Market for different customers that we have in Europe and the United States. One I wanted to focus on today was the opportunity that we executed on for a $50 million sales agreement with a large U.S. filler for 10 mL syringes. We signed that agreement in July of 2024. This will be an agreement that will be supported by our facility in Europe, and we will actually sell out most of the capacity for our facility as it is right now for this particular customer.
The exciting news is we worked with Aegis at the end of the year last year to raise the money for the equipment and the technology that we needed to be able to expand the footprint for these products inside the facility and to be able to scale up, to be able to produce the number of products that we have the sales agreement for and the potential opportunity to expand. This opportunity carries with it a potential expansion piece for us that could bring another 250 million units to the facility.
The raise, the financial raise that we did with Aegis, was a little complicated for us because we were so small, but we really appreciate the help and the support that we got from investors to be able to bring the money forward, to be able to support this, what we consider to be a strategic and transformative agreement for our facility in Hungary. For those of you that do not know our story, we own and operate the facility in Europe. There is no debt on that facility. It focuses on smart safety syringe technology and some other products. The facility is scalable and expandable, which we will be working through this year to be able to support the contract I just mentioned. We are aggressively looking for a U.S. manufacturing facility either to own outright or through a partnership.
One of the opportunities we're looking at is the potential facility in South Carolina that we found. This facility in South Carolina specializes in prefillable syringes with copolymer technology, which we feel is the next big step for prefilled syringes. Having worked in this industry for close to 30 years now, prefilled syringes are one of the fastest growing spaces for drug delivery, and the specialized copolymer technologies bring advantages, which I'll talk about here in a minute, for the market for our customers. Just a brief overview on the products that we make in Europe today. The SecureGard product is a needle product that carries with it low-waste technology, passive safety technology, and then reuse prevention. The SoloGard product on the far right also carries with it low waste and reuse prevention.
The SoloGard product on the right is the product that we'll be talking about for the large contract that we have for the U.S. filler. Prefillable syringes, we included a slide in here for Aegis to share within the deck to help people understand the advantages, but from the standpoint of how the market uses them and how the customers benefit from them. The strategy there is to get to a lightweight syringe technology that brings with it accuracy and manufacturing capabilities that create a very clean product for the end customer and for the patient. These products are typically produced in clean rooms with clean room injection molding, manufacturing, and assembly technology. There are huge advantages over glass and other types of products. It creates drug stability and drug performance characteristics that are unlike other types of products.
It really helps our healthcare customers, and it allows our healthcare customers to put different types of products in these syringes to help the patients that they serve. Just a brief overview on our facility in Hungary, kind of a detailed summary page here. We've talked about it a little bit, but I thought it was important to include it in the deck so people understand our capability and what can take place for our facility. The agreement that we've been working on and talking about at length is this particular agreement here. A large U.S. filler of 10 mL syringes has seen high growth and is moving away from their Chinese source of syringes due to quality issues and tariffs. We've been able to secure an opportunity to support this business for them and then begin production for them.
We'll be making some of our first shipments to the customer next week. We expect to create early revenue here in Q2 with this project with our first purchase order. This customer has committed to taking as much product as we can make as we scale up this year and bring in some of the equipment and get it qualified and begin to ramp up to be able to hit the run rate of the 500 million units over five years. An overview of the syringe market. For those of you that don't know much about it, again, like I mentioned, it's one of the fastest growing spaces for drug delivery. A lot of money behind this, a lot of investment behind this by healthcare companies. We see this as a huge opportunity to grow organically and to partner with other suppliers.
The market globally is very broad. I wanted to have a slide in here for people to understand who uses these prefillable syringes and what they use them for, and then the different sizes. People can understand that not only is it fast growing, but it is a global opportunity for companies that can make these and supply these to meet different customer requirements. In the recent news that took place in 2024, you saw significant investment in drug manufacturing, drug filling capability, which also included syringe manufacturing and specialized drug packaging. Eli Lilly is a big name that most people have heard of. SCHOTT is also a large name in the specialized packaging market that I have worked with and against for many years, making a huge investment in North Carolina.
