STSS Sharps Technology Inc

PROPOSAL NO. 1

APPROVAL OF THE REDUCTION OF THE POTENTIAL MINIMUM EXERCISE PRICE OF COMMON STOCK PURCHASE WARRANTS ISSUED PURSUANT TO THE SECURITIES PURCHASE AGREEMENT FROM $1.56 TO $0.0001, WHICH IS THE PAR VALUE OF THE COMPANY’S COMMON STOCK.

Why is this proposal included for Stockholder approval?

On February 3, 2023 , the Company completed a Private Investment in Public Equity Offering (“PIPE Offering”), in connection with which it entered into a Securities Purchase Agreement (the “Agreement”) and Registration Rights Agreement (the “Registration Rights Agreement”) with institutional investors for aggregate gross proceeds of approximately $3,800,000  (before deducting fees to the placement agent and other expenses payable by the Company). The PIPE Offering closed on February 3, 2023. The aggregate gross proceeds to the Company were approximately $3.8 million, before deducting fees to the placement agent and other offering expenses payable by the Company.

The common stock being offered by the selling stockholders are those previously issued to the institutional investors in the February 2023 Private Placement and those issuable to the investor upon exercise of the warrants. For additional information regarding the issuances of those shares of common stock and warrants, see “Private Placement of Shares of Common Stock and Warrants” above. We have registered the shares of common stock in order to permit the selling stockholders to offer the shares for resale from time to time. Except for the ownership of the shares of common stock and warrants, the selling stockholders have not had any material relationship with us within the past 2 years. The PIPE Offering closed on February 3, 2023.

In connection with the PIPE Offering, the Company issued 4,054,055 Warrants exercisable for one share of common stock, at a price of $1.56, subject to adjustments pursuant to the Warrant agreements (the “ Warrant Agreement”). The Warrants (the “Warrants”) are exercisable immediately upon issuance and will expire five years from the issuance date.

The Agreement requires the Company to use its reasonable best efforts to obtain stockholder approval to reduce the potential minimum exercise price of the Warrants (the “Floor Price”) from $1.56 to $0.0001, the par value of the Company’s Common Stock. The Company is unable to change the Floor Price without stockholder approval due to Nasdaq Rule 5635(d).

Our common stock is listed on The Nasdaq Capital Market and, as such, we are subject to the Nasdaq Stock Market Rules. Nasdaq Rule 5635(d) is referred to as the “Nasdaq 20% Rule.” The Nasdaq 20% Rule requires that an issuer obtain stockholder approval prior to certain issuances of common stock or securities convertible into or exchangeable for common stock at a price less than the lower of (i) the Nasdaq official closing price immediately preceding the transaction, and (ii) the average Nasdaq official closing price for the five trading days immediately preceding the transaction (the “Minimum Price”), if such issuance equals 20% or more of the common stock or voting power of the issuer outstanding before the transaction.

In connection with the PIPE Offering, the Company issued 4,054,055 Warrants, which represented approximately 37% of the 11,656,936 shares of common stock outstanding on the closing date of the PIPE Offering. On such date, the Minimum Price for purposes of the Nasdaq 20% Rule was $1.56. Therefore, under the Nasdaq 20% Rule, the Company cannot issue additional shares in connection with the PIPE Offering at a price less than $1.56, and thus cannot reduce the Floor Price to less than $1.56, without stockholder approval.

The Agreement requires that we obtain such approval as may be required by the applicable rules and regulations of The Nasdaq Capital Market to reduce the Floor Price from $1.56 to $0.0001, the par value of the Company’s common stock. The Agreement requires that if the Company does not obtain stockholder approval at the first meeting, the Company shall call a meeting two times per year (which may include one Special Meeting) to seek stockholder approval until the earlier of the date stockholder approval is obtained, or the date the Warrants are no longer outstanding.

Effect of Floor Price Proposal on Warrant Exercise Price

The Warrant Agreement provides for an adjustment of the exercise price for subsequent offerings while the Warrants are outstanding, that are made at an effective price per share less than the exercise price then in effect. Such lower price being defined in the Warrant Agreement as the Base Share Price and such offering defined as a Dilutive Issuance. Simultaneously with a Dilutive Issuance, the Warrant exercise price shall be reduced and only reduced to equal the greater of (x) the Base Share Price and (y) the Floor Price. Prior to Stockholder approval the Floor Price shall be $1.56.   

