{"url_path":"/sec/shmdw/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS**","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":5142,"has_tables":true,"body_markdown":"**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**\n\n*Following and as a result of the Business Combination, the business of SCHMID is conducted through Gebr. Schmid GmbH, its direct, wholly-owned subsidiary, as well as the direct, wholly owned subsidiaries of SCHMID.*\n\n*The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of SCHMID’s consolidated results of operations and financial condition. The discussion should be read together with the consolidated audited financial statements for the years ended December 31, 2025, 2024 and 2023 and the related notes that are included elsewhere in this Annual Report. The following discussion and analysis is based on SCHMID’s consolidated financial statements prepared in accordance with IFRS and the interpretations of the IFRS Interpretations Committee (IFRS IC) as issued by the IASB. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to SCHMID’s plans and strategy for its business, includes forward-looking statements that involve risks and uncertainties.*\n\n**Overview**\n\nWe are a global supplier of equipment, software and services for various industries such as PCB, substrate manufacturing, photovoltaics, and glass and energy storage 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 as an iron foundry located in Freudenstadt, Germany and has a tradition of being at the forefront of technology. Throughout the more than 160 years of our operations, we have maintained our operations by developing our products according to trends in the market. We have been developing machines for the electronics industry since the 1960s, and photovoltaic solutions since the early 2000s. We focus on a modular product portfolio of machinery used in the manufacturing of high-end PCB equipment and semiconductor packaging devices which includes common flexible circuit fabrication techniques such as subtractive, SAP, and mSAP. We are a global supplier of capital equipment, software and services for the PCB and substrate manufacturing industries. We focus on the highest end of the market in terms of technology and performance. We 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 and photovoltaics products. We produce our products in two manufacturing sites: one in Germany and one in China. In addition, we have built up an extensive service and sales network in six centers in the US, Europe, and Asia. In addition to our sales and service centers and two manufacturing sites, we also work with partners – such as AVACO - in South Korea. 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\n**Key Factors Affecting Our Results of Operations**\n\nWe believe that our performance and future success depend on several factors which have affected our previous performance in the periods for which financial information is presented in this Annual Report. These factors include:\n\nMarket growth in our key PCB market and Advanced Packaging Solutions\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. The PCB market is expected to significantly expand in the next three years with ET technology gaining a significant market share as new factories are expected to switch to ET technology machinery. In 2024, we already realized revenue with ET technology and expect this market to increase in the upcoming years. In addition to that, we are convinced that our new TGV Etching system, which is suitable for labs as well as for high-volume manufacturing, will show a positive development with an increased customer base and new applications. Due to positive feedback from our customers, we expect to receive orders for our ET technology as well as for our TGV Etching system in 2025\n\nDevelopments in Orders from our Core Customers\n\nIn fiscal year 2025, approximately 19% of our revenues were generated from sales to our two largest customers and our ten largest customers represented approximately 60% of our revenues. If we fail to retain these key customers our results could be materially adversely impacted. Our core customers were also the key drivers of our revenues from fiscal year 2023 to the fiscal year 2024.\n\n51\n\n[Table of Contents](#TOC)\n\nTrends affecting the Demand for our Customers’ End Products\n\nWe sell our machines to large original equipment manufacturers and to companies in their global supply chain in various sectors such as the electronics and semiconductor industries, but also the photovoltaics and energy systems industries. The demand for our products and our revenues is influenced by several larger trends impacting this diverse set of industries:\n\n●Our revenues are impacted by technological advancements in the electronics industry, including the rollout of 5G, digital infrastructure that includes increasing adoption and continued miniaturization of personal devices and Internet-of-Things connected devices, cloud computing and artificial intelligence. The strong digital infrastructure has resulted in increases in data volume that need to be transmitted, stored, and processed. All these changes drive demand for our customers’ products and in turn also the demand for our machines and equipment.