SkyAI, Inc. 10-Q

Item 1. Financial Statements: SHARPS TECHNOLOGY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2025 December 31, 2024 (Unaudited) (Audited) Assets: Current Assets Cash $ 8,322,192 $ 864,041 Account Receivable – trade, net 136,080 - Tax Receivable - VAT 303,343 102,493 Escrow Deposit ( Note 7 ) - 250,000 Prepaid expenses and other current assets 101,524 89,735 Inventories, net ( Note 3 ) 1,631,794 1,867,671 Current Assets 10,494,933 3,173,940 Fixed Assets, net of accumulated depreciation (Notes 4 and 5) 4,423,256 4,035,110 Other Assets, including deposits on fixed assets (Notes 5 and 6) 2,167,008 104,698 TOTAL ASSETS $ 17,085,197 $ 7,313,748 Liabilities: Current Liabilities Accounts payable $ 802,156 $ 976,548 Accrued expenses and other 298,523 346,536 Notes Payable, net of discount (Note 7) - 3,763,622 Warrant liability (Notes 8 and 10) 1,312,848 98,913 Total Current Liabilities 2,413,527 5,185,619 Deferred Tax Liability ( Note 12 ) 132,000 132,000 Total Liabilities 2,545,527 5,317,619 Commitments and Contingencies (Note 15) - - 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; 1,666,667 shares authorized; 1,023,214 , shares issued and outstanding (2024: 6,827 ) 101 1 Additional paid-in capital 42,623,842 36,418,041 Accumulated other comprehensive income 872,792 23,293 Accumulated deficit ( 28,957,065 ) ( 34,445,206 ) Total Stockholders’ Equity 14,539,670 1,996,129 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 17,085,197 $ 7,313,748 The accompanying notes are an integral part of these financial statements. F- 1 SHARPS TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30 (UNAUDITED) 2025 2024 2025 2024 THREE MONTHS ENDED JUNE 30, SIX MONTH ENDED JUNE 30, 2025 2024 2025 2024 Revenue, net $ 222,722 $ - $ 222,722 $ - Cost of goods manufactured 524,663 - 524,663 - Cost of goods – inventory reserve 730,086 - 730,086 - Total cost of goods manufactured 1,254,749 - 1,254,749 - Gross Margin (Loss) ( 1,032,027 ) - ( 1,032,027 ) - Operating expenses: Research and development 61,455 180,297 143,471 377,736 Selling, General and administrative 1,912,900 1,740,803 3,852,653 3,387,416 Total operating expenses 1,974,355 1,921,100 3,996,124 3,765,152 Loss from Operations ( 3,006,382 ) ( 1,921,100 ) ( 5,028,151 ) ( 3,765,152 ) Other income (expense) Interest income (expense) 96,953 5,288 ( 530,038 ) 24,312 FMV adjustment on warrants 6,468,811 822,130 11,087,700 1,672,187 Other (expense) (see Note 15) - ( 1,000,000 ) - ( 1,000,000 ) Foreign currency ( 75 ) ( 8,645 ) ( 41,370 ) ( 16,060 ) Total Other income (expense) 6,565,689 ( 181,227 ) 10,516,292 680,439 Net Income (loss) Before Provision for Taxes $ 3,559,307 $ ( 2,102,327 ) $ 5,488,141 $ ( 3,084,713 ) Deferred Tax Benefit - - - - Net Income (loss) 3,559,307 ( 2,102,327 ) 5,488,141 ( 3,084,713 ) Net income (loss) per share, basic and diluted $ 3.58 $ ( 643.64 ) $ 10.45 $ ( 1,012.71 ) Weighted average shares used to compute net income (loss) per share, basic and diluted 995,212 3,266 525,185 3,046 The accompanying notes are an integral part of these financial statements. F- 2 SHARPS TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR THE THREE AND SIX MONTHS ENDED JUNE 30 (UNAUDITED) 2025 2024 2025 2024 THREE MONTHS ENDED JUNE 30, SIX MONTH ENDED JUNE 30, 2025 2024 2025 2024 Net Income (loss) $ 3,559,307 $ ( 2,102,327 ) $ 5,488,141 $ ( 3,084,713 ) Other comprehensive income: Foreign currency translation adjustments 556,926 ( 21,911 ) 849,499 ( 239,964 ) Comprehensive Income (loss) $ 4,116,233 $ ( 2,124,238 ) $ 6,337,640 $ ( 3,324,677 ) The accompanying notes are an integral part of these financial statements. F- 3 SHARPS TECHNOLOGY, INC. CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 (Unaudited) Shares Amount Shares Amount Capital Income Deficit Equity Preferred Stock Common Stock Additional Paid in Accumulated Other Comprehensive Accumulated Total Stockholders Shares Amount Shares Amount Capital Income Deficit Equity Balance -December 31, 2023 1 $ - 2,314 $ - $ 32,491,478 $ 591,812 $ ( 25,149,004 ) $ 7,934,286 Net loss for the three months ended March 31, 2024 - - - - - - ( 982,386 ) ( 982,386 ) Share-based compensation charges - - - - 126,387 - - 126,387 Exercise of Pre-Funded Warrants - - 60 396 - - 396 Foreign Currency Translation - - - - - ( 218,053 ) - ( 218,053 ) Balance - March 31, 2024 1 $ - 2,374 $ - $ 32,618,261 $ 373,759 $ ( 26,131,390 ) $ 6,860,630 Net loss for the three months ended June 30, 2024 - - - - - ( 2,102,327 ) ( 2,102,327 ) Share-based compensation charges - - - 201,918 - - 201,918 Exercise of Pre-Funded Warrants - - 452 - 2,985 - - 2,985 Registration A Offering 636 - 1,296,922 1,296,922 Warrant Inducements - - 869 - 978,981 - - 978,981 Foreign Currency Translation - - - - - ( 21,911 ) - ( 21,911 ) Balance - June 30, 2024 1 $ - 4,331 $ - $ 35,099,067 $ 351,848 $ ( 28,233,717 ) $ 7,217,198 SHARPS TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 (Unaudited) Preferred Stock Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Shares Amount Capital Income Deficit Equity Balance – December 31, 2024 - $ - 6,827 $ 1 $ 36,418,041 $ 23,293 $ ( 