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What changed in SmartKem, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SmartKem, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+107 added−152 removedSource: 10-K (2026-04-08) vs 10-K (2025-03-31)

Top changes in SmartKem, Inc.'s 2025 10-K

107 paragraphs added · 152 removed · 75 edited across 7 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+26 added−60 removed121 unchanged
Biggest changeAs a result of the closing of the December 2025 Offering (as defined below), our stockholders’ equity increased above the $2.5 million requirement, and Nasdaq informed us that we were not required to submit a plan to regain compliance. ​ There can be no assurance that we will be able 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, 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.
Biggest changeIf we do not qualify for the second compliance period or fails to regain compliance during the second 180-day period, then Nasdaq will notify us of its determination to delist the Company's common stock, at which point the Company will have an opportunity to request a hearing before the Panel. ​ The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider implementing available options, including, but not limited to, implementing a reverse stock split of its outstanding securities, to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules. ​ There can be no assurance that we will be able 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, 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.
These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. ​ We are also subject to other laws and regulations governing international operations, including regulations administered by the governments of the U.K and the U.S., and authorities in the European Union, including applicable export control regulations, economic sanctions and embargoes on certain countries and persons, anti-money laundering laws, import and customs requirements and currency exchange regulations, collectively referred to as the Trade Control laws. ​ Any violation of the Bribery Act, FCPA or other applicable anti-bribery, anti-corruption laws and anti-money laundering laws including Trade Control laws could result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees, loss of export privileges, severe criminal or civil sanctions or suspension or debarment from government contracts, substantial diversion of management’s attention, drop in stock 30 Table of Contents price or overall adverse consequences to our business, all of which may have an adverse effect on our reputation, business, financial condition, and results of operations. ​ In order to comply with environmental laws and regulations, we may need to modify our activities or incur substantial costs, and such laws and regulations, including any failure to comply with such laws and regulations, could subject us to substantial costs, liabilities, obligations and fines. ​ We must comply with federal, state, local and foreign governmental regulations related to the use, storage, discharge and disposal of materials used in our products and manufacturing processes.
These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. ​ We are also subject to other laws and regulations governing international operations, including regulations administered by the governments of the U.K and the U.S., and authorities in the European Union, including applicable export control regulations, economic sanctions and embargoes on certain countries and persons, anti-money laundering laws, import and customs requirements and currency exchange regulations, collectively referred to as the Trade Control laws. ​ 20 Table of Contents Any violation of the Bribery Act, FCPA or other applicable anti-bribery, anti-corruption laws and anti-money laundering laws including Trade Control laws could result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees, loss of export privileges, severe criminal or civil sanctions or suspension or debarment from government contracts, substantial diversion of management’s attention, drop in stock price or overall adverse consequences to our business, all of which may have an adverse effect on our reputation, business, financial condition, and results of operations. ​ In order to comply with environmental laws and regulations, we may need to modify our activities or incur substantial costs, and such laws and regulations, including any failure to comply with such laws and regulations, could subject us to substantial costs, liabilities, obligations and fines. ​ We must comply with federal, state, local and foreign governmental regulations related to the use, storage, discharge and disposal of materials used in our products and manufacturing processes.
These provisions: ● establish a classified board of directors so that not all members of our board are elected at one time; ● provide that directors may only be removed “for cause”; ● authorize the issuance of “blank check” preferred stock that our board of directors could issue from time to time to increase the number of outstanding shares and discourage a takeover attempt; ● eliminate the ability of our stockholders to call special meetings of stockholders; ● prohibit stockholder action by written consent, which has the effect of requiring all stockholder actions to be taken at a meeting of stockholders; ● provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws; ● establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and ● require supermajority approvals to remove the protective provisions in our certificate of incorporation and bylaws listed above or to amend our bylaws. ​ Such provisions could impede any merger, consolidation, takeover or other business combination involving the Company or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company. ​ Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees. ​ Our amended and restated certificate of incorporation requires that, unless we consent in writing to the selection of an alternative forum: ● any derivative action or proceeding brought on our behalf; ● any action asserting a claim of breach of any fiduciary duty owed by any current or former director, officer, other employee, or stockholder of ours to our company or our stockholders; ● any action asserting a claim arising pursuant to any provision of the Delaware General Corporate Law (the “DGCL”), our certificate of incorporation or bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or ● any action asserting a claim governed by the internal affairs doctrine; 39 Table of Contents ​ The Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the exclusive forum or if the Court of Chancery of the State of Delaware does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware. ​ Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.
These provisions: ● establish a classified board of directors so that not all members of our board are elected at one time; ● provide that directors may only be removed “for cause”; ● authorize the issuance of “blank check” preferred stock that our board of directors could issue from time to time to increase the number of outstanding shares and discourage a takeover attempt; ● eliminate the ability of our stockholders to call special meetings of stockholders; ● prohibit stockholder action by written consent, which has the effect of requiring all stockholder actions to be taken at a meeting of stockholders; ● provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws; ● establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and ● require supermajority approvals to remove the protective provisions in our certificate of incorporation and bylaws listed above or to amend our bylaws. ​ Such provisions could impede any merger, consolidation, takeover or other business combination involving the Company or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company. ​ Our Amended and Restated Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees. ​ Our amended and restated certificate of incorporation requires that, unless we consent in writing to the selection of an alternative forum: ● any derivative action or proceeding brought on our behalf; ● any action asserting a claim of breach of any fiduciary duty owed by any current or former director, officer, other employee, or stockholder of ours to our company or our stockholders; ● any action asserting a claim arising pursuant to any provision of the Delaware General Corporate Law (the “DGCL”), our certificate of incorporation or bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or ● any action asserting a claim governed by the internal affairs doctrine; ​ The Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the exclusive forum or if the Court of Chancery of the State of Delaware does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware. ​ Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.
The perception that we may not be able to continue as a going 22 Table of Contents concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations. ​ Our quarterly results of operations are likely to vary from period to period, which could cause the market price of our common stock to fluctuate or decline. ​ Our results of operations have varied from period to period, and we expect that our quarterly results of operations will continue to vary as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including: ● our ability to attract existing customers, including due to our perceived or actual financial condition; ● the budgeting cycles and purchasing practices of customers; ● the timing and length of our sales cycles, including the ability of our customers to design-in successfully with our technology; ● changes in customer requirements or market needs, including market acceptance of our technology; ● the timing and impact of new product introductions by us or our competitors or any other change in the competitive landscape of the semiconductor industry, including consolidation among our customers or competitors; ● deferral of orders from customers in anticipation of new products or product enhancements announced by us or our competitors; ● our ability to execute our growth strategy and operating plans; ● our ability to successfully expand our business domestically and internationally; ● our ability to successfully compete with other companies in our market; ● changes in our pricing policies or those of our competitors; ● any disruption in, or termination of, our relationship with channel partners; ● insolvency or credit difficulties confronting our customers, affecting their ability to purchase or pay for our products, or confronting our key suppliers, which could disrupt our supply chain; ● the cost and potential outcomes of potential future litigation; ● general economic conditions; and ● the amount and timing of operating costs and capital expenditures related to the expansion of our business. ​ Any of the above factors, individually or in the aggregate, may result in significant fluctuations in our quarterly operating results.