The FDA is focused on the support of the GLP-1 drugs and what's taking place there with branded products and then being able to support the generic transition for that particular platform. Brief slide for our management team so people know who we are. Very fortunate to have a strong team around me to be able to support us on the financial side, the sales side, manufacturing, and product development. We'll be adding to this team here in the second half of the year to be able to strengthen our manufacturing and quality and regulatory capabilities as we look to expand our facility in Europe and bring the products forward along with additional strategic announcements that will be made later this year.
Key highlights in summary, next steps for us is how we secure the financing to be able to support us for Q1, moving forward with the $50 million agreement for the SoloGard product that we talked about, then working on the opportunity for the U.S. manufacturing facility to try to bring prefillable syringes to the market from that particular facility, either with a direct opportunity to own it or through a partnership. Just a brief summary on where we are today. There's been a lot of questions that we received indirectly. I wanted to have a section in the slide that kind of summarized our cash position, where we are with warrants, then our opportunity to put revenue together for Q2, how many shares we have out there, and kind of where we are with the market.
James, I think that's kind of where we are.
All righty. That was an excellent presentation, short and sweet. The good news is I've got a lot of questions that have come in in the chat. We can actually extend this out for as long as we need.
Okay.
First question, your company reported a net loss of $9.8 million for the year-end 2023 and has not generated any revenue to date. Given this, how do you justify the $2.1 million increase in the 2023 equity incentive plan, especially when the company is yet to achieve profitability?
The equity plan was there to support the team who's working through the plans to create the revenue plan. As I shared in the presentation, we are now executing on creating revenue. In this industry, it's healthcare, it's medical devices. These products are regulated by the FDA. As I've shared in previous conferences and meetings with Aegis investors, there's a longer lifecycle to go from concept to manufacturing to commercialization to revenue than you might have for other types of products. When customers take on medical devices and/or they convert from one supplier to another, there's a lot of work that has to go in to qualify these products. You have regulatory approval at lots of different levels. If you know our story, our team is very small.
Many of us wear many hats, and we've been working aggressively to accomplish a lot of things. We've tried to be transparent with investors in the market on everything that we're doing. To not only support, but reward efforts as we've made them to go public, to start up the facility, to begin production, to identify opportunities commercially, to get products qualified, to win contracts, and now to be creating revenue, you have to be able to put a team together that's committed to this not only for their paycheck, but also for the long term for the company. We've been careful and strategic around how we did that.
Understood. Great answer. Next question, what strategies have been employed to expand Sharps Technology's footprint in the European healthcare market?
Yeah, so we have worked to a point now where we have a local salesforce there that supports our operation in Europe. We also are working through distribution touchpoints to be able to help us reach out to potential users of our products to begin the qualification process. Ben and Braden have done a great job not only here in the United States, but also in Europe in setting up that small network. As I mentioned, with the win for the contract that we have for the SoloGard product, it pretty much takes most of the current capacity and then some for the facility. With the success that they've had, we are going to now be in a place later this year to put together a plan to do a small expansion for the facility.
We have to be careful with our business and the targeted customers because we have currently limited production and sales capability. We aggressively built some inventory when we started up in 2023 and then worked to qualify different products to different places, both in Europe and the United States, which we've been successful with. We are working with different groups, as I mentioned, on the distribution side to be able to help us to continue to grow the business.
Excellent answer. Next question, since launching the integrated virtual try-on suite in January, what have beta clients seen in conversion lift or return rate reduction? When do you plan to expect the first paid production deployments?
Yeah, I don't think that question's for us, James. I don't think it's our industry.
Okay. Sorry, there's a lot of questions that are coming in here. In April 2025, you announced the reverse stock split. How do you justify this decision and what steps are being taken to ensure that this move translates into long-term value for investors?
Yeah, and so that was the purpose for the meeting today and why I was brief, but to the point so we could focus on the $50 million SoloGard agreement, which is top center up here. We leveraged the investment that we were able to secure through the $20 million financing, which for people that do not know our story was a large amount of money and it was a difficult, complex financing. For us to execute on the $50 million agreement and to potentially win another $25 million for a business from this customer, we had to go through that pain to be able to do that. We talked to many different groups about how to do this, and we were fortunate to have the help from Aegis.
Unfortunately, we had to go through the reverse, and we had to go through some compliance efforts as an end result, which we knew might be a risk. That funding has already, a large part of it has already been put to work to order equipment and get the facility running at scale, initial scale to be able to support those contracts. The short answer is that funding has gone into direct investment to support our first large customer to bring revenues as early as this quarter to Sharps.
