SmartKem, Inc. Files 8-K for Asset Acquisition

TL;DR

SmartKem selling assets, filing shows acquisition deal and equity sales.

AI Summary

On December 18, 2024, SmartKem, Inc. entered into a Material Definitive Agreement related to the acquisition of its assets by an unnamed entity. The filing also disclosed unregistered sales of equity securities and material modifications to security holder rights. The company's former name was Parasol Investments Corp, with a name change effective July 10, 2020.

Why It Matters

This 8-K filing indicates a significant event for SmartKem, Inc., likely involving a change in control or a substantial transaction through an asset acquisition.

Risk Assessment

Risk Level: medium — The filing details an asset acquisition and unregistered equity sales, which can introduce complexities and potential risks for stakeholders.

Key Players & Entities

• SmartKem, Inc. (company) — Registrant
• Parasol Investments Corp (company) — Former company name
• December 18, 2024 (date) — Date of earliest event reported
• July 10, 2020 (date) — Date of name change

FAQ

Key Financial Figures

• $0.0001 — ch registered Common Stock, par value $0.0001 per share SMTK The Nasdaq Stock Mar
• $3.00 — n Stock sold in the Public Offering was $3.00. The RD Purchase Agreement contains cu
• $2.9999 — rrant sold in the Private Placement was $2.9999. The PIPE Purchase Agreement contains
• $7.65 million — receive gross proceeds of approximately $7.65 million from the RD Purchaser Offering and the
• $150,000 — mited to legal fees, up to a maximum of $150,000. The Company also agreed to issue to th
• $10,000 — nvertible Preferred Stock, Stated Value $10,000 per share (the "Series A-1 Preferred St
• $4.34 — ce of the Series A-1 Preferred Stock to $4.34; (v) prevents the conversion of the Ser
• $1,500,000 — GH") for so long as AIGH holds at least $1,500,000 in aggregate Stated Value of Series A-1

Filing Documents

• tm2431416d1_8k.htm (8-K) — 64KB
• tm2431416d1_ex1-1.htm (EX-1.1) — 201KB
• tm2431416d1_ex3-1.htm (EX-3.1) — 121KB
• tm2431416d1_ex4-1.htm (EX-4.1) — 94KB
• tm2431416d1_ex4-2.htm (EX-4.2) — 97KB
• tm2431416d1_ex4-3.htm (EX-4.3) — 99KB
• tm2431416d1_ex5-1.htm (EX-5.1) — 9KB
• tm2431416d1_ex10-1.htm (EX-10.1) — 228KB
• tm2431416d1_ex10-2.htm (EX-10.2) — 224KB
• tm2431416d1_ex10-3.htm (EX-10.3) — 155KB
• tm2431416d1_ex99-1.htm (EX-99.1) — 14KB
• tm2431416d1_ex5-1img001.jpg (GRAPHIC) — 5KB
• tm2431416d1_ex5-1img002.jpg (GRAPHIC) — 7KB
• tm2431416d1_ex5-1img003.jpg (GRAPHIC) — 2KB
• image_005.jpg (GRAPHIC) — 51KB
• 0001104659-24-130523.txt ( ) — 1891KB
• tmb-20241218.xsd (EX-101.SCH) — 3KB
• tmb-20241218_lab.xml (EX-101.LAB) — 33KB
• tmb-20241218_pre.xml (EX-101.PRE) — 22KB
• tm2431416d1_8k_htm.xml (XML) — 4KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. Registered Direct Offering and Concurrent Private Placement On December 18, 2024, SmartKem, Inc. (the "Company") entered into a securities purchase agreement (the "RD Purchase Agreement") with certain institutional investors (each, an "RD Purchaser" and, collectively, the "RD Purchasers"), pursuant to which the Company agreed to issue and sell to the RD Purchasers: (i) in a registered direct public offering (the "Public Offering") 1,449,997 shares of the Company's common stock, par value $0.0001 ("Common Stock"); and (ii) in a concurrent private placement (the "RD Purchaser Private Placement" and, together with the Public Offering, the "RD Purchaser Offering") Class D Common Stock Purchase Warrants (the "Class D Warrants") to purchase up to 1,449,997 shares of Common Stock. The purchase price for each share of Common Stock sold in the Public Offering was $3.00. The RD Purchase Agreement contains customary representations, warranties and agreements of the Company and the RD Purchasers and customary indemnification rights and obligations of the parties. Pursuant to the terms of the RD Purchase Agreement, the Company has agreed to certain restrictions on the issuance and sale of its shares of Common Stock and securities convertible or exercisable into shares of Common Stock for a period of 90 days following the closing of the RD Purchaser Offering, subject to certain exceptions. The Company has also agreed to certain restrictions on engaging in a "variable rate transaction" (as defined in the RD Purchase Agreement) for a period of 180 days following the closing of the RD Purchaser Offering, subject to certain exceptions. The Public Offering is being made pursuant to the Company's shelf registration statement on Form S-3 (File No. 333-281608) previously filed with the Securities and Exchange Commission (the "SEC") on August 16, 2024 and declared effective by the SEC on August 22, 2024, the related base prospect