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. ​ Our quarterly results of operations are likely to vary from period to period, which could cause the market price of our common stock to fluctuate or decline. ​ Our results of operations have varied from period to period, and we expect that our quarterly results of operations will continue to vary as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including: ● our ability to attract existing customers, including due to our perceived or actual financial condition; ● the budgeting cycles and purchasing practices of customers; ● the timing and length of our sales cycles, including the ability of our customers to design-in successfully with our technology; ● changes in customer requirements or market needs, including market acceptance of our technology; ● the timing and impact of new product introductions by us or our competitors or any other change in the competitive landscape of the semiconductor industry, including consolidation among our customers or competitors; ● deferral of orders from customers in anticipation of new products or product enhancements announced by us or our competitors; ● our ability to execute our growth strategy and operating plans; ● our ability to successfully expand our business domestically and internationally; ● our ability to successfully compete with other companies in our market; ● changes in our pricing policies or those of our competitors; ● any disruption in, or termination of, our relationship with channel partners; ● insolvency or credit difficulties confronting our customers, affecting their ability to purchase or pay for our products, or confronting our key suppliers, which could disrupt our supply chain; ● the cost and potential outcomes of potential future litigation; ● general economic conditions; and ● the amount and timing of operating costs and capital expenditures related to the expansion of our business. ​ Any of the above factors, individually or in the aggregate, may result in significant fluctuations in our quarterly operating results.
Certain of our partners, including ITRI, are located in Taiwan. In addition, we expect that many of our potential customers will be located in Taiwan. 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.
Certain of our partners are located in Taiwan. In addition, we expect that many of our potential customers will be located in Taiwan. 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.
The concentration of ownership might decrease the market price of our common stock by: ​ ● delaying, deferring, or preventing a change in control of the Company, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company or our assets and might affect the prevailing market price of our common stock; ● impeding a merger, consolidation, takeover, or other business combination involving us; or ● discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company. ​ The significant concentration of stock ownership may also adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise. ​ Provisions in our amended and restated certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock. ​ Our amended and restated certificate of incorporation and bylaws contain provisions that could depress the trading price of our common stock by acting to discourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous.
The concentration of ownership might decrease the market price of our common stock by: ​ ● delaying, deferring, or preventing a change in control of the Company, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company or our assets and might affect the prevailing market price of our common stock; ● impeding a merger, consolidation, takeover, or other business combination involving us; or ● discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company. ​ The significant concentration of stock ownership may also adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise. ​ 28 Table of Contents Provisions in our amended and restated certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock. ​ Our Amended and Restated Certificate Of Incorporation and Bylaws contain provisions that could depress the trading price of our common stock by acting to discourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation provides that the federal district courts of the United States of America are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. ​ The exclusive forum provisions described above do not apply to claims arising under the Exchange Act. ​ While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act against us, our directors, officers, or other employees in a venue other than in the federal district courts of the United States of America.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation provides that the federal district courts of the United States of America are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. ​ The exclusive forum provisions described above do not apply to claims arising under the Exchange Act. ​ 29 Table of Contents While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act against us, our directors, officers, or other employees in a venue other than in the federal district courts of the United States of America.
If we are not able to maintain successful strategic distributor and reseller relationships with our international channel partners or recruit additional channel partners, our future success in these international markets could be limited . ​ 29 Table of Contents We are subject to economic, political and other risks that could have a materially adverse effect on our business, financial condition and results of operations. ​ Our operations and our financial results, including our ability to execute our business strategy, can be adversely affected by changes in global economic conditions as well as the potential impacts of geopolitical uncertainties and international conflicts. ​ We have operations in the United Kingdom and Asia and certain of our partners, including ITRI, are located in Taiwan.
If we are not able to maintain successful strategic distributor and reseller relationships with our international channel partners or recruit additional channel partners, our future success in these international markets could be limited . ​ We are subject to economic, political and other risks that could have a materially adverse effect on our business, financial condition and results of operations. ​ Our operations and our financial results, including our ability to execute our business strategy, can be adversely affected by changes in global economic conditions as well as the potential impacts of geopolitical uncertainties and international conflicts. ​ We have operations in the United Kingdom and Asia and certain of our partners, including ITRI, are located in Taiwan.
However, similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports and in a registration statement under the Exchange Act on Form 10.
However, similar to emerging growth 25 Table of Contents companies, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports and in a registration statement under the Exchange Act on Form 10.
If these FINRA requirements are applicable to us or our securities, they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for and price of our common stock. ​ Substantial future sales of shares of our common stock could cause the market price of our common stock to decline. ​ A substantial portion of outstanding shares of our common stock has been registered for resale by the holders thereof.
If these FINRA requirements are applicable to us or our securities, they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for and price of our common stock. 27 Table of Contents ​ Substantial future sales of shares of our common stock could cause the market price of our common stock to decline. ​ A substantial portion of outstanding shares of our common stock has been registered for resale by the holders thereof.
However, in the event of an accident or incident at these facilities, we cannot assure you that the amounts or coverage of insurance will be sufficient to satisfy any damages and losses. ​ 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.
However, in the event of an accident or incident at these facilities, we cannot assure you that the amounts or coverage of insurance will be sufficient to satisfy any damages and losses. 17 Table of Contents ​ 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.
We cannot assure stockholders of a positive return on their investment when they sell their shares of our common stock, nor can we assure that stockholders will not lose the entire amount of their investment. ​ 37 Table of Contents FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock. ​ The Financial Industry Regulatory Authority (“FINRA”) has adopted rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.
We cannot assure stockholders of a positive return on their investment when they sell their shares of our common stock, nor can we assure that stockholders will not lose the entire amount of their investment. ​ FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock. ​ The Financial Industry Regulatory Authority (“FINRA”) has adopted rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.
See “Item 9A Controls and Procedures.” ​ 34 Table of Contents Effective internal controls are necessary for us to provide reasonable assurance with respect to our financial reports and to effectively prevent financial fraud. Pursuant to the Sarbanes-Oxley Act, we are required to periodically evaluate the effectiveness of the design and operation of our internal controls.
See “Item 9A Controls and Procedures.” ​ 24 Table of Contents Effective internal controls are necessary for us to provide reasonable assurance with respect to our financial reports and to effectively prevent financial fraud. Pursuant to the Sarbanes-Oxley Act, we are required to periodically evaluate the effectiveness of the design and operation of our internal controls.
While the ultimate outcome of investigations, inquiries, information requests and legal proceedings is difficult to predict, defense of litigation claims can be expensive, time-consuming, and distracting, and adverse resolutions or settlements of those matters may result in, among other things, modification of our business practices, costs and significant payments, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. ​ Security breaches, computer malware, computer hacking attacks and other security incidents could harm our business, reputation, brand and operating results.
While the ultimate outcome of investigations, inquiries, information requests and legal proceedings is difficult to predict, defense of litigation claims can be expensive, time-consuming, and distracting, and adverse resolutions or settlements of those matters may result in, among other things, modification of our business practices, costs and significant payments, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. ​ Risks Related to Our Information Technology and Cybersecurity Security breaches, computer malware, computer hacking attacks and other security incidents could harm our business, reputation, brand and operating results.
