Filed Pursuant to Rule 424(b)(3)
Registration No. 333-281608
PROSPECTUS
SmartKem, Inc.
$100,000,000
Common Stock
Preferred Stock
Warrants
Debt Securities
Subscription Rights
Units
We may offer, issue and sell from time to time
together or separately, in one or more offerings, any combination of (i) our common stock, (ii) our preferred stock, which we may issue
in one or more series, (iii) warrants, (iv) senior or subordinated debt securities, (v) subscription rights and (vi) units. The debt securities
may consist of debentures, notes, or other types of debt. The debt securities, preferred stock, warrants and subscription rights may be
convertible into, or exercisable or exchangeable for, common or preferred stock or other securities of ours. The units may consist of
any combination of the securities listed above.
The aggregate public offering price of the securities
that we are offering will not exceed $100,000,000. We will offer the securities in an amount and on terms that market conditions will
determine at the time of the offering. Our common stock is listed on the Nasdaq Capital Market under the symbol “SMTK.” The
last reported sale price for our common stock on August 21, 2024 on the Nasdaq Capital Market was $5.24 per share. You are urged to obtain
current market quotations of our common stock. As of the date of this prospectus, we have no preferred stock, warrants, debt securities,
subscription rights or units listed or quoted on any securities exchange or other nationally recognized trading market. Each prospectus
supplement will indicate if the securities offered thereby will be listed or quoted on any securities exchange or another nationally recognized
trading market.
As of the date of this prospectus, the aggregate
market value of our outstanding common stock held by non-affiliates, or the public float, was $11,529,922.80, which was calculated based
on 1,720,884 shares of our outstanding common stock held by non-affiliates at a price of $6.70 per share, the closing price of our common
stock on August 2, 2024. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell securities pursuant to this prospectus
with a value of more than one-third of the aggregate market value of our common stock held by non-affiliates in any 12-month period, so
long as the aggregate market value of our common stock held by non-affiliates is less than $75,000,000. During the 12 calendar months
prior to, and including, the date of this prospectus, we have not sold any securities pursuant to General Instruction I.B.6 of Form S-3.
Investing
in our securities involves risk. You should carefully consider the risks that we refer you to under the section captioned “Risk
Factors” in this prospectus on page 4 and in other filings we make with the Securities and Exchange Commission before buying
our securities.
Should we offer any of the securities described
in this prospectus, we will provide you with the specific terms of the particular securities being offered in a supplement to this prospectus.
You should read this prospectus and any supplement, together with additional information described under the headings “Additional
Information” and “Incorporation of Certain Information by Reference” carefully before you invest. This prospectus may
not be used to sell securities unless accompanied by a prospectus supplement.
We may sell these securities directly to our stockholders
or to other purchasers or through agents on our behalf or through underwriters or dealers as designated from time to time. If any agents
or underwriters are involved in the sale of any of these securities, the applicable prospectus supplement will provide the names of the
agents or underwriters and any applicable fees, commissions or discounts.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The date of this prospectus is August 22,
2024.
TABLE OF CONTENTS
ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement
that we filed with the Securities and Exchange Commission (the “SEC”) using a “shelf” registration process. Under
this shelf registration process, we may from time to time offer and sell, in one or more offerings, any or all of the securities described
in this prospectus, separately or together, up to an aggregate offering price of $100,000,000. This prospectus provides you with a general
description of the securities we may offer. When we issue securities pursuant to this prospectus, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any prospectus supplement together with additional information
described under the heading “Additional Information” and “Incorporation of Certain Information by Reference.”
You may only rely on the information contained
in this prospectus and the accompanying prospectus supplement or in any free writing prospectus prepared by or on behalf of us or to which
we have referred you. We have not authorized anyone to provide you with different information. This prospectus and any prospectus supplement
do not constitute an offer to sell or a solicitation of an offer to buy any securities other than the securities offered by this prospectus
and the prospectus supplement. This prospectus and any prospectus supplement do not constitute an offer to sell or a solicitation of an
offer to buy any securities in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus
or any prospectus supplement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no
change in our affairs since the date of this prospectus or such prospectus supplement or that the information contained by reference to
this prospectus or any prospectus supplement is correct as of any time after its date.
Unless otherwise stated or the context otherwise
indicates, references to “SmartKem,” the “Company,” “we,” “our,” “us,” or
similar terms refer to SmartKem, Inc. and its subsidiaries.
PROSPECTUS SUMMARY
The following summary highlights
some information from this prospectus. It is not complete and does not contain all of the information that you should consider before
making an investment decision. You should read this entire prospectus, including the “Risk Factors” section on page 4 and
the disclosures to which that section refers you, the financial statements and related notes and the other more detailed information appearing
elsewhere or incorporated by reference into this prospectus before investing in any of the securities described in this prospectus.
Overview
We are seeking to reshape
the world of electronics with our disruptive organic thin-film transistors (“OTFTs”) that we believe have the potential to
drive the next generation of displays. Our patented TRUFLEX® semiconductor and dielectric inks, or electronic polymers, are used to
make a new type of transistor that we believe have the capability to revolutionize the display industry. Our inks enable low temperature
printing processes that are compatible with existing manufacturing infrastructure to deliver low-cost displays that outperform existing
technologies. Our electronic polymer platform can be used in a range of display technologies including microLED, miniLED and AMOLED displays
for next generation televisions, laptops, augmented reality (“AR”) and virtual reality (“VR”) headsets, smartwatches
and smartphones.
Implications of Being
an Emerging Growth Company and a Smaller Reporting Company
As a company with less
than $1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in
the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and as a “smaller reporting company” under applicable SEC regulations.
An emerging growth company and a smaller reporting company may take advantage of reduced reporting requirements that are otherwise applicable
to public companies. These provisions include, but are not limited to:
| · | being permitted to present only two years of audited financial statements and only two years of related “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” disclosure in our periodic reports and registration statements,
including this prospectus; reduced disclosure about our executive compensation arrangements; |
| · | not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, as amended, on the
effectiveness of our internal controls over financial reporting; |
| · | reduced disclosure obligations regarding executive compensation arrangements in our periodic reports, proxy statements and registration
statements, including this prospectus; and |
| · | exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved. |
We will cease to be an
emerging growth company on the last day of our fiscal year in which the fifth anniversary of the first sale of our common stock pursuant
to our initial registration statement occurs. However, if certain events occur prior to the end of such five-year period, including if
we become a “large accelerated filer,” our annual gross revenues exceed $1.235 billion or we issue more than $1.0 billion
of non- convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.
We will continue to be a smaller reporting company as long as we have a public float (determined as of the end of our second fiscal quarter)
of less than $250 million or have annual revenues of less than $100 million as of the last fiscal year for which we have audited
financial statements and a public float of less than $700 million.
We have elected to take
advantage of certain of the reduced disclosure obligations in the registration statement of which this prospectus is a part and may elect
to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders
may be different than you might receive from other public reporting companies in which you hold equity interests.
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,
until those standards apply to private companies. We have elected to take advantage of the benefits of this extended transition period
and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging
growth companies. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised
accounting standards. Until the date that we are no longer an emerging growth company or affirmatively and irrevocably opt out of the
exemption provided by Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), upon
issuance of a new or revised accounting standard that applies to our financial statements and that has a different effective date for
public and private companies, we will disclose the date on which we will adopt the recently issued accounting standard.
If we are a smaller reporting
company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements
that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two
most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies,
smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Corporate Information
We
were incorporated as Parasol Investments Corporation in the State of Delaware on May 13, 2020. SmartKem Limited was incorporated
under the laws of England and Wales on July 21, 2008. On February 23, 2021, we completed an exchange with SmartKem Limited and
the former shareholders of SmartKem Limited The “Exchange”) pursuant to which substantially all of the equity interests in
SmartKem Limited were exchanged for shares of our common stock, and SmartKem Limited became our wholly owned subsidiary. Immediately following
the Exchange, the business of SmartKem Limited became our business and we changed our name to “SmartKem, Inc.” Prior
to the Exchange, Parasol Investments Corporation was a “shell” company registered under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), with no specific business plan or purpose until it began operating the business
of SmartKem Limited following the closing of the Exchange.
Our principal executive
offices are located at Manchester Technology Center, Hexagon Tower, Delaunays Road, Blackley Manchester, M9 8GQ U.K. Our telephone number
is 011-44-161-721-1514. Our website address is www.smartkem.com. Information contained on, or that can be accessed through, our website
is not a part of this prospectus.
