What changed in this filing

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Item 1. Business

2024-03-27 compared with 2023-03-30 · 170 added, 132 removed, 168 unchanged (64% of the section changed)

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and its subsidiaries.

We are seeking to reshape the world of electronics with our proprietary organic semiconductor platform that we believe has the potential to affect the form and function of the next generation of low-cost displays and sensors.

Our patented TRUFLEX® inks are solution deposited at a low temperature, on low-cost substrates to make OTFT circuits.

Our organic semiconductor platform can be used in a number of display technologies including miniLEDs, microLED and AMOLED displays that can drive televisions, laptops AR and VR headsets, smartwatches and smartphones.

We have a research and development facility in Manchester, UK, and manufacture product protypes for prospective customers using our semiconductor manufacturing processes housed at the Centre for Process Innovation (CPI) at Sedgefield, UK.

We have an extensive IP portfolio including 125 granted patents across 19 patent families, and 40 codified trade secrets.

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.

We design and develop our materials at our research and development facility in Manchester, UK.

We manufacture prototypes for prospective customers at the Centre for Process Innovation (“CPI”) in Sedgefield, UK.

We also operate a field application office in Taiwan.

With our collaboration partners, we are developing a commercial-scale production process and EDA tools for our materials to demonstrate the commercial viability of manufacturing a new generation of displays using our materials.

We have an extensive IP portfolio including 125 granted patents across 19 patent families, 15 pending patents and 40 codified trade secrets.

Our Technology

The invention and development of FET devices has enabled the rapid expansion of the electronics industry, particularly with the advent of the planar process essential for integrated circuitry.

The invention and development of OTFT devices has enabled the rapid expansion of the electronics industry, particularly with the advent of the planar process essential for integrated circuitry.

This is due to the ability to create compact circuits with an ever-increasing capability, lower cost per logic function, and a higher frequency of operation.

Integrated circuits are present in almost all electronic devices today and there is a constant drive to embed smart features into a greater number of applications.

Integrated circuits are present in almost all electronic devices today and there is a constant drive to embed more smart features into a greater number of applications.

TFTs are a type of FET that can be processed on large area flat surfaces to make display screen backplanes, digital/analog electronics, and sensor arrays for a wide range of consumer and industrial applications.

The manufacturing of silicon-based electronics either in wafer or thin-film form, such as a-Si on glass, requires a high temperature process (approximately 300°C).

Because plastic materials melt at high temperatures, TFTs are manufactured on special glass that can withstand such high temperatures and are used to produce mainly rigid products.

Our OTFT technology comprises predominantly organic materials (such as polymers and organic small molecules) that can be solution coated at low temperature (as low as 80°C) onto a wide range of low-cost plastic substrates, as well as traditional substrate materials.

Because most polymer substrates melt at these high temperatures, TFTs are mainly manufactured on special glass that can withstand such high temperatures resulting in the production of mainly rigid products.

Our OTFT technology comprises predominantly organic materials (such as polymers and organic small molecules) that can be solution coated at low temperature (as low as 80°C) using existing manufacturing infrastructure onto a wide range of low-cost plastic substrates, as well as onto traditional substrate materials.

The similarity in stretchability and coefficient of thermal expansion between the substrate and our TRUFLEX® materials permits production of robust, bendable/flexible and lightweight devices.

Our OTFT performance, as measured by charge mobility, exceeds a-Si performance by a factor of four, which we believe offers product designers a significant extension of capability, by enabling them to transform flat, bulky objects into lightweight, robust, and flexible products that we expect will appeal to consumers.

Our OSC materials use a polycrystalline small molecule with high mobility, together with a low molecular weight semiconducting polymer, to control the morphology, phase segregation and uniformity of the semiconducting layer and a solvent to deliver inks that are used to make devices with mobilities in excess of 4 cm2/Vs.

In addition, we have developed all the other layers that are necessary to form the complete transistor stack.

Plastic substrates, such as PET, PEN, TAC and COC have relatively low Tg in the range of 100°C to 200°C.

Our device stability under positive and negative thermal bias stress testing (60°C for 1 hour at +/-30V) achieves <2V change in threshold voltage even without device encapsulation).

The current driving ability of the short channel OTFT devices has been shown to be able to drive mini and micro-LED displays at >100,000 nits, making the technology attractive for use in emissive display applications.

Our recent demonstration of monolithic integration (OTFT backplane processed on top of GaN mini/microLED arrays) proved the viability of using a monolithic manufacturing process that is more efficient that existing manufacturing techniques.

Our OSC materials combine a high mobility polycrystalline small molecule with a low molecular weight semiconducting polymer.

The polymer controls the morphology, phase segregation and uniformity of the

semiconducting layer and a solvent is included to deliver inks that are used to fabricate devices with mobilities of approximately 4 cm2/Vs.

In addition, we have developed all the other interlayer polymers that are necessary to form the complete transistor stack.

Polymeric plastic substrates, such as PET, PEN, TAC and COC have relatively low glass transition temperatures (Tg) in the range of 100°C to 200°C.

Using these plastics at temperatures above this level causes significant distortion and, in some instances, may even result in melting or thermal breakdown of the polymer.