The occurrence of pandemics, epidemics, or widespread outbreaks of infectious diseases, as well as the imposition of related public health measures and travel and business restrictions or other actions that may be taken by governmental authorities in an effort to contain such pandemics, epidemics or outbreaks, have had, and could in the future have, a material adverse effect on our business.
The occurrence of pandemics, epidemics, or widespread outbreaks of infectious diseases, as well as the imposition of related public health measures and travel and business restrictions or other actions that may be taken by governmental authorities in an effort to contain such pandemics, epidemics or outbreaks, have had, and could in the future have, a 18 Table of Contents material adverse effect on our business.
The degree to which the future pandemics and similar events ultimately impact our business and results of operations will depend on future developments beyond our control. ​ We are subject to risks associated with international sales and operations. ​ We have operations in the United Kingdom and Asia and expect that most of our sales revenue will result from sales to customers in Asia.
The degree to which the future pandemics and similar events ultimately impact our business and results of operations will depend on future developments beyond our control. ​ Risks Related to Our International Operations and Regulatory Compliance We are subject to risks associated with international sales and operations. ​ We have operations in the United Kingdom and Asia and expect that most of our sales revenue will result from sales to customers in Asia.
As a result, we must hire and train experienced personnel to staff and manage our foreign operations. To the extent that we experience difficulties in recruiting, training, managing and retaining international employees, particularly managers and other members of our international sales team, we may experience difficulties in sales productivity in, or market penetration of, foreign markets.
As a result, we must hire and train experienced personnel to staff and manage our foreign operations. To the extent that we experience difficulties in recruiting, training, managing and retaining international employees, particularly managers and 19 Table of Contents other members of our international sales team, we may experience difficulties in sales productivity in, or market penetration of, foreign markets.
Nor can we predict with certainty which, if any, of these rights will or may be asserted against us by third parties. ​ 32 Table of Contents To protect our product technology, documentation and other proprietary information, we enter into confidentiality agreements with our employees, customers, consultants and strategic partners.
Nor can we predict with certainty which, if any, of these rights will or may be asserted against us by third parties. ​ To protect our product technology, documentation and other proprietary information, we enter into confidentiality agreements with our employees, customers, consultants and strategic partners.
Issued patents can be subject to oppositions, interferences and other third-party challenges that can result in the revocation of the patent or limit patent claims such that patent coverage lacks sufficient breadth to protect subject matter that is commercially relevant. Competitors may be able to circumvent our patents.
Issued patents can be subject to oppositions, interferences and other third-party challenges that can result in the revocation of the patent or limit patent claims such that patent coverage lacks sufficient breadth to protect 22 Table of Contents subject matter that is commercially relevant. Competitors may be able to circumvent our patents.
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.
To the extent that we raise additional capital through the sale of equity or 14 Table of Contents 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.
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. ​ 27 Table of Contents We rely on our management team and other key employees and will need additional personnel to grow our business.
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 rely on our management team and other key employees and will need additional personnel to grow our business.
Such security incidents, whether intentional or otherwise, may result from actions of hackers, criminals, nation states, vendors, employees or customers. We rely on our internal technology systems for development, marketing, operational, support and sales activities.
Such security incidents, whether intentional or otherwise, may result from actions of hackers, criminals, nation states, vendors, employees or customers. 21 Table of Contents We rely on our internal technology systems for development, marketing, operational, support and sales activities.
We must satisfy the continued listing requirements of Nasdaq to maintain the listing of our common stock on The Nasdaq Capital Market. ​ On November 15, 2024, we received a letter (the “Letter”) from the Listing Qualifications Department of Nasdaq indicating that we were not in compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market, under Listing Rule 5550(b)(1) (the “Minimum Stockholders’ Equity Requirement”), because our stockholders’ equity of $2.3 million as reported in our Quarterly Report on Form 10-Q for the period ended September 30, 2024 was below the required minimum of $2.5 million, and because, as of November 15, 2024, we did not meet the alternative compliance standards relating to the market value of listed securities of $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years.
We must satisfy the continued listing requirements of Nasdaq to maintain the listing of our common stock on The Nasdaq Capital Market. ​ On August 15, 2025, we received a letter (the “Letter”) from the Listing Qualifications Department of Nasdaq indicating that we were not in compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market, under Listing Rule 5550(b)(1) (the “Minimum Stockholders’ Equity Requirement”), because our stockholders’ equity of $(0.1) million as reported in our Quarterly Report on Form 10-Q for the period ended June 30, 2025 was below the required minimum of $2.5 million, and because, as of August 15, 2025, we did not meet the alternative compliance standards relating to the market value of listed securities of $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years.
Potential customers may also prefer to purchase from their existing suppliers rather than a new supplier regardless of 24 Table of Contents product performance or features. As a result, even if the features of our products are superior, customers may not purchase our products.
Potential customers may also prefer to purchase from their existing suppliers rather than a new supplier regardless of product performance or features. As a result, even if the features of our products are superior, customers may not purchase our products.
In addition, Nasdaq listing requirements and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel are required to devote a substantial amount of time to these compliance initiatives.
In addition, Nasdaq listing requirements and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel are required to devote a substantial amount of time to these 23 Table of Contents compliance initiatives.
In addition, these stockholders, acting together, have the ability to significantly impact the management and affairs of our 38 Table of Contents company. The interests of these stockholders may not be the same as or may even conflict with your interests.
In addition, these stockholders, acting together, have the ability to significantly impact the management and affairs of our company. The interests of these stockholders may not be the same as or may even conflict with your interests.
This could consume significant resources and divert the efforts of our technical and management personnel, regardless of the litigation’s outcome. ​ Risks Related to our Financial Control Environment ​ We incur significant costs as a result of operating as a public company. ​ As a public company, we incur significant legal, accounting and other expenses.
This could consume significant resources and divert the efforts of our technical and management personnel, regardless of the litigation’s outcome. ​ Risks Related to Our Financial Controls and Reporting ​ We incur significant costs as a result of operating as a public company. ​ As a public company, we incur significant legal, accounting and other expenses.
Our financial performance depends, in part, on our ability to design, develop, manufacture, assemble, test, market and support new products and enhancements on a timely and cost-effective basis. ​ We have not sold our products at commercial scale.
Our financial performance depends, in part, on our ability to design, develop, manufacture, assemble, test, market and support new products and enhancements on a timely and cost-effective basis. 15 Table of Contents ​ We have not sold our products at commercial scale.
We expect our cash and cash equivalents of $7.1 million as of December 31, 2024 to be insufficient to meet our operating expenses and capital expenditure requirements for at least 12 months from the filing of this Form 10-K.
We expect our cash and cash equivalents of $0.4 million as of December 31, 2025 to be insufficient to meet our operating expenses and capital expenditure requirements for at least 12 months from the filing of this Form 10-K.
Moreover, these rules and regulations significantly increase our legal and 33 Table of Contents financial compliance costs and make some activities more time-consuming and costly.
Moreover, these rules and regulations significantly increase our legal and financial compliance costs and make some activities more time-consuming and costly.
No assurance can be given that an active 36 Table of Contents trading market for our common stock will develop or be sustained.
No assurance can be given that an active trading market for our common stock will develop or be sustained.
We may be unable to secure contracts with distributors on favorable terms or at all.