34,445,206 ) $ 1,996,129 Net income for the three months ended March 31, 2025 - - - - - 1,928,834 1,928,834 Share-based compensation charges - - - - 44,383 - - 44,383 Equity Offering - January 2025 – see Note 8 - - 47,619 4 5,873,405 - - 5,873,409 Warrant Exercise – Series B Cashless – see Note 8 - - 431,395 43 ( 43 ) - - - Foreign currency translation - - - - - 292,573 - 292,573 Balance – March 31, 2025 - $ - 485,841 $ 48 $ 42,335,786 $ 315,866 $ ( 32,516,372 ) $ 10,135,328 Balance - $ - 485,841 $ 48 $ 42,335,786 $ 315,866 $ ( 32,516,372 ) $ 10,135,328 Net income for the three months ended June 30, 2025 - - - - - - 3,559,307 3,559,307 Net income (loss) - 3,559,307 3,559,307 Share-based compensation charges 288,109 288,109 Warrant Exercise – Series B Cashless – see Note 8 - - 537,373 53 ( 53 ) - - - Foreign currency translation - - - - - 556,926 - 556,927 Balance – June 30, 2025 - - 1,023,214 101 42,623,842 872,792 ( 28,957,065 ) 14,539,670 Balance - - 1,023,214 101 42,623,842 872,792 ( 28,957,065 ) 14,539,670 The accompanying notes are an integral part of these financial statements. F- 4 SHARPS TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30 (UNAUDITED) 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 5,488,141 $ ( 3,084,713 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 271,328 388,520 Stock-based compensation 332,492 328,305 Accretion of debt discount 708,390 - FMV adjustment for warrants ( 11,087,700 ) ( 1,672,187 ) Escrow forfeited - 1,000,000 Inventory reserve adjustment 730,086 - Foreign exchange (income) loss 75 ( 8,646 ) Changes in operating assets: Accounts receivable - trade ( 136,080 ) - VAT receivable, prepaid expenses and other current assets ( 200,988 ) ( 49,627 ) Inventory ( 290,166 ) ( 255,439 ) Accounts payable and accrued liabilities ( 171,508 ) ( 174,889 ) Net cash used in operating activities ( 4,355,930 ) ( 3,528,676 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of and deposits paid for fixed assets ( 1,959,758 ) ( 19,355 ) Escrow payment under agreement - ( 1,000,000 ) Net cash used in investing activities ( 1,959,758 ) ( 1,019,355 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from offerings and warrant exercises 18,175,043 2,972,348 Repayment of Debt ( 4,222,012 ) - Net cash provided by financing activities 13,953,031 2,972,348 Effect of exchange rate changes on cash ( 179,192 ) 46,068 NET INCREASE (DECREASE) IN CASH 7,458,151 ( 1,529,615 ) CASH — BEGINNING OF PERIOD 864,041 3,012,908 CASH — END OF PERIOD $ 8,322,192 $ 1,483,293 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Interest (OID) paid, attributed to Note (see Note 7) $ 875,000 - Cash paid for taxes - - The accompanying notes are an integral part of these financial statements. F- 5 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 1. Description of Business Nature of Business Sharps Technology, Inc. (“Sharps” or the “Company”) is a medical device and pharmaceutical packaging company that has designed and patented various safety syringes and has safety syringe designs that were acquired and commenced commercialization in the second quarter of 2025 by manufacturing and distribution of its products. The accompanying consolidated financial statements include the accounts of Sharps Technology, Inc. and its wholly owned subsidiary, 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 any cash flow from operations since inception but commenced generating revenues in the second quarter of 2025. As of and for the six months ended June 30, 2025, the Company used cash in operations of $ 4,355,930 and has cash of $ 8,322,192 which may not be sufficient to fund the Company’s planned operations for the next twelve 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 products and continue to 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 derivative liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. As of June 30, 2025, the most significant estimates relate to inventory reserves, 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 six months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are maintained with various financial institutions. At June 30, 2025 and December 31, 2024, the Company had $ 8,322,192 and $ 864,041 , respectively and no cash equivalents at either date. F- 6 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, which is placed with high-credit-quality financial institutions and at times exceeds federally insured limits. To date, the Company has not experienced any losses on its deposits of cash. Inventories The Company values inventory at the lower of cost (average cost) or net realizable value. Work-in-process and finished goods inventories consist of material, labor, and manufacturing overhead. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. A reserve is established for any excess or obsolete inventories or they may be written off. At June 30, 2025 and December 31, 2024, inventory is comprised of raw materials, components and finished goods. During the three months ended June 30, 2025, a reserve for the negative impacts of recent market factors, including recent global tariff assessments, has been established in the amount of $ 730,086 . 