20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-42040

SCHMID Group N.V.

(Exact name of Registrant as specified in its charter)

Not applicable	The Netherlands
(Translation of registrant’s name into English)	(Jurisdiction of incorporation or organization)

Robert-Bosch-Str. 32-36, 72250 Freudenstadt, Germany

(Address of principal executive offices)

Julia Natterer

c/o SCHMID Group N.V.

Robert-Bosch-Str. 32-36

72250 Freudenstadt

Germany

Tel: +49 7441 538 0

Email: natterer.ju@schmid-group.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class:	Trading Symbol(s):	Name of each exchange on which registered:
Class A Ordinary Shares, par value €0.01 per share	SHMD	Nasdaq Global Select Market
Redeemable Warrants, each exercisable for one Class A Ordinary Share at an exercise price of $11.50 per share	SHMD.WS	Nasdaq Global Select Market

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Not Applicable

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Not Applicable

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: On April 30, 2024, the issuer had 42,974,862 ordinary shares, nominal value €0.01 per share, outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐   No ☑

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐   No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Emerging growth company	☑

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark which basis for accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐  Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☑

TABLE OF CONTENTS

		Page
EXPLANATORY NOTE		1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		4
PART I.		6
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	6
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	6
ITEM 3.	KEY INFORMATION	6
ITEM 4.	INFORMATION ON THE COMPANY	43
ITEM 4A.	UNRESOLVED STAFF COMMENTS	53
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	54
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	64
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	74
ITEM 8.	FINANCIAL INFORMATION.	76
ITEM 9.	THE OFFER AND LISTING	78
ITEM 10.	ADDITIONAL INFORMATION	79
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	106
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	106
PART II.		107
PART III.		111
ITEM 17.	FINANCIAL STATEMENTS	111
ITEM 18.	FINANCIAL STATEMENTS	111
ITEM 19.	EXHIBITS	112

i

EXPLANATORY NOTE

On April 30, 2024 (the “Closing Date”), SCHMID Group N.V. (“Schmid Group” or the “Company”), closed the previously announced business combination (the “Business Combination”) pursuant to the Business Combination Agreement, dated as of May 31, 2023, as amended by a first amendment agreement dated September 26, 2023 (the “First Business Combination Agreement”) and a second amendment agreement dated January 29, 2024, by and among Pegasus Digital Mobility Acquisition Corp., a Cayman Islands exempted company (“Pegasus”), Gebr. Schmid GmbH, a German limited liability company ("Schmid"), Pegasus TopCo B.V., a Dutch private liability company (which was converted into a Dutch public limited liability company, and renamed SCHMID Group N.V., prior to the closing of the Business Combination) (“TopCo”), and Pegasus MergerSub Corp., a Cayman Islands limited liability company and wholly-owned subsidiary of the Schmid Group (“Merger Sub”). References made to Schmid Group pertaining to occurrences predating the Business Combination closing, refer to Gebr. Schmid GmbH, which was the predecessor to SCHMID Group N.V. at the top of the group’s structure.

On the Closing Date, several transactions were completed pursuant to the Business Combination Agreement, including:

● TopCo issued 99 new ordinary shares to its shareholder Pegasus;

● The shareholders of Schmid, Anette Schmid, Christian Schmid and a Community of Heirs (the “Schmid Shareholders”) purchased all 100 TopCo shares from Pegasus at nominal value;

● The Schmid Shareholders subscribed to 28,725,000 TopCo shares and an additional 5,000,000 earn-out shares at €0.01 nominal value and in consideration contributed 100% of the Gebr. Schmid shares by transferring them to TopCo;

● TopCo changed its legal form from a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) to a Dutch public limited liability company (naamloze vennootschap) and was renamed SCHMID Group N.V.;

● The Schmid Group issued shares in exchange for each Pegasus Class A and B share outstanding, and issued 1,406,361 shares to XJ Harbour HK Limited ("XJ Harbour");

● The Schmid Group issued further shares in the amount of 756,964 shares to Pegasus Digital Mobility Sponsor Corp., the sponsor of Pegasus (the "Sponsor"), as payment for approximately USD 8.6 million in liabilities which TopCo assumed before the closing by a debt assumption agreement between Pegasus, the Sponsor and TopCo; and

● Pegasus merged with Merger Sub, with Pegasus as the surviving company and, after giving effect to the merger, becoming a direct, wholly-owned subsidiary of SCHMID Group.

Prior to the Business Combination, SCHMID Group N.V. did not conduct any material activities other than those incident to its formation and the matters contemplated by the Business Combination Agreement, such as the making of certain required securities law filings, and the establishment of Merger Sub. Upon the closing of the Business Combination, SCHMID Group N.V. became the direct parent of Schmid, a Germany-based technology provider with extensive expertise in high-tech manufacturing processes.

Class A Shares, and warrants to purchase one Class A Share at a price of $11.50, subject to adjustment, Public Warrants (“Public Warrants”), began trading on the Nasdaq Global Select Market (“Nasdaq”) under the symbols “SHMD” and “SHMD.WS”, respectively, on May 1, 2024.

Unless otherwise indicated, “SCHMID Group”, “the Company”, “we”, “us” and “our” refer to SCHMID Group N.V. after conversion into a Dutch public limited liability company and Pegasus TopCo B.V. prior to the conversion into a Dutch public liability company. References to “€” are to the common currency of the European Monetary Union and references to “U.S. dollars”, “$” or “cents” are to the lawful currency of the United States.

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FREQUENTLY USED TERMS

Unless otherwise stated in this Annual Report on Form 20-F or the context otherwise requires, references have the following meaning:

“Annual Report” means this annual report of the Company on Form 20-F.

“Board” means the board of directors of the Company.

“Business Combination” means the transactions contemplated by the Business Combination Agreement.

“Business Combination Agreement” means the Business Combination Agreement, dated May 31, 2023, by and among TopCo, Merger Sub, Pegasus and Gebr. Schmid GmbH, as amended by that First Amendment to Business Combination Agreement dated as of September 26, 2023 and as amended by the Second Amendment to Business Combination Agreement dated as of January 29, 2024, and as it may be further amended from time to time.

“Class A Shares” or the "Shares" means the shares of the Company.

“Closing Date” means April 30, 2024, the date of the closing of the Business Combination.

“Code” means the Internal Revenue Code of 1986, as amended.

"Company" means SCHMID Group N.V.

“Continental” means Continental Stock Transfer & Trust Company, the transfer agent and warrant agent of the Company.

"ET" means embedded traces, a process which we believe the next level technology for high-end PCBs & Substrates.

“EU” means the European Union.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

"FCPA" means U.S. Foreign Corrupt Practices Act.

“GDPR” means the European General Data Protection Regulation.

“IAS” means the International Accounting Standard.

“IASB” means the International Accounting Standards Board. “IBR” means the incremental borrowing rate.

“IFRS” means the International Financial Reporting Standards as issued by the IASB.

"mSAP" means modified semi additive processes.

"MergerSub" means Pegasus MergerSub Corp., a Cayman Islands exempted company.

“NASDAQ” means the Nasdaq Stock Exchange in New York.

“NYSE” means the New York Stock Exchange.

“OEMs” means original equipment manufacturers.

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“Pegasus” means Pegasus Digital Mobility Acquisition Corp., a Cayman Islands exempted company.

“Pegasus Private Placement Warrants” means the 9,750,000 warrants originally issued in the private placement that occurred concurrently with the closing of Pegasus’s IPO.

“Pegasus Public Warrants” means the 11,250,000 public warrants, each of which is a warrant to purchase one Pegasus Class A Ordinary Share at a price of $11.50 per share, subject to adjustment in accordance with the Warrant Agreement.

“Pegasus Warrants” means collectively the Pegasus Public Warrants and the Pegasus Private Placement Warrants.

"PCB" means printed circuit board.

"RMB" means the Chinese Renminbi.

"SAP" means semi-additive processes.

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

“Schmid” or “SCHMID” means SCHMID Group N.V.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Sponsor” means Pegasus Digital Mobility Sponsor LLC., a Cayman Islands limited liability company, which is the sponsor of Pegasus.

“TopCo” means Pegasus TopCo B.V., a Dutch private liability company (besloten vennootschap met beperkte aansprakelijkheid) which has been converted and renamed to SCHMID Group N.V. on April 30, 2024.

"XJ Harbour" means XJ Harbour HK Limited.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains or may contain forward-looking statements that involve significant risks and uncertainties. Statements contained in this Annual Report, other than statements of historical fact, including statements about SCHMID’s expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts are forward-looking statements. Words or phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will” and “would,” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. Examples of forward-looking statements in this Annual Report include, but are not limited to, statements regarding SCHMID’s operations, cash flows, financial position and dividend policy.

Forward-looking statements are subject to risks and uncertainties. The risks and uncertainties include, but are not limited to:

● our future financial condition and operating results;

● our ability to remain in compliance with financial covenants under our financing arrangements;

● our ability to extend, renew or refinance our existing debt;

● our liquidity and losses from operations and projected cash flows and related impact on our ability to continue as a going concern;

● our growth, expansion and acquisition prospects and strategies, the success of such strategies, and the benefits we believe can be derived from such strategies;

● our ability to effectively manage our inventory and inventory reserves;

● impairments of our goodwill or other intangible assets;

● changes in consumer spending patterns and overall levels of consumer spending;

● our ability to further upgrade our information technology systems and infrastructure, including our accounting processes and functions;

● our ability to continue to remedy weaknesses in our internal controls;

● costs as a result of operating as a public company;

● our assumptions regarding interest rates and inflation;

● changes affecting currency exchange rates;

● continuing business disruptions arising from the on-going war in Ukraine and in the aftermath of the coronavirus pandemic;

● our financial condition and ability to obtain financing in the future to implement our business strategy and fund capital expenditures, acquisitions and other general corporate activities;

● estimated future capital expenditures needed to preserve our capital base;

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● changes in general economic conditions in the Federal Republic of Germany (“Germany”), and the European Union, the United States of America and the People’s Republic of China, including changes in the unemployment rate, the level of energy and consumer prices, wage levels, etc.;

● the market acceptance of our products by our customers and our ability to adapt to technological changes;

● the growth in the market for Embedded Traces technology in our products;

● changes in our competitive environment and in our competition level;

● the occurrence of accidents, terrorist attacks, natural disasters, fires, environmental damage, or systemic delivery failures;

● our inability to attract and retain qualified personnel, consultants and collaborators;

● changes in laws and regulations;

● our expectations relating to dividend payments and forecasts of our ability to make such payments; and

● other factors discussed in “Item 3. Key Information — D. Risk Factors” in this Annual Report.

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described under the section titled “Item 3. Key Information — D. Risk Factors” in this Annual Report. Accordingly, you should not rely on these forward-looking statements, which speak only as of the date of this Annual Report. We undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this Annual Report or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Annual Report.

In addition, statements that “Schmid believes” or “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date such statements are made. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely on these statements.

Although we believe the expectations reflected in the forward-looking statements were reasonable at the time made, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither SCHMID nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should carefully consider the cautionary statements contained or referred to in this section in connection with the forward-looking statements contained in this Annual Report and any subsequent written or oral forward-looking statements that may be issued by SCHMID or persons acting on our behalf. Our actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained in this Annual Report as described in “Item 3. Key Information — D. Risk Factors”, “Item 4 —Information on the Company” and “Item 5 — Operating and Financial Review and Prospects”. Given these risks, uncertainties and other important factors, you should not place undue reliance on these forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this Annual Report. Also, these forward-looking statements represent our estimates and assumptions only as of the date such forward-looking statements are made. Except as required by law, we assume no obligation to update any forward-looking statements publicly, whether as a result of new information, future events or otherwise.

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PART I.

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

A. Directors and Senior Management

Information regarding the directors and executive officers of the Company after the closing of the Business Combination is included in Item 6.A, “Directors and Senior Management” below.

The business address for each of the directors and executive officers of the Company is Robert-Bosch-Str. 32-36, 72250 Freudenstadt, Germany.

B. Advisers

Clifford Chance PmbB, Junghofstrasse 14, 60311 Frankfurt, Germany, has acted as U.S. counsel for Pegasus and is acting as U.S. counsel to the Company following the closing of the Business Combination which occurred on April 30, 2024.

Clifford Chance LLP, Amsterdam Droogbak 1A 1013 GE, Netherlands, has acted as Dutch counsel for Pegasus and is acting as Dutch counsel to the Company following the closing of the Business Combination.

C. Auditors

For the fiscal years ended December 31, 2023, 2022 and 2021, KPMG AG Wirtschaftsprüfungsgesellschaft, Friedenstraße 10, 81671 Munich, Germany has acted as independent registered public accounting firm for the Company.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. [Reserved]

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Our business faces significant risks and uncertainties. You should carefully consider all of the information set forth in this Annual Report, including without limitation “Item 5 — Operating and Financial Review and Prospects,” and in other documents we file with or furnish to the SEC, including the following risk factors, before deciding to invest in or to maintain an investment in our securities. Our business, as well as our reputation, financial condition, results of operations and share price, could be materially adversely affected by any of these risks, as well as other risks and uncertainties not currently known to us or not currently considered material. The following risk factors have been organized by category for ease of use; however, many of the risks may have impacts in more than one category.

6

Risk Factors Summary

Our business faces significant risks and uncertainties. You should carefully consider all of the information set forth in this Annual Report and in other documents we file with or furnish to the SEC, including the following risk factors, before deciding to invest in or to maintain an investment in our securities. Our business, as well as our reputation, financial condition, results of operations and share price, could be materially adversely affected by any of these risks, as well as other risks and uncertainties not currently known to us or not currently considered material. These risks include, among others, the following:

● SCHMID’s ability to maintain the listing of our securities on the NASDAQ;

● Our ability to implement business plans, operating models, forecasts, and other expectations and identify and realize additional business opportunities;

● Schmid faces intense competition in the markets and industries in which it operates, and Schmid’s competitiveness depends on being successful in new product development and to market its embedded traces technology.

● The reputation of Schmid’s brand is an important company asset and is key to Schmid’s ability to remain a trusted supplier of specialty products, equipment and services.

● Schmid’s profitability could suffer if its cost management strategies are unsuccessful, or Schmid’s competitors develop an advantageous cost structure that Schmid cannot match.

● Schmid’s direct customers and their direct and indirect customers face numerous competitive challenges, which may materially adversely affect their business and as a result Schmid’s business.

● Schmid’s revenue, earnings, and other operating results have fluctuated in the past and may fluctuate in the future due to the nature of its business.

● Any disruptions to Schmid’s supply chain, significant increases in material costs, or shortages of critical components, could adversely affect Schmid’s business and result in increased costs.

● Most of Schmid’s revenue is derived from the electronics business which subjects its revenues and profitability to fluctuations and developments in one global area of business.

● Economic, financial, geopolitical, epidemiological, or other conditions could result in business disruptions which could seriously harm Schmid’s future revenue and financial condition and increase Schmid’s costs and expenses.

● Schmid’s operations and assets in foreign jurisdictions may be subject to significant political and economic uncertainties.

● Schmid’s management has limited experience in operating a public company.

● Schmid’s ability to obtain additional capital on commercially reasonable terms may be limited.

● Schmid is generally subject to substantial regulation and laws and unfavorable changes to, or its failure to comply with, these regulations and/or laws could substantially harm its business and operating results.

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● Failure of information security and privacy concerns could subject Schmid to penalties, damage Schmid’s reputation and brand, and harm Schmid’s business and results of operations.

● Schmid may be unable to successfully execute its growth initiatives, business strategies, or operating plans.

● Schmid’s know-how and innovations, which it relies on for its current and future business, may not be adequately protected.

● Schmid’s patent applications may not be successful, which may have a material adverse effect on Schmid’s ability to prevent others from commercially exploiting products similar to Schmid’s products.

Risks Related to Our Business, Technology, and Industry

In the markets and industries in which we operate, we face intense competition and our failure to compete successfully in product development may have an adverse effect on our business, financial condition, and results of operations.

The electronic and photovoltaic industries in which we operate are highly competitive. We encounter competition from numerous and varied competitors in all areas of our business, especially in photovoltaics. For example, the photovoltaic industry includes large Chinese players who often dominate equipment manufacturing as the market is highly commoditized, price driven and under the focus of the Chinese government, which seeks to implement favorable industry policy for local producers. Further, we face competition not only from competitors who manufacture similar products, but also those who may offer a variety of other alternative products. Additionally, industry consolidation may result in larger, more homogeneous, and potentially stronger competitors in the markets in which we compete in the future.

We compete primarily on the basis of product quality, innovation, technology, brand reputation as well as through the services and support we offer. Our competitors may continue to develop their existing portfolios of products, introduce new products and enhance their existing products, which could cause a decline in market acceptance of our products. Our competitors may also improve their manufacturing processes or expand their manufacturing capacity, which could make it more difficult or costly for us to compete successfully. In addition, our competitors could enter into exclusive arrangements with our existing or potential customers or suppliers, which could limit our ability, or make it significantly more costly, to acquire necessary raw materials or to generate sales.

Some of our competitors may have or may obtain greater financial, technical, and marketing resources than we do. This would allow them to devote greater resources to promoting and selling certain products. Unlike many of our competitors who specialize in a single or limited number of product lines, we have a portfolio of businesses and must allocate resources across those businesses. As a result, we may invest less in certain areas of our business than our competitors invest which may lead to a competitive disadvantage.

Further, because some of our competitors are small divisions of large, international businesses, these competitors may have access to greater resources than we do and may therefore be better able to withstand a change in conditions within our industry or the economy as a whole.

Some of our competitors may also incur fewer expenses than we do in creating, marketing, and selling certain products and may face fewer risks in introducing new products to the market. This circumstance results from the nature of our business model, which is based on providing innovative and high-quality products, and therefore may require us to spend a proportionately greater amount on R&D than some of our competitors. If our pricing, marketing resources or other factors are not sufficiently competitive, or if there is an adverse reaction to our product decisions, we may lose market share in certain areas, which could adversely affect our business, financial condition, and results of operations.

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Additionally, competitors could benefit from favorable tax regimes or additional governmental grants and subsidies. Certain of our competitors in various countries in which we do business, including China, may be owned by or affiliated with members of local governments and political entities. These competitors may receive special treatment with respect to regulatory compliance and product registration, while certain of our products, including those based on new technologies, may be delayed or even prevented from entering into the local market.

Escalating trade tensions, for example between the United States and China, can also lead to restrictions on the import and export of certain goods and technologies to or from certain countries. Further, additional trade import taxes can create disruption in competitiveness. Disruption in the global supply chain due to an escalation of trade tensions, the outbreak of war, a disease epidemic or other unexpected situation can cause certain services, goods and materials to be unavailable or in limited supply and can further limit production capability and result in an inability to produce equipment for customers within an acceptable timeframe and at the needed volume. Such disruptions can have a material impact on our business, results of operations and financial condition. in time and in the needed volume.

We are currently in the process of patenting the technology for embedded traces (“ET”) which we believe is the next level technology for high-end PCBs & substrates. We believe we are the only participant in the market that is currently able to supply equipment for ET production and our best estimate, based on third-party data from a leading international consultancy firm, assumes that the ET market for high-end PCB equipment will grow substantially in 2024. If competitors concentrate on the ET as well and develop either better or more cost competitive processes and machinery, we could fail to capture the growth we expect in the ET market, which could have a material adverse effect on our business, financial condition, and results of operations.

The reputation of our brand is an important company asset and is key to our ability to remain a trusted supplier of specialty products, equipment and services.

We have maintained a strong reputation in the electronics and photovoltaics industries for more than 160 years. Our products, equipment and services are associated with long-lasting and reliable high quality.

The reputation of our brand is an important company asset and is key to our ability to remain a trusted supplier of specialty products, equipment and services and to attract and retain customers. Negative publicity regarding our company or actual, alleged, or perceived issues regarding one of our products or services, particularly given the high cost-of-failure nature of our products and services, could harm our relationships with customers and may adversely affect our credibility and our business.

Our business is dependent on the continued acceptance by our customers of our existing products and services and the value placed on them. If these products and services do not maintain market acceptance, our revenues may decrease. A portion of our sales originate from our worldwide customer-oriented services, which is an important element of our business. If we do not devote sufficient resources or are otherwise unsuccessful in assisting our customers effectively with the products sold to them, we could adversely affect our ability to retain existing customers and could discourage prospective customers from adopting our services. We may be unable to respond quickly enough to accommodate short-term increases in demand for customer support. We may also be unable to modify the nature, scope and delivery of our customer support to compete with changes in the support services provided by our competitors. Increased demand for customer support, without corresponding revenue, could increase costs and adversely affect our business, results of operations and financial condition.

We are also continually investing in new product development to expand our offerings beyond our traditional products and services. Market acceptance of any new products or services may be affected by customer confusion surrounding our introduction of new products and services. Our expansion into new offerings may present increased risks and efforts to expand beyond our traditional products and services may not succeed. However, if we do not continue to innovate and provide innovative machinery and technological solutions that are competitive within our industry, we may lose customers, and our revenues and results of operations could suffer.

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Through our products, we have established ourselves as one of the leaders in quality and innovation in the markets in which we operate. For that reason, our customers are willing to pay above market prices for our machinery and technological solutions. If we do not continue to innovate and provide innovative machinery and technological solutions that are competitive within our industry, our customers may no longer be willing to pay above market price for our machinery and technological solutions or may move to our competitors. Our customers moving to our competitors could have a material adverse effect on our business, financial condition, and results of operations.

In addition, our business is subject to constant and rapid technological change, product obsolescence, price erosion, evolving standards, and raw material price fluctuations. The industry is currently affected by localization and a shift in customers’ businesses. In particular, there is currently a reorganization of the global supply chain underway, with a focus on decreasing dependency on China. The trends and characteristics in these industries may cause significant fluctuations in our results of operations and cash flows and have a material adverse effect on our financial condition. Our growth and success depend upon our ability to enhance our existing products and services and to develop and introduce new products and services to keep pace with such changes and developments and to meet changing customer needs and preferences. However, newer products or services may not achieve market acceptance if current or potential customers do not value the benefits of using our products, do not achieve favorable results using our products, use their budgets for different products, experience difficulties in using our products, or believe that our products are not cutting edge or do not add as much value as our competition’s products. If these newer products and services do  not achieve market acceptance, there could be a material adverse effect on our business, financial condition, and results of operations and our profitability could decline. Additionally, changes, including technological changes, in our customers’ products or processes may make our specialty machines unnecessary or reduce the quantity of our specialty machines needed for a given product or process, which would reduce the demand for such. We have had, and may continue to have, customers who find alternative materials or processes and therefore no longer require our products, which could have a material adverse effect on our business, financial condition, and results of operations. Further, our plans for operating our business and leading further growth include adding new products and services. These investments could contribute to losses, and we cannot guarantee whether or when any of these plans will be successful with customers or result in an improvement in profits for our business.

In addition, we may fail to anticipate the impact of new and emerging technology or changes in trends, fail to accurately determine market demand for new products and services, experience cost overruns, delays in delivery or performance problems, or create market confusion by making changes to our existing products and services. If we are not successful in obtaining acceptance for new products or services, demand for our products and services may decline and/or we may not be able to grow our business or growth may occur more slowly than we anticipate. Some of our current or future products or services could also be rendered obsolete as a result of competitive offerings or market shifts. Furthermore, if our customers deviate from the envisaged timeline for the introduction of new technology, the sales of our newer products could be adversely affected. Failure to anticipate or quickly adapt to changes in our customers’ product introduction timelines could have a material adverse effect on our business, financial condition, and results of operations.

Our profitability could suffer if our cost management strategies are unsuccessful, or our competitors develop an advantageous cost structure that we cannot match.

Our ability to improve or maintain our profitability is dependent on our ability to successfully manage our costs. Our cost management strategies include maintaining appropriate alignment between the price of raw materials, the demand for our offerings and our resource capacity and maintaining or improving our sales and marketing and general and administrative costs as a percentage of revenues. If our cost management efforts are not successful, our efficiency may suffer, and we may not achieve desired levels of profitability. In addition, we may not be able to implement our cost management efforts in a manner that permits us to realize the cost savings we anticipate in the time, manner, or amount we currently expect, or at all due to a variety of risks, including, but not limited to, difficulties in integrating shared services within our business, higher than expected employee severance or retention costs, higher than expected overhead expenses, delays in the anticipated timing of activities related to our cost savings plans, and other unexpected costs associated with operating our business. If we are not effective in managing our operating costs in response to changes in demand or pricing, or if we are unable to absorb or pass on increases in the compensation of our employees or costs of raw materials, we may not be able to invest in our business in an amount necessary to achieve our planned rates of growth, and our business, financial condition, and results of operations could be materially adversely affected.

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It may be possible for our current or future competitors to gain an advantage in product technology, manufacturing technology, or process technology, which may allow them to offer products or services that have a significant advantage over our offerings. Advantages could be in price, capacity, performance, reliability, serviceability, industry standards or formats, brand and marketing, or other attributes. If we do not compete successfully by developing and deploying new cost-effective products, processes, and technologies on a timely basis and by adapting to changes in our industry and the global economy, there could be a material adverse effect on our business, financial condition, and results of operations. Similarly, our products are used by manufacturers of component parts for a variety of industries. To the extent these industries become more sensitive to input costs, we may face price pressure. Our ability to respond to such pressures depends on the strength and viability of our internal cost management and pricing programs. Any failure of these programs could have a material adverse effect on our business, financial condition, and results of operations.

If we fail to continuously develop new, improved and more cost-effective technologies and products, this could have a material adverse effect on our business, financial condition and results of operations.

We depend on our continued ability to develop new, improved and more cost-effective technologies and products, to produce the same in a cost-effective manner and to commercialize and distribute new products successfully. The trend towards commoditization and standardization in some of our markets is further increasing the importance of research and development as we need to offer specialized products that are offering higher value to customers in order to achieve satisfactory margins.

We may not be able to successfully and constantly adapt, expand and improve our research and development activities, product portfolio and our marketing strategy in a timely manner and to the necessary extent, or may lack the capacity to invest the required level of human or financial resources in the development of  new products required to respond to the existing trends and future changes. Competitors, in particular those with greater financial resources, might be able to outperform us by developing new technologies or products with favorable characteristics. In addition, the market for a newly developed technology or product may unexpectedly decline or could even disappear. In such case, all or part of our investments in the development of the relevant technology or product, which might be substantial, may be lost.

If we fail to continuously develop new, improved and more cost-effective technologies and products and to constantly adapt our research and development activities, product portfolio and marketing strategy to new trends and technological changes, this could have a material adverse effect on our business, financial condition and results of operations.

Our direct customers and their direct and indirect customers face numerous competitive challenges, which may materially adversely affect their business and ours.

Factors adversely affecting our direct customers and their direct and indirect customers may also adversely affect us. These factors include recessionary periods in their markets, their inability to adapt to rapidly changing technology and evolving industry standards, their inability to develop, market, or gain commercial acceptance of their products, some of which are new and untested and their products becoming commoditized or obsolete. Our customers are also subject to a highly competitive consumer products industry, which may have shorter product lifecycles, shifting end-user preferences, and higher revenue volatility.

If our customers or our customers’ direct and indirect customers in the ultimate end-markets are unsuccessful in addressing these competitive challenges, their businesses may be materially adversely affected, reducing the demand for our offerings, decreasing our revenues, or altering our production cycles and inventory management, each of which could have a material adverse effect on our business, financial condition, and results of operations.

Our revenue, earnings, and other operating results have fluctuated in the past and may fluctuate in the future.

If demand for our products fluctuates as a result of economic conditions or for other reasons, our revenue and profitability could be impacted. Our future operating results will depend on many factors, including the following:

● business, political, and macroeconomic changes, and the overall global economy;

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● wars or epidemic events;

● changes in consumer confidence caused by many factors, including changes in interest rates, credit markets, expectations for inflation, unemployment levels, and energy or other commodity prices;

● fluctuations in demand for our customers’ and their customers’ products;

● our ability to forecast our customers’ demand for our products accurately;

● our ability to anticipate secular trends that affect demand for our products and the degree to which those trends materialize;

● our customers’ ability to manage the inventory that they hold and to forecast accurately their demand for our products;

● our ability to achieve cost savings and improve yields and margins on our new and existing products; and

● our ability to utilize our capacity efficiently or acquire additional capacity in response to customer demand.

It is likely that our future operating results could be adversely affected by one or more of the factors set forth above or other similar factors. If our future operating results are below the expectations of stock market analysts or our investors, our stock price may decline.

Any disruptions to our supply chain, significant increase in material costs, or shortages of critical components, could adversely affect our business and result in increased costs.

Any disruptions to our supply chain, significant increases in the cost of materials or shortages of critical components, could adversely affect our business and result in increased costs. Such a disruption could occur as a result of any number of events, including, but not limited to: market shortages due to surge in demand for any particular part or component, increases in prices or impact of  inflation, the imposition   of regulations, quotas or embargoes on components, labor stoppages, transportation delays or failures affecting the supply chain and shipment of materials and finished goods, supply bottlenecks resulting from plant closures and production adjustments due to public health crises, such as pandemics and epidemics, third-party interference in the integrity of the parts and components sourced through the supply chain, the unavailability of raw materials, severe weather conditions, adverse effects of climate change, natural disasters, geopolitical developments, war or terrorism, and disruptions in utilities and other services. In addition, any future updates or modifications to the anticipated design of Schmid products may increase the number of parts and components we would be required to source and increase the complexity of our supply chain management. Failure to effectively manage the supply of parts and components could materially and adversely affect our results of operations, financial condition and prospects.

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Any continued decline or disruption in the photovoltaics, and electronics markets or any economic downturn or uncertainty, in particular in Europe and Asia, could materially adversely affect our business, results of operations, and financial condition.

In recent years, we have generated a large percentage of our revenue in China and Europe. Any continued decline or disruptions in those markets, especially in respect to the photovoltaics and electronics market, could have a direct impact on our business. Trends in nearshoring global semiconductor supply chains could also directly impact our business as customers may choose to move to competitors whose production facilities are closer to their factories. We have also historically been impacted by economic declines or disruptions in those markets, for example the outbreak of the COVID-19 pandemic which led to severe interruptions to business operations generally and within China in particular. Any similar decline or disruption in the future could materially adversely affect our business, results of operations, and financial condition.

Our performance also depends on the financial health and strength of our customers, which in turn is dependent on the economic conditions of the markets in which we and our customers operate. Declines or uncertainties in Europe, the United States, China and other global economies may lead customers to delay or reduce purchases of our products and services as they take measures to reduce their operating costs, including by delaying the development or launch of new products and brands and/or reducing R&D spending generally.

We are also sensitive to general trends and changes in the key markets we serve. Some of these markets, including the market for substrate manufacturing, exhibit a degree of cyclicality. Decisions to purchase our products and equipment are largely the result of the performance of these and other end-markets. If demand for output in these end-markets decreases, demand for our offerings will decrease as well. Demand for the products produced by customers in our end-markets is impacted by numerous factors, including macroeconomic conditions, prices of commodities, rates of infrastructure spending, consumer confidence and spending, labor conditions, and fuel costs, among others. For example, public skepticism of autonomous driving may negatively impact the demand for high-frequency sensors, which could result in decreased demand for our products. Increases or decreases in these variables globally may significantly impact the demand for our offerings and could have a material adverse effect on our business, financial condition, and results of operations. If we are unable to accurately predict demand in our end-markets or of the customers we serve, we may be unable to meet our customers’ needs, resulting in the loss of potential sales.

Alternatively, we may manufacture excess products, resulting in increased inventories and overcapacity in our manufacturing facilities, increasing our incremental production costs and decreasing our operating margins. In addition, mergers or consolidations among our customers could reduce the number of our customers and potential customers. Consolidation in certain industries that we serve might also adversely affect or otherwise impact our revenues even if these events do not reduce the activities of the consolidated entities. When entities consolidate, overlapping services previously purchased separately are usually purchased only once by the consolidated entity, leading to loss of revenues. In addition, consolidated entities can better negotiate pricing terms while reducing spending on other services that were previously purchased by one of the merged or consolidated entities which may be deemed unnecessary or cancelled. Any such developments among our customers could have material adverse effect on our business, financial condition, and results of operations.

Most of our revenue is derived from our electronics business and while we believe that the business we operate in will grow significantly in the future, this may not materialize which could mean that we fail to reach our 2024 projected revenues and EBITDA.

While we focus on several sectors such as electronics and photovoltaics, the majority of our revenue is achieved from our business with electronics customers. If one or more of the products and services we offer in this business area does not continue to remain profitable or we fail to maintain the quality of the products we offer for any reason, our business, financial condition, and results of operations may be materially adversely affected.

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In particular, in our best estimate, based on third-party data from a leading international consultancy firm, the ET market for high-end PCB equipment will grow substantially in 2024. If the high-end PCB equipment market develops differently, for instance if traditional process technologies or other new technologies continue to capture most or all of the high-end PCB equipment market, we would not be able to grow our own revenues through our ET process technology, which could have a material adverse effect on our business, financial condition, and results of operations.

Our future business plans are formulated on the expectation of positive long-term trends and drivers in the market in which we operate. Key drivers of this growth are technology such as mobile devices and wearables as well as automotive and mobility innovations. If our expectations and estimates are not correct or do not materialize in the manner in which we anticipate, this could have a negative impact on our future business plans and results of operations. In particular, our current projections for our revenues and EBITDA for fiscal year 2024 are based on our current assessment of the macroeconomic conditions in our key target markets and in particular the development of the electronics businesses and significant customer orders. While we based our projections on market trends and discussions with key customers as well as our order backlog as of December 31, 2023, the forecasted revenues and EBITDA may not materialize as we project due to various external factors or delays in order timing or other factors such as competitors receiving orders which we have forecasted to be received by us in 2024.

Difficult and volatile conditions in the capital, credit and commodities markets and in the overall economy could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Difficult global economic conditions, including concerns about sovereign debt and significant volatility in the capital, credit, and commodities markets, could have a material adverse effect on our business, financial condition, results of operations, and cash flows. These global economic factors, combined with low levels of business and consumer confidence and high levels of unemployment, precipitated a slow recovery from the global recession and from time to time create a concern about a return to recessionary conditions. These difficult conditions and the overall economy can affect our business in several ways. For example:

● as a result of the volatility in commodity prices, we may encounter difficulty in achieving sustained market acceptance of past or future price increases, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows;

● under difficult market conditions, there can be no assurance that borrowings under our revolving credit facility would be available or sufficient, and in such a case, we may not be able to successfully obtain additional financing on reasonable terms, or at all;

● in order to respond to market conditions, we may need to seek waivers from certain provisions in financing agreements, and in such case, there can be no assurance that we can obtain such waivers at a reasonable cost, if at all;

● market conditions could cause the counterparties to the derivative financial instruments we may use to hedge our exposure to interest rate, commodity, or currency fluctuations to experience financial difficulties and, as a result, our efforts to hedge these exposures could prove unsuccessful and, furthermore, our ability to engage in additional hedging activities may decrease or become more costly; and

● market conditions could result in our key customers experiencing financial difficulties and/or electing to limit spending, which in turn could result in decreased sales and earnings for us.

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In general, downturns in economic conditions can cause fluctuations in demand for our and our customers’ products, product prices, volumes, and margins. Future economic conditions may not be favorable to our industry and future growth in demand for our products, if any, may not be sufficient to alleviate any existing or future conditions of excess industry capacity. A decline in the demand for our products or a shift to lower margin products due to deteriorating economic conditions could have a material adverse effect on our business, financial condition, and results of operations and could also result in impairments of certain of our assets. We do not know if market conditions or the state of the overall economy will maintain its current course, improve, or decline in the near future. We  cannot provide assurance that  any decline in economic conditions or economic downturn in one or more of the geographic regions in which we sell our products would not have a material adverse effect on our business, financial condition, and results of operations.

Foreign currency exchange rate fluctuations and volatility in global currency markets could have a material adverse effect on our business, financial condition, and results of operations.

Our combined financial statements are presented in Euros. Our international sales and operations expose us to fluctuations in foreign currency exchange rates. These movements in exchange rates may cause our revenues and expenses to fluctuate, impacting our profitability and cash flows and our results generally.

A significant part of our costs and revenues is denominated in currencies other than the Euro, with the significant majority of our non-Euro denominated revenues being in RMB and a significant majority of our costs being denominated in Euro. Because a majority of our revenues and costs are denominated in currencies other than the Euro, changes in foreign currency exchange rates, in particular a depreciation of the Euro against the RMB, could reduce our ability to service our debt.

These risks related to exchange rate fluctuations and currency volatility may increase in future periods as our operations outside of Europe continue to expand. Consequently, our business, financial condition, and results of operations may be materially adversely affected by fluctuations in currency exchange rates.

Natural disasters, catastrophes, fire, or other unexpected events could have a material adverse effect on our business, financial condition, and results of operations.

Many of our business activities involve substantial investments in manufacturing facilities. These facilities could be materially damaged by natural disasters, such as floods, tornadoes, hurricanes, and earthquakes, or by catastrophes, fire or other unexpected events such as adverse weather conditions or other disruptions to our facilities, supply chain, or our customers’ facilities. We could incur uninsured losses and liabilities arising from any such events, including damage to our reputation, and/or suffer severe impairments to our operational capacity, which could have a material adverse impact on our business, financial condition, and results of operations.

Any natural disaster, catastrophe, fire, or other unexpected event could result in personal injury and loss of life, damage to property, and contamination of the environment, which may result in a shutdown of our facilities, suspension of operations, and the imposition of civil or criminal fines, penalties and other sanctions, cleanup costs, and claims by governmental entities or third parties. We are dependent on the continued operation of our production facilities, and the loss or shutdown of operations over an extended period at any of our other major operating facilities could have a material adverse effect on our business, financial condition, and results of operations.

If we fail to retain existing key customers, or if our key customers fail to grow their own sales in the future, our business, results of operations, and financial condition could be materially adversely affected.

We have a concentrated customer base and are dependent on a small number of significant customers in the technology sector for a large percentage of our sales and revenue. For fiscal year 2023, the two largest customers measured in terms of sales volume represented approximately 38% of our revenues and the ten largest customers represented approximately 71% of our revenues. For the fiscal year 2021, we had more than 60 customers and in 2022 we had more than 70 customers with an approximately similar number of customers in 2023. If we fail to retain these key customers or if we fail to replace orders in one period from key customers with orders from other customers in subsequent periods our own results could be materially adversely impacted.

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After introducing our products into their operations, our customers often become highly dependent on our continued provision of products and services. This means that a part of our revenue is derived from subsequent business following the original customer purchase. If such customers were to switch to other providers, we would lose revenue from both initial business as well as subsequent business from follow-on sales and services.

Further, our key customers may fail to grow their own sales in the future which may result in withdrawing from business with us. Loss of any such customer or any disruption in our relationship with such customers could result in decreased revenues. If we are unable to replace revenue generated by one or more of our major customers, our revenue may significantly decrease, which would have a material adverse effect on our business, financial condition, and results of operations.

Our business, financial condition, and results of operations could be adversely affected by decreases in the average selling prices of products.

Decreases in the average selling prices of our products may have a material adverse effect on our business, financial condition, and results of operations. Our ability to maintain or increase our profitability will continue to be dependent, in large part, upon our ability to offset decreases in average selling prices by improving production efficiency or by shifting to higher margin products. In the past, we have elected to discontinue selling certain products as a result of sustained material decreases in the selling price of such products and our inability to effectively offset such decrease through shifts in operations. If we are unable to respond effectively to decreases in the average selling prices of our products in the future, our business, financial condition, and results of operations could be materially adversely affected. Further, while we may elect to discontinue products that are significantly affected by such price decreases, we can provide no assurance that any such discontinuation will mitigate the related declines in our financial condition.

We may be required to record an impairment charge on our accounts receivable if we are unable to collect the outstanding balances from our customers.

We typically pre-finance a large portion of development services and resources for manufacturing customer-specific products and frequently sell products and services to customers on credit. While we carry out credit checks for our customers and generally require down payments for orders, there is a risk of delay for payments of the remaining amounts or that customers do not fulfil their payment obligations in full. We estimate the collectability of our accounts receivable based on our analysis of the accounts receivable, historical bad debts, customer creditworthiness, and current economic trends. We continuously monitor collections from our customers and maintain adequate impairment allowance for doubtful accounts. However, if the bad debts significantly exceed our impairment allowance, we may be required to record an impairment charge and our business, financial condition, and results of operations could be materially adversely affected.

Economic, financial, geopolitical, epidemiological, or other conditions could result in business disruptions which could seriously harm our future revenue and financial condition and increase our costs and expenses.

Concerns over inflation, geopolitical issues, the U.S. financial markets, foreign exchange rates, capital and exchange controls, unstable global credit markets and financial conditions, the COVID-19 pandemic, supply chain disruptions and economic issues have led to periods of significant economic instability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth going forward, and increased unemployment rates. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment and continued unstable or unpredictable economic and market conditions. If these conditions continue to deteriorate or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly and more dilutive. In addition, there is a risk that one or more of our current or future service providers, manufacturers, suppliers and other partners could be negatively affected by difficult economic times, which could adversely affect our ability to attain our operating goals on schedule and on budget or meet our business and financial objectives.

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Our operations, and those of third-party contractors and consultants upon which we rely, could be subject to wildfires, earthquakes, tsunamis, power shortages or outages, floods or monsoons, public health crises, such as pandemics and epidemics, political crises, such as terrorism, war (including trade wars), political instability or other conflicts, and other natural or man-made disasters or other events outside of our control that could disrupt our business. In February 2022, armed conflict escalated between Russia and Ukraine. The sanctions announced by the United States and other countries, following Russia’s invasion of Ukraine, against Russia to date include restrictions on selling or importing goods, services or technology in or from affected regions and travel bans and asset freezes impacting connected individuals and political, military, business and financial organizations in Russia. It is not possible to predict further actions by the United States and other countries and the broader consequences of this war, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, currency exchange rates and financial markets, all of which could impact our business, financial condition and results of operations.

The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. Our ability to obtain supplies and materials for the production of our products could be disrupted if the operations of our suppliers are affected by a man-made or natural disaster or other business interruption. Damage or extended periods of interruption to our corporate, development or research facilities due to fire, natural disaster, power loss, communications failure, unauthorized entry or other events could cause us to cease or delay the marketing or development of some or all of our products and services. Although we maintain property damage and business interruption insurance coverage, our business, financial condition, and results of operations may be seriously harmed should the losses we suffer as a result of such property damage and/or business interruption substantially exceed our insurance coverage and we are required to make up for this shortfall.

Risks Related to our Operations

Our global operations subject us to increased risks.

