NASDAQ: STSSW

On
August 28, 2025, we entered into (i) a consulting agreement (the “Agreement”) with Sol Edge Limited (the
“Consultant”) pursuant to which the Consultant provides consulting and related services with respect to our Treasury
Policy and (ii) a strategic advisor agreement (the “Strategic Advisor Agreement”) with Sol Markets, a Cayman Islands
exempt company (the “Strategic Advisor”) pursuant to which the Strategic Advisor provides strategic advice and guidance
relating to our business, operations, growth initiatives and industry trends in the crypto technology sector. Both the Consultant
and the Strategic Advisor are wholly-owned and controlled by James Zhang, the brother of Alice Zhang, our Chief Investment Officer
and director. Ms. Zhang’s husband Jason Hu was until recently a senior employee of the Consultant. The Consultant has entered into and intends to enter into additional agreements with
registered investment advisors and registered commodity pool operators, with the first agreement entered into with Parafi Capital LP. We currently stake our treasury assets with several SOL
validator service providers, see Validator Agreements below.

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For the period of August 28, 2025
through August 27, 2026, we paid the Consultant an upfront $10 million annual fee equal to 2.5% of the Company’s total digital
assets of $400 million on the date we executed the Consulting Agreement. For all future periods, we have agreed to pay the
Consultant a monthly fee equal to 2% in the aggregate on amounts up to and including $1,000,000,000 in Account value, 1.75% in the
aggregate on amounts above $1,000,000,000 up to and including $1,500,000,000 in Account value, and 1.5% in the aggregate on amounts
above $1,500,000,000 in Account value as of such measurement date divided by 12, beginning on August 27, 2026. We have agreed to pay
to the Consultant such fee, at its option, in the form of USDC, USDT, SOL, or some combination thereof.

This
Agreement shall commence on the Effective Date and shall continue in full force and effect for a term of 20 years (the “Term”),
unless earlier terminated in accordance with Section 13(c). Thereafter, the Agreement may be renewed for additional periods as mutually
agreed in writing by the Parties. If this Agreement is terminated by the Company for any reason during the Term, or if the Consultant
terminates this Agreement due to a material breach by the Company, the Company shall pay to the Consultant, as liquidated damages and
not as a penalty, an amount equal to all fees and other compensation that would have accrued to the Consultant under this Agreement from
the date of termination through the end of the Term, paid monthly throughout the Term in accordance with the payment provisions herein.

In
addition to the payment terms described above, we have provided the Consultant with our Investment Guidelines, as described below, related
to the managing of our digital assets. The Consultant is subject to certain Investment Guidelines, as approved by the Board and overseen
by the Treasury Oversight Committee and are included in our Treasury Policy, the material terms of which are set forth below.

Treasury
Policy and Investment Guidelines

We
manage our Treasury Policy under the oversight of our Treasury Oversight Committee. The Treasury Policy establishes the parameters, allocation
ranges, permitted instruments, and risk controls applicable to all treasury activity. The primary objective of the Treasury Strategy
is to maintain controlled long exposure to the SOL ecosystem, which comprises the vast majority of our digital assets, while generating
yield through staking and selective use of derivative instruments to manage market risk and/or enhance returns. Profit generation is
expected primarily through (i) potential price appreciation of SOL and (ii) protocol-native staking rewards, which are accrued in SOL.
We currently utilize native staking platforms that meet internal counterparty and smart-contract risk criteria. No single validator,
liquid staking protocol, or staking counterparty may exceed 49% of total staked assets, and we will not employ leverage without explicit
Board approval. The Treasury Policy provides that the Board has ultimate oversight of our Treasury Policy, but has delegated authority
to the Treasury Oversight Committee to oversee the day-to-day operations of the Treasury Policy carried out by our CIO, subject to certain
dollar amounts and percentage restrictions. If the CIO wishes to exceed the thresholds set for the CIO, they need the approval of the
Treasury Oversight Committee and if the Treasury Oversight Committee wishes to exceed the thresholds set for the Treasury Oversight Committee,
they need the approval of the Board. Similarly, the Treasury Oversight Committee has oversight of the Consultant and the Investment Guidelines set forth in the
Consulting Agreement provide for certain dollar amounts and percentage restrictions on actions permitted to be taken by the Consultant,
and if the Consultant wishes to exceed such thresholds, they need the approval of the Treasury Oversight Committee.

The
Treasury Policy and Investment Guidelines, amongst other provisions, provide for the following:

●
Limiting
derivative usage through qualified custodians or regulated counterparties. Derivative instruments (including SOL calls, puts, or
total return swaps) to be utilized solely for two permitted purposes: (i) portfolio hedging of SOL market risk and (ii) strategic
exposure management where such instruments enhance yield or liquidity efficiency.

●
Limiting
derivative transactions to pre-approved instruments and counterparties.

