{"url_path":"/sec/shmdw/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION ON THE COMPANY**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1987240/0001104659-26-062643-index.html","accession_number":"0001104659-26-062643","cik":"0001987240","ticker":"SHMD","issuer_name":"SCHMID Group N.V.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1987240/0001104659-26-062643-index.html","primary_entity_key":"0001987240","primary_entity_name":"SCHMID Group N.V."},"word_count":8389,"has_tables":true,"body_markdown":"**ITEM 4. INFORMATION ON THE COMPANY**\n\nA. History and Development of the Company\n\nPegasus TopCo B.V. was incorporated as a Dutch private limited liability corporation (*besloten vennootschap met beperkte aansprakelijkheid*) on February 7, 2023, and converted to a Dutch public limited liability company (*naamloze vennootschap*) and renamed SCHMID Group N.V. on April 30, 2024. As part of the Business Combination, the Company changed its legal form to a public limited liability company (*naamloze vennootschap*). The address of the registered office of the Company is Robert-Bosch-Str. 32-36, 72250 Freudenstadt, Germany, and the telephone number of SCHMID is +49 7441 538 0.\n\nSee “*Explanatory Note*” in this Report for additional information regarding SCHMID and the Business Combination.\n\nThe Company is subject to certain of the informational filing requirements of the Exchange Act. Since the Company is a “foreign private issuer”, it is exempt from the rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and the officers, directors and principal shareholders of the Company are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act with respect to their purchase and sale of SCHMID Ordinary Shares. In addition, SCHMID is not required to file reports and financial statements with the SEC as frequently or as promptly as U.S. public companies whose securities are registered under the Exchange Act. However, SCHMID is required to file with the SEC an Annual Report on Form 20-F containing financial statements audited by an independent accounting firm. The SEC also maintains a website at http://www.sec.gov that contains reports and other information that SCHMID files with or furnishes electronically to the SEC.\n\nThe website address of the Company is https://schmid-group.com/. The information contained on the website does not form a part of, and is not incorporated by reference into, this Report.\n\nAll trademarks, service marks and trade names appearing in this Annual Report are the property of their respective holders. Use or display by us of other parties’ trademarks, trade dress or products in this Annual Report is not intended to, and does not, imply a relationship with, or endorsements or sponsorship of, us by the trademark or trade dress owners.\n\nInformation on the Company’s principal capital expenditures and divestitures is included below under “*Item 5. Operating and Financial Review and Prospects*.”\n\n**Relevant developments relating to the Company in the reporting period and up to filing**\n\n*NASDAQ Delinquency and Delisting Notices*\n\nThe Company was unable to file its Form 20-F reflecting its 2024 financial statements in a timely fashion, because accounting and liquidity issues delayed the finalization of its financial statements, and thus the audit. The Company filed a Form 12b-25 Notification of late filing with the SEC on April 30, 2025, setting out the reasons for the delayed filing. When the Company’s 2024 20-F was not filed within the 15-day extension period, NASDAQ sent the Company a notice informing the Company of non-compliance with NASDAQ Listing Rule 5250(c)(1). In accordance with NASDAQ rules the Company submitted a plan to regain compliance with the Listing Rules on July 14, 2025, and was granted an extension by NASDAQ until November 11, 2025, to regain compliance.\n\nThe issues which delayed the Company’s finalization of its financial statements were the complexity of accounting associated with the de-SPAC transaction, the at the time unfinalized nature of documentation, necessary for accounting purposes, relating to its Turkish partnership, and ongoing negotiations with potential investors and its creditors, regarding potential investments and set-off agreements due to a lack of sufficient liquidity of the Company making such agreements necessary for the completion of the financial statements.\n\n38\n\n[Table of Contents](#TOC)\n\nDuring the period until December 2025 the Company negotiated with various of its creditors, including XJ Harbour, to come to agreements regarding a significant portion of the Company’s outstanding debt. SCHMID was also in negotiations with a number of new investors interested in an investment into the Company. During the spring and summer of 2025, the Company agreed to exclusivity with one investor, with whom the negotiations process was far advanced. In September 2025, shortly before signing definitive contracts with this investor (which is a publicly listed company in its home country), the national regulator of the investor’s home country asked the investor to halt the investment process which led to the abandonment of that transaction by the investor. This delay affected the timeline for the Company’s capital raise, and the Company was unable to finalize its financial statements and file its 2024 20-F by November 11, 2025. On November 12, 2025, the Company received a determination letter from NASDAQ notifying it that, based upon its non-compliance with the filing requirement, the staff had determined to delist the Company’s securities. The Company was granted a stay in relation to the removal from trading of the Company’s securities on NASDAQ in accordance with NASDAQ rules upon request by the Company. The Company, in accordance with NASDAQ rules requested a hearing before the NASDAQ Hearings Panel in relation to the determination letter. In January 2026, the NASDAQ Hearings Panel granted the Company an extension to regain compliance with NASDAQ rules. The Company filed its 2024 20-F on February 13, 2026 to regain compliance. By letter received on February 19, 2026, NASDAQ confirmed that the Company has regained full compliance with applicable NASDAQ rules. In application of NASDAQ listing rule 5815(d)(4)(B), the Company is currently subject to a mandatory panel monitoring period of one year from the date of the letter, that is until February 19, 2027.\n\n*Debt Set-Off and Share Issuance Agreements with XJ Harbour and with AVACO*\n\nOn November 12, 2025, the Company entered into a subscription agreement and a set-off agreement with XJ Harbour, pursuant to which the Company agreed to issue and sell shares to XJ Harbour in a private placement. The Company agreed to issue ordinary shares to XJ Harbour at $2.15 per share to set off $26,962,158.90 of liabilities (including accrued interest) owed to XJ Harbour by the Company. In an extraordinary general shareholders’ meeting held by the Company on December 23, 2025, the shareholders authorized the issuance of shares to XJ Harbour. 