rate 0 0 The Warrant liability at December 31, 2024 and 2023 was as follows: Schedule of Warrant Liability 2024 2023 Trading and Overallotment Warrants $ 15,681 1,121,250 Note Warrants 428 30,588 Offering Warrants – February 2023 - 234,072 Offering Warrants – September 2023 - 1,036,875 Offering Warrants – May 2024 82,804 - Total Warrant Liability $ 98,913 2,422,785 F- 17 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 10. Warrant Liability (continued) The Warrants outstanding at December 31, 2024 and 2023, reflective of the reverse split that occurred in October 2024, were as follows: Schedule of Warrant Outstanding December 31, 2024 December 31, 2023 Trading and Overallotment Warrants 400,568 400,568 Note Warrants 10,695 10,695 Offering Warrants – February 2023 - 102,206 Offering Warrants – September 2023 - 397,727 Offering Warrants – May 2024 260,799 - Warrants issued for services arrangement 28,636 22,500 Total Warrants Outstanding 700,699 933,696 For the years ended December 31, 2024 and 2023 the FMV gain (loss) adjustment, which is reflected in the FMV adjustment on Warrants in the Consolidated Statements of Operations was $ 3,016,935 and $ 169,583 , respectively. Note 11. Stock Options 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 265,000 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 63,636 (pre -reverse - 1,400,000 ) 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 159,090 (pre-reverse – 3,500,000 ) options and/or shares of restricted stock. The 2023 Plan was approved by shareholders at the annual meeting A summary of options granted and outstanding is presented below, 2023 reflects effect of reverse split. Schedule of Stock Options Granted and Outstanding 2024 2023 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Outstanding at Beginning of year 109,493 $ 67.12 61,733 $ 96.14 Granted 63,409 6.27 48,409 29.70 Forfeited/cancelled ( 20,607 ) $ 66.27 ( 649 ) $ 38.50 Outstanding at end of year 152,295 $ 41.87 109,493 $ 67.12 Exercisable at end of year 131,440 $ 46.60 85,511 $ 76.34 F- 18 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 11. Stock Options (continued) 1) During the year ended December 31, 2024, the Company granted five -year options (the “Options”) to purchase a total of 63,409 shares of the Company’s common stock, par value $ 0.0001 per share (the “Common Stock”) 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. During the year ended December 31, 2023, the Company granted five-year options (the “Options”) to purchase a total of: a) 44,318 (pre-reverse – 975,000 ) shares of the Company’s common stock, par value $ 0.0001 per share (the “Common Stock”) to its directors, executive officers, employees and consultants pursuant to the Company’s. 2022 and 2023 Equity Incentive Plans. The Options are exercisable at $ 30.14 (pre -reverse -$ 1.37 ) per share which was the closing price on January 25, 2023. b) 4,090 (pre-reverse – 90,000 ) shares of the Company’s Common Stock in connection with an employment or consulting agreements at the exercise price, representing the closing price on the grant date ranging from $ 18.04 to $ 28.60 , reverse effected. During the years ended December 31, 2024 and 2023, the estimated weighted-average grant-date fair value of options granted was $ 6.27 per share and $ 17.60 per share, respectively. As of December 31, 2024 and 2023, there was $ 134,807 and $ 498,454 , respectively, of unrecognized stock-based compensation related to unvested stock options with a weighted average fair value of $ 10.01 and $ 20.68 per share, respectively, which is expected to be recognized over a weighted-average period 33 months as of December 31, 2024. The following table summarizes information about options outstanding at December 31, 2024: 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 $ 5.94 to 6.27 60,710 - 3.95 44,957 - $ 18.04 to 20.24 1,818 - 3.58 1,818 - $ 26.62 to 30.58 51,705 - 2.79 51,705 - $ 38.50 2,468 - 1.25 2,468 - $ 61.60 6,429 - 1.25 6,429 - $ 96.25 9,415 - .25 9,415 - $ 154.00 19,750 - 1.00 19,750 - At December 31,2024, the stock options outstanding and the options exercisable have exercise prices that exceed the stock market price at December 31, 2024 and as such no intrinsic value exist. Intrinsic value is defined as the difference between the exercise price of the options and the market price of the Company’s common stock. In 2024 and 2023, the Company recognized stock-based compensation expense of $ 512,240 , of which $ 508,899 and $ 3,341 was recorded in general and administrative and research and development expenses, respectively and $ 920,108 , of which $ 906,745 and $ 13,363 was recorded in general and administrative and research and development expenses, respectively. 