SmartKem, Inc. Files Q1 2024 10-Q, Details Agreement

TL;DR

SmartKem's Q1 10-Q is in, shows financial health and a key Jan 26 amendment agreement.

AI Summary

SmartKem, Inc. filed its 10-Q for the period ending March 31, 2024. The filing details financial information and operational updates. Notably, the company entered into a Consent Conversion and Amendment Agreement on January 26, 2024, which likely impacts its capital structure and future operations.

Why It Matters

This filing provides investors with the latest financial snapshot of SmartKem, Inc., including any material changes or agreements that could affect its stock performance.

Risk Assessment

Risk Level: medium — The filing is a standard 10-Q, but the mention of a 'Consent Conversion and Amendment Agreement' suggests potential changes in debt, equity, or operational terms that warrant closer examination.

Key Numbers

• 20240331 — Reporting Period End Date (Indicates the financial period covered by the 10-Q.)
• 20240126 — Agreement Date (Marks the date of a significant Consent Conversion and Amendment Agreement.)

Key Players & Entities

• SmartKem, Inc. (company) — Filer of the 10-Q
• 20240331 (date) — End of reporting period
• 0001817760 (company) — Central Index Key for SmartKem, Inc.
• 20240126 (date) — Date of Consent Conversion and Amendment Agreement

FAQ

Key Financial Figures

• $0.0001 — on stock Additional other Total $0.0001 par value $0.0001 par value paid-in

Filing Documents

• smtk-20240331x10q.htm (10-Q) — 1342KB
• smtk-20240331xex31d1.htm (EX-31.1) — 15KB
• smtk-20240331xex31d2.htm (EX-31.2) — 16KB
• smtk-20240331xex32d1.htm (EX-32.1) — 9KB
• smtk-20240331xex32d2.htm (EX-32.2) — 9KB
• 0001558370-24-008481.txt ( ) — 6720KB
• smtk-20240331.xsd (EX-101.SCH) — 48KB
• smtk-20240331_cal.xml (EX-101.CAL) — 49KB
• smtk-20240331_def.xml (EX-101.DEF) — 145KB
• smtk-20240331_lab.xml (EX-101.LAB) — 391KB
• smtk-20240331_pre.xml (EX-101.PRE) — 297KB
• smtk-20240331x10q_htm.xml (XML) — 1317KB

Financial Statements

Financial Statements 3 Unaudited Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 3 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024 and 2023 4 Unaudited Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2024 and 2023 5 Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 6 Notes to the Unaudited Interim Condensed Consolidated Financial Statements 7-23 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 24 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 27 Item 4.

Controls and Procedures

Controls and Procedures 28 Part II Other Information 29 Item 1.

Legal Proceedings

Legal Proceedings 29 Item 1A.

Risk Factors

Risk Factors 29 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30 Item 3. Defaults Upon Senior Securities 30 Item 4. Mine Safety Disclosures 30 Item 5. Other Information 30 Item 6. Exhibits 30 Exhibit Index 31

Financial Statements

Item 1. Financial Statements SMARTKEM, INC. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except number of shares and per share data) March 31, December 31, 2024 2023 Assets Current assets Cash and cash equivalents $ 7,251 $ 8,836 Accounts receivable — 268 Research and development tax credit receivable 807 610 Prepaid expenses and other current assets 1,082 811 Total current assets 9,140 10,525 Property, plant and equipment, net 388 455 Right-of-use assets, net 223 285 Other assets, non-current 6 7 Total assets $ 9,757 $ 11,272 Liabilities and stockholders' equity Current liabilities Accounts payable and accrued expenses $ 2,038 $ 1,178 Lease liabilities, current 174 230 Other current liabilities 367 360 Total current liabilities 2,579 1,768 Lease liabilities, non-current 4 19 Warrant liability 619 1,372 Total liabilities 3,202 3,159 Commitments and contingencies (Note 7) — — Stockholders' equity: Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized, 3,592 and 13,765 shares issued and outstanding , at March 31, 2024 and December 31, 2023, respectively — — Common stock, par value $ 0.0001 per share, 300,000,000 shares authorized, 1,379,750 and 889,668 shares issued and outstanding , at March 31, 2024 and December 31, 2023, respectively* — — Additional paid-in capital 112,007 104,757 Accumulated other comprehensive loss ( 1,596 ) ( 1,578 ) Accumulated deficit ( 103,856 ) ( 95,066 ) Total stockholders' equity 6,555 8,113 Total liabilities and stockholders' equity $ 9,757 $ 11,272 * reflects a one-for-thirty-five (1: 35 ) reverse stock split effected on September 21, 2023 The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements. 3 SMARTKEM, INC. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unau