●
Limiting
our total investible assets (a) the combined exposure to SOL and SOL-related instruments (including native and liquid staking), (b)
the amount of cash or USD stablecoin reserves for settlement and liquidity management (outside of operating cash needs of any operating
businesses under the company), (c) the derivative exposure (hedging or yield enhancement)

●
Limiting
the acceptance of in-kind SOL investments and any funding other than U.S. dollars, stablecoins or liquid SOL.

●
Ensuring
that only SOL pairs with sufficient daily trading volume are permitted.

●
Ensuring
that the aggregate exposure to any single validator, liquid staking platform, or protocol smart contract shall not exceed a certain
percentage of total staked assets.

●
Ensuring
the daily net purchases or sales capped at a certain percentage of SOL average daily volume (ADV).

●
Ensuring
amount of margin exposure.

●
Ensuring
that the aggregate exposure to any single counterparty, custodian, or protocol shall not exceed a certain percentage of NAV (excluding
SOL staking diversification described above).

Currently
our Treasury Policy is primarily dedicated to SOL, and other than our holdings in USDT and USDC described above, we do not intend to
allocate a significant portion of our treasury assets to other digital assets in the near term. As a result, our assets are highly concentrated
in a single digital asset. Adverse developments specific to SOL, its protocol, or its ecosystem could have a disproportionate impact
on our financial condition and results of operations.

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In addition to our medical device
sales and distribution enterprise and management of its SOL treasury, we have recently begun to explore strategic acquisitions and/or
investments globally. To this goal, our treasury strategy and engineering teams continue to analyze these opportunities and develop our
own digital products. We have been and continue to prioritize long term growth of the Company’s business, potentially using proceeds from the sale
of SOL to fund our expansion plans described above.

From
time to time we may utilize a mix of call options, put options as well as other derivatives.

Our
Treasury Policy is intended to bring value to our stockholders through the following:

●
utilizing
intelligent capital markets issuances, including the issuance of both equity and convertible debt, where we may issue capital for
the benefit of stockholders to purchase and hold more SOL;

●
staking
the majority of the SOL in our treasury to earn a staking yield and turn the treasury into a productive asset;

●
purchasing
locked SOL at a discount to the current spot price; and

●

selling
our SOL holdings, whether on the open market, through block trades, or other negotiated transactions,
for various reasons and at various times, including, in order to repurchase shares of our
Common Stock when our Board believes such repurchases will result in accretive value creation
for our stockholders and at such times when it is legally permissible to do so.

We
may also from time to time repurchase shares of our Common Stock when our Board believes such repurchases will result in accretive
value creation for our stockholders, including when our Common Stock is trading at a discount to the net asset value of our SOL holdings
on a per-share basis. Any such repurchases may be funded from the proceeds of SOL sales, operating cash flow, or other available
funds, and would be subject to applicable securities laws and regulations, including Rule 10b-18 under the Securities Exchange Act
of 1934, as amended.

There
can be no assurance that the value of SOL will increase, and investors should carefully consider the risks associated with digital assets.

Cryptocurrencies
that are part of Blockchain economies

A
cryptocurrency is a type of digital asset that exists on a particular blockchain and can be moved from one party to another party on
that blockchain. Cryptocurrencies that comprise part of a blockchain economy or blockchain platform, typically have more
functionality than a payment currency. Blockchain economies or platforms permit the use of the cryptocurrency to create other
digital assets or tokens, run decentralized applications on the blockchain platform, and build various types of functionality and
features on the blockchain platform. Examples of cryptocurrencies that are part of blockchain economies include SOL and Ether. Cryptocurrencies that are part of a blockchain are inherently riskier than stablecoins, but still relatively safer than
other newer and untested forms of cryptocurrencies. Risks of cryptocurrencies such as SOL involve numerous factors such as market
risks and technological risks, see “Risks Related to Our Digital Asset Trading Strategy and
Cryptocurrencies.”

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Stablecoins

Many
of the blockchain applications on large blockchain networks involve the use of “stablecoins,” which are designed to maintain
a constant price related to or based on some other asset or traditional currency because of, for instance, their issuers’ promise
to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of
stablecoins in circulation. In July 2025, the U.S. President signed into law the “GENIUS Act,” which establishes a federal
framework for “payment stablecoins,” treating them as payment systems, not securities, and mandating fiat-backed reserves,
monthly disclosures, anti-money laundering safeguards, and similar measures. Stablecoins have grown rapidly as a medium of exchange and
store of value, particularly on digital asset trading platforms, and their use as an alternative to digital assets such as bitcoin and
SOL could expand further as rules are promulgated under the GENIUS Act. Given that stablecoins, such as the type we own, USDT and USDC,
are pegged to the U.S. dollar, they are typically a safer and less volatile cryptocurrency than other types, such as SOL. However, as
with all forms of cryptocurrencies there still remains risk with respect to stablecoins,