All trademarks, service
marks and trade names appearing in this prospectus are the property of their respective holders. Use or display by us of other parties’
trademarks, trade dress, or products in this prospectus is not intended to, and does not, imply a relationship with, or endorsements or
sponsorship of, us by the trademark or trade dress owners.
RISK FACTORS
Before purchasing any of the securities you should
carefully consider the risk factors incorporated by reference in this prospectus from our most recent Annual Report on Form 10-K and any
subsequent updates described in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. For a description of these reports
and information about where you can find them, see “Additional Information” and “Incorporation of Certain Information
By Reference.” Additional risks not presently known or that we presently consider to be immaterial could subsequently materially
and adversely affect our financial condition, results of operations, business and prospects.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated
by reference in this prospectus contain, and our officers and representatives may from time to time make, forward-looking statements that
involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by terms such as “may,”
“will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,”
“target,” “project,” “estimate,” “believe,” “estimate,” “predict,”
“potential” or “continue” or the negative of these terms or other similar expressions intended to identify statements
about the future. These statements speak only as of the date of this prospectus and involve known and unknown risks, uncertainties and
other important factors that may cause our actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking statements. We have based these forward-looking statements largely
on our current expectations and projections about future events and financial trends that we believe may affect our business, financial
condition and results of operations. These forward-looking statements include, without limitation, statements about the following:
| · | the implementation of our business model and strategic plans for our business, technologies and products; |
| · | the rate and degree of market acceptance of any of our products or organic semiconductor technology in |
| · | general, including changes due to the impact of (i) new semiconductor technologies, (ii) the performance of organic semiconductor
technology, whether perceived or actual, relative to competing semiconductor materials, and (iii) the performance of our products, whether
perceived or actual, compared to competing silicon-based and other products; |
| · | the timing and success of our, and our customers’, product releases; |
| · | our ability to develop new products and technologies; |
| · | our estimates of our expenses, ongoing losses, future revenue and capital requirements, including our needs for additional financing; |
| · | our ability to obtain additional funds for our operations and our intended use of any such funds; |
| · | our ability to remain eligible on an over-the-counter quotation system; |
| · | our receipt and timing of any royalties, milestone payments or payments for products, under any current or future collaboration, license
or other agreements or arrangements; |
| · | our ability to obtain and maintain intellectual property protection for our technologies and products and our ability to operate our
business without infringing the intellectual property rights of others; |
| · | the strength and marketability of our intellectual property portfolio; |
| · | our dependence on current and future collaborators for developing, manufacturing or otherwise bringing our products to market; |
| · | the ability of our third-party supply and manufacturing partners to meet our current and future business needs; |
| · | our exposure to risks related to international operations; |
| · | our dependence on third-party fabrication facilities; |
| · | the impact of the COVID-19 pandemic and any future communicable disease outbreak on our business and operations; |
| · | our relationships with our executive officers, directors, and significant stockholders; |
| · | our expectations regarding our classification as a “smaller reporting
company,” as defined under Exchange Act, and an “emerging growth company” under the JOBS Act in future periods; |
| · | our future financial performance; |
| · | the competitive landscape of our industry; and |
| · | the impact of government regulation and developments relating to us, our competitors, or our industry. |
The foregoing does not represent an exhaustive list of matters that
may be covered by the forward-looking statements contained herein and in the documents incorporated by reference herein or risk factors
that we are faced with that may cause our actual results to differ from those anticipate in our forward-looking statements. Factors that
may affect our results include, but are not limited to, the risks and uncertainties discussed in the “Risk Factors” section
on page 4 of this prospectus, in our Annual Report on Form 10-K or in other reports we file with the SEC.
Moreover, new risks regularly emerge, and it is
not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on our business
or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking
statements. The Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act, do not protect any forward-looking
statements that we make in connection with this offering. All forward-looking statements included in this prospectus and in the documents
incorporated by reference in this prospectus are based on information available to us on the date of this prospectus or the date of the
applicable document incorporated by reference. Except to the extent required by applicable laws or rules, we undertake no obligation to
publicly update or revise any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result
of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this prospectus
and in the documents incorporated by reference in this prospectus. We qualify all of our forward-looking statements by these cautionary
statements.
You should rely only on the information in this
prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or
inconsistent information, you should not rely upon it.
USE OF PROCEEDS
Unless we inform you otherwise in the prospectus
supplement, we will use the net proceeds from the sale of the securities offered by this prospectus and the exercise price from the exercise
of any convertible securities, if any, for working capital and general corporate purposes.
When particular securities are offered, the prospectus
supplement relating to that offering will set forth our intended use of the net proceeds received from the sale of those securities we
sell. Pending the application of the net proceeds for these purposes, we expect to invest the proceeds in short-term, interest-bearing
instruments or other investment-grade securities.
THE SECURITIES WE MAY OFFER
The descriptions of the securities contained in
this prospectus, together with the applicable prospectus supplements, summarize all of the material terms and provisions of the various
types of securities that we may offer. We will describe in the applicable prospectus supplement relating to any securities the particular
terms of the securities offered by that prospectus supplement. If we indicate in the applicable prospectus supplement, the terms of the
securities may differ from the terms we have summarized below. We may also include in the prospectus supplement information about material
United States federal income tax considerations relating to the securities, and the securities exchange, if any, on which the securities
will be listed.
We may sell from time to time, in one or more offerings:
| · | subscription rights to purchase shares of common stock, preferred stock or debt securities; |
| · | warrants to purchase shares of common stock or preferred stock; and |
| · | units consisting of any combination of the securities listed above. |
In this prospectus, we refer to the common stock,
preferred stock, debt securities, subscription rights, warrants and units collectively as “securities.” The total dollar amount
of all securities that we may sell will not exceed $100,000,000.
If we issue debt securities at a discount from
their original stated principal amount, then, for purposes of calculating the total dollar amount of all securities issued under this
prospectus, we will treat the initial offering price of the debt securities as the total original principal amount of the debt securities.
This prospectus may not be used to consummate a
sale of securities unless it is accompanied by a prospectus supplement.
DESCRIPTION OF CAPITAL STOCK
We have authorized capital stock consisting of 300,000,000 shares of
common stock and 10,000,000 shares of preferred stock. As of July 31, 2024, we had 1,750,472 shares of common stock issued and outstanding,
and 856 shares of Series A-1 Preferred Stock issued and outstanding . Unless stated otherwise, the following discussion summarizes
the term and provisions of our amended and restated certificate of incorporation and our amended and restated bylaws. This description
is summarized from, and qualified in its entirety by reference to, our amended and restated certificate of incorporation and our amended
and restated bylaws, which are filed as exhibits to the registration statement of which this prospectus forms a part.
Common Stock
Voting
Rights
Each holder of common
stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors.
Our amended and restated certificate of incorporation and our amended and restated bylaws do not provide for cumulative voting rights.
Because of this, the holders of a plurality of the shares of common stock entitled to vote in any election of directors can elect all
of the directors standing for election, if they should so choose. With respect to matters other than the election of directors, at any
meeting of the stockholders at which a quorum is present or represented, the affirmative vote of a majority of the voting power of the
shares present in person or represented by proxy at such meeting and entitled to vote on the subject matter shall be the act of the stockholders,
except as otherwise required by law. The holders of one-third of the stock issued and outstanding and entitled to vote, present in person
or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders.
Dividends
Subject to preferences
that may be applicable to any then-outstanding convertible preferred stock, holders of our common stock are entitled to receive dividends,
if any, as may be declared from time to time by our board of directors out of legally available funds.
We have never paid cash
dividends on our common stock. Moreover, we do not anticipate paying periodic cash dividends on our common stock for the foreseeable future.
Any future determination about the payment of dividends will be made at the discretion of our board of directors and will depend upon
our earnings, if any, capital requirements, operating and financial conditions, contractual restrictions, including any loan or debt financing
agreements, and on such other factors as our board of directors deems relevant.
Liquidation
In the event of our liquidation,
dissolution, or winding up, holders of our common stock will be entitled to share ratably in the net assets legally available for distribution
to stockholders after the payment of all of our debts and other liabilities and the satisfaction of any liquidation preference granted
to the holders of any then-outstanding shares of preferred stock.
Preferred Stock
Our board of directors has
the authority, without further action by the stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series and
to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences, and privileges could include dividend
rights, conversion rights, voting rights, redemption rights, liquidation preferences, sinking fund terms, and the number of shares constituting
any series or the designation of such series, any or all of which may be greater than the rights of common stock. The issuance of preferred
stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments
and payments upon liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing
change in our control or other corporate action.
