MANCHESTER, England - Smartkem, Inc. (NASDAQ:SMTK), a company specializing in organic thin-film transistors (OTFTs), has priced a mixed offering of common stock and warrants totaling $7.65 million to various investors - a significant amount considering the company's current market capitalization of just $4.43 million. According to InvestingPro data, the company's stock has experienced substantial volatility, declining over 38% in the past week alone. The company disclosed this development in a recent press release, with the offerings comprising both public and private components.
The public offering includes 1,449,997 registered shares of common stock and an equal number of unregistered Class D warrants, each priced at $3.00. Each share purchase comes with a corresponding Class D warrant. Additionally, in a private placement, Smartkem is selling 169,784 unregistered shares of common stock and pre-funded warrants to purchase up to 930,215 shares, plus Class D warrants to purchase up to 1,099,999 shares. These private placement securities are also priced at $3.00 per share and related Class D warrant, with pre-funded warrants slightly less at $2.9999. InvestingPro analysis shows the company maintains a positive current ratio of 1.88, indicating sufficient liquid assets to meet short-term obligations.
The Class D warrants will be immediately exercisable at an exercise price of $3.00 per share and will expire on December 31, 2025. Pre-funded warrants are exercisable at $0.0001 per share and can be exercised at any time until fully utilized.
Before accounting for placement agent fees and other expenses, the gross proceeds from these offerings are expected to be $7.65 million. This capital raise comes at a crucial time, as InvestingPro data reveals the company is quickly burning through cash with negative free cash flow of $9.51 million in the last twelve months. Smartkem plans to use the net proceeds for working capital and general corporate purposes. InvestingPro subscribers have access to 15 additional key insights about SMTK's financial health and market performance.
Craig-Hallum Capital Group LLC is serving as the exclusive placement agent for these transactions. The offerings are anticipated to close on December 20, 2024, subject to customary closing conditions.
In accordance with the offerings, Smartkem has committed to a registration rights agreement to register the shares of common stock issuable upon the exercise of the Class D and pre-funded warrants for resale, with a deadline no later than April 25, 2025, or 10 days after the filing of the company's annual report.
The sale of registered shares is being conducted under Smartkem's existing shelf registration statement, which was declared effective by the Securities and Exchange Commission (SEC) on August 22, 2024.
This announcement is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
In other recent news, SmartKem, Inc. has made significant strides in restructuring its capital ahead of a potential equity offering. In preparation, the semiconductor manufacturer has modified its previous agreements with security holders and announced the delay in dividend accrual on its Series A-1 Convertible Preferred Stock. The company has also settled with the Hewlett Fund LP, releasing claims against the company in exchange for Class C Warrants.
SmartKem's recent developments include a partnership with AU Optronics Corp. to develop rollable, transparent microLED displays. This venture is part of the Taiwan-UK Research & Development Collaboration, aiming to make microLED displays more accessible for mass production.
However, the company has been notified by Nasdaq of potential delisting due to an equity shortfall, falling below Nasdaq's $2.5 million requirement. SmartKem is given a 45-day period to present a plan to regain compliance.
At the 2024 annual shareholders meeting, the company elected Ian Jenks and Melisa Denis for three-year terms and ratified Marcum LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2024. SmartKem has also entered into a joint development agreement with Shanghai Chip Foundation Semiconductor Technology Co., Ltd. Lastly, SmartKem has awarded one-time special bonuses and stock options to its key executives.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.