12,540,539 shares of the Company were issued to XJ Harbour on January 16, 2026, and transferred to XJ Harbour.\n\nOn November 3, 2025 the Company also entered into a subscription and set-off agreement with SCHMID Avaco Korea Co., Ltd, with shares issued but never counted as part of the Company's outstanding shares, as such shares were never entered into the Company’s share register due to them not being registered by January 31, 2026 as contractually required and are to be canceled in accordance with the agreements. (see “*Item 10. Material Contracts*”)\n\n*Term Loan Facility with Black Forest Special Situations I*\n\nThe Company signed a secured two-tranche term loan facility with a total commitment value of up to €10,000,000 with the lender Black Forest Special Situations I, a Cayman Islands incorporated entity, on December 16, 2025. The lender is backed by a consortium that includes the Company’s chairman of the Board, Sir Ralf Speth, members of the Board of directors of the Company, its CFO Arthur Schuetz, and third-party investment and advisory professionals. The first tranche consisted of €2,500,000, which was paid out to the Company on December 18, 2025.\n\nThe second tranche of up to €7,500,000 was not utilized due to the Company issuing USD 30 million in convertible notes (see below).\n\nBlack Forest Special Situations I has a conversion right under the term loan facility, which is exercisable at a share price of US$2.15 into shares of the Company between six months after the draw down of the first tranche and the date of the term loan facility’s maturity, which is 15 months after the first tranche draw down. The first and second tranches may be converted independently of one another. The term loan facility has a 15% p.a. interest rate with interest payable at maturity, unless the conversion right is exercised, and interest is also converted into shares of the Company. Further, the term loan facility includes security by the Company’s majority shareholders, Christian Schmid and Anette Schmid who pledged personal assets for each tranche as security. The Company and the Company’s 100% German subsidiary Gebr. Schmid GmbH are both guarantors.\n\nAs part of the drawdown of the €2,500,000 first tranche, the Company also agreed to issue option rights to Black Forest Special Situations I to acquire 1,250,000 shares of the Company at the prevailing VWAP at the time of concluding the term loan facility, which was $4.19 per share. The term loan facility agreement stipulated that an option agreement shall be executed, which was agreed and signed in January 2026 and sets out the exercise mechanics of the options as well as the discretionary possibility of the Company to cashless exercise the options. The options expire on December 16, 2030, and may be exercised in full or in several parts during the lifetime of the options agreement.\n\n39\n\n[Table of Contents](#TOC)\n\n*USD 30 Million 7.00% Senior Convertible Note due 2028*\n\nOn January 18, 2026 SCHMID entered into an investment agreement with an institutional investor, Linden Advisors LP, to sell, and on January 21, 2026 sold senior convertible notes in an aggregate principal amount of $30.0 million convertible into ordinary shares of the Company together with the issuance of warrants to purchase ordinary shares of the Company in a private placement to the Investor. The notes were issued at 98% of principal amount pursuant an indenture in two tranches to Linden Capital L.P., Crown Managed Accounts SPC and PCH Manager Fund SPC: (i) $15.0 million were funded on January 21, 2026 and (ii) $15.0 million were funded following the effectiveness of a registration statement covering the resale of the underlying shares in relation to the notes on March 5, 2026.\n\nThe notes bear interest at a rate of 7% per annum, compounded quarterly and payable in kind, subject to the Company’s right to elect cash payment upon prior notice. They have a two-year maturity, i.e. they will mature on January 21, 2028, unless previously converted into shares of the Company. This conversion option of the notes into shares of the Company at prices determined by reference to fixed premium conversion prices including at 95% of the applicable volume-weighted average price of the shares of the Company, is subject to a minimum conversion price and certain daily conversion limits as further specified in the investment agreement.\n\nOn March 5, 2026, March 25, 2026, April 8, 2026, April 20, 2026 and April 23, 2026, the noteholders of the $30.0 million convertible notes provided conversion notices and were issued ordinary shares of the Company as follows:\n\n●$2.0 million convertible notes were converted on March 5, 2026 at a share price of $6.0918 and a total of 331,183 shares were issued.\n\n●$2.0 million convertible notes were converted on March 25, 2026 at a share price of $5.9946 and a total of 337,850 shares were issued.\n\n●$2.0 million convertible notes were converted on April 8, 2026 at a share price of $4.8241 and a total of 420,873 shares were issued.\n\n●$2.0 million convertible notes were converted on April 20, 2026 at a share price of $5.6501 and a total of 379,127 shares were issued.\n\n●$2.0 million convertible notes were converted on April 23, 2026 at a share price of $5.6501 and a total of 379,344 shares were issued.\n\n●$2.0 million convertible notes were converted on April 24, 2026 at a share price of $5.8267 and a total of 349,521 shares were issued.\n\nAs a result, as of the date of this Annual Report, the aggregate principal amount now only amounts to $18 million in convertible notes.\n\nIn connection with the issuance of the notes, the Company also issued warrants to the investor to purchase shares of the Company in an amount determined by reference to the principal amount of the notes. In connection with the funding of the second tranche of the convertible notes on March 5, 2026, as contractually agreed in the investment agreement, further warrants were issued and the exercise price for all warrants was adjusted to be $8.0125 (subject to anti-dilution protection mechanisms). A total of 3,744,150 warrants were issued to Linden Capital L.P., Crown Managed Accounts SPC and PCH Manager Fund SPC. The warrants are exercisable until December 15, 2028, at an exercise price of $8.0125, exercisable for cash or, at the Company’s election, on a cashless basis, with such cashless conversion calculated based on the Company’s share price at the time of such cashless conversion.\n\nIn connection with the execution of this investment agreement, the Company also entered into a registration rights agreement to file a registration statement covering the resale of the shares issuable upon conversion of the notes and exercise of the warrants. The Company’s obligations under the notes are guaranteed by its German operating subsidiary, Gebr. Schmid GmbH, subject to applicable German law limitations. The investment agreement and the provisions of the notes and warrants contain customary affirmative and negative covenants, issuer call provisions, change of control protections, mandatory redemption events, and events of default customary for transactions of this type.