The
GENIUS Act may also create new opportunities for stablecoin-based yield strategies within our Treasury Policy framework. As the regulatory
framework established by the GENIUS Act matures and rules are promulgated thereunder, the increased legal clarity around stablecoin reserves,
disclosures, and permissible uses may facilitate institutional adoption of stablecoins and expand the range of yield-generating instruments
available to treasury operators such as us. We may explore allocating a portion of our treasury to stablecoin-denominated lending, liquidity
provision, or other yield-generating activities that become permissible under the GENIUS Act framework. However, the rules implementing
the GENIUS Act are still being promulgated, and there remains significant uncertainty regarding the final requirements, implementation
timelines, and the scope of permissible activities for stablecoin holders and issuers. Changes in the final rules or their interpretation
could limit or eliminate anticipated opportunities or impose compliance costs that render such strategies uneconomical. Furthermore,
the broader regulatory landscape for digital assets continues to evolve rapidly, and legislative or enforcement actions at the federal
or state level could adversely affect the stablecoin market and our ability to utilize stablecoins as part of our Treasury Strategy.

Treasury
Strategy

Our Treasury Strategy is currently anchored in maintaining strategic long
exposure to SOL, which may comprise up the vast majority of our of treasury assets under the approved allocation ranges. Profit generation
is expected primarily through (i) potential price appreciation of SOL and (ii) protocol-native staking rewards, which are accrued in SOL.
We utilize both native staking and liquid staking platforms that meet internal counterparty and smart-contract risk criteria. No single
validator, liquid staking protocol, or staking counterparty may exceed 49% of total staked assets. The key components of our Treasury
Strategy include the following:

●
Staking
Income - Staking rewards are a recurring source of yield and represent a significant component of expected treasury income. We
delegate SOL to a diversified set of approved validators and liquid staking protocols, emphasizing operator quality, geographic
dispersion, and infrastructure resiliency. Staking rewards may increase our SOL holdings and therefore compound the long-term
exposure to the underlying asset.

●
Use
of Derivative Instruments - Although we utilized derivatives during 2025, as of December 31, we did not have any open derivative
positions. In the future, we may utilize SOL-related derivative instruments, including exchange-traded or over-the-counter call
options, put options, and total return swaps, solely for (i) hedging SOL market risk and (ii) strategic yield enhancement or
exposure management. Derivative exposure is generally limited to 10% of the portfolio, and no single derivative transaction or
counterparty exposure may exceed established notional thresholds without Treasury Oversight Committee approval. All derivative
transactions are executed only through regulated or otherwise qualified custodians and counterparties and require documented trade
rationales, including their expected economic and risk impact. Our treasury management guidelines currently approved by the Board limits
derivative exposure to 10% of the total treasury. We do not use derivatives for speculative purposes or to obtain
synthetic leverage.

●
Liquidity
and Portfolio Construction - We may hold up to 20% of our treasury assets in cash or USD-denominated stablecoins to support liquidity,
settlement requirements, and volatility management. All trading activity is executed only through approved venues that meet internal
compliance standards, and daily net purchase or sale activity is limited to no more than 20% of SOL average daily trading volume
to mitigate market-impact risk. We may reallocate to cash or other highly liquid instruments, including U.S. Treasury securities
or certain other types of vehicles, at the discretion of the Chief Investment Officer when warranted by market conditions.

●
Risk
Management and Operational Controls – Risk management is embedded throughout our Treasury Strategy. We impose strict concentration
limits on counterparties, custodians, derivative exposures, and staking platforms, with no single exposure generally permitted to
exceed 49% of net asset value. All custody relationships are structured to provide read-only data access, dual-authorization withdrawal
controls, and whitelisted addresses for outbound transfers. We receive daily or monthly holdings data from our custodians, and these
reports are reconciled through internal net asset value systems to ensure completeness and accuracy.

●
Expected
Profit Generation - We expect to generate profit from a combination of (i) long-term appreciation of SOL held in the treasury, (ii)
ongoing staking rewards earned through native and liquid staking, and (iii) incremental yield and risk mitigation achieved through
permitted derivative strategies. We believe that these activities, conducted within the prescribed governance and risk limits, support
its objective of producing sustainable, risk-adjusted returns while maintaining a conservative operational posture.