We may be unable to secure 16 Table of Contents contracts with distributors on favorable terms or at all.
A disruption or failure of these systems or in those of our external service providers, in the event of a major storm, earthquake, fire, telecommunications failure, cyber-attack, terrorist attack or other catastrophic event could cause system interruptions, reputational harm, delays in our product development and loss of critical data and could materially and adversely affect our ability to operate our business. 31 Table of Contents We may experience disruptions, data loss, outages and other performance problems on our systems due to service attacks, unauthorized access or other security related incidents.
A disruption or failure of these systems or in those of our external service providers, in the event of a major storm, earthquake, fire, telecommunications failure, cyber-attack, terrorist attack or other catastrophic event could cause system interruptions, reputational harm, delays in our product development and loss of critical data and could materially and adversely affect our ability to operate our business.
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. ​ We are a smaller reporting company, and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make our common stock less attractive to investors. ​ We are currently a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company, and we have a public float of less than $250 million and annual revenues of less than $100 million during our most recently completed fiscal year.
Changes to accounting methods or policies, or interpretations thereof, may require us to reclassify, restate or otherwise change or revise our historical financial statements, including those contained in this Report. ​ Risks Related to Our Common Stock ​ We are a smaller reporting company, and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make our common stock less attractive to investors. ​ We are currently a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company, and we have a public float of less than $250 million and annual revenues of less than $100 million during our most recently completed fiscal year.
A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis. ​ In connection with our preparation of our financial statements for the second quarter of 2023, a material weakness in our internal control over financial reporting was identified relating to the complex financial reporting and accounting associated with our private placement that closed in June of 2023. a non-cash item.
A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis. ​ In connection with the preparation of our financial statements for the first quarter of 2025, we identified a material weakness in our internal control over financial reporting relating to the lack of an independent review and assessment of our internal controls environment.
At the same time, the global silicon semiconductor industry experienced a shortage in supply and difficulties in ability to meet customer demand and led to an increase in lead-times of the production of semiconductor chips and components.
For example, the COVID-19 pandemic adversely impacted our operations and those of our customers, contract manufacturers, suppliers and logistics providers. At the same time, the global silicon semiconductor industry experienced a shortage in supply and difficulties in ability to meet customer demand and led to an increase in lead-times of the production of semiconductor chips and components.
If an actual or perceived security incident occurs, the market perception of the effectiveness of our security controls could be harmed, our brand and reputation could be damaged, we could lose customers, and we could suffer financial exposure due to such events or in connection with remediation efforts, investigation costs, regulatory fines and changed security control, system architecture and system protection measures. ​ Risks Related to our Intellectual Property ​ Any failure by us to protect our proprietary technologies or maintain the right to use certain technologies may negatively affect our ability to compete. ​ To compete effectively, we must protect our intellectual property.
If an actual or perceived security incident occurs, the market perception of the effectiveness of our security controls could be harmed, our brand and reputation could be damaged, we could lose customers, and we could suffer financial exposure due to such events or in connection with remediation efforts, investigation costs, regulatory fines and changed security control, system architecture and system protection measures. ​ Risks Related to Our Intellectual Property ​ Any failure by us to protect our proprietary technologies or maintain the right to use certain technologies may negatively affect our ability to compete. ​ SmartKem agreed to assign, transfer, and convey to SmartKem IP LLC, a Delaware limited liability company, certain of the Company's right, title, and interest in and to certain patents and patent applications, together with all continuations, continuations-in-part, divisionals, reissues, reexaminations, extensions, foreign counterparts, and all rights to sue for past, present, and future infringement thereof.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2024.
As a result, and as of the date of this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2025.
If we are unable to build an effective sales organization and/or if we are unable to secure relationships with third-party distributors, we will not be able to successfully commercialize our products, our future product revenue will suffer, and we would incur significant additional losses. ​ We rely on access to third-party facilities for prototyping and commercial process development and expect to enter into arrangements with third parties to fabricate our products at commercial scale.
If we are unable to build an effective sales organization and/or if we are unable to secure relationships with third-party distributors, we will not be able to successfully commercialize our products, our future product revenue will suffer, and we would incur significant additional losses. ​ We expect that our sales cycles will be long and unpredictable, and our sales efforts will require considerable time and expense.
Future pandemics and similar events could materially increase our costs, severely negatively impact business development and commercialization, net income, and other results of operations, and impact our liquidity position.
Future pandemics and similar events could materially increase our costs, severely negatively impact business development and commercialization, net income, and other results of operations, and impact our liquidity position. The duration of any such impacts cannot be predicted, and such impacts may also have the effect of heightening many of the other material risks we face .
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. ​ Our principal stockholders and management have substantial control over us and could delay or prevent a change in corporate control. ​ Our executive officers and directors, together with holders of 5% or more of our outstanding common stock and their respective affiliates, beneficially own 62.1% of our common stock.
Our principal stockholders and management have substantial control over us and could delay or prevent a change in corporate control. ​ Our executive officers and directors, together with holders of 5% or more of our outstanding common stock and their respective affiliates, beneficially own 4.1% of our common stock.
Additionally, to the extent our competitors develop products that our prospective customers view as equivalent or superior to ours, the average duration of our sales cycles may increase, and our sales efforts may be less successful. ​ Our current operations are concentrated, and in the event of an earthquake, terrorist attack or other disaster affecting these locations or those of our major suppliers, our operations may be interrupted, and our business may be harmed. ​ Our principal executive offices and primary operating facilities are situated in England and Asia, and most of our major suppliers, which are wafer foundries and assembly houses, are located in areas that have been subject to severe earthquakes and are susceptible to other disasters such as tropical storms, typhoons or tsunamis.
Such third-party fabricators may experience manufacturing delays, capacity constraints, quality control issues or pricing fluctuations that could prevent us from delivering products to customers on time or on a cost-effective basis, which could result in the loss of sales and customers and have a material adverse effect on our business, financial condition and results of operations. ​ Our current operations are concentrated, and in the event of an earthquake, terrorist attack or other disaster affecting these locations or those of our major suppliers, our operations may be interrupted, and our business may be harmed. ​ Our principal executive offices and primary operating facilities are situated in England and Asia, and most of our major suppliers, which are wafer foundries and assembly houses, are located in areas that have been subject to severe earthquakes and are susceptible to other disasters such as tropical storms, typhoons or tsunamis.
An interruption within our supply chain may increase costs or otherwise impact our business, results of operations and financial condition. For example, the COVID-19 pandemic adversely impacted our operations and those of our customers, contract manufacturers, suppliers and logistics providers.
Disruptions in global supply chains have impacted, and may in the future, impact, our business, results of operations and financial condition. An interruption within our supply chain may increase costs or otherwise impact our business, results of operations and financial condition.
If this were to occur, our stockholders could lose all or part of their investment. ​ Our recurring losses from operations have raised substantial doubt regarding our ability to continue as a going concern and will likely require additional capital to support our business and objectives . ​ We have incurred recurring losses since inception and, as of December 31, 2024, had an accumulated deficit of $114.6 million.
