MANAGEMENT REPORT AND ANALYSIS OF THE FINANCIAL SITUATION AND OPERATING RESULTS

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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains certain forward-looking statements
and information relating to the Company and its subsidiaries that are based on
the beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. When used in this
report, the words "may,", "could", "position," "plan," "potential," "continue,"
"anticipate," "believe," "expect," "estimate," "project" and "intend" and words
or phrases of similar import, as they relate to the Company or its subsidiaries
or Company management, are intended to identify forward-looking statements. Such
statements reflect the known and unknown risks, uncertainties and assumptions
related to certain factors, including without limitations, competitive factors,
general economic conditions, customer relations, relationships with vendors,
governmental regulation and supervision, seasonality, distribution networks,
product introductions and acceptance, technological change, changes in industry
practices, onetime events and other factors described herein including the
impact of the coronavirus COVID-19 ("COVID-19") pandemic on our operations and
financial results. Based upon changing conditions, should any one or more of
these risks or uncertainties materialize, or should any underlying assumptions
prove incorrect, actual results may vary materially from those described herein
as anticipated, believed, estimated, expected or intended. Consequently, no
forward-looking statements can be guaranteed. When considering these
forward-looking statements, you should keep in mind the risk factors and other
cautionary statements in this Quarterly Report on Form 10-Q or refer to our
Annual Report on Form 10-K. Actual results may vary materially. You are
cautioned not to place undue reliance on any forward-looking statements. You
should also understand that it is not possible to predict or identify all such
factors and as such should not consider the preceding list or the risk factors
to be a complete list of all potential risks and uncertainties. The Company does
not intend to update these forward-looking statements.

GENERAL

Sharps Compliance Corp. is a leading national healthcare waste management
provider specializing in regulated waste streams including medical,
pharmaceutical and hazardous. Our services facilitate the safe and proper
collection, transportation and environmentally-responsible treatment of
regulated waste from customers in multiple healthcare-related markets. The
markets we manage are small to medium-size healthcare waste generators including
professional offices (ambulatory surgical centers, physician groups, dentists
and veterinarians), long-term care facilities, government agencies, home health
care, retail clinics and immunizing pharmacies. Additionally, our mailback
solutions are positioned to manage waste generated in the home setting such as
sharps, lancets and ultimate-user medications which generates business
relationships with pharmaceutical manufacturers and other markets to provide
safe and proper disposal. Lastly, we maintain a strong distribution network for
the sale of our solutions within the aforementioned markets.

We assist our customers in determining solutions that best fit their needs for
the collection, transportation and treatment of regulated medical,
pharmaceutical and hazardous waste. Our differentiated approach provides our
customers the flexibility to transport waste via direct route-based services,
the United States Postal Service ("USPS") or common carrier depending upon
quantity of waste generated, cost savings and facility needs. Our comprehensive
services approach includes a single point of contact, consolidated billing,
integrated manifest and proof of destruction repository. Furthermore, we provide
comprehensive tracking and reporting tools that enable our customers to meet
complex medical, pharmaceutical and hazardous waste disposal and compliance
requirements. We believe the fully-integrated nature of our operations is a key
factor leading to our success and continued recurring revenue growth.

Our flagship products are the Sharps Recovery System™ and MedSafe® Medication
Disposal System. These two product offerings account for over 50% of company
revenues. The Sharps Recovery System is a comprehensive medical waste management
mailback solution used in all markets due to its cost-effective nature and
nationwide availability. The MedSafe solution meets the immediate needs of an
increasing community risk associated with unused, ultimate-user, medications.
Developed in accordance with the Drug Enforcement Administration ("DEA")
implementation of the Secure and Responsible Drug Disposal Act of 2010 (the
"Act"), MedSafe is a superior solution used in both private and public sectors
to properly remove medications from communities and aid in the prevention of
drug misuse.

Over the past few years, the Company has made a series of investments to build a
robust direct service, route-based, pickup offering for medical, pharmaceutical
and hazardous waste. We have built an infrastructure capable of covering more
than 80% of the U.S. population with permitted trucks, transfer stations and
treatment facilities. We continue to add routes and the infrastructure required
for operational efficiency to reach more customers and prospects directly. Our
route-based services, matched with comprehensive mailback solutions, offer us a
key differentiator in the market and the ability to capitalize on larger or
regional contracts within the healthcare market. With the growth in
infrastructure to support the route-based service, we have strategically added
new distribution for faster and more cost-effective delivery of products to
customers.

We continue to develop new solutions to meet market demands. Over the past five
years we have added a robust portfolio of ultimate-user medication disposal
solutions for controlled substances, a system for DEA-inventory controlled
medication disposal for professionals, the Black Pail Program for disposal of
most unused pharmaceuticals, including Resource Conservation and Recovery Act
("RCRA") hazardous medications, and the Inhaler Disposal system. We have also
developed route-based services for medical, pharmaceutical and hazardous waste,
the TakeAway Recycle System™ for single-use devices ("SUDs") and the Hazardous
Drug Spill Control Kit™, a USP <800> (as defined below) compliant spill kit for
cleanup of chemotherapy and other hazardous drug spills.