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, 2024 and 2023. Schedule of Fair Value of Stock Option Awards 2024 2023 Expected term (years) 2.66 to 3.06 2.88 to 3.25 Expected volatility 81.15 % to 83.04 % 75.40 % to 89.93 % Risk-free interest rate 4.71 % to 4.76 % 3.71 % to 4.27 % Dividend rate 0 0 F- 19 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 11. Stock Options (continued) In 2024 and 2023, the Company recognized stock-based compensation expense of $ 512,240 , of which $ 508,899 and $ 3,341 was recorded in general and administrative and research and development expenses, respectively and $ 920,108 of which $ 906,745 and $ 13,363 was recorded in general and administrative and research and development expenses, respectively. Note 12. Income Taxes A reconciliation of the Federal statutory rate of 21 % in the years ended December 31, 2024 and 2023, respectively 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 Year Ended December 31, 2024 December 31, 2023 Expected benefit at statutory federal tax rate $ ( 1,958,502 ) $ ( 2,073,230 ) Permanent differences – net ( 633,540 ) ( 35,469 ) State and local taxes, net of federal tax benefit - - Other ( 4,338 ) ( 24,569 ) Change in valuation allowance 2,566,380 2,103,268 Income tax expense (benefit) $ ( 30,000 ) $ ( 30,000 ) The components of the Company’s deferred tax assets (liabilities) are as follows: Schedule of Components of Deferred tax Assets Year Ended December 31, 2024 Year Ended December 31, 2023 Deferred tax assets (liabilities): Fixed assets, net of impairments $ 4,529 $ ( 281,073 ) Interest 35,178 35,178 Research and development expenses 446,811 400,810 Stock-based compensation 1,004,182 895,509 Charitable Contributions 420 420 Net operating losses - federal 6,253,513 4,456,242 Net operating losses – state and local 543,264 543,264 Net operating losses - foreign 345,913 233,114 Research credit 28,985 28,985 Less valuation allowance ( 8,794,795 ) ( 6,474,449 ) Net deferred tax liability $ ( 132,000 ) $ ( 162,000 ) F- 20 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 12. Income Taxes (continued) 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, 2024, the Company had U.S. federal net operating loss carryforwards of approximately $ 29,779,000 of which $ 241,000 , if not fully utilized, expires by 2038 and which $ 29,538,000 do not expire. The Company has foreign net operating loss carryforwards of $ 3,845,000 , if not fully utilized, expire through 2029. Utilization is dependent on generating sufficient taxable income prior to expiration of the tax loss carryforwards. 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. 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, 2024 December 31, 2023 United Stated Operations $ ( 7,495,413 ) $ ( 8,173,807 ) International Operations ( 1,830,789 ) ( 1,697,831 ) (Loss) Income before taxes ( 9,326,202 ) ( 9,871,638 ) Note 13. Related Party Transactions and Balances As of December 31, 2024 and 2023, accounts payable and accrued liabilities include $ 99,500 and $ 32,974 , respectively, payable to officers, and directors of the Company. The amounts are unsecured, non-interest bearing and are due on demand (See Note 15). Note 14. Fair Value Measurements The Company’s financial instruments include cash, accounts payable, notes payable, contingent stock and warrant liability and warrant liability. Cash, contingent stock liability, contingent warrant liability and warrant liability are measured at fair value. Accounts payable and notes payable are measured at amortized cost and approximates fair value due to their short duration and market rate for similar instruments, respectively. F- 21 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 14. Fair Value Measurements (continued) As of December 31, 2024, the following financial assets and liabilities were measured at fair value on a recurring basis presented on the Company’s consolidated balance sheet: 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 $ 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 As of December 31, 2023, 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 $ 3,012,908 - - $ 3,012,908 - - - Total assets measured at fair value $ 3,012,908 - $ 3,012,908 Liabilities Warrant liability $ - 2,422,785 - $ 2,422,785 Total liabilities measured at fair value $ - 2,422,785 - $ 2,422,785 Note 15. Commitments and Contingencies Fixed Assets and Other At December 31, 2024 and 2023, the remaining amounts due under outstanding orders of $ 12,166 and $ 56,874 , respectively, is recorded in Accounts Payable. At December 31, 2024, the Company had outstanding orders to purchase equipment, molds and component parts for $ 36,500 of which $ 24,333 is within Other Assets and the balance to be incurred and paid upon completion. F- 22 