We believe that we will need to raise substantial additional capital to fund our operations and the development and commercialization of our products and technologies, and there can be no assurance that such capital will be available on acceptable terms, or at all. ​ Risks Related to Our Business and the Industry in Which We Operate ​ Our recurring losses from operations have raised substantial doubt regarding our ability to continue as a going concern and will likely require additional capital to support our business and objectives . ​ We have incurred recurring losses since inception and, as of December 31, 2025, had an accumulated deficit of $125.1 million.
In addition, our competitors may be able to design around our patents. ​ There can be no assurance that an issued patent will remain valid and enforceable in a court of law through the entire patent term. Should the validity of a patent be challenged, the legal process associated with defending the patent can be costly and time consuming.
Should the validity of a patent be challenged, the legal process associated with defending the patent can be costly and time consuming.
Further, if our products are not in compliance with prevailing industry 23 Table of Contents standards, such non-compliance could materially and adversely affect our financial condition, cash flows and results of operations. ​ If MicroLED technology is not widely adopted by display manufacturers, our business would be harmed. ​ A significant share of our growth is dependent on the adoption by display manufacturers of MicroLED technology.
Further, if our products are not in compliance with prevailing industry standards, such non-compliance could materially and adversely affect our financial condition, cash flows and results of operations. ​ We participate in highly competitive markets characterized by rapid technological changes, and existing and new companies may introduce products that compete with ours, which may adversely affect our business and operating results .
Removed
Item 1A. Risk Factors An investment in our securities is highly speculative and involves a high degree of risk. We face a variety of risks that may affect our operations or financial results and many of those risks are driven by factors that we cannot control or predict.
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Item 1A. Risk Factors ​ Risks Related to Our Financial Position, Financial Reporting Matters and Need for Capital ​ We have generated no revenue from commercial sales to date, and our future profitability is uncertain.
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You should carefully consider the risks described below together with all of the other information in this Report, including our consolidated financial statements and the related notes and the information described in the section entitled “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in our other filings with the SEC.
Added
We were incorporated in 2009, and since inception we have incurred losses and expect to continue to operate at a net loss for at least the next several years as we continue our research and development efforts and develop manufacturing, sales, marketing and distribution capabilities for our TRUFLEX® materials.
Removed
If any of the risks described below occur, our business, financial condition, results of operations and prospects could be materially adversely affected. In that case, the market price of our common stock would likely decline, and investors could lose all or a part of their investment.
Added
Our comprehensive losses for the years ended December 31, 2025 and 2024 were $13.0 million and $9.9 million, respectively, and our accumulated deficit as of December 31, 2025 was $125.1 million. There can be no assurance that the products and technologies under development by us will achieve commercial acceptance or generate meaningful revenue.
Removed
Only those investors who can bear the risk of loss of their entire investment should consider an investment in our securities.
Added
Furthermore, there can be no assurance that if our products are adopted by customers they will be successfully commercialized at scale, and the extent of our future losses and the timing of our profitability are highly uncertain. If we are unable to achieve profitability, we may be unable to continue our operations.
Removed
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our operations. ​ Summary of Risk Factors ​ ● We have a history of losses, anticipate continued operating losses in the future, and may not be able to achieve or maintain profitability.
Added
If we fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product development, and you will likely lose your entire investment. We will need to raise capital from time to time to continue the development of our products and technologies.
Removed
If we cannot achieve or maintain profitability, stockholders could lose all or part of their investment. ● Our quarterly results of operations are likely to vary from period to period, which could cause the market price of our common stock to fluctuate or decline. ● We may not be able to develop technologies and products to satisfy changes in customer demand or industry standards, and our competitors could develop products that decrease the demand for our products. ● If MicroLED technology is not widely adopted by display manufacturers, our business would be harmed. ● We compete in highly competitive markets characterized by rapid technological changes, and existing and new companies may introduce products that compete with ours, which may adversely affect our business and operating results. ● If we are unable to establish sales capabilities on our own or through third parties, we may not be able to market and sell our existing or future products - or generate product revenue. ● We rely on access to third-party facilities for prototyping and commercial process development and expect to enter into arrangements with third parties to fabricate our products at commercial scale.
Added
There can be no assurance that any revenues we may generate in the future will be sufficient to fund our ongoing operations.
Removed
The loss of access to a third-party facility, or our inability to enter into agreements with third-party fabricators could have a material adverse effect on our business development . ● Because we will depend on third-party fabricators to manufacture products for us, we will be susceptible to manufacturing delays and pricing fluctuations that could prevent us from shipping customer orders on time, if at all, or on a cost-effective basis, which may result in the loss of sales, income and customers. ● We rely on our management team and other key employees and will need additional personnel to grow our business.
Added
Additionally, to the extent our competitors develop products that our prospective customers view as equivalent or superior to ours, the average duration of our sales cycles may increase, and our sales efforts may be less successful. ​ Risks Related to Our Operations and Manufacturing We rely on access to third-party facilities, including ITRI, for prototyping and commercial process development, and the loss of access to such facilities could have a material adverse effect on our business. ​ We rely on third-party facilities, including the Industrial Technology Research Institute ("ITRI") in Taiwan, for prototyping and the development of commercial-scale manufacturing processes for our TRUFLEX® materials.
Removed
The loss of one or more key employees or our inability to attract and retain qualified personnel could harm our business. ● Any failure by us to protect our proprietary technologies or maintain the right to use certain technologies may negatively affect our ability to compete. ● We incur significant costs as a result of operating as a public company. ● If we fail to maintain effective internal controls, we may not be able to report financial results accurately or on a timely basis, or to detect fraud, which could have a material adverse effect on our business or share price. ● An active trading market for our common stock may not develop or be sustained, which may make it difficult for investors to sell shares of our common stock and may make it difficult for us to raise capital. ● If our common stock were to be delisted from Nasdaq due to our failure to meet all applicable Nasdaq listing requirements the market liquidity of our common stock would be adversely affected, the market price of our common stock could decrease and our ability to access the capital markets could be negatively impacted. ● We do not anticipate paying dividends on our common stock, and investors may lose the entire amount of their investment. ​ 21 Table of Contents Risks Related to our Business and the Industry in Which We Operate ​ We have a history of losses, anticipate continued operating losses in the future, and may not be able to achieve or maintain profitability.
Added
Our ability to demonstrate our technology to potential customers and to develop commercially viable manufacturing processes depends in significant part on our continued access to these facilities.
Removed
If we cannot achieve or maintain profitability, stockholders could lose all or part of their investment . ​ Since our inception, we have generated substantial net losses as we have devoted our resources to the development of our technology, and our business model has not been proven. As of December 31, 2024, we had an accumulated deficit of $114.6 million.
Added
If our agreements with ITRI or other third-party facility providers are terminated or not renewed, or if we are unable to enter into new agreements with alternative third-party fabricators on acceptable terms, our ability to develop and commercialize our products could be materially impaired. In addition, we expect to rely on third-party fabricators to manufacture our products at commercial scale.
Removed
For the years ended December 31, 2024 and December 31, 2023 our total comprehensive loss was $9.9 million and $9.6 million, respectively. We expect our operating losses to continue for the foreseeable future as we continue to invest in our infrastructure and research and development of our technologies.
Added
We may experience disruptions, data loss, outages and other performance problems on our systems due to service attacks, unauthorized access or other security related incidents.