Series A-1
Preferred Stock
On June 14, 2023,
we filed a Certificate of Designation of Preferences, Rights and Limitations with the Secretary of State of the State of Delaware, and
on January 29, 2024, we filed an Amended and Restated Certificate of Designation of Preferences, Rights and Limitation with the Secretary
of the State of Delaware designating 11,100 shares out of the authorized but unissued shares of its preferred stock as Series A-1
Preferred Stock with a stated value of $10,000 per share (as amended and restated, the “Series A-1 Certificate of Designation”).
The following is a summary of the principal terms of the Series A-1 Preferred Stock as set forth in the Series A-1 Certificate
of Designation is qualified in its entirety by reference to the Series A-1 Certificate of Designation, which is included in our amended
and restated certificate of incorporation, which is filed as an exhibit to the registration statement of which this prospectus forms a
part.
Dividends
The holders of Series A-1
Preferred Stock are entitled to dividends, on an as-if converted basis, equal to and in the same form as dividends actually paid on shares
of common stock, when and if actually paid. In addition, in the event that on December 14, 2024, the trailing 30-day VWAP (as defined
in the Series A-1 Certificate of Designation) is less than the then-effective Series A-1 Conversion Price, the Series A-1
Preferred Stock will begin accruing dividends at the annual rate of 19.99% of the stated value thereof (the “Series A-1 Dividend”).
The Series A-1 Dividend would be paid in cash, or, at the option of the Company if certain equity conditions are met, in shares of
common stock at a price per share equal to ninety percent (90%) of the trailing 10-day VWAP for the last 10 trading date prior to
the date the Series A-1 Dividend is paid.
Voting
Rights
The shares of Series A-1
Preferred Stock have no voting rights, except to the extent required by the Delaware General Corporation Law (the “DGCL”).
As long as any shares of Series A-1 Preferred
Stock are outstanding, we may not, without the approval of a majority of the then outstanding shares of Series A-1 Preferred Stock
which must include AIGH Investment Partners LP and its affiliates (“AIGH”) for so long as AIGH is holding at least $1,500,000
in aggregate stated value of Series A-1 Preferred Stock acquired pursuant to the Purchase Agreement (as defined in the Series A-1
Certificate of Designation) (a) alter or change the powers, preferences or rights given to the Series A-1 Preferred Stock, (b) alter
or amend our amended and restated certificate of incorporation, the Series A-1 Certificate of Designation or our amended and restated
bylaws in such a manner so as to materially adversely affect any rights given to the Series A-1 Preferred Stock, (c) authorize
or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined below) senior
to, or otherwise pari passu with, the Series A-1 Preferred Stock, (d) increase the number of authorized shares of Series A-1
Preferred Stock, (e) issue any Series A-1 Preferred Stock except pursuant to the Purchase Agreement, or (f) enter into
any agreement to do any of the foregoing.
Liquidation
Upon any liquidation,
dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the then holders of the Series A-1
Preferred Stock are entitled to receive out of the assets available for distribution to stockholders of the Company an amount equal to
100% of the stated value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon,
prior and in preference to the common stock or any other series of preferred stock.
Conversion
The Series A-1 Preferred
Stock is convertible into common stock at any time at a conversion price of $87.50, subject to adjustment for certain anti-dilution provisions
set forth in the Series A-1 Certificate of Designation (the “Series A-1 Conversion Price”). Upon conversion the
shares of Series A-1 Preferred Stock will resume the status of authorized but unissued shares of preferred stock of the Company.
Conversion at the
Option of the Holder
The Series A-1 Preferred
Stock is convertible at the then-effective Series A-1 Conversion Price at the option of the holder at any time and from time to time.
Mandatory
Conversion at the Option of the Company
So long as certain equity
conditions are satisfied, we may give notice requiring the holders to convert all of the outstanding shares of Series A-1 Preferred
Stock into shares of common stock at the then-effective Series A-1 Conversion Price.
Beneficial Ownership
Limitation
The Series A-1 Preferred
Stock cannot be converted to common stock if the holder and its affiliates would beneficially own more than 4.99% (or 9.99% at the election
of the holder) of the outstanding common stock. However, any holder may increase or decrease such percentage to any other percentage
not in excess of 9.99% upon notice to us, provided that any increase in this limitation will not be effective until 61 days after
such notice from the holder to us and such increase or decrease will apply only to the holder providing such notice.
Preemptive Rights
No holders of Series A-1
Preferred Stock will, as holders of Series A-1 Preferred Stock, have any preemptive rights to purchase or subscribe for common stock
or any of our other securities.
Redemption
The shares of Series A-1
Preferred Stock are not redeemable by the Company.
Negative Covenants
As long as any Series A-1
Preferred Stock is outstanding, unless the holders of more than 50% in stated value of the then outstanding shares of Series A-1
Preferred Stock shall have otherwise given prior written consent (which must include AIGH for so long as AIGH is holding at least $1,500,000
in aggregate stated value of Series A-1 Preferred Stock acquired pursuant to the Purchase Agreement), the Company cannot, subject
to certain exceptions, (a) enter into, create, incur, assume, guarantee or suffer to exist any indebtedness, (b) enter into,
create, incur, assume or suffer to exist any liens, (c) repay, repurchase or offer to repay, repurchase or otherwise acquire more
than a de minimis number of shares of its common stock, common stock equivalents or junior securities, (d) enter into any transaction
with any affiliate of the Company which would be required to be disclosed in any public filing with the SEC, unless such transaction is
made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company, (e) declare
or pay a dividend on junior securities or (f) enter into any agreement with respect to any of the foregoing.
Trading Market
There is no established
trading market for any of the Series A-1 Preferred Stock, and we do not expect a market to develop. We do not intend to apply for
a listing for any of the Series A-1 Preferred Stock on any securities exchange or other nationally recognized trading system.
Transfer Agent and Registrar
The transfer agent and registrar
for our common stock and Series A-1 Preferred Stock is VStock Transfer, LLC. The transfer agent’s address is 18 Lafayette Place,
Woodmere, NY 11598, and its telephone number is (212) 828-8436.
The transfer agent and registrar
for any additional series or class of preferred stock, if any, will be set forth in each applicable prospectus supplement.
Anti-Takeover Effects of Certain Provisions
of Delaware Law, Our Amended and Restated Certificate of Incorporation and Our Amended and Restated Bylaws
Certain provisions of
Delaware law and certain provisions included in our amended and restated certificate of incorporation and in our amended and restated
bylaws summarized below may be deemed to have an anti-takeover effect and may delay, deter, or prevent a tender offer or takeover attempt
that a stockholder might consider to be in its best interests, including attempts that might result in a premium being paid over the market
price for the shares held by stockholders.
Preferred Stock
Our amended and restated
certificate of incorporation contains provisions that permit our board of directors to issue, without any further vote or action by the
stockholders, shares of preferred stock in one or more series and, with respect to each such series, to fix the number of shares constituting
the series and the designation of the series, the voting rights (if any) of the shares of the series and the powers, preferences, or relative,
participation, optional, and other special rights, if any, and any qualifications, limitations, or restrictions, of the shares of such
series.
Classified Board
of Directors
Our amended and restated
certificate of incorporation provides that our board of directors is divided into three classes, with the number of directors in
each class being as nearly equal in number as possible. The directors in each class serve for a three-year term, one class being
elected each year by our stockholders, with staggered three-year terms. These provisions may have the effect of deferring, delaying
or discouraging hostile takeovers, or changes in control of us or our management.
Removal of Directors
Our amended and restated
certificate of incorporation provides that stockholders may only remove a director for cause.
Director Vacancies
Our amended and restated
certificate of incorporation authorizes only our board of directors to fill vacant directorships.
No Cumulative Voting
Our amended and restated
certificate of incorporation does not provide stockholders with the right to cumulate votes in the election of directors.
Special Meetings
of Stockholders
Our amended and restated
certificate of incorporation and amended and restated bylaws provide that, except as otherwise required by law, special meetings of the
stockholders may be called only by the chairperson of our board of directors, the chief executive officer, or our board of directors.
