Sharps Technology(STSS) - 2024 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (Unaudited) Q1 2024 saw no revenue, a net loss reduction to $0.98 million from $2.11 million due to warrant liability adjustments, and decreased cash, highlighting going concern risks Condensed Consolidated Balance Sheets Total assets decreased to $9.80 million from $11.79 million by March 31, 2024, driven by reduced cash and warrant liabilities, leading to a decline in stockholders' equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2024 ($) | December 31, 2023 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $1,165,913 | $3,012,908 | | Total Current Assets | $3,210,640 | $4,838,551 | | Total Assets | $9,803,822 | $11,789,268 | | Liabilities & Equity | | | | Warrant liability | $1,572,728 | $2,422,785 | | Total Current Liabilities | $2,781,192 | $3,692,982 | | Total Liabilities | $2,943,192 | $3,854,982 | | Total Stockholders' Equity | $6,860,630 | $7,934,286 | Condensed Consolidated Statements of Operations Q1 2024 saw no revenue, with net loss significantly improving to $982,386 from $2,111,830 due to lower operating expenses and a larger warrant fair value gain Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Revenue, net | $ - | $ - | | Research and development | $197,439 | $333,888 | | General and administrative | $1,646,613 | $1,983,912 | | Loss from operations | $(1,844,052) | $(2,317,800) | | FMV adjustment warrants | $850,057 | $184,085 | | Net loss | $(982,386) | $(2,111,830) | | Net loss per share, basic and diluted | $(0.05) | $(0.20) | Condensed Consolidated Statements of Cash Flows Q1 2024 net cash used in operations was $1.89 million, with minimal financing inflows compared to $3.24 million in Q1 2023, resulting in a $1.85 million net cash decrease Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,889,315) | $(2,062,670) | | Net cash used in investing activities | $(2,852) | $(163,272) | | Net cash provided by financing activities | $396 | $3,238,711 | | Net (Decrease) Increase in Cash | $(1,846,995) | $1,086,349 | | Cash - Beginning of Year | $3,012,908 | $4,170,897 | | Cash - End of Period | $1,165,913 | $5,257,246 | Notes to the Condensed Consolidated Financial Statements Notes reveal Sharps is a pre-revenue medical device company facing going concern doubts due to insufficient working capital, detailing inventory, fixed assets, warrant liabilities, stock options, and commitments - The company is a pre-revenue medical device company and has not generated revenue or cash flow from operations since inception[21][23] - There is substantial doubt about the company's ability to continue as a going concern, as its working capital of $429,448 as of March 31, 2024, is insufficient to fund planned operations for the next 12 months. The company's continuation is dependent on raising additional financing[23] - Certain warrants are accounted for as liabilities and are re-measured at fair value each reporting period. For Q1 2024, this resulted in a non-cash gain of $850,057, which significantly reduced the reported net loss[42][74] - Subsequent to the quarter's end, on April 26, 2024, the company granted five-year options to purchase a total of 1,395,000 shares to directors, officers, employees, and consultants under its 2023 Equity Incentive Plan[93] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's pre-revenue status and going concern risk, highlighting decreased Q1 2024 R&D and G&A expenses, a significant warrant revaluation gain, and critical liquidity challenges requiring further capital - The company has generated no revenue to date and had an accumulated deficit of $26.1 million as of March 31, 2024[96] - Working capital of $429,448 as of March 31, 2024, is not sufficient to fund planned operations for the next 12 months, raising substantial doubt about the company's ability to continue as a going concern[97] - The company entered into a cooperative sales and distribution agreement with Roncadelle Operations s.r.l on March 4, 2024, establishing mutual exclusive distributorship in specified global territories[105] Results of Operations Comparison (Q1 2024 vs Q1 2023) | Item | 2024 ($) | 2023 ($) | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Research and development | $197,439 | $333,888 | $(136,449) | (41)% | | General and administrative | $1,646,613 | $1,983,912 | $(337,299) | (17)% | | FMV (gain) loss adjustment | $(850,057) | $(184,085) | $(665,972) | 362% | | Net loss | $982,386 | $2,111,830 | $(1,129,444) | (53)% | - Cash used in operating activities decreased to $1.89 million in Q1 2024 from $2.06 million in Q1 2023, primarily due to lower operating expenses[129] Quantitative and Qualitative Disclosures About Market Risk Disclosure about market risk is not required as the company qualifies as a smaller reporting company - Disclosure about market risk is not required for smaller reporting companies[137] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of the end of the quarter, the company's disclosure controls and procedures were effective[138] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[139] PART II OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently involved in any material legal proceedings[140] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Form 10-K for the year ended December 31, 2023 - As of the filing date, there have been no material changes to the risk factors disclosed in the Form 10-K for the year ended December 31, 2023[141] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered equity sales occurred in Q1 2024, and IPO proceeds were consistently used for working capital, facility acquisition, and capital expenditures as per the prospectus - No unregistered sales of equity securities occurred during the quarter ended March 31, 2024[142] - Net proceeds from the April 2022 IPO have been used for working capital, acquisition of the Hungary facility, and capital expenditures, with no material change in the expected use of proceeds[144] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files