SmartKem, Inc 10-Q for FY2022 Q1

SmartKem, Inc. (SMTK)

10-Q 2022-05-13 For: 2022-03-31

Added on April 12, 2026

About this 10-Q

SmartKem, Inc filed this 10-Q on May 13, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $30K
Net loss: $2.76M; compared with a net loss of $9.37M a year earlier
Diluted EPS: -$0.10; compared with -$0.51 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

Delaware		85-1083654
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒


		Page

Part I	Financial Information

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	3

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2022 and 2021	4

	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021	5

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	6

	Notes to the Unaudited Interim Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31

Item 4.	Controls and Procedures	31

Part II	Other Information

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	34

Item 6.	Exhibits	34



Exhibit Index		35

Signatures		37



	March 31,		December 31,
	2022		2021
ASSETS	(UNAUDITED)

Current assets:
Cash and cash equivalents	$	10,647	$	12,226
Accounts receivable		30		—
Research and development tax credit receivable		1,324		1,070
Prepaid expenses and other current assets		1,265		802
Total current assets		13,266		14,098
Property, plant equipment, net of accumulated depreciation of $1,130 and $1,102		770		802
Right-of-use assets, net		90		154
Other assets		6		6
Total assets	$	14,132	$	15,060

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and accrued expenses	$	1,160	$	1,423
Current lease liabilities		56		87
Total current liabilities		1,216		1,510
Non-current lease liabilities		19		28
Total liabilities		1,235		1,538

Commitments and contingencies (Note 8)
Stockholders’ Equity:
Common stock, par value $0.0001 per share, 300,000,000 shares authorized, 26,566,809 and 25,554,309 shares issued and outstanding, at March 31, 2022 and December 31, 2021, respectively*		3		3
Additional paid-in capital		91,935		89,954
Accumulated other comprehensive loss		(1,207)		(1,363)
Accumulated deficit		(77,834)		(75,072)
Total Stockholders’ equity		12,897		13,522

Total Liabilities and Stockholders’ Equity	$	14,132	$	15,060


	Three Months Ended March 31,
	2022		2021
Revenue	$	30	$	—
Cost of revenue		23		—
Gross profit		7		—

Other operating income		284		433

Operating Expenses:
Research and development		1,459		4,013
Selling, general and administrative		1,240		3,983
Transaction expenses		—		1,314
Total operating expenses		2,699		9,310

Loss from operations		(2,408)		(8,877)

Non-operating (Expense)/Income
(Loss) on foreign currency transactions		(354)		(470)
Interest expense		—		(19)
Total non-operating (expense)		(354)		(489)

Loss before income taxes		(2,762)		(9,366)
Income tax expense		—		—
Net loss	$	(2,762)	$	(9,366)

Net loss	$	(2,762)	$	(9,366)
Other comprehensive loss:
Foreign currency translation		156		16
Total comprehensive loss	$	(2,606)	$	(9,350)

Basic & diluted net loss per common share	$	(0.10)	$	(0.51)

Basic & diluted weighted average shares outstanding		28,438,003		18,351,532


						Accumulated
				Additional		Other
	Common stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Loss		Deficit		Equity (Deficit)
Balance at January 1, 2021	13,627,887		1		61,276		(1,480)		(57,946)	$	1,851
Issuance of common shares due to exercise of stock-options	1,404,813		1		19		-		-		20
Stock-based compensation expense	-		-		6,020		-		-		6,020
Repurchase of common stock	(2,307,700)		-		-		-		-		-
Effect of reverse capitalization	2,500,000		-		-		-		-		-
Issuance of common shares to vendor	50,000		-		99		-		-		99
Issuance of common stock and warrants in private placement	10,162,000		1		24,637		-		-		24,638
Issuance costs related to common stock and warrants in private placement	-		-		(2,454)		-		-		(2,454)
Foreign currency translation adjustment	-		-		-		16		-		16
Net loss	-		-		-				(9,366)		(9,366)
Balance at March 31, 2021	25,437,000		3		89,597		(1,464)		(67,312)		20,824

