Smartkem Announces Significant Reduction in Accounts Payable Through Debt Conversion Agreement

Rhea-AI Summary

Smartkem (Nasdaq: SMTK) announced a debt conversion agreement on Feb 6, 2026 that satisfied approximately $2.0 million of accounts payable by issuing common stock and pre-funded warrants at an implied conversion price of $2.75 per share.

The securities were issued in a private transaction exempt from registration under Section 4(a)(2) of the Securities Act, the obligations were fully discharged, no cash was paid, and the company said the deal should materially reduce ongoing cash requirements and strengthen the balance sheet.

Positive

• Accounts payable reduction of $2.0M through equity issuance
• No cash outflow required to satisfy the converted obligations
• Expected meaningful reduction in ongoing cash requirements

Negative

• Issuance of common stock and pre-funded warrants at $2.75 may dilute existing shareholders
• Securities issued in a private exempt transaction, limiting liquidity and resale until registration or exemption

News Market Reaction

-21.37% 101.8x vol

49 alerts

-21.37% News Effect

+49.6% Peak Tracked

-33.3% Trough Tracked

-$1M Valuation Impact

$4M Market Cap

101.8x Rel. Volume

On the day this news was published, SMTK declined 21.37%, reflecting a significant negative market reaction. Argus tracked a peak move of +49.6% during that session. Argus tracked a trough of -33.3% from its starting point during tracking. Our momentum scanner triggered 49 alerts that day, indicating elevated trading interest and price volatility. This price movement removed approximately $1M from the company's valuation, bringing the market cap to $4M at that time. Trading volume was exceptionally heavy at 101.8x the daily average, suggesting significant selling pressure.

Data tracked by StockTitan Argus on the day of publication.

Key Figures

Debt converted: $2.0 million Implied conversion price: $2.75 per share Net loss (quarter): $3.9 million +5 more

8 metrics

Debt converted $2.0 million Outstanding obligations converted to equity securities in Feb 06, 2026 agreement

Implied conversion price $2.75 per share Price used to convert payables into stock and pre-funded warrants

Net loss (quarter) $3.9 million Quarter ended Sep 30, 2025 per Form 10-Q

Net loss (YTD) $8.5 million Year-to-date through Sep 30, 2025 per Form 10-Q

Cash balance $0.9 million Cash and cash equivalents as of Sep 30, 2025 per Form 10-Q

Accounts payable & accrued $4.9 million Accounts payable and accrued expenses as of Sep 30, 2025

Senior secured notes $1,100,000 Principal amount issued Nov 2025 per 8-K

Bridge financing raised $1.0 million Bridge financing subsequent to Sep 30, 2025 quarter-end

Market Reality Check

Price: $0.3963 Vol: Volume 207,435 vs 20-day ...

low vol

$0.3963 Last Close

Volume Volume 207,435 vs 20-day average 300,813 (relative volume 0.69x). low

Technical Trading below 200-day MA, with price 0.504 vs MA(200) at 1.41.

Peers on Argus

SMTK was up 5% pre-news while peers were mixed: AXTI up 15.64%, ASYS up 3.16% bu...

1 Up 1 Down

SMTK was up 5% pre-news while peers were mixed: AXTI up 15.64%, ASYS up 3.16% but also seen down 28.29% in momentum data, ATOM down 7.2%, TRT slightly down. With peers moving in both directions and sector scanner showing one up and one down name, the move appears stock-specific.

Historical Context

5 past events · Latest: Feb 03 (Positive)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Feb 03	Strategic partnership	Positive	-16.8%	State-level support for proposed nuclear-grade graphite facility with Carbonium Core.
Feb 02	Acquisition LOI	Positive	-13.2%	Non-binding LOI to acquire Carbonium Core using $120M in preferred stock.
Jan 06	Commercial agreement	Positive	+6.6%	12‑month paid proof-of-concept deal for MicroLED wearables with electronics leader.
Dec 10	Tech milestone	Positive	+10.1%	Announcement of world-first all-organic-transistor biometric sensor with academic partner.
Dec 01	Conference presentation	Positive	+5.6%	Presentation of MiP4 MicroLED backlight technology at IDW Japan 2025.

Pattern Detected

Recent product and technology updates tended to see positive price reactions, while the larger strategic transactions with Carbonium Core coincided with notable price declines.

Recent Company History

Over the past few months, Smartkem announced technology and commercial milestones alongside major strategic initiatives. MicroLED and biometrics updates in Dec 2025 and the MicroLED proof-of-concept agreement on Jan 6, 2026 each saw positive single‑digit price gains. By contrast, the Feb 2–3, 2026 Carbonium Core LOI and state‑level support news coincided with double‑digit declines, suggesting investor concern around those transactions. Today’s accounts payable conversion continues the focus on addressing the strained balance sheet previously highlighted in the Nov 13, 2025 10‑Q.

Market Pulse Summary

The stock dropped -21.4% in the session following this news. A negative reaction despite the liabili...

Analysis

The stock dropped -21.4% in the session following this news. A negative reaction despite the liability reduction would fit a pattern where financing and strategic actions draw scrutiny. While the conversion wipes out roughly $2.0 million of accounts payable with no cash paid, it adds equity and pre-funded warrants at $2.75 per share, on top of recent financings and going-concern warnings. Shareholders may focus on dilution and execution risk rather than the immediate balance-sheet improvement.

