美國
證券交易委員會
華盛頓特區20549
表格
(Mark One)
交易所法案1934
截至季度結束日期的財務報告
or
1934年交易所法案
過渡期從 至
委託文件編號：001-39866
(根據其章程規定的註冊人準確名稱)
| ||
（國家或其他管轄區的 | （IRS僱主 | |
公司成立或組織） | （標識號碼） |
(主要領導機構的地址)
（報告人電話號碼）
在法案第12(b)條的規定下注冊的證券：
每一類的名稱 |
| 交易標誌 |
| 登記的交易所名稱 |
|
|
請在選項前打勾，表示註冊申報人（1）在過去12個月內（或對於申報人需要在該期間內提交這些報告的較短期間）已提交每個根據證券交易所法案第13或15（d）條規定需要提交的報告，並且（2）在過去90天內一直受到這些提交要求的影響。
根據規則405及第232.405章的有關規定，在過去12個月內（或註冊人需要提交該等文件的較短時期內），註冊人是否已經遞交了每個交互式數據文件。
請勾選標記以說明註冊人是大型快速申報人、加速申報人、非加速申報人、較小的報告公司還是新興成長型公司。請查看《交易所法》第120億.2條中「大型快速申報人」、「加速申報人」、「較小的報告公司」和「新興成長型公司」的定義。
大型加速報告人 | ☐ | 加速文件提交人 | ☐ |
☒ | 較小的報告公司 | ||
新興成長公司 |
如果是新興成長型企業，請勾選表示註冊者已選擇不使用交易所法案第13(a)條規定的任何新的或修訂後的財務會計準則的擴展過渡期。
請勾選是否爲外殼公司（如《交易所法案》第120億.2條所定義）。 是
截至2024年11月8日，有
項目1. 基本報表
SMARTKEm, INC.
縮短的合併財務報表
(以千為單位，股份數及每股資料除外)
九月三十日 | 十二月三十一日 | |||||
| 2024 | 2023 | ||||
(未經查核) | ||||||
資產 |
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流動資產合計 | ||||||
現金及現金等價物 | $ | | $ | | ||
應收帳款 |
| — |
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研究和發展稅收抵免應收款 |
| |
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預付費用及其他流動資產 |
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全部流動資產 |
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不動產、廠房及設備淨值 |
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淨使用權資產 |
| |
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其他非流動資產 |
| |
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資產總額 | $ | | $ | | ||
負債及股東權益 |
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流動負債 | ||||||
應付帳款和應計費用 | $ | | $ | | ||
租賃負債，流動 |
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其他流動負債 | | | ||||
流動負債合計 |
| |
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非流動負債：租賃負債 |
| |
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認股權負債 | — |
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總負債 |
| |
| | ||
承諾和可能的事項（註7） |
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股東權益： |
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面額優先股 $ |
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普通股，面值 $ |
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資本公積額額外增資 |
| |
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累積其他全面損失 |
| ( |
| ( | ||
累積虧損 |
| ( |
| ( | ||
股東權益總額 |
| |
| | ||
負債和股東權益總額 | $ | | $ | | ||
附註是這些未經審核的中期簡明綜合財務報表的一個不可分割的部分。
3
SMARTKEm, INC.
綜合損益簡明綜合表
(未經查核)
（金額以千為單位，除每股數字和每股資料外）
截至 9 月 30 日止的三個月 | 截至九月三十日的九個月 | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
營業收入 | $ | — | $ | | $ | | $ | | ||||
營業成本 |
| — |
| |
| |
| | ||||
毛利潤 |
| — |
| |
| |
| | ||||
其他營業收益 |
| | |
| |
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營業費用 |
|
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|
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研發費用 |
| | |
| |
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銷售，一般及行政費用 |
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| |
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外幣交易（增益）/損失 |
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| |
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營業費用總計 |
| |
| |
| |
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營運虧損 |
| ( |
| ( |
| ( |
| ( | ||||
營業外收入/（費用） |
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|
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|
| ||||
外幣交易的收益/（虧損） | — | ( | ( | | ||||||||
分配給認股權證的交易成本 | — | — | — | ( | ||||||||
調整認股權負債公允價值變動 | — | | | | ||||||||
利息收入/(費用) |
| ( | |
| |
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非營業收入/(支出)總額 |
| ( |
| ( |
| |
| | ||||
收入稅前虧損 | ( | ( | ( | ( | ||||||||
所得稅支出 | — | — |
| ( |
| — | ||||||
淨損失 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
淨損失 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
其他綜合損失： |
|
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|
|
|
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外幣兌換 |
| | |
| |
| ( | |||||
總綜合損失 | $ | ( | $ | ( | $ | ( | $ | ( | ||||
$ | ||||||||||||
$ | $ | ( | $ | ( | $ | ( | $ | ( | ||||
$ | $ | ( | $ | ( | $ | ( | $ | ( | ||||
每普通股股息 | $ | — | $ | — | $ | ( | $ | — | ||||
带权基本股份平均权重 | | | | | ||||||||
加權平均稀釋後擴大十分數* | | | | | ||||||||
於2023年9月21日實行的1:35股票合併，反映在這裡。反映於2023年9月21日實行的每35股合併為1股的逆向股票拆分。 | ||||||||||||
附註是這些未經審核的中期簡明綜合財務報表的一個不可分割的部分。
4
SMARTKEm, INC.
股東權益簡明合併報表
(未經查核)
(以千為單位，股份數據除外)
優先股 | 普通股 | 額外的 | 其他未分配盈餘 | 總計 | ||||||||||||||||||
面值$0.0001的股票 | 面值$0.0001 | 實收資本 | 全面性 | 累計 | 股东权益 | |||||||||||||||||
股份 |
| 金額 | 股份 |
| 金額 |
| 資本金 |
| 收入/（損失） |
| 赤字 |
| 股東權益 | |||||||||
2024 年 1 月 1 日結存 | | $ | — | | $ | — | $ | | $ | ( | $ | ( | $ | | ||||||||
以股份為基礎之報酬支出 | — |
| — | — |
| — |
| |
| — |
| — |
| | ||||||||
股票獎勵的發行 | — |
| — | |
| — |
| |
| — |
| — |
| | ||||||||
向供應商發行普通股 | — |
| — | |
| — |
| |
| — |
| — |
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優先股轉換為普通股 | ( |
| — | |
| — |
| — |
| — |
| — |
| — | ||||||||
優先股換股為普通股權證 | ( |
| — | — |
| — |
| — |
| — |
| — |
| — | ||||||||
在償還優先股時視同股息 | — |
| — | — |
| — |
| |
| — |
| ( |
| ( | ||||||||
將warrants無現金行使為普通股 | — |
| — | |
| — |
| — |
| — |
| — |
| — | ||||||||
外幣兌換調整 | — |
| — | — |
| — |
| — |
| ( |
| — |
| ( | ||||||||
淨損失 | — |
| — | — |
| — |
| — |
| — |
| ( |
| ( | ||||||||
2024年3月31日止結餘 | | $ | — | | $ | — | $ | | $ | ( | $ | ( | $ | | ||||||||
以股份為基礎之報酬支出 | — |
| — | — |
| — |
| |
| — |
| — |
| | ||||||||
向供應商發行普通股 | — |
| — | |
| — |
| |
| — |
| — |
| | ||||||||
優先股轉換為普通股 | ( |
| — | |
| — |
| — |
| — |
| — |
| — | ||||||||
行使權證以換取普通股 | — |
| — | |
| — |
| |
| — |
| — |
| | ||||||||
認股證的公允價值已從負債重分類為權益 | — |
| — | — |
| — |
| |
| — |
| — |
| | ||||||||
外幣兌換調整 | — |
| — | — |
| — |
| — |
| |
| — |
| | ||||||||
淨損失 | — |
| — | — |
| — |
| — |
| — |
| ( |
| ( | ||||||||
2024年6月30日餘額 | | $ | — | | $ | — | $ | | $ | ( | $ | ( | $ | | ||||||||
以股份為基礎之報酬支出 | — |
| — | — |
| — |
| |
| — |
| — |
| | ||||||||
向供應商發行普通股 | — |
| — | |
| — |
| |
| — |
| — |
| | ||||||||
優先股轉換為普通股 | ( |
| — | |
| — |
| — |
| — |
| — |
| — | ||||||||
外幣兌換調整 | — |
| — | — |
| — |
| — |
| |
| — |
| | ||||||||
淨損失 | — |
| — | — |
| — |
| — |
| — |
| ( |
| ( | ||||||||
2024年9月30日結餘 | | $ | — | | $ | — | $ | | $ | ( | $ | ( | $ | | ||||||||
5
SMARTKEm, INC.