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 of the Company’s outstanding warrants are fair valued on a recurring basis with the trading price or FMV using Black Sholes which could cause fluctuations in operating results at the reporting periods. Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Valuations are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree of judgment. Level 2 Level 2 applied to assets or liabilities for which there are other than Level 1 observable inputs such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 2 instruments require more management judgment and subjectivity as compared to Level 1 instruments. For instance: determining which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer credit rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced; and determining whether a market is considered active requires management judgment. Level 3 Level 3 applied to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The determination for Level 3 instruments requires the most management judgment and subjectivity. F- 7 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) Fixed Assets Fixed assets are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred. The Company’s fixed assets consist of land, building, machinery and equipment, molds, computer system and website. Depreciation is calculated using the straight-line method commencing on the date the asset is operating in the way intended by management over the following useful lives: Building – 20 years, Machinery and Equipment – 3 - 10 years and Computer systems and Website – 3 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. Purchased 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- 8 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) Derivative Instruments The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC 480”), Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own stock and whether the holders of the warrants could potentially require net cash settlement in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. At their issuance date and as of June 30, 2025, certain warrants (see Notes 8 and 10) are accounted for as liabilities as these instruments did not meet all of the requirements for equity classification under ASC 815-40 based on the terms of the aforementioned warrants. The resulting warrant liabilities are re-measured at each balance sheet date until their exercise or expiration, and any change in fair value is recognized in the Company’s consolidated statements of operations. Foreign Currency Translation/Transactions The Company has determined that the functional currency for its foreign subsidiary is the local currency. For financial reporting purposes, assets and liabilities denominated in foreign currencies are translated at current exchange rates and profit and loss accounts are translated at weighted average exchange rates. Resulting translation gains and losses are included as a separate component of stockholders’ equity as accumulated other comprehensive income or loss. Gains or losses resulting from transactions entered into in other than the functional currency are recorded as foreign exchange gains and losses in the consolidated statements of operations. Comprehensive income (loss) Comprehensive income (loss) consists of the Company’s consolidated net income (loss) and foreign currency translation adjustments related to its subsidiary. Foreign currency translation adjustments included in comprehensive income (loss) were not tax effected as the Company has a full valuation allowance at June 30, 2025 and December 31, 2024. Accumulated other comprehensive income (loss) is a separate component of stockholders’ equity and consists of the cumulative foreign currency translation adjustments. 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 in March 2024 included 407 pre-funded warrants (reverse effected) (see Note 8). Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of June 30, 2025, there were 418,953 stock options and warrants that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented. F- 9 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) Revenue The Company generates revenue from the sale of single use syringe products 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 of 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 being 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 manufactured. 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 customers facility. In all such cases, the customer must obtain an authorization from the Company. The Company has not incurred returns. Shipping and Handling Costs Shipping and handling costs associated with the distribution of finished goods to customers are recorded in cost of goods manufactured. 