We have global operations and, accordingly, our business is subject to risks resulting from differing legal and regulatory requirements, political, social, and economic conditions, and unforeseeable developments in a variety of jurisdictions. We have a significant presence in several major regions, including certain emerging markets such China, and we plan to continue and diversify global expansion. Our global operations are subject to the following risks, among others:

● political instability, including regime changes, and corruption;

● acts of terrorism and military actions in response to such acts;

● unexpected changes in regulatory environments and government interference in the economy;

● changes to economic sanctions laws and regulations, including regulatory exemptions that currently authorize certain of our limited dealings involving sanctioned countries;

● increasingly stringent laws related to privacy and consumer and data protection, including the EU General Data Protection Regulation and US State privacy and security breach notification laws;

● international trade disputes that could result in tariffs or other protectionist measures;

● social unrest, crime, strikes, riots and civil disturbances;

● varying tax regimes, including with respect to the imposition of confiscatory taxes, other unexpected taxes, or withholding taxes on remittances and other payments by our partnerships or subsidiaries;

● differing labor regulations, particularly in Germany and China where we have a significant number of employees;

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● rising wages and rates of inflation;

● fluctuations in foreign currency exchange rates and foreign exchange controls and restrictions on repatriation of funds;

● the outbreak of disease pandemics and responsive governmental measures;

● inability to collect payments, or seek recourse under, or comply with ambiguous or vague commercial or other laws;

● difficulty in obtaining, or denial of, export licenses or delay or interruption of the transportation of our products;

● differing protections for intellectual property rights;

● increased risk of cybersecurity incidents and cyberattacks from third-party and state actors and privacy violations;

● difficulties in attracting and retaining qualified management and employees;

● increased credit risk and different financial conditions of customers and distributors may necessitate longer payment cycles of accounts receivable or result in increased bad debt write-offs (including due to bankruptcy) or additions to reserves;

● differing business practices, which may require us to enter into agreements that include non-standard terms; and

● difficulties in penetrating new markets due to entrenched competitors, lack of recognition of our brand, and lack of local acceptance of our products and services.

Our overall success as a global business depends, in part, on our ability to anticipate and effectively manage these risks, but there can be no assurance that we will be able to do so without incurring unexpected costs. If we are not able to manage the risks related to our international operations, our business, financial condition, and results of operations may be materially adversely affected.

Our business in various markets requires us to respond to rapid changes in market conditions in these countries. Our overall success as a global business depends, in part, upon our ability to succeed in different legal, regulatory, economic, social, and political conditions. We may not succeed in developing and implementing policies and strategies which will be effective in each location where we do business.

Furthermore, any of the foregoing factors or any combination thereof could have a material adverse effect on our business, financial condition, and results of operations.

We may also face difficulties managing and administering an internationally dispersed business. In particular, the management of our personnel across several countries can present logistical and managerial challenges. Additionally, international operations present challenges related to operating under different business cultures and languages. We may have to comply with unexpected changes in foreign laws and regulatory requirements, which could negatively impact our operations and ability to manage our global financial resources. Export controls or other regulatory restrictions could prevent us from shipping our products into and from some markets. Moreover, we may not be able to adequately protect our trademarks and other intellectual property overseas due to uncertainty of laws and enforcement in several countries.

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Changes in tax regulations in Germany or the United States and other jurisdictions, including under and with respect to bilateral and multilateral tax treaties, or the interpretation thereof, could significantly reduce the financial performance of our foreign operations or the magnitude of their contributions to our overall financial performance. In addition, the interpretation and application of consumer and data protection laws in the United States, Europe, and elsewhere are often uncertain, contradictory, and in flux. It is   possible that any such newly introduced or amended laws are interpreted and applied in a manner that is inconsistent with our data practices. If so, this could result in government-imposed fines or orders requiring that we change our data practices, which could have an adverse effect on our business. Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

We are not insured against all potential risks.

To the extent available, we maintain insurance coverage that we believe is customary in our industry, covering our respective properties, operations, personnel, and businesses. Such insurance does not, however, provide coverage for all liabilities, including certain hazards incidental to our business, and we can provide no assurance that our insurance coverage will be adequate to cover claims that may arise or that we will be able to maintain adequate insurance at rates we consider reasonable. For example, the occurrence of a significant business interruption in the operation of one or more of our key facilities, countries, business partners, or systems could result in liability to us that is not insured and therefore could have a material adverse effect on our business, financial condition, and results of operations. In addition, our products are used in or integrated with many high-risk end-products and therefore if such products were involved in a disaster or catastrophic accident, we could be involved in litigation arising out of such incidents and susceptible to significant expenses or losses.

In the event of a total or partial loss affecting any of our property, certain items of equipment and inventory may not be easily replaced. Accordingly, even though there may be insurance coverage, the extended period needed to obtain replacement units or inventory may cause significant delays, which may have a material adverse effect on our business, financial condition, and results of operations. In addition, certain zoning laws and regulations may prevent rebuilding substantially the same facilities in the event of a casualty, which may have a material adverse effect on our business, financial condition, and results of operations.

As a result, we cannot assure you that we are insured against all potential risks or for those risks that are covered by insurance that the insurance proceeds will compensate us fully for our losses, which could result in a material adverse effect on our business, financial condition, and results of operations.

Our ability to use and operate certain portions of our facilities may be limited by the validity of, or a default or termination under, our real property leases.

Certain portions of our facilities are leased from third-party landlords, and we continue to lease facilities in the future. The invalidity of, or default or termination under, any of our leases may interfere with our ability to use and operate all or a portion of certain of our facilities, which may have a material adverse effect on our business, financial condition, and results of operations.

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Our operations and assets in foreign jurisdictions may be subject to significant political and economic uncertainties.

We operate and have subsidiaries and partners in various jurisdictions such as China, Taiwan, South Korea, Malaysia and the United States. Changes in laws and regulations, or their interpretation, or the imposition of unexpected or confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of  currency, or the nationalization or other expropriation of  private enterprises could have a material adverse effect on our business, financial condition, and results of operations of our subsidiaries. For example, under its current leadership, the Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the Chinese government will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice.

The foreign economies may differ from the economies of Germany or the U.S. in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources. While such economies may have experienced significant growth in the past 30 years, growth may have been uneven, both geographically and among various sectors of the economy. Such economies may not continue to grow and if there is growth, such growth may not be steady and uniform. If there is a slowdown, such slowdown may have a negative effect on our business and operations in such economies as well as on our business in general. We can provide no assurance that the various macroeconomic measures and monetary policies adopted by the foreign governments to guide economic growth and the allocation of resources will be effective in sustaining the growth rate of the respective foreign economies. If growth of such economies stagnates or there is an economic downturn, our business, financial condition, and results of operations may be materially adversely affected.

Uncertainties presented by the foreign legal systems could limit the legal protections available to us and subject us to legal risks, which could have a material adverse effect on our business, financial condition, and results of operations.

We operate and have subsidiaries and partners in various jurisdictions such as China, Taiwan, Korea, Malaysia and the United States. Our operations in foreign jurisdictions are subject to foreign applicable laws, rules and regulations. In such jurisdictions, a fully integrated legal system may not yet be developed, or imposed laws may not sufficiently cover all aspects of economic activities and prior court decisions may have limited value as precedents. Additionally, foreign statutes may often be principle-oriented and require detailed interpretations by the enforcement bodies to further apply and enforce such laws. In particular, some of these laws and regulations may be relatively new, and there may be limited volume of published decisions. For that reason interpretation and enforcement of these laws and regulations involve uncertainties.

In addition, a legal system may be based in part on government policies and internal rules, some of which may not be published on a timely basis or at all, and some of which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Any administrative and court proceedings may be protracted, resulting in substantial costs and diversion of resources and management attention. Further, as administrative and court authorities may have significant discretion in interpreting and implementing statutory, regulatory, and contractual terms, it may be more difficult to predict the outcome of administrative and court proceedings and the level of legal protection than in more developed legal systems. These uncertainties may also impede our ability to enforce the contracts we have entered into in foreign jurisdictions. As a result, these uncertainties could have a material adverse effect on our business, financial condition, and results of operations.

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Our management has limited experience in operating a public company.

Our management has limited experience in the management of a publicly listed company. Our management team may not successfully or effectively manage our transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the combined company. We may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies. The development and implementation of the standards and controls necessary for the combined company  to achieve the level of accounting standards required of a public company listed in the United States may require costs greater than expected. It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company, which will increase our operating costs in future periods.

Material increases in labor costs in China could have an adverse impact on our business and operating results.

We operate a number of manufacturing facilities in China. In past years, we and other manufacturers have experienced increases in labor costs in our Chinese facilities due to rising inflation. Increases in the cost of labor in manufacturing facilities in China, including those of Schmid, are expected to continue to occur in the future.

To the extent we are unable to pass on increases in labor costs to our customers by increasing the prices for our products and services, minimum wage increases, or increases in other labor costs, or to move our operations into a jurisdiction where labor cost is lower, this could have a material adverse effect on our business, financial condition, and results of operations.

Changes in the Chinese government’s policy on foreign investment in China may adversely affect our business and results of operations.

The Foreign Investment Access Special Management Measures (Negative List) (2019 Version) (“Negative List”), which became effective on July 30, 2019, has identified the industrial areas that are restricted or prohibited for foreign investors. The business of our Chinese subsidiaries does not fall within any of such restricted or prohibited areas and their business scope was duly approved by the Chinese foreign investment regulatory authority upon their establishment.

The Negative List may, however, be updated from time to time, and there can be no assurance that the Chinese government will not change its policies in a manner that would render part or all of our business to fall within the restricted or prohibited categories. If we cannot obtain approval from the relevant approval authorities to engage in a business that becomes prohibited or restricted for foreign investors pursuant to any applicable updates under the Negative List, we may be forced to sell or restructure our business in China. If we are forced to adjust our corporate structure or business as a result of changes in government policy on foreign investment, this could adversely affect our reputation, business, financial condition, and results of operations.

The Chinese government may enact further restrictive measures in the future which could adversely affect our reputation, business, financial condition, and results of operations.

Our ability to obtain additional capital on commercially reasonable terms may be limited.

Although we believe our cash and cash equivalents, together with cash we expect to generate from operations and unused capacity available under our revolving credit facility, provide adequate resources to fund ongoing operating requirements, we may need to seek additional financing to compete effectively.

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If we are unable to obtain capital on commercially reasonable terms, it could:

● reduce funds available to us for purposes such as working capital, capital expenditures, research and development, strategic acquisitions, and other general corporate purposes;

● restrict our ability to introduce new products or exploit business opportunities;

● increase our vulnerability to economic downturns and competitive pressures in the markets in which we operate; and

● place us at a competitive disadvantage.

We intend to continue to make investments to support our business and may require additional funds. In particular, we may seek additional funds to develop new products and enhance our platform and existing products, expand our operations, including our sales and marketing organizations, improve our infrastructure or acquire complementary businesses, technologies, services, products and other assets.

Accordingly, we may need to engage in equity or debt financings to secure additional funds. Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. We may not be able to obtain additional financing on reasonable terms or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth, scale our infrastructure, develop product enhancements and to respond to business challenges could be significantly impaired, and our business, results of operations and financial condition may be adversely affected.

Risks Related to Regulation and Litigation

Our financial results may be affected by tariffs, border adjustment taxes or other adverse trade restrictions.

We have global operations, including a significant presence in several major regions, including markets such as Malaysia, Taiwan, South Korea, United States, and China. We cannot predict whether the countries in which we operate, or may operate in the future, could become subject to new or additional trade restrictions imposed by the United States or other governments, including the likelihood, type or effect of any such restrictions. The U.S. government imposed various actions regarding trade with China, including levying various tariffs on imports from China, and is contemplating imposing additional actions in the future. Imposing additional tariffs, border adjustment taxes or other adverse trade restrictions on countries where we have operations could have a material adverse effect on our business, financial condition, and results of operations.

The international scope of our operations and our corporate and financing structure may expose us to potentially adverse tax consequences.

We are subject to taxation in, and to the tax laws and regulations of, multiple jurisdictions as a result of the international scope of our operations and our corporate and financing structure. We are also subject to intercompany pricing laws, including those relating to the flow of funds between our companies pursuant to, for example, purchase agreements, licensing agreements, or other arrangements. Adverse developments in these laws or regulations, or any change in position regarding the application, administration, or interpretation of these laws or regulations in any applicable jurisdiction, or our inability to comply with all applicable requirements of these laws or regulations could have a material adverse effect on our business, financial condition, and results of operations.

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In addition, the tax authorities in any applicable jurisdiction may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our activities or transactions, including the tax treatment or characterization of our tax residency. If any competent tax authorities were to successfully challenge the tax treatment or characterization of any of these, it could result in the disallowance of deductions, the imposition of additional or new taxation in certain jurisdictions, the imposition of withholding taxes on internal deemed transfers or in general, capital gains taxes, including on transfers that have been made and/or deemed to have been made in connection with the Transactions or otherwise, the reallocation of income, penalties, or other consequences that could have a material adverse effect on our business, financial condition, and results of operations.

Our failure to comply with trade restrictions such as economic sanctions and export controls could negatively impact our reputation and results of operations.

We are subject to trade restrictions, including economic sanctions and export controls, imposed by governments around the world with jurisdiction over our operations, which prohibit or restrict transactions involving certain designated persons and certain designated countries or territories, including Russia,  Cuba, Iran, Syria, North Korea, and the Crimea Region of  Ukraine. Our failure to successfully comply with any such laws and regulations may expose us to reputational harm as well as significant sanctions,

including criminal fines, imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts, and other remedial measures. Investigations of alleged violations can be costly and disruptive. We maintain policies and procedures designed to comply with these laws and regulations. As part of our business, we may, from time to time, engage in limited sales and transactions involving certain countries that are targets of economic sanctions, provided that such sales and transactions are authorized pursuant to applicable economic sanctions laws and regulations. However, we cannot predict the nature, scope, or effect of future regulatory requirements, including changes that may affect existing regulatory authorizations, and we cannot predict the manner in which existing laws and regulations might be administered or interpreted. Any changes in economic sanctions laws in the future could adversely impact our business.

In addition, any perceived or actual breach of compliance by us with respect to applicable laws, rules, and regulations could have a significant impact on our reputation and could cause us to lose existing customers; prevent us from obtaining new customers; negatively impact investor sentiment about our company; require us to expend significant funds to remedy problems caused by violations and to avert further violations; and expose us to legal risk and potential liability — all of which may have a material adverse effect on our reputation, business, financial condition, and results of operations.

We are or will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance with such laws can subject us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation.

We are or will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which we conduct or in the future may conduct activities, including the U.S. Foreign Corrupt Practices Act (“FCPA”), European anti- bribery and corruption laws, and other anti-corruption laws and regulations. The FCPA and European anti- bribery and corruption laws prohibit us and our officers, directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. A violation of these laws or regulations could adversely affect our business, results of operations, financial condition and reputation. Our policies and procedures designed to ensure compliance with these regulations may not be sufficient and our directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be held responsible.

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Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our business, results of operations, financial condition and reputation.

We may be adversely affected by changes in legislation and regulation, which may impact how we provide products and services.

We are subject to extensive laws, regulations, and industry standards in the various jurisdictions where we operate, market, and distribute our products, including, inter alia, environmental, occupational health and safety, product regulatory and liability, patent and trademark, competition, financial, accounting, and  tax laws and regulations, which vary from jurisdiction to jurisdiction. Legislative and regulatory changes that impact us and our customers’ industries may impact how we provide products and services to our customers. It is difficult to predict in what form laws and regulations will be adopted or how they will be construed by the relevant courts, or the extent to which any changes might adversely affect us. Delays in adapting our products and services to legislative and regulatory changes could harm our reputation. Also, we may not be as well-equipped to respond to changes in legislation or regulation as some of our competitors or we may become subject to new legislation or regulation with regard to the products and services we offer which could cause us to be prohibited from providing certain services or make provision of affected services more costly.

Although we have implemented policies and procedures that are designed to ensure compliance with applicable laws, rules, and regulations, there is no guarantee that we will remain in compliance. Any noncompliance could result in civil, criminal and administrative fees, fines, penalties, taxes, interruptions in our operations, and reputational harm for the company, which may have a material adverse effect on our business, financial condition, and results of operations.

We operate in a litigious environment, which may adversely affect our business, financial condition, and results of operations.

We may become involved in legal actions and claims arising in the ordinary course of business, including litigation regarding employment matters, breach of contract, and other commercial matters. Due to the inherent uncertainty in the litigation process, the resolution of any particular legal proceeding could result in changes to our products and business practices and/or substantial payment obligations or costs to be borne by us, which could have a material adverse effect on our business, financial condition, and results of operations.

We may be liable for damages based on product liability claims brought against our customers in our end- markets or from our customers and their employees, and any successful claim for damages could have a material adverse effect on our business, financial condition, and results of operations.

In addition, many of our products provide critical performance attributes to our customers’ products that are sold to consumers who could potentially bring product liability suits related to such products. Our sale of these products therefore involves the risk of product liability claims, including class action lawsuits that claim liability for death, injury, or property damage caused by products that we manufacture or that contain our components. If a person were to bring a product liability suit against one of our customers, this customer may attempt to seek contribution from us. A person may also bring a product liability claim directly against us. A successful product liability claim or series of claims against us in excess of our insurance coverage for payments, for which we are not otherwise indemnified, could have a material adverse effect on our business, financial condition, and results of operations. While we endeavor to protect ourselves from such claims and exposures in our contractual negotiations, we can provide no assurance that our efforts in this regard will ultimately protect us from any such claims.

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If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on our business.

We and any contract manufacturers and suppliers we engage are subject to numerous federal, state, and local environmental, health, and safety laws, regulations, and permitting requirements, including those governing generation, handling, use, storage, treatment, and disposal of hazardous and regulated materials and waste; the emission and discharge of hazardous materials into the ground, air, and water; and employee health and safety. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. Under certain environmental laws, we could be held responsible for costs relating to any contamination at our current or past facilities and at third-party facilities. We also could incur significant costs associated with civil or criminal fines and penalties.

Compliance with applicable environmental laws and regulations may be costly, and current or future environmental laws and regulations may impair our research, product development and manufacturing efforts. In addition, we cannot entirely eliminate the risk of accidental injury or contamination from these materials or waste. Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not currently maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with storage or disposal of hazardous and flammable materials, including chemicals and biological materials. Accordingly, in the event of contamination or injury, we could be held liable for damages or be penalized with fines in an amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended, which could have a material adverse effect on business, financial condition, results of operations and growth prospects.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair research, development or commercialization efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions that could have a material adverse effect on our business, reputation and growth prospects.

Global climate change legislation could negatively impact our results of operations or limit our ability to operate our business.

We operate production facilities in several countries. In many of the countries in which we operate, legislation has been passed or proposed, or legislation is being considered, to limit greenhouse gases through various means, including the capping and trading of emissions credits. Greenhouse gas regulation in the jurisdictions in which we operate could negatively impact our future results from operations through increased costs of production. We may be unable to pass such increased costs on to our customers, which may decrease our revenues and net income and have a material adverse effect on our business, financial condition, and results of  operations. In addition, the potential impact of climate change regulation on our customers  is highly uncertain and may also materially adversely affect our business, financial condition, and results of operations.

Failure of information security and privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations.

We must comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the United States, Europe and elsewhere. For example, the European Union adopted the General Data Protection Regulation (“GDPR”), which became effective in 2018, and the State of California adopted the California Consumer Privacy Act of 2018 (“CCPA”); additional U.S. states are likely to adopt measures similar to the CCPA in the near term. Both the GDPR and the CCPA impose additional obligations on companies regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored. Compliance with existing, proposed and recently enacted laws (including implementation of the privacy and process enhancements called for under the GDPR) and regulations can be costly; any failure to comply with these regulatory standards could subject us to legal and reputational risks.

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Compliance with any additional laws and regulations may incur significant costs and may place restrictions on the conduct of our business and the manner in which we interact with our customers. Any failure to comply with applicable regulations could also result in regulatory enforcement actions against us, and misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against us by governmental entities or others, and damage to our reputation and credibility,  and could have a negative impact on revenues and profits.

Significant capital and other resources may be required to protect against information security  breaches or to alleviate problems caused by such breaches or to comply with our privacy policies or privacy- related legal obligations. The resources required may increase over time as the methods used by hackers and others engaged in online criminal activities are increasingly sophisticated and constantly evolving. Any failure or perceived failure by us to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could cause our customers to lose trust in us and could expose us to legal claims. Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of online retail and other online services generally, which may reduce the number of orders we receive.

Risks Related to Employee Matters, Managing Growth, and Relationships with Suppliers and Other Third Parties

If we do not continue to attract, motivate, and retain members of our senior management team and qualified employees, we may not be able to support our operations.

The completion and execution of our strategies depend on the continued service and performance of our senior management team. If we lose key members of our senior management team, we may not be able to effectively manage our transition to a public company or our current and future operations. The loss or incapacity of existing members of our senior management team or key scientists and engineers could adversely affect our operations, particularly if we experience difficulties hiring qualified successors.

In addition, our business depends on our ability to continue to attract, motivate, and retain many skilled employees across all of our operations. There is a limited pool of employees who have the requisite skills, training, and education. We compete with many businesses and organizations that are seeking skilled individuals, particularly those with experience in technology and the sciences fields. Competition for professionals across our entire business can be intense, as other companies seek to enhance their positions in the markets we serve. In addition, competition for experienced talent and employees can intensify globally, requiring us to increase our focus on attracting and developing highly skilled employees. We also face additional challenges in terms of recruiting a requisite number of skilled and qualified workers due to regional or global trends such as labor supply issues in connection with an aging workforce. As competition for experienced talent grows, we may be forced to increase spending on employee salaries which could have a material adverse effect on our business, financial condition, and results of operations.

Future organizational changes and the implementation of our cost savings initiatives could also cause our employee attrition rate to increase and may result in significant costs to us in connection with implementing such initiatives. If we are unable to continue to identify or be successful in attracting, motivating, and retaining appropriately qualified personnel, there could be a material adverse effect on our business, financial condition, and results of operations.

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We may acquire other businesses which could require significant management attention, disrupt our business, dilute shareholder value, and adversely affect our results of operations.

As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies. The identification of suitable acquisition candidates is difficult, and we may not be able to complete such acquisitions on favorable terms, if at all. If we do complete future acquisitions, we may not ultimately strengthen our competitive position or achieve our goals and business strategy; we may be subject to claims or liabilities assumed from an acquired company, product, or technology; and any acquisitions we complete could be viewed negatively by our customers, investors, and securities analysts. In addition, if we are unsuccessful at integrating future acquisitions, or the technologies associated with such acquisitions, into our company, the revenue and results of operations of the combined company could be adversely affected. Any integration process may require significant time and resources, which may disrupt our ongoing business and divert management’s attention, and we may not be able to manage the integration process successfully. We may not successfully evaluate or utilize the acquired technology or personnel, realize anticipated synergies from the acquisition, or accurately forecast the financial impact of an acquisition transaction and integration of such acquisition, including accounting charges. We may have to pay cash, incur debt, or issue equity or equity-linked securities to pay for any future acquisitions, each of which could adversely affect our financial condition or the market price of our common shares. The issuance of equity or equity-linked debt to finance any future acquisitions could result in dilution to our shareholders. The incurrence of indebtedness would result in increased liabilities and could also include covenants or other restrictions that would impede our ability to manage our operations. The occurrence of any of these risks could harm our business, results of operations, and financial condition.

We may be unable to successfully execute on our growth initiatives, business strategies, or operating plans.

We are continually executing on several growth initiatives, strategies, and operating plans designed to enhance our business. In addition to these growth strategies, our business plan incorporates certain transformational initiatives, including our enhanced senior leadership team, globalized management structure, renewed focus on customers, optimized R&D, cost management initiatives, and a new incentive structure and may include potential acquisitions.

The anticipated benefits from these strategies and initiatives are based on several assumptions that may prove to be inaccurate, including assumptions as to the key trends that will drive growth in our business. Moreover, we may not be able to successfully complete these growth initiatives, strategies, and operating plans without making additional expenditures or at all. If we are unable to complete these initiatives, strategies, and operating plans, we may not realize all the benefits we currently anticipate, including the growth targets and cost savings we expect to achieve. The anticipated cost savings disclosed elsewhere in this Annual Report are presented on a gross basis and do not reflect any expenses that may be required to achieve such cost savings.

A variety of risks could cause us not to realize some or all the expected benefits. These risks include, among others, delays in the anticipated timing of activities related to such growth initiatives, strategies, and operating plans; the secular trends on which many of our strategies and initiatives are based not materializing or not materializing to the degree expected; increased difficulty and cost in implementing our growth efforts; and the incurrence of other unexpected costs associated with operating the business. Moreover, our continued implementation of these programs may disrupt our operations and performance. Similarly, we may not realize the benefits we currently expect from our comprehensive systems and solutions approach.

If any of the assumptions underlying our growth initiatives prove to be inaccurate or any of the foregoing risks materialize, we may not realize the expected benefits of our initiatives and we may be adversely affected, including as the result of the costs associated with these initiatives. If, for any reason, the benefits we realize are less than our estimates or the implementation of these growth initiatives, strategies, and operating plans adversely affects our operations or cost more or take longer to effectuate than we expect, or if our assumptions, including our assumptions with respect to growth of our end-markets, prove inaccurate, our business, financial condition, and results of operations may be materially adversely affected.

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Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, internal codes of conduct, and insider trading prohibition.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with applicable regulations, to provide accurate information to the German, Chinese, United States or other regulators, to comply with manufacturing standards we have established, to comply with federal and state fraud and abuse laws and regulations in Germany, the United States and other countries or jurisdictions, to report financial information or data accurately, or to disclose unauthorized activities to us.

It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations, including applicable environmental laws and regulations. If any such misconduct occurs or any related actions are instituted against us (and we are not successful in defending ourselves or asserting our rights) such misconduct or actions could have a material adverse effect on our business, financial condition, and results of operations.

If any of our suppliers become economically distressed or declare bankruptcy, we may be required to provide substantial financial support or take other measures to ensure supplies of components or materials, which could increase our costs, affect our liquidity or cause production disruptions.

We procure various types of materials and components from our suppliers. We have historically obtained a significant proportion of the materials we require to manufacture our products from a limited number of suppliers, for example in connection with sensor and control technology and pumps and filters.

If these suppliers experience substantial financial difficulties, cease operations, or otherwise face business disruptions, we may be required to provide substantial financial support to ensure supply continuity or would have to take other measures to ensure components and materials remain available. Any disruption could affect our ability to deliver orders to our clients and could increase our costs and negatively affect our liquidity and financial performance.

Increases in costs or reductions in the supplies of our specialty and commodity raw materials required for our manufacturing, testing, and operations processes could materially and adversely affect our business, financial condition, and results of operations.

We use a variety of specialty and commodity raw materials, including precious metals and specialty plastic materials, in our manufacturing processes, and our most significant raw material input by value is plastics. Our manufacturing operations depend upon obtaining adequate supplies of raw materials on a timely basis. We purchase our major raw materials on a contract or as-needed basis from outside sources. The availability and prices of raw materials may be subject to curtailment or change due to, among other things, the financial stability of our suppliers, suppliers’ allocations to other purchasers, interruptions in production by suppliers, new laws or regulations, changes in foreign currency exchange rates, and worldwide price levels. In addition, many of our raw materials and intermediate products are available in the quantities we require from a limited number of suppliers, which makes it more difficult to replace suppliers in the event of any supply disruption. Further, in some cases, we are limited in our ability to purchase certain raw materials from other suppliers by supply agreements that contain certain minimum purchase requirements. Additionally, we can provide no assurance that, as our supply contracts expire, we will be able to renew them or, if they are terminated, that we will be able to obtain replacement supply agreements on terms favorable to us.

In particular, we may face difficulties or delays in finding a new supplier should a critical supplier stop supplying us with components or software. In particular, while we may find a new supplier quickly, we will need to make sure that this new supplier meets our performance standards and that the component, materials and software can be integrated into our machinery without an impact on delivery timelines or the quality of our products. Our business, financial condition, and results of operations could be materially adversely affected if we are unable to obtain adequate supplies of raw materials in a timely manner or if the costs of raw materials increase significantly.

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From time to time, suppliers may extend lead times, limit supplies, or increase prices due to capacity constraints, environmental limitations, or other factors. We may not always be able to pass on these price increases, and price increases by our other suppliers, to our customers due to competitive pricing pressure, and, even when we are able to do so, there may be a time delay between increased raw material prices and our ability to increase the prices of our products. Any limitation on, or delay in, our ability to pass on any price increases could have a material adverse effect on our business, financial condition, and results of operations.

We depend upon our information technology systems, which are subject to interruption and failure.

Our business operations could be disrupted if our information technology systems fail to perform adequately. The efficient operation of our business depends on our information technology systems, some of which are managed by third-party service providers. We rely on our information technology systems to effectively manage our business data, communications, supply chain, order entry and fulfillment, and other business processes. The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies, and the loss of sales and customers, causing our business and results of operations to suffer. In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, power outages, systems failures and security breaches. Further, our information technology systems, including those managed by third-party service providers, may be subject to computer viruses, malicious software, attacks by hackers, and other forms of cyber intrusions or unauthorized access, any of which can create system disruptions, shutdowns, or unauthorized disclosure of sensitive data. Any such damage or interruption could have a material adverse effect on our business, financial condition, and results of operations.

In addition, a security breach that leads to disclosure of information protected by privacy laws could compel us to comply with breach notification requirements under state, national, and federal laws and regulations, potentially resulting in litigation or regulatory action, or otherwise subjecting us to liability under laws that protect personal data.

Moreover, there are inherent risks associated with developing, improving, expanding and updating our current systems, such as the disruption of our data management, procurement, production execution, finance, supply chain and sales and service processes. These risks may affect our ability to manage our data and inventory, procure parts or supplies or manufacture, deploy, deliver and service our machines, adequately protect our intellectual property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts. We cannot be sure that these systems upon which we rely, including those of our third-party vendors or suppliers, will be effectively implemented, maintained or expanded as planned. If these systems do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

We attempt to mitigate the above risks by employing several measures, including monitoring and testing of our security controls, employee training, maintenance of protective systems and contingency plans, and contracting with service providers to address third-party cybersecurity risks. Nonetheless, it is impossible to eliminate all cybersecurity risk and thus we remain potentially vulnerable to known or unknown threats. Information security risks have generally increased in recent years because of the increased proliferation, sophistication, and availability of complex malware and hacking tools to carry out cyber-attacks. As cyber threats continue to evolve, we may be required to expend additional resources to mitigate new and emerging threats while continuing to enhance our information security capabilities or to investigate and remediate security vulnerabilities.

Risks Related to Schmid’s Intellectual Property

Our know-how and innovations may not be adequately protected.

We believe that our product development, brand recognition and reputation, and the technological and innovative skills of our personnel are essential to establishing and maintaining our leadership position. We rely on a combination of patent, copyright, trademark, trade secrets, confidentiality procedures, technical measures, and contractual agreements with our customers, suppliers, and employees to establish and protect our know-how and innovations according to our products and services. If we fail to protect our know- how and innovations, our competitive position could suffer, which could adversely affect our business, financial condition, and results of operations.

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We may be forced to initiate litigation or other enforcement actions against third parties to protect our know-how and innovations as well as defend and enforce our intellectual property rights. Litigating claims related to the enforcement of intellectual property rights is very costly and can be burdensome in terms of management time and resources, which could adversely affect our business, financial condition, and results of operations. Moreover, the scope of our intellectual property rights may not prevent competitors from designing around such rights.

In some cases, we rely upon unpatented proprietary manufacturing expertise, continuing technological innovation, and other trade secrets to develop and maintain our competitive position. While we generally will enter into confidentiality agreements with our employees and third parties to protect our intellectual property, our confidentiality agreements could be breached and may not provide meaningful protection for our trade secrets or proprietary manufacturing expertise. In addition, adequate remedies may not be available in the event of unauthorized use or disclosure of our trade secrets or manufacturing expertise. Violations by others of our confidentiality agreements and the loss of employees who have specialized knowledge and expertise could harm our competitive position and cause our sales and operating results to decline as a result of increased competition.

In addition, we rely on both registered and unregistered trademarks to protect our name and brands.  We can provide no assurance that our pending trademark applications will be approved. Failure by us to adequately maintain the quality of our products and services associated with our trademarks or any loss to the distinctiveness of our trademarks may cause us to lose certain trademark protection, which could result in the loss of goodwill and brand recognition in relation to our name and products. In addition, successful third-party challenges to the use of any of our trademarks may require us to rebrand our business or certain products or services associated therewith.

The failure of our patents, applicable intellectual property law, or our confidentiality agreements to protect our intellectual property and other proprietary information, including our know-how and innovations relating to processes, apparatuses, technology, trade secrets, trade names and proprietary manufacturing expertise, methods, and compounds, or if we are unsuccessful in our judicial enforcement proceedings, could have a material adverse effect on our competitive advantages, business, financial condition, and results of operations, and could require us to devote resources to advertising and marketing these new brands. Further, we can provide no assurance that competitors will not infringe our trademarks or patents, or that we will have adequate resources to enforce our trademarks or patents.

From time to time, competitors challenge the validity of our patents and trademarks, and we challenge the validity of their patents and trademarks. Further, our competitors may circumvent our patents or our patents may not be of sufficient scope or strength to provide us with meaningful protection or commercial advantage. We cannot be certain either of successfully defending the validity of our patents and trademarks or of invalidating patents and trademarks of our competitors. Additionally, our patents will all eventually expire, after which we will not be able to prevent our competitors from using our previously patented technologies, which could materially adversely affect any competitive advantage we have stemming from those products and technologies. We also cannot assure that competitors will not infringe our patents, or that we will have adequate resources to enforce our patents.

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Our efforts to protect our intellectual property may be less effective in some countries where intellectual property rights are not as well protected as in Germany or the United States and changes in patent laws or their interpretations could diminish the value of patents in general, thereby impairing our ability to protect our products.

The laws of some countries regarding trademark, patent, copyright, and other intellectual property rights also do not protect proprietary rights to the same degree as the laws of Germany or the United States and there is a risk that our ability to protect our proprietary rights may not be adequate in these countries. Many companies have encountered significant problems in protecting their proprietary rights against copying or infringement in such countries, some of which are countries in which we intend to operate or to sell our products. In particular, the application of laws governing intellectual property rights in China, where we operate, has historically been less effective than those in other jurisdictions, mainly due to the lack of procedural rules for discovery of evidence, low damage awards, and low rates of criminal penalties against intellectual rights infringements. Accordingly, protection of intellectual property rights in China may not be as effective as other countries. Furthermore, the policing of unauthorized use of proprietary technology is difficult and costly, and we may need to commence and become involved in costly and lengthy proceedings to enforce or defend patents issued to us or determine the enforceability, scope, and validity of our proprietary rights or those of others. The experience and capabilities of different courts in handling intellectual property related matters vary, and outcomes are unpredictable. Therefore, it could involve substantial risks to us. If we are unable to adequately protect our intellectual property rights in China or elsewhere, our business, financial condition, and results of operations could be materially adversely affected.

In addition, our competitors in China and these other countries may independently develop similar technology or duplicate our products, even if unauthorized, which could potentially reduce our sales in these countries and have a material adverse effect on our business, financial condition, and results of operations. While we generally consider applying for patents in those countries where we intend to make, have made, use, or sell patented products, we may not accurately assess all the countries where patent protection will ultimately be desirable. If we fail to timely file a patent application in any such country, we may be precluded from doing so at a later date. Furthermore, our pending patent applications may be challenged by third parties and may not be issued by the applicable patent offices as patents. We also cannot assure you that the patents issued as a result of our foreign patent applications will have the same scope of coverage as our German, European or U.S. patents. It is possible that only a limited number of the pending patent applications will result in issued patents, which may have a material adverse effect on our business, financial condition, and results of operations.

We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position. We rely on a combination of patents, trade secrets (including know-how), employee and third-party nondisclosure agreements, copyrights, trademarks, intellectual property licenses, and other contractual rights to establish and protect our rights in our technology. Despite our  efforts to protect our proprietary rights, third parties may attempt to copy or otherwise obtain and use our intellectual property or seek court declarations that they do not infringe upon our intellectual property rights or those rights are not enforceable. Monitoring unauthorized use of our intellectual property is difficult and costly, and the steps we have taken or will take are aimed to prevent misappropriation. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources, including significant amounts of time from our key executives and management, and may not have the desired outcome.

Filing, prosecuting, and defending patents covering our products throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent or other intellectual property protection to develop their own products and, further, may export otherwise infringing products to territories where we may have or obtain patent or other intellectual property protection, but where patent or other intellectual property enforcement is not as strong as that in Germany or the United States. These unauthorized products may compete with our products in such jurisdictions and take away our market share where we do not have any issued or licensed patents or other intellectual property protection and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

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Our ability to protect and enforce our intellectual property rights may be further adversely affected by unforeseen changes in intellectual property laws. In general, changes in patent laws or their interpretations, including in the United States, Germany or other countries where available protections are generally stronger, could diminish the value of our patents, thereby impairing our ability to protect our products. This could have a material adverse impact on our business, financial condition and results of operations.

We may be subject to claims that our employees, consultants or independent contractors have infringed, misappropriated or otherwise violated the intellectual property of a third party, including trade secrets or know- how of their former employers or other third parties.

We may be subject to claims that our employees or consultants have wrongfully used for our benefit or disclosed to us confidential information of third parties. We employ individuals who were previously employed at other companies, or at research institutions. Some of these employees, consultants and contractors may have executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we try to ensure that our employees and consultants do not use the intellectual property rights, proprietary information, know-how or trade secrets of others in their work for us and seek to protect our ownership of intellectual property rights by ensuring that our agreements with employees, collaborators, and other third parties with whom we do business include provisions requiring such parties to assign rights in inventions to us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’ former employers or other third parties. To the extent that our employees, consultants or contractors use intellectual property rights or proprietary information owned by others in their work for us, disputes may arise as to the rights in any related or resulting know-how and inventions. We may also be subject to claims that former employers or other third parties have an ownership interest in our patents or other intellectual property or proprietary rights. Litigation may be necessary to defend against any of these claims. There is no guarantee of success in defending these claims, and if we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. In addition, we may lose personnel as a result of such claims and any such litigation, or the threat thereof, may adversely affect our ability to hire employees or contract with independent contractors. Even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees.

If we fail to validly execute invention assignment agreements with our employees and contractors involved in the development of intellectual property, the value of our products, business and competitive position may be harmed. Our patent rights and other intellectual property may also be subject to priority, ownership or inventorship disputes, interferences, and similar proceedings.

To maintain the confidentiality of our trade secrets, proprietary information and other intellectual property rights, we have certain confidentiality and invention assignment provisions in place with our employees, consultants, suppliers, contract manufacturers, collaborators and others. However, we may not enter into such agreements with each party that may have or have had access to our trade secrets or proprietary technology and processes or who conceives or develops intellectual property rights that we regard as our own. Moreover, even when we obtain agreements assigning intellectual property to us, the assignment of intellectual property rights may not be self-executing, and we may be forced to bring claims against third parties or defend claims that they may bring against us to determine the ownership of what we regard as our intellectual property. There can be no assurance that such agreements and provisions are in place in all instances that may be needed or that where they are in place they will be upheld in the face of a potential challenge, that other parties will not breach their agreements with us or that we will have adequate remedies to address any breach.

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We may also be subject to claims that former employees, collaborators, or other third parties have an interest in our current or future patents and patent applications or other intellectual property rights, including as an inventor or co-inventor. If we are unable to obtain an exclusive license to any such third-party co- owners’ interest in such patents and patent applications, such co-owners rights may be subject, or in the future subject, to assignment or license to other third parties, including competitors. In addition, we may need the cooperation of any such co-owners to enforce any such patents and any patents issuing from such patent applications against third parties, and such cooperation may not be provided. Additionally, we may be subject to claims from third parties challenging our ownership interest in or inventorship of intellectual property we regard as our own, for example, based on claims that our agreements with employees or consultants obligating them to assign intellectual property rights to us are ineffective or in conflict with prior or competing contractual obligations to assign inventions to another employer, to a former employer, or to another person or entity, despite the inclusion of valid, present-tense intellectual property assignment obligations. Litigation may be necessary to defend against claims, and it may be necessary or we may desire to enter into a license to settle any such claim.

If we or our licensors are unsuccessful in any priority, validity (including any patent oppositions), ownership or inventorship disputes to which we or they are subject, we may lose valuable intellectual property rights through the loss of one or more of our patents, or such patent claims may be narrowed, invalidated, or held unenforceable, or through loss of exclusive ownership of or the exclusive right to use our owned or in-licensed patents. In the event of loss of patent rights as a result of any of  these disputes, we may be required to obtain and maintain licenses from third parties, including parties involved in any such interference proceedings or other priority or inventorship disputes. Such licenses may not be available on commercially reasonable terms or at all, or may be non-exclusive. If we are unable to obtain and maintain such licenses, we may need to cease the development, manufacture, and commercialization of one or more of the products we may develop. An inability to incorporate technologies, features or other intellectual property that are important or essential to our products could have a material adverse effect on our business and competitive position. The loss of exclusivity or the narrowing of our patent claims could limit our ability to stop others from using or commercializing similar or identical technology and products. Even if we are successful in priority, inventorship or ownership disputes, such disputes could result in substantial costs and be a distraction to management and other employees. Any litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent sales representatives. Any of the foregoing could result in a material adverse effect on our business, financial condition, results of operations or prospects.

Our patent applications may not be successful, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.

We are currently in the process of patenting the technology for embedded traces which is the next level technology for high-end PCBs & Substrates. While some parts of the patents have gone through, the official process for all the technology is not yet completed. We believe we are the only participant in the market that is currently able to supply equipment for ET production.

For this technology or for any other technology for which we have filed, or in the future may file, a particular patent application, we cannot be certain that we are the first inventor of the subject matter. Moreover, we cannot be certain if we are the first party to file such a patent application or that our application will ultimately be successful. If another party has filed a patent application for the same subject matter as we have, or similar subject matter is otherwise publicly disclosed, we may not be entitled to the protection sought by the patent application. Further, the scope of protection of issued patent claims is often difficult to determine. As a result, we cannot be certain that a patent, for which an application was filed, will actually be issued, or that our issued patents will afford protection against competitors with similar technology or will cover certain aspects of our products. In addition, our competitors may design around our issued patents, which may adversely affect our business, prospects, financial condition or operating results.

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As our patents may expire and may not be extended, our patent applications may not be granted and our patent rights may be contested, circumvented, invalidated or limited in scope, our patent rights may not protect us effectively. In particular, we may not be able to prevent others from developing or exploiting competing technologies.