Advance Notice
Procedures for Director Nominations
Our bylaws provide that
stockholders seeking to nominate candidates for election as directors at an annual or special meeting of stockholders must provide timely
notice thereof in writing. To be timely, a stockholder’s notice generally will have to be delivered to and received at our principal
executive offices before notice of the meeting is issued by our secretary, with such notice being served not less than 90 nor more than
120 days before the meeting. Although the amended and restated bylaws do not give the board of directors the power to approve or
disapprove stockholder nominations of candidates to be elected at an annual meeting, the amended and restated bylaws may have the effect
of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential
acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of our
company.
Action by Written
Consent
Our amended and restated
certificate of incorporation and amended and restated bylaws provide that any action to be taken by the stockholders must be effected
at a duly called annual or special meeting of stockholders and may not be effected by written consent.
Amending our Certificate
of Incorporation and Bylaws
Our amended and restated
certificate of incorporation provides that the affirmative vote of at least 662∕3% of the votes entitled to be cast by holders of
all outstanding shares then entitled to vote, voting together as a single class, is required to amend certain provisions of our amended
and restated certificate of incorporation.
Our amended and restated
bylaws may be adopted, amended, altered or repealed by stockholders only upon approval of at least 662∕3% of the votes entitled
to be cast by holders of all outstanding shares then entitled to vote, voting together as a single class. Additionally, our amended and
restated certificate of incorporation provides that our bylaws may be amended, altered or repealed by the board of directors.
Authorized but
Unissued Shares
Our authorized but unissued
shares of common stock and preferred stock will be available for future issuances without stockholder approval, except as required by
the listing standards of any exchange upon which our common stock may become listed and could be utilized for a variety of corporate purposes,
including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued
and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of our company
by means of a proxy contest, tender offer, merger, or otherwise.
Exclusive Jurisdiction
Our amended and restated
certificate of incorporation provides that, unless we consent to the selection of an alternative forum, the Court of Chancery of the State
of Delaware, or if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware, is the exclusive
forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a
fiduciary duty owed by any current or former director, officer, or other employee to the us or our stockholders, any action arising pursuant
to any provision of the DGCL or our certificate of incorporation or bylaws (as either may be amended from time to time), or (iv) (A) any
action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted
by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction
thereof, the federal district court of the State of Delaware and (B) the federal district courts of the United States shall be the
exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Section 27 of the
Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act
or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to actions arising under the Exchange
Act or the rules and regulations thereunder. Although our amended and restated certificate of incorporation contains the exclusive
forum provisions described above, it is possible that a court could find that such provision is inapplicable for a particular claim or
action or that such provision is unenforceable, and our stockholders will not be deemed to have waived our compliance with the federal
securities laws and the rules and regulations thereunder.
Delaware Anti-Takeover
Statute
We are subject to Section 203
of the DGCL, which prohibits a person deemed an “interested stockholder” from engaging in a “business combination”
with a publicly held Delaware corporation for three years following the date such person becomes an interested stockholder unless
the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner
or another prescribed exception applies. Generally, an “interested stockholder” is a person who, together with affiliates
and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of a
corporation’s voting stock.
Generally, a “business
combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder.
The existence of this provision may have an anti- takeover effect with respect to transactions not approved in advance by the board of
directors, such as discouraging takeover attempts that might result in a premium over the price of our common stock.
DESCRIPTION OF STOCK WARRANTS
We summarize below some of the provisions that
will apply to the warrants unless the applicable prospectus supplement provides otherwise. This summary may not contain all information
that is important to you. The complete terms of the warrants will be contained in the applicable warrant certificate and warrant agreement.
These documents have been or will be included or incorporated by reference as exhibits to the registration statement of which this prospectus
is a part. You should read the warrant certificate and the warrant agreement. You should also read the prospectus supplement, which will
contain additional information and which may update or change some of the information below.
General
We may issue warrants to purchase our debt or equity
securities or securities of third parties or other rights, including rights to receive payment in cash or securities based on the value,
rate or price of one or more specified commodities, currencies, securities or indices, or any combination of the foregoing. Warrants may
be issued independently or together with any other securities and may be attached to, or separate from, such securities. Each series of
warrants will be issued under a separate warrant agreement to be entered into between us and a bank, trust company or other financial
institution, as warrant agent, or we may issue warrants directly to investors. A description of the terms and material provisions of any
warrants we may issue will be set forth in the applicable prospectus supplement.
The applicable prospectus supplement will describe
the following terms of any warrants in respect of which this prospectus is being delivered:
| · | the title of such warrants; |
| · | the aggregate number of such warrants; |
| · | the price or prices at which such warrants will be issued; |
| · | the currency or currencies in which the price of such warrants will be payable; |
| · | the securities or other rights, including rights to receive payment in cash or securities based on the value, rate or price of one
or more specified commodities, currencies, securities or indices, or any combination of the foregoing, purchasable upon exercise of such
warrants; |
| · | the price at which and the currency or currencies in which the securities or other rights purchasable upon exercise of such warrants
may be purchased; |
| · | the date on which the right to exercise such warrants shall commence and the date on which such right shall expire; |
| · | if applicable, the minimum or maximum amount of such warrants which may be exercised at any one time; |
| · | provision for changes to or adjustments in the exercise price of such warrants, if any; |
| · | if applicable, the designation and terms of the securities with which such warrants are issued and the number of such warrants issued
with each such security; |
| · | if applicable, the date on and after which such warrants and the related securities will be separately transferable; |
| · | information with respect to book-entry procedures, if any; |
| · | if applicable, a discussion of any material United States Federal income tax or foreign income tax considerations; and |
| · | any other terms of such warrants, including terms, procedures and limitations relating to the exchange and exercise of such warrants. |
Transfer Agent and Registrar
The transfer agent and registrar,
if any, for any warrants will be set forth in the applicable prospectus supplement.
DESCRIPTION OF DEBT SECURITIES
This prospectus describes certain general terms
and provisions of debt securities that we may offer. The debt securities may be issued pursuant to, in the case of senior debt securities,
a senior indenture, and in the case of subordinated debt securities, a subordinated indenture, in each case in the forms filed as exhibits
to this registration statement, which we refer to as the “indentures.” The indentures will be entered into between us and
a trustee to be named prior to the issuance of any debt securities, which we refer to as the “trustee.” The indentures will
not limit the amount of debt securities that can be issued thereunder and will provide that the debt securities may be issued from time
to time in one or more series pursuant to the terms of one or more securities resolutions or supplemental indentures creating such series.
We have summarized below the material provisions
of the indentures and the debt securities or indicated which material provisions will be described in the related prospectus supplement
for any offering of debt securities. These descriptions are only summaries, and you should refer to the relevant indenture for the particular
offering of debt securities itself which will describe completely the terms and definitions of the offered debt securities and contain
additional information about the debt securities.
All references in this section, “Description
of Debt Securities,” to “SmartKem,” the “Company”, “we”, “us”, “our”,
the “registrant” or similar words are solely to SmartKem, Inc., and not to its subsidiaries.
Terms
When we offer to sell a particular series of debt
securities, we will describe the specific terms of the securities in a prospectus supplement. The prospectus supplement will set forth
the following terms, as applicable, of the debt securities offered thereby:
| · | the designation, aggregate principal amount, currency or composite currency and denominations; |
| · | the price at which such debt securities will be issued and, if an index formula or other method is used,
the method for determining amounts of principal or interest; |
| · | the maturity date and other dates, if any, on which principal will be payable; |
| · | whether or not the debt securities will be secured or unsecured, and the terms of any secured debt; |
| · | whether the debt securities rank as senior debt, senior subordinated debt, subordinated debt or any combination
thereof, and the terms of any subordination; |
| · | the interest rate (which may be fixed or variable), if any; |
| · | the date or dates from which interest will accrue and on which interest will be payable, and the record
dates for the payment of interest; |
| · | the manner of paying principal and interest; |
| · | the place or places where principal and interest will be payable; |
| · | the terms of any mandatory or optional redemption by us or any third party including any sinking fund; |
| · | the terms of any conversion or exchange; |
| · | the terms of any redemption at the option of holders or put by the holders; |
| · | any tax indemnity provisions; |
| · | if the debt securities provide that payments of principal or interest may be made in a currency other
than that in which the debt securities are denominated, the manner for determining such payments; |
| · | the portion of principal payable upon acceleration of a Discounted Debt Security (as defined below); |
| · | whether and upon what terms debt securities may be defeased; |
| · | any events of default or covenants in addition to or in lieu of those set forth in the indentures; |
| · | provisions for electronic issuance of debt securities or for the issuance of debt securities in uncertificated
form; and |
| · | any additional provisions or other special terms not inconsistent with the provisions of the indentures,
including any terms that may be required or advisable under United States or other applicable laws or regulations, or advisable in connection
with the marketing of the debt securities. |
Debt securities of any series
may be issued as registered debt securities or uncertificated debt securities, in such denominations as specified in the terms of the
series.