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. F- 10 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 2. Summary of Significant Accounting Policies (continued) Recent Accounting Pronouncements 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 evaluating 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 June 30, 2025 and December 31, 2024: Schedule of Inventories June 30, 2025 December 31, 2024 Raw materials $ 695,542 $ 326,068 Work in process 75,592 81,075 Finished goods 860,660 1,460,528 Total $ 1,631,794 $ 1,867,671 Note 4. Fixed Assets Fixed asset, net, as of June 30, 2025 and December 31, 2024, are summarized as follows: Schedule of Fixed Assets, Net June 30, 2025 December 31, 2024 Land $ 267,019 $ 227,575 Building 3,093,768 2,665,117 Machinery and Equipment 2,441,502 2,143,895 Computer Systems, Website and Other 290,661 290,661 Total Fixed Assets 6,092,950 5,327,248 Less: accumulated depreciation ( 1,669,694 ) ( 1,292,138 ) Fixed asset, net $ 4,423,256 $ 4,035,110 F- 11 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 4. Fixed Assets (continued) Depreciation expense of fixed assets for the six months ended June 30, 2025 and 2024 was $ 264,866 and $ 378,636 , respectively. Substantially, all of the Company’s fixed assets are located at the Company’s Hungary location. During the quarter ended March 31, 2025, the Company fully adjusted the value of the machinery and equipment impaired at December 31, 2024 resulting in a decrease in both the gross cost basis and accumulated depreciation by $ 823,617 . 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. Note 6. Other Assets Other assets as of June 30, 2025 and December 31, 2024 are summarized as follows: Schedule of Other Assets June 30, December 31, 2025 2024 Intangibles, net $ 31,062 $ 32,503 Fixed asset deposits 2,063,751 - Other 72,195 72,195 Total Other assets $ 2,167,008 $ 104,698 Intangibles are related to the Asset Acquisition (see Note 5) and consist of an acquired workforce and permits. Amortization for the six months ended June 30, 2025 and 2024 was $ 6,954 and $ 7,143 , respectively. The remaining life of the unamortized intangibles is approximately 2.25 years. Fixed asset deposits at June 30, 2025 relate primarily to machinery, molds and other capital assets (see Note 15). F- 12 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 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 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 three and six months ended June 30, 2025, the Company recorded accreted interest and fees of $ 0 and $ 708,390 , 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 (See Note 8). 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 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 condensed consolidated financial statement and footnotes. F- 13 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 8. Stockholders’ Equity (continued) Common Stock 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 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 (see Note 10). 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- 14 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 8. Stockholders’ Equity (continued) On September 23, 2024, as noted in Note 7, 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 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 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 reverses -$ 14.08 ) per share to $ 2,178 (pre reverses -$ 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 . 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 warrants 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. 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) 391 (pre reverse – 117,340 ) PIPE Shares (or PIPE Pre-Funded Warrants in lieu thereof) and (ii) PIPE Warrants (non-trading) to purchase 1326 (pre reverse - 397,727 ) shares of our common stock, at a combined purchase price of $ 7,089 (pre reverse -$ 23.63 ) per unit or $ 7,082 (pre reverse - $ 23,606 ) 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 April 2025 and October 2024 reverse split, of $ 4,224 adjusted to $ 2,178 at May 30, 2024, based on anti-dilution terms in the warrants. See Note 8€ 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. F- 15 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 8. Stockholders’ Equity (continued) On February 3, 2023, the Company completed a securities purchase agreement (“Offering”) with institutional investors and received net proceeds from the Offering of approximately $ 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 341 (pre reverse - 102,206 ) units at a purchase price of $ 11,154 (pre reverse - $ 37.18 ) 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 reverse splits in April 2025 and October 2024, of $ 10,296 , adjusted 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 . See Note 8(f) 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. 