\n\n40\n\n[Table of Contents](#TOC)\n\n*Share issuances and set-off agreements with majority shareholders and related parties*\n\nOn April 24, 2026 the Company entered into separate subscription agreements and set-off agreements with Anette Schmid, Christian Schmid, Christine Schmid and Schmid Grundstücke GmbH & Co KG respectively, to off-set financial liabilities in an aggregate amount of EUR 30.75 million. In connection with these agreements, the Company entered into debt assumption agreements with the Company’s fully-owned subsidiary, Gebr. Schmid GmbH.\n\nPursuant to the subscription agreements the Company has agreed, subject to the approval by a shareholders’ meeting, to be held on May 20, 2026, to issue and sell to Anette Schmid, Christian Schmid, Christine Schmid and Schmid Grundstücke GmbH & Co KG in private placements a number of shares of the Company determined by dividing the EUR 30.75 million by the 5-trading day VWAP of shares of the Company immediately preceding the approval by the Board. Exclusively in the case of the financial liabilities to Christine Schmid, amounting to EUR 2.4 million, the share price will be determined in relation to the 5-trading day VWAP with an applied 20% discount.\n\n*USD 30 Million Standby Equity Purchase Agreement*\n\nOn May 12, 2026, the Company entered into a Standby Equity Purchase Agreement (“**SEPA**”) with an institutional investor, YA II PN, Ltd. (“**Yorkville**”), providing SCHMID access to equity financing of up to USD 30.0 million at its discretion, for 24 months from the signing date. Under the terms of the SEPA, the Group paid a commitment fee of 0.5% of the USD 30.0 million equity line to secure the SEPA facility, and Yorkville is contractually obligated, to purchase the shares of the Company over time upon the Company’s exercise of drawdown notices. The purchase price will be based on one of two pricing options selected by the Company. Under Option 1, the purchase price will equal 97% of the VWAP of the shares of the Company on the day of drawdown notice receipt. Under Option 2, the purchase price will equal 99% of the lowest daily VWAP of the shares of the Company during the three consecutive trading days commencing on the drawdown notice date.\n\nThe SEPA enables the Group to raise equity capital at its discretion, with the ability to issue shares to the investor on a periodic (including daily) basis. This structure provides the Group with a committed source of capital and significant flexibility as to the timing and amount of any equity issuances, allowing management to access liquidity if and when required, or to refrain from drawing on the facility if sufficient liquidity is available from operations or other sources. The Company will be able to draw under the SEPA once the shares underlying the facility have been registered.\n\n*Appointment of Arthur Schuetz as the new CFO of the Company*\n\nArthur Schuetz was appointed by the Board as the new CFO of SCHMID Group N.V. as of January 1, 2026, replacing Julia Natterer, who continues to serve as CFO of Gebr. SCHMID GmbH.\n\nIn his role as CFO for the Company Mr. Schuetz receives an annual fixed salary of EUR 180,000. In addition the Company entered into a service agreement with Mr. Schuetz which in 2026 provides for the payment of a service fee of EUR 20,000, as well as 6,000 shares of the Company per month, and 50,000 share options every six months of employment at a strike price of $4.00 for the first half of 2026 and thereafter at a strike price of the volume-weighted average price over the preceding 6 months (which have an exercise window of five years), and an incentive variable salary component amounting to 35,000 shares annually, tied to an EBIT target of SCHMID, where under or over performance reduce or increase the variable salary pro rata (30% underperformance floor amounting to no eligibility and 30% overperformance ceiling amount to maximum 200% eligibility). The agreement with Mr. Schuetz foresees an update to his compensation, incentive share and share options plan in 2027 being the share based component of the fixed salary calculated by dividing EUR 250,000 by the volume-weighted average price over the preceding 6 months, 50,000 share options every six months (exercisable for five years) at a strike price to be set by the Board and the Audit Committee, and an incentive variable salary component amounting to 35,000 shares annually, tied to an EBIT target set by SCHMID Board, where under or over performance reduce or increase the variable salary pro rata (30% underperformance floor amounting to no eligibility and 30% overperformance ceiling amount to 200% eligibility).\n\n41\n\n[Table of Contents](#TOC)\n\n*Agreement with Helmut Rauch, Chief Operating Officer (COO)*\n\nThe Company and Helmut Rauch, the COO (employed on the level of Gebr. Schmid GmbH with no executive function at the level of SCHMID Group N.V.), agreed in 2025 that Mr. Rauch would receive shares in the Company as part of his remuneration package. Starting in 2026 Mr. Rauch is set to receive 6,000 shares of the Company per month, and 50,000 share options every six months of employment at a strike price of $4.00 for the first half of 2026 and thereafter at a strike price of the volume-weighted average price over the preceding 6 months (which have an exercise window of five years), and an incentive variable salary component amounting to 35,000 shares annually, tied to an EBIT target of SCHMID, where under or over performance reduce or increase the variable salary pro rata (30% underperformance floor amounting to no eligibility and 30% overperformance ceiling amount to maximum 200% eligibility). The agreement with Mr. Rauch foresees an update to his compensation, incentive share and share options plan in 2027 being the share based component of the fixed salary calculated by dividing EUR 250,000 by the volume-weighted average price over the preceding 6 months, 50,000 share options every six months (exercisable for five years) at a strike price to be set by the Board and the Audit Committee, and an incentive variable salary component amounting to 35,000 shares annually, tied to an EBIT target set by SCHMID Board and the Audit Committee, where under or over performance reduce or increase the variable salary pro rata (30% underperformance floor amounting to no eligibility and 30% overperformance ceiling amount to 200% eligibility).