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How
We Earn Staking Rewards

We intend to stake up to 95% of our total SOL holdings, and will utilize
the remaining unstaked SOL primarily for liquidity management, potential validator operations and as collateral for any margin loans or
future lending agreements To earn staking rewards, we intend to delegate our SOL to third parties via Solana’s in-protocol delegation
system while keeping the SOL held by third party custodians. This means we deposit our SOL into a stake account, which is then delegated
to a validator’s vote account. We stake to validators who are integrated into our qualified custodians’ platforms, allowing
us to stake SOL to validators directly from our custody accounts. This also permits us to maintain that the keys that can move our SOL
are still controlled by the custodians we have engaged. See “Use of Custodians and Storage of Sol.” Of the validators
integrated into our qualified custodians, our team is staking to those who, in our opinion, have demonstrated a track record of high performance,
high yield generation, and attractive delegator economics. We use multiple validators to seek to maximize the return on our SOL treasury
and to mitigate the risk of having only one or two validators for our treasury staking. All of our locked SOL is staked with BitGo’s
validator, which is one of our qualified custodians (see Use of Custodians and Storage of SOL). We mitigate concentration risk
by ensuring that no validator has over 49% of our SOL holdings staked with them with the caveat that should our total SOL holdings decrease
our locked SOL staked with BitGo’s validator may go above this threshold given that the locked SOL cannot be unstaked or moved until
it is unlocked. Locked SOL unlocks are released to us on a monthly basis by BitGo based on a pre-determined release schedule. The agreements
with our staking providers provide that we will pay a fee equal to between 0%-4% of the rewards generated by the SOL staked to such provider.
The agreements direct the staking providers to include our SOL, once received, in their delegated staking pool, with the providers having
no discretion as to movement or re-hypothecation of our SOL. We maintain possession and control of the staked SOL at all times and can
choose when to exit the staking amount. We have the ability to terminate the agreement with the staking providers at any time. We recently
entered into an agreement with one staking provider to create an STSS-branded validator. This provider is charging a 4% commission on
staking rewards earned by the validator and charged on a per-epoch basis. The STSS-branded validator was set up by the Coinbase team and
is physically managed by a Coinbase sub-service provider. Coinbase has provided performance guidelines and assurances that it will adhere
to certain operational standards in order to ensure that the validator performs at a high level and maximizes yield for our delegated
SOL. Although we do not directly own or operate the validator infrastructure, the branding arrangement allows us to maintain a branded
presence within the Solana validator ecosystem while leveraging Coinbase’s institutional-grade infrastructure, operational expertise,
and security controls. Our reliance on Coinbase and its sub-service provider for the operation of the STSS-branded validator introduces
counterparty risk, as any underperformance, downtime, or operational failure by Coinbase or its sub-service provider could result in reduced
staking rewards or reputational harm to us. We do not control the selection of Coinbase’s sub-service provider or the specific operational
procedures employed by such sub-service provider.

How
We Manage Liquidity

We
acknowledge that during the deactivation period, staked SOL is not earning rewards and is not yet liquid. We factor this into our liquidity
and risk management framework.

Our
staking program involves a temporary loss of transferability of staked SOL during the “deactivation” or cooldown period.
Under normal conditions, we expect to regain complete control over un-staked SOL within approximately 48 hours; however, network conditions
could extend this period. To mitigate liquidity risk, we intend to maintain a portion of our treasury in un-staked SOL and cash to meet
short-term obligations. Our use of SOL options may involve margin requirements or collateral posting, which could reduce available liquidity.
Option premiums paid or received may also create volatility in our near-term cash flows. A certain portion of our holdings is comprised
of SOL that is programmatically locked by the FTX estate. As such the release of such locked SOL is outside our control.

8

Use
of Custodians and Storage of SOL

If
a custodian were to become insolvent, it is possible that we face delays or difficulties obtaining our digital assets. We solely
utilize third-party qualified custodians to hold our SOL, other than the portion of our SOL held through a single non-qualified
custodian, as set forth below. As of the date hereof, we utilize BitGo Bank & Trust, National Association (N.A.).
(“BitGo”), Anchorage Digital Bank N.A. (“Anchorage”) and Coinbase, Inc. (“Coinbase”), as the
custodians of our digital assets, none of which hold over 40% of such assets. We do not self-custody our SOL. We use qualified
custodians that utilize risk management and operational best practices related to hot vs. cold storage, access controls, custody
technology and insurance, among other practices. We are in the process of onboarding with other qualified custodians to ensure that
we mitigate our SOL treasury risk through the use of additional qualified custodians.

If any of our custodians were to become insolvent or enter bankruptcy or
receivership proceedings, we may face significant delays or difficulties in recovering our digital assets held by such custodian. The
treatment of digital assets held in custodial accounts in the event of a custodian’s insolvency is an evolving area of law, and
it is unclear whether our digital assets would be treated as our property or as part of the custodian’s bankruptcy estate. The failure
of FTX Trading Ltd. and its affiliates in November 2022, in which customers holding digital assets on the FTX platform faced prolonged
delays and significant losses in recovering their assets, demonstrated the material risks associated with custodian insolvency. While
we have sought to mitigate this risk by diversifying our custody arrangements across multiple custodians and ensuring that no single custodian
holds more than 40% of our digital assets, there can be no assurance that we would be able to recover some or all of our digital assets
in a timely manner, or at all, in the event of a custodian insolvency. Of our qualified custodians, Anchorage Digital Bank N.A. is a federally
chartered digital asset bank regulated by the Office of the Comptroller of the Currency (“OCC”) and BitGo Bank & Trust,
National Association (N.A.). is a federally chartered national trust bank for digital assets, which provides certain regulatory protections,
including requirements for minimum capital, segregation of client assets, and examinations by federal bank regulators. However, even with
respect to a federally regulated custodian, there is no equivalent of Federal Deposit Insurance Corporation (“FDIC”) insurance
for digital assets, and the specific protections available to depositors of digital assets at a federally chartered bank in the event
of insolvency remain untested.

