SmartKem, Inc._March 31, 2025

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-42115

SmartKem, Inc.

(Exact name of registrant as specified in its charter)

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

Manchester Technology Centre, Hexagon Tower.

Delaunays Road, Blackley

Manchester, M9 8GQ U.K.

(Address of Principal Executive Offices)

011-44-161-721-1514

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, par value $0.0001 per share	SMTK	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 12, 2025, there were 4,431,165 of the registrant’s shares of common stock outstanding.

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TABLE OF CONTENTS


		Page

Part I	Financial Information	3

Item 1.	Financial Statements	3
	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024	3
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2025 and 2024	4
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2025 and 2024	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024	6
	Notes to the Unaudited Interim Condensed Consolidated Financial Statements	7-18

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	23

Part II	Other Information	24

Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	24

Exhibit Index		25
Signatures		26

Table of Contents

Item 1. Financial Statements

SMARTKEM, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except number of shares and per share data)



	March 31,		December 31,
	2025		2024
Assets
Current assets
Cash and cash equivalents	$	3,881	$	7,141
Research and development tax credit receivable		664		519
Prepaid expenses and other current assets		1,091		849
Total current assets		5,636		8,509
Property, plant and equipment, net		220		269
Right-of-use assets, net		54		120
Other assets, non-current		—		6
Total assets	$	5,910	$	8,904

Liabilities and stockholders’ equity
Current liabilities
Accounts payable and accrued expenses	$	1,439	$	1,791
Lease liabilities, current		24		47
Other current liabilities		639		450
Total current liabilities		2,102		2,288
Lease liabilities, non-current		21		25
Total liabilities		2,123		2,313

Commitments and contingencies (Note 7)		—		—

Stockholders’ equity:
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, 856 shares issued and outstanding, at March 31, 2025 and December 31, 2024, respectively		—		—
Common stock, par value $0.0001 per share, 300,000,000 shares authorized, 3,620,217 and 3,590,217 shares issued and outstanding, at March 31, 2025 and December 31, 2024, respectively		—		—
Additional paid-in capital		122,651		122,316
Accumulated other comprehensive loss		(2,110)		(1,105)
Accumulated deficit		(116,754)		(114,620)
Total stockholders' equity		3,787		6,591
Total liabilities and stockholders’ equity	$	5,910	$	8,904

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

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SMARTKEM, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except number of shares and per share data)


	Three Months Ended March 31,
	2025		2024
Revenue	$	23	$	—
Cost of revenue		1		—
Gross profit		22		—

Other operating income		251		202

Operating expenses
Research and development		1,497		1,276
General and administrative		2,009		1,362
(Gain)/loss on foreign currency transactions		(95)		13
Total operating expenses		3,411		2,651

Loss from operations		(3,138)		(2,449)

Non-operating income/(expense)
Gain/(loss) on foreign currency transactions		969		(6)
Change in fair value of the warrant liability		—		753
Interest income/(expense)		10		6
Total non-operating income/(expense)		979		753

Loss before income taxes		(2,159)		(1,696)
Income tax refund		25		—
Net loss	$	(2,134)	$	(1,696)
Preferred stock deemed dividends		—		(7,094)
Net loss attributed to common stockholders	$	(2,134)	$	(8,790)

Weighted average shares outstanding - basic and diluted		6,649,603		2,735,375

Basic and diluted net loss per common share attributed to common stockholders	$	(0.32)	$	(3.21)

Net loss	$	(2,134)	$	(1,696)
Other comprehensive loss:
Foreign currency translation		(1,005)		(18)
Total comprehensive loss	$	(3,139)	$	(1,714)

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

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SMARTKEM, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share data)


	Preferred Stock			Common stock			Additional		Accumulated other				Total
	$0.0001 par value			$0.0001 par value			paid-in		comprehensive		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		capital		income / (loss)		deficit		equity
Balance at January 1, 2025	856	$	—	3,590,217	$	—	$	122,316	$	(1,105)	$	(114,620)	$	6,591
Stock-based compensation expense	—		—	—		—		250		—		—		250
Issuance of common stock to vendor	—		—	30,000		—		85		—		—		85
Foreign currency translation adjustment	—		—	—		—		—		(1,005)		—		(1,005)
Net loss	—		—	—		—		—