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 as a liability under ASC 815 of $ 5.2 M (See Note 10). Warrants a) a) The Company allocated the proceeds of the January 2025 Offering based on the fair values for the Series A, Series B warrants and Prefunded Warrants. The Company determined the fair value of the Series A and Series B warrants at the Offering date using the Monte Carlo pricing model and treated the valuation as a liability in consideration of the variable number of the issuer’s equity shares in the warrant agreements. The fair value of the Prefunded warrants, also recorded as liability, was based on market price of the common shares. The aggregate fair value at the Offering date was $ 110.0 M and the excess of the fair value over the Offering proceeds of $ 18.2 M, in accordance with ASC 480 “Distinguishing Liabilities from Equity, was recorded as a FMV loss adjustment of $ 91.8 M and a warrant liability of $ 110 M. Subsequent to Shareholder approval of the price adjustment on March 28, 2025 and through March 31, 2025 of 23,933 (pre reverse – 7,198,124 ) Series B warrants were exercised, under the alternative cashless feature, at March 31, 2025 with the elimination of the variable feature in the Series A and B warrants and the complete exercise of the Prefunded warrants, a FMV gain adjustment was recorded of $ 96.3 M, decrease in the warrant liability of $ 102 M and increase to stockholders equity of $ 5.9 M. During the three months ended June 30, 2025, 29,883 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 Sholes valuation method and Series B at the contracted value for the alternative cashless value of $ 9.00 ( pre – reverse - $ 0.03 ). See Note 10 for the Black Sholes assumptions. The remaining 916 (pre reverse - 275,000 ) Prefunded units were exercised prior to March 31, 2025 and the financial statement impact is included above. Since the initial issuance of 54,762 (pre-reverse 16,428,571 ) Series B warrants, approximately 98% have been exercised under the alternative cashless feature. At June 30, 2025, 885 (pre-reverse 265,650 ) Series B warrants remain outstanding. F- 16 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 8. Stockholders’ Equity (continued) b) 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. c) 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. The Inducement Warrants are recorded at the FMV, computed using the Black Scholes valuation method and, recorded a FMV gain adjustment of $ 2,100 and $ 82,217 for the three and six months ended June 30, 2025. For the three and six months ended June 30, 2024, the Company recorded a FMV gain adjustment of $ 293,684 (See Note 10). d) 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 three and six months ended June 30, 2025, was computed using the Black Sholes valuation model was $ 260,566 . The assumptions for warrants were: a) volatility of 139.59 3%, risk free interest rate of 3.71 % and 0 % dividend rate. In connection with an 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 had issued zero warrants during the three months ended June 30, 2024, and 20 (pre-reverse 6,136 ) during the six months ended June 30, 2024. The FMV of the warrants recorded for the six months ended June 30, 2024, computed using the Black Sholes valuation model was $ 8,590 . The assumptions for the six months ended June 30, 2024, were: a) volatility of 33.46 % to 81.62 %, three-year term, risk free interest rate of 4.20 % to 4.21 % and 0 % dividend rate. The warrant holder forfeited the warrants on June 1, 2025 for no further consideration. e) 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 Sholes valuation method. The PIPE Warrant’s liability required remeasurement at each reporting period. The PIPE Warrants were classified as a liability based on ASC 815. For the three and six months ended June 30, 2024, the Company recorded a FMV gain adjustment of $ 326,580 , including the modification charge of $ 489,225 and $ 651,884 ,. The warrants were fully exercised in 2024. f) 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 Sholes valuation method. The Offering Warrants are classified as a liability based on ASC 815. For the three and six months ended June 30, 2024 the Company recorded FMV gain adjustments of $ 139,844 , including the modification charge of 146,028 referred to in Note 10 and $ 221,582 , respectively. The warrants were fully exercised in 2024. g) 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 the three and six months ended June 30, 2025, the Company recorded a FMV gain adjustment of $ 3,842 and $ 15,643 , respectively (See Note 10). During the three and six months ended June 30, 2024, the Company recorded an FMV gain adjustment of $ 60,375 and $ 491,625 , respectively. F- 17 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 8. Stockholders’ Equity (continued) h) 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 three and six months ended June 30, 2025, the Company recorded a FMV gain of $ 105 and $ 427 , respectively (See Note 10). During the three and six months ended June 30, 2024, the Company recorded a FMV gain of $ 1,647 and $ 13,412 , respectively. i) i) 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 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 As noted above, the 2025 Series A and 2025 Series B Warrants issued in connection with the 2025 Offering were accounted for as liabilities in accordance with ASC 815-40 and are presented as a Warrant liability in the accompanying consolidated balance sheet. The 2025 Series A and B warrants, were measured at fair value at inception. As of March 31, 2025, and thereafter, the Series A will