We cannot assure you that we will be granted patents pursuant to our pending applications or those we plan to file in the future. Even if our patent applications succeed and we are issued patents in accordance with them, these patents could be contested, circumvented or invalidated in the future. In addition, the rights granted under any issued patents may not provide us with meaningful protection or competitive advantages. The claims under any patents that issue from our patent applications may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to ours. The intellectual property rights of others could also bar us from licensing and exploiting any patents that issue from our pending applications. Numerous patents and pending patent applications owned by others exist in the fields in which we have developed and are developing our technology. These patents and patent applications  might have priority over our patent applications and could result in refusal or invalidation of our patent applications. Finally, in addition to those who may claim priority, any of our existing or pending patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable.

We may need to defend ourselves against patent or trademark infringement claims, which may be time- consuming and would cause us to incur substantial costs.

Companies, organizations, or individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with our ability to make, use, develop, sell, leasing or market our products, which could make it more difficult for us to operate our business. As the number of products and services in our markets increases and the functionality of  these products and services further overlaps, we may become increasingly subject to claims by a third party that our products and services infringe such party’s intellectual property rights.

From time to time, we may receive communications from holders of patents (including non-practicing entities or other patent licensing organizations), trademarks or other intellectual property regarding their proprietary rights. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or otherwise assert their rights and urge us to take licenses. In addition, there is a growing occurrence of patent suits being brought by organizations that use patents to generate revenues without manufacturing, promoting or marketing products, or investing in R&D in bringing products to markets. These organizations continue to be active and target whole industries as defendants. We may not prevail in any such litigation given the complex technical issues and inherent uncertainties in intellectual property litigation.

In the event of a successful claim of infringement against us and our failure or inability to obtain a license to the infringed technology or other intellectual property right, our business, prospects, operating results and financial condition could be materially and adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention. Further, we may be required to compensate the third-party bringing the suit either by paying a lump sum or ongoing license fees to be able to continue selling a particular product or service. This type of compensation could be significant. We might also be prevented or enjoined by a court from continuing to provide the affected product or service and may be forced to significantly increase our development efforts and resources to redesign such product or service. We may also be required to defend or indemnify any customers who have been sued for allegedly infringing a third-party’s patent in connection with using one of our products or services. Responding to intellectual property claims, regardless of the validity, can be time-consuming for our personnel and management, result in costly litigation, cause product shipment delays, and harm our reputation, any of which could have a material adverse effect on our business, financial condition, and results of operations.

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Being a Public Company listed on a U.S. Stock Exchange

We will need to improve our operational and financial systems to support our expected growth, increasingly complex business arrangements, and rules governing revenue and expense recognition and any inability to do so will adversely affect our billing and reporting.

To manage the expected growth of our operations and increasing complexity, we will need to improve our operational and financial systems, procedures, and controls and continue to increase systems automation to reduce reliance on manual operations. Any inability to do so will affect our manufacturing operations, customer billing and reporting. Our current and planned systems, procedures and controls may not be adequate to support our complex arrangements and the rules governing revenue and expense recognition for our future operations and expected growth. Delays or problems associated with any improvement or expansion of our operational and financial systems and controls could adversely affect our relationships with our customers, cause harm to our reputation and brand and could also result in errors in our financial and other reporting. We expect that complying with these rules and regulations will substantially increase our legal and financial compliance costs and will make some activities more time-consuming and costly. The increased costs will increase our net loss. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.

If Schmid is unable to maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in the company and materially and adversely affect its business and operating results.

Schmid's management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in the Exchange Act Rule 13a-15(f). Schmid's internal control over financial reporting is designed to provide reasonable assurance to its management and board of directors regarding the preparation and fair presentation of published financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of Schmid's annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Schmid's annual report for the year ended December 31, 2023, identified two material weaknesses as of December 31, 2023. One related to the fact that Schmid did not have an adequate number of individuals within its accounting and financial reporting function with sufficient training and experience in IFRS and SEC reporting standards, including revenue recognition, accounting for financial instruments, income taxes, leases, and the consolidated statement of cash flows. A second because Schmid did not design and implement effective controls over certain general information technology controls for IT systems that are relevant to the preparation of the financial statements. As a result, a reasonable possibility exists that the Company’s business process controls that depend on the completeness and accuracy of financial information generated by these IT systems will not prevent or detect a material misstatement on a timely basis.

There can be no guarantee that any future possible weaknesses will be identified and addressed through current internal controls and procedures. In such case, Schmid may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements or investors may lose confidence in Schmid's financial reporting and its stock price may decline as a result.

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We are a “foreign private issuer” and a “controlled company” within the meaning of the rules of the stock exchange on which we intend to list our common shares and, as a result, expect to qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to shareholders of companies that are subject to such requirements.

The corporate governance rules of the stock exchange on which we intend to list our common shares require listed companies to have, among other things, a majority of independent board members and independent director oversight of executive compensation, nomination of directors and corporate governance matters. While we expect to abide by the rules applicable to independent directors, by having a board of directors consisting of a majority of independent directors, as a foreign private issuer, we are permitted to, and we may, follow home country practice in lieu of the above requirements, subject to certain exceptions. As long as we would rely on the foreign private issuer exemption for certain of these corporate governance standards, a majority of our Board are not required to be independent directors and our Compensation Committee and Nominating and Corporate Governance Committee are not required to be composed entirely of independent directors. In that case, management oversight may be more limited than if we were subject to all the corporate governance standards of the stock exchange on which we intend to list our common shares.

Following the consummation of this offering, Anette Schmid and Christian Schmid will continue to control a majority of the voting power of our outstanding common shares. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the stock exchange on which we intend to list our common shares. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

● the requirement that a majority of the Board consist of independent directors;

● the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

● the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

● the requirement for an annual performance evaluation of the nominating and corporate governance committee and compensation committee.

In the event we no longer qualify as a foreign private issuer, we may utilize these exemptions if we continue to qualify as a “controlled company.” If we were to utilize the controlled company exemption, we will not have a majority of independent directors and our Nominating and Corporate Governance and Compensation Committees will not consist entirely of independent directors and such committees will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all the corporate governance requirements of the stock exchange on which we list our common shares.

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We will incur significant expenses and devote other significant resources and management time as a result of being a public company, which may negatively impact our financial performance and could cause our results of operations and financial condition to suffer.

We will incur significant legal, accounting, insurance and other expenses as a result of being a public company. We are subject to rules outlined by the SEC, NASDAQ and requirements under Dutch corporate law. We expect that compliance with these laws, rules and regulations and the move from a private to a public company will substantially increase our expenses, including our legal, accounting and information technology costs and expenses, and make some activities more time consuming and costly, and these new obligations will require attention from our executive officers and senior management and could divert their attention away from the day-to-day management of our business. We also expect these laws, rules and regulations and the move from a private to a public company to make it more costly for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. Due to increased risks and exposure it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as officers. As a result of the foregoing, we expect a substantial increase in legal, accounting, insurance and certain other expenses in the future, which will negatively impact our financial performance and could cause our results of operations and financial condition to suffer. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our shares, fines, sanctions and other regulatory action and potentially civil litigation, which could adversely impact our business, results of operation, financial condition and the price of our shares.

A liquid market for our shares may not develop and/or persist.

Prior to the Business Combination which concluded on April 30, 2024, there has been no public market for the shares of Schmid. An active trading market for the shares may never develop or, if developed, it may not be sustained. You may be unable to sell your shares unless a market can be established and sustained. This risk will be exacerbated if there is a high level of redemptions of the Pegasus shares in connection with the closing of the Business Combination. Fluctuations in the price of the shares could contribute to the loss of all or part of your investment. The trading price of the shares could be volatile and subject to wide fluctuations in response to various factors.

Our failure to meet continued listing requirements could result in a delisting of our shares.

The NASDAQ requires companies to fulfill specific requirements in order for their shares to continue to be listed. If our common shares are delisted from the NASDAQ at some later date, our shareholders could find it difficult to sell our common shares. In addition, if our common shares are delisted at some later date, we may have our common shares quoted on the Bulletin Board or in the “pink sheets” maintained by the National Quotation Bureau, Inc. The Bulletin Board and the “pink sheets” are generally considered to be less efficient markets than the NASDAQ. In addition, if our common shares are not so listed or are delisted at some later date, our common shares may be subject to the “penny stock” regulations. These rules impose additional sales practice requirements on broker-dealers that sell low-priced securities to persons other than established customers and institutional accredited investors and require the delivery of a disclosure schedule explaining the nature and risks of the penny stock market. As a result, the ability or willingness of broker-dealers to sell or make a market in our common shares might decline. If our common shares are delisted at some later date or become subject to the penny stock regulations, it is likely that the price of our common shares would decline and that our shareholders would find it difficult to sell their shares.

If securities or industry analysts do not publish research or reports about our business or publish negative reports about our business, our share price and trading volume could decline.

The trading market for our shares may depend on the research and reports that securities or industry analysts publish about us or our business. Currently, we do not have any analyst coverage and may not obtain analyst coverage in the future. In the event we obtain analyst coverage, we will not have any control over such analysts. If one or more of the analysts who will cover Schmid downgrade our shares or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of Schmid or fail to regularly publish reports on Schmid we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

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We are an “emerging growth company,” and our reduced SEC reporting requirements may make our shares less attractive to investors.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Business Combination, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of Schmid shares held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we issued more than $1.0 billion in non-convertible debt during the prior three-year period. We intend to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, such  as an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our shares less attractive because we intend to rely on certain of these exemptions and benefits under the JOBS Act. If some investors find our shares less attractive as a result, there may be a less active, liquid and/or orderly trading market for our shares and the market price and trading volume of our shares may be more volatile and decline significantly.

Compliance obligations under the Sarbanes-Oxley Act may require substantial financial and management resources and shareholders may have fewer advantages until we cease to be an emerging growth company.

As indicated above, prior to the Business Combination, we were not a publicly reporting company required to comply with Section 404 of the Sarbanes-Oxley Act (“Section 404”). Our management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting obligations that are applicable to us as a NASDAQ listed company, including the requirement to document and test our internal control over financial reporting so that our management can certify as to the effectiveness of its internal control over financial reporting. These regulatory compliance and reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on its personnel. If we are not able to implement the requirements of Section 404, including any additional requirements when we are no longer an emerging growth company, in a timely manner or with adequate compliance, we may not be able to assess whether its internal control over financial reporting is effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our securities.

As a foreign private issuer, we will be exempt from a number of rules under the U.S. securities laws and will be permitted to file less information with the SEC than a U.S. domestic public company, which may limit the information available to our shareholders.

We are a foreign private issuer, as such term is defined in Rule 405 under the Securities Act. As a foreign private issuer, we will not be subject to all of the disclosure requirements applicable to public companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. As long as we are a foreign private issuer, we will not be required to obtain shareholder approval for certain dilutive events, such as the establishment or material amendment of certain equity-based compensation plans, we will not be required to provide detailed executive compensation disclosure in our periodic reports, and we will be exempt from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, our officers and directors will be exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of its securities.

As a foreign private issuer we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. domestic public companies and will not be required to file quarterly reports on Form 10-Q or current reports on Form 8-K under the Exchange Act.

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Also, as a foreign private issuer, we will be permitted to follow home country practice in lieu of certain NASDAQ corporate governance rules, including those that require listed companies to have a majority of independent directors (although all of the members of the audit committee must be independent under the Exchange Act) and independent director oversight of executive compensation, nomination of directors and corporate governance matters; have regularly scheduled executive sessions with only independent directors; and adopt and disclose a code of ethics for directors, officers and employee. Accordingly, our shareholders may not have the same protections afforded to shareholders of listed companies that are subject to all of the applicable corporate governance requirements.

We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.

We are a “foreign private issuer,” as such term is defined in Rule 405 under the Securities Act. In the future, we would lose our foreign private issuer status if a majority of our shareholders, directors or management are U.S. citizens or residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatory provisions, our loss of foreign private issuer status would make such provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. For example, the annual report on Form 10-K requires domestic issuers to disclose executive compensation information on an individual basis with specific disclosure regarding the domestic compensation philosophy, objectives, annual total compensation (base salary, bonus, and equity compensation) and potential payments in connection with change in control, retirement, death or disability, while the annual report on Form 20-F permits foreign private issuers to disclose compensation information on an aggregate basis. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors, and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. We may also be required to modify certain of our policies to comply with good governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers.

The rights of shareholders in companies subject to Dutch corporate law differ in material respects from the rights of shareholders of corporations incorporated in the United States.

We are a Dutch public company with limited liability (naamloze vennootschap). Our corporate affairs are governed by our articles of association, our internal rules and policies and by the laws governing companies incorporated in the Netherlands. The rights of shareholders may be different from the rights and obligations of shareholders in companies governed by the laws of U.S. jurisdictions. The role of the management board in a Dutch company is also materially different, and cannot be compared to, the role of a board of  directors in a corporation incorporated in the United States. In the performance of their duties, our management board is required by Dutch law to consider the interests of our company and the sustainable success of its business, with an aim to creating sustainable long-term value, taking into account the interests of its shareholders, its employees and other stakeholders of the company, in all cases with due observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder.

We are not obligated to, and do not, comply with all best practice provisions of the Dutch Corporate Governance Code.

We are subject to the Dutch Corporate Governance Code (the “DCGC”). The DCGC contains both principles and best practice provisions on corporate governance that regulate relations between the management board and the general meeting of the shareholder of SCHMID and matters in respect of financial reporting, auditors, disclosure, compliance and enforcement standards. The DCGC is based on a “comply or explain” principle. Accordingly, companies are required to disclose in their annual reports (which are filed in the Netherlands) whether they comply with the provisions of the DCGC. If they do not comply with those provisions (for example, because of a conflicting NASDAQ requirement, we are required to give the reasons for such noncompliance. The DCGC applies to Dutch companies listed on a government-recognized stock exchange, whether in the Netherlands or elsewhere, including the NASDAQ.

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We acknowledge the importance of good corporate governance. However, we do not comply with all the provisions of the DCGC, to a large extent because such provisions conflict with or are inconsistent with the corporate governance rules of the NASDAQ and U.S. securities laws, or because we believe such provisions do not reflect customary practices of global companies listed on the NASDAQ. Any such non-compliance may affect your rights as a shareholder, and you may not have the same level of protection as a shareholder in a Dutch company that fully complies with the DCGC.

Shareholders may not be able to exercise pre-emptive rights and, as a result, may experience substantial dilution upon future issuances of shares.

Shareholders may be restricted or excluded by a resolution proposed by the management and adopted by the Extraordinary General Meeting of shareholders to exercise preemptive rights in case of further issuances of shares. Shareholders may be restricted or excluded by a resolution proposed by the management and adopted by the General Meeting to exercise pre-emptive rights in case of further issuances of shares.

Dividend Policy

Under Dutch law, we may only pay dividends to the extent our shareholders’ equity (eigen vermogen) exceeds the sum of the issued share capital plus the reserves which must be maintained by Dutch law or by our articles of association and (if it concerns a distribution of profits) after adoption of the annual accounts by our General Meeting from which it appears that such distribution is allowed. Subject to such restrictions, any future determination to pay dividends will be at the discretion of our Board and will depend on a number of factors, including our results of operations, earnings, cash flow, financial condition, future prospects, contractual restrictions, capital investment requirements, restrictions imposed by applicable law and other factors considered relevant by our Board.

Our Board may decide that all or part of our remaining profits shall be added to our reserves. After such reservation, any remaining profit will be at the disposal of the General Meeting at the proposal of our Board, subject to the applicable restrictions of Dutch law. Our Board is permitted, subject to certain requirements, to declare interim dividends without the approval of the General Meeting. Unless our Board sets another date for payment, dividends and other distributions will be made payable pursuant to a resolution of our Board within four (4) weeks after adoption. Claims for payment of dividends and other distributions not made within five years from the date that such dividends or distributions became due for payment will lapse, and any such amounts will be considered to have been forfeited to SCHMID (verjaring).

Investors may have difficulty enforcing civil liabilities against us or the members of our management and our board.

SCHMID is incorporated in the Netherlands, and we expect to conduct most of our operations in Germany or outside of the United States through our subsidiaries. A majority of our management and our directors are not United States residents and do not have significant assets in the United States, and the majority of our assets are located outside the United States. As a result, it may not be possible, or may be very difficult, to serve process on company representatives or the company in the United States, or to enforce judgments obtained in U.S. courts against our representatives or SCHMID based on civil liability provisions of the securities laws of the United States. There is no treaty between the United States and the Netherlands for the mutual recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon the U.S. federal securities laws, would not be enforceable in the Netherlands unless the underlying claim is re-litigated before a Dutch court of competent jurisdiction. U.S. investors will be unable to enforce any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws, against us, members of our management and our directors. In addition, there is doubt as to whether a Dutch court would impose civil liability on us or the members of our management or our directors in an original action predicated solely upon the U.S. federal securities laws brought in a court of competent jurisdiction in the Netherlands against us or our management or directors.

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Dutch, German and European insolvency laws are substantially different from U.S. insolvency laws and may offer our shareholders less protection than they would have under U.S. insolvency laws.

As a Dutch public limited liability company and as a company with its ‘center of main interest’ in Germany, we are subject to Dutch and German insolvency laws in the event any insolvency proceedings are initiated against us including, among other things, Regulation (EU) 2015/848 of the European Parliament and of the Council of May 20, 2015 on insolvency proceedings, as amended. Should courts in another European country determine that the insolvency laws of that country apply to us in accordance with and subject to such EU regulations, the courts in that country could have jurisdiction over the insolvency proceedings initiated against us. Insolvency laws in Germany, the Netherlands or the relevant other European country, if any, may offer our shareholders less protection than they would have under U.S. insolvency laws and make it more difficult for our shareholders to recover the amount they could expect to recover in a liquidation under U.S. insolvency laws.

Shareholders may be subject to limitations on transfer of their shares.

Our shares are transferable on the transfer agent’s books. However, the transfer agent may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the transfer agent may refuse to deliver, transfer or register transfers of shares generally when our books or the transfer agent’s books are closed, or at any time if we or the transfer agent deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

Our Articles of Association include sole and exclusive forum provisions.

The sole and exclusive forum for any action, proceeding or claim against us under the Securities Act, the Exchange Act or any claim for which the federal district courts of the United States of America are the sole and exclusive forum, relating to our Articles of Association, shall be the federal district courts of the United States of America. This forum selection provision in our Articles of Association may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us. It is also  possible that, notwithstanding the forum selection clause included in our Articles of Association, a court could rule that such a provision is inapplicable or unenforceable. We further note that investors cannot waive compliance with US federal securities laws and rules or regulations thereunder.

Risks Related to Taxes

Our tax residency might change if Germany ratifies the MLI (as defined below) and changes its provisional election on the corporate residence tie-breaker.

Our tax residency in Germany for purposes of the convention between Germany and the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (the “German-Dutch tax treaty”) is subject to the application of the provisions on tax residency as stipulated in the German-Dutch tax treaty as effective as of the date of this Annual Report.

However, among others treaties, Germany and the Netherlands entered into a Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“MLI”). The MLI operates to amend bilateral tax treaties between participating states, provided there is a match between certain options made by the relevant states. The MLI provides, amongst others, for an amendment of relevant treaty rules regarding tax residency for purposes of relevant tax treaties. According to its elections, the Netherlands applies such deviating rules on tax residency, i.e., it did not opt out. However, currently, the MLI is not applicable between the Netherlands and Germany, because, inter alia, Germany has not included the German- Dutch tax treaty in the list of reservations and notifications attached to the Implementation Act of the MLI which entered into force on April 1, 2021. This is in line with the current draft of the MLI Application Law (Gesetz zur Anwendung des Mehrseitigen Übereinkommens vom 24.11.2016) dated 15 December 2023, which does not forsee any amendments to the German-Dutch tax treaty.

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Our ability to utilize our net operating loss and tax credit carryforwards to offset future taxable income may be subject to certain limitations, including losses as a result of the Business Combination.

We have incurred and are likely to continue incurring significant tax losses, which may be limited in their usability under German and other tax laws, in particular following significant shareholder changes. Although we do not expect the Business Combination to result in a forfeiture of our German tax loss attributes, the realization of future tax savings from such tax loss attributes depends on the tax authorities’ continued willingness to accept them and our ability to generate future taxable income in Germany against which such losses can be offset.

Future changes to tax laws could materially and adversely affect us and reduce net returns to our shareholders.

Our tax treatment is subject to changes in tax laws, regulations, and treaties, or the interpretation thereof, tax policy initiatives and reforms under consideration, and the practices of tax authorities in jurisdictions in which we operate. The income and other tax rules in the jurisdictions in which we operate are constantly under review by taxing authorities and other governmental bodies. Changes to tax laws (which may have retroactive application) could adversely affect us or our shareholders. The new Global Minimum Tax regime, which has already been implemented in Germany with effect from 31st of December 2023, may lead to an increase of our overall tax burden.

We are unable to predict what tax proposals may be proposed or enacted in the future or what effect such changes would have on our business, but such changes, to the extent they are brought into tax legislation, regulations, policies or practices, could affect our financial position overall or our effective tax rates in the future in countries where we have operations and where we are organized or deemed a resident for tax purposes, and increase the complexity, burden, and cost of tax compliance.

We may be or become a PFIC, which could result in adverse U.S. federal income tax consequences to U.S. holders of Class A Shares or Public Warrants.

In general, a non-U.S. corporation, such as us, will be a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes in any taxable year in which, after applying relevant look-through rules with respect to the income and assets of its subsidiaries, (i) 75% or more of its gross income is passive income, and/or (ii) 50% or more of the value of its assets (generally based on the quarterly average of the value of its assets during such year) is attributable to assets, including cash, that produce passive income or are held for the production of passive income. Passive income generally includes dividends, interest, certain royalties and rents, annuities, net gains from the sale or exchange of property producing such income and net foreign currency gains.

Based on the expected composition of our gross assets and income and the manner in which we expect to operate our business in 2024 and future years, we do not expect to be classified as a PFIC for U.S. federal income tax purposes for our 2024 taxable year or in the foreseeable future. However, whether we are a PFIC is a factual determination made annually, and our status could change depending, among other things, upon changes in the composition and relative value of our gross receipts and assets. Accordingly, there can be no assurances that we will not be a PFIC for our 2024 taxable year or any future taxable years.

If we are a PFIC for any taxable year during which a U.S. holder owns Class A Shares, the U.S. holder generally will be subject to adverse U.S. federal income tax consequences and additional reporting requirements. U.S. holders of Class A Shares and Public Warrants should consult their tax advisors regarding the application of the PFIC rules to us and the risks of investing in a company that may be a PFIC. See “Certain Material U.S. Federal Income Tax Considerations—Application of the PFIC Rules to Schmid Securities.”

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ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

Pegasus 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 Group is +49 7441 538 0.

See “Explanatory Note” in this Report for additional information regarding SCHMID Group and the Business Combination.

The 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 Group Ordinary Shares. In addition, Schmid Group 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 Group 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 Group files with or furnishes electronically to the SEC.

The 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.

All 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.

Information on the Company’s principal capital expenditures and divestitures is included below under “Item 5. Operating and Financial Review and Prospects.”

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B. Business Overview

Introduction

We are a global supplier of equipment, software and services for various industries such as printed circuit board (“PCB”), substrate manufacturing, photovoltaics, and glass and energy storage with a focus on the highest end of this market 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 forefront of technology. Throughout the almost 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 electronics industry since the 1960s, photovoltaics solutions since the early 2000s and energy storage for the last seven years. 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 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 five 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 the 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.

We 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 contract with new customers and allows us to continue to grow our market share and capitalize on the overall positive market growth trends.

Our customers include large, global original equipment manufacturer (OEMs) from the semi- conductor and consumer electronics industry and companies that are part of the supply chain of such global companies.

We 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 800 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.

We 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; (ii) strategic investments in automation solutions, such as the next generation of fully automatic factories; and (iii) software insourcing for semiconductor equipment communication standard (“SECS/GEM”), which can allow for more reliable data exchange and which will allow us to offer our own software as the interface to our customers’ software solutions.

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In fiscal year 2023 we generated €90.2 million in revenues. Our Adjusted EBITDA amounted to €39.1 million in fiscal year 2023. This total Adjusted EBITDA for the fiscal year 2023 has not be adjusted for several “one-off” effects as follows: (i) the €21.4 million reversal of an impairment in relation to the Silicon Group sales, (ii) the two exit bonuses of €9.2 million and (iii) Business Combination related legal, consulting, and other costs of approximately €8.7 million. Adjusted for such one-off effects in 2023, our Adjusted EBITDA would have amounted to €17.2 million.

Our Business Operations

We operate our business by providing machines for industries, including, but not limited to, electronics and photovoltaics, and 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.

We 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 both our electronics and photovoltaics products and services in the future.

The following table shows our revenue by country for the fiscal year 2023:

in € thousand	2023
China	15,308
Taiwan	1,634
USA	17,522
Germany	9,577
Malaysia	16,681
Austria	17,810
Other	11,714
Total	90,246

Electronics

We 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.

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The 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.

The 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):

● The Infinity C+ Line are vertical spin-process machines for developing, flash-etching and surface treatment.

● The Infinity V+ Line are machines for a vertical inline process for developing, etching and stripping applications.

● The Infinity P+ Line are machines for high-end single panel electroplating tools.

● CMP is a full format chemical mechanical polishing equipment for leveling copper.

● The PlasmaLine are vertical inline and cluster plasma etching and sputtering machines.

● The InfinityLine A+ is used for automation of process equipment for fully automatic loading and unloading.

● The Infinity H+ Line are machines for a horizontal inline processing for multiple processes and applications.

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● Other equipment includes various special equipment for horizontal inline processing and software solutions for such equipment.

Customers in Electronics

We 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.

We 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.

The ET Process

The ET process is a 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.

The 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.

We 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.

The 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.

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Our 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 30% of equipment spending for a traditional fabrication methods factory to 90% in an ET technology factory. This estimate is an internal management estimate based on the understanding of technical processes required for factory fabrication methods.

In 2023, the ET technology was estimated to only accounted for a small share of the total high-end PCB equipment market. The PCB market is expected to significantly expand in the next three years with ET technology gaining a significant market share starting in 2024 as new factories are expected to switch to ET technology machinery.

In addition to the growth prospects of ET technology, the total addressable market for PCB and substrate equipment in 2022 amounted to approximately $5 billion with an expected industry growth of serviceable addressable high-end PCB market at CAGR 38.3% in the period from 2022 until 2026 in the estimate of the Company based on third-party data by Prismark Partners, the leading source for PCB market data, and industry expert information by a leading international consultancy firm. Within this overall industry there is a shift to the high-end production technologies which are our key target focus.

Photovoltaics

Our business in the photovoltaics market is significantly smaller in terms of revenues compared to our business in the electronics market. However, we have been working on photovoltaics solutions for over 20 years and believe our machinery includes significant advantages for customers compared to processes and machines offered by our competitors. We have also developed solutions that allow photovoltaics to reach high volume at low cost. We are currently aiming to develop this business further and, subject to supportive market and economic conditions, anticipate significant growth in this area, fueled by customer demand, a transition to renewable energy and regional drivers in US, Europe and China.

We are also currently working on developing the next generation of wet process systems for combined alkaline texturing and alkaline polishing equipment as well as an atmospheric pressure chemical vapor deposition (“APCVD”) that can enable low-cost tunnel oxide passivated contact (“TOPCon”) and integrated back contact (“IBC”) cell manufacturing, amongst others. In addition to silicon based solar cell manufacturing, we also focus on horizontal inline wet process equipment for thin-film solar modules. Our glass know-how from our thin-film business is also used in other glass treatment processes such as glass surface structuring.

Customers in Photovoltaics

We have a customer base consisting of the larger producers and developers of solar cells and thin-film solar modules. For our existing customers we focus on building trusted, long-lasting relationships combined with an emphasis on our know-how. For new customers, we rely on our deep technological know-how as well as on our reliable availability of service personnel through our service hubs. That is coupled with our co- development approach and customer-supported R&D as part of our efforts to ensure the fit of SCHMID machines to an individual customer’s production requirements.

After Sales Services

Through 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.

We 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.

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Business Strategies

We 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 electronic market as a result of ET adoption in the PCB and substrate market over the next years, thus displacing traditional technologies such as mSAP and SAP. 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 will be equipment and processes for glass substrate manufacturing. 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.

We also plan to consider selected strategic acquisitions that are aligned with our technology focus, in particular in the area of software for advanced connectivity and high-end automation.

Overall, 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:

● 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 Intel`s move to more advanced glass substrates that use next generation chiplet based CPU`s or so called CoWoS (chip on wafer on substrate concepts).

● 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.

● 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 our estimates, the ET process uses 30% less energy, 70% less water and 40% less chemicals than current processes and reduces CO2 emissions by 30%. 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.

● 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.

● Market applications for end products produced by our machines include solar cells and modules for charging stations, full battery know how for the Vanadium Redox Flow Batteries (“VRFBs”) in stationary energy storage. 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.

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Geographically, we aim to further expand into new geographies and regions, in particular in Asia outside of China and in North America. We expect an increase of greenfield projects outside of China with the aim to reduce supply chain risks which have emerged as a concern of our customers after the COVID-19 pandemic. As part of this broader reach to supply customers, we may in the future also add an additional production location in Asia. In the North American market, we have in February 2024 entered into a strategic partnership with Calumet Electronics, a leading American printed circuit board manufacturer pioneering the domestic production of advanced packaging substrates. Through this strategic partnership, we are aligning efforts with Calumet to establish the first-ever US-based advanced substrate facility. We continuously review our geographic footprint to serve our customers and follow them to the locations they are operating in and aim to continue this dynamic approach in the future.

We 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.

Another growing market is equipment used for fuel cell production. Using our process know-how, we have been successful adapting our equipment for use in the production of bipolar plates.

Sales and Procurement

Through 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.

We 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.

Research and Development

Our research and development efforts are focused on expanding the market position in all our target markets and to provide high-tech technology solutions for our customers. As a technology-oriented business, we research and develop in our own product-related technology center with 32,000 square feet laboratory and prototyping facility in Freudenstadt.

As part of our activities in basic research, we work with customers and cooperation partners as well as leading research institutes worldwide. In our research projects we undertake and focus on new technologies and research products in the fields of photovoltaics, electronics and energy storage:

● The subject of research and development in the electronics market is developing applications for the new ET process, sampling for customers and finetuning their products. At the same time, we optimize the equipment for the next generation’s requirements of our OEMs with a focus on glass substrates. Our research focus is to meet newly emerging requirements in the high-tech sector to support the latest process and manufacturing technologies.

● In the field of photovoltaics, we focus on various products including on the research and development in relation to the expansion of the new generation of systems of our InfinityLine for alkaline structuring and polishing. The actual APCVD tools are redesigned for the needs of TOPCon solar cells.

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● In energy storage we focus on the structuring of copper foil as current collector, production equipment for fuel cells and supporting our business partners in the field of VRFB for large energy storage.

We employ over 150 scientists, researchers and engineers worldwide and have multiple laboratories equipped with state-of-the-art technology and research conditions. Of these 150 employees, our technology center in Freudenstadt alone employs over 30 scientists, researchers and process engineers who carry out research and development work such as testing equipment, developing processes and sampling for customers. We regularly register new patents and as of December 31, 2023 we had more than 100 patents and industrial property rights. Furthermore, we hold several global trade names and trademark registrations and applications for registration, which we consider to be of value in identifying our products.

We benefit from a network of cooperative partners from industry leading institutes such as the Institute of Photovoltaics, the Institute of Solar Energy Research, the Fraunhofer Institute for Solar Energy Systems (ISE) and the University of Konstanz. We also focus on an efficient transfer from R&D to industrial applications and high-volume manufacturing which is crucial in our industry. Our technology center includes full prototyping capabilities for electronics, photovoltaics and glass applications. In addition, we have lamination, LDI, developing, etching, stripping and other capabilities along with extensive physical and chemical laboratories for basic research and statistical data analyses.

We have created additional opportunity for revenue generation through paid R&D. We expect our licensing revenue to increase due to growing installed base.

Competition

We 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. 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.

Employees

As of December 31, 2023, we had approximately 800 employees (by headcount). 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.

Health, Safety and Environmental

We 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.

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Legal Proceedings

In the general course of business, we sometimes face legal proceedings and claims against us.

Our subsidiary Schmid China Ltd. filed a claim against Beyond Force Company Limited for an outstanding payment due to our subsidiary of RMB 53 million (approximately $7.3 million as of September 2023) plus interest amounting to approximately RMB 21 million (approximately $2.9 million as of September 2023). Beyond Force Company Limited has filed a counterclaim valued at approximately RMB 123 million (approximately $16.9 million as of September 2023). Schmid has challenged the jurisdiction of the local Chinese court in this matter. After the relevant Chinese court dismissed our challenge in relation to whether the local Chinese court has jurisdiction, we filed an appeal, which is currently pending at the High People’s Court of Guangdong Province.

Except for legal actions in China, we are currently not subject to any material litigation or other legal proceedings.

In June 2023, we settled a dispute with a lender. More information is set out in the combined financial statements filed as part of this Annual Report.

C. Organizational Structure

The following diagram depicts our organizational structure as of the date of this Annual Report (including the material subsidiaries):

* SCHMID Group N.V. and XJ Harbour have agreed that XJ Harbour will transfer the approximately 25% of shares held by XJ Harbour in SCHMID Technology Guangdong Co., Ltd. to Gebr. Schmid GmbH in three tranches. For more information, see “Item 5. Operating and Financial Review and Prospects –C. Material Contracts.”

For a list of SCHMID’s subsidiaries see Exhibit 8.1 "List of Subsidiaries of SCHMID Group N.V."

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D. Property, Plant and Equipment

Our 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 for both electronics and photovoltaic business and global customer supply. In addition, our core research and development activities are located in Freudenstadt including our technology center. We also have a production facility in Zhongshan in China in which we produce machines and equipment for both electronics and photovoltaics 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.

We also maintain further facilities in the United States, Malaysia, Singapore, 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 Brazil, Italy, the Netherlands, Sweden, Austria, Israel, India and Japan.

Our partner in Advanced Energy Storage Systems Investment Company, Kingdom of Saudi Arabia, was SABIC Investment and Local Content Development Company, Kingdom of Saudi Arabia. The joint venture with SABIC (Saudi Arabia) has been terminated by mutual agreement in October 2023. The Company has made the strategic decision to relocate the manufacturing and technology development of machinery for vanadium redox flow-based energy storage systems back to Europe. Schmid has already started investigating suitable locations for the newly planned technology and production facility for its storage systems.

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Following and as a result of the Business Combination, the business of the Schmid Group is conducted through Gebr. Schmid GmbH, its direct, wholly-owned subsidiary, as well as the direct, wholly owned subsidiaries of Schmid.

The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of Schmid’s combined results of operations and financial condition. The discussion should be read together with the combined audited financial statements for the years ended December 31, 2023, 2022 and 2021 and the related notes that are included elsewhere in this Annual Report. The following discussion and analysis is based on Schmid’s combined 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.

Overview

We 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 this market 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 almost 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 and energy storage for the last seven years. 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 five centers in the US, Europe, and Asia. In addition to our sales and service centers and two manufacturing sites, we also work with partners 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.

Key Factors Affecting Our Results of Operations

We 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:

Market growth in our key PCB market and ET technology adoption

Our 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 30% of equipment spending for a traditional fabrication methods factory to 90% in an ET technology factory. This estimate is an internal management estimate based on the understanding of technical processes required for factory fabrication methods. In 2023, ET technology only accounted for a small portion of the high-end PCB equipment market. The PCB market is expected to significantly expand in the next three years with ET technology gaining a significant market share starting in 2024 as new factories are expected to switch to ET technology machinery. ET technology is continuously showing a positive development with an increased customer base and new applications. The technology and its required equipment is showing the expected multi-usability approach to have a smooth transfer to ET or also a partial upgrade from mSAP & SAP. The customer base for these production lines could be increased, with the first packaging fabrication currently expected to be sold and delivered to the US high-end market in 2024. Due to positive feedback from our customers, we expect to receive orders for our ET technology in 2024.

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Developments in Orders from our Core Customers

In fiscal year 2023, approximately 38% of our revenues were generated from sales to our two largest customers (€17.7 million from our top customer and €16.4 million from our second largest customer) and our ten largest customers represented approximately 71% 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 2022 to the fiscal year 2023. In 2022, a long-term order for technical developments from another large customer also had a positive impact on the developments of our sales. In 2023, the industry trend and orders were generally more subdued than expected.

Trends affecting the Demand for our Customers’ End Products

We 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 are influenced by a number of larger trends impacting this diverse set of industries:

● 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.

● 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 used, which is one of our key machine technologies, uses less energy and water compared to traditional manufacturing technologies.

● The automotive industry is a significant consumer of electronic components. Electric vehicles are expected to have a key role in transport in the coming years. Regulatory initiatives including those in the EU, the US and China have supported the adoption of electric vehicles. In recent years, the number of electric vehicles produced globally has been increasing steadily. In addition, vehicles are generally adding more computer power, sensors and electronics to their systems to for instance provide autonomous driving feature or support high power applications, highly reliable radar and sensor applications. Our machines support the production of many of these applications including the semiconductor and electronic components required for these systems.

Macroeconomic and Geopolitical Factors

We operate across a wide range of countries. Not all of 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. An example of this is the geopolitical and macroeconomic headwinds that appear to have initially been set off by the Russian invasion of Ukraine launched on February 24, 2022, which resulted in increased volatility in the financial markets and disruptions to various industries that occurred simultaneously with the tightening of Covid-related monetary policy. In addition, it is currently not clear how other conflicts, such as the 2023 war between Hamas and Israel, will affect regional and global economies and financial markets.

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Segment Reporting

Schmid has prepared IFRS financial statements and segment reporting, see note 6 of the financial statements for the year ended December 31, 2023.

Key Components of Operating Results:

The following discussion sets forth certain components of our statement of profit and loss and certain factors that impact those items:

Revenue:

We 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.

Cost of sales:

Our 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.

Selling:

Selling 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 cost including utilities, insurances, travel expenses and expenses for short-term leases. Other expenses include mainly depreciation and amortization.

General Administration Expenses:

General 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.

Research and development expenses

Research 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 cost such as utilities, insurance, travel expenses and expenses for short-term leases.

Other income:

Other income principally consists of foreign currency gains and other miscellaneous income such as government grants.

Other expenses:

Other 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.

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A. Operating Results

The following table sets forth results of operations for the year ended December 31, 2023 and 2022.

	Year Ended
	December 31,
	2023	2022
	(in € thousands)
Statements of Profit or Loss Data
Revenue	90,246	95,058
Cost of sales	(63,849)	(61,721)
Gross profit	26,397	33,337
Selling	(12,577)	(11,369)
General administration	(12,538)	(6,973)
Research and development	(5,148)	(4,818)
Other income	15,985	3,375
Other expenses	(2,620)	(2,988)
Reversal on impairment on financial assets, net	22,696	3,091
Operating profit	32,195	13,654
Financial result	9,594	(11,988)
Share of profit (loss) in joint ventures	(1,057)	—
Income before income tax	40,732	1,667
Income tax (expense) benefit	(2,778)	1,924
Net income for the period	37,954	3,591

Comparison of the Years Ended December 31, 2023 and 2022

Revenue

Our revenues decreased by €4.8 million from €95.1 million in the year ended December 31, 2022, to €90.2 million in the year ended December 31, 2023. The majority of our revenue was generated from the sale of our technical equipment and processes in the amount of €78.7 million in the year ended December 31, 2023, compared to €78.8 million in the year ended December 31, 2022. The PCB and semiconductor market is subject to shifts in demand that are difficult to predict, and we cannot be certain when and to what extent future demand or future weakness in this industry will materialize. In 2023, we experienced weakened demand in our market, particularly in China and Taiwan, which has been accompanied by a decline in industry-wide spending on production equipment in this region. The main reason for the decline in sales is the weakened end-market demand for electronics, such as personal computers and smartphones. The longer-term markets in Europe, the USA and the rest of Asia were unable to compensate for this weakened demand, especially as certain projects of Chinese customers to relocate production capacity to the rest of Asia have also been delayed.

Our second largest revenue stream was the sale of our spare parts and the provision of services to our customers such as maintenance. In the year ended December 31, 2023, we generated €11.5 million from the sale of spare parts and provision of services, a significant decline from €16.3 million generated in 2022. The Spare parts and services division was also negatively impacted by the economic situation in China. The lack of sales in the services and spart parts business was mainly caused by a reduction of orders in China and Taiwan (including due to the geopolitical situation in Taiwan).

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Geographically, our revenue distribution across jurisdictions shifted. The weakening of the Chinese market in particular has a significant impact on our revenues in 2023. Although the strategic markets in the US, Europe and other Asian countries performed in line with expectations, they were unable to compensate for this. 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):

	Year Ended December 31,2023
in € thousand	2023	2022
China	15,308	39,424
Taiwan	1,634	12,846
USA	17,522	11,478
Germany	9,577	10,743
Malaysia	16,681	7,915
Austria	17,810	3,928
Other	11,714	8,724
Total	90,246	95,058

On December 31, 2023, our order backlog for the sale of technical equipment and processes amounted to €55 million. We expect to recognize revenue from all order backlogs within one year.

Cost of Sales

Our cost of sales increased by €2.1 million from €61.7 million in the year ended December 31, 2022, to €63.8 million in the year ended December 31, 2023. The increase was generally due to higher material costs, higher personnel expenses and higher depreciation and amortization.

Gross Profit

Our gross profit decreased from €33.3 million in the year ended December 31, 2022, to €26.4 million in the year ended December 31, 2023. As a result, our gross profit margin decreased from 35.2% in the year ended December 31, 2022 to 29.3% in the year ended December 31, 2023. The decrease in the gross profit margin was principally due to slightly increased fixed costs and material costs, while revenue declined as set out above.

Selling

Selling expenses increased by €1.2 million from €11.4 million in the year ended December 31, 2022 to €12.6 million in the year ended December 31, 2023. The increase was mainly attributable to increased personnel expenses and distribution-related external administration (that comprises allocated costs such as utilities, insurance, travel expenses or expenses for short-term leases).

General and Administration

General and administration expenses increased from €7.0 million during the year ended December 31, 2022, to €12.5 million during the year ended December 31, 2023. The main driver for this increase was additional costs triggered incurred related to the Business Combination as well as general cost increases in personnel expenses, administrative expenses and legal and consulting fees.

Research and Development

Research and development expenses increased from €4.8 million for the year ended December 31, 2022, to €5.1 million during the year ended December 31, 2023. The change is attributable to a planned increase for personnel costs and expenses for R&D related administration.

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Other Income

Other income increased from €3.4 million in the year ended December 31, 2022, to €16.0 million during the year ended December 31, 2023.