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 15. Commitments and Contingencies (continued) Contingencies At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. On July 10, 2024, Barry Berler (“Berler”), a co-founder and former Chief Technology Officer of the Company, commenced a lawsuit in the United States District Court for the Eastern District of New York, Barry Berler v. Sharps Technology, Inc. and Alan Blackman, Case No. 2:24-cv-04787. In this case, Berler asserts claims for damages of an aggregate of $ 456,000 for alleged (1) failure to make full payment of certain monthly payments under his consulting agreement with the Company (the “Consulting Agreement”) in the amount of $52,500, (2) failure to pay a bonus with a target of $216,000 under the Consulting Agreement, (3) $187,500, representing 50% of the severance payment paid by the Company to Mr. Blackman, the Company’s co-founder and former Chief Operating Officer and Co-Chairman and a declaration and injunctive relief establishing that Berler is the rightful owner of 50% of the Company’s Series A Preferred Stock (which preferred stock is no longer outstanding). The Company has accrued for the claim for aforementioned unpaid monthly consulting fees. The Company believes that Berler’s claims are without merit, intends to defend itself vigorously and has requested dismissal of these claims and no amounts have been reserved for the bonus and severance at his point. In addition, on September 17, 2024, the Company filed an answer and counterclaims with respect thereto, including for recoupment of certain compensation the Company has previously paid to Berler. and on February 27, 2025 the Company filed an amended answer and counterclaims against Berler,Plastomold Industries Ltd. (“Plastomold”), Plasto Design Ltd and Plasto Design Solutions . On June l7, 2024, Berler filed a demand for arbitration and statement of claim under the commercial arbitration rules of the American Arbitration Association (“AAA”) asserting claims for payment of $ 500,000 plus interest, under the Company’s royalty agreement with Berler, as amended, rescission thereof and reversion to Berler of the intellectual property rights subject thereto. The Company believes that Berler’s claims are without merit and intends to defend itself vigorously in connection with these claims. On April 3, 2024, Plastomold commenced a lawsuit against the Company in the United States District Court for the Eastern District of New York, Plastomold Industries Ltd v. Sharps Technology, Inc., Case No. 2:24-CV-02580, asserting claims for damages in the amount of $ 1.762 million for alleged (1) failure to pay invoices, of which approximately $1 million would relate to a maintenance agreement for units allegedly manufactured and sold using machinery that was defective and has never successfully produced any saleable products, (2) breach of the implied covenant of good faith and fair dealing, (3) unjust enrichment, and (4) conversion. Plastomold asserts it provided certain products and services to the Company for which its invoices were not fully paid. The Company believes that Plastomold’s claims are without merit and intends to defend itself vigorously and no amounts have been reserved at this point. On June 3, 2024, the Company filed an answer and affirmative defenses and counterclaim, which counterclaim is for damages that the Company believes would exceed the claims asserted by Plastomold, based on the insufficiency of Plastomold’s services and the results thereof, including the failure to provide machinery capable of reliably manufacturing the designated products in compliance with design specifications and functionality requirements, and with respect to which test results failed. Royalty Agreement In connection with the purchase of certain intellectual property in July 2017, Barry Berler and Alan Blackman entered into a royalty agreement which provides that Barry Berler will be entitled to a royalty of four percent ( 4 %) of net sales derived from the use, sale, lease, rent and export of products related to the intellectual property. The royalty continues until the patent expires or is no longer used in the Company’s product. The royalty agreement was assumed by the Company in December 2017. In September 2018, the Royalty Agreement was amended to reduce the royalty to 2 % and further provided for a single payment of $ 500,000 to Barry Berler within three years in return for cancellation of all further royalty obligations of the Company. In May 2019, the Royalty Agreement was further amended to change the payment date to on or before May 31, 2021 or during the term of the amended Royalty Agreement should the Company be acquired or a controlling interest be acquired. The Company has not made the aforementioned