Okay, excellent. Now, I do have a number of additional questions. However, our esteemed healthcare research analyst, Dr. David Bouchey, just popped up on camera, and I always like to give him priority. So David, over to you.
Thank you very much. Yeah, I do have a couple of quick questions. First off, I'd like to also note that I believe you paid down your long-term debt and you now are debt-free. Is that true?
That's true. We used a portion of the $20 million financing to pay down the small loan that we had on assets in Hungary. We are currently debt-free as it summarizes in the top left corner.
All right. In terms of the two purchase orders you have for $100,000 worth of syringes from the European medical supply company and $400,000 from the U.S. supplier, you will count these as revenues as they are shipped and received. Is that correct?
That's correct.
The revenues can be spread. Some of them will be in the second quarter and some of them will be in the third quarter.
Yeah. So the $100,000 order is already taken care of and shipped. It was more of a large qualification order for this potential long-term customer. The SoloGard project for the U.S. healthcare company issued the initial purchase order, but as I mentioned in the presentation, we're going to make first shipment against that as early as next week. We will continue to build product to ship against the remaining balance of the purchase order. The customer has committed to as many purchase orders as we need that we can support as we scale up. We anticipate receiving additional purchase orders pretty soon as we make and ship. As we're successful, they'll continue to supply the purchase orders.
That is why I kind of summarized what I did, David, is that we can make and ship as much of that product as we can, and they'll take it.
Yeah. That was actually going to be my next question, that these are not standalone purchase orders. These are the initial purchase orders and what will be a series of purchase orders for each of these two separate agreements.
Absolutely. Yep.
All right. You touched upon the financing, which full disclosure, Aegis did run that in January. You did announce today that you are in full compliance with Nasdaq again. Part of that was going through that 1 for 300 reverse stock split. What clarity can you give me about what your current warrant structure is?
Yeah, that's why I kind of summarized here. Most of the warrants have been eliminated. So all of that overhang from the warrant activity around the raise has been cleaned up. We're in a very good place from that, and we executed against that prior to the reverse. We don't see any issues related to the warrants going forward.
Excellent. As you begin to get more and more of these purchase orders in, do you anticipate the possibility of at least being cash flow positive next year?
Yes, we will be. That's the plan is to be cash flow positive next year for sure, and then execute against the scale-up for the U.S. customer. We have strategic projects that we hope to execute on either here in the United States or in Hungary that will bring prefillable syringes to the market as early as next year. The revenue potential and the margins and the profitability from those products are much, much higher. We've had strong interest from a key customer that I have relationships with in my past that has asked us to put together a plan on the prefilled syringes either in our facility in Hungary or the potential facility that we would acquire here in the States.
That is another thing I wanted to bring up, the agreement that you're working on that's in process with the South Carolina plant that would be primarily responsible, although not solely responsible, for manufacturing the prefillable syringes. That does not preclude you from having other customers and selling prefillable syringes to other customers, does it?
No, no. That's where for us, we've been working on an agreement for some time for different reasons to try to get it right for us and for others that are part of that. The renewed interest that I just mentioned on the prefilled side is going to put us in a place where we'll probably begin to order equipment in the second half of the year here to be able to bring prefilled syringes forward either in South Carolina or another facility inside the U.S. where we partner to do that because we're talking to other people around opportunities to do that and/or in our Hungary facility. Our Hungary facility with a small expansion could support the prefilled syringe business for this large initial customer and also support the SoloGard project that we've been talking about.
If we're able to execute on that ordering of equipment, it could really change our facility in Europe and/or allow us to get started sooner with our potential facility inside the States.
I think the number of drugs that are coming out now that are being shipped as a prefilled syringe is increasing, and the number of prescriptions for those drugs is also increasing. Are you seeing an increasing demand there? How does your having that advanced copolymer position you for that?