股东权益的综合存货表演（续）
(未經查核)
(以千為單位，股份數據除外)
優先股 | 普通股 | 額外的 | 其他未分配盈餘 | 總計 | ||||||||||||||||||
每股價值為$0.0001 | 每股價值為$0.0001 | 實收資本 | 全面性 | 累計 | 股东权益 | |||||||||||||||||
股份 |
| 金額 | 股份 |
| 金額 |
| 資本金 |
| 收入/（損失） |
| 赤字 |
| 股東權益 | |||||||||
2023 年 1 月 1 日結存 | — | $ | — | | $ | — | $ | | $ | ( | $ | ( | $ | | ||||||||
以股份為基礎之報酬支出 | — |
| — | — |
| — |
| |
| — |
| — |
| | ||||||||
向供應商發行普通股 | — |
| — | |
| — |
| |
| — |
| — |
| | ||||||||
外幣兌換調整 | — |
| — | — |
| — |
| — |
| ( |
| — |
| ( | ||||||||
淨損失 | — |
| — | — |
| — |
| — |
| — |
| ( |
| ( | ||||||||
2023年3月31日結束餘額 | — | $ | — | | $ | — | $ | | $ | ( | $ | ( | $ | | ||||||||
以股份為基礎之報酬支出 | — |
| — | — |
| — |
| |
| — |
| — |
| | ||||||||
發行優先股，扣除發行成本後的淨額 | |
| — | — |
| — |
| |
| — |
| — |
| | ||||||||
外幣兌換調整 | — |
| — | — |
| — |
| — |
| ( |
| — |
| ( | ||||||||
淨損失 | — |
| — | — |
| — |
| — |
| — |
| ( |
| ( | ||||||||
2023年6月30日結餘 | | $ | — | | $ | — | $ | | $ | ( | $ | ( | $ | | ||||||||
以股份為基礎之報酬支出 | — |
| — | — |
| — |
| |
| — |
| — |
| | ||||||||
優先股轉換為普通股 | ( |
| — | |
| — |
| — |
| — |
| — |
| — | ||||||||
行使權證轉換為普通股 | — |
| — | |
| — |
| |
| — |
| — |
| | ||||||||
外幣兌換調整 | — |
| — | — |
| — |
| — |
| |
| — |
| | ||||||||
淨損失 | — |
| — | — |
| — |
| — |
| — |
| ( |
| ( | ||||||||
截至2023年9月30日的結餘 | | $ | — | | $ | — | $ | | $ | ( | $ | ( | $ | | ||||||||
於2023年9月21日實行的1:35股票合併，反映在這裡。反映於2023年9月21日實行的每35股合併為1股的逆向股票拆分。 | ||||||||||||||||||||||
附註是這些未經審計的中期簡明綜合財務報表的重要組成部分.
6
SMARTKEm, INC.
簡明合併現金流量量表
(未經查核)
（以千為單位）
截至九月三十日的九個月 | ||||||
| 2024 |
| 2023 | |||
從營運活動中的現金流量: |
|
|
|
| ||
淨損失 | $ | ( | $ | ( | ||
調整為使淨虧損轉化為經營活動所使用現金： |
|
|
| |||
折舊 | | | ||||
以股份為基礎之報酬支出 | | | ||||
向供應商發行普通股 | | | ||||
使用權資產攤銷 | | | ||||
外幣交易虧損 | | ( | ||||
分配給認股權證的交易成本 | — | | ||||
調整認股權負債公允價值變動 | ( | ( | ||||
營運資產及負債的變動： | ||||||
應收帳款 | | ( | ||||
研究和發展稅收抵免應收款 | ( | | ||||
預付費用及其他流動資產 | | ( | ||||
其他非流動資產 | | — | ||||
應付帳款和應計費用 | | | ||||
租賃負債 | ( | ( | ||||
應付所得稅 | — | ( | ||||
其他流動負債 | ( | ( | ||||
經營活動所使用之淨現金流量 |
| ( |
| ( | ||
投資活動之現金流量: |
|
|
|
| ||
固定資產購入 | ( | ( | ||||
投資活動所使用之淨現金 |
| ( |
| ( | ||
來自融資活動的現金流量 |
|
|
|
| ||
私募發行優先股所得款項 | — | | ||||
私募發行認股權所得款項 | — | | ||||
支付發行成本 | — | ( | ||||
行使認股權的收益 | | | ||||
籌資活動提供的淨現金 |
| |
| | ||
匯率變動對現金的影響 | |
| ( | |||
現金的淨變化 |
| ( |
| | ||
期初現金餘額 | | | ||||
期末現金餘額 | $ | | $ | | ||
現金和非現金投資和籌資活動的補充披露 |
|
|
|
| ||
就諮詢服務發行普通股 | $ | | $ | | ||
warrants公平價值的初始分類 | $ | — | $ | | ||
使用權資產和租賃負債的增加 | $ | | $ | | ||
附註是這些未經審核的中期簡明綜合財務報表的一個不可分割的部分。
7
1. | 組織、業務、持續經營和報表編製基礎 |
組織
SmartKem, Inc.（以下簡稱“公司”），前身為Parasol Investments Corporation（“Parasol”），成立於2020年5月13日，為成立於英格蘭和威爾士法律下的SmartKem Limited的繼承者。該公司最初成立為根據1934年修改的《證券交易所法》（以下簡稱“交易法”）註冊的“外殼”公司，沒有具體的業務計劃或目的，直到在2021年2月21日與SmartKem Limited簽訂的《證券交易所協議》（以下簡稱“交易協議”）完成的交易後，開始經營SmartKem Limited的業務。根據交易協議，除了以$購買的某些延遲股份外，所有SmartKem Limited的股權均以Parasol普通股和SmartKem Limited的股權交換（以下簡稱“交易”）。
業務
公司正在尋求通過其破壞性有機薄膜晶體管（“OTFTs”）來重塑電子產業，這種產品有潛力革新顯示屏行業。公司的專利TRUFLEX®液態半導體聚合物用於製造一種可以應用於多種顯示技術的新型晶體管，包括下一代微LED顯示屏。公司的油墨實現低溫印刷工藝，與現有製造基礎設施相容，提供性能優於現有技術的低成本顯示屏。公司在英國曼徹斯特的研發中心開發材料，並在英國瑟奇菲爾德的創新中心（“CPI”）提供快速成型服務。公司與台灣工業技術研究院（ITRI）簽訂了技術轉移協議（TTA），用於在其Gen2.5生產線上進行產品快速成型，並在台灣設有一個現場應用辦公室。公司擁有龐大的知識產權組合，包括19個專利家族中的125項授權專利和40項法規化的商業秘密。
風險與不確定性
公司的業務面臨重大風險和不確定性，包括未能獲得額外資金以妥善執行公司的業務計劃的風險。公司面臨開發階段公司常見的風險，包括但不限於公司或競爭對手開發新技術創新，依賴關鍵人員，依賴第三方製造商，保護專有技術和遵守監管要求。
公司根據一項框架協議獲得設備使用權，用於製造採用公司油墨的演示產品。如果公司失去對這個生產設施的使用權，將會重大不利地影響公司製造原型機和為潛在客戶展示產品的能力。失去這種使用權將明顯妨礙公司進行產品開發和流程改進活動。存在替代提供相似服務的供應商，但將需要努力和時間將其納入公司的運營中。
經營概念
該公司持續虧損，包括在截至2024年9月30日的九個月內淨虧損為＄
該公司預期截至2024年9月30日，其現金及現金等價物為＄
8
其業務和研究發展活動之後。如果支出顯著增加或開發計劃進展比預期更迅速，這段期間可能會縮短。
公司未來的生存能力取決於籌集額外資金以資助其業務。公司將需要獲得額外資金來滿足其運營需求，資助其銷售和市場推廣努力、研究和開發支出以及業務發展活動。直到公司能夠通過收入產生足夠現金的時候，管理層的計劃是通過股本發行，債務融資，合作，戰略聯盟和市場營銷，分銷或許可安排來資助公司的營運資本需求。如果公司通過發行股權證券籌集額外資金，公司現有的安全持有人可能會遭受稀釋。如果公司借錢，債務增加將產生增加的債務服務義務，並可能要求公司同意可能限制其業務的營運和財務契約。如果公司進行合作，戰略聯盟或其他類似安排，則可能被迫放棄有價值的權利。然而無法保證將有足夠數量的融資在需要時提供，且可能無法通過可接受條款或完全提供。在這個時候無法準確確定籌集資金所需的確切金額和時間，這將取決於多個因素，包括對公司產品和服務的市場需求，產品開發努力的質量，營運資本的管理，以及對服務採購的正常支付條款和條件的繼續。如果公司無法大幅增加收入、減少支出或以其他方式產生營運現金流，則公司將需要籌集額外資金。
公司可能無法按期支付債務，管理層計劃未能減輕這種重大懷疑。截至2024年9月30日的簡明綜合財務報表是在假設該公司將作為持續經營進行準備的。因此，合併財務報表不包括可能在公司無法持續作為持續事業時所需的資產和負債金額和分類的任何調整。
報告基礎
2024年9月30日和2023年12月31日這家公司的未經審計的中期簡明綜合財務報表，以及截至2024年9月30日和2023年的三個月和九個月應該與包含在該公司年度報告10-k的經審計的合併財務報表和附註一起閱讀，該報告於2024年3月27日期提交給證券交易委員會（SEC），並且也可以在公司的網站上找到（www.smartkem.com）。在這些對中期簡明綜合財務報表的附註中，“我們”，“我們”或“我們的”一詞指的是公司及其合併子公司。
這些中期簡明綜合財務報表未經審計，按照美國普遍公認的會計原則（GAAP）和SEC對Form 10-Q和附表S-X的規定，由公司編製用於中期報告。它包括所有全資子公司的帳戶，並且所有重要的公司內帳戶和交易在合併中已被消除。金額以千為單位表示，除股份數和每股數據外。
編制中期簡明綜合財務報表需要管理層做出影響報告金額的假設和估計。這些中期簡明綜合財務報表反映了所有調整，包括常規的累計調整，以便公平呈現公司截至2024年9月30日和2023年的中期結果，財務狀況和現金流量; 但是，重要的是要注意，公司的中期營運結果和現金流量不一定能反映出預期的全年或任何中期期間的營運結果和現金流量。
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股票合併倒數
基本報表中呈現的所有股份數字和每股金額，包括這些註腳，反映了2023年9月21日實施的一比三十五的股票逆向拆分。 (1:35) 反向股份拆分於2023年9月21日實施。
2. 重大會計政策摘要
除下列政策外，公司重要會計政策並未有任何實質變化，如附註3 所述，詳細列於公司年度報告所包含合併財務報表中的重要會計政策。