payment or incur any change in control as such the 2 % royalty remains in place. Employment Agreements On August 1, 2022, the Company cancelled the consulting agreement with Alan Blackman, Co- Chairman and Chief Operating Officer and entered into an Employment Agreement. The Company terminated Mr. Blackman’s Employment Agreement effective May 1, 2023. Mr. Blackman continued to serve as the Co-Chairman and a member of the Board of Directors. Subsequent to June 30, 2023, the Company and Mr. Blackman entered into a separation agreement whereby, Mr. Blackman would be paid severance payments of approximately $ 346,000 plus medical benefits over thirteen months , which was recorded as an expense and an accrued expense as of June 30, 2023 The severance payments were fully paid by August 31, 2024. At December 31, 2023, the outstanding balance due Mr. Blackman was $ 218,000 , which is recorded in accrued expenses. Further, all unvested options were fully vested and the Company recorded a charge of $ 60,000 . In connection with the separation agreement, Mr. Blackman no longer served as Co-Chairman or Board member and had agreed to vote his Series A Preferred Stock in favor of the election, reelection, and/or designation of each individual nominated to serve as a director on the Board of Director as shall be identified in an applicable proxy statement filed by the Company for such election of directors. Once the payments due Mr. Blackman were fully paid, the Series A Preferred Stock were deemed immediately cancelled and forfeited and without further consideration. The Series A Preferred has been returned to the status of an authorized but unissued share of preferred stock of the Company. On September 30, 2022, the Company entered into a formal employment agreement, effective on such date and will continue until terminated by either party, subject to the terms of the agreement, with Andrew R. Crescenzo who has been serving as the Company’s Chief Financial Officer on a contract services basis for the last three years. The agreement provided for annual compensation of $ 225,000 and plus a one-time $ 18,750 incentive payment upon the commencement of the agreement. During the course of the term, Mr. Crescenzo will be eligible for (i) performance bonuses to be granted at the discretion of the Company’s Compensation Committee and (ii) to participate in the Company’s 2022 Equity Incentive Plan. The agreement contains customary employment terms and conditions. F- 23 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 15. Commitments and Contingencies (continued) On November 10, 2023, the Company executed an Employment Agreement with Robert Hayes, its Chief Executive Officer amending the employment letter dated September 6, 2021. The agreement term automatically renews for successive one-year terms as of the commencement date unless prior written notice by either party within ninety days prior to end of the current term. The agreement provides for termination of employment and severance benefits under stated conditions and restrictive covenants. The agreement provides for annual compensation retroactive to June 1, 2023 of $ 600,000 from $ 400,000 and a stated increase with the successful acquisition of InjectEZ and other terms of the acquisition agreement (See Note 5). The agreement provides for bonus compensation for: (i) closing the Nephron acquisition agreement, (ii) long-term incentives for achieving revenue targets and market caps for the Company’s stock and (iii) other Company achievements. In addition, the agreement provides for benefits and paid time off. On May 20, 2024, the Company entered into an Amendment to the Asset Purchase Agreement dated September 22, 2023, with Nephron and Nephron’s InjectEZ, LLC, (collectively, the “Seller”). The September 22, 2023 agreement superseded the manufacturing and supply agreement entered into in connection with the NPC Agreement on September 29, 2022, and the Nephron Agreement entered into on September 29, 2022. The Amended Asset Purchase Agreement includes the purchase of certain assets. In connection with the Asset Purchase agreement, the Company paid a non-refundable deposit of $ 1 M to be held in escrow as a deposit on the purchase price. The Asset Purchase agreement stipulated that the $ 1 M deposit would be maintained until July 19, 2024, at which date, if the contemplated transaction was not consummated, through no fault of the Seller, the escrow would be released to the Seller by the escrow agent. The escrow deposit of $ 1,000,000 was released to the Seller and recorded in Other Expense as a forfeited agreement cost in the three months ended June 30, 2024. As stated above, The Company and Seller continue to work towards a further amendment of the Asset Purchase