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In addition, short duration processing at low temperature results in significant energy savings.

Also, plastics do not have the same risk of shattering as glass and therefore less strengthening around the edge of large area plastic-bases devices is necessary, such as the use of aluminum frames to support torsional rigidity.

Plastics can also be processed in very thin sheets (tens of microns) which saves space that can be used for increased battery capacity.

Thin plastic substrates also enable the device to conform very easily to non-planar

surfaces such as the human body which makes them well suited for wearable sensor and display devices.

Thin plastic sheets are also conformable, allowing electronics to be curved around irregular surfaces.

Also, plastics do not have the same risk of shattering as glass and therefore less strengthening around the edge of large area plastic-based devices is necessary, such as the use of aluminum frames to support torsional rigidity in glass substrates.

Plastics can also be processed in very thin sheets (tens of microns) which saves space within the final product that can be used instead for increased battery capacity.

Thin plastic substrates also enable the device to conform very easily to non-planar surfaces such as the human body which makes them well suited for wearable sensor and display devices.

Thin plastic sheets are also conformable, allowing electronics to be formed around irregular surfaces, for example, curved pillars in buildings.

Our BL, SAM, OSC, OGI, SRL and PV inks can be deposited using standard coating techniques such as spin-coating or slot-die coating which are widely used for the lithography processes used in TFT manufacturing.

As a result, our OTFT process can be integrated into existing manufacturing lines using standard industrial techniques without the need for large capital investment.

As a result, our OTFT process can be integrated into existing manufacturing lines using standard industrial techniques without the need for additional large capital investment.

Furthermore, the solubility of our inks would permit customers to digitally print the features of the OTFT device, which we believe may be attractive to potential customers seeking to lower manufacturing costs.

In February 2023, we joined the collaborative Hi-Accμracy project that brings together eleven of the most

innovative and forward-thinking companies in the industry in a bid to establish the next generation of OLAEs – including OTFT and EL-QD-LED based displays.

Our role will include developing an OTFT back-plane upon which a QD-LED front-plane will be printed.

The resulting 300ppi RGB display will showcase the performance of our range of

TRUFLEX® materials when used in conjunction with micron scale additive patterning processes and low temperature

processing conditions.

As part of the Hi-Accµracy project, printing of our OSC inks is being trialed using high resolution and high efficiency Reverse Offset Printing and Electrostatic Jetting as a route to future large area manufacture of flexible OLAE structures such as OTFTs and EL-QD-LED displays.

Products and Services

We have internally developed all the materials necessary to fabricate high-performance OTFT devices except for the contact metals and substrates on which those materials are deposited.

We supply our products as a set of stable liquid inks, with each ink forming a separate layer of the device.

Each of the inks forming these layers has been carefully designed to result in the device performance and electrical stability required by the customer.

We supply the ink set with a detailed POR for making the desired device.

In addition to supplying our OTFT stack materials as a package, prospective customers are evaluating the use of our range interlayer materials as single layers in new and existing chip and display products, such as redistribution layers, pixel definition layers, permanent resists and organic dielectric layers due to the favorable processability, patternability and other properties of our materials when compared with existing materials.

Products have been scaled up for formulated ink supply to customers in packages sizes ranging from 100mL to several liters.

These are supplied with CoA and POR alongside device and design consultancy to ensure successful technology transfer.

We intend to offer foundry services to customers who wish to have electronic circuits manufactured for them.

Through arrangements with the United Kingdom’s CPI, we have access to a 2.5 generation (370mm x 470mm) foundry that we use for creating prototypes for evaluation by potential customers.

In 2022 we began process characterization using a maskless aligner at CPI to reduce the time from CAD layout to prototype for new designs.

Additionally, in partnership with The Industrial Technology Research Institute of Taiwan, we successfully demonstrated the direct patterning of one of our interlayer dielectric materials using digital lithography technology (DLT).

We do not have the ability to produce our flexible transistors at commercial scale and intend to seek relationships with existing foundries that are capable of producing our products at commercial scale to provide us with the ability to meet full production orders for customers that do not have their own facilities.

We use product prototyping services to demonstrate applications enabled by OTFT to prospective customers.

This allows potential customers seeking to evaluate physical samples of our materials prior to committing to purchase.

In early 2023, we announced the creation of the first monolithic micro-LED display using OTFTs.

We believe that by simplifying the process of connecting transistors to LEDs, there is the potential to accelerate the commercialization of micro-LED displays.

Consumer electronics companies are actively developing micro-LED displays since they promise higher brightness, lower power consumption and longer lifetime.

We believe this will be particularly important for portable powered displays such as smartwatches and AR/VR displays which cannot readily accommodate large batteries.

Advantages of Our TRUFLEX® Technology

The most widespread technology is a-Si which is principally used in the manufacture of backplanes for LCDs.

The most widespread display backplane technology currently in use is a-Si which is principally used in the manufacture of LCDs.

More recent developments in inorganic semiconductors include use of the metal oxide IGZO for backplanes for large area OLED TVs and LTPS for high resolution cell phones.

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This adds to the overall cost of production of a bendable or foldable device.