be remeasured based on the Black Scholes method, with changes in fair value presented within the consolidated statement of operations. The Black Scholes Option-Pricing model used the following assumptions for the six months ended June 30, 2025 (See Note 8). Schedule of Fair Value of Warrant June 30, 2025 Expected term (years) 4.74 to 4.83 Expected volatility 148.11 % to 206.65 % Risk-free interest rate 3.71 % to 3.80 % Dividend rate 0 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 June 30, 2025 condensed consolidated balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statement of operations, The non-trading warrants, related to the February 2023, September 2023 and May 2024 offerings, were valued using the Black-Scholes pricing model. The assumptions as of the six months ended June 30, 2025, related to the May 2024 warrants only since the February and September 2023 warrants were fully exercised by December 31, 2024, and 2024 were as follows: (See Note 8) F- 18 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 10. Warrant Liability (continued) June 30, 2025 June 30, 2024 Expected term (years) 4.58 - 4.83 3.90 - 5.59 Expected volatility 148.11 % to 206.65 % 58.78 to 68.05 % Risk-free interest rate 3.70 % to 3.88 % % 4.10 % to 4.56 % Dividend rate 0 0 The Warrant liability at June 30, 2025 and December 31, 2024 consists of the following: Schedule of Warrant Liability 2025 2024 Trading and Overallotment Warrants $ 39 $ 15,681 Note Warrants 1 428 Offering Warrants – May 2024 586 82,804 Offering Warrants– January 2025 – Series A 1,225,453 - Offering Warrants – January 2025 – Series B 86,769 - Total Warrant Liability $ 1,312,848 $ 98,913 The Warrants outstanding at June 30, 2025 and December 31, 2024, reflective of the reverse split that occurred on April 28, 2025, were as follows: Schedule of Warrant Outstanding June 30, 2025 December 31, 2024 Trading and Overallotment Warrants 1,335 1,335 Note Warrants 36 36 Offering Warrants – May 2024 869 869 Offering Warrants – January 2025 – Series A 328,196 - Offering Warrants – January 2025 – Series B 5,307 - Warrants issued for services arrangement 72,094 95 Total Warrants Outstanding 407,837 2,335 For the three and six months ended June 30, 2025 the FMV gain adjustment, which is reflected in the FMV adjustment on Warrants in the Condensed Consolidated Statements of Operations was $ 6,468,811 and $ 11,087,700 , respectively, including the net effect for the loss on the January 2025 Offering date (See Note 8) and remeasurement adjustments based on the fair market values as of March 31, 2025 and June 30, 2025. For the three and six ended June 30, 2024, the FMV gain adjustment, which is reflected in the FMV adjustment on Warrants in the Condensed Consolidated Statements of Operations was $ 822,130 , which includes the modification charge of $ 635,253 for the warrants exercised in connection with the Inducement Agreements and $ 1,672,187 respectively (See Note 8). 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 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 F- 19 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 11. Stock Options (continued) A summary of options granted and outstanding is presented below and the table following reflecting effect of reverse split of 1 for 300 on April 28, 2025: Schedule of Stock Options Granted and Outstanding June 30, 2025 Options Weighted Average Exercise Price Outstanding at Beginning of year 507 $ 12,565 Granted - - Forfeited/cancelled ( 6 ) 1,881 Outstanding at end of period 501 $ 12,697 Exercisable at end of period 457 $ 13,489 As of June 30, 2025 and December 31, 2024, there was $ 71,174 and $ 134,807 , respectively, of unrecognized stock-based compensation related to unvested stock options with a weighted average fair value of $ 1,608 (pre reverse - $ 5.36 and $ 3,003 (pre reverse - $ 10.01 ) per share, respectively, which is expected to be recognized over a weighted-average period of ten months as of June 30, 2025. The following table summarizes information about options outstanding at June 30, 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 $ 1,782 to 1,881 196 - 3.75 168 - $ 5,412 to 6,072 6 - 3.33 6 - $ 7,986 to 9,174 172 - 2.54 156 - $ 11,550 8 - 1.00 8 - $ 18,480 22 - 1.00 22 - $ 28,875 31 - - 31 - $ 46,200 66 - 1.00 66 - At June 30, 2025, the stock options outstanding and the options exercisable have exercise prices that exceed the stock market price at June 30, 2025 and as such, no intrinsic value exists. Intrinsic value is defined as the difference between the exercise price of the options and the market price of the Company’s common stock. For the three and six months ended June 30, 2025, the Company recognized stock-based compensation expense of $ 27,543 and $ 70,290 , which was recorded in selling, general and administrative expense. For the three and six months ended June 30, 2024, the Company recognized stock-based compensation expense of $ 201,918 and $ 319,715 respectively, of which $ 316,374 and $ 3,341 was recorded in selling, general and administrative and research and development expenses, respectively. F- 20 