The increase was mainly due to two exit bonus agreements. An exit bonus of €4.7 million related to the sale of a business group owned by Christian Schmid (the “Silicon Group”). The Silicon Group concluded several loan agreements with the Schmid Group, Silicon being the borrower. In 2021, Christian Schmid and the Schmid Group had entered into an agreement with respect to Silicon. Under this agreement, Christian Schmid was obliged to pay to the Schmid Group in case of a sale of Silicon a bonus of 5% from the net inflow of the Silicon sale as an exit bonus. Another exit bonus of €4.5 million related to the sale of subsidiary Montratec GmbH, to Montratec Sarl in 2018. The underlying stock purchase agreement included a clause on potential exit events, which requires Montratec Sarl to pay Schmid up to €4.5 million upon a future exit from Montratec. Schmid was informed in April 2023 about this exit event, i.e. that Montratec GmbH was sold by Montratec Sarl which resulted in an exit bonus of €4.5 million to Schmid.

Other miscellaneous income includes a gain resulting from a cancelled sale and leaseback agreement with a third party (€1.8 million) as well as government grants related to income in an amount of €356 thousand (2022: €519 thousand, 2021: €123 thousand). The grants are received in cash to compensate for expenses incurred in relation to research projects. In addition, other miscellaneous income includes income from asset disposals.

Other Expenses

Other expenses decreased from €3.0 million in the year ended December 31, 2022 to €2.6 million during the year ended December 31, 2023. The decrease is mainly attributable to expenses in 2022 attributable to the disposal of assets while in 2023 other expenses included a gain in relation to disposals of assets, as well as to a reduction in expenses for certain miscellaneous other items.

Reversal on impairment of financial assets

For the year ended December 31, 2023, a reversal of impaired financial assets in the amount of €21.4 million was recognized. The reversal of the impairment in 2023 relates to receivables from several legal entities of a business group owned by the shareholders of the Schmid Group  with a book value of €0 as the receivables had been fully impaired during 2014 due to the financial situation of the Silicon Group. In June 2023, the Silicon Group was sold to Group14 Technologies, USA and as part of the stock purchase agreement, Group14 Technologies, Inc. committed to the repayment of the receivables to Gebr. Schmid GmbH. Therefore, the impairment of the receivables to the Silicon Group has been fully reversed during the six months ended June 30, 2023.

Operating Profit

The Company’s operating profit increased from €13.7 million in the year ended December 31, 2022 to €31.3 million in the year ended December 31, 2023, principally driven by the reversal of the impairment and the existing bonus payments set out above.

Financial Result

Our financial result increased from a net expense of €12.0 million in the year ended December 31, 2022, to a net gain of €9.6 million in the year ended December 31, 2023. The change was mainly due to an extinguishment gain of €15.8 million related to our borrowings from debt funds for which we reached a settlement with the creditors resulting in loan extinguishment.

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Income Tax (Expense) Benefit

We accounted for an income tax benefit of €1.9 million in the year ended December 31, 2022 and an income tax expense of €2.8 million the year ended December 31, 2023. The tax rate in 2023 is significantly driven by the fact that the Company was able to use tax loss carryforwards for which no deferred tax assets have been recognized in prior years. The tax rate in 2023 is below the German average tax rate due to the fact that part of the gains realized by the Company are not taxable and for the remaining part tax loss carryforwards can be used to reduce the tax impact.

Non-IFRS Financial Information

This 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 combined financial results prepared in accordance with IFRS.

The following table summarizes our Adjusted EBITDA reconciled to our profit /(loss), the closest IFRS measure for each period presented:

	Year ended December 31,
	2023	2022
	(in € thousands)
Net Income (loss) for the period	40,732	1,667
Financial result	(9,594)	11,988
Amortization and depreciation	6,904	6,283
Share of profit(loss) in joint ventures	1,057	—
Total Adjusted EBITDA	39,099	19,937

The total Adjusted EBITDA for various unusual income and expenses as follows: (i) the €21.4 million reversal of an impairment in relation to the Silicon Group sales, (ii) the two exit bonuses of €9.2 million and (iii) Business Combination related legal, consulting, and other costs of approximately €8.7 million. Adjusted for such one-off effects, our Adjusted EBITDA would have amounted to €17.2 million.

For more information see notes 5, 6, 11, 13 and 20 of our combined financial statements included elsewhere in this Annual Report.

B. Liquidity and Capital Resources

Sources of Liquidity and Operational and Funding Requirements

We principally finance our operations from our operating cash flows, i.e., the cash we generate by selling our machines, spare parts and services to customers. However, during the COVID-19 pandemic, we also obtained significant financing from shareholders (including investments from minority shareholders) and third party lenders, but repaid these loans in June 2023. As of December 31, 2023, and 2022, we had cash and cash equivalents of €5.7 million and €8.3 million on our balance sheet, respectively.

As a result of our NASDAQ listing, we expect to incur additional costs associated with operating as a public company, including expenses related to legal, accounting and financial reporting and regulatory matters, maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, and investor relations.

On a pro forma basis following the Business Combination, which was completed on April 30, 2024, we estimate that the pro forma cash on hand at December 31, 2023 would be sufficient to meet our operational needs for at least 12 months.

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On a pro forma basis, we believe that our current cash and cash equivalents, together with the cash that we expect to receive from the Business Combination will provide sufficient funding to continue to finance our future cash requirements, though we cannot assure that this will actually be the case. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. Additionally, changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. Some of these risks and uncertainties are described in more detail in this Annual Report under the heading “Risk Factors”.

As of December 31, 2023, we had current financial liabilities of €26.1 million (of which €8.1 million are loans from shareholders and €16.7 million are loans from other related parties) and non-current financial liabilities of €22.2 million (of which €19.9 million are loans from shareholders) on our balance sheet. For more information, see note 28 of the combined financial statements for the financial year 2023 included elsewhere in this Annual Report.

Cash Flows

The following table summarizes our cash flows for each period presented (in € thousands):

	Year Ended December 31,
	2023	2022
Cash flow from:
Operating activities	13,810	280
Investing activities	72,477	(7,168)
Financing activities	(89,098)	3,165
Net increase (decrease) in cash and cash equivalents	(2,810)	(10,053)

Cash flow generated by operating activities for the year ended December 31, 2023, was €13.8 million, an increase compared with cash outflow of €0.3 million for the year ended December 31, 2022. The change in cash flow from operating activities reflected changes in working capital but is also related to more cash coming into the business operationally.

For the year ended December 31, 2023, net cash provided from investing activities amounted to €72.5 million compared to €7.2 million of net cash used in investing activities in the year ended December 31, 2022. The change was principally a result of the repayment of the shareholder loan by Christian Schmid as a result of the Silicon Business sale.

For the year ended December 31, 2023, net cash used in financing activities amounted to an outflow of approximately €89.1 million, while cash generated from financing activities for the year ended December 31, 2022, was €3.2 million. The main driver of the change was the payment of loans that came due during the year.

Future funding Requirements

While we fund our operations from our operating activities, we may enter into further debt instruments with lenders, or issue new shares to investors in private placements in order to increase our cash position for future growth initiatives. As of the date of this Annual Report, no such additional debt instruments or private placement agreements have been concluded, (equaling the estimated redemption price at the closing of the Business Combination) to the Company, noting that such investors are entitled to receive 41,610 shares from the Sponsor as part of the incentive share compensation for entering into an investment agreement before the closing of the Business Combination.

Off-Balance Sheet Arrangements

As of December 31, 2023, the Schmid Group did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

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Financial Risk Management

We 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. Schmid regularly assesses each of these risks to minimize any adverse effects on our business as a result of those factors.

C. Research and Development, Patents and Licenses

Description of our Proprietary Technology and Intellectual Property

For information about our proprietary technology and intellectual property, please see “Item 4. Information on the Company — B. Business Overview.”

Research and Development

For information about our research and development activities, see “Item 4. Information on the Company — B. Business Overview.”

D. Trend Information

Based on our budget forecasts for the whole 2024 financial year, we estimate that our sales will be up to €130 million and our adjusted EBITDA will be up to €35 million (before de-SPAC, IPO-related or listing-related costs) for the financial year ended December 31, 2024.

The current forecasts for the financial year 2024 are mainly based on (i) the order backlog as at December 31, 2023, which amounted to €55 million (this order backlog covers a significant portion of our forecast for our full year sales in the 2024 financial year), and (ii) discussions with the Group’s most important customers about their project pipelines and potential orders that can be realized in the financial year 2024 and the assessment of macroeconomic conditions, in particular the expectation that the markets in China and Taiwan will return to their previous strength in the first half of the year 2024 and that the global economy will develop in line with the IMF’s expectations at the beginning of 2024.

The market for glass substrates and the demand for additional production lines for ET processes in particular are showing positive demand trends. We believe the demand for our ET technology will add further growth to our sales in the medium term beyond 2024.

Based on our budget projections and forecasts, we estimate that our operating cash flow (before de-SPAC, IPO-related or listing-related costs) will amount up to €21 million in financial year 2024. We plan a significant increase in capital expenditure up to €11 million in financial year 2024 compared to 2023 as a result of our plan to increase our growth-related capital expenditure.

In the North American market, we have in February 2024 entered into a strategic partnership with Calumet Electronics, a leading American printed circuit board manufacturer pioneering the domestic production of advanced packaging substrates. Through this strategic partnership, we are aligning efforts with Calumet to establish the first-ever US-based advanced substrate facility.

On April 17, 2024 we announced that Australian Flow Batteries Pty Ltd ("AFB"), a leader in innovative energy solutions and economical, safe, and reliable power storage, and SCHMID Energy Systems GmbH, one of our subsidiaries signed a memorandum of understanding in relation to a strategic partnership aimed at transforming the residential energy storage market. The memorandum of understing represents a collaborative effort to leverage AFB’s comprehensive approach to electricity independence and carbon footprint reduction. The common strategic goal is to develop and supply Vanadium-Redox-Flow-Battery systems. The agreement sets forth a joint development and supply framework for advancing the design, supply, and production of flow battery systems, with a focus on energy sustainability and innovation.

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Our independent registered public accounting firm, KPMG AG Wirtschaftsprüfungsgesellschaft, has not examined, compiled or otherwise applied procedures to the financial forecast presented herein and, accordingly, does not express an opinion or any other form of assurance on it.

BDO USA, P.C., Pegasus’s independent registered public accounting firm has not audited, reviewed, examined, compiled, nor applied agreed-upon procedures with respect to the financial projections contained in this Annual Report, and accordingly, BDO USA, P.C. does not express an opinion or any other form of assurance with respect thereto.

E. Critical Accounting Estimates

Our combined financial statements for the fiscal years ended December 31, 2023, 2022 and 2021, have been prepared in accordance with IFRS as issued by the IASB. The preparation of the combined 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 combined 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.

For more information on critical accounting estimates, see the notes of the Company’s combined financial statements, which are included in Item 18 of this Annual Report.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The information about SCHMID’s management is based on the provisions of SCHMID’s Articles of Association, which is included as an exhibit to this Annual Report.

Overview

The following table lists the names and positions of those individuals are SCHMID’s directors and executive officers.

Name	Position
Executive Officers
Christian Schmid	Chief Executive Officer
Julia Natterer	Chief Financial Officer
SCHMID Board of Directors
Prof. Dr. Sir Ralf Speth	Chairman, Non-executive Director (independent)
Christian Schmid	Executive Director
Anette Schmid	Non-executive Director
Dr. Stefan Berger	Non-executive Director (independent)
Boo-Keun Yoon	Non-executive Director (independent)
Christian Brodersen	Non-executive Director (independent)

The board of directors of the Schmid Group after the closing of the Business Combination consists of six members.

The business address for each of the directors and executive officers of the Company is Robert-Bosch-Str. 32-36, 72250 Freudenstadt, Germany.

Executive Officers

Christian Schmid is serving as the Company’s Chief Executive Officer and Executive Director of the Company’s board. Mr. Schmid has been a member of Gebr. Schmid management since 1998, where he acted as an assistant to the management board before becoming managing director in 2001. As the CEO of Schmid, Mr. Schmid has extensive experience in the development of high-tech machines and systems designed for surface treatment processes to be used across various industries including electronics, photovoltaics, glass and energy storage. Since 1998, Mr. Schmid has acted as managing director of many of Schmid’s subsidiaries and affiliates, including, as of the date of this Annual Report, SCHMID Asia Ltd. (1998-present), SCHMID China Ltd (2005-present), Schmid Verwaltungs GmbH (2009-present), Schmid Energy Systems GmbH (2011-2023), SCHMID Pekintas Günes Enerji Sistemleri San. Ve Tic. A.S. (2013-present), SCHMID Taiwan Ltd. (2016-present) and C. Schmid Beteiligungsverwaltung GmbH (2017-present). Mr. Schmid has also acted in the role of director for SCHMID Systems, Inc., SCHMID Automation (Zhuhai) Co. Ltd. (2017-present), SCHMID Avaco Korea Co. Ltd. (2018-present), Advanced Energy Storage Systems Investment Company (2020-2023) and SCHMID Technology (Guangdong) Co. Ltd. (2021-2023). Mr. Schmid began his career in the engineering space in 1984 as an engineering draftsman and received an advanced technical certificate in engineering following two years of military substitute service at Arbeiterwohlfahrt Freudenstadt. From 1996 until he joined the management team of Schmid, Mr. Schmid worked for Hahn & Kolb on the development and implementation of an internet-based c-parts supply system. Mr. Schmid has a business engineering degree from the Offenburg University of Applied Sciences and Arts (Fachhochschule).

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Julia Natterer serves as the Company’s Chief Financial Officer. Ms. Natterer holds a degree in Business Administration from the University of Regensburg and has over 20 years of experience. She acted across various managerial positions in finance, accounting and audit. Ms. Natterer has successfully passed the exams of a Certified Public Accountant in Germany (Wirtschaftsprüfer) and Tax Consultant in Germany (Steuerberater). Her main areas of expertise are the organization, management and advisory of industrial companies regarding the preparation and audit of financial statements, financing issues and tax matters. Ms. Natterer started her career in 2000 in the audit department of KPMG in Munich. In 2008, she became the Head of Finance of Convotherm Elektrogeräte GmbH where she held responsibilities for accounting, treasury, controlling, taxes as well as some IT responsibilities. When she joined SÜSS MicroTec in 2010 as Director of Finance & Controlling, she was additionally entrusted with M&A negotiations and post-merger integration and implementation. Ms. Natterer joined Schmid in 2021 as Chief Financial Officer.

The Board of Directors

See “— Executive Directors” for the biography of Christian Schmid.

Anette Schmid is a director of the Company’s board. Ms. Schmid has over 25 years of experience working for Schmid. Her main areas of expertise are strategic IT alignment, project systems, production, logistics, controlling, integrated value flows, interfaces, accounting conversion, selection consulting and audit support. From 2013 on, Anette Schmid was involved in the project management of selected projects with focus on IT, SAP (system analysis program development (Systemanalyse Programmentwicklung)) and controlling at Gebr. Schmid GmbH. Since 2011, she has been a co-owner of Gebr. Schmid GmbH and owner of Schmid Aequitas GmbH & Co. KG and Schmid Aequitas Verwaltung GmbH. From 1999 to 2012, Anette Schmid was SAP project manager and co-owner of untersee GmbH where she was involved in the implementation of integrated SAP systems in various companies in the machinery and plant engineering industry, such as Mannesmann-Rexroth AG, Putzmeister AG, Winkler+Dünnebier GmbH, Krones AG, Herrenknecht AG, Schmidt Technology GmbH, KACO new energy GmbH, TQ-Systems GmbH and others. Further, she worked at Gebr. Schmid GmbH in SAP activities in controlling and sub-project management in SAP system implementation, controlling and logistics from 1996 to 1998. In addition to her share in Gebr. Schmid GmbH, Anette Schmid is co-owner of Schmid Grundstücke GmbH & Co. KG and Schmid Grundstücksverwaltung GmbH since 2015. Anette Schmid has a bachelor’s degree in business administration.

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Prof. Dr. Sir Ralf Speth serves as the Chairman of board of directors of SCHMID. Prof. Dr. Sir Ralf Speth has over 40 years of operating, M&A and financing experience in the automotive and transportation-related sector. Prof. Dr. Sir Ralf Speth is considered to be an industry thought leader on the global need for energy transition and the technologies which will transform our energy infrastructure, most notably as it relates to hydrogen power and autonomous driving technologies. Since September 2020, Prof. Sir Ralf Speth has served as a non-executive director and the vice-chairman of the board of Jaguar Land Rover Automotive PLC, a British multinational automotive subsidiary of Tata Motors and a manufacturer of luxury vehicles and sport utility vehicles, and, as of October 2016, a member of the Board of Directors of Tata Sons, the principal holding company of more than 100 operating companies with a combined revenue of more than $100 billion. Prof. Dr. Sir Ralf Speth has also been a professor at the University of Warwick since 2014. As of March 2022, he serves as director of Swiss E, Mobility Group AG (SEMG). Prof. Dr. Sir Ralf Speth also serves as director of the Norton Motorcycle Company, a position he has held since March 2022. As of January 2021, Prof. Dr. Sir Ralf Speth serves as a strategic advisor to Bladon Micro Turbine Limited, a designer, developer and manufacturer of micro turbine gensets to serve the telecommunication market. In February 2021, he joined the strategic advisory board of FiveAI Limited, a developer of autonomous-vehicle technology. In October 2020, he joined the Board of Directors of TVS Motor Company, which is one of the top 5 global manufacturers of two- and three-wheelers. He became the company’s Chairman in January 2023. In March 2021, he joined the supervisory board of FEV Group, the internationally recognized vehicle development services provider with more than 6,000 employees globally who deliver solutions around innovative vehicle powertrains and electrification, intelligent & connected mobility, and vehicle software and connectivity solutions. In March 2021, he began serving as a strategic advisor to Haro, a manufacturer of hardwood and laminate flooring. He became a member of Haro’s board of directors in September 2021. In July 2021, he began serving as a strategic advisor for Luminar Technologies, Inc. (Nasdaq: LAZR), a developer of advanced sensor technologies for the autonomous-vehicle industry. In July 2021, Prof. Dr. Sir Ralf Speth became a strategic advisor for CT Charlton USA, a company that serves as sales liaison for manufacturers that supply products for some of the world’s largest automotive groups. In addition, as of January 2020, he serves as a strategic advisor to Continuum Life Sciences, a non-profit focused on cancer research. Prof. Dr. Sir Ralf Speth also served as the Chief Executive Officer of Jaguar Land Rover from February 2010 to September 2020, helping the company grow substantially over this period, including leading its push into new markets, and establishing factories in China, Slovakia, Brazil and India. Prof. Dr. Sir Ralf Speth also spearheaded Jaguar Land Rover’s car line-up expansion, introducing highly successful models like the Range Rover Evoque, Range Rover Velar, Defender, and the award winning, electric Jaguar I-Pace, the first luxury e-SUV and triple 2019 World Car of the Year. Prior to joining Jaguar Land Rover, Prof. Dr. Sir Ralf Speth held positions as Executive Director of the Material Handling Division and Global Head of Production, both at the Linde Group (NYSE: LIN), a global leader in both clean hydrogen and in H2 refueling stations for cars, trucks, trains, forklifts and buses and engineering company with 2020 sales of $27 billion, Director of Production, Quality and Product Planning at the Ford Motor Company’s PAG before the division’s sale to Tata Motors in 2010. Prior to joining Ford, Prof. Dr. Sir Ralf Speth spent over 20 years at BMW Group, a world leading premium manufacturer of automobiles and motorcycles with its four brands BMW, MINI, Rolls-Royce and BMW Motorrad, working across various executive and managerial positions. Prof. Dr. Sir Ralf Speth has been a member of the Royal Academy of Engineering since 2014. In 2015, Prof. Dr. Sir Ralf Speth was appointed an honorary Knight Commander of the Order of the British Empire for his services to the UK automotive industry. In August 2019, the award was made substantive following Prof. Dr. Sir Ralf Speth becoming a British citizen. In May 2020, Prof. Dr. Sir Ralf Speth was elected a Fellow of the Royal Society. Prof. Dr. Sir Ralf Speth was awarded a degree in Engineering from the University of Applied Sciences Rosenheim, Germany. Additionally, Prof. Dr. Sir Ralf Speth received a Doctorate of Engineering in Mechanical Engineering and Business Administration from the University of Warwick. Over the course of his distinguished career in the transportation industry, Prof. Dr. Sir Ralf Speth has been the recipient of a number of recognitions and awards, including Auto Best 2014, Winner; Auto Express. Winner, 2014; Hall of Fame, 2014; Automotive News Europe. ALL STAR, 2014; Coventry Award of Merit, 2014; Future Manufacturing Award, 2013; Fellow of the Royal Academy of Engineering, 2014; Issigonis Trophy, 2017; MANBEST 2013, Warsaw; The Institution of Engineering and Technology, IET. Gold Medal, 2011; The Outstanding Industrialist, 2013; and Trophée d’Or, Logistique Européenne, Elancourt, France.

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Dr. Stefan Berger serves as director of the Company’s board. Dr. Berger has over 15 years of experience in global blue-chip and family-owned companies across multiple geographies and sectors, including Automotive OEMs and Suppliers, Commodities, Healthcare, Publishing, Telecommunications, Fashion and Consumer Goods. In August 2021, he began serving on the Strategic Board of Advisors of Skyworks Aeronautics Corp., a designer and developer of high-performance gyroplanes. From October 2017 to June 2021, Dr. Berger served as Director of Electrification at Jaguar Land Rover Limited, a British multinational automotive subsidiary of Tata Motors and a manufacturer of luxury vehicles and sport utility vehicles, where he was responsible for the company’s off-board electrification activities in the field of charging services for electric vehicles and battery second life. Dr. Berger laid the foundation for Jaguar Land Rover’s transformation to electrified vehicles by driving the electric product plan and overall strategy. In his role he also served as a trustee on the Board of The Faraday Institution from January 2018 to March 2020. The Faraday Institution is part of the UK government funded $350 million Faraday Challenge, an initiative to develop, design and manufacture world-leading batteries in the UK. Prior to Jaguar Land Rover, from May 2016 to September 2017 and June 2013 to February 2014, Dr. Berger served as Vice President to the Chairman’s Office at Tata Sons, the principal holding company of more than 100 operating companies with a combined revenue of more than $100 billion. In this role, Dr. Berger worked closely with Group companies including Tata Motors and Jaguar Land Rover on the development and implementation of strategic and operational plans on behalf of the Group Chairman. Prior to his role at Tata Sons, Dr. Berger Co-founded Visioning, the private investment and consulting office of Prof. Dr. Wolfgang Reitzle, where he served as a Managing Director from May 2014 to March 2016. From November 2010 to May 2013 Dr. Berger held the role of Director Corporate Strategy at Jaguar Land Rover where he helped the company to set up its JV in China and drove Jaguar Land Rover’s strategy. Before that he was Executive Assistant of the CEO of the Linde Group (NYSE: LIN), a global leader in both clean hydrogen and in H2 refueling stations for cars, trucks, trains, forklifts and buses and engineering company with 2020 sales of $27 billion, Prof. Dr. Wolfgang Reitzle. Dr. Berger earned a degree in Business Administration and Information Systems from the University of Passau and went on to complete a doctoral thesis in Information Systems from the University of Regensburg (Institute of Information Systems) & Bavarian Research Cooperation on Information Systems.

Boo-Keun Yoon serves as director of the Company’s board. Mr. Yoon holds a bachelor’s degree in electrical engineering from Hanyang University and has 45 years of experience at Samsung Electronics. He began his career at Samsung Electronics in November 1978 as a TV engineer and has worked in Korea, Germany and the UK. In January 1999, he was promoted to the executive level of the Global Operations Team for Samsung’s Visual Display Business. Beginning in January 2007, Mr. Yoon acted as Vice President and Head of the Visual Display Business, and in January 2009 he was promoted to President and Head of the division. In 2011 he was appointed to the role of President and Head of the Consumer Electronics Division and concurrently served as Head of the Digital Appliances Business. He was promoted to President and CEO of the Consumer Electronics Division in March 2013. In November 2017, he was appointed to Vice Chairman and CEO. Since May 2018, he has worked as Vice Chairman for the Corporate Relations Department. In addition, he has acted as Vice Chairman of the Korean Chamber of Commerce and Industry as well as the Korean Enterprise Federation. From January 2020 until 2023, he also worked as senior advisor at Samsung Electronics. Over time, Mr. Yoon has been honored with several awards, inter alia, the Order of Science and Technology Merit of the President of Korea in April 2007.

Christian Brodersen serves as director of the Company’s board. Mr. Brodersen holds a degree in law from the Goethe University of Frankfurt am Main and also studied law in Geneva. He is a fully qualified lawyer admitted to the bar in Germany. In addition, he earned a Master of Law degree from the London School of Economics. From 1976 until 1981, he worked as an attorney in the Tax and Legal Department of the auditing company Coopers & Lybrand in Frankfurt am Main. Mr. Brodersen became a qualified tax consultant (Steuerberater) in Germany in 1980 and a qualified and certified public accountant (Wirtschaftsprüfer) in Germany in1982. From 1981 on, he worked as associated attorney in the international law firm Baker McKenzie in Frankfurt am Main and in 1987 became partner. He was additionally appointed as notary public in Frankfurt am Main from 1991 through 2018 when he reached the legal retirement age for a notary public, Mr. Brodersen retired as partner in 2020.

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Board Diversity

The table below provides certain information regarding the diversity of the Board as of the date of this Annual Report:

Board Diversity Matrix
Country of Principal Executive Offices:	Germany
Foreign Private Issuer	Yes
Disclosure Prohibited under Home Country Law	No
Total Number of Directors	6
Part I: Gender Identity
Directors	Female: 1
	Male: 5
	Non-Binary: 0
	Did not disclosure gender: 0
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction	1
LGBTQ+	0
Did Not Disclose Demographic Background	0

Leadership Diversity

We have not made any determination on the diversity of our leadership team as of December 31, 2023.

Family Relationships

Christian Schmid and Anette Schmid are siblings.

B. Compensation

Compensation of Board Members

The Board of Directors have not yet received any compensation following the closing of the Business Combination.

Anette Schmid is an employee of Gebr. Schmid (for information on her compensation, see below under “Non-executive Directors Compensation”).

Upon the closing of the Business Combination, the Schmid Group entered into indemnification agreements with its directors and executive officers.

Share Ownership of Executive Officers and Non-Executive Directors

See the section entitled “Item 7. Major Shareholders and Related Party Transactions” below.

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Equity Incentive Plan

We intend to put in place an equity incentive plan which may cover the directors and executives, but could also cover our employees. As of the date of this Annual Report, the Board of Directors has not yet resolved on the implementation of any equity incentive plan. We currently intend to use up to 2,500,000 shares of the Company for such an equity incentive plan.

Adoption of Clawback Policy

In accordance with Rule 10D-1 promulgated under the Exchange Act and Nasdaq Listing Rule 5608, we adopted an Incentive Compensation Recoupment Policy which is filed herewith as Exhibit 97.1

Arrangements with Executive Officers

Christian Schmid Compensation

On April 30, 2024, it was resolved to establish and approve, subject to the adoption of the Compensation Policy and with effect as per April 30, 2024, the following compensation for Mr Christian Schmid as an executive director:

● an annual fixed amount of EUR 606,363 and an annual fee of EUR 70,000 (the annual fixed amount will be increased with 3.3% as of May 1, 2024);

● an annual short-term bonus of up to 30% of the annual fixed amount, based (i) on the Company's consolidated EBIT margin, and (ii) certain individual targets set out by the compensation committee:

o Mr Christian Schmid will receive EUR 11,000 for each percentage point of consolidated EBIT margin achieved by the Company (on a pro rata basis, i.e. if the Company’s consolidated EBIT margin is 1.5%, Mr Christian Schmid will receive EUR 16,500); and

o Mr Christian Schmid will receive EUR 25,000 if he fulfils his individual targets: for the year 2023 the individual target was achieved with the conclusion of the business combination agreement; for the year 2024 the individual target is achieved once the Company’s listing on the NASDAQ has been completed; and

o If the EBIT margin is negative, an amount of EUR 11,000 per negative percentage point of the consolidated EBIT margin achieved by the Company in the financial year 2024 will be deducted from this EUR 25,000 short-term bonus (on a pro rata basis as set out above), provided that the short-term bonus cannot be less than EUR 0; and

● the following additional allowances: schooling costs, travelling expenses and a company car, if requested by Mr Christian Schmid.

Julia Natterer Compensation

Julia Natterer’s compensation for her role as CFO includes the following:

● an annual fixed amount of EUR 189,360 and an annual service fee of EUR 35,000 (the annual fixed amount will be increased with 3.3% as of May 1, 2024);

● an annual short-term bonus of up to 50% of the annual fixed amount, based (i) on the Company's consolidated EBIT margin, and (ii) certain individual targets as follows: (i) EUR 4,500 for each percentage point of consolidated EBIT margin achieved by the Company (on a pro rata basis) and (ii) EUR 15,000 for individual targets if she fulfils her individual targets: for the year 2023 the individual target was achieved with the conclusion of the business combination agreement; for the year 2024 the individual target is achieved once the Company's listing on the NASDAQ has been completed; and if the EBIT margin is negative, a deduction.

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● the following additional allowances: a company car, if requested by Ms. Julia Natterer.

Christian Schmid Service Agreements

In April 2024, the Company entered into a services agreement with Christian Schmid. The services agreement provides for, among other things, a service fee of €70,000.

Julia Natterer Service Agreement

In April 2024, the Company entered into a services agreement with Julia Natterer. The services agreement provides for, among other things, a service fee of €35,000.

Non-Executive Director Compensation

In connection with the Business Combination, we adopted a Board member compensation policy, as amended, which governs the compensation of our executive and non-executive directors. The terms and conditions of the Board member compensation policy that are applicable to non-executive directors are designed to attract and retain high quality non-executive Board members by providing competitive compensation and aligning their interests with the interests of shareholders through equity awards. On April 30, 2024 the following compensations have been resolved (subject to the formal adoption of the compensation policy) as the annual compensation for the non-executive directors:

● Mr. Stefan Berger: EUR 90,000;

● Mr. Ralf Speth: EUR 165,000;

● Mr. Christian Brodersen: EUR 115,000;

● Mr. Boo-Keun Yoon: EUR 90,000, and

● Ms. Anette Schmid:

o Anette Schmid will receive a fixed annual fee of EUR 95,000;

o an annual base salary for the operational tasks she will perform for the Company or its subsidiaries of EUR 244,567 (the annual base salary will be increased bz 3.3% as of May 1, 2024 and this annual base salary is subject to an increase equal to the increase that all employees of Gebr. Schmid GmbH may receive from time to time due to the discretion of management);

o a short-term bonus of up to 50% of the annual base salary based on the Company's consolidated EBIT margin and certain individual targets set out by the management:

◾ Ms Anette Schmid will receive EUR 10,000 for each percentage point of consolidated EBIT margin achieved by the Company (on a pro rata basis, i.e. if the Company's consolidated EBIT margin is 1.5%, Ms Anette Schmid will receive EUR 15,000); and

◾ Ms Anette Schmid will receive EUR 25,000 if she fulfils her individual targets: for the year 2023 the individual target was achieved with the conclusion of the business combination agreement; for the year 2024 the individual target is achieved once the Company's listing on the NASDAQ has been completed; and

◾ If the EBIT margin is negative, an amount of EUR 10,000 per negative percentage point of consolidated EBIT margin achieved by the Company will be deducted from this EUR 25,000 short-term bonus (on a pro rata basis as set out above), provided that the short-term bonus cannot be less than EUR 0; and

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o a company car, if requested by Ms Anette Schmid.

Home Country Compliance

As a foreign private issuer, in accordance with NASDAQ listing requirements, we comply with home country compensation requirements and certain exemptions thereunder rather than complying with NASDAQ compensation requirements. Dutch law does not provide for limitations with respect to the aggregate annual compensation paid to Directors, such compensation should however be consistent with our compensation policy. Such compensation policy was adopted by the General Meeting. Changes to such compensation policy require a vote of the General Meeting by simple majority of votes cast. The Board determines the remuneration of individual Directors with due observance of the compensation policy. A proposal with respect to remuneration schemes in the form of shares or rights to shares in which Directors may participate is subject to approval by the General Meeting by simple majority of votes cast. Such a proposal must set out at least the maximum number of shares or rights to subscribe for shares to be granted to the Directors and the criteria for granting or amendment. Our compensation policy authorizes the Board to determine the amount, level and structure of the compensation packages of the Directors at the recommendation of our compensation committee. These compensation packages may consist of a mix of fixed and variable compensation components, including base salary, short-term incentives, long-term incentives, fringe benefits, severance pay and pension arrangements, as determined by the Board.

C. Board Practices

Board Structure

Subject to our articles of association, the Board is charged with the management of the Company. In fulfilling their duties, our directors serve the interest of the Company and the business connected with it. Supervision of the fulfillment of duties by the executive directors and of the general course of our affairs and our business are primarily carried out by the non-executive directors. The executive directors must in due time provide the non-executive directors with the information they need to carry out their duties.

The Board consists of one executive directors and five non-executive directors. The total number of directors, including the number of executive directors and non-executive directors, may be increased or decreased pursuant to a resolution of the Board. The Board is a one-tier board.

Under our articles of association, our executive and non-executive directors will be appointed by the General Meeting at the binding nomination of the non-executive directors and for such term as proposed by the non-executive directors, provided that a director must retire at the close of the first annual General Meeting following the expiry of the term of their appointment. A director may be reappointed one or more times.

The General Meeting may at all times overrule the binding nature of each nomination by at least a two-thirds (2/3) majority of the votes cast, provided such majority represents more than half of the issued share capital of the Company (a “General Meeting Supermajority”). If the General Meeting overrules a binding nomination, the non-executive directors will make a new nomination and a new General Meeting will be called at which the resolution for appointment of a director will require at least a General Meeting Supermajority. If a nomination for such a director has not been made or has not been made in due time, this will be stated in the notice of the General Meeting, and the General Meeting will be free to appoint a director at its discretion by the resolution of a General Meeting Supermajority.

Under our articles of association, the General Meeting may at any time suspend or dismiss a non-executive director or executive director. The General Meeting may only adopt a resolution to suspend or dismiss a director by a General Meeting Supermajority, unless the resolution is adopted on the basis of a proposal by the Board; in that case, the resolution may be adopted by an absolute majority of the votes cast, representing more than half of the issued share capital of the Company.

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Director and Officer Qualifications

We have not established any specific, minimum qualifications that must be met by each of our directors and officers. However, we generally evaluate the following qualities: educational background, diversity of professional experience, including whether the person is a current or was a former chief executive officer or chief financial officer of a public company or the head of a division of a prominent international organization, knowledge of our business, integrity, professional reputation, independence, wisdom and ability to represent the best interests of our shareholders and stakeholders.

Appointment Term

The initial Directors have been appointed for four years.

Committees of the Board

The Board has established three standing committees, including Audit Committee, Compensation Committee and Nomination and Corporate Governance Committee.

Audit Committee

The audit committee consists of Christian Brodersen (Chairperson of audit committee), Boo-Keun Yoon and Stefan Berger. The audit committee will assist the Board in overseeing the Company’s accounting and financial reporting processes and the audits of its financial statements. Christian Brodersen serves as chairperson of the audit committee. In addition, the audit committee is responsible for the appointment, compensation, retention and oversight of the work of Schmid’s independent registered public accounting firm. The Board has determined that Christian Brodersen satisfies the “independence” requirements set forth in Rule 10A-3 under the Exchange Act and qualifies as an “audit committee financial expert,” as such term is defined in the rules of the SEC. The composition of our audit committee is consistent with the best practice provisions of the Dutch Corporate Governance Code (“DCGC”).

We intend to rely on the phase in rules of the SEC and NASDAQ with respect to the independence of our audit committee. These rules require that all members of our audit committee must meet the independence standard for audit committee membership within one year of the effectiveness of the completion of the Business Combination.

The audit committee is governed by a charter that complies with applicable NASDAQ rules and that is posted on the Company’s website.

Compensation Committee

The compensation committee consists of Christian Brodersen, Anette Schmid and Ralf Speth. The compensation committee assists the Board in determining compensation for the Company’s executive officers and the Directors. The composition of our compensation committee is consistent with the best practice provisions of the Dutch Corporate Governance Code (DCGC). Christian Brodersen serves as chairperson of the compensation committee.

Under SEC and NASDAQ rules, there are heightened independence standards for members of the compensation committee, including a prohibition against the receipt of any compensation from the Company other than standard director fees.

The compensation committee is governed by a charter that is posted on the Company’s website.

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Nomination Committee

The nomination and corporate governance committee consists of Christian Brodersen, Anette Schmid and Ralf Speth. The nomination committee assists the Board in identifying individuals qualified to become Directors consistent with criteria established by the Company and in developing our code of business conduct and ethics. Christian Brodersen serves as chairperson of the nomination committee. The composition of our nomination committee is consistent with the best practice provisions of the DCGC.

The nomination committee is governed by a charter that is posted on our website.

D. Employees

We believe that our employees are crucial to the success of our business, which depends on our human capital and a strong leadership team. We aim to attract, retain and develop staff with the skills, experience and potential necessary to implement our growth strategy. Our human capital resources objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and new employees. As of December 31, 2021, we has approximately 800 employees. We have not experienced any work stoppages, and we consider our relationship with our employees to be good.

E. Share Ownership

Information regarding the ownership of our Ordinary Shares by our Directors and executive officers is set forth in Item 7.A of this Annual Report.

F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation

Not applicable.

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

The table below sets forth information regarding the beneficial ownership of Schmid Group Shares immediately following the consummation of the Business Combination by:

● each person, or group of affiliated persons, known by us to beneficially own more than 5% of our outstanding ordinary shares;

● each of our directors;

● each of our executive officers; and

● all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. Each person named in the table has sole voting and investment power with respect to all of the ordinary shares shown as beneficially owned by such person, except as otherwise indicated in the table or footnotes below.

Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all shares beneficially owned by them. To our knowledge, no shares beneficially owned by any executive officer, director or director nominee have been pledged as security.

Except for Pegasus Digital Mobility Sponsor LLC (the Sponsor), the business address of each person named below is c/o SCHMID Group., Robert-Bosch-Str. 32-36, 72250 Freudenstadt, Germany.

	Post-Business Combination
		% Voting		%  Share Ownership
Beneficial Owner	Number of Shares	Power(4)		(Disposition Power)(4)
Executive Officers and Directors(1)
Christian Schmid(2)	6,894,000	18.15	%	18.15	%
Anette Schmid(2)	6,894,000	18.15	%	18.15	%
Prof. Sir Ralf Speth(3)	185,000	0.49	%	0.49	%
Dr. Stefan Berger(3)	177,084	0.47	%	0.47	%
5% and Greater Shareholders
Christian Schmid(2)	6,894,000	18.15	%	18.15	%
Anette Schmid(2)	6,894,000	18.15	%	18.15	%
Community of Heirs(5)	14,937,000	39.33	%	39.33	%
Pegasus Digital Mobility Sponsor LLC(6)	2,453,508	6.5	%	6.5	%

(1) Boo-Keun Yoon and Christian Brodersen do not own any shares as of the date of this Annual Report.

(2) Does not include 5,000,000 earn-out shares which existed at the closing of the Business Combination, but for which Christian Schmid and Anette Schmid do not have the voting power or disposition power until USD 15.00 per share (for 2,500,000 shares), respectively, USD 18.00 per share (for the remainder of 2,500,000 shares) are reached. Christian Schmid and Anette Schmid are also holding 1,000,000 private warrants each, which can be converted into shares of the Company on a 1:1 basis or converted on a cashless basis. In addition, Christian Schmid and Anette Schmid will each receive an additional 1,000,000 private warrants from Pegasus Digital Mobility Sponsor LLC within nine (9) months of the closing of the Business Combination (or earlier in case the Company refinances itself with a loan of at least €10 million) in accordance with the warranty agreement concluded on April 29, 2024.

(3) On April 30, 2024, Dr. Stefan Berger, Prof. Sir. Ralf Speth and Jeremey Mistry entered into a warrant and share transfer agreement with Pegasus Digital Mobility Sponsor LLC in which they agreed to transfer 2,000,000 private warrants to Pegasus Digital Mobility Sponsor LLC in exchange of 200,000 shares in the Company of which Jeremey Mistry was allocated 100,000 shares and Dr. Stefan Berger was allocated the other 100,000 shares. No shares were allocated to Prof. Sir Ralf Speth under this warrant and share transfer agreement.

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(4) The voting power calculation and share ownership (disposition power) calculation is based on the total number of shares outstanding on the closing date of the Business Combination of 37,974,862 shares (not including the 5,000,000 earn-out shares for which Christian Schmid and Anette Schmid do not hold any voting power or disposition power as of the date of this Annual Report). In addition, the calculations do not account for any warrants (which can be converted into shares on a 1:1 basis or on a cashless basis in the future).

(5) Christian Schmid and Anette Schmid are the sole beneficiaries of the Community of Heirs after Dieter C. Schmid (Erbengemeinschaft). The aggregate shareholding of Anette Schmid, Christian Schmid and the Community of Heirs is 28,725,000 (not including the earn-out shares) which as of the closing of the Business Combination constituted 75.6% of the voting power and share ownership in the Company.

(6) Based on information available to the Company on the closing of the Business Combination, Pegasus Digital Mobility Sponsor LLC owned 975,000 shares (former founder shares of Pegasus, based on transfers between the directors and officers of Pegasus and Pegasus Digital Mobility Sponsor LLC agreed on May 31, 2023), 756,964 new shares issued by the Company against set-off of approximately €8.6 million in debt owed to Pegasus Digital Mobility Sponsor LLC and an additional retained 921,544 shares which were part of the 2,812,500 incentive shares to be used for investment agreements. On April 30, 2024, Dr. Stefan Berger, Prof. Sir. Ralf Speth and Jeremey Mistry entered into a warrant and share transfer agreement with Pegasus Digital Mobility Sponsor LLC in which they agreed to transfer 2,000,000 private warrants to Pegasus Digital Mobility Sponsor LLC in exchange of 200,000 shares in the Company.

Due to the fact that some of our shares are held by brokers and other nominees, the number of our shares held by, and the number of, beneficial holders with addresses in the U.S. is not fully ascertainable. As of April 30, 2024, according to the records of our transfer agent Continental Stock Transfer & Trust Company, 1,461,537 shares were held through Cede & Co, the nominee of The Depository Trust Company, in whose name all shares held in “street name” are held in the U.S. Of the other shares, 28,725,000 shares (and in addition 5,000,000 earn out shares) are held by non-US persons as they are held by Christian Schmid, Anette Schmid and the Community of Heirs, 1,406,361 are held by XJ Harbour HK Limited which is a non-US person. The remainder of the shares are held by a mix of U.S. and non-U.S. persons.

