Sharps Technology Inc. Warrant

Company Overview

Business Model: Sharps Technology, Inc. is an innovative medical device and pharmaceutical packaging company focused on patented smart-safety syringe products. The Company's product lines emphasize ultra-low waste capabilities, incorporating both passive and active safety features, and reuse prevention. Sharps Technology, Inc. also develops products with specialized copolymer technology for the prefillable syringe market segment. The Company owns and operates a manufacturing facility in Hungary and is pursuing commercialization through manufacturing and distribution of its products. To date, Sharps Technology, Inc. has not generated any revenue.

Market Position: Sharps Technology, Inc. positions its Securegard and Sologard safety syringe product lines as competitive advantages due to their ultra-low waste features (less than 20 microliters of dead space compared to 70-140 microliters in competitors' syringes), passive and active safety mechanisms, and reuse prevention features. The Securegard and Sologard lines are FDA and WHO approved, and Safegard Medical (Hungary) KFT holds the European CE Mark. These products are currently in qualification phases with leading EU and US companies, with initial revenue potential in 2025. The Company notes a rapidly growing demand for innovative injection solutions across various therapeutic areas including vaccines, biologics, weight loss (GLP-1), ophthalmic, cosmetic, gene therapies, and diabetes and inflammatory disease management. Primary competitors include Retractable Technologies, Inc., Becton Dickinson & Company, Medtronic Minimally Invasive Therapies, Terumo Medical Corp., Smiths Medical, and B. Braun.

Recent Strategic Developments:

• January 2025 Offering: Completed a $20 million offering, providing working capital to expand European operations through advanced machinery, workforce expansion, and enhanced production capabilities, while also becoming debt-free.
• Stericare Solutions, LLC Supply Agreement (July 2024): Entered into an agreement to sell 520 million units of 10ml polypropylene Sologard syringes to Stericare Solutions, LLC over an initial five-year term, with expected revenues exceeding $50 million. Deliveries were targeted to commence in November 2024.
• European Sales Agreement (December 2024): Signed a sales agreement with a prominent European medical supply company for Securegard safety syringes in Poland, Slovakia, and the Czech Republic. Deliveries for qualification purposes are underway.
• InjectEZ, LLC Acquisition Termination (March 2024): The agreement to acquire InjectEZ, LLC was terminated, resulting in the forfeiture of a $1 million non-refundable deposit in the second quarter of 2024. Sharps Technology, Inc. continues to engage with the seller to finalize manufacturing arrangements in South Carolina and actively seeks funding partners for U.S. manufacturing capacity expansion.
• Provensa Product Line Delay: Commercialization of the Sharps Provensa product line has been delayed due to the need for further design and assembly optimization, requiring additional capital investment not currently budgeted. No timeline for further development has been determined.

Geographic Footprint: Sharps Technology, Inc.'s principal executive office is in Melville, New York, U.S. The Company owns and operates a 41,000 square foot manufacturing facility in Hungary, which is its primary production location. Of its fifty-five full-time employees, fifty are based in Hungary. The Company reported a loss before income taxes of $(7,495,413) from United States Operations and $(1,830,789) from International Operations for the year ended December 31, 2024.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 0%
• Operating Margin: Not meaningful
• Net Margin: Not meaningful

Investment in Growth:

• R&D Expenditure: $2,471,762
• Capital Expenditures: $163,137
• Strategic Investments: A $1,000,000 escrow deposit was forfeited in 2024 related to a terminated asset acquisition agreement. Proceeds from the January 2025 offering are allocated to expanding production capacity in Hungary, including advanced machinery and facility upgrades.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: No share repurchases were made in 2024 or 2023.
• Dividend Payments: Sharps Technology, Inc. has not paid any cash dividends and has no present intention of paying dividends in the foreseeable future, planning to retain any future earnings for operations and business development.
• Dividend Yield: 0%
• Future Capital Return Commitments: None disclosed.

Balance Sheet Position:

• Cash and Equivalents: $864,041 (as of December 31, 2024)
• Total Debt: $3,763,622 (Notes Payable, net of discount, as of December 31, 2024)
• Net Cash Position: $(2,899,581) (as of December 31, 2024)
• Credit Rating: Not disclosed.
• Debt Maturity Profile: A Senior Secured Note for an aggregate principal amount of $4,375,000 (including OID interest of $875,000) matured on January 31, 2025, and was repaid using proceeds from the January 2025 offering.

Cash Flow Generation:

• Operating Cash Flow: $(6,929,544) (2024)
• Free Cash Flow: Negative, reflecting cash used in operating activities and capital expenditures.