As hospitals and surgery centers increase their sustainability efforts, they are
looking for ways to recycle more materials, such as SUDs. SUDs are constructed
of materials capable of being recycled, primarily plastics and metals. With a
greater emphasis on more sustainable solutions, the TakeAway Recycle System is a
much-needed complement to the single-use device market.

Our dually permitted trucks allow our hazardous waste direct pickup service to
align with our medical waste so that we can fully service all our customers.
Most healthcare professionals have hazardous waste in addition to medical waste.
By also transporting hazardous waste, we have a competitive advantage over local
haulers while still offering cost-effective pricing.

Highlights during the first quarter of fiscal 2022 Capital markets activity:

On August 30, 2021, the Company closed its previously announced underwritten
secondary offering of a total of 2,070,000 shares of its common stock at a
public offering price of $8.65 per share, including the exercise in full by the
underwriter of its option to purchase an additional 270,000 shares to cover
over-allotments in connection with the offering. After the underwriting discount
and offering expenses payable by the Company, the Company received net proceeds
of approximately $16.8 million.

Impact Relating to COVID-19 and the Company's Continuation of Its Infrastructure
Build Out
We are closely monitoring the impact of COVID-19 on all aspects of our business
and geographies, including how it will impact our customers, employees,
suppliers, vendors, business partners and distribution channels. While we did
not incur significant disruptions during the three and six months ended
December 31, 2021 from COVID-19, we are unable to predict the impact that
COVID-19 will have on our financial position and operating results due to
numerous uncertainties. These uncertainties include the severity of the virus,
the duration of the outbreak, governmental, business or other actions (which
could include limitations on our operations or mandates to provide products or
services), impacts on our supply chain, the effect on customer demand or changes
to our operations. The health of our workforce, and our ability to meet staffing
needs in our route-based, treatment and distribution operations and other
critical functions cannot be predicted and is vital to our operations.
The Company has taken precautions to ensure the safety of its employees
including remote working options for certain corporate office employees, while
at the same time remaining active as a leading national provider of
comprehensive medical waste solutions, bringing uninterrupted essential support
to its customers and the healthcare industry. For example, the Company increased
its route-based drivers, plant and operations personnel by ten percent (10%) in
advance of the COVID-19 pandemic to make sure that its operations and servicing
of customers would not be adversely affected by the potential absence of
employees due to COVID-19. The Company also temporarily increased the pay for
its front-line operations personnel and drivers during the pandemic.
Related to customer demand, the Company saw temporary closures of about 1,000
dental, dermatology and physician practices equating to about $0.1 million in
lost monthly revenue for the Company from mid-March 2020 through June 2020.
Offsetting this through most of fiscal year ended June 30, 2021 was increased
volumes of medical waste generated by many of the Company's long-term care
customers who are utilizing the Company's systems and services to contain and
dispose of personal protective equipment ("PPE") used in their facilities.
The Company is continuing to focus on expanding its infrastructure programs,
which began in calendar 2019, to support what it anticipated would be a strong
2021 flu and immunization season as well as medical waste disposal related to
the COVID-19 vaccine which became available for administration in the U.S. at
the end of calendar year 2020. Additionally, the Company saw some increased
medical waste volumes related to COVID-19 such as the long-term care market
where PPE in many facilities has been disposed of as medical waste and not as
trash which has been the historical practice. Finally, the Company's route-based
footprint now extends to 37 states, or 80% of the population, significantly
increasing the pipeline of larger small and medium quantity generator sales
opportunities.
To address these opportunities, the Company has:
•Significantly increased its production and inventory of medical waste mailback
and shipback solutions to ensure it remains well positioned to meet ongoing
customer demand related to immunizations overall and the continued rollout of
COVID-19 vaccines and boosters as well as increased COVID-19 testing;
•Increased its medical waste processing capacity from 10 million to 27 million
pounds per year through the addition of a larger autoclave at its Texas facility
as well as an additional autoclave at its Pennsylvania facility;
•Secured a larger warehouse and distribution facility in Pennsylvania to store
and distribute larger volumes of medical waste mailbacks; and
•Expanded its route-based truck fleet and drivers necessary to facilitate the
potential increase in volumes from its expanded 37 state route-based footprint
and related larger prospect opportunities.

These efforts have contributed to the Company's success in meeting customer
needs throughout the pandemic, particularly as the rollout of COVID-19 vaccines
has created increased demand for the Company's services.
On a broader note, the impacts of a potential worsening of global economic
conditions and the continued disruptions to, and volatility in, the credit and
financial markets, consumer spending and other unanticipated consequences remain
unknown. In addition, we cannot predict the impact that COVID-19 will have on
our customers, vendors, suppliers and other business partners. However, any
material adverse effect on these parties could adversely impact our results of
operations, cash flows and financial conditions. External effects from the
COVID-19 pandemic began at the end of the third quarter of 2020 and did not have
a material adverse impact on the three and six months ended December 31, 2021
results. The situation surrounding COVID-19 remains fluid, and we are actively
managing our response in collaboration with customers, employees and business
partners and assessing potential impacts to our financial position and operating
results, as well as adverse developments in our business. For further
information regarding the impact of COVID-19 on the Company, please see Item 1A,
Risk factors in the Company's annual report on form 10-K for the year ended June
30, 2021.