B. Related Party Transactions

See also Note 35 of our combined financial statements included elsewhere in this Annual Report for a description of certain transactions with related parties required to be disclosed under IFRS.

Christian Schmid and Anette Schmid are holders of private warrants and are major shareholders of the Company, see “Item 7 Major Shareholders and Related Party Transactions — A. Major Shareholders."

For a description of our remuneration agreements with members of the Board and senior management, see the section titled “Item 6. Directors, Senior Management and Employees — B. Compensation.”

We have adopted a code of business conduct that prohibits directors and executive officers from engaging in the decision-making process relating to transactions in which such director or officer has a conflict of interest. Consistent with Dutch law, if the Board must approve a transaction in which a director has a conflict of interest, such transaction can only be effected if it has been approved by a majority of the Board (including a majority of independent directors) not otherwise interested in the transaction and such transaction must be fair and reasonable to the Company and on terms not less favorable to the Company than those available from unaffiliated third parties.

C. Interests of Experts and Counsel

Not Applicable.

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ITEM 8. FINANCIAL INFORMATION.

A. Consolidated Statements and Other Financial Information.

See Item 18 of this Report for the combined financial statements and other financial information.

Legal Proceedings

From time to time, we may be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. The results of litigation and claims cannot be predicted with certainty. As of the date of this Annual Report, neither we nor any of our subsidiaries are party to any governmental, legal or arbitration proceedings (nor are we aware of any such proceedings that are pending or threatened) that have had or may have a significant effect on our financial position or profitability.

Please see “Item 4. Information on the Company — B. Business Overview.” For more information on legal proceedings.

Dividends and Dividend Policy

We have never paid or declared any cash dividends in the past, and we do not anticipate paying any cash dividends in the foreseeable future. We intend to retain all available funds and any future earnings to fund the further development and expansion of our business. Under Dutch law, we may only pay dividends and other distributions from our reserves to the extent our shareholders’ equity (eigen vermogen) exceeds the sum of our paid-in and called-up share capital plus the reserves we must maintain under Dutch law or the Articles of Association and (if it concerns a distribution of profits) after adoption of our statutory annual accounts by the General Meeting from which it appears that such dividend distribution is allowed. Subject to those restrictions, any future determination to pay dividends or other distributions from our reserves will be at the discretion of the Board and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors we deem relevant. See “Item 8 Financial Information — B. Dividends and Dividend Policy.”

Under the Articles of Association, the Board may decide that all or part of the profits shown in our adopted statutory annual accounts will be added to our reserves. After reservation of any such profits, any remaining profits will be at the disposal of the General Meeting at the proposal of the Board for distribution on the Ordinary Shares, subject to applicable restrictions of Dutch law. The Board is permitted, subject to certain requirements and applicable restrictions of Dutch law, to declare interim dividends without the approval of the General Meeting. Dividends and other distributions shall be made payable no later than a date determined by the Board. Claims to dividends and other distributions not made within five years from the date that such dividends or distributions became payable will lapse and any such amounts will be considered to have been forfeited to us (verjaring).

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We may reclaim any distributions, whether interim or not interim, made in contravention of certain restrictions of Dutch law from shareholders that knew or should have known that such distribution was not permissible. In addition, on the basis of Dutch case law, if after a distribution we are not able to pay our due and collectable debts, then our shareholders or directors who at the time of the distribution knew or reasonably should have foreseen that result may be liable to our creditors. We have never declared or paid any cash dividends and we have no plan to declare or pay any dividends in the foreseeable future on our Ordinary Shares. We currently intend to retain any earnings for future operations and expansion.

Since we are a holding company, our ability to pay dividends will be dependent upon the financial condition, liquidity and results of operations of, and our receipt of dividends, loans or other funds from, our subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation to make funds available to us. In addition, there are various statutory, regulatory and contractual limitations and business considerations on the extent, if any, to which our subsidiaries may pay dividends, make loans or otherwise provide funds to our company.

B. Significant Changes

A discussion of significant changes since December 31, 2023, is provided under Item 4 and Item 5 of this Report and is incorporated herein by reference.

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ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

Nasdaq Listing of Schmid Group Ordinary Shares and Public Warrants

The Schmid Group Ordinary Shares and Public Warrants are listed on Nasdaq under the symbol “SHMD” and “SHMD.WS”, respectively. Holders of Schmid Group Ordinary Shares and Public Warrants can obtain current market quotations for their securities. There can be no assurance that the Schmid Group Ordinary Shares and/or Public Warrants will remain listed on Nasdaq. If Schmid Group fails to comply with the Nasdaq listing requirements, the Schmid Group Ordinary Shares could be delisted from Nasdaq.

The information set forth in Exhibit 2.1 “Description of Securities” is incorporated herein by reference.

B. Plan of Distribution

Not applicable

C. Markets

The Schmid Group Ordinary Shares and Public Warrants are listed on Nasdaq under the symbol “SHMD” and “SHMD.WS”, respectively. Holders of the Schmid Group Ordinary Shares can obtain current market quotations for their securities. There can be no assurance that the Schmid Group Ordinary Shares will remain listed on Nasdaq. If Schmid fails to comply with the Nasdaq listing requirements, the Schmid Group Ordinary Shares and the warrants of Schmid could be delisted from Nasdaq. A delisting of the Schmid Group Ordinary Shares will likely affect the liquidity of the Schmid Group Ordinary Shares and could inhibit or restrict the ability of Schmid to raise additional financing.

D. Selling Shareholders

Not applicable

E. Dilution

Not applicable

F. Expenses of the Issue

Not applicable

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ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

As of the date of this Report, the Schmid Group has an issued share capital in the amount of €0.01 per issued share.

Under Dutch law, the Schmid Group’s authorized share capital of a public limited liability company is the maximum capital that the Schmid Group may issue without amending the Schmid Group’s Articles of Association and may be a maximum of five times the issued capital. An amendment of the Schmid Group Articles of Association would require a resolution of Schmid Group’s General Meeting upon proposal by the Schmid Group’s Board. The Schmid Group Articles of Association provide for an authorized share capital amounting to €0.01.

As of the Closing Date, none of the Schmid Group Shares were held by Schmid in treasury.

All issued and outstanding Schmid Group Shares are held in registered form. No share certificates may be issued.

B. Memorandum and Articles of Association

The information set forth in Exhibit 2.1 “Description of Securities” and the copy of our Amended and Restated articles of association filed as Exhibit 1.1, which are each incorporated herein by reference.

C. Material Contracts

Except as otherwise disclosed in this Annual Report (including the exhibits thereto), we are not currently, and have not been in the last two years, party to any material contract, other than contracts entered into in the ordinary course of business.

Material Contracts Relating to the Business Combination

Business Combination Agreement

On May 31, 2023, Pegasus, Schmid, TopCo and Merger Sub entered into the Business Combination Agreement which was amended by that First Amendment to Business Combination Agreement dated as of September 26, 2023 and which was further amended by the Second Amendment to Business Combination Agreement dated as of January 29, 2024, and which provided for, among other things, that Pegasus was selling TopCo to the shareholders of Gebr. Schmid GmbH for nominal consideration; the shareholders of Schmid were contributing their shares in Gebr. Schmid GmbH to TopCo in return for 28,725,000 TopCo shares; Pegasus then merged with Merger Sub, with Pegasus as the surviving company. In connection with the merger, each issued and outstanding share of Pegasus were, as a result of the Business Combination Agreement, automatically cancelled and extinguished in exchange for merger consideration and each outstanding warrant to purchase a Pegasus Class A share was, by its terms, converted into a warrant to purchase one TopCo share, on the same contractual terms and conditions as were in effect with respect to such warrants immediately prior to the closing of the merger; and immediately thereafter, a notarial deed was agreed to be executed by a Dutch notary in order to change the legal form of TopCo from a private limited liability company to a public limited liability company and its name changed to SCHMID Group N.V. The events set out in the Business Combination Agreement were completed on April 30, 2024.

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Earn-out Agreement

In connection with the execution of the Second Amendment to Business Combination Agreement, Pegasus, TopCo and Anette Schmid and Christian Schmid entered into an earn-out agreement pursuant to which (i) 2,500,000 TopCo shares are issued to Anette Schmid and Christian Schmid (in equal parts) and vest if the share price of TopCo following the completion of the Business Combination reaches USD 15.00 and (ii) 2,500,000 TopCo shares are issued to Anette Schmid and Christian Schmid (in equal parts) and vest if the share price of TopCo following the completion of the Business Combination reaches USD 18.00 (the “Earn- out Agreement”). The Earn-out Agreement expires after three (3) years from the date of the closing of the Business Combination.

Shareholders’ Undertaking

In connection with the Business Combination Agreement, Pegasus and the existing shareholders of Schmid entered into a Shareholders’ Undertaking pursuant to which, among other things, each such existing shareholder of Schmid (a) granted or will grant, as applicable, Schmid and TopCo with a power of attorney permitting and directing Schmid and/or TopCo to execute the necessary transfer documents (on behalf of such existing shareholder of Schmid), required pursuant to Dutch and German law, to effect the closing of the Business Combination Agreement, (b) undertook, vis-à-vis the Company, TopCo, Pegasus and each other existing shareholder of Schmid to take all necessary or desirable actions in connection with the transactions set forth in the Business Combination Agreement and (c) agreed, to certain customary covenants to support the Business Combination.

In the First Amendment to the Shareholders’ Undertaking, the parties agreed that Christian Schmid can transfer up to 1.5% of the shares in Schmid prior to the closing of the Business Combination, subject to such third party acceding to the lock-up arrangements and other obligations in relation to such shares.

Sponsor Support Agreement

In connection with their entry into the Business Combination Agreement, the Sponsor, Pegasus, TopCo and Schmid and certain individuals entered into the Sponsor Support Agreement, pursuant to which the Sponsor and other holders of founder shares have agreed (a) to vote in favor of  the Business Combination Agreement and the transactions contemplated thereby and take all actions reasonably necessary to cause the closing of the Business Combination, including execution of the TopCo Ordinary Shareholder approval and (b) forfeit 2,812,500 Pegasus Class B Ordinary Shares that would otherwise have converted into TopCo Ordinary Shares in connection with the Merger for no consideration which may be used for incentives for non- redemption agreements or for PIPE investors (and if not used for such purposes, will be cancelled).

Lock-Up Letter and Agreements to Remove Lock-ups

In connection with the Business Combination Agreement, TopCo, the Sponsor and the existing shareholders of Schmid entered into a Lock-Up Letter imposing certain restrictions on such shareholders ability to offer, sell, pledge or otherwise transfer or dispose of the shares they will receive in TopCo unless and until certain conditions outlined therein are met.

On February 27, 2024, Pegasus, the Sponsor, Schmid, TopCo, and certain members of the board of directors and management of Pegasus entered into an agreement pursuant to which 2,812,500 Pegasus Class B Ordinary Shares are to be used as incentives to entice existing holders of Pegasus Class A Shares or new investors to enter into non-redemption and investment agreements. In order to enable the use of such Pegasus Class B Ordinary Shares, the agreement also lifts and waives the lock-up periods applicable thereto as well as any restrictions on the transfer of such shares.

Furthermore, on April 29, 2024, Pegasus, the Sponsor and TopCo agreed to also lift and waive the lock-up periods applicable to 1,375,000 shares held by certain 2021 IPO anchor investors in order to increase the freefloat of the Company after the closing of the Business Combination.

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Registration Rights Agreement

At the closing of the Business Combination, TopCo has entered into a Registration Rights Agreement with Pegasus, Sponsor, XJ Harbour and Schmid shareholders providing for, among other things, subject to the terms thereof, customary registration rights. TopCo has agreed to file a shelf registration statement to register the TopCo Ordinary Shares covered by the Registration Rights Agreement no later than thirty days following consummation of the Business Combination.

Warrant Assumption Agreement

In connection with the Business Combination Agreement, TopCo, Pegasus and Continental Stock and Transfer & Trust Company will, prior to Closing, enter into a Warrant Assignment, Assumption and Amendment Agreement, pursuant to which the parties will agree that, as part of the Merger, each Pegasus Public Warrant and Private Placement Warrant that is outstanding immediately prior to the effective time of the Merger shall cease to represent a right to acquire Pegasus Class A Ordinary Shares and shall automatically represent, immediately following the Merger, a right to acquire TopCo Ordinary Shares on the same contractual terms and conditions as were in effect immediately prior to Merger under the original Warrant Agreement, including that the warrant holders are deemed to have consented to an exclusive forum provision requiring all claims to be brought before the courts of the State of New York or the United States District Court for the Southern District of New York other than suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of  America are the sole and exclusive forum.

Private Warrants Transfer Agreement

In connection with the Second Amendment to Business Combination Agreement, the Sponsor entered into an agreement with Anette Schmid and Christian Schmid pursuant to which the Sponsor committed to transfer 2,000,000 private warrants to Anette Schmid (1,000,000 private warrants) and Christian Schmid (1,000,000 private warrants) subject to the closing of the Business Combination.

On April 29, 2024 in connection with the conclusion of the Warranty Agreement, the Sponsor, Anette Schmid and Christian Schmid entered into an amendment to the Warrant Transfer Agreement pursuant to which an additional 2,000,000 private warrants will be transferred upon the earlier of (a) the receipt of at least EUR 10 million in proceeds from a new loan to be entered into by Gebr. Schmid GmbH or SCHMID Group N.V. or another SCHMID Group company and (b) six (6) months after closing of the business combination.

Private Warrants Undertaking Agreement

In connection with the execution of the Second Amendment to Business Combination Agreement, the Sponsor, Pegasus, Schmid, TopCo and all officers and directors of Pegasus who hold private warrants have entered into a private warrants undertaking agreement, pursuant to which the Sponsor and such officers and directors of Pegasus agreed to (i) only exercise their private warrants on a “cashless basis” in accordance with the terms of the private warrants, and (ii) in case the reference price of the TopCo shares subsequently to the closing of the Business Combination reaches USD 18.00 to, on a “cashless basis”, exercise their private warrants in accordance with terms of the private warrants unless such warrants have been previously redeemed or exercised.

XJ Subscription Agreement

In connection with the execution of the Second Amendment to Business Combination Agreement, Pegasus, Schmid and TopCo entered into a subscription agreement with XJ Harbour according to which XJ agreed to in stages transfer its 24.1% equity interest in Schmid Technology (Guangdong) Co., Ltd. (“STG”), a subsidiary of Schmid, to TopCo for consideration amounting to

(i)1,406,361 TopCo shares to be allotted to XJ Harbour at the time of the completion of the Business Combination,

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(ii)a EUR 10 million payment to XJ Harbour from TopCo at the closing of the Business Combination, (iii) a EUR 5 million payment to XJ from TopCo within 270 days from the day of the closing of the Business Combination and (iv) a EUR 15 million payment (plus an interest in respect thereof at an annual rate of 6% from the closing of the Business Combination to the date of payment) to XJ Harbour from TopCo within 455 days from the day of the closing of the Business Combination.

XJ Harbour will retain approximately 16% of the shares in STG after the closing of the Business Combination, of which it will transfer approximately 4% of such shares in STG to TopCo after the EUR 5 million payment and the remainder after the last payment has been received.

XJ Harbour and TopCo agreed on April 29, 2024 that the initial payment of EUR 10 million to XJ Harbour is split into two equal payments, one due at closing of the Business Combination (which has been paid to XJ Harbour by the Company) and a second tranche after 30 days from the closing of the Business Combination.

Warranty Agreement

On April 29, 2024, Pegasus, Gebr. Schmid GmbH, TopCo, Merger Sub and Validus/StratCap, LLC entered into a warranty agreement (the "Warranty Agreement") in which Validus/StratCap, LLC guaranteed a reduction in the total indebtedness of Pegasus and TopCo remaining at the closing of the Business Combination (or converted to shares of TopCo at closing) will not exceed USD 7.4 million of which USD 2.75 million are deferred by nine months from the closing (or earlier if TopCo enters into a loan agreement for more than EUR 10 million). In addition, StratCap agreed to provide a loan of USD 2.35 million to TopCo within 30 days after closing of the Business Combination repayable within 12 months after closing (or earlier if TopCo enters into a loan agreement for more than EUR 10 million).

Prior to the Business Combination, Pegasus, TopCo, the Sponsor and various investors entered into non-redemption and investment agreements at a total volume of USD 26.4 million as follows:

● Various investors entered into non-redemption and investment agreements for a total of 1,430,683 Class A ordinary shares of Pegasus (equaling approximately USD 16.3 million at the redemption price). In order to induce such investors to enter into these non-redemption and investment agreements, the Sponsor committed to transfer 1,741,743 founder shares (that were transferred to Class A shares prior to closing of the Business Combination and then exchanged 1:1 into shares of SCHMID Group N.V.) to such investors.

● In addition, the Sponsor entered into an investment agreement to purchase 756,964 SCHMID Group N.V. shares at the closing of the Business Combination against approximately USD 8.6 million in debt of Pegasus owed ro the Sponsor (such debt was transferred to SCHMID Group N.V. through a debt assumption and exchange agreement against the payment of cash by Pegasus to SCHMID Group N.V.). It was further agreed that Sponsor retains 921,544 founders shares which would otherwise be cancelled at closing of the Business Combination in order to induce the Sponsor to purchase SCHMID Group N.V. shares against setting off all USD 8.6 million in debt it was owed by Pegasus.

● In addition, two further investors agreed to subscribe for 35,000 SCHMID Group N.V. shares after the closing of the Business Combination against cash payment to SCHMID Group N.V. at the redemption price per share (the Sponsor is obligated to transfer 42,610 of its founder shares – which have been converted into SCHMID Group N.V. shares at closing – to such investors for their commitment). In addition, Appleby, Cayman counsel to Pegasus committed to subscribe 87,565 shares of SCHMID Group N.V. against setting off fees due to Appleby (the Sponsor is obligated to transfer 106,603 of its founder shares – which have been converted into SCHMID Group N.V. shares at closing – to Appleby for its commitment to subscribe for the shares against setting off its fees that became due at the closing). These subscriptions for new shares of SCHMID Group N.V. are subject to the approval of the board of directors of the Company.

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D. Exchange Controls and Other Limitations Affecting Security Holders

Under Dutch law, there are no exchange controls applicable to the transfer to persons outside of the Netherlands of dividends or other distributions with respect to, or of the proceeds from the sale of, shares of a Dutch company, subject to applicable restrictions under sanctions and measures, including those concerning export control, pursuant to applicable resolutions adopted by the United Nations, regulations of the European Union, the Sanctions Act 1977 (Sanctiewet 1977), national emergency legislation, or other legislation, applicable anti-boycott regulations and similar rules. Pursuant to the Dutch Foreign Financial Relations Act 1994 (Wet financiële betrekkingen buitenland 1994) entities could be obliged to provide certain financial information to the Dutch Central Bank for statistical purposes only. The European Directive Mandatory Disclosure Rules (2011/16/EU) in relation to cross-border tax arrangements can provide for future notification requirements. There are no special restrictions in our articles of association or Dutch law that limit the right of shareholders who are not citizens or residents of the Netherlands to hold or vote shares.

Under German law, there are no exchange controls restricting the transfer of funds between Germany and other countries or individuals subject to applicable restrictions concerning import or export control or sanctions and measures against certain persons, entities and countries subject to embargoes in accordance with German law and applicable regulations and resolutions adopted by the United Nations and the European Union.

Under German foreign trade regulation, with certain exceptions, every corporation or individual residing in Germany must report to the German Central Bank (Deutsche Bundesbank) on any payment received from or made to a non-resident corporation or individual if the payment exceeds €12,500 (or the equivalent in a foreign currency). Additionally, certain corporations and financial institutions and individuals residing in Germany must report to the German Central Bank on any claims of a resident against, or liabilities payable to, a non-resident corporation or individual exceeding an aggregate of €5 million (or the equivalent in a foreign currency) at the end of any calendar month. Resident corporations and individuals are also required to report annually to the German Central Bank on any stakes of 10% or more they hold in the equity of non-resident corporations with total assets of more than € 3 million. Corporations residing in Germany with assets in excess of €3 million must report annually to the German Central Bank on any stake of 10% or more in the company held by an individual or a corporation located outside Germany.

E. Taxation

Certain Material U.S. Federal Income Tax Considerations

This section describes certain material U.S. federal income tax consequences to a U.S. holder (as defined below) with respect to the ownership and disposition of the Class A Shares and the Public Warrants (collectively, the “Schmid securities”). This discussion deals only with U.S. holders that hold their Schmid securities as capital assets. It does not cover all aspects of U.S. federal income taxation that may be relevant to the U.S. holders (including reporting requirements, consequences under any alternative minimum tax or net investment income tax), and does not address state, local, non-U.S. or other tax laws (such as estate or gift tax laws). This discussion also does not address tax considerations applicable to U.S. holders that own (directly, indirectly or by attribution) 5% or more of the Schmid securities by vote or value, nor does this section discuss all of the tax considerations that may be relevant to certain types of investors subject to special treatment under the U.S. federal income tax laws (such as financial institutions; insurance companies; individual retirement accounts and other tax-deferred accounts; tax-exempt organizations; dealers in securities or currencies; traders in securities that elect to mark their securities to market for U.S. federal income tax purposes; investors that hold Schmid securities as part of straddles, hedging transactions or conversion transactions for U.S. federal income tax purposes; persons that received Schmid securities as compensation for services; nonresident alien individuals present in the United States for 183 days or more during any taxable year; persons that have ceased to be U.S. citizens or lawful permanent residents of the United States; investors holding the Schmid securities in connection with a trade or business conducted outside of the United States; S corporations; partnerships or other entities or arrangements treated as partnerships or other flow-through entities for U.S. federal income tax purposes (and investors therein); U.S. citizens or lawful permanent residents living abroad; investors that are required to include amounts in their taxable income in advance of receipt under rules regarding applicable financial statements; or U.S. holders whose functional currency is not the U.S. dollar).

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As used herein, the term “U.S. holder” means a beneficial owner of Schmid securities that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation created or organized under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust.

The U.S. federal income tax treatment of a partner in an entity or arrangement treated as a partnership for U.S. federal income tax purposes that holds Schmid securities will depend on the status of the partner and the activities of the partnership. Entities or arrangements treated as partnerships for U.S. federal income tax purposes should consult their tax advisers concerning the U.S. federal income tax consequences to them and their partners of owning Schmid securities.

This discussion is based on the tax laws of the United States, including the Code, its legislative history, existing and proposed regulations thereunder, published rulings of the IRS and court decisions, all as of the date hereof and all subject to change at any time, possibly with retroactive effect. Any such change or differing interpretation could affect the accuracy of the statements and conclusions set forth in this discussion. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax considerations described in this discussion. No ruling has been or will be sought from the IRS regarding any matter discussed below.

ALL HOLDERS OF SCHMID SECURITIES SHOULD CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM RELATING TO THE OWNERSHIP OF SCHMID SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS AND POSSIBLE CHANGES IN TAX LAW.

Ownership of Schmid Securities

This discussion is subject to the discussion in “— Application of the PFIC Rules to Schmid Securities” below.

Distributions on Class A Shares

The gross amount of any distribution on Class A Shares that is made out of the Company’s current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) generally will be taxable to a U.S. holder as ordinary dividend income on the date such distribution is actually or constructively received. Any such dividends generally will not be eligible for the dividends received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. To the extent that the amount of the distribution exceeds the Company’s current and accumulated earnings and profits (as determined under U.S. federal income tax principles), such excess amount will be treated first as a non-taxable return of capital to the extent of the U.S. holder’s adjusted tax basis in its Class A Shares, and thereafter as capital gain recognized on a sale or exchange.

Dividends paid by the Company generally will be taxable to a non-corporate U.S. holder at the reduced rate normally applicable to long-term capital gains, provided that the Company is considered a “qualified foreign corporation” and certain other requirements are met. A qualified foreign corporation includes a foreign corporation that is eligible for the benefits of the income tax treaty between Germany and the United States (the “Treaty”). A foreign corporation is also treated as a “qualified foreign corporation” with respect to dividends paid by that corporation on shares that are readily tradable on an established securities market in the United States. U.S. Treasury Department guidance indicates that shares listed on the NASDAQ, such as the Class A Shares, will be readily tradable on an established securities market in the United States. There can be no assurance, however, that the Class A Shares will be considered readily tradable on an established securities market in later years or that the Company will be eligible for the benefits of the Treaty. A U.S. holder will not be able to claim the reduced rate on dividends received from the Company if the Company is treated as a PFIC (as defined below) in the taxable year in which the dividends are received or in the preceding taxable year (or if any shares of the Company that they own are treated as stock in a PFIC). See the section entitled “— Application of the PFIC Rules to Schmid Securities” below.

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Subject to certain conditions and limitations, withholding taxes, if any, on dividends paid by the Company may be treated as foreign taxes eligible for credit against a U.S. holder’s U.S. federal income tax liability under the U.S. foreign tax credit rules. For purposes of calculating the U.S. foreign tax credit, dividends paid on the Class A Shares will generally be treated as income from sources outside the United States and will generally constitute passive category income. The rules governing the U.S. foreign tax credit are complex. U.S. holders should consult their tax advisors regarding the availability of the U.S. foreign tax credit under particular circumstances.

Sale, Exchange, Redemption or Other Taxable Disposition of Schmid Securities

A U.S. holder generally will recognize gain or loss on any sale, exchange, redemption or other taxable disposition of Schmid securities in an amount equal to the difference between (i) the amount realized on the disposition and (ii) such U.S. holder’s adjusted tax basis in such securities. Any gain or loss recognized by a U.S. holder on a taxable disposition of Schmid securities generally will be capital gain or loss and will be long-term capital gain or loss if the holder’s holding period in such securities exceeds one year at the time of the disposition. Preferential tax rates may apply to long-term capital gains of non-corporate U.S. holders (including individuals). The deductibility of capital losses is subject to limitations. Any gain or loss recognized by a U.S. holder on the sale or exchange of Schmid securities generally will be treated as U.S.-source gain or loss. Therefore, a U.S. holder may have insufficient foreign-source income to utilize foreign tax credits attributable to any non-U.S. withholding tax (if any) imposed on a sale, exchange, redemption or other taxable disposition. U.S. holders should consult their tax advisors as to the availability of and limitations on any foreign tax credit attributable to non-U.S. withholding taxes (if any such taxes are imposed).

Exercise or Lapse of a Public Warrant

Except as discussed below with respect to the cashless exercise of a Public Warrant, a U.S. holder generally will not recognize gain or loss upon the acquisition of a Class A Share on the exercise of a Public Warrant for cash. A U.S. holder’s tax basis in a Class A Share received upon exercise of the Public Warrant generally should be an amount equal to the sum of the U.S. holder’s adjusted tax basis in the Public Warrant exchanged therefor and the exercise price. The U.S. holder’s holding period for a Class A Share received upon exercise of the Public Warrant will begin on the date following the date of exercise (or possibly the date of exercise) of the Public Warrant and will not include the period during which the U.S. holder held the Public Warrant. If a Public Warrant is allowed to lapse unexercised, a U.S. holder generally will recognize a capital loss equal to such holder’s adjusted tax basis in the Public Warrant.

The tax consequences of a cashless exercise of a Public Warrant are not clear under current tax law. A cashless exercise may be tax-deferred, either because the exercise is not a gain realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either tax-deferred situation, a U.S. holder’s basis in the Class A Shares received would equal the holder’s basis in the Public Warrants exercised therefor. If the cashless exercise were treated as not being a gain realization event, a U.S. holder’s holding period in the Class A Shares would be treated as commencing on the date following the date of exercise (or possibly the date of exercise) of the Public Warrants. If the cashless exercise were treated as a recapitalization, the holding period of the Class A Shares generally would include the holding period of the Public Warrants exercised therefor.

It is also possible that a cashless exercise of a Public Warrant could be treated in part as a taxable exchange in which gain or loss would be recognized. In such event, a U.S. holder would recognize gain or loss with respect to the portion of the exercised Public Warrants treated as surrendered to pay the exercise price of the Public Warrants (the “surrendered warrants”). The U.S. holder would recognize capital gain or loss with respect to the surrendered warrants in an amount generally equal to the difference between (i) the fair market value of the Class A Shares that would have been received with respect to the surrendered warrants in a regular exercise of the Public Warrants and (ii) the sum of the U.S. holder’s adjusted tax basis in the surrendered warrants and the aggregate cash exercise price of such warrants (if they had been exercised in a regular exercise). In this case, a U.S. holder’s tax basis in the Class A Shares received would equal the U.S. holder’s tax basis in the Public Warrants exercised plus (or minus) the gain (or loss) recognized with respect to the surrendered warrants. A U.S. holder’s holding period for the Class A Shares generally would commence on the date following the date of exercise (or possibly the date of exercise) of the Public Warrants.

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Due to the absence of authority on the U.S. federal income tax treatment of a cashless exercise of warrants, there can be no assurance which, if any, of the alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. holders should consult their tax advisors regarding the tax consequences of a cashless exercise of Public Warrants.

Possible Constructive Distributions

The terms of each Public Warrant provide for an adjustment to the number of Class A Shares for which the Public Warrant may be exercised or to the exercise price of the Public Warrant in certain events. An adjustment which has the effect of preventing dilution generally is not taxable. A U.S. holder of a Public Warrant generally would be treated as receiving a constructive distribution from the Company if, for example, the adjustment increases the holder’s proportionate interest in the Company’s assets or earnings and profits (e.g., through an increase in the number of Class A Shares that would be obtained upon exercise of such warrant) as a result of a distribution of cash to the holders of the Class A Shares which is taxable to the U.S. holders of such shares as described in the section entitled “— Distributions on Class A Shares” above. Such constructive distribution generally would be subject to tax as described in the section entitled that section in the same manner as if the U.S. holder of such warrant received a cash distribution from the Company equal to the fair market value of such increased interest.

Application of the PFIC Rules to Schmid Securities

A non-U.S. corporation, such as the Company, will be a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes in any taxable year in which, after applying relevant look-through rules with respect to the income and assets of its subsidiaries, (i) 75% or more of its gross income is passive income, and/or (ii) 50% or more of the value of its assets (generally based on the quarterly average of the value of its assets during such year) is attributable to assets, including cash, that produce passive income or are held for the production of passive income. Passive income generally includes dividends, interest, certain royalties and rents, annuities, net gains from the sale or exchange of property producing such income and net foreign currency gains. Based on the expected composition of the Company’s gross assets and income and the manner in which the Company expects to operate its business in 2024 and future years, the Company does not expect to be classified as a PFIC for U.S. federal income tax purposes for the Company’s 2024 taxable year or in the foreseeable future. Whether the Company is a PFIC is a factual determination made annually, and the Company’s status could change depending, among other things, upon changes in the composition and relative value of its gross receipts and assets.

If the Company were a PFIC in any year during which a U.S. holder owns Class A Shares, subject to the discussion below regarding the mark-to-market (“MTM”) or qualified electing fund (“QEF”) elections, a U.S. holder generally will be subject to special rules (regardless of whether the Company continues to be a PFIC) with respect to (i) any “excess distribution” (generally, any distributions received by a U.S. holder on its Class A Shares in a taxable year that are greater than 125% of the average annual distributions received by the U.S. holder in the three preceding taxable years or, if shorter, the U.S. holder’s holding period for the Class A Shares) and (ii) any gain realized on the sale or other disposition of Class A Shares. Under these rules (a) the excess distribution or gain will be allocated ratably over the U.S. holder’s holding period, (b) the amount allocated to the current taxable year and any taxable year prior to the first taxable year in which the Company is a PFIC will be taxed as ordinary income, and (c) the amount allocated to each of the other taxable years will be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year and an interest charge for the deemed deferral benefit will be imposed with respect to the resulting tax attributable to each such other taxable year.

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A U.S. holder may be able to avoid some of the adverse impacts of the PFIC rules described under in the preceding paragraph by making an MTM election with respect to its Class A Shares. The election is available only if the Class A Shares are considered “marketable stock,” which generally includes stock that is regularly traded in more than de minimis quantities on a qualifying exchange. If a U.S. holder makes the MTM election, it generally will not be subject to the excess distribution regime discussed in the preceding paragraph and the tax consequences should be as set forth above under this paragraph. Any gain from marking the Class A Shares to market or from disposing of them would be ordinary income. Any loss from marking the Class A Shares to market would be recognized only to the extent of unreversed gains previously included in income. Loss from marking the Class A Shares to market would be ordinary, but loss on disposing of them would be capital loss except to the extent of unreversed inclusions with respect to such stock. It is expected that Class A Shares, which are listed on NASDAQ, will qualify as marketable shares for the PFIC rules purposes. No assurance can be given that the Class A Shares will be traded in sufficient frequency and quantity to be considered “marketable stock.” A valid MTM election cannot be revoked without the consent of the IRS unless the Class A Shares cease to be marketable stock. In addition, it is anticipated that U.S. holders of Public Warrants will not be able to make an MTM election with respect to such warrants.

A U.S. holder would not be able to avoid the tax consequences described above by electing to treat the Company as a QEF because the Company does not intend to provide U.S. holders with the information that would be necessary to make a QEF election with respect to the Class A Shares. In any event, U.S. holders of Public Warrants will not be able to make a QEF election with respect to their warrants.

U.S. holders should consult their own tax advisors concerning the Company’s possible PFIC status and the consequences to them, including potential reporting requirements, if the Company were classified as a PFIC for any taxable year.

Information Reporting and Backup Withholding

Information reporting requirements may apply to distributions on and proceeds from a disposition of the Schmid securities. Backup withholding may apply to such amounts if the U.S. holder fails to provide an accurate taxpayer identification number or is otherwise subject to backup withholding.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against the U.S. holder’s U.S. federal income tax liability, and a U.S. holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for a refund with the IRS and furnishing any required information. U.S. holders should consult their tax advisors regarding these rules and any other reporting obligations that may apply to the ownership or disposition of Schmid securities, including reporting obligations related to the holding of certain foreign financial assets.

Material Dutch Tax Considerations

The following summary of certain Dutch taxation matters is based on the laws and practice in force as of the date of this proxy statement/prospectus and is subject to any changes in law and the interpretation and application thereof, which changes could have retroactive effect. The following summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to acquire, hold or dispose of Class A Shares and/or Warrants, and does not purport to deal with the tax consequences applicable to all categories of investors, some of which may be subject to special rules. An investor holding Class A Shares is being referred to as a shareholder (“Shareholder”) and an investor holding Warrants is being referred to as a warrant holder (“Warrant Holder”).

For the purpose of the paragraph “Taxes on Income and Capital Gains” below it is assumed that an individual holding Class A Shares and/or Warrants who is taxed as a resident of the Netherlands for income tax purposes did not, does not and will not have a substantial interest (aanmerkelijk belang) or a deemed substantial interest in Schmid.

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Generally speaking, an individual has a substantial interest in a company if (a) such individual, either alone or together with his partner, directly or indirectly has or is deemed to have, or (b) certain relatives of such individual or his partner directly or indirectly have or are deemed to have (i) the ownership of, a right to acquire the ownership of, or certain rights over, shares representing 5% or more of either the total issued and outstanding capital of such company or the issued and outstanding capital of any class of shares of such company, or (ii) the ownership of, or certain rights over, profit participating certificates (winstbewijzen) that relate to 5% or more of either the annual profit or the liquidation proceeds of such company. Also, an individual has a substantial interest in a company if his partner has, or if certain relatives of the individual or his partner have, a deemed substantial interest. In such company. Generally, an individual or his partner or relevant relative has a deemed substantial interest in a company if either (a) such person or his predecessor has disposed of or is deemed to have disposed of all or part of a substantial interest or (b) such person has transferred an enterprise in exchange for shares in such company, on a non-recognition basis.

This summary assumes that Schmid is not affiliated (gelieerd) to any recipient (voordeelgerechtigde) of any payments under the Class A Shares and/or Warrants within the meaning of the Withholding Tax Act 2021 (Wet bronbelasting 2021).

Generally speaking, an, entity is regarded as ‘affiliated’ for Dutch Withholding Tax Act 2021 (Wet bronbelasting 2021) purposes, if (i) it has a qualifying interest in Schmid, (ii) Schmid has a qualifying interest in the relevant entity or (iii) a third party has a qualifying interest in both Schmid and the relevant entity. Generally, the term “qualifying interest” means a direct or indirectly held interest, individually or jointly as part of a collaborating group (samenwerkende groep), that gives the holder of such interest definite influence over the decisions of the entity in which the interest is held and allows determination of its activities.

Where this summary refers to a Shareholder, Warrant Holder, holder of Class A Shares and Warrants, an individual holding Class A Shares and Warrants or an entity holding Class A Shares and Warrants, such reference is restricted to an individual or entity holding legal title to as well as an economic interest in such Class A Shares and Warrants or otherwise being regarded as owning Class A Shares and Warrants for Dutch tax purposes. It is noted that for purposes of Dutch income, corporate and gift and inheritance tax, assets legally owned by a third party such as a trustee, foundation or similar entity, may be treated as assets owned by the (deemed) settlor, grantor or similar originator or the beneficiaries in proportion to their interest in such arrangement.

Where the summary refers to “the Netherlands” or “Dutch” it refers only to the European part of the Kingdom of the Netherlands.

This overview assumes that Schmid shall have its place of effective management in Germany and that it is treated as a German tax resident for German tax purposes.

Investors should consult their professional advisers as to the tax consequences of acquiring, holding and disposing of Class A Shares.

Dividend Withholding tax

Class A Shares

In general, Schmid must withhold Dutch dividend tax from dividends distributed on the Class A Shares at the rate of 15%.

Dividends include, without limitation:

(i) distributions of profits (including paid-in capital not recognised for Dutch dividend tax purposes) in cash or in kind, including deemed and constructive dividends;

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(ii) liquidation distributions and, generally, proceeds realised upon a repurchase of Class A Shares by Schmid or upon the transfer of Class A Shares to a direct or indirect subsidiary of Schmid, in excess of the average paid-in capital recognised for Dutch dividend tax purposes;

(iii) the par value of Class A Shares issued to a shareholder or any increase in the par value of Class A Shares, except to the extent such (increase in the) par value is contributed to or funded out of the Schmid’s paid-in capital recognised for Dutch dividend tax purposes;

(iv) repayments of paid-in capital recognised for Dutch dividend tax purposes up to the amount of Schmid’s profits (zuivere winst) unless Schmid’s general meeting of shareholders has resolved in advance that Schmid shall make such repayments and the par value of the Class A Shares concerned has been reduced by a corresponding amount through an amendment of Schmid’s articles of association.

However, Schmid is not required to withhold Dutch dividend tax from dividends distributed on the Class A Shares if, and for as long as, Schmid is resident solely in Germany for purposes of the convention between Germany and the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (the “German-Dutch tax treaty”), unless:

(i) the Shareholder is an individual who is resident or deemed to be resident in the Netherlands for Dutch income tax purposes or an entity or enterprise that is subject to the Corporate Tax Act 1969 (Wet op de vennootschapsbelasting 1969) and is resident or deemed to be resident in the Netherlands for Dutch corporate tax purposes; or

(ii) the Shareholder is an individual not resident and not deemed to be resident in the Netherlands for Dutch income tax purposes or an entity not resident and not deemed to be resident in the Netherlands for Dutch corporate tax purposes and derives profits from an enterprise, which enterprise is, in whole or in part, carried on through a permanent establishment (vaste inrichting) or a permanent representative (vaste vertegenwoordiger) in the Netherlands, to which the Class A Shares are attributable.

The current German-Dutch tax treaty stipulates that if a company is treated as tax resident of both the Netherlands and Germany it shall be treated as resident of the country in which it has its place of effective management for purposes of the treaty. As set out above, for the purposes of this summary we assume that Schmid shall have its place of effective management in Germany.

If the Shareholder is a resident or deemed to be a resident of the Netherlands for Dutch corporate or income tax purposes, Dutch dividend withholding tax which is withheld with respect to proceeds from the Class A Shares will generally be creditable for Dutch corporate tax or Dutch income tax purposes. For Shareholders that are subject to Dutch corporate tax, the credit of Dutch dividend withholding tax per annum is limited to the amount of Dutch corporate tax due in that year. Any uncredited Dutch dividend withholding can be carried forward without time restrictions.

Under the terms of Dutch domestic anti-dividend stripping rules, a recipient of dividends distributed on Class A Shares will not be entitled to an exemption from, reduction, refund, or credit of dividend tax if the recipient is not the beneficial owner of such dividends as meant in those rules.

It is currently uncertain what evidence, information and documentation will be required by the Dutch tax authorities for purposes of accepting application of the German-Dutch tax treaty as described above, either at source or through a refund request by a Shareholder or Warrant Holder.

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Warrants

The mere exercise of a Warrant does in the view of Schmid not give rise to Dutch dividend withholding tax, except to the extent (i) the exercise price paid in cash per issued Class A Share is below the nominal value of a Class A Share and (ii) such difference is not charged against Schmid’s share premium reserve recognized for purposes of Dutch dividend withholding tax. If any Dutch dividend withholding tax due is not effectively withheld for the account of the relevant Warrant Holder, Dutch dividend withholding tax shall be due by Schmid on a grossed-up basis, meaning that the Dutch dividend withholding tax basis shall be equal to the amount referred to in the preceding sentence multiplied by 100/85. Exceptions and relief from Dutch dividend withholding tax may apply as set forth in the preceding paragraph.

Taxes on Income and Capital Gains

Residents

Resident entities

An entity holding the Class A Shares and Warrants which is or is deemed to be resident in the Netherlands for Dutch corporate tax purposes and which is not tax exempt, will generally be subject to corporate tax (vennootschapsbelasting) in the Netherlands in respect of income or a capital gain derived from such Class A Shares and Warrants at rates up to 25.8%, unless the entity has the benefit of the participation exemption (deelnemingsvrijstelling) with respect to such Class A Shares. Generally speaking, the entity holding Class A Shares will have the benefit of the participation exemption if the entity owns at least 5% of the nominal paid-up share capital of Schmid.

Resident individuals

A Shareholder or Warrant Holder who is or is deemed to be resident in the Netherlands for Dutch income tax purposes will generally be subject to income tax in the Netherlands in respect of income or a capital gain derived from such Class A Shares and Warrants at rates up to 49.5% if:

(i) the income or capital gain is attributable to an enterprise from which the holder derives profits (other than as a shareholder); or

(ii) the income or capital gain qualifies as income from miscellaneous activities (belastbaar resultaat uit overige werkzaamheden) as defined in the Income Tax Act 2001 (Wet inkomstenbelasting 2001), including, without limitation, activities that exceed normal, active asset management (normaal, actief vermogensbeheer).

