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Item 1. Business

2025-03-31 compared with 2024-03-27 · 162 added, 112 removed, 226 unchanged (55% of the section changed)

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and its subsidiaries.

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.

We are seeking to change the world of electronics with a new class of transistor developed using our proprietary advanced semiconductor materials that we believe has the potential to revolutionize the display industry.

Our TRUFLEX® semiconductor polymers enable low temperature printing processes that are compatible with existing manufacturing infrastructure to deliver low-cost, high-performance displays.

Our semiconductor platform can be used in a range of display technologies including MicroLED, miniLED and AMOLED, as well as in applications in advanced chip packaging, sensors, and logic.

We design and develop our materials at our research and development facility in Manchester, UK and provide prototyping services at the Centre for Process Innovation (“CPI”) in Sedgefield, UK.

We also operate a field application office in Hsinchu, Taiwan, close to our collaboration partner, The Industrial Technology Research Institute of Taiwan (“ITRI”).

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.

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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 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.

Because most polymer substrates melt or degrade 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.

The similarity in the 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 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.

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

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.

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 cm 2 /Vs.

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

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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.

Our OTFTs can be processed at temperatures as low as 80°C, enabling the use of polymer substrates that are optically clear and low-cost.

Our OTFTs can be processed at temperatures as low as 80°C, enabling the use of polymer substrates that are optically clear, flexible and less expensive than glass or temperature resistant polymers.

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-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.

Plastics can also be processed in very thin sheets (tens of microns) which saves space within the final product, allowing 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 sensors 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 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.

Our unique materials set comprising BL, SAM, OSC, OGI, SRL and PV inks can be deposited using standard coating techniques such as spin-coating which is widely used for the lithography processes used in TFT manufacturing.

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

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

Advantages of Our TRUFLEX® Technology

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.

All these inorganic processes are operated at high temperatures and therefore require high-cost substrates, especially if they are to be processed on plastic.

All are subject to failure on bending, have limited flexibility, and require additional product engineering for protection during bending to prevent failure of the display.

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

Inorganic TFTs are fabricated using high temperatures for the plasma-enhanced chemical vapor deposition (PECVD) SiNx (often exceeding 300°C).

They therefore require high-cost, temperature resistant polymers (e.g., polyimide) substrates, especially if they are to be used to manufacture plastic-based screens.

All inorganic TFTs can be subject to damage on bending and require additional product engineering for protection during bending to prevent failure of the display.

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 polymeric 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® OTFTs are uniquely suited for this application.

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

We believe that our ability to employ TRUFLEX® materials at temperatures as low as 80°C will enable manufacturers to use low-cost plastic substrates and the polymeric nature of our materials will allow the transistors to be truly flexible.

We believe that robust and lightweight display screens, which are capable of being curved, flexed or folded to tight bend radii, would enable manufacturers of mobile devices to create products more tailored to customer demand and that our TRUFLEX® OTFTs are well suited for this application.

Our materials are organic and polymer-like and hence can withstand the mechanical 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.

Low temperature processing enables a wider range of plastic substrates to be used, allowing properties such as optical clarity to be optimized.

There are also opportunities to process the OTFT on top of other display elements, such as a micro-LED array since the low process temperature would not damage the emissive components.

Our low-temperature OTFTs also permit them to be poured on top of other display elements, such as a MicroLED array, since the low process temperature would not damage the emissive components.

We believe this ability to pattern the backplane on top of other components could lead to alternative display or sensor design configurations with advantages such as higher aperture ratio.

We also believe that our ability to build the backplane in-situ over the micro-LED array — which would eliminate the critical front and backplane hybridization step — has the potential to increase the yield of the display fabrication process.

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.

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.

We also believe that our ability to build the backplane in-situ over the MicroLED array (the ‘chip-first’ approach) — which would eliminate the critical front and backplane hybridization step — has the potential to increase the yield of the display fabrication process while also reducing manufacturing cost.