\n\n●Our customers have an increasing preference for green manufacturing processes that result in fewer greenhouse gas emissions and are efficient in the use of other resources such as water. Our ET technology, which is one of our key machine technologies, uses less energy and water compared to traditional manufacturing technologies.\n\nMacroeconomic and Geopolitical Factors\n\nWe operate across a wide range of countries. Not all these countries are subject to the same economic and political forces at the same time, which usually provides us with a natural degree of macroeconomic and geopolitical diversification. There are, however, likely to be periods of time in which many, or even most, or all of the countries in which we operate will be subject to similar or identical forces that may impact our business negatively. One example of this is the geopolitical and macroeconomic turmoil triggered by the ongoing war in Ukraine, which led to increased volatility on the financial markets and disruption in various sectors. Military conflicts in the Middle East and the changing political and economic relations between the US and other countries also appear to be having a major impact on global economies and financial markets. In general, geopolitical changes, such as trade wars and the implementation of tariffs or significant changes in energy prices can have a negative impact on our business in one or more markets.\n\nFinancial Transactions in 2025 and 2026\n\nFollowing the completion of the de-SPAC transaction in April 2024, we entered into a series of transactions in 2025 and 2026 to restructure our financial liabilities. These transactions included the subscription agreement and set-off agreement with XJ Harbour in 2025, the shareholder debt waiver with Anette Schmid and Christian Schmid in 2025, the secured two-tranche term loan facility with Black Forest Special Situations I in 2025, the senior convertible notes and warrants issued to Linden Advisors LP in 2026, the subscription agreements and set-off agreements with shareholders and related parties Anette Schmid, Christian Schmid, Christine Schmid and Schmid Grundstücke GmbH & Co KG in 2026, and the SEPA entered into with Yorkville in 2026 – See “*Item 10 Additional Information – B. Material Contracts*” for details of these transactions.\n\n**Segment Reporting**\n\nSCHMID has prepared IFRS financial statements and segment reporting. See note 6 of the Consolidated Financial Statements.\n\n**Key Components of Operating Results:**\n\nThe following discussion sets forth certain components of our consolidated statements of profit and loss and certain factors that impact those items:\n\nRevenue:\n\nWe generate revenues from contracts with customers across all major geographic areas from two operational segments: (i) technical equipment and processes, which includes mainly the sale of machines including installation, long-term development and extended warranties; and (ii) spare parts and services, which includes the sale of spare parts as well as services including repairs, modifications of machines and inspections.\n\n52\n\n[Table of Contents](#TOC)\n\nCost of sales:\n\nOur cost of sales includes personnel expenses, material expenses, depreciation and amortization, and certain other expenses such as costs for outward freight, production-related short-term leases, and facility costs.\n\nSelling:\n\nSelling expenses principally consist of personnel expenses, legal and consulting fees, sales commission, distribution related external administration, advertisement, and other expenses. Personnel expenses mainly include salary and salary-related expenses. Distribution-related external administration comprises administration costs including utilities, insurances, travel expenses and expenses for short-term leases. Other expenses include mainly depreciation and amortization.\n\nGeneral Administration Expenses:\n\nGeneral and administration expenses consist principally of expenditures incurred in connection with the personnel expenses, legal and consulting fees, external administrative expenses and other administrative expenses. External administrative expenses comprise cost like utilities, insurance, travel expenses and expenses for short-term leases. Other administrative expenses include mainly depreciation and amortization.