Business

Business The Company is seeking to reshape the world of electronics with its disruptive organic thin-film transistors ("OTFTs") that have the potential to drive the next generation of displays. The Company's patented TRUFLEX semiconductor and dielectric inks, or electronic polymers, are used to make a new type of transistor that has the potential to revolutionize the display industry. The Company's inks enable low temperature printing processes that are compatible with existing manufacturing infrastructure to deliver low-cost displays that outperform existing technology. The Company's electronic polymer platform can be used in a number of display technologies including microLED, miniLED and AMOLED displays for next generation televisions, laptops, augmented reality ("AR") and virtual reality ("VR") headsets, smartwatches and smartphones. The Company develops its materials at its research and development facility in Manchester, UK and provides prototyping services at the Centre for Process Innovation ("CPI") at Sedgefield, UK. It has a field application office in Taiwan. The Company has an extensive IP portfolio including 125 granted patents across 19 patent families and 40 codified trade secrets. Risk and Uncertainties The Company's activities are subject to significant risks and uncertainties including the risk of failure to secure additional funding to properly execute the Company's business plan. The Company is subject to risks that are common to companies in the development stage, including, but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, reliance on third party manufacturers, protection of proprietary technology and compliance with regulatory requirements. The Company has access under a framework agreement to equipment which is used in the manufacturing of demonstrator products employing the Company's inks. If the Company lost access to this fabrication facility, it would ma

Legal proceedings

Legal proceedings In the normal course of business, the Company may become involved in legal disputes regarding various litigation matters. In the opinion of management, any potential liabilities resulting from such claims would not have a material effect on the interim condensed consolidated financial statements. 8. STOCKHOLDERS' EQUITY Reverse Stock Split At the Company's Annual Meeting of Stockholders held on August 25, 2023 (the "Annual Meeting"), the Company's stockholders approved a proposal to approve and adopt an amendment to the Company's Amended and Restated Certificate of Incorporation to effect a reverse stock split of its shares of common stock, issued and outstanding or reserved for issuance, at a specific ratio within a range from 1-for- 30 to 1-for- 60 , inclusive, prior to the first anniversary of stockholder approval of the proposal, and to grant authorization to the Board of Directors to determine, in its sole discretion, whether to effect the reverse stock split, as well as its specific timing and ratio. On September 19, 2023, the Company's Board of Directors adopted resolutions to effect as soon as reasonably practicable the reverse split of the issued and outstanding shares of the Common Stock at a ratio of 1-for- 35 . On September 19, 2023, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company's Amended and Restated Certificate of Incorporation (the "Charter Amendment") to effect a reverse stock split of the issued and outstanding shares of the Company's common stock, $ 0.01 par value per share, at a ratio of 1-for- 35 to be effective as of September 21, 2023 at 12:01 a.m., New York City time (the "Reverse Stock Split"). The Charter Amendment did not change the par value or any other terms of the common stock. Preferred Stock The board of directors has the authority, without further action by the stockholders, to issue up to 10,000,000 shares of preferred stock in one or mor

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View this 10-Q filing on SEC EDGAR