Securities may be issued under the indentures as
Discounted Debt Securities to be offered and sold at a substantial discount from the principal amount thereof. Special United States federal
income tax and other considerations applicable thereto will be described in the prospectus supplement relating to such Discounted Debt
Securities. “Discounted Debt Security” means a security where the amount of principal due upon acceleration is less than the
stated principal amount.
We are not obligated to issue all debt securities
of one series at the same time and, unless otherwise provided in the prospectus supplement, we may reopen a series, without the consent
of the holders of the debt securities of that series, for the issuance of additional debt securities of that series. Additional debt securities
of a particular series will have the same terms and conditions as outstanding debt securities of such series, except for the date of original
issuance and the offering price, and will be consolidated with, and form a single series with, such outstanding debt securities.
Ranking
The senior debt securities will rank equally with
all of our other senior and unsubordinated debt. Our secured debt, if any, will be effectively senior to the senior debt securities to
the extent of the value of the assets securing such debt. The subordinated debt securities will be subordinate and junior in right of
payment to all of our present and future senior indebtedness to the extent and in the manner described in the prospectus supplement and
as set forth in the board resolution, officer’s certificate or supplemental indenture relating to such offering.
We have only a stockholder’s claim on the
assets of our subsidiaries. This stockholder’s claim is junior to the claims that creditors of our subsidiaries have against our
subsidiaries. Holders of our debt securities will be our creditors and not creditors of any of our subsidiaries. As a result, all the
existing and future liabilities of our subsidiaries, including any claims of their creditors, will effectively be senior to the debt securities
with respect to the assets of our subsidiaries. In addition, to the extent that we issue any secured debt, the debt securities will be
effectively subordinated to such secured debt to the extent of the value of the assets securing such secured debt.
The debt securities will be obligations exclusively
of SmartKem, Inc. To the extent that our ability to service our debt, including the debt securities, may be dependent upon the earnings
of our subsidiaries, our ability to do so will be dependent on the ability of our subsidiaries to distribute those earnings to us as dividends,
loans or other payments.
Certain Covenants
Any covenants that may apply to a particular series
of debt securities will be described in the prospectus supplement relating thereto.
Successor Obligor
The indentures provide that, unless otherwise specified
in the securities resolution or supplemental indenture establishing a series of debt securities, we shall not consolidate with or merge
into, or transfer all or substantially all of our assets to, any person in any transaction in which we are not the survivor, unless:
| · | the person is organized under the laws of the United States or a jurisdiction within the United States; |
| · | the person assumes by supplemental indenture all of our obligations under the relevant indenture, the debt securities and any coupons; |
| · | immediately after the transaction no Default (as defined below) exists; and |
| · | we deliver to the trustee an officers’ certificate and opinion of counsel stating that the transaction complies with the foregoing
requirements and that all conditions precedent provided for in the indenture relating to the transaction have been complied with. |
In such event, the successor will be substituted
for us, and thereafter all of our obligations under the relevant indenture, the debt securities and any coupons will terminate.
The indentures provide that these limitations shall
not apply if our board of directors makes a good faith determination that the principal purpose of the transaction is to change our state
of incorporation.
Exchange of Debt Securities
Registered debt securities may be exchanged for
an equal aggregate principal amount of registered debt securities of the same series and date of maturity in such authorized denominations
as may be requested upon surrender of the registered debt securities at an agency of the Company maintained for such purpose and upon
fulfillment of all other requirements of such agent.
Default and Remedies
Unless the securities resolution or supplemental
indenture establishing the series otherwise provides (in which event the prospectus supplement will so state), an “Event of Default”
with respect to a series of debt securities will occur if:
| (1) |
we default in any payment of interest on any debt securities of such series when the same becomes due and payable and the default continues for a period of 30 days; |
| (2) |
we default in the payment of all or any part of the principal and premium, if any, of any debt securities of such series when the same becomes due and payable at maturity or upon redemption, acceleration or otherwise and such default shall continue for five or more days; |
| (3) |
we default in the performance of any of our other agreements applicable to the series and the default continues for 30 days after the notice specified below; |
| (4) |
a court of competent jurisdiction enters an order or decree under any Bankruptcy Law (as defined below) that: |
| |
(A) |
is for relief against us in an involuntary case, |
| |
(B) |
appoints a Custodian (as defined below) for us or for any substantial part of our property, or |
| |
(C) |
orders the winding up or liquidation of us, and the order or decree remains unstayed and in effect for 90 consecutive days; |
| (5) |
we, pursuant to or within the meaning of any Bankruptcy Law: |
| |
(A) |
commence a voluntary case, |
| |
(B) |
consent to the entry of an order for relief against us in an involuntary case, |
| |
(C) |
consent to the appointment of a Custodian for us or for any substantial part of our property, or |
| |
(D) |
make a general assignment for the benefit of our creditors; or |
| (6) |
there occurs any other Event of Default provided for in such series. |
The term “Bankruptcy Law” means Title
11 of the United States Code or any similar Federal or State law for the relief of debtors. The term “Custodian” means any
receiver, trustee, assignee, liquidator or a similar official under any Bankruptcy Law.
“Default” means any event which is,
or after notice or passage of time would be, an Event of Default. A Default under subparagraph (3) above is not an Event of Default until
the trustee or the holders of at least 25% in principal amount of the series notify us of the Default and we do not cure the Default within
the time specified after receipt of the notice.
The trustee may require indemnity satisfactory
to it before it enforces the indentures or the debt securities of the series. Subject to certain limitations, holders of a majority in
principal amount of the debt securities of the series may direct the trustee in its exercise of any trust or power with respect to such
series. Except in the case of Default in payment on a series, the trustee may withhold from securityholders of such series notice of any
continuing Default if the trustee determines that withholding notice is in the interest of such securityholders. We are required to furnish
the trustee annually a brief certificate as to our compliance with all conditions and covenants under the indentures.
The indentures do not have cross-default provisions.
Thus, a default by us on any other debt, including any other series of debt securities, would not constitute an Event of Default.
Amendments and Waivers
The indentures and the debt securities or any coupons
of the series may be amended, and any Default may be waived as follows:
Unless the securities resolution or supplemental
indenture otherwise provides (in which event the applicable prospectus supplement will so state), the debt securities and the indentures
may be amended with the consent of the holders of a majority in principal amount of the debt securities of all series affected voting
as one class. Unless the securities resolution or supplemental indenture otherwise provides (in which event the applicable prospectus
supplement will so state), a Default other than a Default in payment on a particular series may be waived with the consent of the holders
of a majority in principal amount of the debt securities of the series. However, without the consent of each securityholder affected,
no amendment or waiver may:
| · | change the fixed maturity of or the time for payment of interest on any debt security; |
| · | reduce the principal, premium or interest payable with respect to any debt security; |
| · | change the place of payment of a debt security or the currency in which the principal or interest on a debt security is payable; |
| · | change the provisions for calculating any redemption or repurchase price with respect to any debt security; |
| · | adversely affect any holder’s right to receive payment of principal and interest or to institute suit for the enforcement of
any such payment; |
| · | reduce the amount of debt securities whose holders must consent to an amendment or waiver; |
| · | make any change that materially adversely affects the right to convert any debt security; |
| · | waive any Default in payment of principal of or interest on a debt security; or |
| · | adversely affect any holder’s rights with respect to redemption or repurchase of a debt security. |
Without the consent of any securityholder, the indentures or the debt
securities may be amended to:
| · | provide for assumption of our obligations to securityholders in the event of a merger or consolidation requiring such assumption; |
| · | cure any ambiguity, omission, defect or inconsistency; |
| · | conform the terms of the debt securities to the description thereof in the prospectus and prospectus supplement offering such debt
securities; |
| · | create a series and establish its terms; |
| · | provide for the acceptance of appointment by a successor trustee or to facilitate the administration of the trusts by more than one
trustee; |
| · | provide for uncertificated or unregistered securities; |
| · | make any change that does not adversely affect the rights of any securityholder; |
| · | add to our covenants; or |
| · | make any other change to the indentures so long as no debt securities are outstanding. |
Conversion Rights
Any securities resolution or supplemental indenture
establishing a series of debt securities may provide that the debt securities of such series will be convertible at the option of the
holders thereof into or for our common stock or other equity or debt instruments. The securities resolution or supplemental indenture
may establish, among other things, (1) the number or amount of shares of common stock or other equity or debt instruments for which $1,000
aggregate principal amount of the debt securities of the series is convertible, as may be adjusted pursuant to the terms of the relevant
indenture and the securities resolution; and (2) provisions for adjustments to the conversion rate and limitations upon exercise of the
conversion right. The indentures provide that we will not be required to make an adjustment in the conversion rate unless the adjustment
would require a cumulative change of at least 1% in the conversion rate. However, we will carry forward any adjustments that are less
than 1% of the conversion rate and take them into account in any subsequent adjustment of the conversion rate.