公司在必要時會為以下情況記錄被視為分紅派息：(i)為優先股兌換發前投資期權，基於發前投資期權的公平價值超過優先股帶值；(ii)為優先股修正訂為電銷帳務，基於修正前後優先股的公平價值。
管理層的估計使用
按照GAAP準則編制合併財務報表要求管理層對會計資產和負債的金額進行估計和假設，包括在合併財務報表日期的資產負債顯示和揭露，以及報告期間的收入和費用金額。公司合併財務報表中最重要的估計與假設涉及普通股的估值，期權公平價值和認股權負債的公平價值。這些估計和假設基於當前事實、歷史經驗和其他各種因素，認為在當時情況下是合理的，其結果形成對金融資產和負債價值的判斷以及記錄支出，這些支出無法從其他來源上明顯得出。由於在準備合併財務報表時所使用的估計或判斷周圍因素的不確定性，實際結果可能與這些估計存在重大差異。
最近會計宣告
2023年11月，財務會計標準委員會(FASB)發佈會計標準更新(ASU)編號2023-07。板塊報告（主題280），改善可報告部門披露將要求公司披露定期提供給首席營運決策者（CODM）的重要業務部門費用。該公告將對截至2024年12月31日的年度申報生效。公司仍在評估採用該標準的影響。
在2023年12月14日，FASB發布了ASU 2023-09，所得稅揭露的改進適用於所有受所得稅影響的實體。該標準要求就報告實體的有效稅率調解提供細分信息，以及有關所支付所得稅的信息。該標準旨在提供更詳細的所得稅披露。對於上市公眾企業（PBEs），新的要求將在2024年12月15日後開始的年度期間生效。指導將以前瞻性方式應用，有選擇性地適用該標準的回顧性應用。公司仍在評估採用該標準的影響，但不認為其對其業務成果、財務狀況或現金流量產生實質影響。
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3. 預付費用和其他流動資產
預付費用和其他流動資產包括以下內容：
九月三十日 | 十二月三十一日 | |||||
（以千為單位） |
| 2024 | 2023 | |||
預付保險 | $ | | $ | | ||
研究補助金應收款項 | | | ||||
預付設施成本 | | | ||||
增值稅應收款項 | | | ||||
預付軟體許可證 | | | ||||
預付專業服務費用 |
| — |
| | ||
其他應收款和其他預付費用 | | | ||||
預付費用及其他流動資產總額 | $ | | $ | | ||
4. 資產、計劃與設備
物業、廠房及設備包括以下項目：
九月三十日 | 十二月三十一日 | |||||
（以千為單位） |
| 2024 | 2023 | |||
廠房和設備 | $ | | $ | | ||
傢具和裝置 |
| |
| | ||
電腦硬體和軟體 |
| |
| | ||
| |
| | |||
減：累積折舊 |
| ( |
| ( | ||
不動產、廠房及設備淨值 | $ | | $ | | ||
透過折舊的支出為2023年和2024年六月三十日止的三個月和六個月分別為$9,577和$465,639。
5. 應付帳款和應計費用
應付帳款和應計費用包括以下項目：
九月三十日 | 十二月三十一日 | |||||
（以千為單位） |
| 2024 | 2023 | |||
應付帳款-交易 | $ | | $ | | ||
薪資負債 |
| |
| | ||
應付增值稅 | | — | ||||
應計費用 - 審計與會計費用 |
| — |
| | ||
應計費用 - 技術費用 |
| |
| | ||
應計費用 - 其他 |
| |
| | ||
應付帳款和應計費用總額 | $ | | $ | | ||
6. 租賃
公司有營運租賃，包括辦公室、實驗室空間和設備，剩餘租期為
該公司並非任何租賃協議中的出租人，也沒有任何因租賃安排而發生的關聯交易。
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下面的表格呈現了關於公司營運租賃的租金成本與截至期間相關的某些信息:
截至 9 月 30 日止的三個月 | 截至九月三十日的九個月 | |||||||||||
（以千為單位） |
| 2024 |
| 2023 |
| 2024 |
| 2023 | ||||
營運租賃成本 | $ | | $ | | $ | | $ | | ||||
短期租賃成本 |
| |
| — |
| |
| | ||||
變量租賃成本 |
| — |
| |
| — |
| | ||||
租賃成本總額 | $ | | $ | | $ | | $ | | ||||
全部租賃成本已包含在未經審核的簡化合併營運財務報表中，如下所示:
截至 9 月 30 日止的三個月 | 截至九月三十日的九個月 | |||||||||||
（以千為單位） | 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
研發費用 | $ | | $ | | $ | | $ | | ||||
銷售，一般及行政費用 |
| |
| |
| |
| | ||||
租賃成本總額 | $ | | $ | | $ | | $ | | ||||
公司運作租賃的租賃資產和租賃負債已紀錄在未經審核的簡明綜合賬目資產負債表中，具體如下:
| 九月三十日 | 十二月三十一日 | ||||
（以千為單位） |
| 2024 |
| 2023 | ||
資產 |
|
|
| |||
使用權資產-營運租賃 | $ | | $ | | ||
租賃資產總額 | $ | | $ | | ||
負債 |
|
|
|
| ||
流動負債： |
|
|
|
| ||
租賃負債，流動 - 經營租賃 | $ | | $ | | ||
非流動負債： |
|
|
| |||
租賃負債，非流動資產 - 營運租賃 |
| |
| | ||
租賃負債總額 | $ | | $ | | ||
截至2024年6月29日或2023年12月31日，公司擁有外匯期貨合約、股票掉期合約或普通股投資，均屬於第三層資產。
下表呈現了與公司經營租賃相關的現金流量資訊，截至以下期間為止：
九月三十日 | ||||||
（以千為單位） | 2024 |
| 2023 | |||
經營租賃的經營現金流出 | $ | | $ | | ||
營運租賃負債的補充非現金金額，源自取得使用權資產 | $ | | $ | | ||
下表顯示公司截至該時期營運租賃的加權平均剩餘租期和加權平均折扣率相關資訊：
九月三十日 | |||
2024 | |||
租賃剩餘加權平均期限（年）- 營運租賃 | |||
折現率加權平均（運營租賃） | |||
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公司營運租約的剩餘到期期限（不包括短期租賃）如下：
九月三十日 | |||
（以千為單位） | 2024 | ||
2024 | $ | | |
2025 | | ||
2026 | | ||
2027 | | ||
未折現租賃總支付款項 | | ||
扣除假定利息 | ( | ||
總淨租賃負債 | $ | | |
7. 承諾與負債
法律訴訟
公司在業務的正常運作中，可能會涉及各種訴訟事項。管理層認為，由此類索賠引起的任何潛在責任將不會對中期簡明綜合基本報表產生實質影響。
8. 股東權益
股票合併倒數
在2023年8月25日舉行的公司股東年度大會（“2023年年度大會”）上，股東們批准了一項建議，即批准並採納對公司修訂和重訂章程的修訂，以在範圍內對其已發行和流通或預留發行的普通股進行逆向股份合併，比率從1股合併至 至1 股合併至，在股東批准該提議之首年週年紀念日之前，授權董事會自行判斷是否實施逆向股份合併，以及確定其具體的時機和比率。於2023年9月19日，公司董事會採納決議，盡快實施對現有股份進行逆向合併，比率為1股合併至.
於2023年9月19日，公司向特拉華州州秘書提交了公司修訂和重訂章程 ( “章程修訂”)，以對公司已發行和流通的普通股進行逆向股份合併，每股面值
優先股
董事會有權，無需股東進一步行動，最多發行
A系列第一並議股票
於2023年6月14日，公司向特拉菲卡州州書記提交了一份指定優先、權利和限制的憑證。
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以下是A-1特選股票的主要修訂和重述條款摘要，如在修訂和重述的A-1指定證書中所載：
分紅派息
A-1特選股票持有人將享有分紅派息，按折換計算，等同於和實際支付的普通股股息形式相同的金額，實際支付時。此外，如果在第18th 在結束日期的月周年紀念日之後，其後的
投票權
Series A-1 首選股的股份
只要尚有任何一股 Series A-1 首選股尚未贖回，公司便不得未經獲得當時已發行股份過半數同意的情況下，對 Series A-1 首選股的權力、權益或特殊權利進行修改或更改。此過半數同意必須包括 AIGH Investment Partners LP 及其聯屬公司（以下簡稱“AIGH”），只要 AIGH 持有至少 $
清償能力
在任何公司解散、清償或停業，無論自願或非自願（以下簡稱“清償”）的情況下，時任 Series A-1 首選股股東有權從可供分配給公司股東的資產中獲得以下金額
轉換
A-1優先股可隨時按照轉換價格$轉換為普通股
持有人選擇轉換
A-1優先股持有人可隨時根據持有人的選擇按當時有效的A-1轉換價格進行轉換、並可不時進行轉換。
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根據公司選擇的強制轉換
只要符合某些股權條件，本公司可能會發出通知，要求持有人按當時生效的 A-1 系列轉換價將所有未發行的 A-1 系列優先股轉換股轉換為普通股股。
實惠所有權限制
如持有人及其附屬公司有利地擁有超過以上，則 A-1 系列優先股不能轉換為普通股
優先權利
贖回
本公司不能贖回 A-1 系列優先股份。
負立約
只要任何 A-1 系列優先股票仍未償還，除非持有人超過
交易市場
沒有任何 A-1 系列優先股的交易市場，我們也不預期市場發展。我們不打算在任何證券交易所或其他國家認可的交易系統申請任何 A-1 系列優先股票上市。如果沒有活躍的交易市場，A-1 系列優先股的流動性將受到限制。
A-2 系列優先股
2023 年 6 月 14 日，該公司向特拉華州國務司長提交特拉華州務司長指定優惠、權利和限制證書，以指定
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(“Series A-2 設計證書”)。以下是Series A-2 首選股票的主要條款摘要，如Series A-2 設計證書所載：
分紅派息
持有Series A-2 首選股票的持有人將有權享有按換算後基準相同形式及數目的股息，當且如果實際支付時，等同於並且與實際支付的普通股息相同。
投票權
Series A-2優先股的股份
只要任何Series A-2優先股股份仍存在，公司不得在未獲得大多數當時流通的Series A-2優先股同意的情況下（a）修改或改變Series A-2優先股的權力、偏好或權利，（b）修改或修訂公司憲章、Series A-2指定書或公司章程，以使對Series A-2優先股的任何權利受到實質不利影響，（c）授權或創建任何與Series A-2優先股相比在清償時分紅、贖回或資產分配較優先或以其他方式相關的股等級，（d）訂立任何協議從事以上任何事項。pari passu在清算中，Series A-2優先股的持有人有權從公司向股東分配的資產中獲得的金額等於