Our ability to employ TRUFLEX® materials at temperatures as low as 80°C enables manufacturers to use low-cost plastic substrates and the organic nature of our materials allows the transistors to be truly flexible.

We believe that robust and lightweight display screens which are capable of being bent or folded would enable manufacturers of mobile devices to create products more tailored to customer demand and that our TRUFLEX® OFTFs are uniquely suited for this application.

Our materials are organic and hence can withstand the strains experienced in severe bending such as a fold of a display.

Our ability to employ TRUFLEX® materials at temperatures as low as 80°C enables manufacturers to use low-cost plastic substrates and the polymeric nature of our materials allows the transistors to be truly flexible.

Our materials are organic and polymer-like and hence can withstand the strains experienced in severe bending such as a fold of a display.

In addition, the substrate does not require the degree of protection from the edges as glass displays do which can eliminate the weight and cost associated with aluminum frames.

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The small size of micro-LED’s and tight pixel pitches makes it challenging to ensure each micro-LED aligns perfectly with the corresponding pixel driver on the backplane.

Additionally, hybridization processes can introduce a thermal mismatch between the front and backplane materials causing micro-LEDs to crack or fail from the mechanical stress and can produce a non-uniform bond between the two layers.

We believe our monolithic build process will greatly reduce or eliminate these issues.

Moreover, when micro-LEDs are directly integrated into the backplane using a monolithic process there is no requirement for the supplementary layers and interfaces needed in some production methods to bond the two pieces together — consequently optical losses should be reduced, and overall efficiency of the display should be improved.

Electrical connection of the micro-LEDs on top of the display backplane requires the use of eutectic bonds through a metal junction containing at least one low melting point metal.

Deposition and patterning of the low melting point metal for the bumping process typically uses thermal evaporation and lift-off processes, which are not typically used in display

backplane fabs, therefore creating uncertainty over the scale up of this approach.

Our chip-first integration route makes use of photolithography and/or dry etching to form vias through one of our dielectric layers and then a metal contact is deposited through the via to connect to the micro-LED pads.

The metallization process uses sputtering, photolithography and wet etching, all of these are scalable techniques used in current display manufacturing.

Products and Services

We have developed in-house the materials necessary to fabricate high-performance OTFT devices except for the contact metals and substrates on which those materials are deposited.

We supply our products as a set of stable liquid inks, with each ink forming a separate layer of the device.

Each of the inks forming these layers has been carefully designed to result in the device performance and electrical stability specified by the customer.

We supply the ink set with a detailed process of record (“POR”) for making the desired device.

In addition to supplying our OTFT stack materials as a package, prospective customers also evaluate the use of our range of interlayer materials as single layers in new and existing chip and display products (in so-called Advanced Electronics packaging).

The interlayer materials are being tested as redistribution layers, pixel definition layers, permanent resists and organic dielectric layers due to their favorable processability, patternability, planarity and other properties of our materials when compared with existing materials.

During 2023, we began developing a range of customized dielectric inks for customers’ Advanced Electronics packaging applications.

Products have been scaled up for formulated ink supply to customers in package sizes ranging from 100mL to several liters.

These are supplied with certificate of analysis CoA and POR alongside device and design consultancy to ensure successful technology transfer.

We intend to offer foundry services to customers who wish to have electronic circuits manufactured for them.

Through our agreement with the United Kingdom’s CPI, we have access to a 300mm x 300mm foundry that we use for creating prototypes for evaluation by potential customers.

In 2022 we began process characterization using a maskless aligner at CPI to reduce the time from CAD layout to prototype for new designs.

Additionally, in partnership with The Industrial Technology Research Institute of Taiwan (“ITRI”), we successfully demonstrated the direct patterning of one of our interlayer dielectric materials using digital lithography technology (“DLT”).

In 2023, we entered into a transfer technology agreement with ITRI pursuant to which ITRI is developing Gen 2.5 scale (370mm x 470mm) commercial manufacturing processes for a range of our OTFT materials.

The goal of our agreement with ITRI is to develop robust commercial scale manufacturing processes that will enable potential customers to develop prototypes on ITRI’s Gen2.5 line using our OTFT technology before transferring the manufacturing process to their own lines or to a third-party foundry, including ITRI.

We believe that the successful development of commercial manufacturing processes will help to accelerate the adoption of our technology by display manufacturers in Taiwan and other areas of Asia.

We do not have the in-house capability to produce our flexible transistors at commercial scale and intend to seek relationships with existing foundries to provide us with the ability to meet full production orders for customers that do not have their own facilities.

We use product prototyping services to demonstrate applications enabled by OTFT to prospective customers.

This allows potential customers to evaluate physical samples of our materials prior to committing to purchase.

During 2023, we announced the successful creation of the first monolithic micro-LED display using OTFTs, which was the result of our collaboration with Prof.

Xiaojun Guo’s group at Shanghai Jiao Tong University, China.

This break-through was published in November 2023 in the peer-reviewed journal, Nature Communications .

We believe that this new method of processing our thin-film transistor backplane on top of Gallium Nitride LEDs has the potential to accelerate the commercialization of micro-LED displays by demonstrating the ability to efficiently manufacture micro-LED displays by simplifying the process of connecting transistors to LEDs.