Our
primary custodians generally maintain the majority of their custodied SOL holdings in cold storage (>95%), with hot wallets used only
for limited operational purposes. Custodians employ SOC 2–audited security controls, geographic redundancy, multi-person approval
processes, and conduct key-generation ceremonies in offline, secure facilities. Private keys are never exposed to networked devices.
Custodians maintain insurance coverage with respect to the custodial accounts. Our custody agreements typically have terms of one to
three years, may be terminated on 30 days’ notice, and include fees for storage and transactions. Our qualified custodians do not
rehypothecate or otherwise use our SOL.

On
August 19, 2025, our wholly-owned subsidiary, Sol Equity Limited, a Cayman Islands exempt company (“Sol Equity”) entered
into a Custodial Services Agreement with BitGo (the “BitGo Agreement”) to hold our digital assets. The term of the BitGo
Agreement is for one year with successive one-year renewals unless prior notice of non-renewal is given by either party. We pay BitGo
a monthly digital asset storage fee based upon the market value of the assets in storage. The BitGo Agreement is terminable by either
us or BitGo on thirty days’ notice as a result of a breach of the BitGo Agreement and may be suspended by BitGo if we violate the
intended use of the account or due to a change in the applicable law, litigation or bankruptcy. The BitGo Agreement provides that BitGo
shall obtain and maintain, at its sole expense, insurance coverage in such types and amounts as shall be commercially reasonable for
the custodial services provided thereunder.

On
August 21, 2025, Sol Equity entered into a Master Custody Services Agreement with Anchorage (the “Anchorage Agreement”) to
hold our digital assets. The term of the Anchorage Agreement is for one year with a one-year renewal. We pay Anchorage a monthly custody
fee based upon the market value of the assets in custody. The Anchorage Agreement is silent with respect to insurance coverage of the
custodial assets.

On
August 19, 2025, Sol Equity entered into a Custody Agreement with FalconX (the “FalconX Agreement”) to hold our digital assets.
The FalconX Agreement terminable at will by either us or FalconX upon 90 days notice. We pay FalconX an annual custody fee based upon
the market value of the assets in custody and a percentage of staking rewards. The FalconX Agreement is terminable by FalconX if we violate
the intended use of the account or a material breach. The FalconX Agreement provides that FalconX’s compensation framework for
the custodial assets is supported by insurance policies and that the insurance covers specific incidents and claims are processed in
accordance with the insurer’s terms. As of February 17, 2026, all assets at FalconX were moved to other custodians.

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On
September 24, 2025, Sol Equity entered into a Prime Broker Agreement with Coinbase (the “Coinbase Agreement”). The Coinbase
Agreement is terminable at will by either us or Coinbase upon 30 days notice. We pay Coinbase a fixed rate, inclusive of Coinbase’s
commission for each executed order Coinbase may terminate, restrict or suspend the Coinbase Agreement upon an event of default by us.
Coinbase may also close the Company’s account if it has been inactive for more than one year. The Coinbase Agreement provides that
Coinbase shall obtain and maintain, at its sole expense, insurance coverage in such types and amounts as shall be commercially reasonable
for the custodial services provided thereunder. As these custodial agreements do not set forth the specific amounts of insurance coverage,
some of our digital assets may not be subject to coverage if any of the custodian’s coverage is too low. See “If we or
our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our SOL, or if
our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our SOL and our financial
condition and results of operations could be materially adversely affected.”

Use
of DeFi Protocols

We
may from time to time interact with decentralized finance (“DeFi”) protocols, either directly or indirectly through staking,
validator operations, custody arrangements, or liquidity management activities. DeFi protocols generally rely on open-source smart contracts
deployed on public blockchains, including SOL. While these smart contracts are intended to operate automatically according to their code,
they may contain coding errors, vulnerabilities, or design flaws that can be exploited.