Should the Stockholders approve this proposal, the current Floor Price of $1.56 will be rendered inapplicable and the Floor Price will be $0.0001, the par value of the Company’s Common Stock. For clarity purposes, the Warrant exercise price will only be reduced if the Company issues shares of Common Stock or securities convertible into Common Stock at less than $1.56 per share.

The following example illustrates the effect of the proposal based on:

Warrant Exercise Price if proposal approved:

Warrant Exercise Price if proposal not approved:

Operational Impact to Company of Floor Price Proposal

Should the proposal not be approved by the Stockholders, the Company will be required to solicit such approval at least twice annually until the proposal is approved or the Warrants are no longer outstanding or have expired or the floor price has otherwise been reduced to $0.0001. If the proposal is not approved, such subsequent proposals will require additional costs and management resources to be incurred to solicit the requests for Stockholders approval of the proposal. Management does not anticipate in the foreseeable future that any subsequent offerings as defined in the Agreement would be issued at an effective price below $1.56. Should the price of subsequent offerings not be less than $1.56, there is no effect on the Warrant exercise price of approving the proposal as it would remain at $1.56 if the Base Price of any subsequent offerings is $1.56 or greater. 

Vote Required

This proposal will be approved by the affirmative vote of a majority of the voting securities present and represented by proxy and entitled to vote at the Special Meeting. Abstentions and broker non-votes will have the same effect as votes against this proposal. Common stock and Series A Preferred Stock will vote together as a class on this proposal.

Board of Directors Recommendation

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE REDUCTION OF THE MINIMUM EXERCISE PRICE OF COMMON STOCK PURCHASE WARRANTS ISSUED PURSUANT TO THE SECURITIES PURCHASE AGREEMENT FROM $1.56 TO $0.0001, WHICH IS THE PAR VALUE OF THE COMPANY’S COMMON STOCK

No Appraisal Rights

Under the Nevada Revised Statutes, our stockholders are not entitled to appraisal rights with respect to the matter  .

Vote Required

The affirmative vote of a majority of the votes cast in connection with Proposal No. 1 at the Special Meeting of common stock and Series A Preferred Stock.

The Board of Directors unanimously recommends a vote FOR the approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of 20% below the market price of our common stock, as required by and in accordance with Nasdaq Marketplace Rule 5635(d).

HOUSE HOLDING OF MATERIALS

In some instances, only one copy of the proxy materials is being delivered to multiple stockholders sharing an address, unless we have received instructions from one or more of the stockholders to continue to deliver multiple copies. We will deliver promptly, upon oral or written request, a separate copy of the applicable materials to a stockholder at a shared address to which a single copy was delivered. If you wish to receive a separate copy of the proxy materials you may call us at 631-574 -4436, or send a written request to Sharps Technology, Inc., 105 Maxess Road, Suite 124, Melville, NY 11747, attention: Secretary. If you have received only one copy of the proxy materials, and wish to receive a separate copy for each stockholder in the future, you may call us at the telephone number or write us at the address listed above. Alternatively, stockholders sharing an address who now receive multiple copies of the proxy materials may request delivery of a single copy, also by calling us at the telephone number or writing to us at the address listed above.

WHERE YOU CAN FIND MORE INFORMATION

The Company files annual, quarterly and current reports, proxy statements and other information with the Commission. You can read and copy any materials that the Company files with the Commission at the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information about the operation of the SEC’s Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission also maintains a Web site that contains information we file electronically with the Commission, which you can access over the Internet at www.sec.gov. The Company is incorporating by reference its Annual Report on Form 10-K filed on March 31, 2023.

You should rely only on the information contained in, or incorporated by reference as an exhibit to, this Proxy Statement. We have not authorized anyone else to provide you with different information. You should not assume that the information in this Proxy Statement is accurate as of any date other than June [__], 2023, or such earlier date as is expressly set forth herein.

OTHER BUSINESS

The Board of Directors knows of no business to be brought before the Special Meeting other than as set forth above. If other matters properly come before the stockholders at the meeting, it is the intention of the persons named on the proxy to vote the shares represented thereby on such matters in accordance with their judgment.

Dated: May [__], 2023