Consumer electronics companies are actively developing micro-LED displays because such displays promise higher brightness, lower power consumption and longer lifetime.

The existing manufacturing processes for creating micro-LED displays use physical transfer of LEDs from the wafer upon which they are manufactured to the TFT display backplane, where they must be laser welded to the contact pad of the transistor to make an electrical connection.

Because millions of tiny LEDs

need to be transferred from one place to another and welded into place, error rates from misplacement reduce the efficiency of these processes.

Our low temperature process makes it possible for OTFT transistors to be processed directly on top of the micro-LEDs.

This eliminates the mass transfer and laser welding process, and the fabrication of OTFTs can use existing low-cost manufacturing tools currently used for LCD backplane manufacturing.

We believe that the improvements available through the adoption of our process will be particularly important for portable powered displays such as smartwatches and AR/VR displays which cannot readily accommodate large, heavy batteries.

Market Opportunity

According to Precedence Research, the global display market size was valued at $168.4 billion in 2022 and is projected to hit around $297.1 billion by 2030, expanding growth at a CAGR of 7.35% from 2022 to 2030.

Growth in the display market is driven primarily by increasing demand for consumer electronics, including smart phones, automotive products, e-readers and flat panel displays.

According to Precedence Research, the global display market size was estimated at $158 billion in 2022 and is expected to grow to around $315 billion by 2032, an expected compound annual growth rate of 7.20% during the forecast period.

Growth in the display market is driven primarily by increasing demand for consumer electronics, including smart phones, automotive products, wearables, e-readers and flat panel displays.

We believe that display manufacturers continue to seek product differentiation as a part of their marketing strategies.

Our TRUFLEX® materials enable customers to make backlight units that are both flexible and can drive high currents stably.

Our TRUFLEX® materials enable customers to make backlight units and direct emissive displays that are both flexible and can drive stable currents.

Over the last two years several manufacturers have launched TVs with mini-LED backlight units, and a number of companies are developing a new generation of direct emission micro-LED displays, flexible OLED displays, and transparent OLED displays.

These new formats are supported by a variety of different backplanes using tiled versions of existing technologies or PCB backplanes.

We believe that TRUFLEX® materials can be used to provide active-matrix transistor arrays that can address all of these new product categories using low-cost, flexible substrates.

We believe that TRUFLEX® materials can be used to provide active-matrix transistor arrays that can address these new product categories using low-cost, flexible substrates.

As products become more sophisticated and smart technology is implemented in wider use cases, we expect that manufacturers will seek technology solutions, such as our TRUFLEX® technology that enable them to implement the product designs that consumers will demand.

In addition, we believe that our OTFTs are suitable for applications where a relatively low number of transistors are required over a wide area such as sensors or distributed logic circuits.

In addition, we believe that our OTFTs are suitable for applications where a relatively low number of transistors are required over a wide area such as chemical/biological sensors or distributed logic circuits.

We believe that the low cost of prototyping and our ability to rapidly transition from design to device will help drive the development of these technologies.

Commercialization Strategy

A large sector of our target customers are large consumer electronics companies based in Asia (Taiwan, South Korea, Japan and China) that already own or have access to display backplane manufacturing lines and engage in large scale production of display products for TV or mobile/tablet markets using a-Si process lines.

We believe that these companies are continually seeking to create novel, higher added value electronics products that cannot be manufactured using a-Si glass backplanes.

We believe these potential customers will be attracted to our TRUFLEX® technology which would enable them to create novel, plastic-based products with improved robustness, higher flexibility and lighter weight using their existing production lines.

Other potential customers may not have access to display manufacturing lines and will seek a complete solution for their needs, including production capability.

These are often companies who will use displays as a component within their products and will buy from Asian manufacturers according to what is available at the time.

We can provide prototype production from the Gen 2.5 line at CPI.

We intend to scale this capability by partnering with one or more foundry providers to scale up our ability to meet full production orders for customers that do not have their own facilities.

Once the demand for our backplanes has exceeded our ability to supply products then the market pull would be sufficient to engage Asian display makers to transfer production to their facilities.

Our market strategy includes the identification of specific capabilities or products that we believe can most benefit from our TRUFLEX® technology.

This identification process may involve our marketing efforts or feedback and requests from potential customers.

As described below, once a commercial opportunity is identified, we will engage in a process of demonstration and evaluation with the potential customer.

Our strategy also involves the design and sale of materials for use as logic devices or circuits.

Once we have identified a specific application requirement, we expect to proceed with development work through an understanding of the product specifications and engineering work to calculate the size and capabilities of pixel TFTs and storage capacitors.

For digital logic applications, the situation is more complex, and circuits cannot be designed without access to supporting simulation, design, and layout software.

In silicon IC design, EDA tools are used to predict the behavior of circuits made using foundry services.

This allows designers to simulate the behavior of prototype circuits and check their functionality ahead of the fabrication, therefore saving time and money.

Our commercialization strategy rests on three pillars:

continuous improvement of our polymer materials, development of EDA tools, and development of robust commercial manufacturing processes.

Continued Development of Our Materials

We design and develop our materials at our research and development facility in Manchester, UK.