Accounting
Treatment of Digital Assets

Effective
with the adoption of Accounting Standards Update No. 2023-08, “Accounting for and Disclosure of Crypto Assets” (“ASU
2023-08”), we measure our SOL at fair value in our consolidated balance sheet, with changes in
fair value recognized in net income each reporting period in accordance with ASC 350-60. We determine the fair value of our SOL holdings
using the closing price on our principal market as of the reporting date, in accordance with ASC 820, Fair Value Measurement. This mark-to-market
accounting treatment may result in significant volatility in our reported net income and comprehensive income from period to period,
driven primarily by fluctuations in the market price of SOL rather than changes in our underlying business operations. Staking rewards
received in SOL are recognized as revenue at fair value on the date received. We believe that fair value measurement provides the most
relevant and transparent information about our digital asset holdings to investors, but investors should be aware that reported earnings
may fluctuate significantly as a result.

SOL
- The Token of the Solana Blockchain

SOL
is the native token of the Solana blockchain. SOL was created with an initial supply of 500 million SOL, though much of the initial supply
was locked or earmarked for various use cases including the community, the foundation and investors. New SOL are brought into existence
primarily through inflationary rewards distributed to validators and delegators. The SOL staking yield is made up of three primary components:
inflationary rewards, transaction/priority fees, and maximal extractable value. Inflationary rewards started out at 8.0%, and are currently
4.3%, and will fall 15% every epoch-year until they reach a long-term floor of 1.5%. Unlock schedules applicable to these allocations
may periodically increase circulating supply, creating potential selling pressure and adversely affecting the price of SOL. Historically,
50% of all transaction fees were burned (with the other 50% going to the validator), but now all transaction fees go to the validator
after the passage and adoption of the Solana Improvement Document 96.

How
SOL is Used

SOL
is used as part of Solana’s proof-of-stake consensus mechanism. In general, proof-of-stake blockchains have block producers called
validators that run nodes, bond or stake the protocol’s native token, propose blocks when chosen to do so, and validate/sign the
transactions and blocks of others when not. Validators are chosen to produce a block in proportion to their stake, which makes it extremely
costly for bad actors to attempt to control the network and add invalid transactions to the blockchain. Validators receive staking rewards
for the work they perform, which further incentivizes validators to behave properly, as they would otherwise miss out on such rewards.
Other proof-of-stake networks often “slash” some or all of a validator’s stake if it intentionally or unintentionally
performs its duties poorly, for example, by double-signing a transaction, though Solana has not implemented slashing at this time. In
addition to its use within consensus, SOL is also a “gas token”, meaning that users of the Solana blockchain pay SOL to validators
(and delegators) as compensation for processing their transactions.

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Although
Solana has not implemented slashing at this time, there can be no assurance that slashing will not be introduced in the future through
a protocol upgrade or governance proposal. The introduction of slashing on the Solana network could result in a partial or total loss
of SOL staked with a validator that is found to have engaged in malicious behavior or experienced significant downtime. If slashing is
implemented and any of our validators are subject to slashing penalties, we could lose a portion of our staked SOL, which could have
a material adverse effect on our financial condition. We monitor Solana governance proposals and protocol development activity to assess
the likelihood of slashing implementation and its potential impact on our staking operations.

SOL
validators may also earn income through maximal extractable value (“MEV”), which refers to the value that validators can
capture by strategically ordering, including, or excluding transactions within a block. MEV activity on the Solana network has grown
significantly and represents an additional component of validator economics. While MEV may increase the total yield available to validators
and their delegators, it also introduces risks, including the potential for transaction censorship, front-running of user transactions,
and network congestion caused by MEV-seeking bots. Regulatory scrutiny of MEV practices could result in restrictions that reduce validator
revenue or increase compliance costs. Changes to MEV distribution mechanisms, such as modifications to the Jito-Solana client or similar
infrastructure, could adversely affect staking yields available to us.

We
see three particularly notable items giving Solana a technical advantage compared to many smart contract blockchain peers.
Solana’s proof-of-history gives validators a notion of time and allows them to produce blocks without requiring the network to
first agree upon the current block, resulting in speed advantages. Further, unlike peer blockchains that often use single-threaded
virtual machines, Solana enables parallel transaction execution to increase throughput and take advantage of future hardware
improvements resulting from increased CPU core counts. In addition, Solana is optimized for speed and security, and is naturally
growing into decentralization as hardware and bandwidth costs fall over time, positioning it well along the Blockchain
Trilemma.

While
Solana Labs and the Solana Foundation have played important roles in the development of the Solana ecosystem, no single entity owns or
controls the Solana network. However, concentration of influence in these entities, particularly in early-stage protocol governance,
presents risks that investors should consider.

The
Solana Ecosystem

Solana’s
performance and technical capabilities enable many use cases from DeFi to decentralized physical infrastructure networks, AI agents,
social media, gaming, stablecoins, real-world assets, among others. We believe Solana is advantaged by best-in-class technology and strong
network effects that have attracted a large, growing, and vibrant ecosystem of users, developers, and decentralized applications.