清償能力
。
轉換
A-2優先股可隨時按照1美元的換股價格轉換為普通股，但須調整為A-2特設細則中所載的某些抗稀釋條款（“A-2換股價格”）
持有人選擇的情況下轉換
A-2優先股可由持有人在任何時間選擇按當時有效的A-2換股價格轉換
自動轉換
在紐交所美國交易日馬上前一天，當普通股於紐交所美國市場、納斯達克資本市場、納斯達克全球市場、納斯達克全球精選市場或紐約證券交易所所有，但不少於所有優先A-2優先股股份中的股份，應自動轉換，無需持有人進行任何操作，也無需支付任何額外的代價，轉換為根據當時適用的A-2換股價格除以A-2優先股的指定貨幣數所確定的普通股股份。
《有益所有權限制》
如果持有人及其聯屬公司在轉換後持有的普通股比例將超過特定比例，則A-2優先 股無法轉換為普通股。
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的
優先權利
贖回
本公司不能贖回 A-2 系列優先股份。
交易市場
沒有任何 A-2 系列優先股的交易市場，並且本公司也不預期市場發展。本公司不打算在任何證券交易所或其他國家認可的交易系統申請任何 A-2 系優先股票上市。如果沒有活躍的交易市場，A-2 系列優先股的流動性將受到限制。
A-1 及 A-2 系優先股票及 A 類及 B 類認股證發行
於 2023 年 6 月 14 日，本公司和部分投資者簽訂了證券購買協議（「購買協議」），該協議根據該協議總出售（i）
二零二三年六月二十二日，在二零二三年六月份管道的第二次收市中，本公司總銷售 (i)
每張 A 類認股證的行使價為 $
還有一個額外的
該公司已根據 ASC 815「衍生產品及對沖」規定，將 A 類及 b 類認股權證作為衍生工具對帳。本公司將認股權證作為負債，因為由於在某些情況下調整行使價的情況下調整發行股份數量，以及 Black-Scoles 計算中有預先指定波動輸入，可用於計算合約中定義的基本交易時的代價計算。本公司於 2024 年 5 月 31 日上市納斯達克資本市場後，有關調整股份數量的條文已不再生效。此外，公司重新評估預先指定的波動性輸入，並確定這並不阻止認股權證被視為已指定為公司股票指數。因此，由 2024 年 5 月 31 日起，認股權證會作為股票工具帳目。
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公司在扣除開支後收到了$的淨收益。
根據購買協議的條款，在截至2025年12月15日的一段期間，如果我們在隨後的融資中發行普通股或普通股等價證券（如購買協議中所定義的）, 重要買家（在購買協議中定義為購買至少
另外，在此期間內，公司可能不得在隨後的融資中發行每股普通股的有效價格低於當時有效的 A-1 優先股轉換價格，未經重要買家的同意，其中必須包括 AIGH 及其關聯者，只要他們根據購買協議購買的 A-1 優先股的總額已達至少 $
如果公司在普通股上市前的後續融資中發行普通股或普通股等價物，購股協議規定，如果某重要買方合理認為後續融資的任何條款比2023年6月PIPE的條款對於後續融資的投資者更有利，該重要買方有權要求公司修改2023年6月PIPE的條款以包含該較有利的條款給予該重要買方。此條款可能使在上市之前獲得額外資金變得更昂貴，因為它允許任何重要買方“挑選”後續融資的條款，並要求將任何被認為更有利的條款追溯性地納入2023年6月PIPE的條款中。此條款可能也在後續融資的條款方面造成不確定性，因為重要買方有權在決定哪些後續融資條款對他們更有利之前，審閱已完成後續融資的條款。
購股協議規定，在2025年6月14日之前，重要買方可以通過交換其擁有的面額等於後續融資認購金額的A-1優先股中的部分或全部份額參與後續交易。此條款可能對公司在後續融資中籌集到的資本金額產生不利影響，因為它允許重要買方將現有投資轉為新融資，而不需要投入現金。此條款也可能使公司更難籌集額外資本，因為其他投資者可能希望提供後續融資中提供的全部或更大部分資金，或可能要求公司籌集一定數量的新資本，或可能不願意承諾提供融資，除非知道有多少重要買方將以現金提供後續融資金額。
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如果公司無法在需要時籌集額外資金，公司可能需要延遲、限制、減少或終止商業化、研究和產品開發，或者授予開發和市場銷售其產品的權利，而這些是公司本來希望自行開發和市場銷售的，這可能對公司的業務、財務狀況和營運結果產生重大不利影響。
同意、轉換和修訂協議
2024年1月26日，公司與每位A-1系列優先股的持有人（每位為“持有人”，合稱“持有人”）簽訂了一份同意、轉換和修訂協議（“同意協議”）。根據同意協議，每位持有人根據同意協議的條款和條件轉換，
根據同意協議，公司發行了(i)
根據同意協議，公司與持有人同意修訂和重述A-1系列優先股的優惠、權利及限制的授權證書（“修訂和重述的A-1系列授權證書”），以(i)進行某些調整以反映反向拆分，(ii)刪除所有投票權，除非適用法律要求，(iii)將A-1系列優先股的申報價值提高至$
公司因認定的分紅派息而增加了$
截至2024年9月30日，共有
普通股
投票權
每位普通股股東有權得到
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出席人或代理代表出席的票數在股東會的所有會議中組成決議所需的法定人數。
分紅派息
公司從未向股東支付任何現金分紅，並且不預期在可預見的將來向股東支付現金分紅。未來支付現金股息的決定將由董事會自行決定，並將取決於財務狀況、營運結果、資本需求以及董事會認為相關的其他因素。
供應商提供服務所發行的普通股
2024年9月10日，公司發行了普通股股份。
普通股票認股權證
公司購買普通股的認股權活動摘要如下：
| Weighted- | |||||||||
平均價格 | ||||||||||
Weighted- | 仍未行使的期權數量： | |||||||||
平均價格 | 合約上的 | |||||||||
購回的股票數目 | 行使價格 | 行使數量： | 期限 | |||||||
股份 | 每股股票 | 價錢 | （年） | |||||||
2024年1月1日的未到期認股權證 |
| | $ | $ | |
| ||||
已發行 |
| — | — |
|
| |||||
已行使 |
| ( |
| |
|
| ||||
Expired |
| — |
| — |
|
| ||||
截至2024年9月30日的未行使認股權證 |
| | $ | $ | |
| ||||
公司預先資助認股權憑證購買普通股的活動摘要如下：
Weighted- | ||||||
平均價格 | ||||||
購回的股票數目 | 行使數量： | |||||
股份 | 價錢 | |||||
2024年1月1日持有的預先資助認股權 |
| | $ | | ||
已發行 |
| |
| | ||
已行使 |
| — |
| |||
Expired |
| — |
| |||
2024年9月30日前資助認股權仍未行使 |
| | $ | | ||
9. 分享基礎報酬
公司於2021年2月23日批准了2021年股權激勵計劃（"2021 Plan"），根據2021 Plan可發行的普通股股票最大總數為
在2023年度股東大會上，公司股東批准了對公司2021年計劃的修訂（"2021年計劃修訂"），增加了為普通股預留的股份數量。
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根據2021年計劃發行的股份
確定股份獎勵的適當公平價值需要主觀假設的輸入，包括公司普通股的公平價值，以及對於期權而言，期權的預期存續期間，以及預期股價波動率。公司使用Black-Scholes期權定價模型來評估其期權獎勵。用於計算股份獎勵的公平價值的假設代表管理層的最佳估計，涉及固有不確定性和管理層裁決的應用。因此，如果因素發生變化並且管理層使用不同的假設，未來股份獎勵的股份報酬成本可能大不相同。
在截至2024年9月30日的三個月內，公司未發行任何期權。在截至2024年9月30日的九個月內，公司向員工、董事和顧問發行了期權，發行總數為
以下表格反映了截至2024年9月30日的九個月內的選擇權計畫下的股票活動：
| Weighted- | ||||||||||||
平均價格 | |||||||||||||
Weighted- | 仍未行使的期權數量： | Weighted- | 總計 | ||||||||||
平均價格 | 合約上的 | 平均價格 | 內在價值： | ||||||||||
購回的股票數目 | 行使數量： | 期限 | Fair Value at | 價值 | |||||||||
股份 | 價錢 | （年） | 授予日期 | （以千為單位） | |||||||||
Options outstanding at January 1, 2024 |
| |
| $ | |
|
| $ | |
| |||
已行使 | — | — | |||||||||||
已取消/失效 |
| ( |
|
| |
|
|
|
|
|
| ||
Expired |
| — |
|
| — |
|
|
|
|
|
| ||
已授予股份 |
| |
|
| |
|
|
|
|
|
| ||
2024年9月30日尚未行使的期權 |
| |
| $ | |
|
| $ | |
| |||
截至2024年9月30日可行使的期權 | | $ | | $ | |||||||||
股票報酬已包括在未經審核的中期簡明綜合營業報表中，具體如下：
截至 9 月 30 日止的三個月 | 截至九月三十日的九個月 | ||||||||||||
（以千為單位） | 2024 |
| 2023 |
| 2024 |
| 2023 | ||||||
研發費用 | $ | | $ | | $ | | $ | | |||||
銷售、一般和行政 |
| |
| |
| |
| | |||||
總計 | $ | | $ | | $ | | $ | | |||||
截至2024年9月30日尚未認列的與未發放股票期權獎勵相關的總報酬成本為$
10. 每股網損
基本每股網損是通過將淨損除以期間內普通股權重平均數來確定，不考慮可以轉換為現金或幾乎不需要現金的潛在稀釋證券，除了那些可以發行用於少量或無現金代價的股份。稀釋每股淨損是通過將淨損除以稀釋後的權重平均股份數來確定。稀釋後的權重平均股份反映出可能具有稀釋效應的潛在稀釋普通股，如按庫藏股法計算的期權和認股權證。在報告淨營運虧損的時期，所有普通股期權和認股權證通常被視為具有抗稀釋性質，因此基本每股淨損和稀釋每股淨損相等。
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
(in thousands, except share data) | 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Net loss - basic | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Preferred stock dividends | — | — | ( | — | ||||||||