As described in more detail below under “Research and Development,” we continue to develop new OTFTs in response to customer feedback and market trends.

During 2023, in response to requests from potential customers, our chemistry team has focused on the development of a range of specialized dielectric polymer interlayers.

Additional specialty dielectric polymer formulations are being designed for use in advanced mobile communications operating at frequencies in excess of 5GigaHz (5G applications and beyond).

Interlayer inks are also being provided to potential customers for evaluation across a wide range of advanced electronics packaging applications.

We believe that our knowledge base and experience in the design and characterization of OTFTs gives us the ability to respond rapidly to customer preferences and emerging market trends.

Development of EDA Tools

We have developed an initial PDK for our process that is designed to be used by third parties in EDA software to allow them to design digital logic devices.

The PDK contains information such as design rules that are specific to our process equipment, and it will also incorporate models of OTFTs made using our materials set.

This will be used for digital device simulation and layout of circuit designs.

This will be used for

digital device simulation and layout of circuit designs.

We continue to characterize the electrical performance of our materials and to use that data to improve the correlation between simulations produced using those tools and actual devices.

As part of this development, we expect to populate a library of reference designs for common gates used in digital electronic circuits to further simplify third party design processes.

At this time, our circuit layout work is done by hand by skilled engineers.

For digital logic applications, the situation is more complex, and circuits cannot be designed without access to supporting simulation, design, and layout software.

In silicon IC design, EDA tools are used to predict the behavior of circuits made using foundry services.

This allows designers to simulate the behavior of prototype circuits and check their functionality ahead of the fabrication, therefore saving time and money.

We believe that the development of proprietary EDA tools that permit customers to efficiently design circuits using our processes and materials is an important requirement for our commercial success.

We have identified a potential partner and are currently in negotiations with Flexible Integrated Circuits S.L.

(FlexiIC) with the aim to configure open-source EDA tools for our OTFTs.

Development of Robust Commercial Manufacturing Processes

As a result, our OTFT process can be integrated into existing manufacturing lines using standard industrial techniques without the need for additional large capital investment.

While we can provide prototype foundry services for potential customers through our access to CPI, we do not have the capability to provide commercial-scale foundry services.

We believe that many customers will produce circuits using our OTFT materials either directly or through their existing third-party foundry arrangements.

Accordingly, we believe the development of robust commercial manufacturing processes that use existing foundry equipment and that can be easily transferred to commercial foundries is an important part of our commercialization strategy.

Through our relationship with ITRI, we have successfully demonstrated the direct patterning of one of our interlayer dielectric materials using DLT, a common commercial manufacturing technology.

We believe that the successful development of commercial manufacturing processes will help to accelerate the adoption of our technology by display manufacturers in Taiwan and other areas of Asia.

Sales and Marketing

We have a direct sales force consisting of two employees located in Taiwan, and sales representation in China.

We believe that these companies are continually seeking to create novel, higher added value electronics products that cannot be manufactured using a-Si glass backplanes.

We have a direct sales force consisting of three employees located in Taiwan, and sales representation in China.

Our CEO and management team are also actively engaged in developing customer and partner relationships.

We believe that our initial customers will be located in Taiwan, Japan and the Peoples Republic of China but we are also directly working with OEMs located in North America, Europe and Asia who have the ability to require their suppliers to use our materials.

that our initial customers will be located in Taiwan, Japan and China but we are also directly working with OEMs located in North America, Europe and Asia who have the ability to require their suppliers to use our materials.

Our sales team is supported by engineers and product specialists located at our headquarters in the U.K.

We intend to seek third-party distribution or sale-agent agreements with potential partners where we believe such agreements are justified by the potential market opportunity.

Our sales and marketing efforts were adversely impacted by the effects of the COVID-19 pandemic.

During the pandemic, travel to and from Asia and other regions was significantly restricted.

As a result, we had to cease virtually all business travel and sought to increase our presence in affected markets through other means, including engaging sales representation in China.

In addition, many of our expected customers are located in Asia, which has imposed severe lock-down restrictions in an effort to combat the pandemic.

Those customers have reported supply shortages and

manufacturing delays as a result of the pandemic and the related restrictions, which has had a material adverse impact on the expected markets for our products.

In addition, shipping costs have increased significantly as a result of limitations on other modes of transportation.

Pandemic restrictions have now been mostly lifted in these territories, allowing business travel to recommence.

Our marketing efforts include attendance at significant industry tradeshows at which we demonstrate the capabilities of our TRUFLEX® technology and responding to requests for proposals and other inquiries from potential customers.

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In other instances, a customer may come to us with specific performance specifications and inquire about our ability to provide products meeting their specifications after which we provide samples of materials or specific data for evaluation.

After the initial evaluation, the prospective customer may request a prototype of a specific design as a proof-of-concept.

We fabricate prototypes using the Gen 2.5 foundry access we have through our arrangement with CPI.

After the initial evaluation, the prospective customer may request a prototype of a specific design as proof-of-concept.

We fabricate prototypes using the foundry access we have through our arrangement with CPI.

In 2023 we also commissioned ITRI to establish our OTFT process on their Gen 2.5 line in Taiwan to undertake prototype development in Taiwan.