The small size of MicroLEDs (normally under 100 microns and evolving down to <20 microns) and tight pixel

pitches make it challenging to ensure each MicroLED aligns perfectly with the corresponding pixel driver on the backplane.

Electrical connection of the MicroLEDs 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 high precision and well-established photolithography processing 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 MicroLED pads.

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

The difficulty of manufacturing MicroLEDs with existing technology has led to delays in the rollout of the MicroLED displays.

For example, in March 2024, Apple Inc.

reported that it had cancelled its project to develop MicroLED displays in-house for wearable devices, including the Apple Watch.

Because a number of development projects were delayed, scaled back or postponed in the wake of Apple’s action, media reports speculated that Apple’s setback might affect continued development of MicroLED technology.

However, development of MicroLED technology has continued at a rapid pace with Samsung Electronics Co., Ltd.’s (“Samsung”) “The Wall” being a prominent example of a commercially available MicroLED display, while Sony Group Corporation (“Sony”) also produces MicroLED video walls and cinema screens.

Additional global display manufacturers who continue to pioneer MicroLED display technology include LG Corporation (“LG”), AUO Corporation (“AUO”) and BOE Technology Group Co., Ltd.

and it is widely acknowledged that next generation displays will inevitably migrate to MicroLED technology due to its higher brightness and resolution.

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.

We have developed in-house the materials necessary to fabricate high-performance OTFT devices, other than 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 separate layers 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.

Products have been scaled up for formulated ink supply to customers in package sizes ranging from 100ml to several liters, all supplied from our Manchester facility.

These are supplied with a 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, with the choice of two facilities, depending on the application size and quantity.

Through our current agreement, expiring on March 31, 2025, 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”).

Additionally, in partnership with ITRI, we have 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 believe that the successful development of commercial manufacturing processes and their validation on ITRI’s equipment will help to accelerate the adoption of our materials technology and process concepts by display manufacturers.

During 2024, we continued to develop the process of establishing the

fabrication of our OTFT-based devices, including by conducting the set-up of the recipes for the individual device layers.

We do not have the in-house capability to produce our flexible transistors at commercial scale and intend to partner 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.

This allows potential customers to evaluate physical samples of our materials prior to committing to final design and long-term supply agreements.

During 2023, we announced the successful creation of the first monolithic MicroLED 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.

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

In 2024 we showed the first flexible samples of MicroLEDs using our chip-first approach at the International Meeting on Information Display (IMID).

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 MicroLED displays by demonstrating the ability to efficiently manufacture MicroLED displays by simplifying the process of connecting transistors to LEDs.

Consumer electronics companies are actively developing MicroLED displays because such displays promise higher brightness, lower power consumption and longer lifetime than current display technology.

The existing manufacturing processes for creating MicroLED 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 leading to significant and costly rework and low yields.

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

This “chip first” approach 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 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 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.

The main market for our technology is in the display industry.

According to Omdia, the global display market size is forecast to exceed 200 million square meters of area in 2025, with over 75% of this in the TV and public display segments.

The overall global display market was estimated at around $150 billion in 2024.

Advances in display technology focus on improving image quality and power consumption and the development of new form factors, such as flexible/foldable or curved displays.

MicroLED technology is a focus of leading OEMs because it offers higher brightness, better energy efficiency and longer lifespans compared to traditional displays.

MicroLED Technology is being targeted at a range of applications including premium TV, commercial signage and automotive applications.

Markets and Markets Research Pvt.

projects that the MicroLED market will grow from $592 million in 2021 to over $21 billion by 2027—a 81.5% compound annual growth rate (CAGR).

According to a research report from Grand View Research, Inc., 34% of MicroLED revenue in 2023 came from the 3,000 to 5,000 pixel per inch segment (smartphones, smartwatches and VR devices) while the greater than 5,000 pixel per inch segment is expected to grow at a 79% CAGR from 2024 to 2030, driven by rising demand for high-resolution displays in AR/VR headsets like Apple’s Vision Pro and the Meta Quest Pro.

