8-K
SmartKem, Inc. (SMTK)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 12,2024
SmartKem, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-42115 | 85-1083654 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission<br><br> <br>File Number) | (IRS Employer<br><br> <br>Identification No.) |
Manchester Technology Center, Hexagon Tower
Delaunays Road, Blackley
Manchester, M9 8GQ U.K.
(Address of principal executive offices, including zip code)
011-44-161-721-1514
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered |
|---|---|---|
| Common Stock, par value $0.0001 per share | SMTK | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b - 2 of the Securities Exchange Act of 1934 (§240.12b - 2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On August 12, 2024, SmartKem, Inc. (the “Company”) issued a press release regarding the Company’s financial results for its fiscal quarter ended June 30, 2024. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated by reference herein.
The information in this Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01. | Financial Statements and Exhibits |
|---|
(d) Exhibits:
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release, dated August 12,<br> 2024. |
| 104 | Cover Page Interactive Date 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: August 12, 2024 | By: | /s/ Barbra Keck |
| Barbra Keck | ||
| Chief Financial Officer |
Exhibit 99.1
| PRESS<br><br>RELEASE |
|---|
Smartkem Reports Second Quarter 2024 Financial Results
Manchester, England – Monday, August 12, 2024 – Smartkem (Nasdaq: SMTK), a company that has the potential to power the next generation of displays using its disruptive organic thin-film transistors (OTFTs), today provides a business update and reports financial results for the three and six months ended June 30, 2024.
Recent Business Highlights
During Q1 and Q2 2024, Smartkem:
| · | Announced that it had uplisted to The Nasdaq Stock Market. |
|---|---|
| · | Commenced a project with RiTdisplay, with whom it entered into a joint development<br>agreement in 2021, to develop the world’s first commercially ready active-matrix OLED (AMOLED) display using OTFT technology. This<br>new project is funded by Innovate UK (part of UK Research and Innovation (UKRI)), as part of the Taiwan-UK Research & Development<br>Collaboration. |
| · | Entered into a technology collaboration agreement with the Industrial Technology<br>Research Institute (ITRI) in Taiwan. |
| · | Began collaborating with FlexiIC to develop low-cost, rapid turnaround custom<br>circuits using OTFT technology. |
| · | Entered into a joint development agreement with Tianma to develop OTFT biosensors. |
| · | Joined the Hi-Accµracy<br>Project to develop active-matrix printed Q-LED displays. |
| · | Exhibited and gave company presentations at key trade industry conferences<br>including Touch Taiwan 2024 and Display Week 2024 in San Jose, where CEO Ian Jenks gave a keynote speech at the DSCC / SID Business Conference. |
Q2 2024 Financial Highlights:
| · | Cash and cash equivalents as of June 30, 2024, were $4.4 million compared<br>to $8.8 million as of December 31, 2023. |
|---|---|
| · | Operating expenses for the three months ended June 30, 2024, were<br>$3.0 million compared $2.5 million for the same period of 2023. |
| · | Revenues for the three months ended June 30, 2024, were $40.0 thousand<br>compared to $8.0 thousand for the same period of 2023. |
| · | In May 2024, Smartkem received approval to list its common stock on the Capital<br>Market tier of The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “SMTK”. Trading on Nasdaq commenced with<br>the open of trading on Friday, May 31, 2024. |
Smartkem Ltd
Manchester Technology Center, Hexagon Tower,
Delaunays Road, Blackley, Manchester, M9 8GQ UK
+44 (0) 161 721 1514
enquiries@smartkem.com
| PRESS<br><br>RELEASE |
|---|
CEO Outlook Commentary:
Smartkem Chairman and CEO, Ian Jenks, comments,
“The most exciting 2024 milestone for the company so far is the recent announcement of our uplist to Nasdaq. We are proud to now be trading on the world’s premier technology stock exchange and believe that it will result in increased marketability and liquidity.”