A significant proportion of all work done during this phase of our sales cycle would be done at our expense, with customers making a contribution in some cases.

Assuming successful prototyping is completed, we expect that we would negotiate and enter into a development agreement with an interested customer under which we would, in collaboration with the potential customer, engage in further engineering and design work.

We expect that we would receive compensation for those services.

We might also engage in pilot-scale level manufacturing of the products developed for the customer as part of that process.

After the satisfactory completion of development work and any related pilot project, an interested customer would then enter into a sales agreement with us under which we would either agree to manufacture products to the customer’s specifications from time to time as requested by the customer, including potential minimum quantity requirements, or we would agree to license our process to the customer for a fee based on a royalty of sales and enter into a supply agreement for our proprietary inks, utilizing a process owned and qualified by us, formulated into inks either in our own facilities or by third-party formulators and shipped directly to customers.

We expect that we will receive compensation for those services.

We could also engage in a pilot-scale level of manufacturing for the products developed for the customer as part of that process.

After the satisfactory completion of development work and any related pilot project, an interested customer would then enter into a sales agreement with us under which we would either agree to manufacture products to the customer’s specifications from time to time as requested by the customer, including potential minimum quantity requirements, or we would agree to license our process to the customer for a fee based on a royalty of sales and enter into a supply agreement for our proprietary inks, utilizing a process developed by ITRI and owned and qualified by us, formulated into inks either in our own facilities or by third-party formulators and shipped directly to customers.

We expect that the sales cycle described above will take approximately 12-24 months.

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Accordingly, we will have a significant risk that we will incur those expenses without ever making a sale.

In October 2021, we entered into a joint development agreement with RiTdisplay, a Taiwan based developer of displays.

Under this agreement the two parties are collaborating on the production of a full color demonstration AMOLED display.

In February 2022, we entered into a joint development agreement with Nanosys Inc., a leader in developing and delivering quantum dot and micro-LED technology.

Under this agreement the two parties will work together on a new generation of low-cost solution printed micro-LED and quantum dot materials for advanced displays.

Research and Development

To-date, we have focused our resources on the development of improved performance organic semiconductors which have high charge mobility, excellent uniformity, device stability and robustly satisfy the TFT performance specifications defined by potential customers.

Our portfolio of available organic semiconductors has been extended as a result of these efforts to include newly synthesized small molecules.

Prior to 2023, we focused our technical resources on the development of improved performance organic semiconductors which have high charge mobility, enable excellent layer uniformity, device stability and robustly satisfy the TFT performance specifications defined by potential customers.

Our portfolio of available organic semiconductors was extended as a result of these efforts to include newly synthesized small OSC molecules.

Our chemistry team, led by our Chief Scientist, has in-depth knowledge of structure-property relationships for organic materials.

Dielectric and passivation interlayer

materials are also critical to enabling the OTFT device current to be maximized while ensuring stability during extended operation under voltage or current bias stress.

Dielectric and passivation interlayer materials are also critical to enabling the OTFT device current to be maximized while ensuring stability during extended operation under voltage or current bias stress.

Some of the critical parameters for performance of an OTFT device include:

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On/off ratios of >10˄6 are typically required for TFTs used in display pixels so that the programmed voltage does not decay during the frame time.

Our OTFTs have on/off ratios in the order of 10˄7 and have even demonstrated 10˄9 on/off ratio in large W/L devices.

Our OTFTs have on/off ratios in the order of 10˄7 and have even demonstrated 10˄9 on/off ratios in devices having large W/L.

● Turn on voltage (“Vto”) – the gate voltage at which the TFT starts to increase its current output.

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● Threshold voltage (“Vth”) – gate-source voltage at which the magnitude of the drain current reaches a specified low value (e.g., 10˄-9A).

● Threshold voltage (Vth) stability – The ability of device to maintain a defined threshold or turn on voltage following a period of electrical stress (either at room temperature or elevated temperature).

● Threshold voltage stability – The ability of device to maintain a defined threshold or turn on voltage following a period of electrical stress (either at room temperature or elevated temperature).

Bias voltage shifts of <2V after 1 hour voltage stress at 60°C and +30V or -30V is a typical specification required for display applications.

We have demonstrated <1V Vth bias stress shift for NBTS and <2V for PBTS in R&D tests.

We are working on integrating this capability into our full five-mask device stack.

More recently, in response to requests from potential customers, our chemistry team has focused on the development of a range of specialized polymer interlayers.

Some of these materials are intended for use in the display industry as redistribution layers and as pixel definition layers.

During 2023, in response to requests from potential customers, our chemistry team has focused on the development of a range of specialized dielectric polymer interlayers.

Some of these materials are intended for use in the display industry as redistribution layers, interlayer dielectrics and as pixel definition layers.

Additional specialty dielectric polymer formulations are being designed for use in advanced mobile communications operating at frequencies in excess of 5GigaHz (5G applications and beyond).

We believe our novel dielectrics should enable manufacturers to offer higher bandwidth and faster speed with lower power consumption.

Interlayer inks are also being provided to potential customers for evaluation across a range of applications.

Once new materials have been characterized, our materials process development team customizes the formulations and process parameters to allow integration into the device process at CPI.