The Business Research Private Ltd.

reported that it expects the smartwatch market to grow from $91.01 billion in 2024 to $106 billion in 2025, a 17% CAGR.

In addition, Maximize Market Research PVT.

has reported that the automotive display market was valued at 8.4 billion in 2023, and that total automotive display revenue is expected to grow at a CAGR of 18.26 % from 2024 to 2030, reaching nearly $27.2 billion by 2030.

We believe that our technology can offer single or complete materials sets and novel process and architecture solutions (e.g., chip-first for OTFT backplanes) for most display segments.

Our proprietary TRUFLEX® organic materials set enable customers to make backlight units and direct emissive displays that are both flexible and capable of driving stable currents, combined with the benefits of low temperature processing.

Recently, several manufacturers have launched TVs with mini-LED backlight units, and a number of companies are developing a new generation of direct emission MicroLED displays (including Samsung, with ‘The Wall’ offering unparalleled brightness and visual clarity, Sony, LG and AUO), 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 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 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.

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

Our customized inks can be made with low viscosity, low processing temperatures and without the use of hazardous solvents.

In addition, our organic inks offer low film stress and shrinkage/warpage versus many established materials.

We believe there are other markets in which our materials may offer advantages.

For example, 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 the growth in Internet of Things (IoT) devices also offer opportunities for low cost, mass manufacturable, printable logic devices, as can be made possible by our technology platform.

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

Commercialization Strategy

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

We intend to seek to work with leading display makers, end users and chip packaging players to undertake joint validation programs and support, through a structured technology transfer process and the development of a scalable manufacturing capability with our partners.

In the case of advanced semiconductor packaging dielectrics, we intend to seek to partner with equipment companies – who have well-established channels to the outsourced semiconductor assembly and test (OSAT) customers in Asia - formulating ink specific to the workstation design (e.g., for inkjet printing).

Initial volumes of inks will come from our Manchester materials technology center and later we expect to establish one or more accredited materials manufacturing plants that will supply our client base.

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.

We design and develop our materials at our research and development facility in Manchester, UK, where we respond to customer inquiries and anticipate market trends.

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).

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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.

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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.

We have entered into a four-year collaboration with Flexible Integrated Circuits S.L.

(FlexiIC) with the aim of configuring open-source or low-cost paid for EDA tools for our OTFTs.

Development of Robust Commercial Manufacturing Processes

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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.

While we can provide prototype foundry services for potential customers through our access to CPI and ITRI 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, including ITRI.

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.

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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.

2025 Management Goals

Our management has established a number of 2025 operational goals for our company in furtherance of our efforts to commercialize our products:

● Commence development work on a rollable, transparent MicroLED display with our partner, AUO – commenced in January 2025;

● Complete the first sale of our TRUFLEX® materials to Chip Foundation under the terms of our co-development agreement – completed in January 2025;

● Extend our technology transfer agreement with RiTdisplay to transfer our OTFT process from ITRI to RiTdisplay’s Gen2.5 line;

● Enter into a joint development agreement for a “chip-first” MicroLED display;

● Enter into additional collaboration and/or co-development agreements that further advance our technology toward commercialization;

● Produce a demonstration of a MicroLED display using our OFT technology.

These goals are primarily aspirational in nature and may be subject to modification, alteration or elimination as a result of a number of factors, such as changes in market trends, access to capital, changes in potential customer preferences, performance by our collaboration partners, and technological developments, many of which are out of our control.

There can be no assurance that we will achieve the goals described above or that our achievement of those goals will result in the successful commercialization of our products.

Accordingly, investors are cautioned not to place undue reliance on these goals in making an investment decision about our company.

For additional information, see “Cautionary Note on Forward-Looking Statements” and “Risk Factors” elsewhere in this report.