RESULTS OF OPERATIONS

The following analyzes changes in the condensed consolidated operating results
and financial condition of the Company during the three and six months ended
December 31, 2021 and 2020. The following table sets forth for the periods
indicated certain items from the Company's Condensed Consolidated Statements of
Operations (dollars in thousands and percentages expressed as a percentage of
revenues, unaudited):

                                                      Three-Months Ended December 31,                                            Six-Months Ended December 31,
                                          2021               %               2020               %                  2021                  %               2020               %
Revenues                              $  18,878            100.0  %       $ 17,011            100.0  %       $       32,793            100.0  %       $ 30,162            100.0  %
Cost of revenues                         12,271             65.0  %         11,374             66.9  %               22,765             69.4  %         20,902             69.3  %
Gross profit                              6,607             35.0  %          5,637             33.1  %               10,028             30.6  %          9,260             30.7  %
SG&A expense                              4,388             23.2  %          3,756             22.1  %                8,588             26.2  %          7,544             25.0  %
Depreciation and amortization               236              1.3  %            205              1.2  %                  454              1.4  %            409              1.4  %
Operating Income                          1,983             10.5  %          1,676              9.9  %                  986              3.0  %          1,307              4.3  %
Total other expense                         (17)            (0.1) %            (37)            (0.2) %                  (66)            (0.2) %            (64)            (0.2) %
Income before income taxes                1,966             10.4  %          1,639              9.6  %                  920              2.8  %          1,243              4.1  %
Income tax expense                          529              2.8  %            411              2.4  %                  273              0.8  %            308              1.0  %
Net Income                            $   1,437              7.6  %       $  1,228              7.2  %       $          647              2.0  %       $    935              3.1  %



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THREE MONTHS ENDED DECEMBER 31, 2021 BY COMPARISON WITH THE THREE MONTHS ENDED DECEMBER 31, 2020

Total revenues for the three months ended December 31, 2021 of $18.9 million
increased compared to the total revenues for the three months ended December 31,
2020 of $17.0 million. The increase in revenue is mainly due to higher product
returns on sales in prior periods net of current year deferred revenue plus
increased billings in the Professional and Retail markets. The net increase in
revenue is partially offset by decreases in billings in the Pharmaceutical
Manufacturer, Home Health Care and Long-Term Care markets. The components of
billings by market are as follows (in thousands, unaudited):
                                          Three-Months Ended December 31,
                                          2021                2020        Variance
BILLINGS BY MARKET:
Retail                           $      6,365              $  6,139      $    226
Professional                            5,199                 4,538           661
Home Health Care                        2,028                 2,832          (804)

Pharmaceutical Manufacturer             1,901                 3,062        (1,161)
Long-Term Care                            752                 1,060          (308)
Government                                564                   497            67
Environmental                              54                   179          (125)
Other                                     137                   159           (22)
Subtotal                               17,000                18,466        (1,466)
GAAP Adjustment *                       1,878                (1,455)        3,333
Revenue Reported                 $     18,878              $ 17,011      $  1,867



*Represents the net impact of the revenue recognition adjustments to arrive at
reported generally accepted accounting principles ("GAAP") revenue. Customer
billings include all invoiced amounts associated with products shipped or
services rendered during the period reported. GAAP revenue includes customer
billings as well as numerous adjustments necessary to reflect, (i) the deferral
of a portion of current period sales, (ii) recognition of certain revenue
associated with product returned for treatment and destruction and (iii)
provisions for certain product returns and discounts to customers which are
accounted for as reductions in sales in the same period the related sales are
recorded. See Note 3 "Significant Accounting Policies - Revenue Recognition" in
"Notes to Condensed Consolidated Financial Statements".

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The components of billings by solution are as follows (in thousands except percentages expressed as a percentage of total billings, unaudited):

Three-month period ended the 31st of December,

                                                            2021           % Total                   2020           % Total
BILLINGS BY SOLUTION:
Mailbacks                                               $  10,192                   60.0  %       $ 11,907                   64.4  %
Route-based pickup services                                 3,551                   20.9  %          3,491                   18.9  %
Unused medications                                          1,865                   11.0  %          1,713                    9.3  %
Third party treatment services                                 54                    0.3  %            179                    1.0  %
Other (1)                                                   1,338                    7.8  %          1,176                    6.4  %
Total billings                                             17,000                  100.0  %         18,466                  100.0  %
GAAP adjustment (2)                                         1,878                                   (1,455)
Revenue reported                                        $  18,878                                 $ 17,011



(1)The Company's other products include IV poles, accessories, containers, asset
return boxes and other miscellaneous items.
(2)Represents the net impact of the revenue recognition adjustments required to
arrive at reported GAAP revenue.  Customer billings include all invoiced amounts
associated with products shipped or services rendered during the period
reported. GAAP revenue includes customer billings as well as numerous
adjustments necessary to reflect, (i) the deferral of a portion of current
period sales, (ii) recognition of certain revenue associated with products
returned for treatment and destruction and (iii) provisions for certain product
returns and discounts to customers which are accounted for as reductions in
sales in the same period to related sales are recorded.