\n\nB. Business Overview\n\n**Introduction**\n\nWe are a global supplier of equipment, software and services for various industries such as printed circuit board (“**PCB**”), substrate manufacturing, glass and photovoltaics with a focus on the highest end of these markets in terms of technology and performance. We are a long-established, fifth- generation family-controlled business that was founded in 1864 in Freudenstadt, Germany as an iron foundry and has a tradition of being at the forefront of technology. Throughout the more than 160 years of our operations, we have maintained sustainable operations by developing our products following trends on the market. We have been developing machines for the electronics industry since the 1960s and photovoltaics solutions since the early 2000s. We focus on a modular product portfolio of machinery to use in the manufacturing of high-end PCB equipment and semiconductor packaging devices which includes common flexible circuit fabrication techniques such as subtractive, semi-additive processes (“**SAP**”) and modified semi additive processes (“**mSAP**”). We are a global supplier of capital equipment, software and services for the PCB and substrate manufacturing industry. We focus on the highest end of the market in terms of technology and performance. We do not only develop production techniques and build machines ourselves; we are also extensively working with our customers on joint research & development projects for the next generation of electronics products. We produce our products in two manufacturing sites, one in Germany and one in China. In addition, we have built an extensive service and sales network in six centers in the US, Europe, and Asia. In addition to our sale and service centers and two manufacturing sites, in South Korea we also work with our partners in SCHMID Avaco Korea, Co. Ltd. which we account for using the equity method. We also provide customer service through which we assist our customers with machinery and software upgrades, spare parts, logistics, customer training in multiple languages, on-site management, maintenance contracts, and project management.\n\nWe have developed and applied for patents for the embedded traces (“**ET**”), PCB and substrate production processes that allow a significant increase in manufacturing precision as well as enhanced design features while also achieving cost savings compared to traditional processes and reduce the CO2 emissions of the overall production processes. We believe that our ET technology will gain a significant share of the high- end PCB and substrate market as it has substantial advantages in technology capabilities, cost and to reduce emissions as well as water consumption for production processes (greener production processes). We believe these innovative production processes create a sustainable competitive advantage that helps us reach new customers and allows us to continue to grow our market share and capitalize on the overall positive market growth trends.\n\nOur customers include large, global original equipment manufacturer (“**OEM**”) from the semiconductor, consumer electronics industry, space and defense electronics and companies that are part of the supply chain of such global companies.\n\n42\n\n[Table of Contents](#TOC)\n\nWe have a research and development focused business model. We develop and build innovative machines and systems for wet & vacuum processing in various industries spanning high-end electronics such as PCB and organic packaging, photovoltaics and special glass applications as well as other high-tech industries. We employ more than 150 scientists, engineers and development personnel to focus on new technologies and processes out of a total of approximately 734 employees (by headcount) globally. As a result, we consistently invest a significant amount in R&D. Our science, engineering and development staff work in close collaboration with our customers to jointly develop high-value solutions. Such collaboration may reduce commercial risk, given that solutions are specifically developed for customers. The remainder of our R&D investment is focused on developing next-generation technologies, often as part of a collaborative process with our customers. In addition, we work with universities and leading research institutes such as the Fraunhofer Institute for Solar Energy Systems.\n\nWe expect to continue to invest in the future focusing on three primary areas: (i) growth for ET and glass substrate projects, which have higher working capital needs compared to other technologies; and (ii) strategic investments in automation solutions, such as the next generation of fully automatic factories.\n\nIn fiscal year 2025 we generated €66.9 million in revenues. Our Adjusted EBITDA amounted to €6.3 million in fiscal year 2025. This total Adjusted EBITDA for the fiscal year 2025 has not been adjusted for a €5MM non-cash loan waiver gain. Adjusted for this one-off gain in 2025, our Adjusted EBITDA would have amounted to €1.3 million.\n\n**Our Business Operations**\n\nWe operate our business by providing machines for industries, including, but not limited to, consumer electronics and space and defense electronics, and we provide after-sale services to customers across all industries. For all relevant industries which we see as our customer markets, we offer our core products, such as our machines, as well as technology and customer service support to our customers. Although these industries each have varied end-markets and customers, our expertise, high-quality standards and global scale are essential in both areas. Our equipment covers a wide range of production steps.\n\nWe leverage our research and development investment and cooperate with our research and development partners (universities and institutes) and our clients as we seek to benefit from technologies, innovations, best practices, and other key learnings across our product portfolio. These efforts often result in innovative strength, allowing us to be at the forefront of technology, with high-quality standards for long-lasting and reliable products to meet customer needs, such as understanding the needs of global electronics OEMs for efficient continuous production of higher spec devices with a reduced environmental footprint. We believe we have a track record of delivering disruptive technology solutions and that our strong, long-lasting relationships with key technology OEMs and other customers in their supply chain will remain the key drivers of demand for our electronics products and services in the future.\n\nThe following table shows our revenue by country (based on customer location) for the fiscal year 2025:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**in € thousand**\n\n**  ​ ​ ​**\n\n**2025**\n\n**  ​ ​ ​**\n\n**2024**\n\nGreater China\n\n \n\n25,702\n\n \n\n16,480\n\nUSA\n\n \n\n19,770\n\n \n\n22,207\n\nGermany\n\n \n\n4,154\n\n \n\n3,819\n\nEMEA w/o Germany\n\n \n\n9,841\n\n \n\n12,728\n\nRest of Asia w/o China\n\n \n\n7,477\n\n \n\n5,551\n\nRest of the World\n\n \n\n2\n\n \n\n49\n\nTotal\n\n \n\n**66,945**\n\n \n\n**60,836**\n\nElectronics\n\nWe generate by far the largest part of our revenues and profits in the electronics market. In this market we sell our machines globally and have a wide regional presence that allows us to serve both large OEM as well as the global electronics supply chain, as demonstrated by our longstanding relationships with our key customers that are leaders in their industry.