Legal Defeasance and Covenant Defeasance
Debt securities of a series may be defeased in
accordance with their terms and, unless the securities resolution or supplemental indenture establishing the terms of the series otherwise
provides, as set forth below. We at any time may terminate as to a series all of our obligations (except for certain obligations, including
obligations with respect to the defeasance trust and obligations to register the transfer or exchange of a debt security, to replace destroyed,
lost or stolen debt securities and coupons and to maintain paying agencies in respect of the debt securities) with respect to the debt
securities of the series and any related coupons and the relevant indenture, which we refer to as legal defeasance. We at any time may
terminate as to a series our obligations with respect to any restrictive covenants which may be applicable to a particular series, which
we refer to as covenant defeasance.
We may exercise our legal defeasance option notwithstanding
our prior exercise of our covenant defeasance option. If we exercise our legal defeasance option, a series may not be accelerated because
of an Event of Default. If we exercise our covenant defeasance option, a series may not be accelerated by reference to any covenant which
may be applicable to a series.
To exercise either defeasance option as to a series,
we must (1) irrevocably deposit in trust with the trustee (or another trustee) money or U.S. Government Obligations (as defined below),
deliver a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal
and interest when due on the deposited U.S. Government Obligations, without reinvestment, plus any deposited money without investment
will provide cash at such times and in such amounts as will be sufficient to pay the principal and interest when due on all debt securities
of such series to maturity or redemption, as the case may be; and (2) comply with certain other conditions. In particular, we must obtain
an opinion of tax counsel that the defeasance will not result in recognition of any gain or loss to holders for federal income tax purposes.
“U.S. Government Obligations” means
direct obligations of the United States or any agency or instrumentality of the United States, the payment of which is unconditionally
guaranteed by the United States, which, in either case, have the full faith and credit of the United States pledged for payment and which
are not callable at the issuer’s option, or certificates representing an ownership interest in such obligations.
Regarding the Trustee
Unless otherwise indicated in a prospectus supplement,
the trustee will also act as depository of funds, transfer agent, paying agent and conversion agent, as applicable, with respect to the
debt securities. In certain circumstances, we or the securityholders may remove the trustee as the trustee under a given indenture. The
indenture trustee may also provide additional unrelated services to us as a depository of funds, registrar, trustee and similar services.
Governing Law
The indentures and the debt securities will be
governed by New York law, except to the extent that the Trust Indenture Act of 1939 is applicable.
DESCRIPTION OF SUBSCRIPTION RIGHTS
We may issue subscription rights to purchase our
equity or debt securities. These subscription rights may be offered independently or together with any other security offered hereby and
may or may not be transferable by the stockholder receiving the subscription rights in such offering. In connection with any offering
of subscription rights, we may enter into a standby arrangement with one or more underwriters or other purchasers pursuant to which the
underwriters or other purchasers may be required to purchase any securities remaining unsubscribed for after such offering.
The prospectus supplement relating to any subscription
rights we offer, if any, will, to the extent applicable, include specific terms relating to the offering, including some or all of the
following:
| · | the price, if any, for the subscription rights; |
| · | the exercise price payable for our equity or debt securities upon the exercise of the subscription rights; |
| · | the number of subscription rights to be issued to each stockholder; |
| · | the number and terms of our equity or debt securities which may be purchased per each subscription right; |
| · | the extent to which the subscription rights are transferable; |
| · | any other terms of the subscription rights, including the terms, procedures and limitations relating to the exchange and exercise
of the subscription rights; |
| · | the date on which the right to exercise the subscription rights shall commence, and the date on which the subscription rights shall
expire; |
| · | the extent to which the subscription rights may include an over-subscription privilege with respect to unsubscribed securities or
an over-allotment privilege to the extent the securities are fully subscribed; and |
| · | if applicable, the material terms of any standby underwriting or purchase arrangement which may be entered into by us in connection
with the offering of subscription rights. |
DESCRIPTION
OF UNITS
We may issue units comprised of one or more of
the other securities described in this prospectus in any combination. Each unit will be issued so that the holder of the unit is also
the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each
included security (but, to the extent convertible securities are included in the units, the holder of the units will be deemed the holder
of the convertible securities and not the holder of the underlying securities). The unit agreement under which a unit is issued, if any,
may provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified
date. The applicable prospectus supplement may describe:
| · | the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances
those securities may be held or transferred separately; |
| · | any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; |
| · | the terms of the unit agreement governing the units; |
| · | United States federal income tax considerations relevant to the units; and |
| · | whether the units will be issued in fully registered global form |
This summary of certain general terms of units
and any summary description of units in the applicable prospectus supplement do not purport to be complete and are qualified in their
entirety by reference to all provisions of the applicable unit agreement and, if applicable, collateral arrangements and depositary arrangements
relating to such units. The forms of the unit agreements and other documents relating to a particular issue of units will be filed with
the SEC each time we issue units, and you should read those documents for provisions that may be important to you.
FORMS OF SECURITIES
Each debt security and, to the extent applicable,
warrant, subscription right and unit, will be represented either by a certificate issued in definitive form to a particular investor or
by one or more global securities representing the entire issuance of securities. Certificated securities in definitive form and global
securities will be issued in registered form. Definitive securities name you or your nominee as the owner of the security, and in order
to transfer or exchange these securities or to receive payments other than interest or other interim payments, you or your nominee must
physically deliver the securities to the trustee, registrar, paying agent or other agent, as applicable. Global securities name a depositary
or its nominee as the owner of the debt securities or warrants represented by these global securities. The depositary maintains a computerized
system that will reflect each investor’s beneficial ownership of the securities through an account maintained by the investor with
its broker/dealer, bank, trust company or other representative, as we explain more fully below.
Global Securities
Registered
Global Securities. We may issue the registered debt securities and, to the extent applicable, warrants, subscription rights
and units in the form of one or more fully registered global securities that will be deposited with a depositary or its nominee identified
in the applicable prospectus supplement and registered in the name of that depositary or nominee. In those cases, one or more registered
global securities will be issued in a denomination or aggregate denominations equal to the portion of the aggregate principal or face
amount of the securities to be represented by registered global securities. Unless and until it is exchanged in whole for securities in
definitive registered form, a registered global security may not be transferred except as a whole by and among the depositary for the
registered global security, the nominees of the depositary or any successors of the depositary or those nominees.
If not described below, any specific terms of the
depositary arrangement with respect to any securities to be represented by a registered global security will be described in the prospectus
supplement relating to those securities. We anticipate that the following provisions will apply to all depositary arrangements.
Ownership of beneficial interests in a registered
global security will be limited to persons, called participants, that have accounts with the depositary or persons that may hold interests
through participants. Upon the issuance of a registered global security, the depositary will credit, on its book-entry registration and
transfer system, the participants’ accounts with the respective principal or face amounts of the securities beneficially owned by
the participants. Any dealers, underwriters or agents participating in the distribution of the securities will designate the accounts
to be credited. Ownership of beneficial interests in a registered global security will be shown on, and the transfer of ownership interests
will be effected only through, records maintained by the depositary, with respect to interests of participants, and on the records of
participants, with respect to interests of persons holding through participants. The laws of some states may require that some purchasers
of securities take physical delivery of these securities in definitive form. These laws may impair your ability to own, transfer or pledge
beneficial interests in registered global securities.
So long as the depositary, or its nominee, is the
registered owner of a registered global security, that depositary or its nominee, as the case may be, will be considered the sole owner
or holder of the securities represented by the registered global security for all purposes under the applicable indenture or warrant agreement.