“In the first half of 2024, we delivered against our commitment to increase our marketing efforts and participation in the major global technology conferences, and, crucially, believe we have continued to demonstrate company success and viability through the delivery of our robust three-pillared commercialization strategy that has remained consistent: continuous improvement of our proprietary materials, the development of electronic design automation (EDA) tools, and access to foundry services.”
“We are committed to continuous improvement of our best-in-class materials, supported by ongoing confidence from both the industry and investor communities. We intend to deploy EDA tools to the market through our partnership with FlexiIC, enabling customers to rapidly develop circuitry at low cost for new applications in sensors, internet-of-things (IOT) or other applications. We also intend to grant our customers access to foundry services and have entered into a technology transfer agreement with the Industrial Technology Research Institute (ITRI) in Taiwan to enable product prototyping on its Gen2.5 line for customers as they approach product commercialization.
“We remain confident that our continued efforts to pursue our three-pillared strategy will lead to commercialization and the sale of our materials to both foundry services and to our customers who have transferred our technology to their own fabrication lines.”
Q2 2024 Results:
Revenue and Cost of revenue
Smartkem had revenue of $40.0 thousand and cost of revenue $32.0 thousand in the three months ended June 30, 2024. Smartkem had revenue of $8.0 thousand and cost of revenue of $6.0 thousand in the same period of 2023. Both revenues and related cost of revenue for the three months ended June 30, 2024, and 2023 are a result of sales of OTFT backplanes and TRUFLEX® materials for customer assessment and development purposes.
Other operating income
Other operating income was $0.2 million in the three months ended June 30, 2024, compared to $0.2 million in the same period of 2023. The primary source of the income is related to a research grant and research and development tax credits.
Operating expenses
Operating expenses were $3.0 million for the three months ended June 30, 2024, compared to $2.5 million in the same period of 2023, an increase of $0.5 million.
Smartkem Ltd
Manchester Technology Center, Hexagon Tower,
Delaunays Road, Blackley, Manchester, M9 8GQ UK
+44 (0) 161 721 1514
enquiries@smartkem.com
| PRESS<br><br>RELEASE |
|---|
Research and development expenses are incurred for the development of TRUFLEX® inks to make OTFT circuits and consist primarily of payroll and technical development costs. The research and development expenses represent 38.4% and 49.5% of the total operating expenses for the three months ended June 30, 2024, and 2023, respectively. Research and development expenses decreased $98 thousand for the three months ended June 30, 2024, compared to the same period for the prior year. This decrease is primarily related to lower personnel expenses due to a reduction in force in 2023 and additional personnel resignations in 2024, offset in part by higher technical service costs.
Selling, general and administrative expenses consist primarily of payroll and professional services such as accounting, legal services and investor relations. These expenses represent 61.0% and 52.2% of our total operating expenses for the three months ended June 30, 2024, and 2023, respectively. Selling, general and administrative expenses increased by $0.5 million for the three months ended June 30, 2024, compared to the same period for the prior year. This increase was primarily a result of an increase in personnel expenses related to salary increases and bonus payouts and professional service fees related to the NASDAQ uplisting.
Non-Operating income /Expense
We recorded a loss of $81 thousand related to the valuation of the warrant liability for the three months ended June 30, 2024, compared to a gain of $3 thousand for the same period in 2023. We had transaction costs of $0.2 million related to a private placement financing for the three months ended June 30, 2023, with no similar costs in the same period of 2024. We recorded a loss on foreign currency transactions of $0.2 million for the three months ended June 30, 2024, compared to gain of $0.5 million in the same period on 2023.
Cash Flow from Operating Activities
Net cash used in operating activities was $4.4 million for the six months ended June 30, 2024, compared to $3.1 million for the six months ended June 30, 2023, an increase of $1.5 million. The increase is primarily related to the timing of payments made to vendors and the payout of bonuses.
