SmartKem, Inc. reported significant financial challenges in its 10-Q filing for the period ending September 30, 2024. The company experienced a substantial decline in cash and cash equivalents, which fell to $1.8 million from $8.8 million at the end of 2023. Total current assets also decreased to $3.8 million, down from $10.5 million, while total assets dropped to $4.3 million compared to $11.3 million at the end of the previous fiscal year. Despite a reduction in total liabilities to $2.0 million from $3.2 million, the accumulated deficit worsened to $(109.8 million) from $(95.1 million).

Revenue for the three months ended September 30, 2024, was reported at $0, a decline from $3,000 in the same period of 2023. However, for the nine months ended September 30, 2024, revenue increased to $40,000 from $27,000 year-over-year. Other operating income remained stable at $287,000 for the third quarter and $725,000 for the nine-month period. Operating expenses rose to $3.1 million for the third quarter, up from $2.9 million in 2023, and totaled $8.8 million for the nine months, compared to $8.3 million in the prior year.

The company reported a net loss of $(2.8 million) for the third quarter, slightly improved from $(3.0 million) in 2023, while the nine-month net loss increased to $(7.6 million) from $(7.1 million) year-over-year. Basic and diluted net loss per share for the third quarter was $(0.86), compared to $(1.78) in the same period of 2023, indicating a reduction in losses per share.

SmartKem's financial outlook remains precarious, with management expressing substantial doubt about the company's ability to meet its obligations in the next 12 months without raising additional capital. The company anticipates ongoing operating losses due to costs associated with research funding, technology development, and product commercialization. As of September 30, 2024, the company had not generated sufficient revenue to cover its operating expenses, leading to concerns about its future viability.

Strategically, SmartKem has been involved in various financing activities, including the issuance of preferred stock and warrants, to bolster its capital. However, the company has not raised any proceeds from preferred stock in the current fiscal year, contrasting with $12.4 million raised in the same period of 2023. The company’s ability to continue as a going concern is contingent upon its success in securing additional funding through equity offerings, debt financings, or collaborations.