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 12. Income Taxes At the end of each interim reporting period, the Company estimates its effective tax rate expected to be applied for the full year. This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods. Accordingly, the Company’s effective tax rate for the three and six months ended June 30, 2025 and 2024 was 0 % and 0 %, respectively. The Company’s effective tax rates for both periods were affected primarily by permanent differences between financial reporting and tax accounting for warrants, as well as a full valuation allowance on domestic net deferred tax assets. In addition, 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. We are currently assessing its impact on our consolidated financial statements. Note 13. Related Party Transactions and Balances As of June 30, 2025 and December 31, 2024, accounts payable and accrued liabilities include $ 22,000 and $ 99,500 , 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 and warrant liability. Cash and warrant liability are measured at fair value. Accounts payable and notes payable are measured at amortized cost and approximates fair value due to their short duration and market rate for similar instruments, respectively. As of June 30, 2025, the following financial assets and liabilities were measured at fair value on a recurring basis presented on the Company’s condensed 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 $ 8,322,192 — — $ 8,322,192 Total assets measured at fair value $ 8,322,192 — — $ 8,322,192 Liabilities Warrant liability $ - $ 1,312,848 - $ 1,312,848 Total liabilities measured at fair value $ - $ 1,312,848 - $ 1,312,848 F- 21 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 14. Fair Value Measurements (continued) As of December 31, 2024, the following financial assets and liabilities were measured at fair value on a recurring basis presented on the Company’s condensed 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 15. Commitments and Contingencies Fixed Assets and Other At June 30, 2025, the Company had outstanding orders to purchase equipment, molds and other assets for $ 4.7 M of which $ 1.7 M is within Other Assets and the balance to be incurred and paid upon contract terms. 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 (i) claims for damages of an aggregate of $ 456,000 for defendants’ alleged (1) breach of a 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 (ii) a declaration that Berler is the rightful owner of 50% of the Company’s Series A Preferred Stock (which preferred stock is no longer outstanding) and (iii) an injunction barring Blackman from voting the Preferred Stock and from transferring the Preferred Stock to the Company. The Company has assumed Blackman’s defense pursuant to indemnification obligations. The Company has accrued for the claim for unpaid monthly consulting fees. No amounts have been accrued for the bonus and severance claims. The Company believes that Berler’s claims are without merit and intends to defend itself vigorously. On September 17, 2024, the Company filed an answer and counterclaims with respect thereto, including for recoupment of certain compensation the Company previously paid to Berler. On February 27, 2025 the Company filed an amended answer, counterclaims and third-party claims against Berler, Plastomold Industries Ltd. (“Plastomold”), Plasto Design Ltd and Plasto Design Solutions. This case is in the discovery stage. F- 22 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 15. Commitments and Contingencies (continued) On June l7, 2024, Berler filed a demand for arbitration and statement of claim under the commercial arbitration rules of the American Arbitration Association (“AAA”) against the Company asserting claims for payment of $ 500,000 plus interest, under the Company’s royalty agreement with Berler, as amended, rescission thereof and reversion to Berler of the intellectual property rights subject thereto. The Company believes that Berler’s claims are without merit and intends to defend itself vigorously in connection with these claims. The Company filed an answer with counterclaims. This proceeding is in the discovery stage. 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. This proceeding is in the discovery stage. 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. Further, all unvested options were fully vested and the Company recorded a charge of $ 60,000 in 2023. 