						Accumulated
				Additional		Other
	Common stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Loss		Deficit		Equity (Deficit)
Balance at January 1, 2022	25,554,309	$	3	$	89,954	$	(1,363)	$	(75,072)	$	13,522
Stock-based compensation expense	-		-		98		-		-		98
Issuance of common shares to vendor	12,500		-		43		-		-		43
Issuance of common stock in private placement (note 13)	1,000,000		-		2,000		-		-		2,000
Issuance costs related to common stock in private placement	-		-		(160)		-		-		(160)
Foreign currency translation adjustment	-		-		-		156		-		156
Net loss	-		-		-		-		(2,762)		(2,762)
Balance at March 31, 2022	26,566,809		3		91,935		(1,207)		(77,834)		12,897


	For the Three Months Ended March 31,
	2022		2021
Operating lease cost	$	63	$	47
Short-term lease cost		2		13
Variable lease cost		54		23
Total lease cost	$	119	$	83


	As of
	March 31,
	2022
2022	$	50
2023		22
2024		7
2025		—
2026		—
Thereafter		—
Total undiscounted lease payments		79
Less imputed interest		(4)
Total net lease liabilities	$	75


				Weighted-
				Average
		Weighted-		Remaining
		Average		Contractual
	Number of	Exercise		Term
	Shares	Price		(Years)
Warrants outstanding at January 1, 2022	985,533	$	2.00	4.15
Exercised	—		—	—
Forfeited or Expired	—		—	—
Granted	—		-	—
Warrants outstanding at March 31, 2022	985,533	$	2.00	3.90


		Three Months Ended March 31,				Increase (Decrease)
US$000		2022		2021	Amount		Percentage
Revenue	$	30	$	—	$	30	100	%
Cost of revenue		23		—		23	100	%
Gross Profit		7		—		7	100	%
Other operating income		284		433		(149)	(34)	%
Operating expenses
Research and development		1,459		4,013		(2,554)	(64)	%
Selling, general and administrative		1,240		3,983		(2,743)	(69)	%
Transaction expenses		—		1,314		(1,314)	(100)	%
Total operating expenses		2,699		9,310		(6,611)	(71)	%
Loss from operations	$	(2,408)	$	(8,877)	$	6,469	(73)	%


	Three Months Ended March 31,				Increase (Decrease)				% of total	% of total
	2022		2021		Amount		Percentage		2022	2021
Research & development tax credit	$	284	$	248	$	36	15	%	100%	58%
Research & development grants		—		179		(179)	(100)	%	0%	41%
Other grants		—		6		(6)	(100)	%	0%	1%
Total other operating income	$	284	$	433	$	(149)	(34)	%	100%	100%


	Three Months Ended				Increase (Decrease)
		March 31,		March 31,
US$000	2022		2021			Amount	Percentage
Net cash used in operating activities	$	(3,569)	$	(3,741)	$	172	(5)	%
Net cash used by investing activities		(41)		—		(41)	100	%
Net cash provided by financing activities		1,840		22,204		(20,364)	(92)	%
Effect of exchange rate changes on cash		191		7		184	2,629	%
Net change in cash		(1,579)		18,470		(20,049)	(109)	%
Cash, beginning of period		12,226		764		11,462	1,500	%
Cash, end of period	$	10,647	$	19,234	$	(8,587)	(45)	%


	Payments Due by Period
US$(000)		2022		2023		2024		Total
Operating lease obligations	$	50	$	22	$	7	$	79
Purchase obligations		761		522		67		1,350
	$	811	$	544	$	74	$	1,429


Exhibit No.	Description

2.1 *	Share Exchange Agreement, dated as of February 23, 2021, among the Registrant, SmartKem Limited and the shareholders of SmartKem Limited (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 24, 2021)

3.1	Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on February 24, 2021)

3.2	Amended and Restated Bylaws of the Registrant, as currently in effect (incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K filed on February 24, 2021)

10.1	Subscription Agreement, dated January 27, 2022, by and between the Company and the Purchasers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 27, 2022)

10.2	Registration Rights Agreement, dated January 27, 2022, by and between the Company and the Purchasers (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 27, 2022)

10.3 * ^Ù†	Renewal Lease by Reference of Lease of The Whole of the 8th Floor, Hexagon Tower, Manchester, M9 8GP, dated April 12, 2022, between AG Hexagon BV and SmartKem Limited

31.1†	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2†	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1††	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2††	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS†	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH†	Inline XBRL Taxonomy Extension Schema Document

101.CAL†	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF†	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB†	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE†	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104†	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

	SMARTKEM, INC.

	By:	/s/ Ian Jenks
	Name:	Ian Jenks
	Title:	President, Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Robert Bahns
	Name:	Robert Bahns
	Title:	Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)