If neither condition (i) nor (ii) applies, such Shareholder or Warrant Holder will generally be subject to Dutch income tax on the basis of a deemed return, regardless of any actual income or capital gain derived from Class A Shares and Warrants. For the fiscal year 2024, separate deemed return percentages for savings, debts and investments apply. A deemed return for the category “investments” (including the Class A Shares and Warrants) of 6.04% is applicable, as at the beginning of the relevant fiscal year. The applicable percentages will be updated annually on the basis of historic market yields. Subject to certain anti-abuse provisions, the product of an amount equal to (a) the total deemed return divided by the sum of savings, debts and investments and (b) the sum of savings, debts and investments minus a tax-free allowance, forms the individual’s taxable income from savings and investments (including the Class A Shares and Warrants) for 2024 and will be taxed at the prevailing statutory rate (36% in 2024).

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Non-residents

A Shareholder or Warrant Holder which is not and is not deemed to be resident in the Netherlands for the relevant tax purposes will not be subject to taxation in the Netherlands on income or a capital gain derived from Class A Shares and Warrants, unless:

(i) the income or capital gain is attributable to an enterprise or part thereof which is either effectively managed in the Netherlands or carried on through a permanent establishment (vaste inrichting) or a permanent representative (vaste vertegenwoordiger) taxable in the Netherlands and the Shareholder or Warrant Holder derives profits from such enterprise (other than by way of the holding of securities); or

(ii) the Shareholder or Warrant Holder is an individual and the income or capital gain qualifies as income from miscellaneous activities (belastbaar resultaat uit overige werkzaamheden) in the Netherlands as defined in the Income Tax Act 2001 (Wet inkomstenbelasting 2001), including, without limitation, activities that exceed normal, active asset management (normaal, actief vermogensbeheer).

Gift and Inheritance Taxes

Dutch gift or inheritance taxes will not be levied on the occasion of the transfer of a Shareholder or Warrant Holder by way of gift by, or on the death of, a holder, unless:

(i) such holder is or is deemed to be resident in the Netherlands for the purpose of the relevant provisions; or

(ii) the transfer is construed as an inheritance or gift made by, or on behalf of, a person who, at the time of the gift or death, is or is deemed to be resident in the Netherlands for the purpose of the relevant provisions.

Value Added Tax

There is no Dutch value added tax payable by a Shareholder or Warrant Holder in respect of payments in consideration for the acquisition of Class A Shares and Warrants, payments of dividend on the Class A Shares and Warrants, or payments in consideration for the disposal of Class A Shares and Warrants.

Other Taxes and Duties

There is no Dutch registration tax, stamp duty, or any other similar tax or duty payable in the Netherlands in respect of or in connection with the subscription, issue, placement, allotment, delivery or transfer of Class A Shares and Warrants.

Residence

A Shareholder or Warrant Holder will not be and will not be deemed to be resident in the Netherlands for Dutch tax purposes and, subject to the exceptions set out above, will not otherwise be subject to Dutch taxation, by reason only of acquiring, holding or disposing of Class A Shares and Warrants.

Material German Tax Considerations

The following section is a description of the material German tax considerations that become relevant when acquiring, owning and/or disposing of Class A Shares and Warrants as from the date of this Annual Report. It is based on the German tax law applicable as of the date of this Annual Report without prejudice to any amendments introduced at a later date and implemented with or without retroactive effect.

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This section is intended as general information only and does not purport to be a comprehensive or complete description of all potential German tax effects of the acquisition, ownership or disposal of Class A Shares or Warrants and does not set forth all German tax considerations that may be relevant to a particular person’s decision to acquire Class A Shares or Warrants. It cannot be ruled out that the German tax authorities or courts may consider an alternative interpretation or application to be correct that differs from the one described in this section.

This section does not describe any German tax considerations or consequences that may be relevant to the acquisition, ownership or disposal of Class A Shares or Warrants by a shareholder (i) for whom or for a direct or indirect shareholder or beneficiary of whom the income or capital gains derived from the Class A Shares or Warrants are attributable to employment, trade or freelancing activities, the income from which is taxable in Germany, or (ii) who exchanges, or has exchanged, other German taxable assets for Class A Shares or Warrants (or vice versa) under a German tax deferral transaction of the German reorganization tax act (Umwandlungssteuergesetz).

This section does not constitute particular German tax advice and potential purchasers of Class A Shares or Warrants are urged to consult their own tax advisors regarding the tax consequences of the acquisition, ownership and/or disposal of Class A Shares or Warrants in light of their particular circumstances with regard to the application of German tax law to their particular situations, in particular with respect to the procedure to be complied with to obtain a relief of withholding tax on dividends and on capital gains (Kapitalertragsteuer) and with respect to the influence of provisions of any applicable income tax treaty on the mitigation of double taxation (each a “tax treaty”), as well as any tax consequences arising under the laws of any state, local or other non-German jurisdiction. A shareholder or holder of Warrants may include an individual who or an entity that does not have the legal title to the Class A Shares or Warrants, but to whom nevertheless the Class A Shares or Warrants are attributed for German tax purposes, based either on such individual or entity owning a beneficial interest in the Class A Shares or Warrants or based on specific statutory provisions.

All of the following is subject to change as from the date of this Annual Report. Such changes could apply retroactively and could affect the consequences set forth below. This section does neither refer to any German filing, notification or other German tax compliance aspects nor to foreign account tax compliance act (“FATCA”) aspects.

Tax Residency Status

We have our statutory seat in the Netherlands and our sole place of management in Germany and are therefore tax resident in Germany as from the date of this Annual Report (both under German domestic law and for purposes of the German-Dutch tax treaty). Thus, we qualify as a corporation subject to German unlimited liability for corporate income tax purposes and are treated as a resident of Germany under the Dutch-German tax treaty. However, because our tax residency depends on future facts regarding our place of management, the German unlimited liability for corporate income tax purposes may change in the future.

We assume for all purposes herein that we shall be tax resident in Germany at all relevant points in time when taxable events may occur. For the avoidance of doubt, any tax effects in relation to the Warrants or Class A Shares (other than as regards withholding tax as addressed below) are out of the scope of this Annual Report.

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German Taxation of Holders of Class A Shares

Taxation of Dividends

Withholding Tax on Dividend Payments

Dividends distributed from Schmid to our shareholders are generally subject to German withholding tax, except for certain scenarios in which a dividend is either excluded from the scope of German withholding tax (for example, repayments of capital from the tax contribution account (steuerliches Einlagekonto)) or fully or partially withholding tax exempt, as further described. The withholding tax rate is 25% plus a 5.5% solidarity surcharge (Solidaritätszuschlag) thereon, totaling 26.375% of the gross dividend amount and potentially church withholding tax for shareholders who are private individuals in certain cases (see below). Withholding tax is to be withheld and passed on for the account of the shareholders, depending on the specific circumstances, by a domestic branch of a domestic or foreign credit or financial services institution (Kredit- oder Finanzdienstleistungsinstitut) or by the domestic securities institution (inländisches Wertpapierinstitut) that keeps and administers the Class A Shares and disburses or credits the dividends or disburses the dividends to a foreign agent, or by the securities custodian bank (Wertpapiersammelbank) to which the Class A Shares were entrusted for custody if the dividends are distributed to a foreign agent by such securities custodian bank (each of which is referred to as the “Dividend Paying Agent”), or, in the case the Class A Shares are not held in deposit with a Dividend Paying Agent, Schmid is responsible for withholding and remitting the tax to the competent tax office. Such withholding tax is generally levied and withheld irrespective of whether and to what extent the dividend distribution is taxable at the level of the shareholder and whether the shareholder is a person residing in Germany or in a foreign country.

In the case of dividends distributed to a parent company within the meaning of Art. 3 para. 1 lit. a of the amended EU Directive 2011/96/EU of the Council of November 30, 2011 (the “EU Parent Subsidiary Directive”) domiciled in another Member State of the European Union, withholding tax may be refunded or not levied upon application and subject to further conditions (as set out below). This also applies to dividends distributed to a permanent establishment located in another Member State of the European Union of such a parent company or of a parent company tax resident in Germany if the participation in Schmid is effectively connected with and actually attributed to this permanent establishment. The key prerequisite for the application of the EU Parent Subsidiary Directive is that the shareholder has held a direct participation in the share capital of Schmid of at least 10% for an uninterrupted period of at least twelve months. Further, the foreign resident shareholder must be eligible for purposes of the EU Parent Subsidiary Directive (as set out above) to invoke the reduction, and in addition, nor the German anti-directive/ treaty shopping provision of Section 50d paragraph 3 of the German Income Tax Act (Einkommensteuergesetz) must not be applicable.

The withholding tax on dividends distributed to other foreign resident shareholders may be refunded or not levied upon application (as set out below) in accordance with an applicable tax treaty (to 15%, 5% or 0% depending on certain prerequisites) if Germany has concluded such tax treaty with the country of residence of the shareholder and if the shareholder does not hold the Class A Shares either as part of the assets of a permanent establishment or a fixed place of business in Germany or as business assets for which a permanent representative has been appointed in Germany. Further, the foreign resident shareholder must be eligible for tax treaty purposes, and in addition, neither the limitation of benefits provision in a tax treaty and nor the German anti-directive/treaty shopping provision of Section 50d paragraph 3 of the German Income Tax Act (Einkommensteuergesetz) must be applicable.

In the case of dividends received by corporate bodies (Körperschaften) which are not tax resident in Germany, i.e., corporate bodies with no registered office or place of management in Germany and if the shares neither belong to the assets of a permanent establishment or fixed place of business in Germany nor are part of business assets for which a permanent representative in Germany has been appointed, two-fifths of the withholding tax deducted and remitted may be refunded or not levied upon application (as set out below) without the need to fulfill all prerequisites required for such refund under the EU Parent Subsidiary Directive or under a tax treaty or if no tax treaty has been concluded between the state of residence of the shareholder, however, likewise subject to the conditions of the aforementioned German anti-directive/treaty shopping provision.

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The application for a refund of withholding tax under the EU Parent Subsidiary Directive, a tax treaty or the aforementioned option for foreign corporate bodies is to be filed with the German Federal Central Tax Office (Bundeszentralamt für Steuern) within four years following the end of the calendar year in which the dividends were received. The application shall be made by submitting a completed form for refund (available at the website of the Federal Central Tax Office (http://www.bzst.de) as well as at the German embassies and consulates) together with a withholding tax certificate (Kapitalertragsteuerbescheinigung) issued by the institution that deducted the respective withholding tax. In this case, the refund of deducted withholding tax is procedurally granted in such a manner that the difference between the total amount withheld, including the solidarity surcharge, and the tax liability determined on the basis of the EU Parent Subsidiary Directive (0) % or on the basis of the tax rate set forth in the applicable tax treaty (15%, 5% or 0) % is refunded by the German Federal Central Tax Office.

If, under fulfillment of the prerequisites of the EU Parent Subsidiary Directive or a tax treaty, withholding tax is not to be levied at all, the relevant shareholder must apply to the German Federal Central Tax Office for the issuance of an exemption certificate (Freistellungsbescheinigung) that documents that the prerequisites for the application of the reduced withholding tax rates have been met. Dividends covered by the exemption certificate of the shareholder are then only subject to the reduced withholding tax rates stipulated in the exemption certificate.

Please note that applying for a non-assessment notice and/or applying for a refund might require a significant amount of time. On 2 April 2024, the German Federal Government published a statement, according to which the Central Federal Tax Office currently needs (on an average basis) 480 days for deciding about the issuance of non-assessment notices under relief of source procedures (Freistellungsverfahren) and 615 days for deciding about refunds under the retain and refund procedures (Erstattungsverfahren).

The aforementioned refunds of (or exemptions from) withholding tax are further restricted if (i) the applicable tax treaty provides for a tax reduction resulting in an applicable tax rate of less than 15% and (ii) the shareholder is not a corporation that directly holds at least 10% in the equity capital of Schmid and is subject to tax on its income and profits in its state of residence without being exempt. In this case, the refund of (or exemption from) withholding tax is subject to the following three cumulative prerequisites: (i) the shareholder must qualify as beneficial owner of the shares in a company for a minimum holding period of 45 consecutive days occurring within a period of 45 days prior and 45 days after the due date of the dividends; (ii) the shareholder has to bear (taking into account claims of the shareholder from transactions reducing the risk of changes of the market value of the shares and corresponding claims of related parties of the shareholder) at least 70% of the change in value risk related to the shares in a company during the minimum holding period; and (iii) the shareholder must not be required to fully or largely compensate directly or indirectly the dividends to third parties.

In the absence of the fulfillment of all of the three prerequisites, three-fifths of the withholding tax imposed on the dividends must not be credited against the shareholder’s (corporate) income tax liability but may, upon application, be deducted from the shareholder’s tax base for the relevant assessment period. Furthermore, a shareholder that has received gross dividends without any deduction of withholding tax due to a tax exemption without qualifying for such a full tax credit has (i) to notify the competent local tax office accordingly, (ii) to declare according to the officially prescribed form and (iii) to make a payment in the amount of the omitted withholding tax deduction.

However, these special rules on the restriction of withholding tax credit do not apply to a shareholder whose overall dividend earnings within an assessment period do not exceed €20,000 or that has been the beneficial owner of the shares in a company for at least one uninterrupted year upon receipt of the dividends.

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For individual or corporate shareholders tax resident outside Germany not holding the Class A Shares through a permanent establishment (Betriebsstätte) in Germany or as business assets (Betriebsvermögen) for which a permanent representative (ständiger Vertreter) has been appointed in Germany, the remaining and paid withholding tax (if any) is then final (i.e., not refundable) and settles the shareholder’s limited tax liability in Germany. For individual or corporate shareholders tax resident in Germany (for example, those shareholders whose residence, domicile, registered office or place of management is located in Germany) holding their Class A Shares as business assets, as well as for shareholders tax resident outside of Germany holding their Class A Shares through a permanent establishment in Germany or as business assets for which a permanent representative has been appointed in Germany, the withholding tax withheld (including solidarity surcharge) can be credited against the shareholder’s personal income tax or corporate income tax liability in Germany. Any withholding tax (including solidarity surcharge) in excess of such tax liability will be refunded upon receipt of the relevant tax assessment. For individual shareholders tax resident in Germany holding Class A Shares as private assets, the withholding tax is a final tax (Abgeltungsteuer), subject to the exceptions described in the following section.

Taxation of Dividend Income of Shareholders Tax Resident in Germany Holding Class A Shares as Private Assets (Private Individuals)

For individual shareholders (individuals) resident in Germany holding Class A Shares as private assets, dividends are subject to a flat rate tax, which is satisfied by the withholding tax actually withheld (Abgeltungsteuer). Accordingly, dividend income will be taxed at a flat tax rate of 25% plus 5.5% solidarity surcharge thereon totaling 26.375% and church tax (Kirchensteuer) in case the shareholder is subject to church tax because of his or her personal circumstances. An automatic procedure for deduction of church tax by way of withholding will apply to shareholders being subject to church tax, unless the shareholder has filed a blocking notice (Sperrvermerk) with the German Federal Tax Office (details related to the computation of the specific tax rate, including church tax, are to be discussed with the individual tax advisor of the relevant shareholder). Except for an annual lump sum savings allowance (Sparer-Pauschbetrag) of up to €1,000 (for individual filers) or up to €2,000 (for married couples and for partners in accordance with the registered partnership law (Gesetz über die Eingetragene Lebenspartnerschaft) filing jointly), private individual shareholders will not be entitled to deduct expenses incurred in connection with the capital investment from their dividend income.

The income tax owed for the dividend income is satisfied by the withholding tax withheld by the an agent of Schmid or Schmid. However, if the flat tax results in a higher tax burden as opposed to the private individual shareholder’s personal income tax rate, the private individual shareholder can opt for taxation at his or her personal income tax rate. In that case, the final withholding tax will be credited against the income tax. The option can be exercised only for all capital income from capital investments received in the relevant assessment period uniformly, and married couples as well as partners in accordance with the registered partnership law filing jointly can only jointly exercise the option.

Exceptions from the flat rate tax (satisfied by withholding the tax at source, Abgeltungswirkung) may apply — that is, only upon application — (i) for shareholders who have a shareholding of at least 25% in Schmid and (ii) for shareholders who have a shareholding of at least 1% in Schmid and work for the Company in a professional capacity, each within the assessment period for which the application is first made. In such a case, the same rules apply as for sole proprietors holding Class A Shares as business assets (see below “— Taxation of Dividend Income of Shareholders Tax Resident in Germany Holding Class A Shares as Business Assets — Sole Proprietors”). Further, the flat rate tax does not apply if and to the extent dividends reduced Schmid taxable income.

Taxation of Dividend Income of Shareholders Tax Resident in Germany Holding Class A Shares as Business Assets

If a shareholder holds Class A Shares as business assets, the taxation of the dividend income depends on whether the respective shareholder is a corporation, a sole proprietor or a partnership.

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Dividend income of corporate shareholders is exempt from corporate income tax, provided that the corporation holds a direct participation of at least 10% in the share capital of a company at the beginning of the calendar year in which the dividends are paid (participation exemption). The acquisition of a participation of at least 10% in the course of a calendar year (in one instance) is deemed to have occurred at the beginning of such calendar year. Participations in the share capital of the Company that a corporate shareholder holds through a partnership, including co-entrepreneurships (Mitunternehmerschaften), are attributable to such corporate shareholder only on a pro rata basis at the ratio of the interest share of the corporate shareholder in the assets of the relevant partnership. However, 5% of the tax-exempt dividends are deemed to be non-deductible business expenses for tax purposes and therefore are effectively subject to corporate income tax (plus solidarity surcharge); i.e., tax exemption of 95%. Business expenses incurred in connection with the dividends received are entirely tax deductible. The participation exemption does not apply if and to the extent dividends reduced Schmid’s taxable income.

For trade tax purposes, the entire dividend income is subject to trade tax (i.e., the tax-exempt dividends must be added back when determining the trade taxable income), unless the corporate shareholder holds at least 15% of the Company’s registered share capital at the beginning of the relevant tax assessment period (Erhebungszeitraum). In such case, the dividends are not subject to trade tax. However, trade tax is levied on the amount considered to be a non-deductible business expense (amounting to 5% of the dividend). Trade tax depends on the municipal trade tax multiplier applied by the relevant municipal authority. In the case of an indirect participation via a partnership, please refer to the section “— Partnerships” below.

If the shareholding is below 10% in the share capital, dividends are taxable at the applicable corporate income tax rate of 15% plus 5.5% solidarity surcharge thereon and trade tax (the rate of which depends on the applicable municipality levy rate determined by the municipality in which the corporate shareholder has its place of management and permanent establishments, respectively, to which the Class A Shares are attributed).

Special regulations apply that abolish the 95% tax exemption, if Class A Shares are held (i) as trading portfolio (Handelsbestand) assets in the meaning of Section 340e paragraph 3 of the German Commercial Code (Handelsgesetzbuch) by a (a) credit institution (Kreditinstitut), (b) securities institution (Wertpapierinstitut) or (c) financial service institution (Finanzdienstleistungsinstitut) or (ii) as current assets (Umlaufvermögen) by a financial enterprise (Finanzunternehmen) within the meaning of the German Banking Act (Kreditwesengesetz), in the case more than 50% of the shares of such financial enterprise are held directly or indirectly by a credit institution, a securities institution or a financial service institution, or (iii) by a life insurance company, a health insurance company or a pension fund in the case the shares are attributable to the capital investments, resulting in fully taxable income (any shareholder falling under (i), (ii) or (iii), a “Non-Exempt Corporation”).

Sole proprietors

For sole proprietors (individuals) resident in Germany holding Class A Shares as business assets, dividends are subject to the partial income rule (Teileinkünfteverfahren). Accordingly, only (i) 60% of the dividend income will be taxed at his/her personal income tax rate plus 5.5% solidarity surcharge thereon and (ii) 60% of the business expenses related to the dividend income are deductible for tax purposes. This does not apply to church tax (if applicable). In addition, the dividend income is entirely subject to trade tax if the Class A Shares are held as business assets of a permanent establishment in Germany within the meaning of the German Trade Tax Act (Gewerbesteuergesetz), unless the shareholder holds at least 15% of the Company’s registered share capital at the beginning of the relevant assessment period. In this latter case, the net amount of dividends, i.e., after deducting directly related expenses, is exempt from trade tax. The trade tax levied will be eligible for credit against the shareholder’s personal income tax liability based on the applicable municipal trade tax rate and the individual tax situation of the shareholder limited to currently up to 4.0 times the trade tax measurement amount (Gewerbesteuer-Messbetrag) and also limited to the amount of trade tax actually to be paid.

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Partnerships

In the case Class A Shares are held by a partnership, the partnership itself is not subject to corporate income tax or personal income tax. In this regard, corporate income tax or personal income tax (and church tax, if applicable) as well as solidarity surcharge are levied only at the level of the partner with respect to their relevant part of the partnership’s taxable income and depending on their individual circumstances:

● if the partner is a corporation, the dividend income will be subject to corporate income tax plus solidarity surcharge (see above “—Corporations”);

● if the partner is a sole proprietor, the dividend income will be subject to the partial income rule (see above “—Sole Proprietors”); or

● if the partner is a private individual – only possible if the partnership is not a (operative or deemed) commercial partnership, the dividend income will be subject to the flat tax rate (see above “—Private Individuals”).

In the case the partnership is a (operative or deemed) commercial partnership with its place of management in Germany, the dividend income is subject to German trade tax at the level of the partnership, unless the partnership holds at least 15% of a company’s registered share capital at the beginning of the relevant assessment period. In such case, the dividend income is 95% exempt from trade tax to the extent the partners of the partnership are corporations (indirectly holding at least 10% of the shares in Schmid) and 40% exempt from trade tax to the extent the partners of the partnership are sole proprietors. Any trade tax levied on the level of the partnership will be eligible for credit against an individual shareholder’s personal income tax liability based on the applicable municipal trade tax rate, depending on the individual tax situation of the shareholder and further circumstances and limited to currently 4.0 times the partial trade tax measurement amount allocable to such individual shareholder.

Partnerships can opt to be treated as a corporation for purposes of German income taxation. If the shareholder is a partnership that has validly exercised such option right, any dividends from shares or subscription rights are subject to corporate income tax (and, for the avoidance of doubt, trade tax).

Taxation of Dividend Income of Shareholders Tax Resident Outside of Germany

For foreign individual or corporate shareholders tax resident outside of Germany not holding the Class A Shares through a permanent establishment in Germany or as business assets for which a permanent representative has been appointed in Germany, the deducted withholding tax (possibly reduced by way of a tax relief under a tax treaty or domestic tax law, such as in connection with the EU Parent Subsidiary Directive) is final (that is, not refundable) and settles the shareholder’s limited tax liability in Germany, unless the shareholder is entitled to apply for a withholding tax refund or exemption (as set out above in “— Withholding Tax on Dividend Payments”).

In contrast, individual or corporate shareholders tax resident outside of Germany holding the Company’s Class A Shares through a permanent establishment in Germany or as business assets for which a permanent representative has been appointed in Germany are subject to the same rules as applicable (and described above) to shareholders resident in Germany holding the Class A Shares as business assets. The withholding tax withheld (including solidarity surcharge) will generally be credited against the shareholder’s personal income tax or corporate income tax liability in Germany if the prerequisites set out above (see “— Withholding Tax on Dividend Payments”) are fulfilled.

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Taxation of Capital Gains

Withholding Tax on Capital Gains

Capital gains realized on the disposal of Class A Shares are only subject to withholding tax if a domestic branch of a domestic or foreign credit or financial services institution (Kredit- oder Finanzdienstleistungsinstitut) or a domestic securities institution (inländisches Wertpapierinstitut) (each of which is referred to as the “German Disbursing Agent”) stores or administrates or carries out the disposal of the Class A Shares and pays or credits the capital gains. In those cases, the institution (and not the Company) is required to deduct the withholding tax at the time of payment for the account of the shareholder and to pay the withholding tax to the competent tax authority.

In the case the Class A Shares are held (i) as business assets by a sole proprietor, a partnership or a corporation and such shares are attributable to a German business or (ii) in the case of a corporation being subject to unlimited corporate income tax liability in Germany, the capital gains are not subject to withholding tax. In case of the aforementioned exemption under (i), the withholding tax exemption is subject to the condition that the paying agent has been notified by the beneficiary (Gläubiger) that the capital gains are exempt from withholding tax. The respective notification has to be filed with the tax office competent for the beneficiary by using the officially prescribed form.

Taxation of Capital Gains Realized by Shareholders Tax Resident in Germany Holding Class A Shares as Private Assets (Private Individuals)

For individual shareholders (individuals) resident in Germany holding Class A Shares as private assets, capital gains realized on the disposal of Class A Shares are subject to final withholding tax (Abgeltungsteuer). Accordingly, capital gains will be taxed at a flat tax rate of 25% plus 5.5% solidarity surcharge thereon totaling 26.375% and church tax in case the shareholder is subject to church tax because of his or her personal circumstances. An automatic procedure for deduction of church tax by way of withholding will apply to shareholders being subject to church tax unless the shareholder has filed a blocking notice (Sperrvermerk) with the German Federal Central Tax Office (details related to the computation of the specific tax rate, including church tax, are to be discussed with the personal tax advisor of the relevant shareholder). The taxable capital gain is calculated by deducting the acquisition costs of the Class A Shares and the expenses directly and materially related to the disposal from the proceeds of the disposal. Apart from that, except for an annual lump sum savings allowance (Sparer-Pauschbetrag) of up to €1,000 (for individual filers) or up to €2,000 (for married couples and for partners in accordance with the registered partnership law (Gesetz über die Eingetragene Lebenspartnerschaft) filing jointly), private individual shareholders will not be entitled to deduct expenses incurred in connection with the capital investment from their capital gain.

In case the flat tax results in a higher tax burden as opposed to the private individual shareholder’s personal income tax rate, the private individual shareholder can opt for taxation at his or her personal income tax rate. In that case, the withholding tax (including solidarity surcharge) withheld will be credited against the income tax. The option can be exercised only for all capital income from capital investments received in the relevant assessment period uniformly and married couples as well as for partners in accordance with the registered partnership law filing jointly may only jointly exercise the option.

Capital losses arising from the disposal of the Class A Shares can only be offset against other capital gains resulting from the disposition of the Class A Shares or shares in other stock corporations during the same calendar year. Offsetting of overall losses with other income (such as business or rental income) and other capital income is not possible. Such losses are to be carried forward and to be offset against positive capital gains deriving from the disposal of shares in stock corporations in future years. The constitutionality of such limitation on the offsetting of losses is currently the subject of a pending procedure at the German Federal Constitutional Court.

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The final withholding tax (Abgeltungsteuer) will not apply if the seller of the Class A Shares or in case of gratuitous transfer, its legal predecessor, has held, directly or indirectly, at least 1% of the Company’s registered share capital at any time during the five years prior to the disposal. In that case, capital gains are subject to the partial income rule (Teileinkünfteverfahren). Accordingly, only (i) 60% of the capital gains will be taxed at his or her personal income tax rate plus 5.5% solidarity surcharge thereon and church tax (if applicable) and (ii) 60% of the business expenses related to the capital gains are deductible for tax purposes. The withholding tax withheld (including solidarity surcharge) will be credited against the shareholder’s personal income tax liability in Germany.

Taxation of Capital Gains Realized by Shareholders Tax Resident in Germany Holding Class A Shares as Business Assets

If a shareholder holds Class A Shares as business assets, the taxation of capital gains realized on the disposal of such shares depends on whether the respective shareholder is a corporation, a sole proprietor or a partnership:

Corporations

Capital gains realized on the disposal of Class A Shares by a corporate shareholder are generally exempt from corporate income tax and trade tax. However, 5% of the tax-exempt capital gains are deemed to be non-deductible business expenses for tax purposes and therefore are effectively subject to corporate income tax (plus solidarity surcharge) and trade tax; i.e., tax exemption of 95%. Business expenses incurred in connection with the capital gains are entirely tax deductible.

Capital losses incurred upon the disposal of Class A Shares or other impairments of the share value are not tax deductible. A reduction of profit is also defined as any losses incurred in connection with a loan or security in the event the loan or the security is granted by a shareholder or by a related party thereto or by a third person with the right of recourse against the before mentioned persons and the shareholder holds directly or indirectly more than 25% of the Company’s registered share capital.

Special regulations apply, which may exclude aforementioned tax exemptions, if the Class A Shares are held by a Non-Exempt Corporation.

Sole Proprietors

If the Class A Shares are held by a sole proprietor, capital gains realized on the disposal of the Class A Shares are subject to the partial income rule (Teileinkünfteverfahren). Accordingly, only (i) 60% of the capital gains will be taxed at his or her personal income tax rate plus 5.5% solidarity surcharge thereon and church tax (if applicable) and (ii) 60% of the business expenses related to the dividend income are deductible for tax purposes. In addition, 60% of the capital gains are subject to trade tax if the Class A Shares are held as business assets of a permanent establishment in Germany within the meaning of the German Trade Tax Act (Gewerbesteuergesetz). The trade tax levied will be eligible for credit against the shareholder’s personal income tax liability based on the applicable municipal trade tax rate and the individual tax situation of the shareholder limited to currently up to 4.0 times the trade tax measurement amount.

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Partnerships

In the case the Class A Shares are held by a partnership, the partnership itself is not subject to corporate income tax or personal income tax as well as solidarity surcharge (and church tax) since partnerships qualify as transparent for German income tax purposes. In this regard, corporate income tax or personal income tax as well as solidarity surcharge (and church tax, if applicable) are levied only at the level of the partner with respect to their relevant part of the partnership’s taxable income and depending on their individual circumstances:

● If the partner is a corporation, the capital gains will be subject to corporate income tax plus solidarity surcharge (see above “— Corporations”). Trade tax will be levied additionally at the level of the partner insofar as the relevant profit of the partnership is not subject to trade tax at the level of the partnership. However, with respect to both corporate income and trade tax, the 95%-exemption rule as described above applies. With regard to corporations as partners, special regulations apply if they are held by a Non-Exempt Corporation, as described above.

● If the partner is a sole proprietor (individual), the capital gains are subject to the partial income rule (see above “—Sole Proprietors”).

In addition, if the partnership is liable to German trade tax, 60% of the capital gains are subject to trade tax at the level of the partnership, to the extent the partners are individuals, and 5% of the capital gains are subject to trade tax, to the extent the partners are corporations. However, if a partner is an individual, any trade tax paid on the level of the partnership will be eligible for credit against an individual partner’s personal income tax liability based on the applicable municipal trade tax rate and depending on the individual tax situation of the individual and further circumstances, limited to currently 4.0 times of the partial trade tax measurement (Gewerbesteuer-Messbetrag) and also limited to the amount of trade tax actually to be paid.

Partnerships can opt to be treated as a corporation for purposes of German income taxation. If the shareholder is a partnership that has validly exercised such option right, any capital gains from the disposal of shares or subscription rights are subject to corporate income tax (and, for the avoidance of doubt, trade tax).

Taxation of Capital Gains Realized by Shareholders Tax Resident Outside of Germany

Capital gains realized on the disposal of the Class A Shares by a shareholder tax resident outside of Germany are subject to German taxation provided that (i) the Class A Shares are held as business assets of a permanent establishment or as business assets for which a permanent representative has been appointed in Germany or (ii) the shareholder or, in case of a gratuitous transfer, its legal predecessor has held, directly or indirectly, at least 1% of the Company’s share capital at any time during a five years period prior to the disposal.

In these cases, capital gains are generally subject to the same rules as described above for shareholders resident in Germany. However, if capital gains are realized in case (ii) above by corporations tax resident outside of Germany that are not Non-Exempt Corporations, these capital gains are fully tax exempt under German tax law according to the case law of the German Federal Fiscal Court (Bundesfinanzhof). Additionally, except for the cases referred to in (i) above, most tax treaties concluded by Germany provide for a full exemption from German taxation except if the Company is considered a German real estate holding entity for treaty purposes.

German Taxation of Holders of Warrants

General

Holders of Warrants are likely to be taxed in particular upon certain forms of the exercise, sale or disposal of Warrants (taxation of capital gains) and the gratuitous transfer of Warrants (inheritance and gift tax).

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Taxation of Holders of Warrants Not Tax Resident in Germany

The capital gains from the disposition of the Warrants realized by a non-German tax resident holder of the Warrants would not be treated as German source income and not be subject to German income tax provided that (i) such non-German resident holder does not maintain a permanent establishment or other taxable presence in Germany that the Warrants form part of and (ii) the income does not otherwise constitute German-source income (such as income from the letting and leasing of certain German-situs property or income from certain capital investments directly or indirectly secured by German-situs real estate). If either requirement (i) or (ii) above is not met, a non-German tax resident holder will be subject to German taxation on the aforementioned capital gains corresponding to the taxation of holders of Warrants tax resident in Germany holding the Warrants as business assets, as set out below.

In this case, non-German resident holders of the Warrants are, in general, exempt from German withholding tax on capital gains. However, if capital gains derived from the Warrants are paid out or credited to the holder of the Warrants by a German Disbursing Agent, withholding tax may be levied under certain circumstances both in the case of business and non-business holders of Warrants. The withholding tax may be refunded based on an assessment to tax or under an applicable tax treaty, depending on the individual circumstances of the holder.

Taxation of Holders of Warrants Tax Resident in Germany

Withholding Tax on Capital Gains

The capital gains from the disposition (i.e., the difference between the proceeds from the disposal, redemption, repayment or assignment after deduction of expenses directly related to the disposal, redemption, repayment or assignment and the cost of acquisition) or (if applicable pursuant to the warrant agreement underlying the Warrants) a cash settlement (i.e., the cash amount received minus directly related costs and expenses, e.g., the acquisition costs) of the Warrants received by a German resident holder of Warrants holding the Warrants as private assets will be subject to German withholding tax if the Warrants are kept or administered in a custodial account with a German Disbursing Agent. The tax rate is 25% (plus a 5.5% solidarity surcharge thereon, resulting in an aggregate rate of 26.375%; plus church tax, if applicable). For individual holders who are subject to church tax, the church tax generally has to be withheld by the German Disbursing Agent based on an automatic data access procedure, unless the shareholder has filed a blocking notice (Sperrvermerk) with the Federal Central Tax Office.

In the case the Warrants have not been kept or administered in a custodial account with the same German Disbursing Agent since the time of their acquisition, the withholding tax rate will be applied to 30% of the (disposal) proceeds (the so called “Lump Sum Substitute Basis”), unless the current German Disbursing Agent has been notified of the actual acquisition costs of the Warrants by the previous German Disbursing Agent or by a statement of a bank or financial services institution from another member state of the European Union or the European Economic Area or from certain other countries (e.g., Switzerland or Andorra).

In the event of delivery of Class A Shares upon exercise of the Warrants, the tax consequences are not entirely clear under German tax law. In principle, the acquisition costs of the Warrants plus any additional sum paid upon exercise should be regarded as acquisition costs of the Class A Shares received upon physical settlement. Consequently and subject to the following, no capital gain and no withholding tax may result from such exercise and delivery of Class A Shares upon exercise. Withholding tax may in this case only apply to any gain resulting later from the subsequent disposal, redemption or assignment of the Class A Shares received under certain circumstances.

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Please note, however, that the German tax authorities have not confirmed the above treatment for the exercise of U.S. warrants, but only for the exercise of convertible bonds (Wandelschuldverschreibungen, Optionsscheine), wherefore, uncertainty remains regarding its application on the exercise of the Warrants. Therefore, there is a relevant risk that the delivery of Class A Shares upon exercise of the Warrants may constitute a taxable event and may attract withholding tax (as regards the latter, in the case a German Disbursing Agent is involved as per the above). Generally, capital gains are determined as the difference between (a) the proceeds of the sale or other disposition and (b) the acquisition costs plus the expenses directly connected to the sale or other disposition. It is unclear how exactly such capital gain would have to be determined in case of delivery of Class A Shares upon exercise of the Warrants; possibly, the fair market value of the Class A Shares at the time of the exercise would be deemed relevant.

In computing any German tax to be withheld, the German Disbursing Agent generally deducts from the basis of the withholding tax, subject to certain limitations, negative investment income realized by a non- business holder of the Warrants via the German Disbursing Agent (e.g., losses from the sale of other securities with the exception of shares). The German Disbursing Agent also deducts accrued interest on other securities (if any) paid separately upon the acquisition of the respective security by a non-business holder of Warrants via the German Disbursing Agent. In addition, subject to certain requirements and restrictions , the German Disbursing Agent may credit foreign withholding taxes levied on investment income in a given year regarding securities held by a non-business holder of Warrants in the custodial account with the German Disbursing Agent.

Non-business holders of the Warrants are entitled to an annual saver’s allowance of €1,000 for an individual or €2,000 for a married couple or registered civil union filing taxes jointly for all investment income received in a given year. Upon the non-business holder of the Warrants filing an exemption certificate (Freistellungsauftrag) with the Disbursing Agent, the Disbursing Agent will take the allowance into account when computing the amount of tax to be withheld.

No withholding tax will be deducted if the holder of the Warrants has submitted to the Disbursing Agent a certificate of non-assessment (Nichtveranlagungs-Bescheinigung) issued by the competent local tax office. The deduction of expenses related to the investment income (including gains with respect to the Warrants) is generally not possible for private investors.

German withholding tax should not apply to gains from the disposal, redemption, repayment or assignment of Warrants held by a German tax resident corporation. The same may apply to sole proprietors or partners of partnerships, where the Warrants form part of a trade or business or are related to income from letting and leasing of property, subject to further requirements being met (compare with “— Corporations, Sole Proprietors and Partnerships” below). However, there is a risk that losses resulting from the sale, other disposition or lapse of the Warrants may be ring-fenced and only offsetable against income from forward transactions (Termingeschäfte) in both of the aforementioned cases. Please note that for corporations, sole-proprietors or partnerships that or who are not tax resident in Germany, withholding tax may be levied, as set out above (compare with “— Taxation of Holders of Warrants Not Tax Resident in Germany”).

Taxation of Capital Gains

Individuals as the Holders of the Warrants

The personal income tax liability of a holder of the Warrants holding the Warrants as private assets deriving income from capital investments under the Warrants is, in principle, settled by the tax withheld (unless for example the income from Warrants qualifies as income from the letting and leasing of property). To the extent withholding tax has not been levied, such as in the case of Warrants kept in custody abroad or if no German Disbursing Agent is involved in the payment process, the non-business holder of Warrants must report his or her income and capital gains derived from the Warrants (through disposition or cash settlement, if applicable pursuant to the warrant agreement underlying the Warrants) on his or her tax return and then will also be taxed at a rate of 25% (plus solidarity surcharge of 5.5% thereon, resulting in an aggregate rate of 26.375%; and church tax, if applicable).

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In the event of delivery of Class A Shares upon exercise of the Warrants, the tax consequences are not entirely clear under German tax law. As per the above, there is a relevant risk that the delivery of Class A Shares upon exercise of the Warrants may constitute a taxable event and may attract withholding tax (as regards the latter, in case a German Disbursing Agent is involved as per the above). Generally, capital gains are determined as the difference between (a) the proceeds of the sale or other disposition and (b) the acquisition costs plus the expenses directly connected to the sale or other disposition. It is unclear how exactly such capital gains would have to be determined in case of delivery of Class A Shares upon exercise of the Warrants; possibly, the fair market value of the Class A Shares at the time of the exercise would be deemed relevant. For more detail, cf. above under the general comments.

If the withholding tax has been calculated on the basis of a Lump Sum Substitute Basis, a non-business holder of the Warrants may and in the case the actual gain is higher than 30% of the proceeds must also apply for an assessment on the basis of his or her actual acquisition costs. Further, a non-business holder may request that all investment income of a given year is taxed at his or her lower individual tax rate based upon an assessment to tax with any amounts over withheld being refunded. In each case, the deduction of expenses (other than transaction costs) on an itemized basis is not permitted.

With regard to non-business holders of Warrants, there is a relevant risk that such losses may only be applied against profits from income from capital investments derived in the same or, subject to certain limitations, in subsequent years. For assessment periods beginning after December 31, 2020, such losses incurred by non-business holders of the Warrants may only be applied against income from other forward/future or option transactions derived in the same or, subject to certain limitations, in subsequent years and the deductibility of such losses is limited to €20.000 per year.

In addition, losses of non-business holders arising from a bad debt loss (Forderungsausfall), a waiver of a receivable (Forderungsverzicht) or a transfer of an impaired receivable to a third party or from any other default can only be offset against other income from capital investments and only up to an amount of €20,000 per year. The same rules may apply if the Warrants expire worthless or lapse.

Corporations, Sole Proprietors and Partnerships

Where Warrants form part of a trade or business, the withholding tax, if any, will not settle the personal or corporate income tax liability. The respective holder of Warrants (or the partner of the partnership holding the Warrants) will have to report income and related (business) expenses resulting from the disposition or (if applicable) cash settlement of the Warrants or, potentially, from a delivery of Class A Shares on the tax return and the balance will be taxed at the holder’s (or the partner of the partnership holding the Warrants) applicable tax rate. Withholding tax levied, if any, will be credited against the personal or corporate income tax of the holder (or the partner of the partnership holding the Warrants). Capital gains resulting from a disposal, redemption, repayment, assignment, cash settlement (if applicable) or , potentially, from a delivery of Class A Shares upon exercise of the Warrants may also be subject to German trade tax, if the Warrants form part of a German trade or business. A corporate income tax or trade tax exemption should, in this case, not be applicable.

With regard to business holders of Warrants, there is a risk that losses resulting from the sale, other disposition or lapse of the Warrants may generally only be applied against profits from other forward/future or option transactions derived in the same or, subject to certain restrictions, the previous year. Otherwise these losses can be carried forward indefinitely and, within certain limitations, applied against profits from forward/future or option transactions in subsequent years. Further special rules apply to credit institutions, financial services institutions and finance companies within the meaning of the German Banking Act.

In the case of physical settlement of the Warrants, please see the above sections on disposal of Class A Shares for German taxation of the disposal or other transaction involving a resulting Class A Share.

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Solidarity Surcharge

The solidarity surcharge has been partially abolished or reduced as of the assessment period 2021 for certain German taxpayers. The solidarity surcharge continues, however, to apply for corporate income tax and capital investment income and, thus, on withholding taxes levied. In case the individual income tax burden for an individual holder is lower than 25%, the holder can apply for his or her capital investment income being assessed at his or her individual tariff-based income tax rate, in which case solidarity surcharge would be refunded.

Inheritance and Gift Tax

The transfer of Class A Shares or Warrants to another person by way of succession or donation is subject to German inheritance and gift tax (Erbschaft-und Schenkungsteuer) if at the time of transfer:

(i)the decedent, the donor, the heir, the donee or any other beneficiary has his/her/its residence, domicile, registered office or place of management in Germany, or is a German citizen who has not stayed abroad for more than five consecutive years without having a residence in Germany; or

(ii)(irrespective of the personal circumstances) the Class A Shares or Warrants are held by the decedent or donor as business assets for which a permanent establishment in Germany is maintained or a permanent representative is appointed in Germany; or

(iii)(irrespective of the personal circumstances) at least 10% of the registered share capital of Schmid is held directly or indirectly by the decedent or person making the gift, himself or together with a related party in terms of Section 1 (2) German Foreign Tax Act (Außensteuergesetz).