The net decrease in billings was mainly attributable to increased billings in
the Professional ($0.7 million) and Retail ($0.2 million) markets offset by
decreased billings in the Pharmaceutical Manufacturer ($1.2 million), Home
Health Care ($0.8 million) and Long-Term Care ($0.3 million) markets.
Professional market billings increased 15% to $5.2 million for the three months
ended December 31, 2021 as compared to $4.5 million for the three months ended
December 31, 2020 consistent with a 17% increase in route-based customer
locations. Retail market billings grew 4% to $6.4 million in the second quarter
of fiscal 2022 as compared to $6.1 million in the same prior year period. Within
the retail market, immunization related orders were down slightly at $4.6
million in the second quarter of fiscal 2022 compared to $4.8 million in the
prior year. Pharmaceutical Manufacturer market billings decreased by $1.2
million to $1.9 million in the second quarter of fiscal 2022 as compared to $3.1
million in the same prior year period due to the timing of inventory builds for
patient support programs, driving over half of the $1.7 million decrease in
mailback solution billings. Long-Term Care billings decreased by $0.3 million to
$0.8 million in the second quarter of fiscal 2022 compared to $1.1 million in
the prior year period, related primarily to heightened volumes of COVID-19
related waste management in the prior year, most of which adversely impacted the
route-based business customer billings. Home Health Care market billings
decreased $0.8 million to $2.0 million in the second quarter of fiscal 2022
compared to $2.8 million in the second quarter of fiscal 2021 due to the timing
of distributor orders, driving some of the $1.7 million decrease in mailback
solution billings.

Billings for Mailbacks decreased 14.4% to $10.2 million as compared to
$11.9 million in the prior year period and represented 60.0% of total billings.
Billings for Unused Medications grew 9% to $1.9 million in the second quarter of
fiscal 2022 as compared to $1.7 million in the same prior year period as result
of the 25% increase in the number of MedSafe Inner Liners sold.

Cost of revenues for the three months ended December 31, 2021 of $12.3 million
was 65.0% of revenues. Cost of revenues for the three months ended December 31,
2020 of $11.4 million was 66.9% of revenues. The gross margin for the three
months ended December 31, 2021 of 35.0% increased compared to the gross margin
for the three months ended December 31, 2020 of 33.1% due mainly to higher
revenues.

Selling, general and administrative ("SG&A") expenses for the three months ended
December 31, 2021 and 2020 were $4.4 million and $3.8 million, respectively. The
increase in SG&A is related primarily to $0.2 million in acquisition related
costs, a $0.2 million increase in the accrual of management incentive
compensation and continued investment in sales and marketing.

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The Company reported operating income and income before income taxes of
$2.0 million for the three months ended December 31, 2021 as compared to
operating income and income before income taxes of $1.7 million and $1.6
million, respectively, in the prior year period. Operating income and income
before income taxes increased primarily due to higher gross profit (discussed
above).

The Company’s effective tax rate for the three months ended December 31, 2021
and 2020 were 26.9% and 25.1%, respectively.

The Company reported net income of $1.4 million for the three months ended
December 31, 2021 compared to a net income of $1.2 million for the period of the previous year. Net profit increased due to the increase in operating profit (see above).

The Company reported basic and diluted earnings per share of $0.07 for the two months ended December 31, 2021 and 2020.

SIX MONTHS ENDED DECEMBER 31, 2021 BY COMPARISON WITH THE SIX MONTHS ENDED DECEMBER 31, 2020

Total revenues for the six months ended December 31, 2021 of $32.8 million
increased by $2.6 million, or 8.7%, over the total revenues for the six months
ended December 31, 2020 of $30.2 million. The increase in revenue is mainly due
to higher product returns on sales in prior periods net of current year deferred
revenue plus increased billings in the Professional and Retail markets. The
increase in billings is partially offset by the decrease in billings in the
Pharmaceutical Manufacturer, Home Healthcare and Long-Term Care markets. The
components of billings by market are as follows (in thousands):
                                          Six-Months Ended December 31,
                                                   (Unaudited)
                                        2021               2020        Variance
BILLINGS BY MARKET:
Retail                           $    10,232            $  9,786      $    446
Professional                           9,716               8,671         1,045
Home Health Care                       3,967               5,180        (1,213)
Pharmaceutical Manufacturer            2,397               4,241        (1,844)
Long-Term Care                         1,530               2,369          (839)
Government                             1,271               1,012           259
Environmental                             85                 314          (229)
Other                                    526                 321           205
Subtotal                              29,724              31,894        (2,170)
GAAP Adjustment *                      3,069              (1,732)        4,801
Revenue Reported                 $    32,793            $ 30,162      $  2,631