Regulations

Depending
on the regulatory characterization of Solana, the markets for cryptocurrency in general, and our activities in particular, our business
and our Solana acquisition strategy may be subject to regulation by one or more regulators in the United States and globally. Ongoing
and future regulatory actions may alter, to a materially adverse extent, the nature of digital assets markets, the participation of industry
participants, including service providers and financial institutions in these markets, and our ability to pursue our SOL strategy. Additionally,
U.S. state and federal and foreign regulators and legislatures have taken action against industry participants, including digital assets
businesses, and enacted restrictive regimes in response to adverse publicity arising from hacks, consumer harm, or criminal activity
stemming from digital assets activity. U.S. federal and state energy regulatory authorities are also monitoring the total electricity
consumption of cryptocurrency mining, and the potential impacts of cryptocurrency mining to the supply and dispatch functionality of
the wholesale grid and retail distribution systems. Many state legislative bodies have passed, or are actively considering, legislation
to address the impact of cryptocurrency mining in their respective states.

The SEC recognizes that some
digital assets fall within the definition of a “commodity” under the Commodities Exchange Act of 1936, as amended (the
“CEA”). Under the CEA, the Commodities Futures Trading Commission (the “CFTC”) has broad enforcement
authority to police market manipulation and fraud in spot digital assets markets in which we may transact. Pursuant to SEC
Interpretive Release No. 33-11412, the SEC has established a functional taxonomy that classifies certain crypto assets, including
SOL, as digital commodities rather than securities. These assets are deemed to derive their value from the programmatic operation of
a functional crypto system and market dynamics, rather than from a reasonable expectation of profits derived from the essential
managerial efforts of others. Beyond instances of fraud or manipulation, the CFTC generally does not oversee cash or spot market
exchanges or transactions involving digital asset commodities that do not utilize margin, leverage, or financing. In addition, CFTC
regulations and CFTC oversight and enforcement authority apply with respect to futures, swaps, other derivative products and certain
retail leveraged commodity transactions involving digital asset commodities, including the markets on which these products trade.
While an asset itself may be classified as a digital commodity, the SEC maintains that the specific manner in which it is offered or
sold could still constitute an investment contract transaction subject to federal securities laws.

In
addition, because transactions in SOL provide a degree of anonymity, they are susceptible to misuse for criminal activities, such as
money laundering. This misuse, or the perception of such misuse, could lead to greater regulatory oversight of SOL and SOL platforms,
and there is the possibility that law enforcement agencies could close SOL platforms or other SOL-related infrastructure with little
or no notice and prevent users from accessing or retrieving SOL held via such platforms or infrastructure.

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As
noted above, activities involving SOL and other digital assets may fall within the jurisdiction of more than one financial regulator
and various courts and such laws and regulations are rapidly evolving and increasing in scope. The laws and regulations applicable to
SOL and digital assets are evolving and subject to interpretation and change.

Governments
around the world have reacted differently to digital assets; certain governments have deemed them illegal, and others have allowed their
use and trade without restriction, while in some jurisdictions, such as the U.S., digital assets are subject to overlapping, uncertain
and evolving regulatory requirements.

As
digital assets have grown in both popularity and market size, the U.S. Executive Branch, Congress and a number of U.S. federal and state
agencies, including the Financial Crimes Enforcement Network, the CFTC, the SEC, the Financial Industry Regulatory Authority, the Consumer
Financial Protection Bureau, the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the
Internal Revenue Service and state financial regulators, have been examining the operations of digital asset networks, digital asset
users and digital asset exchanges, with particular focus on the extent to which digital assets can be used to violate state or federal
laws, including to facilitate the laundering of proceeds of illegal activities or the funding of criminal or terrorist enterprises, and
the safety and soundness and consumer-protective safeguards of exchanges or other service-providers that hold, transfer, trade or exchange
digital assets for users. Many of these state and federal agencies have issued consumer advisories regarding the risks posed by digital
assets to investors. In addition, federal and state agencies, and other countries have issued rules or guidance regarding the treatment
of digital asset transactions and requirements for businesses engaged in activities related to digital assets.

Controlled
Equity Offering

On
September 2, 2025, we entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with each of Cantor
Fitzgerald & Co. (“Cantor”) and Aegis Capital Corp. (“Aegis”) (each, an “Agent” and together,
the “Agents”), pursuant to which we, from time to time, at its option may offer and sell shares (the “ATM Shares”)
of its Common Stock, to or through Cantor, acting as principal and/or the sole designated sales agent having an aggregate sales price
of up to $236,605,575 (the “ATM Offering”). Subject to the terms and conditions of the Sales Agreement, Cantor will use its
commercially reasonable efforts consistent with its normal trading and sales practices to sell the ATM Shares from time to time, based
upon our instructions. We have provided the Agents with customary indemnification and contribution rights in favor of the Agents, and
the Agents will be entitled to a commission of 3.0% of the gross proceeds from each sale of the ATM Shares pursuant to the Sales Agreement.
Sales of the ATM Shares, if any, under the Agreement may be made in transactions that are deemed to be “at the market offerings”
as defined in Rule 415 under the Securities Act or by any other method permitted by law. We have no obligation to sell any of the ATM
Shares and may at any time suspend offers under the Sales Agreement or terminate the Sales Agreement.