Net loss - diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted average shares outstanding - basic* | | | | | ||||||||
Weighted average shares outstanding - diluted* | | | | | ||||||||
Net loss per common share - basic* | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per common share - diluted* | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Dividend per common share | $ | - | $ | - | ( | - | ||||||
* reflects a one-for-thirty-five (1:) reverse stock split effected on September 21, 2023 | ||||||||||||
The following potentially dilutive securities were excluded from the computation of earnings per share as of September 30, 2024 and 2023 because their effects would be anti-dilutive:
September 30, | ||||||
| 2024 | 2023 | ||||
Common stock warrants | | | ||||
Assumed conversion of preferred stock | | | ||||
Stock options | | | ||||
Total | | | ||||
At September 30, 2024, the Company had
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2024 |
| 2023 |
| 2024 |
| 2023 | ||||||
Weighted average shares issued | | | | | ||||||||
Weighted average pre-funded and penny warrants | | | | | ||||||||
Weighted average shares outstanding | | | | | ||||||||
11. DEFINED CONTRIBUTION PENSION
The Company operates a defined contribution pension scheme for its UK employees. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund. Pension cost is included in the unaudited interim condensed consolidated statements of operations as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
(in thousands) | 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Research and development | $ | | $ | | $ | | $ | | ||||
Selling, general and administration |
| |
| |
| |
| | ||||
Total | $ | | $ | | $ | | $ | | ||||
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12. FAIR VALUE MEASUREMENTS
The table below presents activity within Level 3 of the fair value hierarchy, our liabilities carried at fair value during the nine months ended September 30, 2024:
(in thousands) | Warrant Liability | ||
Balance at January 1,2024 | $ | | |
Total change in the liability included in earnings |
| ( | |
Reclass from liability to equity | ( | ||
Balance at September 30, 2024 | $ | — | |
The valuation of the warrants was determined using option pricing models. These models use inputs such as the underlying price of the shares issued at the measurement date, expected volatility, risk free interest rate and expected life of the instrument. Since our common stock was not publicly traded until February 2022 there has been insufficient volatility data available. Accordingly, we have used an expected volatility based on historical common stock volatility of our peers. The Company initially accounted for the warrants as derivative instruments in accordance with ASC 815, adjusting the fair value at the end of each reporting period. Upon the Company’s uplisting to the Nasdaq Capital Market on May 31, 2024 certain provisions within the warrant agreements were no longer in effect. As a result, the warrants are accounted for as an equity instrument with the balance of the derivative liability on May 31, 2024 being transferred to Additional Paid-In Capital.
The fair value of the common warrants was determined by using an option pricing model assuming the following:
May-24 | December 31 | |||||
2024 |
| 2023 | ||||
Expected term (years) |
| |||||
Risk-free interest rate |
| |||||
Expected volatility |
| |||||
Expected dividend yield |
| |||||
Additionally, the Company had determined that the warrant liability was most appropriately classified within Level 3 of the fair-value hierarchy by evaluating each input for the option pricing models against the fair-value hierarchy criteria and using the lowest level of input as the basis for the fair-value classification as called for in ASC 820. There are six inputs: closing price of the Company’s common stock on the day of evaluation; the exercise price of the warrants; the remaining term of the warrants; the volatility of the Company’s stock over that term; annual rate of dividends; and the risk-free rate of return. Of those inputs, the exercise price of the warrants and the remaining term are readily observable in the warrant agreements. The annual rate of dividends is based on the Company’s historical practice of not granting dividends. The closing price of SmartKem stock would fall under Level 1 of the fair-value hierarchy as it is a quoted price in an active market (ASC 820-10). The risk-free rate of return is a Level 2 input as defined in ASC 820-10, while the historical volatility is a Level 3 input as defined in ASC 820. Since the lowest level input is a Level 3, the Company determined the warrant liability was most appropriately classified within Level 3 of the fair value hierarchy.