\n\n43\n\n[Table of Contents](#TOC)\n\nThe product portfolio of our electronics business is focused on what we have identified as attractive growth areas of the electronics market that involve technologically advanced production processes. Our modular equipment kit includes equipment for processes such as automation, wet processes (horizontal, vertical and single panel) and vacuum processes. This modular approach to design and manufacturing means that we are using the building kit concept that creates flexibility by using proven components that guarantee high-quality and enable industrial-scale production. Our modular approach to design and manufacturing is also a key advantage in relation to lead times and being able to optimize our cost structure, while maintaining a high level of customization for our customers. Our modular approach supports an increase in the useful life of our equipment by creating a path to upgrades to meet any changes in the needs of our customers after a machine has already been installed and used for several years.\n\nThe following graphic provides an overview of our key product lines and the processes where our machines are used (our machines are used in the process steps marked dark blue):\n\n​\n\n​\n\n●The Infinity C+ Line are vertical spin-process machines for developing, flash-etching and surface treatment.\n\n●The Infinity V+ Line are machines for a vertical inline process for developing, etching and stripping applications.\n\n●The Infinity P+ Line are machines for high-end single panel electroplating tools.\n\n●CMP is a full format chemical mechanical polishing equipment for leveling copper.\n\n●The PlasmaLine are vertical inline and cluster plasma etching and sputtering machines.\n\n●The InfinityLine A+ is used for automation of process equipment for fully automatic loading and unloading.\n\n●The Infinity H+ Line are machines for a horizontal inline processing for multiple processes and applications.\n\n●Other equipment includes various special equipment for horizontal inline processing and software solutions for such equipment.\n\n44\n\n[Table of Contents](#TOC)\n\nCustomers in Electronics\n\nWe work directly with many of the leading global technology companies and are able to satisfy their strict quality requirements. In the electronics market, our customers include well-known manufacturers of computers, mobile phones and tablets as well as the manufacturers of PCB boards and the suppliers of such manufacturers.\n\nWe partner with them during their product development processes and closely collaborate to have our products delivered to meet customer specifications as well as customer acceptance tests. We believe our quality commitment and technical competence have helped us establish a strong reputation in the industry, as well as our commitment to innovation and R&D. Through a combination of high-quality solutions and customized on-site management we have demonstrated a successful track record of consistently meeting the needs of our customers which has resulted in long-standing and trusting relationships. We serve some of the largest OEM and PCB/substrate manufacturers in the world and have historical or ongoing joint development projects for future technologies and products.\n\nOver the past year, we worked out a partnership between SCHMID and TRUMPF, a high-tech company offering manufacturing solutions in the fields of machine tools and laser technology. TRUMPF and SCHMID announced that they are developing an innovative manufacturing process for the latest microchip generation for the global chip industry. This will enable manufacturers to increase the performance of high-end electronic components for smartphones, smart watches and AI applications. In the process known as advanced packaging, manufacturers combine individual chips on silicon components known as interposers. With the process from TRUMPF and SCHMID, these interposers can be made of glass in the future. To create connections on the interposer, manufacturers have to drill holes through the glass, so-called through-glass vias (“TGV”). Manufacturers often have to create millions of holes in a panel to make the desired connections. The combination of TRUMPF’s laser technology and SCHMID’s expertise in etching processes for microchip production enables efficient production. This special approach shortens process times by a factor of ten. After establishing the technology we have now started to accelerate and improve cost performance of the technology. According to the Boston Consulting Group, the market for advanced microchip packaging is expected to grow to more than 96 billion dollars by 2030. TRUMPF and SCHMID, advanced packaging with the help of glass could also develop into an important future market. Currently, applications in consumer electronics such as smartphones dominate the advanced packaging sector. In the future, applications in the field of artificial intelligence are likely to be the growth drivers.\n\nWe are continuing to refine and further develop our ET process which is a new way to produce substrates and High Density Interconnect (“HDI+”) boards. We provide a specialized equipment portfolio that allows our customers to produce ETs. This specialized equipment allows our customers to produce high-end-boards with the best yields at a compelling production cost. ET technology portfolio includes: (i) next generation production equipment which can be used for traditional board concepts typically produced with mSAP and SAP process; (ii) new high-end PCB or substrate which gives the designer of an OEM a new level of flexibility to redesign their products to meet higher performance requirements and (iii) urban, green fabrication facilities concept that allows high flexibility for production of a wider range of boards with one base technology which allows the customers a higher investment security.\n\nThe ET Process\n\nThe ET process is a relatively new way to produce substrates and HDI+ boards. We are currently the only company to offer a full solution, including key equipment and processes to customers in the electronics market for the ET process. In contrast to the standard conventional method of production which uses laser drilling, the ET process uses parallel plasma processing. Traces in ET boards are first embedded in the isolator material and then filled with copper in the already etched embedded structure using a proprietary and highly protected process. This new technology is a fully additive process, allows for flexibility in designing completely new types of 3D structures and can upgrade existing mSAP and SAP deployments. The ET process can also be combined with glass cores allowing for an extension of its use for such products. We are now focusing on minituarisation and sizes below 2 µm.