*Represents the net impact of the revenue recognition adjustments to arrive at
reported GAAP revenue. Customer billings include all invoiced amounts for
products shipped or services rendered during the period reported. GAAP revenue
includes customer billings as well as numerous adjustments necessary to reflect,
(i) the deferral of a portion of current period sales, (ii) recognition of
certain revenue associated with product returned for treatment and destruction
and (iii) provisions for certain product returns and discounts to customers
which are accounted for as reductions in sales in the same period the related
sales are recorded. Most of the difference between customer billings and GAAP
revenue is reflected in the Company's balance sheet as Contract Liability. See
Note 3 "Significant Accounting Policies - Revenue Recognition" in "Notes to
Condensed Consolidated Financial Statements".
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The components of billings by solution are as follows (in thousands):

                                                       Six-Months Ended 

the 31st of December,

                                               2021                % Total         2020       % Total
BILLINGS BY SOLUTION:
Mailbacks                           $       15,749                   53.0  %    $ 18,346        57.5  %
Route-based pickup services                  6,750                   22.7  %       6,647        20.8  %
Unused medications                           4,494                   15.1  %       4,074        12.8  %
Third party treatment services                  85                    0.3  %         314         1.0  %
Other (1)                                    2,646                    8.9  %       2,513         7.9  %
Total billings                              29,724                  100.0  %      31,894       100.0  %
GAAP adjustment (2)                          3,069                                (1,732)
Revenue reported                    $       32,793                              $ 30,162



(1)The Company's other products include IV poles, accessories, containers, asset
return boxes and other miscellaneous items.
(2)Represents the net impact of the revenue recognition adjustment required to
arrive at reported GAAP revenue.  Customer billings include all invoiced amounts
associated with products shipped or services rendered during the period
reported.  GAAP revenue includes customer billings as well as numerous
adjustments necessary to reflect, (i) the deferral of a portion of current
period sales, (ii) recognition of certain revenue associated with products
returned for treatment and destruction and (iii) provisions for certain product
returns and discounts to customers which are accounted for as reductions in
sales in the same period to related sales are recorded.  The difference between
customer billings and GAAP revenue is reflected in the Company's balance sheet
as Contract Liability.

The decrease in billings was mainly due to increased billings in the
Professional ($1.0 million) and Retail ($0.4 million) markets offset by
decreased billings in the Pharmaceutical Manufacturer ($1.8 million), Home
Health Care ($1.2 million) and Long-Term Care ($0.8 million) markets.
Professional market billings increased 12.1% to $9.7 million in the first half
of fiscal 2022 as compared to $8.7 million in the same prior year period. Retail
market billings increased 5% to $10.2 million as compared to $9.8 million in the
first half of fiscal 2021, with billings for flu shot / COVID-19 related orders
relatively flat at $6.4 million, and Retail market unused medications billings
also relatively flat at $2.2 million. Long-Term Care market billings decreased
35% to $1.5 million as compared to $2.4 million in the prior year period due to
heightened volumes of COVID-19 related waste management in the prior year.
During the first half of fiscal 2022, Pharmaceutical Manufacturer market
billings decreased 44% to $2.4 million as compared to $4.2 million in the first
half of fiscal 2021 mainly due to timing of inventory builds. Home Health Care
market billings decreased 23% to $4.0 million for the first half of fiscal 2022
compared to $5.2 million in the first half of 2021 due to the timing of
distributor orders.

Cost of revenues for the six months ended December 31, 2021 of $22.8 million was
69.4% of revenues. Cost of revenues for the six months ended December 31, 2020
of $20.9 million was 69.3% of revenues. Gross margin was essentially flat for
the six months ended December 31, 2021 at 30.6% compared to gross margin for the
six months ended December 31, 2020 of 30.7%.

SG&A expense for the six months ended December 31, 2021 and 2020 was
$8.6 million and $7.5 million, respectively. SG&A expense increased 14% related
to $0.2 million in acquisition related costs, a $0.5 million increase in the
accrual of management incentive compensation and the Company's continued
investments in sales and marketing.

The Company reported operating income of $1.0 million for the six months ended
December 31, 2021 compared to operating income of $1.3 million for the six
months ended December 31, 2020. Operating income decreased due to higher SG&A
expense (discussed above).

The Company reported income before income taxes of $0.9 million for the six
months ended December 31, 2021 versus income before income taxes of $1.2 million
for the six months ended December 31, 2020. Income before income taxes decreased
due to the decrease in operating income (discussed above).

The Company’s effective tax rate for the six months ended December 31, 2021 and 2020 were 29.7% and 24.8%, respectively.

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The Company reported net income of $0.6 million for the six months ended
December 31, 2021 compared to the net result of $0.9 million for the six months ended December 31, 2020. Net profit decreased due to lower pre-tax profit (see above).

The Company reported basic and diluted income per share of $0.03 for the six
months ended December 31, 2021 versus basic and diluted income per share of
$0.06 for the six months ended December 31, 2020. Basic and diluted income per
share decreased due to the decrease in net income (discussed above).