Sales and Marketing

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.

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.

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 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.

The majority 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.

Many of these target companies are already seeking to develop MicroLED technology.

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

We believe display manufacturers 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.

The same region is also a source of new inquiries for evaluation of use of our unique dielectrics in the advanced chip packaging sector.

We have a direct sales force consisting of two employees located in Taiwan, assisted by two technology transfer engineers, and sales representation in China.

Our technical specialists and senior management team also play an active role in promotional events and engage with strategic partners in Asia.

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

Our sales team is supported for new program delivery by engineers and product specialists located the materials technology center in Manchester, our ITRI production validation facility in Taiwan and our prototyping and development site in Sedgefield.

We anticipate building up our sales and marketing resources through a mixture of new in-house and specialist agencies.

Our marketing efforts include attendance at significant industry trade shows (including in 2024:

the IMID, the International Conference on Flexible and Printed Electronics (ICFPE), the PlayNitride MicroLED Technology Forum, SEMICON Taiwan and MicroLED Connect) at which we demonstrate the capabilities of our TRUFLEX® technology and respond to requests for proposals and other inquiries from potential customers.

We publish technical papers that explain our products and technology to inform and engage with potential customers.

We also have entered into a number of joint development agreements to demonstrate the capabilities of our materials and to show the feasibility of utilizing our products in specific applications.

We have also entered into several joint development agreements to demonstrate the capabilities of our materials and to show the feasibility of utilizing our products in specific applications.

In addition, we make presentations at trade events to showcase our technology and familiarize potential customers with the value we believe our technology adds to various applications.

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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.

We fabricate prototypes using the foundry access we have through our existing arrangements with CPI in the UK (for smaller sizes) and ITRI in Taiwan (for Gen 2.5).

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.

in further engineering and design work.

We expect that we will receive compensation for those services.

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Research and Development

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.

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

Our research and development efforts have focused on ensuring that we have a broad, future-proofed portfolio of best-in-class organic semiconductor materials that are patent protected.

Some critical OTFT device parameters include:

● Charge mobility – the ability of the material to conduct charge under an electric field.

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

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 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.

Since 2023, our chemistry team has switched its focus from the development of organic semiconductors to the development of a range of specialized photoimageable dielectric polymers.

Some of these dielectric materials are intended for use in the display industry as redistribution layers, passivation layers, MicroLED interlayers and as pixel definition layers.

In response to requests from potential customers, we have also directed our efforts to the development of customized dielectric materials to be used in the field of Advanced Electronics packaging.

Some of the technical challenges facing the development of these dielectrics include tuning interfacial adhesion between a broad range of different interlayers including polymer-to-polymer, polymer-to- metal and polymer-to-silicon interfaces.

Another important aspect of the development of novel dielectric inks for advanced packaging applications

is the need for them to be capable of being deposited using a range of coating /printing techniques, including use in additive printing such as industrial ink jet printing.

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.

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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.

At any given time, our dielectric inks are under evaluation by a number of potential 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.

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

Through this work, we believe we have developed a novel method for integration of OTFT backplanes and micro-LED devices.

Through this work, we believe we have developed a novel method for integration of OTFT backplanes and MicroLED devices.

We believe this process is feasible due to the low temperature processing of OTFT.

We believe that the use of higher temperature materials, such as a-Si, LTPS and IGZO, would damage the LED devices.

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).

As a result, current practice is to attach the MicroLEDs after the backplane is fabricated.

Using our process, we have demonstrated active-matrix backplanes driving MicroLEDs using OTFT at high brightness (>100,000 nits).

We have sought patent protection for our processes.

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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 current agreement with CPIIS expires on March 31, 2025 but has been extended until May 31, 2025 as described in the next paragraph.

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

CPIIS is in the process of reviewing the operation of the clean room facility used by Smartkem and is seeking to reduce the facility’s operating costs by, among other things, consolidating its clean rooms and seeking to pass more of its operating costs to users including us.