Except as described below, owners of beneficial interests in a registered global security will not be entitled to have the securities
represented by the registered global security registered in their names, will not receive or be entitled to receive physical delivery
of the securities in definitive form and will not be considered the owners or holders of the securities under the applicable indenture
or warrant agreement. Accordingly, each person owning a beneficial interest in a registered global security must rely on the procedures
of the depositary for that registered global security and, if that person is not a participant, on the procedures of the participant through
which the person owns its interest, to exercise any rights of a holder under the applicable indenture or warrant agreement. We understand
that under existing industry practices, if we request any action of holders or if an owner of a beneficial interest in a registered global
security desires to give or take any action that a holder is entitled to give or take under the applicable indenture or warrant agreement,
the depositary for the registered global security would authorize the participants holding the relevant beneficial interests to give or
take that action, and the participants would authorize beneficial owners owning through them to give or take that action or would otherwise
act upon the instructions of beneficial owners holding through them.
Principal, premium, if any, and interest payments
on debt securities and any payments to holders with respect to warrants represented by a registered global security registered in the
name of a depositary or its nominee will be made to the depositary or its nominee, as the case may be, as the registered owner of the
registered global security. None of the Company, the trustees, the warrant agents or any other agent of the Company, agent of the trustees
or agent of the warrant will have any responsibility or liability for any aspect of the records relating to payments made on account of
beneficial ownership interests in the registered global security or for maintaining, supervising or reviewing any records relating to
those beneficial ownership interests.
We expect that the depositary for any of the securities
represented by a registered global security, upon receipt of any payment of principal, premium, interest or other distribution of underlying
securities or other property to holders on that registered global security, will immediately credit participants’ accounts in amounts
proportionate to their respective beneficial interests in that registered global security as shown on the records of the depositary. We
also expect that payments by participants to owners of beneficial interests in a registered global security held through participants
will be governed by standing customer instructions and customary practices, as is now the case with the securities held for the accounts
of customers in bearer form or registered in “street name,” and will be the responsibility of those participants.
If the depositary for any of these securities represented
by a registered global security is at any time unwilling or unable to continue as depositary or ceases to be a clearing agency registered
under the Exchange Act and a successor depositary registered as a clearing agency under the Exchange Act is not appointed by us within
90 days, we will issue securities in definitive form in exchange for the registered global security that had been held by the depositary.
Any securities issued in definitive form in exchange for a registered global security will be registered in the name or names that the
depositary gives to the relevant trustee or warrant agent or other relevant agent of ours or theirs. It is expected that the depositary’s
instructions will be based upon directions received by the depositary from participants with respect to ownership of beneficial interests
in the registered global security that had been held by the depositary.
PLAN OF DISTRIBUTION
Initial Offering and Sale of Securities
Unless otherwise set forth in a prospectus supplement
accompanying this prospectus, we may sell the securities being offered hereby, from time to time, by one or more of the following methods:
| · | to or through underwriting syndicates represented by managing underwriters; |
| · | through one or more underwriters without a syndicate for them to offer and sell to the public; |
| · | through dealers or agents; and |
| · | to investors directly in negotiated sales or in competitively bid transactions. |
Offerings of securities covered by this prospectus
also may be made into an existing trading market for those securities in transactions at other than a fixed price, either:
| · | on or through the facilities of the Nasdaq Capital Market or any other securities exchange or quotation or trading service on which
those securities may be listed, quoted, or traded at the time of sale; and/or |
| · | to or through a market maker other than on the securities exchanges or quotation or trading services set forth above. |
Those at-the-market offerings, if any, will be
conducted by underwriters acting as principal or agent of the Company, who may also be third-party sellers of securities as described
above. The prospectus supplement with respect to the offered securities will set forth the terms of the offering of the offered securities,
including:
| · | the name or names of any underwriters, dealers or agents; |
| · | the purchase price of the offered securities and the proceeds to us from such sale; |
| · | any underwriting discounts and commissions or agency fees and other items constituting underwriters’ or agents’ compensation; |
| · | any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers; |
| · | any securities exchange on which such offered securities may be listed; and |
| · | any underwriter, agent or dealer involved in the offer and sale of any series of the securities. |
The distribution of the securities may be effected
from time to time in one or more transactions:
| · | at fixed prices, which may be changed; |
| · | at market prices prevailing at the time of the sale; |
| · | at varying prices determined at the time of sale; or |
Each prospectus supplement will set forth the manner
and terms of an offering of securities including:
| · | whether that offering is being made to underwriters, through agents or directly to the public; |
| · | the rules and procedures for any auction or bidding process, if used; |
| · | the securities’ purchase price or initial public offering price; and |
| · | the proceeds we anticipate from the sale of the securities, if any. |
In addition, we may enter into derivative or hedging
transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions.
The applicable prospectus supplement may indicate, in connection with such a transaction, that the third parties may sell securities covered
by and pursuant to this prospectus and an applicable prospectus supplement. If so, the third party may use securities pledged by us or
borrowed from us or others to settle such sales and may use securities received from us to close out any related short positions. We may
also loan or pledge securities covered by this prospectus and an applicable prospectus supplement to third parties, who may sell the loaned
securities or, in an event of default in the case of a pledge, sell the pledged securities pursuant to this prospectus and the applicable
prospectus supplement.
Sales Through Underwriters
If underwriters are used in the sale of some or
all of the securities covered by this prospectus, the underwriters will acquire the securities for their own account. The underwriters
may resell the securities, either directly to the public or to securities dealers, at various times in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the
underwriters to purchase the securities will be subject to certain conditions. Unless indicated otherwise in a prospectus supplement,
the underwriters will be obligated to purchase all the securities of the series offered if any of the securities are purchased.
Any public offering price and any concessions allowed
or reallowed to dealers may be changed intermittently.
Sales Through Agents
Unless otherwise indicated in the applicable prospectus
supplement, when securities are sold through an agent, the designated agent will agree, for the period of its appointment as agent, to
use specified efforts to sell the securities for our account and will receive commissions from us as will be set forth in the applicable
prospectus supplement.
Securities bought in accordance with a redemption
or repayment under their terms also may be offered and sold, if so indicated in the applicable prospectus supplement, in connection with
a remarketing by one or more firms acting as principals for their own accounts or as agents for us. Any remarketing firm will be identified
and the terms of its agreement, if any, with us and its compensation will be described in the prospectus supplement. Remarketing firms
may be deemed to be underwriters in connection with the securities remarketed by them.
If so indicated in the applicable prospectus supplement,
we may authorize agents, underwriters or dealers to solicit offers by certain specified institutions to purchase securities at a price
set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a future date specified
in the prospectus supplement. These contracts will be subject only to those conditions set forth in the applicable prospectus supplement,
and the prospectus supplement will set forth the commissions payable for solicitation of these contracts.
Direct Sales
We may also sell offered securities directly to
institutional investors or others. In this case, no underwriters or agents would be involved. The terms of such sales will be described
in the applicable prospectus supplement.
General Information
Broker-dealers, agents or underwriters may receive
compensation in the form of discounts, concessions or commissions from us and/or the purchasers of securities for whom such broker-dealers,
agents or underwriters may act as agents or to whom they sell as principal, or both. This compensation to a particular broker-dealer might
be in excess of customary commissions.
Underwriters, dealers and agents that participate
in any distribution of the offered securities may be deemed “underwriters” within the meaning of the Securities Act so any
discounts or commissions they receive in connection with the distribution may be deemed to be underwriting compensation. Those underwriters
and agents may be entitled, under their agreements with us, to indemnification by us against certain civil liabilities, including liabilities
under the Securities Act, or to contribution by us to payments that they may be required to make in respect of those civil liabilities.
Certain of those underwriters or agents may be customers of, engage in transactions with, or perform services for, us or our affiliates
in the ordinary course of business. We will identify any underwriters or agents, and describe their compensation, in a prospectus supplement.
Any institutional investors or others that purchase offered securities directly, and then resell the securities, may be deemed to be underwriters,
and any discounts or commissions received by them from us and any profit on the resale of the securities by them may be deemed to be underwriting
discounts and commissions under the Securities Act.
