Smartkem Announces Significant Reduction in Accounts Payable Through Debt Conversion Agreement

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.

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

Argus Feb 6 session

-21.37% close to close 112.1x rel. volume Open Argus

Details

News Market Reaction – SMTK

On Feb 6, the day this news came out, SMTK closed 21.37% below the previous close. That session’s volume was 112.1x the stock’s average daily volume.

Data tracked by StockTitan Argus for the Feb 6 session.

Key Figures

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

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

Historical Context

5 past events · Latest: Feb 03

5 events

1. Feb 03

   Strategic partnership

   24h Move

   -16.8%

   State-level support for proposed nuclear-grade graphite facility with Carbonium Core.

2. Feb 02

   Acquisition LOI

   24h Move

   -13.2%

   Non-binding LOI to acquire Carbonium Core using $120M in preferred stock.

3. Jan 06

   Commercial agreement

   24h Move

   +6.6%

   12‑month paid proof-of-concept deal for MicroLED wearables with electronics leader.

4. Dec 10

   Tech milestone

   24h Move

   +10.1%

   Announcement of world-first all-organic-transistor biometric sensor with academic partner.

5. Dec 01

   Conference presentation

   24h Move

   +5.6%

   Presentation of MiP4 MicroLED backlight technology at IDW Japan 2025.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

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. How Rhea-AI works. Not financial advice.

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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

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

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.