We believe our novel dielectric polymer should enable manufacturers to offer higher bandwidth and faster speed with lower power consumption.

Interlayer inks are also being provided to potential customers for evaluation across a wide range of advanced electronics packaging applications.

Once new dielectric materials have been characterized, our materials development team customizes the formulations and process parameters to allow integration into the fabrication processes at CPI.

This team establishes the BKMs for each material and generates an understanding of the parameters that can influence the performance.

Initial work may also be done to plan scale up routes for the materials in anticipation of the need to supply to customers.

Customers frequently request detailed materials data packages for our customized dielectric materials which once approved by them should enable them to quickly process our polymer inks at their in-house facilities.

Our dielectric inks are currently being evaluated by six end users.

Initial work is also being done to scale up routes and identify potential supply chains for our materials in anticipation of customer needs.

The generation of fabrication processes and the integration of new materials is carried out at CPI under the direction of our Chief Technology Officer.

The toolsets at this site provide a rapid feedback loop between our chemistry R&D and industry relevant device performance data sets.

Additionally, the equipment sets can be used to generate demonstrator OTFT backplane devices on plastic, OTFT driven displays, sensors or circuits and a wide range of other device prototypes Technology transfer to customers’ pilot lines can also be supported by this team and they can help to diagnose and rectify process problems.

Additionally, the equipment sets can be used to generate demonstrator OTFT backplane devices on plastic, OTFT driven displays, sensors or circuits and a wide range of other device prototypes.

Technology transfer to customers’ pilot lines can also be supported by this team and they can help to diagnose and rectify process problems.

Process engineers also travel to customers’ sites to assist technology transfer alongside our field application engineering team in Taiwan.

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As a result, current practice is to attach the micro-LEDs after the backplane is fabricated.

Using our process, we have demonstrated active matrix backplanes driving micro-LEDs using OTFT at high

brightness (>100,000 nits).

Using our process, we have demonstrated active-matrix backplanes driving micro-LEDs using

OTFT at high brightness (>100,000 nits).

We have sought patent protection for our processes.

In addition, the Company has successfully integrated OTFT and OLED (AMOLED) in a 200ppi display.

We are a member of the University of California, Santa Barbara (UCSB) Solid State Lighting and Energy Electronics Centre (SSLEEC) which is conducting innovative research into the development of micro-LED displays.

As a member of the SSLEEC we have the right to obtain access to technologies and intellectual property developed by the Center in technology fields such as micro-LEDs and displays.

In 2023, we obtained exclusive rights to a UCSB patent family related to Micro-LEDs.

We are working to integrate our process into the ITRI facility in Taiwan at Gen 2.5 scale, which should permit commercial-scale processing compared with CPI at a lower defectivity.

The ITRI line running our OTFT process is located close to a number of our current and potential future customers and is expected to simplify the process of transferring the technology into manufacturing.

CPI Agreement

We perform prototyping with our own employees using foundry equipment made available to us by CPI.

We use the CPI facility to produce test samples for internal evaluation and for the supply of demonstrators to potential customers and for general market development.

CPI is funded through a combination of U.K.

government grants, collaborative research and development projects funded by the private and public sector and contracts funded by businesses.

CPI provides services to companies engaged in translating ideas and inventions into commercially successful products and processes.

It operates seven national facilities in the Northeast of England and Scotland and provides relevant industry expertise and assets to its customers.

We have entered into a framework services agreement with CPI Innovation Services Limited (“CPIIS”), the commercial trading company for CPI, pursuant to which we purchase services consisting primarily of access to CPI process equipment required for fabrication as well as access to CPI staff with specific skills, to the extent required, at specified costs, including a minimum annual spending requirement.

We have 14 employees at the CPI facility who operate or support operations and OTFT developments using the CPI equipment on our behalf.

Pursuant to the terms of this agreement, we utilize an online booking system to book equipment for immediate use, subject to availability.

For critical equipment that other CPI customers may seek to use, we may book up to two weeks in advance to guarantee availability.

CPIIS has agreed to use its reasonable commercial endeavors to supply the requested services.

The latest agreement with CPIIS has a fixed term and will be completed at the end of March 2024.

On March 22, 2024 we executed a new Framework Agreement with CPIIS for a twelve-month term commencing on April 1, 2024.

The agreement may be terminated by either party in the event of a breach by the other party.

We also lease office space at CPI’s facility in Sedgefield, England.

Collaboration Agreements

In October 2021, we entered into a joint development agreement with RiTdisplay, a Taiwan based developer of displays.

Under this agreement the two parties are collaborating on the production of a full color demonstration AMOLED display.

In 2023, we entered into a technology transfer with RiTdisplay commencing a joint project to develop the world’s first commercially ready active-matrix OLED display using OTFT technology.

If successful, we believe the project with RiTdisplay will result in the development of the world’s first commercially ready active-matrix OLED display using OTFT technology.

In 2022, we entered into a joint development agreement with a Taiwan-based company for the development of a new generation of miniLEDs signage.

This collaboration is expected to lead to the development of a roll-to-roll process for the manufacture of large format LED displays.