\n\nResearch and development expenses\n\nResearch and development is an important factor for our sustainable and long-term success. Research and development expenses principally consist of personnel expenses, depreciation and amortization, legal and consulting fees, research and development-related external administration and certain other research and development related expenses. Research and development-related external administration comprises administration costs such as utilities, insurance, travel expenses and expenses for short-term leases.\n\nOther income:\n\nOther income principally consists of foreign currency gains and other miscellaneous income such as government grants.\n\nOther expenses:\n\nOther expenses include foreign currency losses, other taxes, disposal of assets, and miscellaneous other items. Miscellaneous other items mainly include banking fees and other service charges.\n\n53\n\n[Table of Contents](#TOC)\n\nA. Operating Results\n\nThe following table sets forth results of operations for the year ended December 31, 2025 and 2024.\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Year Ended December 31**\n\n**in € thousand**\n\n  ​ ​ ​\n\n**2025**\n\n  ​ ​ ​\n\n**2024**\n\nRevenue\n\n \n\n66,945\n\n \n\n60,836\n\nCost of sales\n\n \n\n(50,928)\n\n \n\n(48,791)\n\n**Gross profit**\n\n** **\n\n**16,017**\n\n** **\n\n**12,044**\n\nSelling expenses\n\n \n\n(11,999)\n\n \n\n(12,895)\n\nGeneral administration expenses\n\n \n\n(11,404)\n\n \n\n(11,792)\n\nResearch and development\n\n \n\n(2,781)\n\n \n\n(3,974)\n\nOther income\n\n \n\n12,217\n\n \n\n9,018\n\nOther expenses\n\n \n\n(607)\n\n \n\n(2,564)\n\nListing expenses\n\n​\n\n—\n\n​\n\n(71,630)\n\nReversal on impairment on financial assets\n\n \n\n—\n\n \n\n20\n\n**Operating profit (loss)**\n\n** **\n\n**1,443**\n\n** **\n\n**(81,772)**\n\nFinance income\n\n​\n\n66\n\n​\n\n1,888\n\nFinance expenses\n\n​\n\n(72,244)\n\n​\n\n(5,712)\n\n**Financial result**\n\n** **\n\n**(72,178)**\n\n** **\n\n**(3,824)**\n\nShare of profit (loss) in joint ventures\n\n​\n\n(406)\n\n​\n\n—\n\n**Income (loss) before income tax**\n\n** **\n\n**(71,141)**\n\n** **\n\n**(85,596)**\n\nIncome tax benefit (expense)\n\n \n\n41\n\n \n\n1,492\n\n**Net income (loss) for the period**\n\n** **\n\n**(71,100)**\n\n** **\n\n**(84,104)**\n\n​\n\n**Comparison of the Years Ended December 31, 2025 and 2024**\n\nRevenue\n\nOur revenues increased from €60.8 million in the year ended December 31, 2024 to €66.9 million in the year ended December 31, 2025. The majority of our revenue was generated from the sale of our machines in the amount of €54.4 million in the year ended December 31, 2025, compared to €47.4 million in the year ended December 31, 2024 We experienced limited and delayed order intake in particular in the first half, caused by global trade frictions and uncertainetty about tariffs. Orders started to come back strongly during Q2 of the year with revenues rebouncing in Q3 2025.\n\nOur second largest revenue stream was the sale of our spare parts. In the year ended December 31, 2025, we generated €7.8 million from the sale of spare parts, a small decrease from €9.0 million generated in 2024. The spare parts revenue stream was also negatively impacted by the economic situation in China and Taiwan.\n\nOur services revenue increased from €3.9 million in the year ended December 31, 2024 to €4.1 million in the year ended December 31, 2025.\n\n54\n\n[Table of Contents](#TOC)\n\nGeographically, our revenue mix shifted across jurisdictions in 2025 compared to 2024. Revenues in several European markets declined year over year, consistent with continued weakness in industrial investment activity, while revenues in parts of Asia, particularly Greater China, increased. Revenues in the United States were lower than in the prior year, reflecting a moderation from elevated 2024 levels, but remained a significant contributor to total revenues. The following table shows the split in revenues across all our jurisdictions (we allocate revenues based on the country of the customer receiving the services or goods):\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\n**Total**\n\n** **\n\n**66,945**\n\n** **\n\n**60,836**\n\n​\n\nOn December 31, 2025, our order backlog for machine sales amounted to €50.9 million. Order backlog is expected to be realized within 12 months.\n\nCost of Sales\n\nOur cost of sales increased from €48.8 million in the year ended December 31, 2024 to €50.9 million in the year ended December 31, 2025. This was mainly attributable to an increase in material expenses.\n\nGross Profit\n\nOur gross profit increased from €12.0 million in the year ended December 31, 2024 to €16.0 million in the year ended December 31, 2025. As a result, our gross profit margin increased from 19.8% in the year ended December 31, 2024 to 24.0% in the year ended December 31, 2025. This was mainly attributable to higher revenue growth than cost of sales increase.