Agreement. The closing of the Asset Purchase Agreement is contingent on obtaining further amendments and the necessary financing. There can be no assurance that the closing of the asset sale will occur. Note 16. Subsequent Events 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 7). The 2025 Offering consisted of 14,285,714 units consisting of 9,029,814 Common Units with gross proceeds of $ 12.6 M and 5,255,900 Pre-Funded Units with gross proceeds of $ 7.4 M, with each unit consisting of one share of Common Stock. In addition, each unit includes; (i) one Series A Registered Common Warrant to purchase one share of Common Stock per warrant at an exercise price of $ 1.75 (“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 $ 1.75 or pursuant to an alternative cashless exercise option (“2025 Series B Warrant”), collectively, the 2025 Warrants. The public offering price per Common Unit was $ 1.40 or $ 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. The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until exercised in full. Immediately after closing 4,980,900 of the Pre-funded units were exercised and the Company received $ 498 in proceeds. The 2025 Series A Warrants are exercisable immediately and expire 60 months after stockholder approval. The number of securities issuable under the 2025 Series A Warrants is subject to adjustment. The 2025 Series B Warrants are exercisable immediately and expire 30 months after stockholder approval. The number of securities issuable under the 2025 Series B Warrants is subject to adjustment. The Company granted Aegis Capital Corp. (“Aegis”) an overallotment, being a 45-day option to purchase additional shares of Common Stock and/or Warrants of (i) up to 15.0% of the number of shares of Common Stock sold in the offering, (ii) up to 15.0% of the number of 2025 Series A Warrants sold in the offering and (iii) up to 15.0% of the number of 2025 Series B Warrants sold in the offering. The purchase price per additional share of Common Stock is equal to the public offering price of one Common Unit (less $0.00001 allocated to each full Warrant), less the underwriting discount. The purchase price per additional 2025 Warrant is $0.00001. On January 29, 2025, Aegis exercised its over-allotment option with respect to 2,142,857 , 2025 Series A Warrants and 2,142,857 , 2025 Series B Warrants and the Company received net proceeds of approximately $ 43 . The 2025 Offering was made pursuant to an effective registration statement on Form S-1 (No. 333-284237) previously filed with the U.S. Securities and Exchange Commission (SEC) and declared effective by the SEC on January 27, 2025. F- 24 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Note 17 – Segment Reporting The accounting policies for the segment information are the same as described in Note 2- Summary of Significant Accounting Policies. To date, the Company has not generated any product revenue. The Company expects to continue to incur expenses and operating losses for the foreseeable future as marketing and sales of its products commence. The CODM assesses the performance of and decides how to allocate resources for the one segment based on Consolidated Net Loss. Further, EBITDA (earnings before interest, taxes, depreciation and amortization), which is not presented on the face of the Consolidated Statements of Operations, is used to assist with the measurement of segment performance and allocate resources. The CODM also uses Net Loss and EBITDA, to decide the level of investment in various operating activities and other capital allocation activities. The measure of segment assets is reported on the Consolidated Balance Sheets as Consolidated Total assets. The following table presents the Company’s segment results for the years ended: Schedule of Company’s Segment For the year ended December 31, 2024 For the year ended December 31, 2023 Revenue, net $ - $ - Expenses Research and development – Note A 318,892 483,390 General and administrative – Note B 6,764,513 8,200,584 Depreciation and amortization 773,904 882,176 Asset Impairment 1,770,000 560,000 Interest income (expense) 1,664,712 ( 138,118 ) FMV (gain) adjustment on warrants ( 3,016,936 ) ( 169,583 ) Other expense 1,009,891 - Foreign currency and other 41,825 ( 52,689 ) Segment and Consolidated Net loss Before Provision for Taxes $ ( 9,326,202 ) $ ( 9,871,638 ) Deferred Tax Benefit 30,000 30,000 Segment and Consolidated Net Loss ( 9,296,202 ) ( 9,841,638 ) As of and For Year Ended December 31 Total Consolidated Assets $ 7,313,748 $ 11,789,268 Capital Expenditures $ 163,137 $ 698,277 Notes: (A)-net of depreciation and amortization and impairments and (B) -net of depreciation and amortization F- 25 Item 9. Changes in and Disagreements with Accountants None.