SmartKem, Inc. Segments Disclosure
14. SEGMENT REPORTING:
We manage our business activities on a consolidated basis and operate as a single operating segment: Semiconductor materials. Our revenue is mostly generated from R&D grants and R&D tax credits. The accounting policies of the semiconductor materials are the same as those described in Note 2 – Summary of Significant Accounting Policies.
Our CODM is our Chief Executive Officer and President, Ian Jenks. The CODM uses Net income, as reported on our Consolidated Statements of Comprehensive Income, in evaluating performance of the Semiconductor materials segment and determining how to allocate resources of the Company as a whole and making decisions on perspective joint development and collaboration agreements. The CODM does not review assets in evaluating the results of the Semiconductor materials segment, and therefore, such information is not presented.
The following table provides the net losses of the Semiconductor materials segment:
Year Ended December 31, | ||||||
2024 |
| 2023 | ||||
Revenue | $ | 82 | $ | 27 | ||
Cost of revenue | 32 | 23 | ||||
Gross profit | 50 | 4 | ||||
Other operating income | 1,017 | 836 | ||||
Operating expenses | ||||||
Research and development | 5,111 | 5,556 | ||||
General and administrative | 6,342 | 5,188 | ||||
(Gain)/loss on foreign currency transactions | 78 | 87 | ||||
Total operating expenses | 11,531 | 10,831 | ||||
Loss from operations | (10,464) | (9,991) | ||||
Total non-operating income/(expense) | 135 | 1,492 | ||||
Loss before income taxes | (10,329) | (8,499) | ||||
Income tax expense | (1) | - | ||||
Net loss | $ | (10,330) | $ | (8,499) | ||
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About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.