Special regulations apply to German citizens who maintain neither a residence nor their domicile in Germany but maintain a residence or domicile in a low tax jurisdiction and to former German citizens, also resulting in inheritance and gift tax. The few tax treaties on inheritance and gift tax that Germany has entered into may limit the German right to inheritance and gift tax to the case described under (i) above and, with certain restrictions, in case of (ii).

Value Added Tax (VAT)

No German value added tax (Umsatzsteuer) will arise in respect of any acquisition, ownership and/or disposal of the Class A Shares or Warrants unless in certain cases where a waiver of an applicable VAT exemption occurs. Any such waiver would require a supply of shares from one person taxable for VAT purposes to the enterprise of another VAT taxable person.

Transfer Taxes

No German capital transfer tax (Kapitalverkehrsteuer) or stamp duty (Stempelgebühr) or similar taxes are levied when acquiring, owning or disposing the Class A Shares or Warrants. Net wealth tax (Vermögensteuer) is currently not levied in Germany. German real estate transfer tax (Grunderwerbsteuer) may only be attracted by the acquisition (including by way of exercise of Warrants) or sale of Class A Shares or certain comparable transactions under very specific circumstances if Schmid, or a subsidiary entity to Schmid, own German situs real estate at such time, with “ownership” and “real estate” both having an extended meaning under the German Real Estate Transfer Tax Act (Grunderwerbsteuergesetz).

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The European Commission has published a proposal for a directive for a common financial transactions tax (“FTT”) in certain participating member states of the European Union, including Germany. The proposed FTT has a very broad scope and could, if introduced in the form of the proposal, apply to certain dealings in the Class A Shares (including secondary market transactions) in certain circumstances. However, the proposed FTT remains subject to negotiations between the participating member states, and it is currently unclear in what form and when an FTT would be implemented, if at all. Prospective holders of the Class A Shares are advised to monitor future developments closely and to seek their own professional advice in relation to the FTT.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable

H. Documents on Display

We are subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers and under those requirements will file reports with the SEC. Those reports may be inspected without charge at the locations described below. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange Act. Nevertheless, we will file with the SEC an Annual Report on Form 20-F containing financial statements that have been examined and reported on, with and opinion expressed by an independent registered public accounting firm.

We maintain a corporate website at www.schmid-group.com. We intend to post our Annual Report on our website promptly following it being filed with the SEC. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report. We have included our website address in this Annual Report solely as an inactive textual reference.

The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants, such as us, that file electronically with the SEC. With respect to references made in this Annual Report to any contract or other document of our company, such references are not necessarily complete, and you should refer to the exhibits attached or incorporated by reference to this Annual Report for copies of the actual contract or document.

I. Subsidiary Information.

Not applicable.

J. Annual Report to Security Holders

If we are required to provide an annual report to security holders in response to the requirements of Form 6-K, we will submit the annual report to security holders in electronic format in accordance with the EDGAR Filer Manual.

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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks that may result in changes of foreign currency exchange rates and interest rates, as well as the overall change in economic conditions in the countries where we conduct business.

For more information about financial risks we are exposed to, refer to of our audited combined financial statements, included elsewhere in this Annual Report.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. Debt Securities

Not applicable.

B. Warrants and Rights

See Exhibit 2.1 “Description of Securities.”

C. Other Securities

Not applicable.

D. American Depositary Shares

Not applicable.

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PART II.

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

A. Not applicable.

B. Not applicable.

C. Not applicable.

D. Not applicable.

E. Use of Proceeds.

The net proceeds from the closing of the Business Combination have been used, and are expected to continue to be used to pay the first tranche of the XJ Harbour payment under the XJ Subscription Agreement and for costs and expenses in relation to the de-SPAC, IPO and listing.

ITEM  15. CONTROLS AND PROCEDURES

A.Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, management, including our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures. Our chief executive officer and our chief financial officer have concluded that, as of December 31, 2023, our disclosure controls and procedures had two material weaknesses, one relating to the number of employees in the accounting and financial reporting teams and one relating to the shortcomings in design and implementation of effective controls over certain general information technology controls for IT systems (for more detail on these material weaknesses see Section “3. D. Risk Factors – Being a Public Company listed on a U.S. Stock Exchange”). Schmid's management, including our CEO and CFO, are working to remedy the material weaknesses identified.

Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitations, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding our required disclosures.

B.Management’s Annual Report on Internal Control Over Financial Reporting

This annual report does not include a report of management’s assessment regarding internal control over financial reporting or due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

C.Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

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D.Change in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM  16A. AUDIT COMMITTEE FINANCIAL EXPERT

Mr. Broderson fulfills the requirements for a financial expert on the audit committee. He worked as an attorney in the Tax and Legal Department of the auditing company Coopers & Lybrand, became a qualified tax consultant (Steuerberater) in Germany in 1980 and a qualified and certified public accountant (Wirtschaftsprüfer) in Germany in1982.

ITEM  16B. CODE OF ETHICS

We have adopted a code of conduct that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. The code of business conduct is available on our website. We intend to disclose any amendment, as described in Item 16B(d), to the code or any waivers of its requirements, as described in Item 16B(e), on our website (www.schmid-group.com).

ITEM  16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Principal Accounting Fees and Services

KPMG AG Wirtschaftsprüfungsgesellschaft (1021) Berlin, Germany, was our auditor for the year ended December 31, 2023. The following table sets forth the aggregate fees by the categories specified below in connection with certain professional services rendered. We did not pay any other fees to our auditor during the periods indicated below.

	For the Year ended	For the Year ended
	December 31, 2022*	December 31, 2023
	in € thousands	in € thousands
Audit Fees	1,615	1,300
Total Fees	1,615	1,300

* The audit fees for 2022 include costs for the audit of 2021.

Audit fees include fees billed for professional services rendered for audits of our annual consolidated financial statements, reviews of consolidated quarterly information, statutory audit of the Company and our subsidiaries, review of our securities offering documents in relation to the Business Combination, and IPO follow-on transactions such as the review of this Annual Report.

Audit-related fees include fees billed for assurance and related services that generally only the independent accountant can reasonably provide.

ITEM  16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM  16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

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ITEM  16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM  16G. CORPORATE GOVERNANCE

As a “foreign private issuer,” as defined by the SEC, we are permitted to follow home country corporate governance practices, instead of certain corporate governance standards required by Nasdaq for U.S. companies. Accordingly, we follow Dutch corporate governance rules in lieu of certain of Nasdaq’s corporate governance requirements. The DCGC applies to all Dutch companies listed on a government-recognized stock exchange, whether in the Netherlands or elsewhere. The DCGC is based on a “comply or explain” principle. Accordingly, companies are required to disclose in their Dutch annual reports whether or not they are complying with the various rules of the DCGC that are addressed to the board of directors or, if any, the supervisory board of a listed company and, if a company does not apply those provisions, to provide the reasons for such non-application. The DCGC contains principles and best practice provisions for managing boards, supervisory boards, shareholders and general meetings of shareholders, financial reporting, auditors, disclosure, compliance and enforcement standards.

The Company plans to apply the following Dutch corporate governance rules in lieu of the Nasdaq’s corporate governance requirements:

● The Company does not intend to follow NASDAQ Stock Market Listing Rule 5620(c), which requires that for any meeting of shareholders, the quorum must be no less than one-third of the outstanding Ordinary Shares. Instead, the Company will not require any quorum for their shareholders’ meetings, except as provided for by Dutch law in relation to decisions regarding certain matters.

● The Company does not intend to follow NASDAQ Stock Market Listing Rule 5620(b), which requires the solicitation of proxies, the provision of proxy statements for all meetings of the shareholders of the Company and the submission of such proxy solicitations to NASDAQ. Instead, the Company will be provided with a meeting agenda and the relevant documents to be discussed at the general meeting of shareholders, but a solicitation of proxies and the provision of a proxy statement will not be required.

● The Company does not intend to follow NASDAQ Stock Market Listing Rule 5635(d), which requires shareholder approval when a company proposes entering into any transaction, other than a public offering, involving the sale, issuance or potential issuance of the company’s shares (or securities convertible into or exercisable for such shares) equal to 20% or more of the outstanding share capital of such company or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of such shares. Dutch law has no such equivalent limitation, and shareholders have the power to issue shares or rights to subscribe for shares at a company’s general meeting of shareholders unless such power has been delegated to the board of directors. Accordingly, additional shareholder approval is not required for any share issuance made within the parameters delegated to the board of directors.

● The Company does not intend to follow NASDAQ Stock Market Listing Rule 5605(b)(2), which requires that independent directors regularly meet in executive sessions where only independent directors are present. Instead, the Company’s independent directors may choose to meet in executive sessions at their discretion.

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● The Company does not intend to follow NASDAQ Stock Market Listing Rule 5605(d)(2), which requires that a compensation committee be composed of at least two members who are each independent, and if the committee is comprised of at least three members one director may be appointed who is not an executive officer or employee or a family member of an executive officer. Instead, the Company intends to comply with the recommendations of the Dutch Corporate Governance Code, which requires that all members of the compensation committee be non-executive directors and more than half be independent.

● The Company does not intend to follow NASDAQ Stock Market Listing Rule 5605(e)(1), which requires that a nominations committee be comprised solely of independent directors, as Dutch law has no such requirement.

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

ITEM 16J. INSIDER TRADING POLICIES

The Company has adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of the registrant’s securities by directors, senior management, and employees. They are designed to promote compliance with applicable insider trading laws, rules and regulations. The insider trading policy has been filed as an exhibit hereto.

ITEM 16K. CYBERSECURITY

Risk management and strategy

Our approach to risk management is designed to identify, assess, prioritize and manage major risk exposures that could affect our ability to execute our corporate strategy and fulfill our business objectives.

We perform risk assessments and prioritize information security risks identified through the processes described below, including risks associated with our use of third-party service providers. We view information security risks as one of the key risk categories we face. We are at risk for interruptions, outages and breaches of the following systems, which are either owned by us or operated by our third-party vendors or suppliers: (a) operational systems, including business, financial, accounting, enterprise resource, product development, data processing or production processes; (b) facility security systems; (c) personal data of customers, employees, suppliers, or others; or (d) our digital software. As of the date of this Annual Report we are not aware of any information security threats that have or are reasonably likely to affect our business strategy, results of operations or financial condition and provide regular security awareness information for all employees and enhanced training for information security and other specialized personnel.

Our processes for preventing, identifying, assessing and managing information security risks and vulnerabilities are embedded across our business. Among other things, we: (a) review our software and technology to ensure that our security capabilities are up to standard and protect Schmid’s information technology; (b) review information security threat information published by government entities and other organizations in which we participate; and (c) engage third-party service providers to identify vulnerabilities and threats in our information technology environment, to enhance our security capabilities and protect our information technology and (d) adopt third-party tools for detecting and monitoring threats in our environment. We use the findings from these and other processes to improve our information security practices, procedures and technologies.

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Governance

The audit committee, which was formed as of April 30, 2024, is responsible for oversight of cybersecurity risks and preparing decision making for the wider board of directors. Information and reports concerning any significant cybersecurity threats and risk and the processes we have implemented to address them is received from the management board, which addresses and heads our cybersecurity risk management as part of its general oversight function. The audit committee will also receive various reports, summaries or presentations related to cybersecurity threats, risk and mitigation.

Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including the Chief Financial Officer and the Chief Executive Officer. The company management is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, and communicating key priorities to relevant personnel.

PART III.

ITEM 17. FINANCIAL STATEMENTS

We have elected to provide financial statements and related information pursuant to “Item 18 Financial Statements”.

ITEM 18. FINANCIAL STATEMENTS

Financial statements are filed as part of this Annual Report beginning on page F-1.

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ITEM 19. EXHIBITS.

Exhibit Number	Description
1.1	Articles of Association of Schmid Group N.V. as of April 30, 2024
2.1	Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
2.2	Warrant Agreement dated October 21, 2021 (incorporated by reference of Pegasus Digital Mobility Acquisition Corp.’s Current Report (File No. 001-40945) on Form 8-K filed with the SEC on October 26, 2021)
2.3	Warrant Assignment, Assumption and Amendment Agreement between Continental Stock Transfer & Trust Company, SCHMID Group N.V. and Pegasus Digital Mobility Acquisition Corp.
4.1	Business Combination Agreement, dated as of May 31, 2023, by and among Pegasus Digital Mobility Acquisition Corp., Gebr. Schmid GmbH, Pegasus TopCo B.V. (future SCHMID Group N.V.), and Pegasus MergerSub Corp. (incorporated by reference to Exhibit 2.1 to the Issuer’s Registration Statement on Form F-4 (Reg. No. 333-274701), filed with the SEC on March 25, 2024).
4.2	First Amendment to Business Combination Agreement, dated as of September 26, 2023 (incorporated by reference to Exhibit 2.2 to the Issuer’s Registration Statement on Form F-4 (Reg. No. 333-274701), filed with the SEC on March 25, 2024).
4.3	Second Amendment to Business Combination Agreement, dated as of January 29, 2024 (incorporated by reference to Exhibit 2.4 to the Issuer’s Registration Statement on Form F-4 (Reg. No. 333-274701), filed with the SEC on March 25, 2024).
4.4	Earn-out Agreement by and among TopCo, Pegasus and Anette Schmid and Christian Schmid dated January 29, 2024 (incorporated by reference to Exhibit 10.11 to the Issuer’s Registration Statement on Form F-4 (Reg. No. 333-274701), filed with the SEC on March 25, 2024).
4.5	Registration Rights Agreement by and among SCHMID Group N.V., Pegasus Digital Mobility Acquisition Corp., Pegasus Digital Mobility Sponsor LLC, Christian Schmid, and Anette Schmid, dated as of April 30, 2024.
4.6	Private Warrants Transfer Agreement by and among Pegasus Digital Mobility Sponsor LLC, Christian Schmid, and Anette Schmid, dated as of January 29, 2024 (incorporated by reference to Exhibit 10.9 to the Issuer’s Registration Statement on Form F-4 (Reg. No. 333-274701), filed with the SEC on March 25, 2024).
4.7	Warranty Agreement dated April 29, 2024 by and among Pegasus Digital Mobility Acquisition Corp., Gebr. Schmid GmbH, Pegasus TopCo B.V., Pegasus MergerSub Corp. and Validus/StratCap LLC.
4.8	Shareholders’ Undertaking, dated as of May 31, 2023, by and among Pegasus Digital Mobility Acquisition Corp., Anette Schmid, and Christian Schmid (incorporated by reference to Exhibit 10.3 to the Issuer’s Registration Statement on Form F-4 (Reg. No. 333-274701), filed with the SEC on March 25, 2024).
4.9	First Amendment to the Shareholders’ Undertaking dated January 29, 2024 (incorporated by reference to Exhibit 10.12 to the Issuer’s Registration Statement on Form F-4 (Reg. No. 333-274701), filed with the SEC on March 25, 2024).

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4.10	Private Warrants Undertaking Agreement dated as of January 29, 2024, by and among Pegasus Digital Mobility Acquisition Corp., Pegasus Digital Mobility Sponsor LLC, Gebr. Schmid GmbH, Anette Schmid, and Christian Schmid among others (incorporated by reference to Exhibit 10.10 to the Issuer’s Registration Statement on Form F-4 (Reg. No. 333-274701), filed with the SEC on March 25, 2024).
4.11	Company Lock Up Agreement, dated May 31, 2023, by and among Pegasus TopCo B.V., Pegasus Digital Mobility Acquisition Corp., Gebr. Schmid GmbH, and Christian and Anette Schmid (incorporated by reference to Exhibit 10.4 to the Issuer’s Registration Statement on Form F-4 (Reg. No. 333-274701), filed with the SEC on March 25, 2024).
4.12	Sponsor non-redemption and investment agreement dated April 26, 2024, by and among Pegasus Digital Mobility Sponsor LLC, Pegasus TopCo B.V. and Pegasus Digital Mobilitiy Acquisition Corp.
8.1	List of Subsidiaries of SCHMID Group N.V.
11.1	Code of Conduct of SCHMID Group N.V.
11.2	Insider Trading Policy of SCHMID Group N.V.
97.1	Clawback Policy of SCHMID Group N.V.
101	The following materials from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2023, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of December 31, 2021, 2022 and 2023; (ii) Consolidated Statements of Operations for the years ended December 31, 2021, 2022 and 2023; (iii) Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021, 2022 and 2023; (iv) Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2021, 2022 and 2023; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2022 and 2023; and (vi) Notes to Consolidated Financial Statements
104	Cover Page Interactive Data File (formatted as Inline eXtensible Business Reporting Language (iXBRL) and contained in Exhibit 101)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: May 15, 2024	SCHMID Group N.V.
	By:	/s/ Julia Natterer
	Name:	Julia Natterer
	Title:	Chief Financial Officer

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Gebr. Schmid GmbH

Index to the Combined Financial Statements

Content:	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 1021)	F-1
Combined Statements of Profit or Loss and Other Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021	F-2
Combined Statements of Financial Position as of December 31, 2023 and 2022	F-3
Combined Statements of Changes in Equity for the years ended December 31, 2023, 2022 and 2021	F-4
Combined Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021	F-5
Notes to the Combined Financial Statements	F-6
Unaudited Pro Forma Condensed Combined Financial Information	F-52

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the management board

Gebr. Schmid GmbH:

Opinion on the Combined Financial Statements

We have audited the accompanying combined statements of financial position of Gebr. Schmid GmbH (the Company) as of December 31, 2023 and 2022, the related combined statements of profit or loss and other comprehensive income (loss), changes in equity, and cash flows for each of the years in the three‑year period ended December 31, 2023, and the related notes (collectively, the combined financial statements). In our opinion, the combined financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2023, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the combined financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the combined financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG AG Wirtschaftsprüfungsgesellschaft

We have served as the Company’s auditor since 2023.

Munich, Germany

May 15, 2024

F-1

SCHMID – Combined Statements of Profit or Loss and
Other Comprehensive Income (Loss) for the years ended
December 31, 2023, 2022 and 2021

in € thousand	Note	2023	2022	2021
Revenue	7	90,246	95,058	39,481
Cost of sales	7	(63,849)	(61,721)	(30,506)
Gross profit		26,397	33,337	8,975
Selling	8	(12,577)	(11,369)	(7,851)
General administration	9	(12,538)	(6,973)	(6,298)
Research and development	10	(5,148)	(4,818)	(2,733)
Other income	11	15,985	3,375	1,924
Other expenses	12	(2,620)	(2,988)	(4,779)
(Impairment) / Reversal on impairment on financial assets	13	22,696	3,091	3,333
Operating profit (loss)		32,195	13,654	(7,427)
Finance income		19,685	5,758	3,360
Finance expenses		(10,091)	(17,746)	(18,014)
Financial result	14	9,594	(11,988)	(14,654)
Share of profit (loss) in joint ventures	15	(1,057)	—	—
Income (loss) before income tax		40,732	1,667	(22,082)
Income tax benefit (expense)	16	(2,778)	1,924	(5,195)
Net income (loss) for the period		37,954	3,591	(27,277)
Other comprehensive income (loss) that may be reclassified to profit or loss		(1,625)	(503)	130
Exchange differences on translation of foreign business units	26	(1,625)	(503)	130
Items that will not be subsequently reclassified to profit or loss		18	213	20
Remeasurement of defined pension benefit obligation	30	25	300	28
Income tax on remeasurement of defined pension benefit obligation		(7)	(88)	(8)
Other comprehensive income (loss)		(1,607)	(290)	150
Total combined comprehensive income (loss) for the reporting period		36,346	3,301	(27,127)
Net income (loss) attributable to
Owners of SCHMID		36,868	1,550	(24,452)
Non-controlling interests		1,086	2,041	(2,825)
Total combined comprehensive income (loss) attributable to
Owners of SCHMID		35,669	1,456	(24,597)
Non-controlling interests		677	1,845	(2,530)

The accompanying notes are an integral part of these combined financial statements (IFRS).

F-2

SCHMID – Combined Statements of Financial Position as of
December 31, 2023 and 2022

in € thousand	Note	12/31/2023	12/31/2022
ASSETS
Intangible assets	18	14,966	15,828
Property, plant and equipment including right-of-use	19 - 20	14,767	14,695
Financial assets	21	140	115
Deferred tax assets	16	2,543	2,594
Non-current assets		32,416	33,232
Inventories	22	16,353	25,029
Trade receivables and other receivables	23	47,032	108,838
Other current assets	24	5,073	4,815
Cash and cash equivalents	25	5,710	8,332
Current assets		74,166	147,014
Total assets		106,582	180,247
EQUITY AND LIABILITIES
Owner's net investment	26	70,606	70,479
Other reserves		(95,806)	(131,474)
Equity attributable to owners of SCHMID		(25,198)	(60,996)
Non-controlling interest	27	7,358	6,681
Equity		(17,841)	(54,315)
Non-current financial liabilities	28	22,190	34,406
Provisions for pensions	30	894	887
Non-current provisions	29	237	330
Deferred tax liabilities	16	4,388	2,504
Non-current lease liability	20	9,371	841
Non-current liabilities		37,081	38,968
Current financial liabilities	28	26,053	128,454
Current contract liabilities	8	17,931	30,569
Trade payables and other liabilities		25,899	25,400
Other current liabilities	31	13,113	8,706
Current lease liability	20	1,515	491
Current provisions	29	973	360
Income tax liabilities	16	1,858	1,615
Current liabilities		87,343	195,594
Total equity and liabilities		106,582	180,247

The accompanying notes are an integral part of these combined financial statements (IFRS).

F-3

SCHMID – Combined Statements of Changes in Equity for the years ended
December 31, 2023, 2022 and 2021

			Other reserves
				Accumulated	Equity
				other	attributable to
		Owner's net	Accumulated	comprehensive	owners of	Non-controlling
in € thousand	Note	investment	loss	income (loss)	SCHMID	interest	Total Equity
1/1/21		33,204	(108,333)	—	(75,129)	(287)	(75,417)
Income (loss) for the period		—	(24,452)	—	(24,452)	(2,825)	(27,277)
Other comprehensive income (loss)	26	—	—	(145)	(145)	295	150
Total comprehensive income (loss)		—	(24,452)	(145)	(24,597)	(2,530)	(27,127)
Capital increase minority shareholder	27	22,776	—	—	22,776	7,653	30,429
Transactions with shareholder	26	13,100	—	—	13,100	—	13,100
12/31/2021		69,080	(132,785)	(145)	(63,851)	4,836	(59,015)
Income (loss) for the period		—	1,550	—	1,550	2,041	3,591
Other comprehensive income (loss)	26	—	—	(94)	(94)	(196)	(290)
Total comprehensive income (loss)		—	1,550	(94)	1,456	1,845	3,301
Transactions with shareholder	28	1,974	—	—	1,974	—	1,974
12/31/2022		70,479	(131,235)	(239)	(60,996)	6,681	(54,315)
Income (loss) for the period		—	36,868	—	36,868	1,086	37,954
Other comprehensive income (loss)	26	—	—	(1,199)	(1,199)	(409)	(1,607)
Total comprehensive income (loss)		—	36,868	(1,199)	35,669	677	36,346
Transactions with shareholder	28	128	—	—	128	—	128
12/31/2023		70,606	(94,367)	(1,438)	(25,198)	7,358	(17,841)

The accompanying notes are an integral part of these combined financial statements (IFRS).

F-4

SCHMID – Combined Statements of Cash Flows for the years ended
December 31, 2023, 2022 and 2021

in € thousand	2023	2022	2021
Net income (loss) from continued operations	37,954	3,591	(27,277)
Adjustments to reconcile condensed net profit (loss) to net cash
Income tax expense (benefit)	2,778	(1,924)	5,195
Financial result	(8,537)	11,988	14,654
Depreciation and amortization	6,904	6,283	4,893
Net losses from the disposal of intangibles and PP&E	(602)	228	785
Reversal of impairments of financial assets, net	(22,696)	(3,091)	(3,333)
Other non-cash expenses	182	370	(2,541)
Working capital adjustments:
Changes in trade and other receivables	(6,729)	(16,610)	7,698
Changes in inventories	8,244	(5,821)	(6,678)
Change in working capital liabilities	(6,823)	5,674	(3,706)
Change in provisions	382	(408)	23
Taxes paid	(1,161)	—	—
Cash provided by (used in) operating activities	9,897	280	(10,285)
Purchases of intangible assets and property, plant and equipment	(6,907)	(4,616)	(5,040)
Receipts from sale and leasback transaction	8,926	—	—
Investments in financial assets	—	—	(89)
Payment for loan to shareholder	—	(2,552)	(2,408)
Repayment of loan to shareholder	70,000	—	—
Cash used in investing activities	72,019	(7,168)	(7,537)
Proceeds from debt financing	—	4,100	55
Payments for debt financing	(81,871)	(5,880)	(1,911)
Proceeds from equity contributions by minority shareholders	—	—	30,429
Proceeds from shareholder loans	—	795	2,782
Payment of lease liabilities	(819)	(609)	(451)
Interest paid	(1,941)	(1,708)	(799)
Transaction with shareholder	—	—	5,298
Decrease in restricted cash	917	137	270
Cash (used in) provided by financing activities	(83,714)	(3,165)	35,674
Net increase (decrease) in cash and cash equivalents	(1,798)	(10,053)	17,852
Effect of foreign exchange rate changes on cash and cash equivalents	(824)	—	—
Cash and cash equivalents at the beginning of the period	8,332	18,384	533
Cash and cash equivalents at the end of the period	5,710	8,332	18,384

The accompanying notes are an integral part of these combined financial statements (IFRS).

F-5

1.BUSINESS DESCRIPTION

Gebr. SCHMID GmbH (“the Company” or “SCHMID”) is a global supplier of equipment and services for various industries such as printed circuit boards (“PCB”), substrate manufacturing, photovoltaics, and glass and energy storage with a focus on the highest end of this market in terms of technology and developing performance including automation, wet processes (horizontal, vertical and single panel) and vacuum processes. This includes production techniques and building machines as well as extensive work with customers on development projects. SCHMID is also providing customer service through which customers are assisted with upgrades, spare parts, logistics, customer training in multiple languages, on-site management, maintenance contracts and project management.

SCHMID located in Freudenstadt, Germany, was founded in 1864. SCHMID employs over 700 employees worldwide. Manufacturing sites are located in Germany and China. SCHMID products are distributed worldwide by the SCHMID companies directly and by external trading partners. The customers of SCHMID include well-known companies from the hardware and software sector, the electronics industry and the solar and photovoltaic industry, which are located worldwide.

Research and development is a crucial factor for SCHMID’s business success. The majority of research work and the development of SCHMID technologies are conducted in Freundenstadt.

On May 31, 2023, Pegasus Digital Mobility Acquisition Corp., a Cayman Islands exempted company (“Pegasus”), entered into a Business Combination Agreement (the “Business Combination Agreement”), by and among Pegasus ,Gebr. SCHMID GmbH, Pegasus Topco B.V., a Dutch private limited liability company and wholly-owned entity of Pegasus (“TopCo”) and Pegasus MergerSub Corp., a Cayman Islands exempted company and wholly-owned entity of TopCo (“Merger Sub”). On April 30, 2024 TopCo was converted into a Dutch public limited liability company and renamed SCHMID Group N.V. concurrent with the closing of the Business Combination. The Company is presenting combined financial statements including Gebr. SCHMID GmbH and certain entities subject to the Business Combination Agreement. Historically, the reporting entity including the legal entities, which are disclosed in note 2. Basis of Presentation, has not prepared consolidated financial information. All such entities were under common control of Gebr. SCHMID GmbH for all periods presented, except for two joint ventures which are accounted for using the equity method. As described in footnote 35. Related Party Disclosures, Gebr. Schmid GmbH is jointly controlled by Christian Schmid and Anette Schmid.

2.BASIS OF PRESENTATION

The financial statements as of and for the years ended December 31, 2023 and 2022 have been prepared on a combined basis.

These combined financial statements have been prepared on a going concern basis in conformity with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

The basis of preparation and presentation is aimed at providing users with the most relevant and useful financial information about the reporting entity and by considering the objectives of financial reporting as defined and contemplated by the IASB’s Conceptual Framework and IAS 1, Financial Statements Presentation.

F-6

The legal entities which comprise the combined financial statements and its certain investments in joint ventures accounted for using the equity method are as follows:

	Country of	Ownership Interest
Name	incorporation	12/31/2023		12/31/2022
Gebr. Schmid GmbH	Germany	100	%	100	%
SCHMID Systems, Inc.	USA	100	%	100	%
SCHMID Singapore Pte. Ltd.	Singapore	90	%	90	%
SCHMID Korea Co., Ltd	South Korea	100	%	100	%
SCHMID Asia Ltd.	Hong Kong	100	%	100	%
SCHMID Technology Guangdong Co., Ltd.	China	76	%	76	%
SCHMID China Ltd.	Hong Kong	100	%	100	%
SCHMID Shenzhen Ltd.	China	100	%	100	%
SCHMID (Kunshan) Co., Ltd.	China	100	%	100	%
SCHMID Taiwan Ltd.	Taiwan	86	%	86	%
SCHMID Automation (Zhuhai) Co., Ltd.	China	100	%	100	%
SCHMID Solar (Shenzhen) Ltd.	China	100	%	100	%
SCHMID Trading (Zhongshan) Co. Ltd.	China	100	%	—	%
Joint ventures
Advanced Energy Storage Systems Investment Company	Saudi Arabia	51	%	51	%
SCHMID Avaco Korea, Co. Ltd.	South Korea	50	%	50	%

SCHMID presents its combined financial statements in Euros which is the Company’s presentation currency.

All amounts are presented in thousands of Euros (“€ thousand”), unless otherwise stated. Due to rounding, numbers presented may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

The combined financial statements of SCHMID were authorized for issuance by the management board on May 15, 2024.

Intra-reporting entity transactions and balances

Intra-SCHMID balances and transactions, and any unrealized income and expenses (except for foreign currency transaction gains or losses) arising from intra-SCHMID transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of SCHMID’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

The legal entities comprising the reporting entity historically have been recognizing overhead costs in their books and records. There have not been any other corporate functions outside of these group of legal entities providing central services. As such no additional allocations of expenses were necessary during the preparation of these combined financial statements.

Foreign Currency

The combined financial statements are presented in Euro. The Company’s foreign entities identified that the local currency is their functional currency and therefore the financial statements of these entities are translated to Euro using year-end exchange rates for assets and liabilities, and average exchange rates for income and expenses. Adjustments resulting from translating foreign functional currency financial statements into Euro are recorded as a separate component in the combined statements of comprehensive income.

Monetary assets and liabilities that are denominated in currencies other than the respective functional currencies are remeasured at the foreign currency rates as of the reporting date. Foreign currency transaction gains and losses from the remeasurement are included in other income and other expenses, as appropriate, in the combined statements of profit and loss for the period.

F-7

3.MATERIAL ACCOUNTING POLICIES

Business combination

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

● fair values of the assets transferred

● liabilities incurred to the former owners of the acquired business

● equity interests issued by the group, and

● fair value of any asset or liability resulting from a contingent consideration arrangement,

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Company recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred.

The excess of the:

● consideration transferred

● amount of any non-controlling interest in the acquired entity, and

● acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss.

Intangible assets

General

Intangible assets are measured at cost upon initial recognition. In subsequent periods, intangible assets are recognized at cost less any accumulated amortization and impairment losses. Intangible assets with finite useful lives are amortized on a straight-line basis. The estimated (remaining) useful lives as well as the amortization method are subject to annual reviews. If necessary, adjustments due to changes of the expected useful life or of the amortization method are accounted for prospectively as changes in accounting estimates. Amortization expenses for intangible assets are included in cost of sales.

F-8

Research and development (R&D) costs

In accordance with IAS 38 (Intangible Assets), expenses incurred during the R&D phase must be accounted for separately. Research is defined as original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. Such costs are expensed in the period incurred. Development is defined as the technical and commercial implementation of research findings.

In accordance with IAS 38, development costs must be capitalized if the criteria set out in IAS 38.57 are fulfilled. The Company starts to capitalize costs when management board approval is obtained. The approval is only provided when it is ensured that adequate technical, financial and other resources are available to complete the project and that the Company intends to complete and use the intangible asset. Furthermore, prior to approval, the development project leader provides the management board with an overview of the future economic benefits based on external market studies and internal analysis, as well as the documentation of technical feasibility. The Company has an R&D controlling system in place which enables management to determine expenditures attributable to specific technologies during their development.

The Company capitalizes costs for the development of a technology until the time that development of such technology is completed. The capitalized development costs are amortized on a straight-line basis over the economic useful life of 4–10 years based on the expected useful life of such technology. Amortization of capitalized development costs commences upon completion of the development project (technology).

Intangible assets with indefinite useful lives or intangible assets not yet available for use are not amortized; however, they are tested for impairment annually and whenever there is an indication that the intangible asset may be impaired based on the individual asset or on the level of the related cash-generating unit.

Patents and licenses

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated straight-line amortization and accumulated impairment losses. The useful life for patents and licenses is 5–8 years.

Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time (> 12 months) to get ready for their intended use or sale. Other borrowing costs are expensed in the period in which they are incurred.

Impairment tests

At the end of each reporting period, SCHMID assesses whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, SCHMID estimates the asset’s recoverable amount. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. An asset’s recoverable amount is the higher of an asset’s or cash generating unit (“CGU”)’s fair value less costs of disposal and its value in use. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

F-9

Property, Plant and Equipment

Property, plant and equipment are measured at cost, net of accumulated depreciation and any accumulated impairment losses. Costs of construction capitalized include all attributable direct costs including material and production overheads, and, where applicable, an initial estimate of the cost of dismantling and removing the item and restoring the site on which it is located.

Subsequent expenditures on assets are capitalized only when it is probable that future economic benefits associated with the expenditure will flow to SCHMID. Repairs and maintenance are expensed in profit or loss in the period the costs are incurred.

If items of property, plant and equipment are sold or disposed of, the gain or loss arising from the disposal is recognized as other operating income or expense in the combined statement of profit or loss and other comprehensive income (loss).

Depreciation is calculated on a straight-line basis based on the following useful lives:

	Useful life
Buildings and building improvements	10 - 50 years
Technical equipment and machinery	2 - 21 years
Office and other equipment	3 - 13 years

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Leases

SCHMID’s lease obligations primarily relate to rights to buildings mainly for its office, R&D and production premises as well as to leased vehicles. As lease contracts are negotiated on an individual basis, lease terms contain a range of different terms and conditions. Lease contracts are typically entered for a period of 1–10 years.

As a lessee, at the inception of a contract, SCHMID assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration.

SCHMID recognizes right of use assets which represent a right to use the underlying leased assets and corresponding lease liabilities which represent the present value of future lease payments, excluding short-term leases (lease term of 12 months or less from commencement date and do not contain a purchase options) and leases of low value assets acquisition costs less than €6 thousand), in the combined statement of financial position at the date at which the leased asset is available for use.

Liabilities arising from a lease are initially measured at present value of lease payments discounted using interest rate implicit in the lease or incremental borrowing rate in case interest rate implicit in the lease is not readily determinable.

Main components of the lease payments included in the measurement of the lease liability comprise the following:

● fixed lease payments;

● variable lease payments that depend on an index or rate, initially measured using the index or rate as at the commencement date;

● lease payments in an optional renewal period if SCHMID is reasonably certain to exercise an extension option;

F-10

● non-lease components are not separated from lease components but accounted for as a single lease components.

Lease payments contain principal elements and interest. Interest is presented as part of finance costs in the combined statements of profit and loss and other comprehensive income using the effective interest method. Principal and interest portion of lease payments have been presented within financing activities in the statement of cash flow. The carrying amount of lease liabilities is remeasured if there is change in the future lease payments due to change in index or rate.

Right of use assets at the lease commencement date are measured at cost less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities recognized. Cost of right of use assets includes lease liabilities, initial direct costs, prepayments made on or before the commencement date and less any lease incentives received. The right of use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to SCHMID by the end of the lease term or the cost of the right of use asset reflects that SCHMID will exercise a purchase option. In that case the right of use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. The right of use asset is assessed for impairment in case of a triggering event.

Assets related to retirement obligations for leased buildings are included in the cost of right of use assets for the respective underlying building lease.

If SCHMID acts as a lessor and the contract is classified as a finance lease, it is accounted for as a financing transaction. A receivable is valued at the amount of the net investment in the lease and the resulting interest income is recognized as income. The classification of a contract as an operating lease with SCHMID acting as the lessor means that the asset remains on SCHMID`s balance sheet. The income from it is recognized in the income statement over the term of the lease. The asset is amortized in accordance with the applicable IFRS standard, if necessary.

Sale and Leaseback Transaction

When SCHMID sells its assets and leases them back, it needs to be determined whether the sales part of the transaction qualifies as a true sale according to IFRS 15. If the transfer of an asset does not meet the requirements of IFRS 15 to be recognized as a sale, the asset remains on the balance sheet, and a financial liability is recognized equal to the transfer proceeds in accordance with IFRS 9.

In the case of a qualified sale, SCHMID measures the right of use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained. Consequently, SCHMID only recognizes any gain or loss that pertains to the rights transferred to the buyer-lessor.

If the amount received for selling an asset is not the same as the value of the asset, or if the lease payments are not in line with market rates, SCHMID will make adjustments to ensure that the sale proceeds are measured at a fair value. If the lease terms are below market rates, the difference will be treated as a prepayment of future lease payments. Conversely, if the lease terms are above market rates, the excess amount will be considered as additional financing provided by the buyer-lessor to the seller-lessee (IFRS 16.101).

Cash and Cash Equivalents

Cash and cash equivalents in the statement of financial position and statement of cash flows comprise cash at banks and short-term highly liquid deposits with original maturities of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.

F-11

Financial Instruments

Financial instruments are contracts that give rise to a financial asset for one entity and to a financial liability or equity instrument for another entity. SCHMID recognizes a financial instrument when it becomes a party to its contractual provisions. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the settlement date.

Financial assets and financial liabilities are offset, and the net amount is reported in the combined statement of financial position if there is a currently enforceable legal right to set off the recognized amounts and there is an intention to settle on a net basis or to realize the assets and settle the liabilities simultaneously. SCHMID currently has no such assets and liabilities.

Financial assets

SCHMID’s financial assets include cash and cash equivalents, trade and other receivables as well as other financial assets. Other financial assets consist of a loan to one shareholder and other loans.

Financial assets are initially measured at fair value plus, in the case of a financial asset not measured at fair value through profit or loss, transaction costs. As an exception of this general rule, trade receivables are measured at their transaction price.

Financial assets are classified at initial recognition as either measured at amortized cost (“AC”), fair value through other comprehensive income (“FVOCI”), or fair value through profit or loss (“FVTPL”) depending on the contractual cash flows and SCHMID’s business model for managing them. For all financial assets SCHMID has the objective to hold financial assets in order to collect the contractual cash flows. If the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, SCHMID will measure these financial assets at amortized cost under consideration of impairment (see following section). If the contractually agreed cash flows of a financial asset are not solely payments of principal and interest on principal amount outstanding, the respective financial asset has to be classified as measured at FVTPL. Currently all financial assets are measured at amortized cost that are determined by applying the effective interest rate (EIR) method. Effects resulting from impairment of financial assets that are not classified as FVTPL (including reversals of impairment losses on financial assets) are presented in a separate line item in profit or loss in accordance with IAS 1.82(ba), while changes in amortized cost due to the application of the EIR method are presented in finance income / expense.

A financial asset is derecognized (i.e., removed from SCHMID’s combined statement of financial position) when the rights to receive cash flows from the financial asset have expired or have been transferred and SCHMID has transferred substantially all risks and rewards of ownership.

Impairment of financial assets – expected credit losses (“ECLs”)

All financial assets subsequently measured at amortized cost are required to be impaired at initial recognition in the amount of their expected credit loss (“ECL”). ECLs are based on the difference between the cash flows due in accordance with the contract and all the cash flows that SCHMID expects to receive. ECLs are a probability-weighted estimate of credit losses.

For trade receivables with no significant financing component SCHMID applies the simplified approach as required by IFRS 9, which requires lifetime ECLs to be recognized from initial recognition of the receivables instead of monitoring the development of the customers’ credit risk. As a result, trade receivables are clustered into stage 2. In case of objective evidence of impairment, trade receivables have to be clustered into stage 3. The ECL for the uninsured proportion of the trade receivables is based on the probability of default of its customers provided by an external source.

F-12

For cash and cash equivalents advantage is taken of the simplification available for financial instruments with a low credit risk (“low credit risk exemption”) as of the reporting date. Factors that can contribute to a low credit risk assessment are debtor-specific rating information and related outlooks. The requirement for classification with a low credit risk is regarded to be fulfilled for counterparties that have at least an investment grade rating; in this case there is no need to monitor credit risks for financial instruments with a low credit risk. The default probabilities applied to determine the expected credit losses for cash and cash equivalents are based on credit default swap spreads that are quoted on markets, which take future-oriented macroeconomic data into account.

For the other financial assets, primarily the loan granted to one of SCHMID’s shareholder, the low credit risk exemption is not applied. Instead, it was considered credit-impaired as there was no repayment. The loan was repaid during 2023. For the determination of the ECL allowance the term-specific rating-based probability of default rates and historical recovery rates were applied.

In general, SCHMID defines a default event as a situation in which the debt is no longer recoverable. If the financial instrument is perceived to be unrecoverable, then the expectation is that future contractual cash flows will not occur. At this point in time, the balance is written off after giving consideration to any possible security that is available.

Financial liabilities

SCHMID’s financial liabilities include trade payables and other liabilities, lease liabilities (see note 20. Leases), a share option and borrowings. Borrowings consist of loans from financial institutions and other third parties, debt funds and related parties (including bifurcated embedded derivatives).

Financial liabilities are classified as measured at amortized cost ("FLAC") or fair value through profit or loss (“FVTPL”). All financial liabilities are recognized initially at fair value less, in the case of a financial liability not measured at FVTPL, directly attributable transaction costs.

Financial liabilities at FVTPL are measured at fair value and gains and losses are recognized in finance income / expense. Currently, SCHMID only accounts for a share option as well as separated embedded derivatives of loans as a financial liability at FVTPL. All other financial liabilities are subsequently measured at amortized cost using the Effective Interest (“EIR”) method. When applying the EIR method, SCHMID generally amortizes any fees, transaction costs and other premiums or discounts that are included in the calculation of the effective interest rate over the expected life of the financial instrument. Gains and losses are recognized in interest expense when the liabilities are derecognized as well as through the EIR amortization process. If SCHMID revises its estimates of the cash flows used for the initial EIR method of a financial liability, the carrying amount of the financial liability is being adjusted to reflect that fact.

