SCHEDULE 13D/A: Octopus Investments' Stake in SmartKem Dips Below 5% Following Equity Conversion

Octopus Investments and Octopus Titan VCT Plc's beneficial ownership in SmartKem, Inc. has decreased to 4.8% due to the conversion of SmartKem's Series A-1 Preferred Stock into common shares and warrants, not through any sale by Octopus.

Summary

• Octopus Investments Ltd. and Octopus Titan VCT Plc filed Amendment No. 3 to their Schedule 13D regarding their holdings in SmartKem, Inc.
• As of May 8, 2025, Octopus Investments Ltd. and Octopus Titan VCT Plc collectively beneficially own 213,602 shares of SmartKem's Common Stock, representing 4.8% of the outstanding shares.
• This percentage decreased from their previous filing because SmartKem, Inc. converted 835 Series A-1 Preferred Stock into 690,788 shares of common stock and Class C warrants to purchase an additional 1,282,412 common shares.
• The conversion increased SmartKem's total outstanding common shares to 4,431,165.
• The reporting persons did not acquire or dispose of any SmartKem common stock since their last filing on January 21, 2025.
• As a result of the increased share count, the reporting persons' beneficial ownership fell below the 5% threshold.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative for the reporting persons as their percentage ownership was diluted below a key threshold (5%) due to the issuer's capital restructuring, even though they did not sell shares. For the issuer, the conversion could be seen as a positive step in simplifying its capital structure, but the dilution for existing common shareholders is a negative.

Positives

• The reporting persons, Octopus Investments and Octopus Titan VCT Plc, have maintained their absolute share count in SmartKem, Inc., indicating continued investment.

Negatives

• The beneficial ownership percentage of Octopus Investments and Octopus Titan VCT Plc in SmartKem, Inc. decreased from above 5% to 4.8%, diluting their relative stake.
• This dilution was caused by SmartKem's conversion of preferred stock into common shares and warrants, increasing the total outstanding common stock.

Risks

• Existing common shareholders face dilution from the conversion of preferred stock and the potential exercise of warrants, which increases the total number of outstanding shares.
• The decrease in a significant investor's percentage ownership below the 5% threshold might reduce their influence or perceived commitment, although their absolute share count remained unchanged.

Future Outlook

NA

Industry Context

This filing reflects a change in a significant investor's stake due to a capital restructuring event by the issuer, SmartKem, Inc. Such equity conversions are common mechanisms for companies to simplify their capital structure or satisfy obligations related to prior financing rounds, potentially impacting shareholder dilution.

Stakeholder Impact

• Shareholders: Existing common shareholders, including the reporting persons, experienced dilution of their percentage ownership due to the increase in outstanding common shares from the preferred stock conversion and the potential future exercise of warrants.

Key Dates

Keywords

SmartKem Inc., Octopus Investments, Octopus Titan VCT Plc, Schedule 13D, Beneficial Ownership, Equity Conversion, Preferred Stock, Common Stock, Warrants, Dilution, SEC Filing, Investment Fund, Shareholding