\n\n45\n\n[Table of Contents](#TOC)\n\nThe ET technology we have developed allows us to meet customers’ demands that could not be met by traditional PCB manufacturing techniques. For example, ET technology allows us to further miniaturize, increase complexity and incorporate advanced properties by producing better performing PCBs and/or substrates, with narrower line widths, increasing numbers of input and output devices, higher aspect ratios or using new materials, while maintaining acceptable manufacturing efficiency, meeting our customers’ environmental, social and government (“**ESG**”) goals and maintaining a resilient supply chain.\n\nWe provide a specialized equipment portfolio that allows our customers to produce embedded traces. This specialized equipment allows our customers to produce high-end-boards with the best yields at a compelling production cost. ET technology portfolio includes: (i) next generation production equipment which can be used for traditional board concepts typically produced with mSAP and SAP process; (ii) new high-end PCB or substrate which gives the designer of an OEM a new level of flexibility to redesign their products to meet higher performance requirements and (iii) urban, green fabrication facilities concept that allows high flexibility for production of a wider range of boards with one base technology which allows the customers a higher investment security.\n\nThe use of ET technology can (i) increase production yields with reduced facility requirements, (ii) enable new 3D packaging solutions that cover ratification intelligence and photonic applications, and (iii) improve the return on customers’ investment by allowing the manufacture of boards from HDI+ to substrate on the same equipment. Unlike with conventional production, ET technology replaces round holes with square holes, allows for 3D connections, increases the amount of copper for better thermal management, has full 3D, coreless and core, and single- and double-sided build up for substrates, optimizes glass substrates and replaces laser drilling with parallel plasma etching processes. The optimized process reduces the roughness and increases the adhesion between layer stacks and is compatible with future high- performance materials. The embedding concepts allow for implementation of chips directly inside the substrates. These advantages allow higher performance final applications such as those being demanded in AI, high-end consumer electronics, and certain autonomous driving applications.\n\nOur management expects that the further penetration of the ET technology in the overall market will lead to a significant increase of the share of capital expenditure spending for a new factory from 20% of equipment spending for a traditional fabrication methods factory to 50% in an ET technology factory. This estimate is an internal management estimate based on the understanding of technical processes required for factory fabrication methods.\n\nAfter Sales Services\n\nThrough our five service centers located around the world, we focus on offering worldwide customer-oriented services, including on-site management, remote maintenance and diagnosis, customer training and project management at our customers’ facilities.\n\nWe also provide customer support services through the provision of spare parts, upgrades, maintenance contracts and ancillary services allowing our customers to benefit from our service network in multiple jurisdictions globally and more than 100 service engineers capable of providing comprehensive on-site service.\n\n**Business Strategies**\n\nWe aim to continue our technological leadership by investing in product development on an ongoing basis. Our key growth strategy is to drive our revenues in the electronics market as a result of ET adoption in the PCB and substrate market over the next years, thus complementing and selectively displacing conventional SAP and mSAP technologies in applications where sustainability, cost efficiency, process robustness, and total cost of ownership are decisive factors. In addition, we aim to grow organically by focusing on an expansion of our product portfolio and increasing the penetration of the high-end PCB and organic substrate market. An additional growth field is equipment and processes for glass substrate manufacturing, currently focused on R&D, pilot lines, and early OEM engagements, with volume adoption expected in the mid- to long-term. As part of our customer service business, we aim to benefit from economies of scale as the installed base of machinery increases and we as a result can grow revenues for services for our machinery proportionally to the installed base.\n\n46\n\n[Table of Contents](#TOC)\n\nOverall, we believe our revenue growth will be supported by a number of key trends that should increase the demand for our products such as substrates with higher density, higher frequencies and introduction of new materials all of which will require new production technologies, including:\n\n●As the use of artificial intelligence expands, it will become more sophisticated. We believe that the expected broad and rapid adoption of AI will accelerate growth in required computing power. The growth of artificial intelligence technology may lead to an increase in the demand for novel semiconductor packaging solutions that can keep pace with rapid AI growth such as driven by the biggest Foundries (e.g. TSMC, Intel and Samsung) driving demand for advanced interconnect, power delivery, signal integrity and thermal management solutions. While concepts such as chiplet-based architectures and advanced packaging (e.g., CoWoS) continue to evolve, SCHMID primarily benefits from upstream PCB and substrate manufacturing technologies required to support these architectures.\n\n●Greater connectivity and the internet of things (IoT) including personal devices and continuous miniaturization can increase the volume of data that needs to be transmitted, processed and stored and drive further demand for our customers’ products and thus for orders for our machines and services.\n\n●Additionally, as investors become more focused on ESG and environmental pressures, the interest in carbon neutrality, green products and processes will increase. Customers and producers will strive to reduce the eco footprint of manufacturing processes and reduce energy and water consumption and our green production, urban fabrication facilities that meet international environmental standards and facilitate manufacturing in the US, Europe and South East Asia and our R&D efforts provide our customers with products which help them achieve their CO2 reduction targets. Our ET technology is important for this trend. Based on internal assessments and customer data, the ET process can reduce energy consumption by up to 30%, water usage by up to 70%, chemical consumption by up to 40%, and CO₂ emissions by up to 30%, depending on application and configuration. Not only does this ET process decrease the total costs of ownership, but it also lowers the carbon footprint of production which can further help customers achieve their ESG goals. In addition to that, our newly launched TGV etching system maximizes efficiency and fosters sustainable manufacturing practices. It leads to a 35% reduction in power consumption and is a more cost-effective etching solution.