FUTURE PROSPECTS

As a result of the COVID-19 outbreak, the Company has implemented some and may
take additional precautionary measures intended to help ensure the well-being of
its employees, facilitate continued uninterrupted servicing of customers and
minimize business disruptions. For example, the following have recently been
implemented to address some of the uncertainties related to COVID-19:

•Since January 2020, the Company has increased its headcount for route-based
drivers, plant and operations personnel by 10% as a result of COVID-19 to make
sure that its operations and servicing of customers would not be adversely
affected by the potential absence of employees due to COVID-19. The cost of this
increased headcount which is recorded as cost of sales is about $0.1 million per
quarter.
•The Company temporarily increased pay to route-based drivers, plant and
operations personnel through June 30, 2020 due to the additional potential risks
associated with those functions in light of the COVID-19 environment.
•While some areas of the business have seen increased revenue, COVID-19 caused
many of the Company's customers to temporarily close from mid-March 2020 through
June 2020. For example, there have been temporary closures of approximately
1,000 customer offices including dental, dermatology and physician practices
which equates to almost $0.1 million per month in lost revenue. Most of these
offices have now re-opened.
•The Company is considered an essential business and could incur elevated costs
to maintain uninterrupted essential support to its customers and the overall
healthcare industry.
•Since June 30, 2019, inventory levels have been increased (approximately 71%)
which has also precipitated the need for additional warehouse space for the
Company's products. The Company is working to ensure it has adequate products
and solutions to address the potential additional needs that could reasonably be
expected to follow a pandemic of this magnitude. Whether it be supporting an
expected significant increase in seasonal flu immunizations, facilitating the
proper collection, transportation and treatment of syringes utilized in the
administration of the COVID-19 vaccine, or supporting the pick-up and processing
of increased volumes of healthcare waste from the long-term care industry, we
are well positioned to take advantage of these growth opportunities.

To date, external effects from the COVID-19 pandemic did not have a material
adverse impact on the Company's financial position and results of operations for
the year ended June 30, 2021 or the three and six month periods ended December
31, 2021. The full extent of the future impacts of COVID-19 on the Company's
operations is uncertain. A prolonged outbreak could have a material adverse
impact on the financial results and business operations of the Company.

The full extent of the future impacts of COVID-19 on the Company's operations is
uncertain. A prolonged outbreak could have a material adverse impact on the
financial results and business operations of the Company. To date, the Company
has not identified any material adverse impact of COVID-19 on its financial
position and results of operations.

The Company continues to focus on core markets and solution offerings that fuel
growth. Its key markets include healthcare facilities, pharmaceutical
manufacturers, home healthcare providers, long-term care, retail pharmacies and
clinics, and the professional market which is comprised of physicians, dentists,
surgery centers, veterinary practices and other healthcare facilities. These
markets require cost-effective services for managing medical, pharmaceutical and
hazardous waste.

The Company believes that its growth opportunities are supported by the following:

•A large professional market that consists of dentists, veterinarians, clinics,
physician groups, urgent care facilities, ambulatory surgical centers, labs,
dialysis and other healthcare facilities. This regulated market consists of
small to medium quantity generators of medical, pharmaceutical and hazardous
waste where we can offer a lower cost to service with solutions to match
individual facility needs. The Company has made ongoing investments in sales and
marketing initiative to drive growth. Our sales team focuses on larger-dollar
and nationwide opportunities where we can integrate the route-based pickup
service along with our mailback solutions to create a comprehensive medical
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waste management offering. Through targeted telemarketing initiatives,
e-commerce driven website and web-based promotional activities, we believe we
can drive significant additional growth as we increase awareness of the
Company's innovative solution offerings with a focus on individual or small
group professional offices, government agencies, smaller retail pharmacies and
clinics and long-term care facilities. The Company is able to compete more
aggressively in the medium quantity generator market with the addition of
route-based services where the mailback may not be as cost effective. The
Company's route-based business provides direct service to areas encompassing
over 80% of the U.S. population.

•From July 2015 and July 2016, the Company acquired three route-based pickup
service companies, which strengthened the Company's position in the Northeast.
Through a combination of acquisition and organic growth, the Company now offers
route-based pickup services in a thirty-seven (37) state region of the South,
Southeast, Southwest, Midwest and Northeast portions of the United States. To
facilitate operational efficiencies, the Company has opened transfer stations
and offices in strategic locations. The Company directly serves more than 17,360
customer locations with route-based pickup services. With the addition of these
route-based pickup regions and the network of medical and hazardous waste
service providers servicing the entire U.S., the Company offers customers a
blended product portfolio to effectively manage multi-site and multi-sized
locations, including those that generate larger quantities of waste. The network
has had a significant positive impact on our pipeline of sales opportunities -
over 60% of this pipeline is attributable to opportunities providing
comprehensive waste management service offerings where both the mailback and
pickup service are integrated into the offering. In October 2021, the Company
acquired a route-based provider of medical waste solutions with over 500
locations in the Midwest, primarily in Indiana.