The following tables present information about the Company’s financial assets and liabilities that have been measured at fair value as of December 31, 2023 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value. In general, the fair values were determined using Level 3:
Quoted Prices | Significant Other | Significant | ||||||||||
in Active | Observable | Unobservable | ||||||||||
Markets | Inputs | Inputs | December 31, | |||||||||
(Level 1) | (Level 2) | (Level 3) | 2023 | |||||||||
Description | ||||||||||||
Liabilities: | ||||||||||||
Warrant liability | $ | — | $ | — | $ | | $ | | ||||
Total liabilities | $ | — | $ | — | $ | | $ | | ||||
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the financial condition and results of operations of SmartKem, Inc. (“SmartKem” or the “Company”) should be read in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto contained in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 to provide an understanding of its results of operations, financial condition and cash flows.
All references in this Quarterly Report to “we,” “our,” “us” and the “Company” refer to SmartKem, Inc., and its subsidiaries unless the context indicates otherwise.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 with respect to our business, financial condition, liquidity, and results of operations. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should,” and the negative of these terms or other comparable terminology often identify forward-looking statements. Statements in this Quarterly Report on Form 10-Q (this “Report”) that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements, including the risks discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “10-K”) in Item 1A under “Risk Factors” and the risks detailed from time to time in our future reports filed with the Securities and Exchange Commission (the “SEC”). These forward-looking statements include, but are not limited to, statements about:
| ● | the implementation of our business model and strategic plans for our business, technologies and products; |
| ● | the rate and degree of market acceptance of any of our products or organic semiconductor technology in |
general, including changes due to the impact of (i) new semiconductor technologies, (ii) the performance of organic semiconductor technology, whether perceived or actual, relative to competing semiconductor materials, and (iii) the performance of our products, whether perceived or actual, compared to competing silicon-based and other products;
| ● | the timing and success of our, and our customers’, product releases; |
| ● | our ability to develop new products and technologies; |
| ● | our ability to comply with the continued listing requirements of Nasdaq; |
| ● | our estimates of our expenses, ongoing losses, future revenue and capital requirements, including |
our needs for additional financing;
| ● | our ability to obtain additional funds for our operations and our intended use of any such funds; |
| ● | our ability to remain eligible on an over-the-counter quotation system; |
| ● | our receipt and timing of any royalties, milestone payments or payments for products, under any current or future collaboration, license or other agreements or arrangements; |
| ● | our ability to obtain and maintain intellectual property protection for our technologies and products and our ability to operate our business without infringing the intellectual property rights of others; |
| ● | the strength and marketability of our intellectual property portfolio; |
| ● | our dependence on current and future collaborators for developing, manufacturing or otherwise bringing our products to market; |
| ● | the ability of our third-party supply and manufacturing partners to meet our current and future business needs; |
| ● | our exposure to risks related to international operations; |
| ● | our dependence on third-party fabrication facilities; |
| ● | the impact of the COVID-19 pandemic and any future communicable disease outbreak on our business and operations; |
| ● | our relationships with our executive officers, directors, and significant stockholders; |
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| ● | our expectations regarding our classification as a “smaller reporting company,” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”) in future periods; |
| ● | our future financial performance; |
| ● | the competitive landscape of our industry; |
| ● | the impact of government regulation and developments relating to us, our competitors, or our industry; and |
| ● | other risks and uncertainties, including those listed under the caption “Risk Factors” in our 10-K. |
These statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” in our 10-K and in this Report and elsewhere in this Report.