We will file a supplement to this prospectus, if
required, pursuant to Rule 424(b) under the Securities Act, if we enter into any material arrangement with a broker, dealer, agent or
underwriter for the sale of securities through a block trade, special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer. Such prospectus supplement will disclose:
| · | the name of any participating broker, dealer, agent or underwriter; |
| · | the number and type of securities involved; |
| · | the price at which such securities were sold; |
| · | any securities exchanges on which such securities may be listed; |
| · | the commissions paid or discounts or concessions allowed to any such broker, dealer, agent or underwriter, where applicable; and |
| · | other facts material to the transaction. |
In order to facilitate the offering of certain
securities under this prospectus or an applicable prospectus supplement, certain persons participating in the offering of those securities
may engage in transactions that stabilize, maintain or otherwise affect the price of those securities during and after the offering of
those securities. Specifically, if the applicable prospectus supplement permits, the underwriters of those securities may over-allot or
otherwise create a short position in those securities for their own account by selling more of those securities than have been sold to
them by us and may elect to cover any such short position by purchasing those securities in the open market.
In addition, the underwriters may stabilize or
maintain the price of those securities by bidding for or purchasing those securities in the open market and may impose penalty bids, under
which selling concessions allowed to syndicate members or other broker-dealers participating in the offering are reclaimed if securities
previously distributed in the offering are repurchased in connection with stabilization transactions or otherwise. The effect of these
transactions may be to stabilize or maintain the market price of the securities at a level above that which might otherwise prevail in
the open market. The imposition of a penalty bid may also affect the price of securities to the extent that it discourages resales of
the securities. No representation is made as to the magnitude or effect of any such stabilization or other transactions. Such transactions,
if commenced, may be discontinued at any time.
In order to comply with the securities laws of
certain states, if applicable, the securities must be sold in such jurisdictions only through registered or licensed brokers or dealers.
In addition, in certain states the securities may not be sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is available and is complied with.
Rule 15c6-1 under the Exchange Act generally requires
that trades in the secondary market settle in one business day unless the parties to any such trade expressly agree otherwise. Your prospectus
supplement may provide that the original issue date for your securities may be more than one scheduled business day after the trade date
for your securities. Accordingly, in such a case, if you wish to trade securities on any date prior to the first business day before the
original issue date for your securities, you will be required, by virtue of the fact that your securities initially are expected to settle
in more than one scheduled business day after the trade date for your securities, to make alternative settlement arrangements to prevent
a failed settlement.
This prospectus, any applicable prospectus supplement
and any applicable pricing supplement in electronic format may be made available on the Internet sites of, or through other online services
maintained by, us and/or one or more of the agents and/or dealers participating in an offering of securities, or by their affiliates.
In those cases, prospective investors may be able to view offering terms online and, depending upon the particular agent or dealer, prospective
investors may be allowed to place orders online.
Other than this prospectus, any applicable prospectus
supplement and any applicable pricing supplement in electronic format, the information on our website or the website of any agent or dealer,
and any information contained in any other website maintained by any agent or dealer:
| · | is not part of this prospectus, any applicable prospectus supplement or any applicable pricing supplement or the registration statement
of which they form a part; |
| · | has not been approved or endorsed by us or by any agent or dealer in its capacity as an agent or dealer, except, in each case, with
respect to the respective website maintained by such entity; and |
| · | should not be relied upon by investors. |
There can be no assurance that we will sell all
or any of the securities offered by this prospectus.
This prospectus may also be used in connection
with any issuance of common stock or preferred stock upon exercise of a warrant if such issuance is not exempt from the registration requirements
of the Securities Act.
In addition, we may issue the securities as a dividend
or distribution or in a subscription rights offering to our existing securityholders. In some cases, we or dealers acting with us or on
our behalf may also purchase securities and reoffer them to the public by one or more of the methods described above. This prospectus
may be used in connection with any offering of our securities through any of these methods or other methods described in the applicable
prospectus supplement.
LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus
supplement, the validity of the securities offered hereby will be passed upon for us by Lowenstein Sandler LLP, New York, New York. If
the validity of the securities offered hereby in connection with offerings made pursuant to this prospectus are passed upon by counsel
for the underwriters, dealers or agents, if any, such counsel will be named in the prospectus supplement relating to such offering.
EXPERTS
The financial statements
as of December 31, 2022 and for the year ended December 31, 2022 incorporated by reference herein have been so incorporated
in reliance on the report of BDO LLP, an independent registered public accounting firm (the report on the financial statements contains
an explanatory paragraph regarding the Company’s ability to continue as a going concern) incorporated by reference herein,
given on the authority of said firm as experts in auditing and accounting. BDO LLP, Manchester, United Kingdom, is a member of the Institute
of Chartered Accountants in England and Wales.
The financial statements
as of December 31, 2023 and for the year in the period ended December 31, 2023 incorporated by reference herein have been
so incorporated in reliance on the report of Marcum, LLP, an independent registered public accounting firm incorporated by reference
herein, given on the authority of said firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
We have filed with the SEC a registration statement
on Form S-3 under the Securities Act with respect to the securities offered by this prospectus. Pursuant to SEC rules, this prospectus,
which is part of the registration statement, omits certain information, exhibits, schedules and undertakings set forth in the registration
statement. For further information pertaining to us and our securities, reference is made to our SEC filings and to the registration statement
and the exhibits and schedules to the registration statement of which this prospectus forms a part. Statements contained in this prospectus
as to the contents or provisions of any documents referred to in this prospectus are not necessarily complete, and in each instance where
a copy of the document has been filed as an exhibit to the registration statement, reference is made to the exhibit for a more complete
description of the matters involved.
In addition, registration statements and certain
other filings made with the SEC electronically are publicly available through the SEC’s web site at http://www.sec.gov. The registration
statement, including all exhibits and amendments to the registration statement, has been filed electronically with the SEC.
We are subject to the information and periodic
reporting requirements of the Exchange Act and, in accordance with such requirements, will file periodic reports, proxy statements, and
other information with the SEC. These periodic reports, proxy statements, and other information will be available for inspection and copying
at the web site of the SEC referred to above. We also maintain a website at www.smartkem.com, at which you may access these materials
free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained
in, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus. We have included our website
address in this prospectus solely as an inactive textual reference.
You should rely only on the information in this
prospectus and the additional information described above and under the heading “Incorporation of Certain Information by Reference”
below. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent
information, you should not rely upon it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale
is not permitted. You should assume that the information in this prospectus was accurate on the date of the front cover of this prospectus
only. Our business, financial condition, results of operations and prospects may have changed since that date.
The representations, warranties and covenants
made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference into this prospectus were made
solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties
to such agreement, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties
or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied
on as accurately representing the current state of our affairs.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference”
information that we file with it into this prospectus, which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is an important part of this prospectus. The information incorporated by
reference is considered to be a part of this prospectus, and information that we file later with the SEC will automatically update and
supersede information contained in this prospectus and any accompanying prospectus supplement.
We incorporate by reference the documents listed
below that we have previously filed with the SEC:
| · | our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March
27, 2024; |
| · | our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2024 and June 30, 2024,filed with the SEC on May
20, 2024 and August
12, 2024; |
| · | the description of our common stock contained in our Registration Statement
on Form 8-A, filed with the SEC on May
30, 2024. |
All reports and other documents that we file with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the initial filing of the registration statement
and prior to effectiveness of the registration statement and after the date of this prospectus but prior to the termination of the offering
of the securities hereunder will also be considered to be incorporated by reference into this prospectus from the date of the filing of
these reports and documents, and will supersede the information herein; provided, however, that all reports, exhibits and other
information that we “furnish” to the SEC will not be considered incorporated by reference into this prospectus. Any statement
contained in a document incorporated by reference in this prospectus or any prospectus supplement shall be deemed to be modified or superseded
to the extent that a statement contained herein, therein or in any other subsequently filed document that also is incorporated by reference
herein or therein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus or any prospectus supplement.
We will provide you without charge, upon your oral
or written request, with a copy of any or all reports, proxy statements and other documents we file with the SEC, as well as any or all
of the documents incorporated by reference in this prospectus or the registration statement (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into such documents). Requests for such copies should be directed to SmartKem,
Inc., Attn: Chief Financial Officer, Manchester Technology Center, Hexagon Tower, Delaunays Road, Blackley Manchester, M9 8GQ U.K.. You
may also direct any requests for documents to us by telephone at 011-44-161-721-1514.
$100,000,000
Common Stock
Preferred Stock
Warrants
Debt Securities
Subscription Rights
Units
PROSPECTUS
August 22, 2024
SmartKem (NASDAQ:SMTK)
과거 데이터 주식 차트
부터 10월(10) 2024 으로 11월(11) 2024
SmartKem (NASDAQ:SMTK)
과거 데이터 주식 차트
부터 11월(11) 2023 으로 11월(11) 2024