02 Unregistered Sale of Equity Securities

Item 3.02 Unregistered Sale of Equity Securities. The information contained in response to Item 1.01 above is incorporated herein by reference. Item 3.03 Material Modification to Rights of Security Holders. The information contained in response to Item 1.01 above relating to the Company's Series A-1 Preferred Stock and the Second Amended and Restated CoD is incorporated herein by reference. The Second Amended and Restated CoD was filed with the Secretary of State of Delaware on December 20, 2024. As previously reported in the Restructuring 8-K, the Second Amended and Restated CoD among other things: (i) removed the obligation of the Company to pay dividends on shares of the Series A-1 Preferred Stock in certain circumstances; (ii) removed provisions that required the Company to obtain the consent of the holders of a majority of the outstanding shares of Series A-1 Preferred Stock to take certain actions, such as the incurrence of certain indebtedness, the granting of liens and the purchase or redemption of outstanding equity securities; (iii) removed the liquidation preference applicable to the Series A-1 Preferred Stock; (iv) reduced the conversion price of the Series A-1 Preferred Stock to $4.34; (v) prevents the conversion of the Series A-1 Preferred Stock for a period ending on the Effective Date; (vi) provides for the automatic conversion of the Series A-1 Preferred Stock into either shares of Common Stock or the Company's Class C Warrants at the conversion price upon the earlier of the Effective Date or as determined by the written consent of the holders of at least a majority of the outstanding shares of Series A-1 Preferred Stock which must include AIGH Investment Partners LP and its Affiliates ("AIGH") for so long as AIGH holds at least $1,500,000 in aggregate Stated Value of Series A-1 Preferred Stock acquired pursuant to the Purchase Agreement; and (vii) removed certain price protection provisions which had expired pursuant to their terms. The fore

01 Other Events

Item 8.01 Other Events. On December 18, 2024, the Company issued a press release regarding the Offerings. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

01 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits. (d) Exhibits. Exhibit No. Description 1.1 Placement Agency Agreement, dated December 18, 2024 by and between SmartKem, Inc. (the "Company") and Craig-Hallum Capital Group LLC 3.1 Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series A-1 Convertible Preferred Stock 4.1 Form of Pre-funded Warrant 4.2 Form of Class D Warrant 4.3 Form of Placement Agent Warrant 5.1 Opinion of Lowenstein Sandler LLP 10.1 Form of Securities Purchase Agreement, dated December 18, 2024 among the Company and the RD Purchasers party thereto 10.2 Form of Securities Purchase Agreement, dated December 18, 2024 among the Company and the PIPE Investors party thereto 10.3 Form of Registration Rights Agreement, dated December 18, 2024 among the Company and the parties thereto 23.1 Consent of Lowenstein Sandler LLP (contained in Exhibit 5.1) 99.1 Press Release dated December 18, 2024 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SMARTKEM, INC. Dated: December 20, 2024 By: /s/ Barbra C. Keck Name: Barbra C. Keck Title: Chief Financial Officer

View Full Filing

View this 8-K filing on SEC EDGAR