\n\nSelling\n\nSelling expenses decreased from €13.0 million in the year ended December 31, 2024 to €12.0 million in the year ended December 31, 2025. This was mainly attributable to a significant decrease in the amount of sales commissions paid out.\n\nGeneral and Administration\n\nGeneral and administration expenses decreased from €11.8 million during the year ended December 31, 2024 to €11.4 million in the year ended December 31, 2025. The main driver for this were lower expenses for external legal advisors and consultants, which were higher in 2024 due to the Business Combination.\n\nResearch and Development\n\nResearch and development expenses decreased from €4.0 million during the year ended December 31, 2024 to €2.8 million in the year ended December 31, 2025. The personnel expenses were the most significant contributor to the decrease.\n\n55\n\n[Table of Contents](#TOC)\n\nOther Income\n\nOther income increased from €9.0 million during the year ended December 31, 2024 to €12.2 million in the year ended December 31, 2025. The increase was primarily attributable to foreign currency gains of €6.3 million in 2025, mainly related to U.S. dollar-denominated liabilities, and miscellaneous income of €5.9 million, which included income from the derecognition of €5.0 million of liabilities waived by shareholders. In 2024, other income included €3.7 million of income from the SES transaction.\n\nOther Expenses\n\nOther expenses decreased to €0.6 million in 2025 from €2.6 million in 2024, primarily due to a decrease in foreign currency losses from €2.3 million in 2024 to €0.4 million in 2025.\n\nListing Expenses\n\nThe Company incurred listing expenses totaling €71.6 million during the year ended December 31, 2024 in connection with the de-SPAC transaction. The share listing expense is the difference between the fair value of the net assets contributed by Pegasus Digital Mobility Acquisition Corp. and the fair value of equity instruments provided to former Pegasus Digital Mobility Acquisition Corp. shareholders. See Note 13 of the Consolidated Financial Statements for details.\n\nOperating Profit (Loss)\n\nThe Company incurred an operating loss of €81.8 million in the year ended December 31, 2024 and a profit of €1.4 million in the year ended December 31, 2025. The majority of the loss in 2024 was principally due to the €71.6 million share listing expense in that year as a result of the de-SPAC.\n\nFinancial Result\n\nOur financial result increased from a net expense of €3.8 million for the year ended December 31, 2024, to a net expense of €72.2 million for the year ended December 31, 2025. The change reflects higher finance expenses recorded in 2025, including fair value changes related to warrants and options and losses recognized in connection with the modification and settlement of financial liabilities, compared with the prior year. Interest expense decreased from €5.1 million in 2024 to €3.0 million in 2025. Finance income declined to €0.1 million in 2025 from €1.9 million in 2024.\n\nIncome Tax (Expense) Benefit\n\nIncome tax expense was €0.04 million in 2025, compared to an income tax benefit of €1.5 million in 2024. The change reflects differences in the recognition of deferred income tax effects and the absence of comparable tax benefits recognized in the prior year.\n\nNon-IFRS Financial Information\n\nThis Annual Report includes Adjusted EBITDA, which is a non-IFRS company-specific performance measure that we use to supplement our results presented in accordance with IFRS. We present non-IFRS measures because our management uses Adjusted EBITDA in monitoring SCHMID’s business and because we believe that similar measures are frequently used by securities analysts, investors and others in evaluating companies in our industry. The presentation of this non-IFRS information is not meant to be considered in isolation or as a substitute for our consolidated financial results prepared in accordance with IFRS.\n\n56\n\n[Table of Contents](#TOC)\n\nThe following table summarizes our Adjusted EBITDA reconciled to our net income (loss) for the period, the closest IFRS measure for each period presented:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**Year ended December 31**\n\n​\n\n  ​ ​ ​\n\n**2025**\n\n  ​ ​ ​\n\n**2024**\n\n​\n\n​\n\n**in € thousand**\n\n**Net income (loss) for the period**\n\n​\n\n**(71,100)**\n\n** **\n\n**(84,104)**\n\nIncome tax benefit (expense)\n\n​\n\n(41)\n\n​\n\n1,492\n\nShare of loss from equity method investees\n\n​\n\n406\n\n \n\n—\n\nAmortization and depreciation\n\n​\n\n4,824\n\n \n\n7,315\n\nFinancial result\n\n​\n\n72,178\n\n \n\n3,824\n\n**Total adjusted EBITDA**\n\n​\n\n**6,267**\n\n** **\n\n**(74,457)**\n\n​\n\nSee note 6 of our financial statements included elsewhere in this Annual Report.