\n\n●We believe that the expansion in electric vehicles and autonomous driving technologies will lead to a greater demand for high power applications, as well as a greater need for highly reliable radar and sensor applications. As cars continue to include a larger number of semiconductors, new PCB technologies are critical to ensuring the comfort, durability and safety of autonomous driving. Additionally, as countries continue to incentivize drivers to switch to electric vehicles, we expect the market for PCBs to continue to grow as PCBs are used in the production of charging stations and audio and visuals display systems.\n\n●Market applications for end products produced by our machines include AI servers, solar cells and modules for charging stations. We produce other machines that enable production of high-quality parts for cars, such as radar systems for autonomous driving, metal etching for interior design, anti-glare display technology, packaging and HDI+ for 5G communication, packaging for processors and etching thick copper for LED lighting and High- Power solutions.\n\nGeographically, we aim to further expand into new geographies and regions, in particular in Asia outside of China and in North America. In 2025, we generated the first significant revenues from our new subsidiary in Malaysia, which acts as a spare parts and service hub for the entire Asian region (excluding China and Taiwan). For 2026, we plan to enlarge our business there and continue with the growth. We assume that selected Asian countries that have not been in the spotlight to date will develop strongly in the coming years. Furthermore, we continue to believe in very strong economic development in North America. Recently, we have noticed weaker economic development in Europe. However, the latest political developments and the efforts of European countries to become less dependent on the USA and China could accelerate investments driven by strategic autonomy, supply chain resilience, and sustainability objectives, from which SCHMID expects to benefit selectively.\n\nWe have recently entered the glass substrate machining market and have offered specific machines in this sector to customers. We consider this technology to be suitable to be implemented at various original equipment manufacturers. Furthermore, it can be used in combination with ET layers.\n\n47\n\n[Table of Contents](#TOC)\n\n**Sales and Procurement**\n\nThrough our sales, engineering, research and development and procurement teams, we combine deep product expertise of our engineering/R&D and procurement experts with our front-line customer-oriented sales staff. Our local presence in key markets ensures proximity to global customers. Our engineering team drives the technical specifications and can also decide on procurement deals with commercial terms. The procurement process is an important element in our overall sales strategy in which technical qualification and quotation are crucial factors for selection. We are present in all our key target markets when it comes to sales and services. While our global central organization for sales and services is located in Germany, our employees located in the countries in which we operate maintain their relationships with key customers. This includes lifecycle services, retrofit and upgrade solutions, and software-enabled service offerings that enhance equipment performance and long-term customer value.\n\nWe purchase local and imported parts, but also commodities. We have long-standing relationships with our most trusted suppliers and employ specified and diligent processes for qualifying new suppliers. Additionally, we have in-house product development and strict quality control standards that are expected to be followed during production as part of our efforts to ensure our high-quality standards are maintained. While we centrally monitor our purchasing activities, both factories can also make decisions locally in terms of decision making for sourced materials and components.\n\n**Research and Development**\n\nOur research and development (“**R&D**”) efforts are focused on expanding the market position in all our target markets and providing high-tech technology solutions for our customers. As a technology-oriented business, we develop our products in great part in our own 32,000 square foot technology center in Freudenstadt, which includes a laboratory and prototyping facilities.\n\nAs part of our basic research activities, we collaborate with customers, strategic partners and leading research institutions worldwide in the electronics, photovoltaics and energy storage sectors.\n\n●**Electronics.** Our R&D efforts in the electronics market focus on advancing applications for the new ET process, conducting customer sampling, and supporting product optimization. We also continue to enhance equipment capabilities to meet next‑generation OEM requirements, with an emphasis on glass substrates. In addition, we are actively engaged in the processing and structuring of glass as a core material, particularly in the context of TGV (Through Glass Via) technology. This involves etching processes followed by metallization using galvanic deposition, representing a key capability in advanced electronic applications. Furthermore, within the electronics segment, the development of our L+ system should be highlighted. This system enables panel-level CMP (Chemical Mechanical Planarization) processes, which are critical as the final process step in the ET production chain and therefore of high strategic importance.\n\n●**Photovoltaics**. In photovoltaics, our R&D activities relate primarily to the enhancement and expansion of the next generation of our InfinityLine systems for alkaline structuring and polishing.\n\nWe employ more than 150 scientists, researchers and engineers globally, working across multiple laboratories equipped with advanced technologies and research infrastructure, more than 30 of which wok at our technology center in Freudenstadt. We routinely submit new patent applications and, as of December 31, 2025, held more than 100 patents and industrial property rights. We additionally maintain various global trade names and trademark registrations and applications, which we consider valuable for product identification and market presence.