Removed
These efforts may be more costly than we expect, and we may not be able to generate revenue to offset our increased operating expenses. If we are unable to generate substantial revenue, we may never become profitable or be able to maintain any future profitability.
Added
In furtherance thereof, the Company and its subsidiary, SmartKem Ltd, a corporation organized under English law (the "Assignor"), entered into an Intellectual Property Assignment Agreement (the "IP Assignment Agreement") with SmartKem IP LLC (the "Assignee"), pursuant to which the Assignor irrevocably conveyed, transferred, and assigned to the Assignee certain of the Assignor's right, title, and interest in and to certain patents, patent applications, and related intellectual property rights, together with all royalties, fees, income, and proceeds related thereto, and all claims and causes of action with respect thereto.
Removed
To date, MicroLED technology has not achieved widespread adoption because of the complexity and high cost of manufacturing MicroLED displays using existing materials, device architecture and processes.
Added
The Company also agreed to maintain the employment of a designated patent liaison for a period of six (6) months following the effective date of the Settlement Agreements to provide the Holders with information, assistance, and support relating to the Assigned IP. ​ There can be no assurance that an issued patent will remain valid and enforceable in a court of law through the entire patent term.
Removed
Given the high cost of manufacturing (resulting in approximately $100,000 sales price for a large high-definition display screen), it is unlikely that MicroLED technology will be adopted for use in consumer products unless significant efficiencies and fundamental process changes in the manufacturing of MicroLED displays occur.
Added
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 and corrected on a timely basis.
Removed
For example, in 2024 Apple Inc. abandoned a project to manufacture its own MicroLED displays for its Apple Watch products.
Added
Although the financial statements contained in this Annual Report on Form 10-K reflect the appropriate accounting for the relevant period and no prior financial statements were impacted, we cannot assure you that we will be able to remediate this material weakness in a timely manner, or at all, or that additional material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future.
Removed
While we believe our technology, including its use in chip-first architectures, has the potential to make manufacturing of MicroLED displays more efficient and cheaper, our technology has not been utilized commercially and there can be no assurance that our technology will reduce the cost and improve the efficiency of manufacturing MicroLEDs to the point where display manufacturers can profitably price MicroLED displays for mass market consumption.
Added
Due to fiscal constraints during the year ended December 31, 2025, we were not able to fund an independent assessment of our internal control environment; however, with the financing activities described in Note 15 to our consolidated financial statements, we intend to reinstitute the independent evaluation of our internal control environment.
Removed
In addition, even if our technology achieves its goals, there may be technical delays in implementing our technology that could affect the willingness of display manufacturers to manufacture MicroLEDs at commercial scale or could affect the timing and extent of such manufacturing. ​ It is also possible that, despite the advantages of MicroLED displays, other technologies that, while not having all of benefits of MicroLEDs, are less expensive or easier to manufacture, will emerge and be adopted by display manufacturers for similar applications. ​ If the market for MicroLED technology does not develop as we expect or develops more slowly than we expect, our business, prospects, financial condition and operating results will be harmed. ​ We participate in highly competitive markets characterized by rapid technological changes, and existing and new companies may introduce products that compete with ours, which may adversely affect our business and operating results .
Added
If we fail to remediate this material weakness or if we identify additional material weaknesses or significant deficiencies in our internal controls, we may be unable to accurately report our financial results or report them within the timeframes required by law or applicable stock exchange regulations, which could adversely affect investor confidence in the accuracy and completeness of our financial reports and cause the price of our common stock to decline.
Removed
The loss of access to a third-party facility, or our inability to enter into agreements with third-party fabricators could have a material adverse effect on our business development . ​ We do not have our own prototyping or fabrication facilities, and we rely on CPI for access to its facility for fabrication of prototypes and demonstration products.
Added
In addition, failure to maintain effective internal control over financial reporting could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities or to stockholder litigation, any of which could require additional financial and management resources and have a material adverse effect on our business, financial condition, and results of operations. ​ As of the end of the year covered by this Report, we were unable to carry out an independent evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) pursuant to Rule 13a-15 of the Exchange Act.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe seek to further mitigate 40 Table of Contents cybersecurity risks through a combination of monitoring and detection activities, use of anti-malware applications, employee training, quality audits and communication and reporting structures, among other processes.
Biggest changeWe seek to further mitigate cybersecurity risks through a combination of monitoring and detection activities, use of anti-malware applications, employee training, quality audits and communication and reporting structures, among other processes.
Our third-party consultant team is managed by our Chief Financial Officer who reports to the Audit Committee at the board level, as appropriate. ​ As of December 31, 2024, we have not identified an indication of a cybersecurity incident that would have a material impact on our business and consolidated financial statements. ​
Our third-party consultant team is managed by our Chief Financial Officer who reports to the Audit Committee at the board level, as appropriate. ​ As of December 31, 2025, we have not identified an indication of a cybersecurity incident that would have a material impact on our business and consolidated financial statements. ​

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−7 removed0 unchanged
Biggest changeWe also have a leased office in Hsinchu City Taiwan where we lease approximately 1,000 square feet of office space pursuant to a lease which expires in July 2025. We use the CPI facility in Sedgefield, England for virtually all of our fabrication activities.
Biggest changeWe also have a leased office in Hsinchu City Taiwan where we lease approximately 1,000 square feet of office space pursuant to a lease which expires in July 2028. 30 Table of Contents ​
Item 2. Properties ​ Our headquarters are located in Manchester, England, where we lease approximately 10,000 square feet of commercial space for research and development, engineering, testing and corporate offices pursuant to a lease that expires in April 2025.
Item 2. Properties ​ Our headquarters are located in Manchester, England, where we lease approximately 10,000 square feet of commercial space for research and development, engineering, testing and corporate offices pursuant to a lease that expires in April 2028.
Removed
In addition, we lease office space at CPI pursuant to a license of office space which expires on March 31, 2026 and two offices at NetPark, Sedgefield pursuant to leases which expire in January and August 2027.
Removed
CPIIS is in the process of reviewing the operation of the clean room facility used by Smartkem and is seeking to reduce the facility’s operating costs by, among other things, consolidating its clean rooms and seeking to pass more of its operating costs to users including us.
Removed
On March 28, 2025, we entered into an agreement with CPIIS pursuant to which the term of the current CPIIS agreement was extended until May 31, 2025. We intend to use the extension period to complete negotiations with CPIIS regarding a longer-term agreement.
Removed
Under the terms of the extension, we have agreed to an increase in our share of the costs of the CPI facility and to increased minimum usage obligations during the extension period. We expect that any longer-term agreement with CPIIS will require us to bear additional costs.
Removed
If we are unable to reach a new agreement with CPIIS on terms that are satisfactory to us, we intend to find an alternative facility. We believe that there are adequate alternative sites available at which we could conduct our prototyping operations.
Removed
In the event that we decide to move our prototyping operation to an alternative facility, we believe that the move would take between two and nine months, depending on equipment availability and any required facility modifications, during which time we would incur additional costs to prepare the new facility and install any necessary equipment.