\n\nB. Liquidity and Capital Resources\n\nSources of Liquidity and Operational and Funding Requirements\n\nWe principally finance our operations through cash generated from the sale of machines, spare parts and services. We also have relied on debt and related party financing. As of December 31, 2025, and 2024, cash and cash equivalents were €1.6 million and €3.8 million, respectively.\n\nDuring 2025, order intake and sales remained below expectations, resulting in negative operating results and cash flows, particularly in the first six months of the year. In addition, during 2025 the Group was unable to obtain other sources of liquidity through equity or debt measures and, absent mitigating actions, may have been unable to meet certain near-term obligations, including a €23.5 million payment to XJ Harbour related to the de‑SPAC transaction. As of December 31, 2025, the Group had a significant working capital deficiency, reflecting continued operating losses and constrained access to financing during the year. Subsequent to December 31, 2025, the Group implemented measures to strengthen liquidity and reduce near-term obligations, including (i) a debt-for-equity set-off with XJ Harbour in 2025, based on irrevocable contracts signed in November 2025, with the issuance of 12,540,539 shares being completed on January 16, 2026, eliminating the related payment obligation, (ii) the conclusion of an Investment Agreement in January 2026 for the issuance of USD 30.0 million senior convertible notes and additional warrants structured in two tranches of USD 15.0 million each, with the first tranche received on January 21, 2026 and the second tranche received on March 5, 2026; (iii) entry into a Standby Equity Purchase Agreement, or SEPA, with Yorkville on May 12, 2026 providing access to equity financing of up to USD 30.0 million, and (iv) entering into set-off and subscription agreements with Anette Schmid, Christian Schmid, Schmid Grundstücke GmbH & Co. KG and Christine Schmid to issue shares to set off a total of €30.75 million in liabilities, with such set-off being subject to shareholder approval at the upcoming shareholders’ meeting, scheduled for May 20, 2026 as well as board approval to set the exact issuance price. See also *“Item 10.C Material Contracts”.*\n\nManagement’s forecasts assume continued execution of the operating plan, converting the significant order book of €51 million as of December 31, 2025 into revenues, continued order intake, disciplined cost management, and continued access to external financing sources, including the ability to utilize the SEPA facility as and if needed. Management has implemented almost all of its €4 million annual cost-savings program in Germany, primarily focusing on overhead costs. Furthermore, in the unlikely event that financing needs would temporarily exceed its financing sources, management has other options to reduce costs in the short-term including the use of government-subsidized short-time work programs (“*Kurzarbeit*”) in Germany.\n\nBased on the assessment described above, including the measures implemented subsequent to the reporting date and the availability of additional financing through the SEPA facility, management concluded that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, management concluded that there are no material uncertainties related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern, and the going concern basis of accounting remains appropriate in the preparation of the consolidated financial statements. These consolidated financial statements do not include any adjustments that might result if the Group were unable to continue as a going concern.\n\n57\n\n[Table of Contents](#TOC)\n\nAt December 31, 2025, current financial liabilities totaled €87.1 million and non‑current financial liabilities totaled €71.5 million. Trade and related party payables totaled €38.1 million, and current contract liabilities were €13.6 million. Non‑current financial liabilities, amounting to €71.5 million, included third‑party loans of approximately €2.2 million, loans from shareholders of €21.0 million and loans from other related parties of €11.0 million, as well as warrant liabilities of €26.1 million measured at fair value. The loans from shareholders are due at the end of 2027, and the loan from related parties, provided by SCHMID Grundstücke GmbH & Co. KG, is due at the end of 2026; in each case, the term is automatically extended by a further year if the contract is not terminated six months before expiry. The loans from shareholders and loans from related parties are expected to be mostly converted to equity by the end of June.