The
Common Stock to be sold under the Sales Agreement, if any, will be issued and sold pursuant to our shelf registration statement on Form
S-3 (File No. 333-274146), which was filed with the SEC on August 22, 2023, as amended on August 29, 2023 and declared effective by the
SEC on September 5, 2023 and a registration statement on Form S-3 (File No. 333-289980) filed pursuant to Rule 462(b) under the Securities
Act for the purpose of registering additional securities available to be sold under the registration statement on Form S-3 (File No.
333-274146) (collectively, the “Registration Statement”), including a base prospectus as part of the Registration Statement,
and a prospectus supplement dated September 2, 2025 relating to the offer and sale of the ATM Shares pursuant to the Sales Agreement .
During 2025, the Company sold 2,160,023 shares under the ATM Offering for net proceeds of $19,278,502 after brokerage fees.

Share
Repurchase Program

On
October 2, 2025, our Board approved a share repurchase program (the “2025 Repurchase Program”) providing for the repurchase
of up to $100,000,000 of our outstanding shares of common stock. The 2025 Repurchase Program enables us to repurchase its shares in the
open market and in negotiated transactions. The Repurchase Program does not obligate us to repurchase shares of Common stock and the
specific timing and amount of repurchases will vary based on available capital resources and other financial and operational performance
metrics, market conditions, securities law limitations, and other factors. In connection with the 2025 Repurchase Program, on October
6, 2025, we entered into an Open Market Share Repurchase Agreement (the “Repurchase Agreement”) with Cantor Fitzgerald
& Co. (the “Broker”) whereby the Broker has agreed to act as a non-exclusive agent on behalf of us to repurchase
shares of Common Stock in the open market pursuant to Rule 10b-18 of the Securities Exchange Act of 1934. The Repurchase Agreement will
continue in effect until terminated by either us or the Broker, with or without cause, upon written notice to the other party. We will
pay Broker a commission at a rate of $0.02 for each share of Common Stock repurchased pursuant to the Repurchase Agreement. Through the
date of this filing, $1,588,861in funds have been used for the repurchase of 867,678 shares under the Repurchase Agreement,
including fees.

Settlement of Outstanding Litigations and Spinoff
of Hungarian Subsidiary

On October 6, 2025, we entered into a confidential settlement agreement
and release (the “Settlement Agreement”) with Barry Berler, Plastomold Industries Ltd (“Plastomold”), Plasto Design
Solutions (“PDS”), Plasto Design Ltd. (“Plasto Design,” and together with Plastomold and PDS as the “Plasto”)
and Plasto Technology Group LLC (“Plasto Technology”), whereby the Company, Mr. Berler, Plasto and Plasto Technology have
agreed to unconditionally and irrevocably release and discharge each other and their respective representatives from and against any and
all claims alleged in the Litigation (the “Settlement”). The Settlement Agreement also provides that neither party’s
entry into the Settlement Agreement shall be deemed an admission of fault, responsibility, or liability for any claim alleged in the Litigation.
Pursuant to the Settlement Agreement, we entered into definitive agreements, including a bill of sale, assignment and assumption agreement
providing for the transfer by us to Plasto Technology of certain assets, and a contract for the transfer of business share providing for
the assignment by us to Plasto Technology of all of our right, title and interest in and to the issued and outstanding shares of Safegard
Medical Kft, our Hungarian subsidiary. In addition, we executed agreements for the transfer of patents and registered trademarks, along
with the related goodwill associated therewith.

Corporate
Information

We were incorporated in the State of Wyoming on December 16, 2017. On March
22, 2022, we reincorporated as a Nevada corporation. Our principal business address is 105 Maxess Road, Suite 124, Melville, New York
11747.

12

Available
Information

The
address of our principal executive office is 105 Maxess Road, Suite 124, Melville, New York 11747.

Our
common stock and warrants are quoted on the Nasdaq under the symbol “STSS” and “STSSW”. We file annual, quarterly,
and current reports, proxy statements and other information with the U.S. Securities Exchange Commission (the “SEC”). These
filings are available to the public on the Internet at the SEC’s website at http://www.sec.gov.

Our
corporate website is located at www.sharpstechnology.com (this website address is not intended to function as a hyperlink and the
information contained on our website is not intended to be a part of this Report). We make available free of charge on https://www.sharpstechnology.com/investors/all-sec-filings
for our annual, quarterly, and current reports, and amendments to those reports if any, as soon as reasonably practical after we electronically
file such material with, or furnish it to, the SEC. We may from time to time provide important disclosures to investors by posting them
in the Investor Relations section of our website.