Key Terms

pre-funded warrants, accounts payable, Section 4(a)(2)

3 terms

pre-funded warrants financial

"converted into a combination of shares of the Company’s common stock and pre-funded warrants"

Pre-funded warrants are financial instruments that give investors the right to purchase a company's stock at a set price, but with most or all of the purchase price paid upfront. They function like a coupon or gift card for stock, allowing investors to buy shares later at a fixed price, which can be beneficial if they want to avoid future price increases. This makes them important for investors seeking flexibility and certainty in their investment plans.

accounts payable financial

"certain outstanding accounts payable of Smartkem were satisfied in full"

Accounts payable are the short-term bills a company owes to suppliers or service providers for goods and services it has already received but not yet paid for — like a stack of IOUs from the business to its vendors. Investors watch accounts payable because rising or falling balances affect a company’s cash on hand and short-term financial health, signaling how well it can cover obligations, manage cash flow, and fund operations without borrowing.

Section 4(a)(2) regulatory

"exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(a)(2)"

Section 4(a)(2) is a part of U.S. securities laws that allows companies to sell their stock directly to certain investors without registering the sale with regulators. This process is often used for private placements, making it easier and faster for companies to raise money from knowledgeable or institutional investors. It matters to investors because it provides an alternative way to buy shares, often with fewer disclosures and lower costs.

AI-generated analysis. Not financial advice.

MANCHESTER, United Kingdom, Feb. 06, 2026 (GLOBE NEWSWIRE) -- Smartkem, Inc. (Nasdaq: SMTK), (“Smartkem” or the “Company”), a leader in advanced materials, today announced that it has entered into a debt conversion agreement, pursuant to which certain outstanding accounts payable of Smartkem were satisfied in full through the issuance of equity securities of the Company.

Under the terms of the agreement, approximately $2.0 million of outstanding obligations owed were converted into a combination of shares of the Company’s common stock and pre-funded warrants at an implied conversion price of $2.75 per share. Upon issuance of the securities, the obligations were fully discharged.

The transaction resulted in a significant reduction of the Company’s accounts payable, with no cash consideration paid. The Company believes the transaction strengthens its balance sheet by removing this obligation and is expected to result in a meaningful reduction in ongoing cash requirements.

The securities were issued in a private transaction exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof. The securities have not been registered and may not be offered or sold absent registration or an applicable exemption.

About Smartkem
Smartkem is seeking to change the world of electronics with a new class of transistors developed using its proprietary advanced semiconductor materials. Our TRUFLEX® semiconductor polymers enable low temperature printing processes that are compatible with existing manufacturing infrastructure to deliver low-cost, high-performance electronics. Our semiconductor platform can be used in a range of technologies including MicroLED, LCD and AMOLED, as well as in applications in advanced computer and AI chip packaging, sensors, and logic.   
  
Smartkem designs and develops its materials at its research and development facility in Manchester, UK and operates a field application office in Hsinchu, Taiwan, close to collaboration partner, The Industrial Technology Research Institute (ITRI), where it provides prototyping services. Smartkem is developing a commercial-scale production process and Electronic Design Automation (EDA) tools to demonstrate the commercial viability of manufacturing a new generation of displays using its materials.   
  
The company has an extensive IP portfolio including 141 granted patents across 17 patent families, 15 pending patents and 40 codified trade secrets. 

For more information, visit the Smartkem website or follow on LinkedIn.  

Forward-Looking Statements
All statements in this press release that are not historical are forward-looking statements, including, among other things, the impact that the transaction will have on the Company’s balance sheet and its ongoing cash requirements, the potential dilutive effect of the issuance of the securities in connection with the debt conversion agreement, its market position and market opportunity, expectations and plans as to its product development, manufacturing and sales, and relations with its partners and investors. These statements are not historical facts but rather are based on Smartkem, Inc.'s current expectations, estimates, and projections regarding its business, operations and other similar or related factors. Words such as "may," "will," "could," "would," "should," "anticipate," "predict," "potential," "continue," "expect," "intend," "plan," "project," "believe," "estimate," and other similar or elated expressions are used to identify these forward-looking statements, although not all forward-looking statements contain these words. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict and, in some cases, beyond the Company's control. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update information in this release to reflect events or circumstances in the future, even if new information becomes available.  

Contacts
Selena Kirkwood
Head of Communications for Smartkem
s.kirkwood@smartkem.com

FAQ

What did Smartkem (SMTK) announce on Feb 6, 2026 about accounts payable?

They converted approximately $2.0 million of accounts payable into equity securities at an implied $2.75 per share price. According to the company, the conversion fully discharged the obligations and required no cash payment, reducing the company’s outstanding payables.

How will the Feb 6, 2026 debt conversion affect Smartkem's (SMTK) cash needs?

The company expects a meaningful reduction in ongoing cash requirements after conversion. According to Smartkem, removing the $2.0 million obligation lowers near-term cash outlays and strengthens the balance sheet.

What securities did Smartkem (SMTK) issue to settle the $2.0M on Feb 6, 2026?

Smartkem issued a combination of common stock and pre-funded warrants to satisfy the obligations. According to the company, the securities were issued in a private transaction exempt under Section 4(a)(2) of the Securities Act.

Does the Feb 6, 2026 transaction dilute current Smartkem (SMTK) shareholders?

Yes, issuing common stock and pre-funded warrants will dilute existing shareholders to some degree. According to Smartkem, the conversion price was $2.75 per share, which creates additional outstanding equity securities.

Are the securities issued by Smartkem (SMTK) on Feb 6, 2026 freely tradable?

No, the securities were issued in a private exempt transaction and are not registered for public resale. According to Smartkem, they may not be offered or sold absent registration or an applicable exemption.