Material Agreement (Form 8-K)

Item 1.01. Entry into a Material Definitive Agreement

On June 22, 2026, SmartKem, Inc. (the "Company") funded an additional bridge loan to Ferrox Critical Minerals, a British Virgin Islands company ("Ferrox"), in the original principal amount of $2,500,000.00, which loan was evidenced by that certain Convertible Promissory Note (the "Note") issued by Ferrox to the Company. The obligations evidenced by the Note shall accrued interest at a rate of 5.0% per annum and will mature on December 31, 2026. Pursuant to the terms of the Note, the Company was paid an originate fee of $200,000.00. Upon an event of default (as defined in the Note), the Company will be paid a default management fee of $4,500.00 per day and the interest rate shall increase to 15% per annum.

The obligations under the Note are convertible into ordinary shares of Ferrox ("Ordinary Shares") at any time by the Company at a price per Ordinary Share equal to the lower (i) the fair market value of an Ordinary Share at the time of conversion as determined by an independent appraisal firm or (ii) the value of an Ordinary Share determined based on a total equity value of Ferrox of $80,000,000, on a fully-diluted basis. The conversion price is subject to customary adjustments for stock dividends, stock splits and stock combinations.

The Note also contains customary negative covenants restricting Ferrox's ability to, among other things, redeem any of its equity securities, incur or repay indebtedness, make or declare any dividends or distributions on its equity securities, sell, lease or otherwise dispose of its assets, amend its charter or enter into any transactions with its affiliates.

The Note also contains a right of first refusal in favor of the Company on any (i) direct or indirect transfer, sale, lease, license or encumbrance of all or any portion of the capital stock or assets of Ferrox or any of its subsidiaries (other than (x) inventory to be sold in the ordinary course of business consistent with past practice and (y) sales of immaterial or obsolete assets), (ii) any merger, consolidation or other business combination relating to Ferrox or any of its subsidiaries to the extent such transaction constitutes a change of control, (iii) any recapitalization, reorganization or any other extraordinary business transaction involving or otherwise relating to Ferrox or any of its subsidiaries to the extent such transaction constitutes a change of control or (iv) equity issuance or debt incurrence involving Ferrox or any of its subsidiaries (each, a "Fundamental Transaction").

Ferrox has also granted the Company exclusivity with respect to any Fundamental Transaction through December 31, 2026.

The Note is additional to the previously announced convertible promissory note issued by Ferrox to the Company on April 23, 2026.

The foregoing descriptions of the terms of the Note do not purport to be complete and are subject to, and qualified in their entirety by reference to, the Note which is annexed hereto as Exhibit 4.1 and is incorporated herein by reference.