\n\nWe benefit from a network of cooperative partnerships with industry leading institutions, including Fraunhofer Institute for Reliability and Microintegration, the University of Konstanz, Fraunhofer-ISE Freiburg and Helmholtz-Zentrum Berlin. We also cooperate on development in the area of Through Glass Via with the company Trumpf. A core priority of our operations is the efficient transfer of research and development outcomes into industrial applications and high volume manufacturing. Our technology center provides full prototyping capabilities for electronics, photovoltaics and glass applications, as well as lamination, LDI, developing, etching, stripping and other processing capabilities. It also includes comprehensive physical and chemical laboratories for basic research and statistical data analysis.\n\nWe have also developed additional revenue opportunities through paid R&D engagements. We expect licensing revenue to increase over time as our installed base expands.\n\n48\n\n[Table of Contents](#TOC)\n\n**Competition**\n\nWe believe we are well-positioned to compete in our target markets. In PCB high-end equipment, our market is generally consolidated with only a limited number of other major suppliers globally. Among our key competitors are several multinational competitors such as MKS Instruments, Inc., a NASDAQ listed company, but also more regionally operating companies, such as local manufacturers in Italy, China, Taiwan and Asia Pacific. In the photovoltaics market, we also compete with multinational active companies such as Shenzhen SC New Energy Technology Corp, and depending on the specific applications also several other smaller companies. In other areas, such as machines for the energy sector and other specialty areas, we face a diverse set of competitors who specialize in such specific markets.\n\n**Employees**\n\nAs of December 31, 2025, we had 734 employees. The biggest departments are production, engineering, sales and procurement. We have not experienced any work stoppages, slowdowns or other serious labor problems that have materially impeded our business operations.\n\n**Health, Safety and Environmental**\n\nWe are subject to numerous laws and regulations relating to the environmental protection and the health and safety of our employees in multiple jurisdictions in which we operate. We are committed to maintaining compliance with all such applicable legal requirements. We have a strong record of safety and internal controls surrounding the manufacture and implementation of our products and systems and the health of our employees. While we are not subject to the German Supply Chain Due Diligence Act *(Lieferkettensorgfaltspflichtengesetz*), we have nevertheless implemented a Code of Conduct for our employees and suppliers that aims to ensure that working conditions in our supply chain are safe and suitable.\n\n**Legal Proceedings**\n\nIn the general course of business, we sometimes face legal proceedings and claims against us.\n\nOur subsidiary SCHMID China Ltd. (“**SCL**”) filed a claim against Beyond Force Company Limited for an outstanding payment due to our subsidiary of RMB 53 million (approximately $7.6 million as of February 2026) plus interest amounting to approximately RMB 21 million (approximately $3.0 million as of February 2026). Beyond Force Company Limited has filed a counterclaim valued at approximately RMB 123 million (approximately $17.6 million as of February 2026). Both claims were dismissed by the courts in the first as well as in the second instance and forwarded by the appeal court for retrial to the first instance. The subject matter is now for review for retrial and SCHMID is preparing the required documentation. As of January 16, 2026 the court has made the following first instance decision *inter alia* that the payment of RMB 53 million is justified under the condition that SCL shall pay the outstanding debt amounting to approximately over RMB 10,000,000 (approximately $1.4 million as of February 2026) to the Company. Beyond Force Company Limited and SCL have appealed the decision of the first instance.\n\nOn February 13, 2025, Gebr. SCHMID GmbH announced that it has filed a lawsuit against Shenzhen China Science & Technology Co., Ltd. (“**China SC**”) over allegations of trademark infringement and unauthorized copying of proprietary technology. The lawsuit involves, in particular, a claim for injunctive relieve against China SC for use of the SCHMID Group’s intellectual property and for compensation.\n\nOn July 17, 2025, Validus Broker Dealer Investment Management Company LLC (“**Validus Broker Dealer**”) filed a civil action against SCHMID in the United States District Court for the Southern District of New York, arising from a promissory note dated June 13, 2024, with a principal amount of $2,350,000. Validus alleges that the Company failed to pay the principal balance upon maturity on June 13, 2025, an alleged breach. The parties entered into negotiations and mutually agreed to request an extension of the response deadline of the Company to the lawsuit until November 12, 2025. The parties could not resolve the dispute before the response deadline and the Company filed its response timely with the New York court. Both parties made subsequent filings and motions and the lawsuit remains pending. No trial date has been set, and the Company intends to continue to evaluate and pursue all available defenses including any relevant countersuits for breach of contract by Validus Broker Dealer and its affiliate Validus/StratCap, LLC under a warranty agreement dated April 29, 2024 between the Company and Validus/StratCap, LLC. The Company has not recorded any liability related to this matter, as the outcome cannot be predicted at this stage.\n\n49\n\n[Table of Contents](#TOC)\n\nC. Organizational Structure\n\nThe following diagram depicts our organizational structure as of the date of this annual report (including the material subsidiaries):\n\n​\n\nFor a list of SCHMID’s subsidiaries see Exhibit 8.1 “*List of Subsidiaries of SCHMID N.V.*”\n\nD. Property, Plant and Equipment\n\nOur headquarters is located in Freudenstadt, Germany and includes one of our two production facilities with our Freudenstadt location focused on the production of machines and equipment and global customer supply. We also have a production facility in Zhongshan in China in which we produce machines and equipment with a particular focus on the Chinese market. The production facilities have comparable capacity. We can dynamically shift production between them based on requirements and capacity constraints. However our high-end equipment production and our core R&D activities are done in Freudenstadt.\n\nWe also maintain further facilities in the United States, Malaysia, South Korea and Taiwan, which are used primarily for customer service. Further facilities include those with our partners in South Korea which mainly serve as distribution centers and customer service centers. Furthermore, we have distribution partners located in Italy, Benelux, Israel, India, Japan and Brazil."}