Any forward-looking statement in this Report reflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our business, results of operations, industry and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Report and the documents that we reference in this Report and have filed with the SEC as exhibits hereto completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
Company Overview
We are seeking to reshape the world of electronics with our disruptive organic thin-film transistors (“OTFTs”) that have the potential to revolutionize the display industry. Our patented TRUFLEX® liquid semiconductor polymers are used to make a new type of transistor that can be used in a number of display technologies, including next generation microLED displays. Our inks enable low temperature printing processes that are compatible with existing manufacturing infrastructure to deliver low-cost displays that outperform existing technology.
We develop our materials at our research and development facility in Manchester, UK, and provide prototyping services at the Centre for Process Innovation (“CPI”) at Sedgefield, UK. We have entered into a technology transfer agreement (TTA) with the Industrial Technology Research Institute (“ITRI”) in Taiwan for product prototyping on its Gen2.5 fabrication line. We also have a field application office in Taiwan. We have an extensive IP portfolio including 125 granted patents across 19 patent families and 40 codified trade secrets.
Since our inception in 2009, we have devoted substantial resources to the research and development of materials and production processes for the manufacture of organic thin film transistors and the enhancement of our intellectual property.
Our loss before income taxes was $7.6 million and $7.1 million for the nine months ended September 30, 2024 and 2023. As of September 30, 2024, our accumulated deficit was $109.8 million. Substantially all our operating losses have resulted from expenses incurred in connection with research and development activities and from general and administrative costs associated with our operations.
Results of Operations for the three and nine months ended September 30, 2024
Three months ended September 30, 2024 compared with three months ended September 30, 2023
Revenue and Cost of revenue
We had no revenue or cost of revenue in the three months ended September 30, 2024. We had revenue of $3.0 thousand and cost of revenue of $1.0 thousand in the same period of 2023. Both revenues and related cost of
25
revenue are a result of sales of OTFT backplanes and TRUFLEX® materials for customer assessment and development purposes.
Other operating income
Other operating income was $0.3 million in the three months ended September 30, 2024, compared to $0.3 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 $3.1 million for each of the three months ended September 30, 2024 and 2023.
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 48.1% and 53.1% of the total operating expenses for the three months ended September 30, 2024 and 2023, respectively. Research and development expenses decreased $64 thousand for the three months ended September 30, 2024 compared to the same period for the prior year. This decrease is primarily related to lower personnel expenses, 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 50.5% and 42.9% of our total operating expenses for the three months ended September 30, 2024 and 2023, respectively. Selling, general and administrative expenses increased by $0.3 million for the three months ended September 30, 2024 compared to the same period for the prior year. This increase was primarily a result of an increase in personnel expenses as well as professional service fees primarily related to business development initiatives.
Non-Operating income/(expense)
We had a gain of $0.5 million for the three months ended September 30, 2023 related to the valuation of the warrant liability, with no similar gain in the same period of 2024. We recorded a loss on foreign currency of $0.8 million for the three months ended September 30, 2023, with no similar loss in the same period of 2024.
Nine months ended September 30, 2024 compared with nine months ended September 30, 2023
Revenue and Cost of revenue
We had revenue of $40.0 thousand and cost of revenue of $32.0 thousand in the nine months ended September 30, 2024. We had revenue of $27.0 thousand and cost of revenue of $23.0 thousand in the same period of 2023. Both revenues and related cost of revenue for the nine months ended September 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 $0.7 million in the nine months ended September 30, 2024 , compared to $0.7 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 $8.8 million for the nine months ended September 30, 2024, compared to $8.3 million in the same period of 2023, an increase of $0.5 million.
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 44.8% and 49.4% of the total operating expenses for the nine months ended September 30, 2024 and 2023, respectively. Research and development expenses decreased $0.1 million for the
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nine months ended September 30, 2024 compared to the same period for the prior year. This decrease is primarily related to lower personnel expenses, 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 54.4% and 48.4% of our total operating expenses for the nine months ended September 30, 2024 and 2023, respectively. Selling, general and administrative expenses increased by $0.8 million for the nine months ended September 30, 2024 compared to the same period for the prior year. This increase was primarily a result of an increase in personnel expenses as well as professional service fees primarily related to the NASDAQ uplisting and business development initiatives.
Non-Operating income/(expense)
We recorded a gain of $0.7 million related to the valuation of the warrant liability for the nine months ended September 30, 2024 compared to a gain of $0.5 million for the same period in 2023. We had transaction costs of $0.2 million related to a private placement financing for the nine months ended September 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 nine months ended September 30, 2024 compared to gain of $0.2 million in the same period in 2023.
Liquidity and Capital Resources
As of September 30, 2024, our cash and cash equivalents were $1.8 million compared with $8.8 million as of December 31, 2023. We believe this will not be sufficient to fund our operating expenses and capital expenditure requirements for the 12 months from the issuance of these financial statements and that we will require additional capital funding to continue our operations and research development activity. It is possible this period could be shortened if there are any significant increases in spending or more rapid progress of development programs than anticipated.
Our expected cash payments over the next twelve months include (a) $1.6 million to satisfy accounts payable and accrued expenses and (b) $0.2 million to satisfy the lease liabilities. Additional expected cash payments beyond the next twelve months include $31 thousand of lease liabilities.
Our future viability is dependent on our ability to raise additional capital to fund our operations. We will need to obtain additional funds to satisfy our operational needs and to fund our sales and marketing efforts, research and development expenditures, and business development activities. Until such time, if ever, as we can generate sufficient cash through revenue, management’s plans are to finance our working capital requirements through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. If we raise additional funds by issuing equity securities, our existing security holders will likely experience dilution. If we borrow money, the incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations. If we enter into a collaboration, strategic alliance or other similar arrangement, we may be forced to give up valuable rights. There can be no assurance however that such financing will be available in sufficient amounts, when and if needed, on acceptable terms or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including the market demand for our products and services, the quality of product development efforts, management of working capital, and continuation of normal payment terms and conditions for purchase of services. If we are unable to substantially increase revenues, reduce expenditures, or otherwise generate cash flows for operations, then we will need to raise additional funding.
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Cash Flow from Operating Activities
Net cash used in operating activities was $7.0 million for the nine months ended September 30, 2024, compared to $5.6 million for the nine months ended September 30, 2023, an increase of $1.4 million. The increase is related to the payout of bonuses and payments made related to the NASDAQ uplisting and business development initiatives.