\n\nCash Flows\n\nThe following table summarizes our cash flows for each period presented (in € thousands):\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**Year Ended December 31,**\n\n​\n\n  ​ ​ ​\n\n**2025**\n\n  ​ ​ ​\n\n**2024**\n\n**Cash flow from:**\n\n​\n\n  ​\n\n \n\n  ​\n\nOperating activities\n\n​\n\n1,250\n\n \n\n(2,578)\n\nInvesting activities\n\n​\n\n(6,227)\n\n \n\n(4,054)\n\nFinancing activities\n\n​\n\n2,923\n\n \n\n3,959\n\n**Net increase (decrease) in cash and cash equivalents**\n\n​\n\n**(2,055)**\n\n** **\n\n**(2,673)**\n\n​\n\nCash flow provided by operating activities for the year ended December 31, 2025, was €1.3 million, compared to cash flow used in operating activities of €2.6 million for the year ended December 31, 2024. The change reflects lower net cash outflows from operating activities, including the impact of changes in working capital, partially offset by operating losses during the period.\n\nFor the year ended December 31, 2025, net cash used in investing activities amounted to €6.2 million, compared to €4.1 million of net cash used in investing activities in the year ended December 31, 2024. The increase in net cash outflows was primarily attributable to higher purchases of intangible assets and property, plant and equipment, partially offset by limited proceeds from disposals of financial assets.\n\nFor the year ended December 31, 2025, net cash provided by financing activities amounted to €2.9 million, compared to €4.0 million for the year ended December 31, 2024. Financing cash inflows in 2025 primarily reflected proceeds from debt financing, partially offset by repayments of borrowings, lease payments, and interest paid.\n\nAs a result of the foregoing, cash and cash equivalents decreased by €2.2 million during 2025, compared to a decrease of €1.9 million during 2024.\n\nFuture funding Requirements\n\nWe fund our operations primarily through operating activities and through debt and equity financing arrangements. During 2025 and subsequent to year-end, the Company entered into certain financing arrangements, notably including senior convertible notes and a Standby Equity Purchase Agreement, as described under “*Item 10.C Material Contracts*.” The Company may issue equity securities or enter into additional debt arrangements in the future, subject to market conditions, contractual obligations and other factors.\n\n**Off-Balance Sheet Arrangements**\n\nAs of December 31, 2025, SCHMID did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.\n\n58\n\n[Table of Contents](#TOC)\n\n**Financial Risk Management**\n\nWe are exposed to a variety of risks in the ordinary course of our business, including, but not limited to, credit risk, liquidity risk, foreign currency risk and interest rate risk. We are particularly exposed to the risk of not being able to attract sufficient financing and the risk of not fulfilling reporting requirements, and therefore losing the ability to raise equity, as any new shares would not be able to be registered if the Company were delinquent in its SEC filings. SCHMID regularly assesses each of these risks to minimize any adverse effects on our business as a result of those factors.\n\nC. Research and Development, Patents and Licenses\n\n**Description of our Proprietary Technology and Intellectual Property**\n\nFor information about our proprietary technology and intellectual property, please see “*Item 4. Information on the Company — B. Business Overview.*”\n\n**Research and Development**\n\nFor information about our research and development activities, see “*Item 4. Information on the Company — B. Business Overview.*”\n\nD. Trend Information\n\nForecasts and estimates for 2026\n\nIn December 2025 we published our preliminary order intake results for 2025. We announced strong order intake of approximately €95 million for 2025 with most of the order intake recorded since the middle of the second quarter of 2025, mostly due to the Company’s position as a core technology partner in next-generation electronics manufacturing. Growth in order intake were primarily driven by the global surge in AI-server boards, which require highly demanding HDI and ultra-high layer-count PCB architectures. As of March 31, 2026, our total recorded order intake was €13.6 million and generated revenues were €18.2 million for the first quarter. The first quarter has historically been the weakest quarter of the year. The order book stood at €49 million at the end of the quarter. While order intake during the second quarter to date has been broadly in line with first quarter levels, we currently expect second quarter order intake to improve significantly compared to the first quarter, although there can be no assurance that such improvement will be realized. Order intake and order book figures relate exclusively to orders for equipment and does not include orders associated with services or spare parts.