Yeah. That's why I shared some of the headlines that were larger in 2024. Investors and people that are listening can understand it's significant. The commitment to prefilled syringes, whether it's glass, specialized copolymer, or other technologies, is ever-growing. The copolymer offers a lot of advantages that we talked about in this particular slide where you have the ability to create custom products to also put together different technologies to solve industry challenges and conditions that you can't solve with glass, you can't solve with other types of products. The ability to use precision molding, clean room injection molding, and overmolding technologies along with silicone-free technologies. They're lightweight, they don't break, they're very clean. Prefilled glass syringes, I've worked in the industry making all of these products for many years.
Prefilled syringe, glass syringes are kind of the staple that's been there as some of the first products to come on the market. It is a very industrial process. It is very dirty. There is a lot of cleaning and prep that has to go in to prepare the final product. It is prone to breakage. It is prone to debris. A lot of people do not know this, and it is kind of quiet within the industry. That is where we see the prefillable copolymer syringes really being able to take on some of the market because the ability to make them with what I would consider to be superior manufacturing technologies that can be easily validated, show stability over time to give the healthcare companies better products. It is just a natural progression where those products can go.
All right. Now, the copolymers, do they need a silicone lubrication coating like glass syringes do?
Yeah, depending on the elastomer technology that's used and how the copolymer is produced, they can be silicone-free or they can include medical-grade silicone applications. It is a matter of creating the custom product that the healthcare company needs for the drug that's actually going to be put in there.
All right. James, hopefully I've asked a lot of the questions that were in your chat, which I don't get to see. I'll go ahead and let some of these other people ask questions. Thanks. And thanks again, Rob, for coming by and giving this presentation.
Sure, David. Thanks for the questions.
Thanks, David. Always appreciated. Just two more, Rob, and then we'll finish up if that's okay with you.
Yes, sure.
First question is, how does the company's manufacturing facility in Hungary support current and future production demand?
Yeah, that's the benefit of us putting some of this overview information inside the deck for us to share with people that have these types of questions. You can see an aerial shot of the facility there. You can kind of, in the text summary to the left, you can kind of see what our capabilities are. We own a lot of the property around the building. It can be easily expanded. For those of you that are in the industry, you understand the industry. Europe has some strong areas of manufacturing that specialize in these types of products. In Hungary, which is where we're located, it's a strong healthcare medical device producing nation. There's a lot of expertise and technology, not just with us, but other people that are there.
Having the facility that is already leveraged with technology that can be expanded along with the expertise, you can't factor out the human element or the people side of the business. Having all the best machines and having a great clean room means nothing if you don't have people that know how to operate this technology and produce a superior product. We feel we have a great combination of what we consider to be a startup facility that can be expanded that's pretty flexible from the standpoint of what it can do. That is why I was careful to show the different products that we can make. We're looking at other types of products that can be put into this facility pretty easily. We're hoping to make some of those announcements later this year.
Excellent. Thank you. Last question, with the opportunity to ship as much product as the 500,000 unit customer will accept, how do you balance the investment in that manufacturing line versus the prefilled market?
We see the $50 million sales agreement really as a foundation for the facility. When you look at how most manufacturing facilities run in our business or in our industry, you typically have a handful, from one to three, what we call foundational customers, foundational products to be able to support the business. You create the opportunity to bring in what I would call high-value products or higher-end technology, which is what the prefilled syringes are. We see this $50 million sales agreement as a way to make the facility, the facility by itself, cash positive very quickly. We can take some of the money that we've raised and other plans with other partners to bring in some prefilled syringe capability to support that key customer that I mentioned that is looking for prefilled syringes sooner.
Sometimes in the industry, you can actually partner with end customers. The customers want the product. They want it a certain way. They'll make investment into the supplying manufacturing facility to ensure their products are made the right way, and then they have some say in how it's done. There are lots of ways to do it. We see this agreement being the foundational agreement, and then we see the prefilled syringe agreement really being the opportunity to take our European facility to the next level.
Excellent. Robert, that concludes the Q&A portion for today's presentation. I'd like to sincerely thank you with a warm Aegis thank you for your time. Everybody listening today, you can track the company's progress, Sharps Technology, trading on the Nasdaq under the ticker symbol STSS. We look forward to monitoring your progress for the rest of the year. Again, thank you. We loved having you present today.
James, thanks for the opportunity to be here today. Appreciate the questions. Always glad to support these conferences. Thanks again for everybody for listening in.
Pleasure. We look forward to seeing you again soon. Have a great day.