On March 28, 2025, we entered into an agreement with CPIIS pursuant to

which the term of the current CPIIS agreement was extended until May 31, 2025.

We intend to use the extension period to complete negotiations with CPIIS regarding a longer-term agreement.

Under the terms of the extension, we have agreed to an increase in our share of the costs of the CPI facility and to increased minimum usage obligations during the extension period.

We expect that any longer-term agreement with CPIIS will require us to bear additional costs.

If we are unable to reach a new agreement with CPIIS on terms that are satisfactory to us, we intend to find an alternative facility.

We believe that there are adequate alternative sites available at which we could conduct our prototyping operations.

In the event that we decide to move our prototyping operation to an alternative facility, we believe that the move would take between two and nine months, depending on equipment availability and any required facility modifications, during which time we would incur additional costs to prepare the new facility and install any necessary equipment.

In such event, we intend to schedule our prototyping activities to minimize any disruption to those operations and would use ITRI’s prototyping line as an interim facility for such work.

Collaboration Agreements

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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.

In 2023, we entered into a technology transfer agreement 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 2025, we entered into a memorandum of understanding with RiTdisplay for the extension of our existing technology transfer agreement which, when finalized, will include the integration of our OTFT process on to RiTdisplay’s Gen 2.5 Pilot Line which will enable us to provide product prototyping of the world's first commercially ready AMOLED display using OTFT technology on a commercial Gen2.5 OTFT product manufacturing line at RiTdisplay’s existing state-of-the-art facility in Hsinchu, Taiwan.

The memorandum of understanding is non-binding and there can be no assurance as to whether or when a definitive agreement will be executed by the parties or as to the ultimate terms of any such agreement.

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

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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.

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

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

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

Also in February 2024, we entered into a collaboration agreement with FlexiIC to develop low-cost, rapid turnaround custom circuits using organic transistor technology.

A few months later we signed a multi-year agreement with FlexiIC to develop a new generation of CMOS for smart sensors.

In March 2024, we entered into a technology collaboration agreement with ITRI to enable product prototyping on ITRI's Gen 2.5 equipment using our technology.

In September 2024, we entered into a joint development agreement with Chip Foundation to co-develop a new generation of MicroLED backlight technology for Liquid Crystal Displays.

In November 2024, we partnered with AUO to develop a new generation of rollable, transparent MicroLED displays using our technology.

Intellectual Property

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Our patents cover the active organic semiconductor materials, passive interlayer formulations, and deposition processes comprising our TRUFLEX® technology.

We also have numerous patent claims and pending patent applications covering a variety of electronic devices including a novel dual gate application that enables enhanced Vto control and recent applications include Micro-LED devices and improved processes.

Because our patent portfolio covers all material aspects of our TRUFLEX® technology, we believe we have strong protection for our technology and a competitive advantage over potential competitors who may seek to duplicate our ability to create flexible transistors.

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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.

We validate active components internally before use.

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We have not experienced any supply shortages with respect to the materials used to formulate our proprietary inks.

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

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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Government Regulation

In addition to customer specific requirements for safety health and the environment, our formulated materials also may be subject to government regulation during their use in the country of device manufacture and from regulations covering the materials in the finished device.

In addition to customer specific requirements for safety health and the environment, our formulated materials may also be subject to government regulation during their use in the country of device manufacture and from regulations

covering the materials in the finished device.

These could include the toxicity (potential for Carcinogenicity, Mutagenicity, and Teratogenicity) and restrictions from the environmental protection agencies in the countries of manufacture.

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As of December 31, 2024, we had 27 full-time employees and two part-time employees of which 23 are based in the United Kingdom.

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

We believe that our scientists and technical experts are significant assets of our business, and we value and support hiring exceptional talent to further develop our TRUFLEX® technology and drive our business growth.

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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