\n\nIn early 2026 SCHMID initiated its so called “Sprint” cost saving program. “Sprint” will not impact our assemblies in Germany and China which are running close to full capacity. However, personnel expenses in G&A, engineering and R&D in Germany are being lowered through natural attrition, termination of temporary labor contracts and a government-subsidized short-time work program (*Kurzarbeit*) and SCHMID expects to reach an annual run-rate of cost savings of more than € 4 million based on current estimates. Limited one-off costs of around €0.5 million are to be expected. Additionally SCHMID is implementing measures to reduce its listing-related expenses in 2026, with further redutions expected in 2027.\n\nBased on current visibility and business momentum especially in China, SCHMID reaffirms its full-year 2026 guidance. The Company continues to expect revenues exceeding €100 million, an Adjusted EBITDA margin significantly exceeding 12% and order intake of approximately €114 million for the fiscal year 2026. Our forecast for our order intake is based on three reinforcing growth factors that position SCHMID in its growing global target market:\n\n●First, the continued expansion of Advanced Packaging, IC-Substrate and HDI-PCB capacity across Asia is driving sustained demand for SCHMID’s production equipment. Key customers in Taiwan, Japan, Korea and China are executing multi-year investment programs, and SCHMID is deeply embedded in these roadmaps with its next-generation InfinityLine platforms.\n\n●Second, Europe and North America are showing clear signs of recovery in relation to our target customers and markets. Structural incentives in both regions, coupled with renewed investment in high-end PCB, substrate and aerospace electronics, are expected to be translating into a healthier order pipeline from these regions. SCHMID has an established customer and manufacturing footprint in these markets and proven delivery capability in these markets which we believe provide a competitive advantage as customers reactivate projects and initiate new ones.\n\n59\n\n[Table of Contents](#TOC)\n\n●Third, SCHMID’s strengthened product portfolio has increased our order intake and our outlook for further orders. The launch of our new InfinityLine C+, InfinityLine L+ and InfinityLine P+ solutions, the continuous enhancement of panel-level packaging capabilities, and the expansion of glass-core processing technologies are creating differentiated value propositions across multiple customer segments. We believe that we have early customer interest that confirms that our technology is aligned with the next investment cycle in both substrate and advanced PCB manufacturing.\n\nThe Company is not providing quantitative reconciliations of its financial outlook for Adjusted EBITDA margin to a net income (loss) margin because the IFRS measures that are excluded from the non-IFRS financial outlook are difficult to reliably predict or estimate without unreasonable effort due to their dependence on future uncertainties, such as for instance the results for amortization, income tax benefits or losses or profit shares or losses for the upcoming financial year. Additionally, information that is currently not available to the Company could have a potentially unpredictable and potentially significant impact on its future IFRS financial results.\n\nOur independent registered public accounting firm, KPMG AG Wirtschaftsprüfungsgesellschaft, has not examined, compiled or otherwise applied procedures to the financial forecast for 2026 presented herein and, accordingly, does not express an opinion or any other form of assurance on it.\n\nE. Critical Accounting Estimates\n\nOur consolidated financial statements for the fiscal years ended December 31, 2025, 2024 and 2023, have been prepared in accordance with IFRS as issued by the IASB. The preparation of the consolidated financial statements in accordance with IFRS requires the use of estimates and assumptions that affect the value of assets and liabilities — as well as contingent assets and liabilities — as reported on the balance sheet date, and revenues and expenses arising during the fiscal year. In preparing these consolidated financial statements, management exercises its best judgment based upon its experience and the circumstances prevailing at that time. The estimates and assumptions are based on available information and conditions at the end of the financial periods presented and are reviewed on an ongoing basis. Actual results may differ from these estimates under different assumptions and conditions and may materially affect the financial results or the financial position reported in future periods.\n\nFor more information on critical accounting estimates, see the notes of the Company’s consolidated financial statements, which are included in Item 18 of this Annual Report."}