Removed
In such event, we intend to schedule our prototyping activities to minimize any disruption to those operations and would use ITRI’s prototyping line as an interim facility for such work. ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safety Disclosures Not Applicable. ​ 41 Table of Contents ​ PART II ​
Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safety Disclosure Not Applicable. ​ 31 Table of Contents ​ PART II ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMarket For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity Securities ​ Market Information ​ Our common stock has been trading on the Nasdaq Stock Market LLC under the symbol “SMTK” since May 31, 2024. ​ Holders of Record As of March 26, 2025, there were 3,620,217 shares of our common stock outstanding which were held by 215 stockholders of record as reported by our transfer agent.
Biggest changeMarket For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity Securities ​ Market Information ​ Our common stock has been trading on the Nasdaq Stock Market LLC under the symbol “SMTK” since May 31, 2024. ​ Holders of Record As of April 1, 2026, there were 21,202,911 shares of our common stock outstanding which were held by 241 stockholders of record as reported by our transfer agent.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

22 edited+6 added−10 removed29 unchanged
Biggest changeRevenues were $82.0 thousand for the year ended December 31, 2024, compared to $27.0 thousand for the same period of 2023. The increase in revenues resulted primarily from an increase in the sale of demonstrator products to potential partners, as we sought to expand our marketing efforts.
Biggest changeThe increase in revenues resulted primarily from an increase of $107 thousand in the sale of demonstrator products to potential partners, as we sought to expand our marketing efforts and $508 thousand related to several joint development agreements that were completed in 2025.
Additional expected cash payments beyond the next twelve months include $25 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.
Additional expected cash payments beyond the next twelve months include $312 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.
We expect to fund these commitments from our cash balances and working capital. 46 Table of Contents ​ Recently Issued Accounting Pronouncements For recently issued accounting announcements, see “Recently Issued Accounting Pronouncements” in Note 2, “Significant Accounting Policies and Recent Accounting Pronouncements” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
We expect to fund these commitments from our cash balances and working capital. ​ Recently Issued Accounting Pronouncements For recently issued accounting announcements, see “Recently Issued Accounting Pronouncements” in Note 2, “Significant Accounting Policies and Recent Accounting Pronouncements” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
Income tax expense consists primarily of income taxes in jurisdictions in which we conduct business. 44 Table of Contents Results of Operations ​ Twelve months ended December 31, 2024 compared with the twelve months ended December 31, 2023 Revenue and Cost of Revenue ​ Our revenue and cost of revenue reflects sales of TRUFLEX® inks and demonstration products, and the direct costs associated with those sales.
Income Tax Expense/Refund Income tax expense/refund consists primarily of income taxes in jurisdictions in which we conduct business. 34 Table of Contents Results of Operations ​ Twelve months ended December 31, 2025 compared with the twelve months ended December 31, 2024 Revenue and Cost of Revenue ​ Our revenue and cost of revenue reflects sales of TRUFLEX® inks and demonstration products, and the direct costs associated with those sales.
The increase in loss on foreign currency transactions resulted from fluctuations in U.S. dollar/British pound value affecting transactions denominated in foreign currencies and the translation of foreign currency denominated balances on intra-group loans. There was an increase of $0.2 million in non-operating income resulting from the change in the valuation of the warrant liability.
The increase in loss on foreign currency transactions resulted from fluctuations in U.S. dollar/British pound value affecting transactions denominated in foreign currencies and the translation of foreign currency denominated balances on intra-group loans. There was a decrease of $0.7 million in non-operating income resulting from the change in the valuation of the warrant liability.
General and administrative expense, which represented 55.0% and 47.9% of our total operating expenses for the twelve months ended December 31, 2024 and 2023, respectively, increased by $1.1 million to $6.3 million for year ended December 31, 2024 as compared to $5.2 million for the same period in 2023. This increase was mainly due to increased professional service fees.
General and administrative expense, which represented 51.9% and 55.0% of our total operating expenses for the twelve months ended December 31, 2025 and 2024, respectively, increased by $1.1 million to $7.4 million for year ended December 31, 2025 as compared to $6.3 million for the same period in 2024. This increase was mainly due to increased professional service fees.
The increase in net loss in the 2024 period was attributable to the factors described in the preceding paragraphs. 45 Table of Contents Liquidity and Capital Resources As of December 31, 2024, our cash and cash equivalents were $7.1 million compared with $8.8 million as of December 31, 2023.
The increase in net loss in the 2025 period was attributable to the factors described in the preceding paragraphs. 35 Table of Contents Liquidity and Capital Resources As of December 31, 2025, our cash and cash equivalents were $0.4 million compared with $7.1 million as of December 31, 2024.
We expect that our cash and cash equivalents of $7.1 million as of December 31, 2024 will not be sufficient to fund our operating expenses and capital expenditure requirements for the next 12 months and that we will require additional capital funding to continue our operations and research development activity thereafter. ​ Our expected cash payments over the next twelve months include (a) $1.8 million to satisfy accounts payable and accrued expenses and (b) $47 thousand to satisfy the lease liabilities.
We expect that our cash and cash equivalents of $0.4 million as of December 31, 2025 will not be sufficient to fund our operating expenses and capital expenditure requirements for the next 12 months and that we will require additional capital funding to continue our operations and research development activity thereafter. ​ Our expected cash payments over the next twelve months include (a) $2.6 million to satisfy accounts payable and accrued expenses, (b) $271 thousand to satisfy the lease liabilities and (c) $1.1 million to satisfy the note payable.
Cash Flow from Investing Activities Net cash used in investing activities was $75.4 thousand for the year ended December 31, 2024, compared to $18.0 thousand for the year ended December 31, 2023, an increase of $57.4 thousand. The increase resulted from additional purchases of laboratory and capital equipment in 2024.
Cash Flow from Investing Activities Net cash used in investing activities was $123 thousand for the year ended December 31, 2025, compared to $75 thousand for the year ended December 31, 2024, an increase of $48 thousand. The increase resulted from additional purchases of laboratory and capital equipment in 2025.
Non-Operating Income/(Expenses) ​ Total non-operating income/(expense) was $0.1 million for the year ended December 31, 2024, compared to $1.5 million for the year ended December 31, 2023. The decrease in non-operating income resulted primarily from a loss on foreign currency transactions of $0.5 million in 2024, compared to a gain of $1.2 million for the comparable period of 2023.
Non-Operating Income/(Expenses) ​ Total non-operating income was $2.3 million for the year ended December 31, 2025, compared to $0.1 thousand for the year ended December 31, 2024. The increase in non-operating income resulted primarily from a gain on foreign currency transactions of $2.4 million in 2025, compared to a loss of $0.1 thousand for the comparable period of 2024.
Foreign currency translation reflects adjustments made due to currency fluctuations. Transaction Costs. Costs for equity contracts that are classified as a liability. Fair Value of Warrant Liability. The fair value of equity contracts that are classified as a liability. Interest Income. Interest income is interest on our cash deposits. Income Tax Expense.
Foreign currency translation reflects adjustments made due to currency fluctuations. Fair Value of Warrant Liability. The fair value of equity contracts that are classified as a liability. Interest Income. Interest income is interest on our cash deposits. Interest Expense . Interest Expense is related to our short term note payables.
Net Loss Net loss was $10.3 million for the year ended December 31, 2024, an increase of $1.8 million, compared to a net loss of $8.5 million for the year ended December 31, 2023.
Net Loss Net loss was $10.5 million for the year ended December 31, 2025, an increase of $0.2 million, compared to a net loss of $10.3 million for the year ended December 31, 2024.