Operational Excellence

Production & Service Model: Sharps Technology, Inc. focuses on smart safety disposable syringes with ultra-low waste technology, designed to reduce wasted medication (less than 20 microliters of dead space) and incorporate passive and active safety features, along with reuse prevention. The Company has developed polymer-based prefillable syringes using inert polymers (Cyclic Olefin Polymer and Cyclic Olefin Copolymer) as an alternative to traditional glass, offering long-term drug stability, reduced breakage, minimized dead space, and customization for devices like autoinjectors.

Supply Chain Architecture: Key Suppliers & Partners:

• Manufacturing Partners: The Company continues to engage with the seller of InjectEZ, LLC to finalize manufacturing arrangements in South Carolina and actively seeks funding partners to expand U.S. manufacturing capacity.

Facility Network:

• Manufacturing: Owns and operates a 41,000 square foot manufacturing facility in Hungary, primarily used for safety syringe production.
• Research & Development: The Hungary facility was previously used for product development and testing.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Channel Partners:
  • Stericare Solutions, LLC: A supply agreement for 520 million units of 10ml polypropylene Sologard syringes.
  • Prominent European medical supply company: A sales agreement for Securegard safety syringes in Poland, Slovakia, and the Czech Republic.

Customer Portfolio: Enterprise Customers: Sharps Technology, Inc.'s Securegard and Sologard products are in qualification phases with leading EU and US companies. Stericare Solutions, LLC and a prominent European medical supply company represent significant customer relationships for future revenue.

• Customer Concentration: Not explicitly quantified, but the Stericare Solutions, LLC agreement represents a substantial portion of anticipated future revenue.

Geographic Revenue Distribution: As of December 31, 2024, Sharps Technology, Inc. has not generated any revenue. Future revenue is expected from Europe (Poland, Slovakia, Czech Republic) and the U.S. (Stericare Solutions, LLC).

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The market for injectables is experiencing rapid growth, driven by demand in vaccines, biologics, weight loss (GLP-1), ophthalmic, cosmetic applications, gene therapies, and diabetes and inflammatory disease management. The industry faces significant challenges with accidental needlestick injuries (over 3 million worldwide annually) and wasted medication due to dead space in conventional syringes, creating a strong demand for safety-engineered and ultra-low waste devices.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Retractable Technologies, Inc.
• Becton Dickinson & Company
• Medtronic Minimally Invasive Therapies
• Terumo Medical Corp.
• Smiths Medical
• B. Braun

Emerging Competitive Threats: Sharps Technology, Inc. is vulnerable to the development of superior or similar competing products and to changes in technology that could reduce the need for its current offerings.

Competitive Response Strategy: The Company aims to compete on the basis of healthcare worker and patient safety, product performance, and quality, leveraging its innovative drug delivery systems with active and passive safety features and ultra-low waste capabilities. Sharps Technology, Inc. is investing in advanced production technology and expanding its manufacturing footprint in Hungary, while also seeking to establish U.S. manufacturing for its next-generation polymer-based prefillable syringes.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: Sharps Technology, Inc. is an early-stage company with a history of losses and no revenue to date, facing uncertainty in achieving and sustaining profitability. The Company's narrow product focus makes it vulnerable to new, superior, or similar competing technologies. It operates in a highly competitive market against companies with greater financial resources and market influence. Widespread health crises could negatively impact product demand, supply chain, and operational efficiency.

Operational & Execution Risks

Supply Chain Vulnerabilities: The Company needs to build inventory and increase production capacity, which requires purchasing additional equipment. Product liability claims are an inherent business risk, with current coverage at $5 million. Commercialization efforts may face difficulties or delays in marketing, scaling manufacturing, attracting skilled staff, or establishing brand recognition.

Financial & Regulatory Risks

Market & Financial Risks: Sharps Technology, Inc. expects to require additional capital to execute its business plan and expand operations, with no assurance that financing will be available on favorable terms. The Company's common stock is subject to extreme price volatility. Sharps Technology, Inc. received a delisting notification from Nasdaq on March 12, 2025, for failing to meet the minimum $1.00 bid price requirement and is not eligible for a compliance period due to a prior reverse stock split. The Company has requested a hearing to appeal this determination. Future equity issuances could result in significant dilution for existing stockholders.

Regulatory & Compliance Risks: The Company is subject to extensive U.S. and international medical device regulations, including design, testing, marketing authorization, manufacturing, and post-market surveillance. Changes in healthcare regulations, reimbursement programs, or patient access could adversely affect demand or pricing. Compliance with health care fraud and abuse laws (e.g., anti-kickback, false claims) is also required.

