SmartKem, Inc., a semiconductor company, received notification from The Nasdaq Stock Market LLC on Thursday, indicating non-compliance with the Nasdaq Capital Market's minimum stockholders' equity requirement. The company's equity, as reported in its latest quarterly filing, fell short of the Nasdaq's $2.5 million threshold, registering at $2.3 million.
The notice, which does not immediately affect the trading of SmartKem's common stock, highlighted the company's failure to meet not only the stockholders' equity standard but also alternative compliance measures, including a market value of listed securities of $35 million or net income from continuing operations of $500,000 in the most recent fiscal year or two of the past three years.
SmartKem, which trades under the ticker SMTK on the Nasdaq, has been given a 45-day period, until December 30, 2024, to present a plan to Nasdaq outlining steps to regain compliance. If the plan is accepted, Nasdaq may grant an extension up to May 14, 2025, for the company to meet the listing standards. However, if the plan is rejected, SmartKem will have the opportunity to appeal the decision.
The company has stated its intention to submit a compliance plan within the designated timeframe. Nonetheless, there is no guarantee that Nasdaq will accept this plan or that SmartKem will be able to meet the continued listing criteria in the future.
In other recent news, SmartKem, a semiconductor company, has reported significant developments. The company held its 2024 annual shareholders meeting, where two key decisions were made. Directors Ian Jenks and Melisa Denis were elected to serve three-year terms, and Marcum LLP was ratified as the independent registered public accounting firm for the fiscal year ending December 31, 2024.
SmartKem has also entered into a joint development agreement with Shanghai Chip Foundation Semiconductor Technology Co., Ltd., known as Chip Foundation. The partnership aims to co-develop new microLED backlight technology for Liquid Crystal Displays, enhancing LCD performance by integrating SmartKem’s organic dielectric single layer material with Chip Foundation’s microLED devices.
Furthermore, SmartKem has awarded one-time special bonuses and stock options to its key executives. CEO Ian Jenks, CFO Barbra Keck, Chief Scientist Beverley Brown, and Chief Technology Officer Simon Ogier were among the recipients.
InvestingPro Insights
Recent InvestingPro data provides additional context to SmartKem's (SMTK) current financial situation. The company's market capitalization stands at a modest $4.01 million, reflecting its small-cap status. This aligns with the article's discussion of the company's struggle to meet Nasdaq's minimum stockholders' equity requirement.
Two relevant InvestingPro Tips highlight SmartKem's financial challenges. Firstly, the company is "quickly burning through cash," which could explain the low stockholders' equity reported. Secondly, SMTK is "not profitable over the last twelve months," with a negative P/E ratio of -0.48, underscoring the company's financial difficulties mentioned in the article.
The stock's recent performance also mirrors these concerns. InvestingPro data shows that SMTK's stock price has "fallen significantly over the last three months," with a 3-month price total return of -58.25%. This decline may reflect market sentiment regarding the company's Nasdaq compliance issues.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for SMTK, providing a deeper understanding of the company's financial health and market position.
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