Smartkem’s Nasdaq information can be found on the Nasdaq website: https://www.nasdaq.com/market-activity/stocks/smtk
Smartkem Ltd
Manchester Technology Center, Hexagon Tower,
Delaunays Road, Blackley, Manchester, M9 8GQ UK
+44 (0) 161 721 1514
enquiries@smartkem.com
| PRESS<br><br>RELEASE |
|---|
SMARTKEM, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except number of shares and per share data)
| December 31, | |||||
|---|---|---|---|---|---|
| 2023 | |||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | 4,351 | $ | 8,836 | ||
| Accounts receivable | — | 268 | |||
| Research and development tax credit<br> receivable | 967 | 610 | |||
| Prepaid expenses and other current assets | 1,186 | 811 | |||
| Total current assets | 6,504 | 10,525 | |||
| Property, plant and equipment, net | 327 | 455 | |||
| Right-of-use assets, net | 226 | 285 | |||
| Other assets, non-current | 6 | 7 | |||
| Total assets | 7,063 | $ | 11,272 | ||
| Liabilities and stockholders’ equity | |||||
| Current liabilities | |||||
| Accounts payable and accrued expenses | 1,903 | $ | 1,178 | ||
| Lease liabilities, current | 209 | 230 | |||
| Other current liabilities | 347 | 360 | |||
| Total current liabilities | 2,459 | 1,768 | |||
| Lease liabilities, non-current | 16 | 19 | |||
| Warrant liability | — | 1,372 | |||
| Total liabilities | 2,475 | 3,159 | |||
| Commitments and contingencies (Note 7) | — | — | |||
| Stockholders’ equity: | |||||
| Preferred stock, par value 0.0001 per share, 10,000,000<br> shares authorized, 1,106 and 13,765 shares issued and outstanding, at June 30, 2024 and December 31, 2023, respectively | — | — | |||
| Common stock, par value 0.0001 per share, 300,000,000<br> shares authorized, 1,721,900 and 889,668 shares issued and outstanding, at June 30, 2024 and December 31, 2023, respectively* | — | — | |||
| Additional paid-in capital | 112,965 | 104,757 | |||
| Accumulated other comprehensive loss | (1,422 | ) | (1,578 | ) | |
| Accumulated deficit | (106,955 | ) | (95,066 | ) | |
| Total stockholders' equity | 4,588 | 8,113 | |||
| Total liabilities and stockholders’<br> equity | 7,063 | $ | 11,272 |
All values are in US Dollars.
* reflects a one-for-thirty-five (1:35) reverse stock split effected on September 21, 2023
Smartkem Ltd
Manchester Technology Center, Hexagon Tower,
Delaunays Road, Blackley, Manchester, M9 8GQ UK
+44 (0) 161 721 1514
enquiries@smartkem.com
| PRESS<br><br>RELEASE |
|---|
SMARTKEM, INC.
Condensed Consolidated Statements of Operationsand Comprehensive Loss
(Unaudited)
(in thousands, except number of shares and per share data)
| Three Months<br> Ended June 30, | Six Months<br> Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Revenue | $ | 40 | $ | 8 | $ | 40 | $ | 24 | ||||
| Cost of revenue | 32 | 6 | 32 | 22 | ||||||||
| Gross profit | 8 | 2 | 8 | 2 | ||||||||
| Other operating income | 236 | 169 | 438 | 438 | ||||||||
| Operating expenses | ||||||||||||
| Research and development | 1,158 | 1,257 | 2,434 | 2,536 | ||||||||
| Selling, general and administrative | 1,844 | 1,324 | 3,206 | 2,757 | ||||||||
| Loss on foreign<br> currency transactions | 19 | (43 | ) | 32 | 68 | |||||||
| Total operating<br> expenses | 3,021 | 2,538 | 5,672 | 5,361 | ||||||||
| Loss from operations | (2,777 | ) | (2,367 | ) | (5,226 | ) | (4,921 | ) | ||||
| Non-operating income/(expense) | ||||||||||||
| Gain/(loss) on foreign currency transactions | (243 | ) | 533 | (249 | ) | 1,035 | ||||||
| Transaction costs allocable to warrants | — | (198 | ) | — | (198 | ) | ||||||
| Change in fair value of the warrant<br> liability | (81 | ) | 3 | 672 | 3 | |||||||
| Interest income | 3 | 2 | 9 | 6 | ||||||||