Research and development expenses, which represented 44.3% and 51.3% of our total operating expenses for the twelve months ended December 31, 2024 and 2023, respectively, decreased by $0.5 million to $5.1 million for the year ended December 31, 2024, compared to $5.6 million for the same period of 2023.
Research and development expenses, which represented 49.4% and 44.3% of our total operating expenses for the twelve months ended December 31, 2025 and 2024, respectively, increased by $1.9 million to $7.0 million for the year ended December 31, 2025, compared to $5.1 million for the same period of 2024.
Although there are items within our financial statements that require management to make accounting estimates, we do not believe them to be critical, as defined above. JOBS Act Accounting Election We are an emerging growth company, as defined in the JOBS Act.
Although there are items within our financial statements that require management to make accounting estimates, we do not believe them to be critical, as defined above. ​
While we believe we have a strong patent portfolio and there is no actual or, to our knowledge, threatened litigation against us for patent-related matters, litigation or threatened litigation is a common method to effectively enforce or protect intellectual property rights.
While we believe we have a strong patent portfolio and there is no actual or, to our knowledge, threatened litigation against us for patent-related matters, litigation or threatened litigation is a common method to effectively enforce or protect intellectual property rights. Such action may be initiated by or against us and would require significant management time and expenses.
Cost of revenue was $32.0 thousand for the twelve months ended December 31, 2024, compared to $23.0 thousand for the same period of 2023, primarily as a result of a unit increase in the number of products sold during 2024.
Cost of revenue was $272 thousand for the twelve months ended December 31, 2025, compared to $32 thousand for the same period of 2024, primarily as a result of a unit increase in the number of products sold during 2025 and costs associated with the completed joint development agreements during 2025.
Cash Flow from Financing Activities Net cash flows provided by financing activities was $6.5 million for the year ended December 31, 2024, compared to $12.7 million for the year ended December 31, 2023, a decrease of $6.2 million. The decrease in net cash provided by financing activities resulted primarily from lower proceeds from offering activities in 2024 compared to 2023.
Cash Flow from Financing Activities Net cash flows provided by financing activities was $1.0 million for the year ended December 31, 2025, compared to $6.5 million for the year ended December 31, 2024, a decrease of $5.5 million.
Cash Flow from Operating Activities Net cash used in operating activities was $8.1 million for the year ended December 31, 2024 and $8.0 million for the year ended December 31, 2023. While our net loss increased by $1.8 million for the year ended December 31, 2024, the non-cash expenses decreased by $1.8 million.
Cash Flow from Operating Activities Net cash used in operating activities was $7.7 million for the year ended December 31, 2025 and $8.1 million for the year ended December 31, 2024.
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 & development facilities and services, communications infrastructure, and administrative services.
The decrease in net cash provided by financing activities resulted primarily from lower proceeds from offering activities in 2025 compared to 2024. 36 Table of Contents 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 & development facilities and services, communications infrastructure, and administrative services.
Other Operating Income ​ Other operating income was $1.0 million and $0.8 million for the years ended December 31, 2024 and 2023, respectively, and is comprised primarily of research grants and research and development tax credits.
Other Operating Income ​ Other operating income was $1.0 million for both years ended December 31, 2025 and 2024 and is comprised primarily of research grants and research and development tax credits. ​ Operating Expenses ​ Operating expenses increased by $2.7 million to $14.2 million for the year ended December 31, 2025, compared to $11.5 million for the comparable period of 2024.
Risk Factors” in this Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statement. ​ Overview ​ We are seeking to change the world of electronics with a new class of transistor developed using our proprietary advanced semiconductor materials that we believe has the potential to revolutionize the display industry.
Risk Factors” in this Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statement. ​ Overview ​ We develop and manufacture custom electronic materials designed to enable the next generation of electronics.
Such action may be initiated by or against us and would require significant management time and expenses. 43 Table of Contents Components of Results of Operations Revenue Revenue. Our revenue consists of revenue from the sale of TRUFLEX® inks and demonstration products. Cost of Revenues.
Components of Results of Operations Revenue Revenue. Our revenue consists of revenue from the sale of TRUFLEX® inks and demonstration products and revenue earned from various joint development agreements. 33 Table of Contents Cost of Revenues.
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Our TRUFLEX® semiconductor polymers enable low temperature printing processes that are compatible with existing manufacturing infrastructure to deliver low-cost, high-performance displays.
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Our advanced TRUFLEX® materials integrate into existing manufacturing processes, supporting efficient, scalable production and high-performance outcomes across a broad range of electronic applications.
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Our semiconductor platform can be used in a range of display technologies including MicroLED, miniLED and AMOLED, as well as in applications in advanced chip packaging, sensors, and logic. 42 Table of Contents We design and develop our materials at our research and development facility in Manchester, UK and provide prototyping services at the Centre for Process Innovation (“CPI”) in Sedgefield, UK.
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We combine materials science expertise with practical engineering to deliver tailored solutions for partners seeking to innovate in electronics. ​ 32 Table of Contents We design and develop our materials at our research and development facility in Manchester, UK and operate a field application office in Hsinchu, Taiwan.
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We also operate a field application office in Hsinchu, Taiwan, close to our collaboration partner, The Industrial Technology Research Institute of Taiwan (“ITRI”), where we demonstrate the scalability of our technology using ITRI’s equipment.
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We operate with an international footprint, providing materials development, prototyping and technical support to customers and collaborators globally.
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With our collaboration partners, we are developing a commercial-scale production process and EDA tools for our materials to demonstrate the commercial viability of manufacturing a new generation of displays using our materials. We have an extensive IP portfolio including 138 granted patents across 17 patent families, 17 pending patents and 40 codified trade secrets.
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Revenues were $697 thousand for the year ended December 31, 2025, compared to $82 thousand for the same period of 2024.
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The increase in other operating income during 2024 was largely attributable to additional grant revenue recognized in 2024. ​ Operating Expenses ​ Operating expenses increased by $0.7 million to $11.5 million for the year ended December 31, 2024, compared to $10.8 million for the comparable period of 2023.
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The increase in research and development expenses was mainly due to the increase in the cost of our prototyping activities.
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The decrease in research and development expenses was mainly due to lower personnel costs resulting from a reduction in force effected in September 2023, as well as lower technical research and development costs, including consulting, testing and lab supplies.
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Our net loss increased by $0.2 million for the year ended December 31, 2025, the non-cash expenses decreased by $1.4 million and the change in operating asset and liabilities increased by $1.9 million.
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We expect that our research and development expense will increase in 2025 as a result of an expected increase in the cost of our prototyping activities. See “Item 1. Business – CPI Agreement” for additional information.
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The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to either early adopt or delay the adoption of some accounting standards until those standards would otherwise apply to private companies.
Removed
We have elected to use the extended transition period under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.
Removed
As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. ​

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. ​ We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act; therefore, pursuant to Item 301(c) of Regulation S-K, we are not required to provide the information required by this Item. ​ ​ ​ 47 Table of Contents
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. ​ We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act; therefore, pursuant to Item 301(c) of Regulation S-K, we are not required to provide the information required by this Item. ​ ​ ​ 37 Table of Contents

Other SMTK 10-K year-over-year comparisons