•The changing demographics of the U.S. population - according to the U.S. Census
Bureau, 2019 Population Estimates and National Projections, the nation's
65-and-older population has grown rapidly since 2010 (34.2% over the past
decade), which will increase the need for cost-effective medical waste
management solutions, especially in the long-term care and home healthcare
markets. With multiple solutions for managing regulated healthcare-related
waste, the Company delivers value as a single-source provider with blended
mailback and route-based pickup services matched to the waste volumes of each
facility.

•The shift of healthcare from traditional settings to the retail pharmacy and
clinic markets, where the Company focuses on driving increased promotion of the
Sharps Recovery System. According to the Centers for Disease Control ("CDC"),
44.9% of adults received a flu shot and 32.2% of flu shots for adults were
administered in a retail clinic in 2018. Over the flu seasons from 2011 to 2020,
the Company saw growth in the retail flu shot related orders in seven years of
10% to 36%, including a 25% increase in 2020, and declines in three years of 13%
to 17%. Despite the volatility, Sharps believes the Retail market should
continue to contribute to long-term growth for the Company as consumers
increasingly use alternative sites, such as retail pharmacies, to obtain flu and
other immunizations.

•The passage of regulations for ultimate user medication disposal allows the
Company to offer new solutions (MedSafe and TakeAway Medication Recovery System
envelopes) that meet the regulations for ultimate user controlled substances
disposal (Schedules II-V) to retail pharmacies. Additionally, with the new
regulations, the Company is able to provide the MedSafe and TakeAway Medication
Recovery Systems to long-term care and hospice to address a long standing issue
within long-term care.

•Local, state and federal agencies have growing needs for solutions to manage
medical and pharmaceutical waste. The Company's Sharps Recovery System is ideal
for as-needed disposal of sharps and other small quantities of medical waste
generated within government buildings, schools and communities. The Company also
provides TakeAway Medication Recovery System envelopes and MedSafe solutions to
government agencies in need of proper and regulatory compliant medication
disposal. The federal government, state agencies and non-profits are recognizing
the need to fund programs that address prevention as it pertains to the opioid
crisis. MedSafe and mailback envelopes for proper medication disposal are being
funded for prevention programs.

•With an increased number of self-injectable medication treatments and local
regulations, the Company believes its flagship product, the Sharps Recovery
System, continues to offer the best option for proper sharps disposal at an
affordable price. The Company delivers comprehensive services to pharmaceutical
manufacturers that sell high-dollar, self-injectable medications, which include
data management, compliance reporting, fulfillment, proper containment with
disposal, branding and conformity with applicable regulations. In addition, the
Company provides
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auto-injectors with online and retail options for sharps mail-in return systems, such as the Sharp Retrieval System and Complete Needle Collection and Disposal System, respectively.

• Increased interest from many commercial companies looking to improve workplace safety through proper sharps disposal and unused medication disposal solutions. The company offers a variety of services to meet these needs, including Sharps Safe Needle Disposal System, Sharps Retrieval System, Spill Kits and Take-Out Medication Retrieval System wraps.

•The Company continually develops new solution offerings such as ultimate user
medication disposal (MedSafe and TakeAway Medication Recovery System), mailback
services for DEA registrant expired inventory of controlled substances (TakeAway
Medication Recovery System DEA Reverse Distribution for Registrants) and
shipback services for collection and recycling of single-use medical devices
from surgical centers and other healthcare facilities (TakeAway Recycle System).

•COVID-19 prompted healthcare demands and opportunities including the expected
significant increase in seasonal flu immunizations, facilitating the proper
collection, transportation and treatment of syringes utilized in the
administration of the potential COVID-19 vaccine, or supporting the pick-up and
processing of the significantly increased volumes of healthcare waste from the
long-term care industry.

•The Company's financial position with a cash balance of $36.0 million (used for
working capital needs), debt of $3.7 million and additional availability under
the Credit and Loan Agreements as of December 31, 2021 (used to support working
capital needs and is constrained due to the impacts additional borrowings might
have on our future covenant compliance).

CASH AND CAPITAL RESOURCES

Management believes that the Company's current cash resources (cash on hand and
cash flows from operations) will be sufficient to fund operations for at least
the next twelve months. Operating cash flows and the capacity from the Credit
and Loan Agreements are the Company's primary sources of liquidity.

Cash flow

Cash flow has historically been primarily influenced by demand for products and
services, operating margins and related working capital needs as well as more
strategic activities including acquisitions, stock repurchases and fixed asset
additions. Cash increased by $8.2 million to $36.0 million at December 31, 2021
from $27.8 million at June 30, 2021 due to the following:

Cash Flows from Operating Activities - Cash flow from operating activities was
negatively impacted by an increase in accounts receivable of $3.3 million and
decrease in contract liabilities of $3.0 million offset in part by net income of
$0.6 million.
Cash Flows from Investing Activities - Cash flow from investing activities is
for normal permitting and capital expenditures for plant and equipment additions
of $0.8 million and a business acquisition of Affordable Medical Waste for $2.2
million in cash.

Cash flow from financing activities – Cash flow from financing activities provided an increase in cash from the proceeds of the issuance of common shares, net of underwriting fees and $16.8 million partially offset by the repayment of the debt of $0.4 million.