Contractual Payment Obligations
Our principal commitments primarily consist of obligations under leases for office space and purchase commitments in the normal course of business for research and development facilities and services, communications infrastructure, and administrative services. We expect to fund these commitments from our cash balances and working capital.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”), which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.
Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors. In addition, there are other items within our financial statements that require estimation but are not deemed critical as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.
Fair Value Measurements
GAAP emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
Our fair value measurements are generally related to a warrant liability and amendments to preferred stock. The models used for these fair value calculations use inputs such as the underlying price of the shares issued at the measurement date, expected volatility, risk free interest rate and expected life of the instrument. Since our common stock is so thinly traded there is insufficient volatility data available. Accordingly, we have used an expected volatility based on historical common stock volatility of our peers.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
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Item 4. Controls and Procedures
Inherent Limitations on Effectiveness of Controls
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act). Based on that evaluation, the Chief Executive Officer and Chief Accounting Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2024, because of the material weaknesses in internal control over financial reporting described below.
Material Weakness in Internal Control Over Financial Reporting
In connection with the preparation of the financial statements for the first quarter of 2024 a material weakness in the Company’s internal control over financial reporting was identified relating to the complex financial reporting and accounting associated with the Consent, Conversion and Amendment Agreement the Company entered into on January 26, 2024, a non-cash item. None of the Company’s filed financial statements are impacted. The September 30, 2024 financial statements contained in this Form 10-Q reflect the appropriate accounting for this transaction and no prior financial statements were impacted.
Remediation
In connection with the preparation of its quarterly report for the three and nine months ended September 30, 2024 management continues to implement measures designed to ensure that the control deficiency contributing to the material weakness is remediated, such that the controls are designed, implemented, and operating effectively.
While we believe that these actions will be sufficient to remediate the material weakness, it will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of fiscal 2024.
Changes in Internal Controls over Financial Reporting
Aside from the steps taken to address the material weakness discussed above, there were no other changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act) that occurred during the period covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the 10-K, which could materially affect our business, financial condition or future results. The risks described in the 10-K may not be the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Except as set forth below there have been no material changes to the risk factors previously disclosed in the 10-K.
Certain of our partners are and many of our potential customers will be located in Taiwan, which increases the risk that a natural disaster, epidemic, labor strike, war or political unrest could have a material adverse effect on our business, financial condition and results of operations.
Certain of our partners, including The Industrial Technology Research Institute of Taiwan (“ITRI”), are located in Taiwan. In addition, we expect that many of our potential customers will be located in Taiwan, where the bulk of display manufacturing occurs. From time to time, Taiwan has been impacted by significant seismic activity in the area, including earthquakes and related aftershocks, and it is expected that similar events will happen in the future. Because of the relatively small size of Taiwan and the proximity of our partners and future customers to each other, earthquakes, tsunamis, fires, floods, other natural disasters, epidemics such as the COVID-19 outbreak, political unrest, war, labor strikes or work stoppages could simultaneously affect our partners’ production capability, our ability to supply our customers, and our customers’ ability to produce products incorporating our technology. As a result, we may be subject to unanticipated costs and delays that could have a material adverse effect on our business, financial condition and results of operations.
We identified a material weakness in connection with our internal financial reporting controls. Although we are taking steps to remediate this material weakness, there is no assurance we will be successful in doing so in a timely manner, or at all, and we may identify other material weaknesses.
In connection with the preparation of the financial statements for the first quarter of 2024 a material weakness in our internal control over financial reporting was identified relating to the complex financial reporting and accounting associated with the Consent, Conversion and Amendment Agreement we entered into on January 26, 2024, a non-cash item. None of the Company’s filed financial statements are impacted.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Effective internal control over financial reporting is necessary for us to provide reliable financial reporting. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
If we are not able to comply with the requirements of the Sarbanes-Oxley Act or if we are unable to maintain effective internal control over financial reporting, we may not be able to produce timely and accurate financial statements or guarantee that information required to be disclosed by us in the reports that we file with the SEC, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms. Any failure of our internal control over financial reporting or disclosure controls and procedures could cause our investors to lose confidence in our publicly reported information, cause the market price of our stock to decline, expose us to sanctions or investigations by the SEC or other regulatory authorities, or impact our results of operations.
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We can give no assurance that the measures we are taking and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
If we fail to meet all applicable Nasdaq Capital Market requirements and Nasdaq determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock and the market price of our common stock could decrease and our ability to access the capital markets could be negatively impacted.
Our common stock is listed on The Nasdaq Capital Market. There can be no assurance that we will be able to continue to maintain compliance with the Nasdaq continued listing requirements, and if we are unable to maintain compliance with the continued listing requirements, including the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) and the minimum stockholders’ equity requirement of $2.5 million set forth in Nasdaq Listing Rule 5550(b)(1), our shares may be delisted from Nasdaq, which could reduce the liquidity of our common stock materially and result in a corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees, suppliers, customers and business development opportunities. Such a delisting likely would impair your ability to sell or purchase our common stock when you wish to do so. Further, if we were to be delisted from Nasdaq, our common stock may no longer be recognized as a “covered security,” and we would be subject to regulation in each state in which we offer our securities. Thus, delisting from Nasdaq could adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly impact the ability of investors to trade our securities and would negatively impact the value and liquidity of our common shares.
Our recurring losses from operations have raised substantial doubt regarding our ability to continue as a going concern.
We have recognized recurring losses, and as of September 30, 2024, had an accumulated deficit of $109.8 million. We anticipate operating losses to continue for the foreseeable future due to, among other things, costs related to research funding, further development of our technology and products and expenses related to the commercialization of our products. These efforts may be more costly than we expect, and we may not be able to generate revenue to offset our increased operating expenses. We expect our cash and cash equivalents of $1.8 million as of September 30, 2024 to be insufficient to meet our operating expenses and capital expenditure requirements for at least 12 months from the filing of this 10-Q. Our forecast of the period of time through which our current financial resources will be adequate to support our operations and the costs to support our general and administrative and research and development activities are forward-looking statements and involve risks and uncertainties. Our consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.
Our ability to continue as a going concern is dependent on our ability to raise additional working capital through public or private equity or debt financings or other sources, which may include collaborations with third parties. There can be no assurance, however, that such financing will be available, on acceptable terms and conditions, or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including our ability to generate significant revenue, the market demand for our products, the quality of product development efforts including potential joint collaborations, management of working capital, and the continuation of normal payment terms and conditions for purchase of services.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our working capital requirements through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making
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acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or products, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate commercialization, our research and product development, or grant rights to develop and market our products that we would otherwise prefer to develop and market ourselves, it may also impact our ability to continue as a going concern. The perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On September 10, 2024, we issued 30,000 shares of common stock to a consultant with a value of $152.4 thousand. Such issuances were exempt from registration under 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
Item 6. Exhibits
See Exhibit Index.
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EXHIBIT INDEX
Exhibit No. | Description |
2.1 * | |
3.1 | |
3.2 | |
10.1*† | |
31.1† | |
31.2† | |
32.1†† | |
32.2†† | |
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) |
* Annexes, schedules and/or exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant hereby undertakes to furnish supplementally a copy of any of the omitted schedules and exhibits to the SEC on a confidential basis upon request.
† Filed herewith.
†† This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the registrant specifically incorporates it by reference.
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SIGNATURES
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, duly authorized.
Date: November 8, 2024
SMARTKEM, INC. | ||
By: | /s/ Ian Jenks | |
Name: | Ian Jenks | |
Title: | Chief Executive Officer and Chairman of the Board | |
(Principal Executive Officer) | ||
By: | /s/ Barbra C. Keck | |
Name: | Barbra C. Keck | |
Title: | Chief Financial Officer | |
(Principal Financial Officer) | ||
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