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. F- 23 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 15. Commitments and Contingencies (continued) On September 30, 2022, the Company entered into a formal employment agreement, effective on such date and will continue until terminated by either party, subject to the terms of the agreement, with Andrew R. Crescenzo who has been serving as the Company’s Chief Financial Officer on a contract services basis for the last three years. The agreement provided for annual compensation of $ 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 Equity Incentive Plans. The agreement contains customary employment terms and conditions. On November 10, 2023, the Company executed an Employment Agreement with Robert Hayes, its Chief Executive Officer amending the employment letter dated September 6, 2021. The agreement term automatically renews for successive one-year terms as of the commencement date unless prior written notice by either party within ninety days prior to end of the current term. The agreement provides for termination of employment and severance benefits under stated conditions and restrictive covenants. The agreement provided for annual compensation retroactive to June 1, 2023 of $ 600,000 from $ 400,000 and a stated increase with the successful acquisition of InjectEZ (see below) and other terms of the acquisition agreement (See Note 5). The agreement provides for bonus compensation for: (i) closing the Nephron acquisition agreement (see below), (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 and six months ended June 30, 2024. The Company and Seller are currently not actively working towards a further amendment of the Asset Purchase Agreement. If this changes in the future, the closing of the Asset Purchase Agreement would be contingent on obtaining further amendments and the necessary financing, of which there can be no assurance. 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– Segment Reporting The accounting policies for the segment information are the same as described in Note 2- Summary of Significant Accounting Policies. The Company commenced product revenue during the three months ended June 30, 2025. The CODM assesses the performance of and decides how to allocate resources for the one segment based on Consolidated Net Income (Loss) Further, EBITDA (earnings before interest, taxes, depreciation and amortization), which is not presented on the face of the Consolidated Statements of Operations, is used to assist with the measurement of segment performance and allocate resources. The CODM also uses Net Income (loss) and EBITDA, to decide the level of investment in various operating activities and other capital allocation activities. The measure of segment assets is reported on the Consolidated Balance Sheets as Consolidated Total assets. F- 24 SHARPS TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 Note 16– Segment Reporting (continued) The following table presents the Company’s segment results for the six months ended: Schedule of Company’s Segment June 30, 2025 June 30, 2024 Revenue, net $ 222,722 $ - Cost of Manufacturing 1,254,749 - Gross Margin (loss) ( 1,032,027 ) - Expenses Research and development – Note A ( 77,932 ) ( 186,001 ) General and administrative – Note A ( 3,646,864 ) ( 3,190,631 ) Depreciation and amortization ( 271,328 ) ( 388,520 ) Interest income (expense) ( 530,038 ) 24,312 FMV gain/ (loss) adjustment on warrants 11,087,700 1,672,187 Other income (expense) (see note 15) - ( 1,000,000 ) Foreign currency and other ( 41,370 ) ( 16,060 ) Segment and Consolidated Net Income (loss) $ 5,488,141 $ ( 3,084,713 ) June 30, 2025 December 31, 2024 Total Consolidated Assets $ 17,085,197 $ 7,313,748 Capital Expenditures and deposits paid (2025 – Six months ended; 2024 – Year Ended) $ 1,959,758 $ 698,277 Notes: (A)-net of depreciation and amortization The following table presents the Company’s segment results for the three months ended: June 30, 2025 June 30, 2024 Revenue, net $ 222,722 $ - Cost of Manufacturing 1,254,749 - Gross Margin (loss) ( 1,032,027 ) - Expenses Research and development – Note A ( 28,686 ) ( 84,429 ) General and administrative – Note A ( 1,805,262 ) ( 1,643,562 ) Depreciation and amortization ( 140,407 ) ( 193,109 ) Interest income (expense) 96,953 5,288 FMV gain/(loss) adjustment on warrants 6,468,811 822,130 Foreign currency ( 75 ) ( 8,645 ) Other income (expense) (see note 15) - ( 1,000,000 ) Segment and Consolidated Net Income (loss) $ 3,559,307 $ ( 2,102,327 ) Notes: (A)-net of depreciation and amortization Note 17 - Subsequent Events Subsequent to June 30,2025, the Company executed a Subscription and Investment Agreement (the “Subscription Agreement”) with Paul Danner (“Subscriber”), the Company’s Executive Chairperson, whereby the Subscriber purchased five ( 5 ) 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 acknowledges and agrees 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. On August 11, 2025, the Company notified Mr. Hayes of Non -Renewal of his Employment Agreement, as provided for under terms of the Employment Agreement (See Note 15). On August 13, 2025, the Company executed an Employment Agreement with Paul Danner, in connection with his appointment as the Company’s Executive Chairperson effective July 1, 2025. Mr. Danner previously served as a Director and Audit Committee Chairperson. 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 provided for annual compensation of $ 258,000 . The agreement provides for bonus compensation for specified Company achievements. In addition, the agreement provides for benefits and paid time off and participation in the Company’s Equity Incentive Plans. The agreement contains customary employment terms and conditions. F- 25