Geopolitical & External Risks

Geopolitical Exposure: The Company's manufacturing facility in Hungary exposes it to regional geopolitical risks.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: Sharps Technology, Inc. focuses on smart-safety syringe products with ultra-low waste capabilities, passive and active safety features, and reuse prevention. A key area is the development of polymer-based prefillable syringes using inert polymers (Cyclic Olefin Polymer and Cyclic Olefin Copolymer) as a superior alternative to glass, offering enhanced drug stability, reduced breakage, and customization. Innovation Pipeline: The prefillable syringe pipeline includes 1mL short, 2.25mL, 5mL, 10ml and 50ml volumetric sizes, silicone-free systems, ophthalmic drug delivery, dual chamber systems for lyophilized products, and custom container solutions for autoinjectors.

Intellectual Property Portfolio:

• Patent Strategy: Sharps Technology, Inc. owns four utility patents for the Sharps Provensa product (expiring 2035-2040), a design patent (US 743,025) for a safety syringe (expiring November 10, 2029), and utility patents for an ultra low-waste needle and syringe system (US 10,980,950), a pre-filled safety needle and syringe system (US 11,154,663), and an Ultra-Low Waste Disposable Safety Syringe for Low Dose Injections (US 11,497,860). The Company also has two pending U.S. patent applications and four PCT patent applications.
• IP Litigation: The Company is involved in a lawsuit and arbitration with Barry Berler, a co-founder, which includes claims related to intellectual property rights and a royalty agreement.

Technology Partnerships: Sharps Technology, Inc. collaborates with government and private investment sources in Hungary to expand its manufacturing footprint.

Leadership & Governance

Executive Leadership Team

Board Composition: The Board of Directors consists of six members: Robert M. Hayes, Soren Bo Christiansen (Chairman), Paul K. Danner, Timothy J. Ruemler, Brenda Baird Simpson, and Jason L. Monroe. Four directors (Mr. Ruemler, Mr. Danner, Ms. Simpson, and Mr. Monroe) are independent. The Board has an Audit Committee (chaired by Paul Danner), a Compensation Committee (chaired by Jason Monroe), and a Nominating Committee (chaired by Timothy J. Ruemler).

Human Capital Strategy

Workforce Composition: Sharps Technology, Inc. has fifty-five full-time employees. Fifty employees are located at the Company's facilities in Hungary, with the remaining five (including the CEO and CFO) in the U.S. The Company expects to add additional employees as production capacity increases.

Talent Management: Acquisition & Retention: The Company's hiring strategy is focused on supporting increased production capacity.

Business Cyclicality & Seasonality

Demand Patterns: The Company notes that demand for its innovative injection solutions is growing rapidly, driven by the continued preference for injectables in various therapeutic areas.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: Sharps Technology, Inc. operates under the Federal Food, Drug and Cosmetic Act (FDCA) and FDA regulations in the U.S., governing all aspects of medical device lifecycle. Internationally, the Company must obtain marketing authorizations from foreign regulatory authorities, with processes varying by country. Its Securegard and Sologard products are FDA and WHO approved, and Safegard Medical (Hungary) KFT holds the European CE Mark. The Company is also subject to healthcare fraud and abuse laws.

Legal Proceedings:

• Barry Berler Lawsuit (July 2024): A lawsuit filed by a co-founder claiming $456,000 for alleged unpaid consulting fees, bonus, and severance, and seeking ownership of Series A Preferred Stock. The Company has accrued $52,500 for unpaid consulting fees and intends to vigorously defend against the claims, filing counterclaims.
• Barry Berler Arbitration (June 2024): A demand for arbitration claiming $500,000 plus interest under a royalty agreement, rescission, and reversion of intellectual property rights. The Company believes these claims are without merit and intends to defend itself vigorously.
• Plastomold Industries Ltd. Lawsuit (April 2024): A lawsuit claiming $1.762 million for alleged unpaid invoices (including $1 million related to defective machinery), breach of implied covenant, unjust enrichment, and conversion. The Company believes these claims are without merit and has filed counterclaims for damages exceeding Plastomold Industries Ltd.'s claims due to insufficient services and defective machinery.

Tax Strategy & Considerations

Tax Profile: The Company's effective tax rate is reconciled to the federal statutory rate of 21%. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases, with a full valuation allowance recorded against deferred tax assets. As of December 31, 2024, the Company had U.S. federal net operating loss carryforwards of approximately $29,779,000 (some expiring by 2038, some not expiring) and foreign net operating loss carryforwards of $3,845,000 (expiring through 2029).

Insurance & Risk Transfer

Risk Management Framework: Sharps Technology, Inc. maintains product liability coverage of $5 million, which may be increased with sales, and recall insurance.