In 2023, we entered into a joint development agreement with a company in Taiwan for the development of a microLED-based display using our OTFT backplane.

In 2024, we entered into a joint development agreement with Tianma Microelectronics, Co, Ltd.

to integrate Smartkem’s organic thin-film transistor technology with Tianma’s oxide transistors to develop OTFT-based microarray biochips.

In July 2023, we entered into a three-year technical services agreement with ITRI.

Pursuant to this technical services agreement, ITRI is developing Gen 2.5 scale (370mm x 470mm) commercial manufacturing processes for a range of our OTFT materials.

The goal of our agreement with ITRI is to develop robust commercial scale manufacturing

processes that will enable potential customers to develop prototypes on ITRI’s Gen2.5 line using our OTFT technology before transferring the manufacturing process to their own lines or to a third-party foundry, including ITRI.

We believe that the successful development of commercial manufacturing processes will help to accelerate the adoption of our technology by display manufacturers in Taiwan and other areas of Asia.

We have three employees supporting this work in Taiwan in addition to support from SmartKem staff in the UK.

Intellectual Property

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We obtain strategic intermediates and final products from multiple sources who produce our active semiconductor materials to our specifications.

Our TRUFLEX® materials fall into two main categories, “active” organic semiconductor materials and “passive” interlayer materials.

Our TRUFLEX® materials fall into two main categories, “active” organic

semiconductor materials and “passive” interlayer materials.

Our active materials generally require high levels of process and product control, and therefore these are synthesized from start to end by us or a third party that has met certain certification requirements and then formulated by us into the organic semiconductor inks.

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In addition, we have not experienced scheduling delays in obtaining access to CPI’s foundry equipment.

To date, our manufacturing and supply operations have not been adversely impacted by the COVID-19 pandemic.

However, we may be impacted in the future as we seek to expand our operations and enter into foundry arrangements with third-party manufacturers.

CPI Agreement

We perform prototyping with our own employees using foundry equipment made available to us by CPI.

We use the CPI facility to produce test samples for internal evaluation and for the supply of demonstrators to potential customers and for general market development.

CPI is funded through a combination of U.K.

government grants, collaborative research and development projects funded by the private and public sector and contracts funded by businesses.

CPI provides services to companies engaged in translating ideas and inventions into commercially successful products and processes.

It operates seven national facilities in the Northeast of England and Scotland and provides industry relevant expertise and assets to its customers.

We have entered into a framework services agreement with CPI Innovation Services Limited (“CPIIS”), the management company for CPI, pursuant to which we purchase services consisting primarily of access to CPI process equipment required for fabrication as well as access to CPI staff with specific skills, to the extent required, at specified costs, including a minimum annual spending requirement.

We have 18 employees at the CPI facility who operate or support operations and OTFT developments using the CPI equipment on our behalf.

Pursuant to the terms of this agreement, we utilize an online booking system to book usage of equipment for immediate use, subject to availability.

For critical equipment that other CPI customers may seek to use, we may book up to two weeks in advance to guarantee availability.

CPIL has agreed to use its reasonable commercial endeavors to supply the requested services.

The latest agreement with CPIIS became effective upon the Closing and has a fixed term of three years.

The agreement may be terminated by either party in the event of a breach by the other party.

We also lease office space at CPI’s facility in Sedgefield, England.

We believe that competition in our targeted markets is based on a variety of factors, including capability, functionality, performance, reliability, ease of use and ability to supply in sufficient quantities.

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However, these competitors either opt to use polymeric semiconductors (BASF SE, Merck KGaA and Sumitomo Chemical Co., Ltd.) that process well but have a lower mobility than the polycrystalline organic materials in our TRUFLEX® materials, or polycrystalline semiconductors that have high mobility but relatively poor uniformity when processed.

We believe our proprietary technology, which combines a polycrystalline molecule with a matched semiconducting polymer, provides higher mobility and better processability over these technologies.

We believe our proprietary technology, which combines a polycrystalline molecule with a matched semiconducting polymer, provides higher mobility, particularly at short channel lengths and better processability over these technologies.

Many of our potential competitors could have substantial competitive advantages such as greater name recognition, longer operating histories, broader and deeper product portfolios, larger customer bases, substantially greater financial and other resources, and larger scale manufacturing operations.

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Changes in export or import laws or sanctions policies, may adversely impact our operations, delay the introduction and sale of our products in international markets, or, in some cases, prevent the export or import of our products and technology to certain countries, regions, governments, persons, or entities altogether, which could adversely affect our business, financial condition and results of operations.

As of December 31, 2022, we had 50 full-time employees and five part-time employees of which 48 are based in the United Kingdom.

As of December 31, 2023, we had 29 full-time employees and two part-time employees of which 26 are based in the United Kingdom.

21 of our employees hold advanced degrees, including 7 Ph.Ds.

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Corporate History

We were originally incorporated as Parasol Investments Corporation in the State of Delaware in May 2020.

We were originally incorporated as Parasol Investments Corporation (“Parasol”) in the State of Delaware in May 2020.

Prior to the acquisition of SmartKem Limited in February 2021, we were a “shell” company registered under the Exchange Act, with no specific business plan or purpose.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business