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Credit facility

On March 29, 2017, the Company entered into a credit agreement with a commercial
bank which was subsequently amended on June 29, 2018 and on December 28, 2020
("Credit Agreement"). The amended Credit Agreement, which expires on December
28, 2023, provides for a $14.0 million committed credit facility that can be
increased to $18 million upon the Company's request. The proceeds of the Credit
Agreement may be utilized as follows: (i) $6.0 million for working capital,
letters of credit (up to $2.0 million) and general corporate purposes, (ii) $8.0
million for acquisitions and (iii) an additional $4 million for working capital,
upon the Company's request. Indebtedness under the Credit Agreement is secured
by substantially all of the Company's assets with advances outstanding under the
working capital portion of the credit facility at any time limited to a
Borrowing Base (as defined in the Credit Agreement) equal to 80% of eligible
accounts receivable plus the lesser of (i) 50% of eligible inventory and (ii)
$3.0 million. Advances under the acquisition portion of the credit facility are
limited to 75% of the purchase price of an acquired company and convert to a
five-year term note at the time of the borrowing. Borrowings bear interest at
the greater of (a) one-half percent or (b) the One Month ICE LIBOR plus a LIBOR
Margin of 2.5%. The LIBOR Margin may increase to as high as 3.0% depending on
the Company's cash flow leverage ratio.  The interest rate as of December 31,
2021 was approximately 3.0%. The Company pays a fee of 0.25% per annum on the
unused amount of the committed credit facility. No amounts were outstanding
under the working capital portion of the credit facility at December 31, 2021.

On August 21, 2019, certain subsidiaries of the Company entered into a
Construction and Term Loan Agreement and a Master Equipment Finance Agreement
with the Company's existing commercial bank (collectively, the "Loan
Agreement"). The Loan Agreement provides for a five-year, $3.2 million facility,
the proceeds of which are to be utilized for expenditures to facilitate future
growth at the Company's treatment facility in Carthage, Texas (the "Texas
Treatment Facility") as follows: (i) $2.0 million for planned improvements and
(ii) $1.2 million for equipment. Indebtedness under the Loan Agreement is
secured by the Company's real estate investment and equipment at the Texas
Treatment Facility. Advances under the Loan Agreement mature five years from the
Closing Date (August 21, 2019) with monthly payments beginning in the month
after the advancing period ends. The advancing period extended through January
15, 2021 and August 2020 for the real estate portion and the equipment portion
of the Loan Agreement, respectively. Borrowings during the advancing period for
the real estate portion and for the entire term of the equipment portion of the
Loan Agreement bear interest computed at the One Month ICE LIBOR, plus
two-hundred and fifty (250) basis points which was a rate of 2.73% on
December 31, 2021. The Company has entered into a forward rate lock to fix the
rate on the real estate portion of the Loan Agreement at the expiration of the
advancing period at 4.15%.

On January 22, 2021, certain wholly owned subsidiaries of the Company entered
into a real estate term loan agreement (the "Real Estate Loan Agreement") with
its existing commercial bank. The Real Estate Loan Agreement provides for a
five-year, $0.9 million facility, the proceeds of which have been utilized to
purchase the property in Pennsylvania which had previously been leased by the
Company for its operations. The Real Estate Loan Agreement matures five years
from January 22, 2021 with monthly payments based on a 20-year amortization and
bears interest at 4%.

The Company has availability under the Credit Agreement of approximately
$13.3 million ($5.3 million for the working capital and $8.0 million for
acquisitions) as of December 31, 2021 with the option to extend the availability
up to $17.3 million (used to support working capital needs and is constrained
due to the impacts additional borrowings might have on our future covenant
compliance). The Company also has $0.7 million in letters of credit outstanding
as of December 31, 2021.

The Credit and Loan Agreements contain affirmative and negative covenants that,
among other things, require the Company to maintain a maximum cash flow leverage
ratio of no more than 3.0 to 1.0 and a minimum debt service coverage ratio of
not less than 1.15 to 1.00. The Credit and Loan Agreements also contain
customary events of default which, if uncured, may terminate the agreements and
require immediate repayment of all indebtedness to the lenders. The leverage
ratio covenant may limit the amount available under the Credit and Loan
Agreements. The Company was in compliance with all the financial covenants under
the Credit and Loan Agreements as of December 31, 2021.

The Company uses performance bonds to support operations based on certain state requirements. AT December 31, 2021the Company had performance bonds covering the financial assurance up to $1.4 million.

Management believes that the Company's current cash resources (cash on hand and
cash flows from operations) will be sufficient to fund operations for at least
the next twelve months.

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CRITICAL ACCOUNTING METHODS

Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties and could potentially result in
materially different results under different assumptions and conditions. The
Company's critical accounting policies are included in the discussion entitled
Critical Accounting Policies in Item 7. Management's Discussions and Analysis of
Financial Condition and Results of Operations in the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 2021, as filed with the SEC. There
were no material changes to the critical accounting policies disclosed in the
Annual Report on Form 10-K.

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