| Total non-operating<br> income/(expense) | (321 | ) | 340 | 432 | 846 | |||||||
| Loss before income taxes | (3,098 | ) | (2,027 | ) | (4,794 | ) | (4,075 | ) | ||||
| Income tax expense | (1 | ) | — | (1 | ) | — | ||||||
| Net loss | $ | (3,099 | ) | $ | (2,027 | ) | $ | (4,795 | ) | $ | (4,075 | ) |
| Net loss | $ | (3,099 | ) | $ | (2,027 | ) | $ | (4,795 | ) | $ | (4,075 | ) |
| Other comprehensive loss: | ||||||||||||
| Foreign currency<br> translation | 174 | (517 | ) | 156 | (973 | ) | ||||||
| Total comprehensive loss | $ | (2,925 | ) | $ | (2,544 | ) | $ | (4,639 | ) | $ | (5,048 | ) |
| Common share data: | ||||||||||||
| Basic net loss per common share* | $ | (0.98 | ) | $ | (1.82 | ) | $ | (1.63 | ) | $ | (4.18 | ) |
| Diluted net loss per common share* | $ | (0.98 | ) | $ | (1.82 | ) | $ | (4.04 | ) | $ | (4.18 | ) |
| Dividend per common share | $ | — | $ | — | $ | (2.41 | ) | $ | — | |||
| Weighted average number of basic shares outstanding* | 3,157,334 | 1,111,954 | 2,946,354 | 974,599 | ||||||||
| Weighted average number of diluted shares outstanding* | 3,157,334 | 1,111,954 | 2,946,354 | 974,599 |
* reflects a one-for-thirty-five (1:35) reverse stock split effected on September 21, 2023
Smartkem Ltd
Manchester Technology Center, Hexagon Tower,
Delaunays Road, Blackley, Manchester, M9 8GQ UK
+44 (0) 161 721 1514
enquiries@smartkem.com
| PRESS<br><br>RELEASE |
|---|
About Smartkem
Smartkem 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. Smartkem’s patented TRUFLEX® semiconductor and dielectric inks, or liquid electronic polymers, can be used to make a new type of transistor that has the potential to revolutionize the display industry. Smartkem’s inks enable low temperature printing processes that are compatible with existing manufacturing infrastructure to deliver low-cost displays that outperform existing models. 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.
Smartkem develops its materials at its research and development facility in Manchester, UK and its semiconductor manufacturing processes 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. For more information, visit: www.smartkem.com and follow us on LinkedIn www.linkedin.com/company/smartkem-limited and Twitter @SmartkemOTFT.
Forward-Looking Statements
All statements in this press release that are not historical are forward-looking statements, including, among other things, statements relating to the Smartkem’s expectations regarding its market position and market opportunity, expectations and plans as to its product development, manufacturing and sales, and relations with its partners and investors. These statements are not historical facts but rather are based on Smartkem Inc.’s current expectations, estimates, and projections regarding its business, operations and other similar or related factors. Words such as “may,” will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expect,” “intend,” “plan,” “project,” “believe,” “estimate,” and other similar or elated expressions are used to identify these forward-looking statements, although not all forward-looking statements contain these words. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict and, in some cases, beyond the Company’s control. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update information in this release to reflect events or circumstances in the future, even if new information becomes available.
Contact Details:
Barbra Keck, Chief Financial Officer, Smartkem
b.keck@smartkem.com
Selena Kirkwood, Head of Communications, Smartkem
s.kirkwood@smartkem.com
##END##
Smartkem Ltd
Manchester Technology Center, Hexagon Tower,
Delaunays Road, Blackley, Manchester, M9 8GQ UK
+44 (0) 161 721 1514
enquiries@smartkem.com