An embedded derivative in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. The assessment whether to separate an embedded derivative is done only once at initial recognition of the hybrid contract. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows. If there are multiple embedded derivatives in a single hybrid contract that share the same risk exposure and are interdependent, they have to be treated as a combined embedded derivative. The (combined) embedded derivative is measured at fair value with changes in fair value recognized in profit or loss. The remaining host contract is measured at amortized cost.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The resulting gain or loss is recognized in the Combined Statements of Profit or Loss and Other Comprehensive Income (Loss).

F-13

Income Taxes

Current income taxes

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. This includes liabilities and/or receivables for the current period as well as for prior periods. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the reporting entity SCHMID operates and generates taxable income.

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred taxes

SCHMID uses the liability method of accounting for income taxes. Deferred income tax assets and liabilities represent temporary differences between the carrying amounts of assets and liabilities in the combined financial statements and their corresponding tax basis used in the computation of taxable income. Deferred tax however is not recognized on the initial recognition of goodwill, or the initial recognition of an asset or liability (other than in a business combination) in a transaction that affects neither tax nor accounting income.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and any unused tax losses to the extent it is probable that taxable profit will be available against which the deductible temporary differences, the carry forward of unused tax credits and the unused tax losses can be utilized.

Deferred tax liabilities are recognized for all taxable temporary differences associated with investments in entities and associates, except where SCHMID is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the asset is realized, or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax liabilities and assets are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and SCHMID intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax items are recognized similar to the underlying transaction either in profit or loss, other comprehensive income or directly in equity. Changes in deferred tax assets or liabilities are recognized as a component of tax expense (income) in the combined statement of profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

Deferred tax assets and deferred tax liabilities are not discounted and are always classified as non-current asset or liabilities in the balance-sheet.

SCHMID’s business activities are complex, and the related domestic and foreign tax interpretations, regulations, laws and case law are constantly changing. These issues can lead to uncertain tax positions. In accordance with IFRIC 23, uncertain tax positions are accounted for if it is probable that the tax authorities will not accept the income tax treatment applied. The better forecast of the "most likely amount" and the "expected value" has to be recognized.

F-14

Provisions

Provisions are recognized when SCHMID has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Fair Values of Assets and Liabilities

Fair value is a market-based measurement. For some assets and liabilities, observable market transactions or market information is available. For other assets and liabilities, observable market transactions or market information might not be available. When a price for an identical asset or liability is not observable, another valuation technique is used. To increase consistency and comparability in fair value measurements, there are three levels of the fair value hierarchy:

● Level 1: contains the use of unadjusted quoted prices in active markets for identical assets or liabilities

● Level 2: inputs are other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly

● Level 3: inputs are based on unobservable market data

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

SCHMID recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Pension benefits

SCHMID operates one defined benefit pension plan relating to one person. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. The defined benefit obligation is recognized within non-current provisions for pensions.

Remeasurements, comprising of actuarial gains and losses, are recognized immediately in the statement of financial position with a corresponding debit or credit in Other comprehensive income ("OCI") in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Net interest is calculated by applying the discount rate to the net defined benefit liability. SCHMID recognizes the changes in the net defined benefit obligation under OCI.

F-15

Revenue Recognition

The Company records revenue in accordance with IFRS 15 “Revenue from Contracts with Customers". The core principle of the guidance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. This guidance defines a five-step process to achieve this core principle and, in doing so, judgment and estimates are required within the revenue recognition process including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Revenue amounts are presented net of discounts.

Revenue from sales of machines and spare parts is recognized when the customer obtains control over the products sold upon delivery. Sales of machines sometimes include installation services and extended warranty services which, when requested, are priced as a bundle. However, when sold together, these promises qualify as separate performance obligations as they are capable of being distinct and distinct within the context of the contract. The Company allocates transaction prices to these performance obligations based on their relative standalone selling price using a cost-plus margin approach. The respective revenue is recognized after the installation is complete, which is usually after a period of two to three weeks. When selling machines, customers payments are typically divided into an advanced payment on receipt of order confirmation, an advance payment upon delivery and, when installation services are requested, a final payment after installation and customer acceptance of the services. Invoices are according to contractual terms typically payable within 30 – 90 days. Revenue from the sale of extended warranties is recognized overtime on a straight-line basis over the extended warranty period as there is no certain pattern of warranty cases over time and therefore, the benefit to the customer transfers ratably throughout the extension period.

The Company offers repair services, inspections and installations of modifications (“Services”), which are optional for customers and priced separately. When these promises are included in a contract with others, the Company considers these to be distinct performance obligations and allocates transaction prices based on their relative standalone selling price. Service revenue is recognized after the Company has satisfied the performance obligation by transferring the promised service to the customer which is usually not more than a period of two to three weeks. Services are invoiced after the service has been rendered and according to contractual terms and are typically payable within 30 days.

Certain of the Company’s contracts include the provision of development services over an extended period of up to three years (long-term development contracts). The Company develops machinery according to specific requirements provided by the Customer in exchange for nonrefundable consideration provided at fixed points throughout the contract and additional consideration based on the achievement of milestones.

In case of these long-term development contracts, revenue is recognized over time as these contracts meet the criteria of IFRS 15.35. Revenue resulting from fixed payments that the Company receives — which is not connected to certainly defined results — is recognized on a straight-line basis over the term of the contract as the Company efforts and inputs needed are expected to be relatively consistent overtime. Moreover, the Company receives variable consideration at the completion of certain milestones. Due to the high degree of uncertainty with respect to such payments, these are not included in the transaction price recognized overtime and instead are recorded as revenue upon completion of the relevant milestone. If the advance payments invoiced/received exceed the services already provided, the overpayment will be recognized and disclosed under contract liabilities. A contract asset is recognized if the services rendered exceed the advance payments invoiced/received. If the right to consideration is unconditional, a contract asset becomes a trade receivable. This is the case if the due date of the consideration is only dependent on the passage of time. Impairment of contract assets is measured, recognized and disclosed on the same basis as for financial assets within the scope of IFRS 9. SCHMID applies industry-standard payment terms when invoicing.

F-16

Inventories

SCHMID capitalizes and measures existing inventory at the lower of cost or net realizable value. The average cost method is used as the measurement standard for acquisition and production costs. The production costs include not only the direct unit costs but also an appropriate share of material and production overheads. Where necessary, impairments to reflect lower net realizable values as well as other inventory risks are recorded. An impairment loss is reversed, if the reasons for the write-down in the past no longer exist.

Government Grants

The Company has received various government grants related to innovation projects encouraged by governmental authorities which generally reimburse a specified amount or proportion of the costs related to such projects. As these grants are not received in the course of the normal trading transactions, these grants are treated as government grants in accordance with IAS 20. Government grants related to assets are recognized on the date on which the conditions for receipt of the grant are met and are deducted from the carrying amount of the asset; they are recognized in profit or loss over the life of a depreciable asset as a reduced depreciation expense.

Government grants related to costs incurred by SCHMID are recognized in profit or loss as other operating income in the period in which the Company recognizes as expenses the related costs to be compensated by the grants.

Joint Arrangements

Under IFRS 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. SCHMID only has investments in joint ventures. These are accounted for using the equity method, after initially being recognized at cost in the combined balance sheet.

Under the equity method of accounting, the investments are initially recognized at cost and adjusted thereafter to recognize SCHMID’s share of the post-acquisition profits or losses of the investee in profit or loss, and SCHMID’s share of movements in other comprehensive income of the investee in other comprehensive income. Where SCHMID’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, SCHMID does not recognize further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealized gains on transactions between SCHMID and its associates and joint ventures are eliminated to the extent of SCHMID’s interest in these entities. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by SCHMID.

The carrying amount of equity-accounted investments are tested for impairment in accordance with the policy described above.

New and amended standards adopted by SCHMID

The Company has applied the following standards and amendments for the first time for its annual reporting period commencing 1 January 2023:

● IFRS 17 Insurance Contracts

● Definition of Accounting Estimates – amendments to IAS 8

● International Tax Reform – Pillar Two Model Rules – amendments to IAS 12

● Deferred Tax related to Assets and Liabilities arising from a Single Transaction – amendments to IAS 12

F-17

● Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

New Standards and Interpretations not yet adopted by SCHMID

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning on or after January 1, 2023 and have not been applied in preparing these combined financial statements. None of these standards are expected to have a significant effect on the combined financial statements of SCHMID.

Standard	Effective date
Amendment to IFRS 16 – Leases on sale and leaseback	1/1/2024
Amendments to IAS 1:
- Classification of liabilities as current or non-current
- Non-current liabilities with covenants	1/1/2024
Amendment to IAS 7 and IFRS 7 – Supplier finance	1/1/2024
Amendment to IAS 21 – Lack of Exchangeability	1/1/2025

4.SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of SCHMID’s combined financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts. 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 period 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.

Accounting Judgments

R&D Costs

The area of R&D is of crucial importance for the sustainable and long-term success of SCHMID. For each project, management assesses whether the capitalization criteria for an internally generated intangible asset is fulfilled. Especially the distinction between research and development phase includes accounting judgement by the management.

Leasing

In the area of leasing, judgment is required when assessing renewal options. Especially if the options have to be executed over several years. The development of the business, the market and the macroeconomic situation are taken into account by management.

Sale and Leaseback

In evaluating a sale and leaseback transaction, the initial step is to verify if a sale has occurred according to the definition provided by IFRS 15. Accounting judgment is applied by management when reviewing the transfer of control.

Accounting Estimates

Impairment test

An impairment test on R&D costs capitalized on assets that are not yet ready for use is performed at each reporting date. For detailed information on key assumptions underlying recoverable amounts please refer to note 18. Intangible Assets.

F-18

Inventories

Inventories are recognized at the lower of historical cost and net realizable value. Net realizable value is the estimated selling price less estimated costs of completion and estimated costs necessary to finalize the sale. Reserves for inventories, e.g. slow moving items are calculated based on experience in the past. Management estimates are used in determining the expected selling price as well as estimations about slow moving items.

Deferred tax assets

Deferred tax assets are recognized if sufficient future taxable profit is available, including income from forecasted operating earnings and the reversal of existing taxable temporary differences. At each period-end, management evaluates the recoverability of deferred tax assets. As future developments are uncertain and partly beyond management’s control, assumptions are necessary to estimate future taxable profits as well as the period in which deferred tax assets will be recovered. Estimates are revised in the period in which there is sufficient evidence to revise assumptions.

5.SIGNIFICANT EVENTS IN THE PERIOD ENDED DECEMBER 31, 2023

Transactions related to the sale of Schmid Silicon Technology Group

In March 2023, a Stock Purchase Agreement (hereinafter referred to as "SPA") was entered into to sell Schmid Silicon Technology Holding GmbH and subsidiaries (hereinafter referred to as "the Silicon Group") to the Group 14 Technologies Group (hereinafter referred to as "G14"). Prior to the closing of the SPA on June 29, 2023, the Silicon Group was a related party of SCHMID and controlled by Christian Schmid (hereinafter referred to as "CS"), one of the owners of SCHMID. The proceeds from the sale of the Silicon Group were, among other things, used to repay the shareholder loan between CS and SCHMID. The proceeds from the shareholder loan were used to repay certain borrowings of SCHMID.

(a) Additionally, receivables from the Silicon Group which had been impaired in 2017 by SCHMID became recoverable as a result of the SPA resulting in an impairment reversal of €21,375 thousand.

(b) Also, as part of the SPA, certain liabilities of the Silicon Group due to SCHMID were settled with the transfer of shares of G14 to SCHMID valued at €17,664 thousand.

(c) Based on an agreement reached between CS, the Silicon Group and SCHMID in 2021, SCHMID was granted a bonus payment (hereinafter referred to as “Silicon exit bonus”) to be paid upon a successful sale of the Silicon Group to a third party. The Silicon exit bonus of €4,700 thousand was determined based on 5% of the net proceeds (after repayment of third party debt) received from a sale.

(d) In June 2023, CS repaid the shareholder loan to SCHMID with a total cash amount of €70,000 thousand.

(e) The expected credit loss of €1,418 thousand was therefore reversed.

Debt funds

During the year ended December 31, 2023, SCHMID signed agreements with both of the debt funds to repay the loans during 2023.

(f) The parties have agreed to modify certain terms of the loan, including amount and nature of repayments and interest rates resulting in loan extinguishment gains of €15,852 thousand. The extinguishment gains have been recorded in finance income.

(g) In addition, SCHMID and one of debt funds have agreed upon an additional payment of € 2,800 thousand to be paid by the Company, which resulted in finance expense at the same amount.

(h) One of the two loans was repaid in cash in June 2023.

F-19

(i) The second loan was repaid in September 2023 by transferring G14 shares amounting to €17,664 thousand to the debt fund by SCHMID. In addition, Schmid Verwaltungs GmbH transferred G14 shares to the debt fund to settle the complete loan liability of SCHMID. Schmid Verwaltungs GmbH (related party to SCHMID), by transferring G14 shares, repaid a loan receivable  from SCHMID towards Schmid Verwaltungs GmbH.

The following table shows the significant impacts of the transactions described above on the financial statements as of and for the year ended December 31, 2023:

			Shareholder		Receivable
	Silicon		receivable		Silicon exit		Group14		Debt
in € thousand	receivables		CS		bonus		shares		funds
01/01/2023	—		65,589		—		—		(104,166)
Other income	—				4,700	(c)	—		—
Reversal of impairment	21,375	(a)	1,418	(e)	—		—		—
Finance income	—		3,173		—		—		15,852	(f)
Finance expense	—		—		—		—		(4,302)
Cash payments	—		(70,000)	(d)	—		—		70,000	(h)
Non-cash settlement of receivables	(17,664)	(b)	—		—		17,664		—
Non-cash settlement of loans	(2,800)	(g)	—		—		(17,664)	(i)	22,616
Other	(911)		(73)		—		—		—
12/31/2023	—		107		4,700		—		—

6.SEGMENT AND GEOGRAPHIC INFORMATION

In accordance with IFRS 8, Operating Segments, the Company’s operating segments are based on the management approach. Accordingly, segments must be classified and disclosed based on the criteria used internally by the chief operating decision maker (CODM) for the allocation of resources and the evaluation of performance of the components of SCHMID. The Chief Executive Officer, who allocates resources and evaluates segment performance based on the reports regularly submitted to him is the CODM.

During the first half of 2023, in connection with the planned Business Combination transaction, management established a new management reporting and governance structure. The segment reporting of the historical combined financial statements as of and for the years ended December 31, 2023, 2022 and 2021 reflects the current management reporting structure.

As the CODM examines the Company’s performance from a product perspective and has therefore identified two operating segments:

(1) Technical equipment and processes includes mainly the sale of machines including installation and extended warranties.

(2) Spare parts and services includes the sale of spare parts as well as services including repairs, modifications of machines and inspections.

The operating segments are also the reporting segments of the Company.

The performance of the operating segments is measured on the basis of revenue and segment adjusted EBITDA, as measured for management reporting purposes. The measure is defined as net profit (loss) calculated in accordance with IFRS before financial result, including result from at equity investments, taxes, depreciation and amortization.

Assets are neither allocated to the operating segments nor regularly provided to the CODM.

F-20

SCHMID’s key financial metrics by segment are as follows:

	2023
	Technical			Total
	equipment	Spare parts		management
in € thousand	and processes	and services	Other	reporting
Revenues	78,743	11,503	—	90,246
Segment adjusted EBITDA	12,872	3,787	22,440	39,099

	2022
	Technical			Total
	equipment	Spare parts		management
in € thousand	and processes	and services	Other	reporting
Revenues	78,778	16,280	—	95,058
Segment adjusted EBITDA	14,155	9,329	(3,546)	19,937

	2021
	Technical			Total
	equipment	Spare parts		management
in € thousand	and processes	and services	Other	reporting
Revenues	27,587	11,894	—	39,481
Segment adjusted EBITDA	1,868	6,873	(11,276)	(2,534)

The column “Other” includes costs related to head office and group services as well as certain effects not directly attributable to the operating segments. In the financial year ended December 31, 2023 the increase in “Other” is mainly due to the reversal of the impairment of the Silicon receivables (see notes 5. Significant Events in the Period ended December 31, 2023 and 13. Reversal of Impairment of Financial Assets, net) and the gain resulting from bonus payments relating to disposals of several entities (see note 5. Significant Events in the Period ended December 31, 2023 ).

Reconciliation from total segment adjusted EBITDA to income (loss) for the period according to IFRS:

in € thousand	2023	2022	2021
Total segment adjusted EBITDA	39,099	19,937	(2,534)
Financial result	9,594	(11,988)	(14,654)
Amortization and depreciation	(6,904)	(6,283)	(4,893)
Share of profit (loss) in joint ventures	(1,057)	—	—
Income tax benefit (expense)	(2,778)	1,924	(5,195)
Net income (loss) for the period	37,953	3,591	(27,277)

Revenue can be split into the following geographical areas:

in € thousand	2023	2022	2021
China	15,308	39,424	17,652
Taiwan	1,634	12,846	3,814
USA	17,522	11,478	3,375
Germany	9,577	10,743	5,390
Malaysia	16,681	7,915	—
Austria	17,810	3,928	3,793
Other	11,714	8,724	5,457
Total	90,246	95,058	39,481

The revenues are allocated based on the country of the customer receiving the service or goods.

F-21

There are three customers in 2023 with a revenue share of more than 10 % individually of the total revenues. The revenue with the first customer amounts to €17,649 thousand (2022: €25,092 thousand, 2021: €9,931 thousand), €16,361 thousand for the second customer (2022: €11,876 thousand, 2021: €— thousand) and €12,280 thousand for the third customer (2022: €— thousand, 2021:€— thousand). Revenue for these three customers is recognized within both the “Technical equipment and processes” and “Spare parts and services” operating segments.

Non-current assets are distributed among geographical areas as follows:

in € thousand	12/31/2023	12/31/2022
Germany	26,853	28,334
China	2,504	1,922
Other	376	266
Total	29,733	30,523

The non-current assets include property, plant and equipment as well as intangible assets.

7.REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES

The split of SCHMID revenues according to types of sales categories is as follows:

in € thousand	2023	2022	2021
Machines1	77,554	73,151	25,626
Spare Parts	9,722	14,302	8,081
Service2	1,781	1,978	3,802
Other	1,189	5,627	1,971
Total	90,246	95,058	39,481

(1) Included within the “Machines” category is revenue from the sale and installation of machines, long-term development and extended warranties.

(2) Included within the “Services” category is revenue from repair services, installations of modifications and inspections.

Revenue recognized at a point in time was €81,761 thousand, €89,316 thousand and €36,832 thousand for the fiscal years ended December 31, 2023, 2022 and 2021, respectively. Revenue recognized over time was €8,485 thousand, €5,742 thousand and €2,649 thousand for the fiscal years ended December 31, 2023, 2022 and 2021, respectively.

At the end of fiscal year 2023, SCHMID had contract liabilities in connection with the sale of machines, spare parts and installations resulting from prepayments made by customers of €17,931 (December 31, 2022: €30,569 thousand, December 31, 2021: €25,682 thousand). The decrease in 2023 mainly results from a long-term development contract for which revenue is recognized over time in 2022. The services provided by SCHMID and the timing of payments made by the customer during the contract term may differ. In those cases, the contract is recognized in the Combined Statements of Financial Position as either a contract asset or a contract liability. Apart from contract liabilities in connection with customer prepayments, SCHMID recognizes long-term development contracts over time, which leads to a recognition of contract liabilities.

Changes to contract liabilities for years ended December 31, 2023, 2022 and 2021 are as follows:

in € thousand	2023	2022	2021
Balance at January 1	30,569	25,682	17,378
Sales revenues included in contractual liabilities at the beginning of the period	(30,406)	(25,682)	(17,378)
Increase due to customer payments received	17,769	30,569	25,682
Balance at December 31	17,931	30,569	25,682

F-22

At the end of fiscal year 2023, the Order Backlog for the machine sales amounts to €48,651 thousand (December 31, 2022: €79,571 thousand, December 31, 2021: €60,982 thousand). The Order Backlog for spare parts and services amounts to €6,380 thousand (December 31, 2022: €6,535 thousand, December 31, 2021: €7,239 thousand). All Order Backlog is expected to be realized within 1 to 3 years.

Order Backlog represents the goods or services ordered by customers but not delivered/provided as of the date of the statement of financial position.

SCHMID’s cost of sales include the following cost types:

in € thousand	2023	2022	2021
Personnel expenses	(16,690)	(16,221)	(14,094)
Material expenses	(35,767)	(34,274)	(9,519)
Depreciation/amortization	(4,904)	(4,147)	(2,746)
Other expenses	(6,488)	(7,079)	(4,147)
Total cost of sales	(63,849)	(61,721)	(30,506)

Other expenses include a variety of positions such as cost for outward freight, production related short-term leases and facility costs.

8.SELLING

Selling expenses consist of the following:

in € thousand	2023	2022	2021
Personnel expenses	(8,295)	(8,017)	(5,535)
Legal and consulting fees	(834)	(873)	(581)
Sales Commission	(241)	(475)	(95)
Distribution related external administration	(1,537)	(582)	(801)
Advertisement	(649)	(428)	(294)
Other expenses	(1,021)	(995)	(545)
Total selling expenses	(12,577)	(11,369)	(7,851)

Distribution-related external administration comprises costs including utilities, insurance, travel expenses or expenses for short-term leases. Other expenses include mainly depreciation.

9.GENERAL ADMINISTRATION

General administrative expenses consist of the following:

in € thousand	2023	2022	2021
Personnel expenses	(4,131)	(3,992)	(3,692)
Legal and consulting fees	(4,401)	(1,681)	(1,584)
External administrative expenses	(965)	(692)	(529)
Other administrative expenses	(3,042)	(607)	(493)
Total administrative expenses	(12,538)	(6,973)	(6,298)

External administrative expenses comprises allocated cost such as utilities, insurances, travel expenses or expenses for short-term leases. Other administrative expenses mainly include legal and consulting fees which increased significantly in 2023 due to the planned SPAC transaction.

F-23

10.RESEARCH AND DEVELOPMENT EXPENSES

R&D expenses that do not fulfill the recognition criteria according to IAS 38 consist of the following:

in € thousand	2023	2022	2021
Personnel expenses	(2,261)	(1,888)	(1,319)
Depreciation/amortization	(877)	(910)	(627)
Legal and consulting fees	(587)	(614)	(422)
R&D related external administration	(906)	(856)	(282)
Other research and development expenses	(517)	(549)	(83)
Total research and development expenses	(5,148)	(4,818)	(2,733)

R&D related administration comprises allocated cost such as utilities, insurance, travel expenses or expenses for short-term leases.

11.OTHER INCOME

Other income consists of the following:

in € thousand	2023	2022	2021
Foreign currency gains	2,969	1,503	538
Bonus payments	9,200	—	—
Other miscellaneous income	3,815	1,871	1,387
Total other income	15,985	3,375	1,924

The bonus payments are comprised of the Silicon exit bonus of €4,700 thousand (see note 5. Significant Events in the Period ended December 31, 2023) as well as an exit bonus related to Montratec. In 2018, the Company sold one of its subsidiaries, Montratec GmbH, to Montratec Sarl. The underlying stock purchase agreement included a clause on potential exit events, which requires Montratec Sarl to pay SCHMID up to €4,500 thousand (hereinafter referred to as “Montratec exit bonus”) upon a future exit of Montratec Sarl from Montractec GmbH. Additionally, SCHMID entered into a guarantee agreement with Schmid Grundstücke GmbH & Co. KG (referred to as “SGG”), an entity jointly controlled by shareholders of SCHMID, wherein SGG would reimburse the difference between the exit sale consideration actually received from Montratec Sarl and €4,500 thousand (hereinafter referred to as “Montratec guarantee”) in the event that the exit sale consideration is below €4,500 thousand. As a remuneration for this guarantee, SCHMID was required to pay SGG an amount equal to 1.5% p.a. of the €4,500 thousand per year until an exit event would occur. SCHMID was informed in April 2023 about this exit event, i.e. that Montratec GmbH was sold by Montratec Sarl in April 2023 which resulted in an exit bonus of €3,954 thousand being owed by Montratec Sarl to SCHMID and €546 thousand being owed by SGG. The bonus from Montratec has been received in cash during 2023, the payment from SGG as been netted with payables of SCHMID against SGG.

Other miscellaneous income includes a gain resulting from a cancelled sale and leaseback agreement with a third party (€1,875 thousand for the fiscal year ended December 31, 2023) as well as government grants related to income in an amount of €356 thousand for the fiscal year ended December 31, 2023 (2022: €519 thousand, 2021: €123 thousand). The grants are received in cash to compensate for expenses incurred in relation to research projects. In addition, other miscellaneous income includes income from asset disposals, mainly from the sale and leasback transaction (€508 thousand).

F-24

12.OTHER EXPENSES

Other expenses consist of the following:

in € thousand	2023	2022	2021
Foreign currency losses	(2,388)	(2,399)	(2,942)
Other taxes	(166)	(122)	(776)
Disposal of assets	—	(231)	(154)
Miscellaneous other items	(65)	(236)	(908)
Total other expenses	(2,620)	(2,988)	(4,779)

Miscellaneous other items mainly include banking fees and other service charges.

13.REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET

The reversal of impairments of financial assets includes the following amounts:

In € thousand	12/31/2023	12/31/2022	12/31/2021
Reversal of receivables from the Silicon Group	21,375	—	—
Reversal of impairment of shareholder loan (included in trade and other receivables)	1,418	3,091	3,284
Other	(97)	—	49
Total	22,696	3,091	3,333

For additional information on the Silicon Group impairment reversal refer to note 5. Significant Events in the Period ended December 31, 2023. The reversals of impairment of the shareholder loan in prior years are due to the fact that the estimated repayment date is getting closer every year.

The shareholder loan was repaid during the financial year ended December 31, 2023. Therefore, the expected credit loss that was previously recognized on the shareholder loan was reversed during the financial year ended December 31, 2023.

14.FINANCIAL RESULT

Financial result includes the following:

in € thousand	2023	2022	2021
Finance income	19,685	5,758	3,360
thereof fair value changes	—	1,669	124
thereof interest income and similar proceeds	3,883	4,089	3,236
thereof gain from loan extinguishment	15,802	—	—
Finance expenses	(10,091)	(17,746)	(18,014)
thereof interest portion of lease payments	(103)	(68)	(49)
thereof interest expense	(9,988)	(17,678)	(17,965)
Financial result	9,594	(11,988)	(14,654)

Interest income includes in 2023 the interest received on loans, mainly the shareholder loan. For further information on the extinguishment, see note 28. Financial Liabilities. Fair value changes in 2022 result from the fair value measurement of the share option (see note 28. Financial Liabilities) and the embedded derivatives that were bifurcated from certain borrowings. For further information on the interest on of lease liabilities please see note 20. Leases. Interest expenses are mainly resulting from changes in the book value of the loans by using the effective interest method.

F-25

Interest expenses are mainly resulting from financial liabilities and is recognized based on the effective interest method and the additional payment for the debt fund during 2023, see note 5. Significant Events in the Period ended December 31, 2023.

15.SHARE OF PROFIT (LOSS) IN JOINT VENTURES

The share of profit (loss) in joint ventures is relating to a capital injection in the Saudi Arabian joint venture in 2023 that was immediately expensed due to the book value of €0 thousand.

16.INCOME TAXES

Income Tax Benefit (Expense)

Income taxes recognized in the Combined Statement of Profit or Loss and Other Comprehensive Income are as follows:

in € thousand	2023	2022	2021
Current income tax (expense) / income	(1,044)	(2,908)	(1,839)
thereof prior years	168	(6)	(35)
Deferred tax (expense) / income	(1,735)	4,832	(3,357)
thereof temporary differences	(1,853)	12,693	(12,367)
thereof tax loss/interest carryforwards	118	(7,861)	9,010
Income tax as per statement of profit or loss	(2,778)	1,924	(5,195)

For entities domiciled within Germany a corporation tax rate of 15% was used for the calculation of deferred taxes. In addition, a solidarity surcharge of 5.5% on corporation tax and a trade tax rate of 13.3% were taken into account. This resulted in an overall tax rate of 29.125% (2022: 29.125%, 2021: 29.125%) for German companies, which is also SCHMID’s tax rate. At international SCHMID companies, the respective country-specific tax rates were used for the calculation of current and deferred taxes.

Tax Rate Reconciliation

The following table presents the reconciliation of expected tax expense and reported tax expense. Expected tax expense is determined by multiplying combined profit before tax from continuing operations by the total SCHMID tax rate of 29.125%:

in € thousand	2023		2022		2021
Income (loss) before income tax	40,732		1,667		(22,082)
Income tax rate	29.125	%	29.125	%	29.125	%
Expected income tax income (expense)	(11,863)		(485)		6,431
Tax rate differences	891		911		(2,270)
Non-deductible expenses	(79)		(573)		(1,204)
Tax -free income	1,263		495		2,755
Trade tax modifications	(116)		(269)		(417)
Tax effects from withholding tax	(166)		(370)		(1,485)
Tax effects from prior years	488		642		634
Permanent differences resulting from the statement of financial position	2,912		(8)		(2,486)
Loss utilisation of previously not recognized tax loss carryforwards	0		1,152		556
Change in valuation allowance from temporary differences and tax loss carryforwards	3,598		927		(4,904)
Change from interest carryforwards	333		(957)		(2,827)
Other reconciling items	(38)		460		21
Income tax benefit (expense)	(2,778)		1,924		(5,195)
Effective tax rate in %	6.82	%	(115.46)	%	(23.53)	%

F-26

Deferred Taxes

The deferred tax assets ("DTA") and deferred tax liabilities ("DTL") recognition on the financial statement line items in the Statement of Financial Position are summarized below:

	Deferred taxes	Deferred taxes in
	in statement of	other comprehensive	Currency translation
	profit or loss	income	adjustments	DTA	DTL
in € thousand				2023	2023
Non-current assets	(13,373)	—	(116)	3,628	(6,970)
Intangible assets	239	—	(126)	1,843	(4,193)
Property, plant and equipment	(2,167)	—	9	155	(2,542)
Financial assets	(11,444)	—	1	1,630	(235)
Current assets	14,109	—	49	382	(5,584)
Inventories	(487)	—	(6)	220	(598)
Receivables and other assets	15,526	—	52	149	(3,985)
Other current assets	(899)	—	3	—	(956)
Cash and cash equivalents	(31)	—	1	13	(44)
Non-current liabilities	3,288	(7)	(8)	2,813	(7,757)
Non-current borrowings	868	—	4	17	(7,433)
Provisions for pensions	52	(7)	(7)	140	(67)
Non-current provisions	(161)	—	—	60	(257)
Non-current lease liability	2,529	—	(5)	2,596	—
Current liabilities	(8,820)	—	(124)	8,472	(2,998)
Current borrowings	(7,995)	—	—	3,803	(575)
Current contract liabilities	(929)	—	(10)	1,525	—
Trade payables and other liabilities	520	—	(109)	1,600	(665)
Other current liabilities	629	—	(20)	1,104	(30)
Current lease liability	121	—	(4)	210	—
Current provisions	(1,166)	—	19	230	(1,727)
Tax loss/interest carryforward	3,061	—	(2)	6,167	—
Tax Loss Carryforward (CIT)	1,693	—	(2)	3,408	—
Tax Loss Carryforward (Trade Tax)	1,368	—	—	2,759	—
Interest Carryforward	—	—	—	—	—
Gross value	(1,735)	(7)	(194)	21,463	(23,308)
Netting				(18,920)	18,920
Recognition in the statement of financial position				2,543	(4,388)

F-27

	Deferred taxes	Deferred taxes in
	in statement of	other comprehensive	Currency translation
	profit or loss	income	adjustments	DTA	DTL
in € thousand				2022	2022
Non-current assets	9,460	—	(44)	15,085	(4,937)
Intangible assets	(28)	—	45	2,084	(4,547)
Property, plant and equipment	(78)	—	1	153	(381)
Financial assets	9,566	—	—	12,848	(9)
Current assets	(18,238)	—	70	1,801	(21,161)
Inventories	51	—	(3)	246	(131)
Trade receivables and other receivables	(18,193)	—	70	1,554	(20,969)
Other current assets	(96)	—	2	—	(60)
Cash and cash equivalents	—	—	—	—	—
Non-current liabilities	8,138	(88)	(577)	348	(8,571)
Non-current financial liabilities	7,334	—	—	—	(8,287)
Provisions for pensions	513	(88)	(575)	93	(65)
Non-current provisions	256	—	(1)	120	(155)
Non-current lease liability	35	—	(1)	136	(64)
Current liabilities	13,333	—	(67)	15,871	(1,453)
Current financial liabilites	8,367	—	—	11,223	—
Current contract liabilities	2,351	—	(4)	2,464	—
Trade payables and other liabilities	1,209	—	(51)	1,281	(757)
Other current liabilities	676	—	(5)	545	(80)
Current lease liability	27	—	(1)	93	—
Current provisions	704	—	(5)	266	(616)
Tax loss/interest carryforward	(7,861)	—	12	3,108	—
Tax Loss Carryforward (CIT)	(4,535)	—	12	1,717	—
Tax Loss Carryforward (Trade Tax)	(3,326)	—	—	1,392	—
Interest Carryforward	—	—	—	—	—
Gross value	4,832	(88)	(606)	36,213	(36,122)
Netting				(33,619)	33,619
Recognition in the statement of financial position				2,594	(2,504)

No deferred tax assets were recognized for the following tax attributes (gross):

	2023		2022		2021
in € thousand	Tax base	DTA	Tax base	DTA	Tax base	DTA
Deductible temporary differences	41,498	10,805	34,149	8,984	65,199	18,070
Tax loss carryforward (CIT)	91,405	14,701	108,229	17,415	75,903	12,641
Tax loss carryforward (trade tax)	49,147	6,536	65,308	8,686	45,834	6,096
Interest carryforward	35,229	9,089	36,956	9,535	33,209	8,568

The maturities of the tax loss carryforwards for which no deferred tax assets were recognized are as follows:

in € thousand	2023	2022	2021
Up to 5 years	2,685	5,107	3,310
Up to 10 years	1,772	1,064	927
Up to 15 years	4,508	5,187	3,943
Up to 20 years	—	—	340
unlimited	131,586	162,177	113,216

F-28

The reported tax loss and interest carryforwards mainly relate to the German SCHMID entities and can be carried forward indefinitely (German minimum taxation rules and interest stripping rules apply), however, they may be subject to restrictions of the German change in ownership rules (Sec. 8c Körperschaftsteuergesetz) going forward.

The tax loss and interest carryforwards mainly relate to entities that have a history of losses which have been accumulated in the previous years. The respective entities neither have any taxable temporary difference exceeding the deductible temporary differences nor any tax planning opportunities and documentation available that could partly support the recognition of these tax attributes as deferred tax assets. On this basis, SCHMID has determined that it cannot recognize deferred tax assets on the majority of tax attributes carried forward.

Taxable temporary differences associated with investments in entities, branches and associates and interests in joint arrangements in the amount of €931 thousand as of December 31, 2023 (December 31, 2022: €937 thousand) have not been recognized.

Deferred tax assets exceeding deferred tax liabilities in the amount of €522 thousand as of December 31, 2023 (December 31, 2022: €2,594 thousand) for companies that generated a loss in the current or previous period were recognized as these are considered to be recoverable.

On 27 March 2024, the German Growth Opportunities Act (Wachstumschancengesetz) was substantively enacted. As part of this act, the German minimum taxation rule has been temporarily changed for the fiscal years 2024-2027. As a result, the loss deduction has been increased from 60% to 70%. As a result SCHMID Group could benefit by a maximum amount of €522 thousand.

17.EARNINGS PER SHARE

The information on earnings per share pursuant to IAS 33 has not been presented, as the combined entities have not formed a statutory group and, as such, SCHMID has no historical capital structure.

18.INTANGIBLE ASSETS

Intangible assets comprise the following:

	Development	Patents and
in € thousand	Costs	licenses	Total
Costs of acquisition
1/1/2023	22,832	1,042	23,874
Additions	2,915	359	3,274
Disposals/Retirements	—	—	—
Foreign exchange differences	(17)	(28)	(46)
12/31/2023	25,729	1,372	27,102
Accumulated amortization/write downs
1/1/2023	7,495	552	8,046
Amortization	3,975	158	4,133
Disposals/Retirements	—	—	—
Foreign exchange differences	(17)	(26)	(44)
12/31/2023	11,452	684	12,136
Carrying amount:
1/1/2023	15,337	490	15,828
12/31/2023	14,278	689	14,966

F-29

	Development	Patents and
in € thousand	Costs	licenses	Total
Costs of acquisition
1/1/2022	22,968	6,461	29,429
Additions	3,219	389	3,607
Disposals/Retirements	(3,355)	(5,807)	(9,162)
Foreign exchange differences	—	(1)	(1)
12/31/2022	22,832	1,042	23,874
Accumulated amortization/write downs
1/1/2022	7,174	6,280	13,454
Amortization	3,529	80	3,609
Disposals/Retirements	(3,208)	(5,807)	(9,015)
Foreign exchange differences	—	(2)	(2)
12/31/2022	7,495	552	8,046
Carrying amount:
1/1/2022	15,794	181	15,976
12/31/2022	15,337	490	15,828

Retirements relate to intangibles assets with a net book value of zero that are no longer in use by SCHMID and have therefore been eliminated from the asset register.

Development costs represent internally generated intangible assets related to process and manufacturing technologies for various industries such as printed circuit board ("PCB"), substrate manufacturing, photovoltaics, and glass and energy storage, wet processes (horizontal, vertical and single panel) and vacuum processes. Patents and licenses include software licenses, licenses for the use of know-how and acquired patents. The amount of borrowing costs capitalised during the period 2023 is €494 thousand (December 31, 2022: €640 thousand) with a capitalisation rate of 10% (December 31, 2022: 10%).

SCHMID receives government grants that are related to self-developed technology and processes recognized as intangible assets. The grants are received to compensate for incurred expenses that are capitalized as intangible assets and therefore SCHMID reduces the asset value by the amount of the grant. An amount of €159 thousand was deducted from the capitalized book value during 2023, €268 thousand during 2022 and €723 thousand during 2021.

Impairment test on development cost

At each balance sheet date SCHMID performs an impairment test on development costs that are capitalized but not yet ready for use. The impairment test is performed on a CGU level. The recoverable amount of the CGU that includes these development costs (the entity using those technologies) was estimated based on the present value of the future cashflows expected to be derived from the CGU (fair value less cost to sell), using a pre-tax discount rate of 12.89% (December 31, 2022: 11.17%). The recoverable amount of the CGU was estimated to be higher than its carrying amount and no impairment was required.

F-30

19.PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is comprised of the following:

	Land,
	buildings and	Technical	Office and
	leasehold	equipment and	other	Assets under
in € thousand	improvements	machinery	equipment	construction	Total
Costs of acquisition or construction:
1/1/2023	21,303	18,263	14,561	—	54,127
Additions	—	1,679	1,410	513	3,602
Disposals/Retirements	(21,085)	(3,448)	(458)	—	(24,991)
Foreign exchange differences	1	(164)	(126)	—	(289)
12/31/2023	220	16,330	15,386	513	32,449
Accumulated depreciation:
1/1/2023	11,581	15,892	13,293	—	40,766
Depreciation	483	982	583	—	2,048
Disposals/Retirements	(11,995)	(3,447)	(414)	—	(15,856)
Foreign exchange differences	1	(114)	(101)	—	(214)
12/31/2023	71	13,314	13,359	—	26,744
Carrying amount:
1/1/2023	9,722	2,371	1,268	—	13,361
12/31/2023	149	3,016	2,027	513	5,704

	Land,
	buildings and	Technical	Office and
	leasehold	equipment and	other	Assets under
in € thousand	improvements	machinery	equipment	construction	Total
Costs of acquisition or construction:
1/1/2022	21,143	18,692	15,139	345	55,318
Additions	161	940	323	—	1,423
Disposals/Retirements	—	(1,638)	(858)	(12)	(2,507)
Transfers	—	333	—	(333)	—
Foreign exchange differences	—	(64)	(43)	—	(107)
12/31/2022	21,303	18,263	14,561	—	54,127
Accumulated depreciation:
1/1/2022	11,097	16,566	13,756	—	41,419
Depreciation	484	964	417	—	1,865
Disposals/Retirements	—	(1,585)	(842)	—	(2,426)
Foreign exchange differences	—	(53)	(38)	—	(92)
12/31/2022	11,581	15,892	13,293	—	40,766
Carrying amount:
1/1/2022	10,046	2,126	1,383	345	13,899
12/31/2022	9,722	2,371	1,268	—	13,361

Property, plant and equipment includes right-of-use assets amounting to €9,063 thousand as of December 31, 2023 (December 31, 2022: €1,334 thousand). For further information refer to note 20. Leases. Security pledges have been released in 2023 as the respective property has been sold.

F-31

20.LEASES

Lessee accounting

SCHMID’s lease obligations primarily relate to rights to buildings mainly for its office, R&D and production premises as well as to leased vehicles. The carrying amounts of right-of-use assets recognized and the movements during the period were as follows:

in € thousand	Real Estate	Vehicles	Total
1/1/2022	1,207	306	1,513
Additions to right-of-use assets	144	336	480
Depreciation	(430)	(211)	(642)
Foreign exchange differences	(15)	(2)	(17)
12/31/2022	906	428	1,334
Additions to right-of-use assets	8,402	178	8,581
Depreciation	(543)	(236)	(779)
Foreign exchange differences	(68)	(5)	(73)
12/31/2023	8,697	365	9,063

In December 2023, SCHMID signed a sale and leaseback contract with Schmid Grundstücke GmbH Co. KG, an entity controlled by Mrs. Schmid, for production facility and office buildings in Freudenstadt. The purchase price is €11,400 thousand. The lease term is 10 years. There is an extension option that can be exercised by the lessee 12 months before the end of the term. SCHMID can extend the lease term three times by 5 years each time. A lease payment of €100 thousand (excl. VAT) is due in advance each month. This resulted in an increase in the right-of-use asset in the amount of €7,092 thousand and a lease liability in the amount of €8,895 thousand. The gain on sale equals €507 thousand. As the sale and leaseback was concluded with a related party the rate implicit to the lease was used.

For other leases SCHMID cannot readily determine the interest rate implicit in the leases, therefore, it uses its incremental borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that SCHMID would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBRs used by SCHMID are calculated based on the risk-free rate, individual country risk premiums of underlying country and credit spread. The weighted average IBR on December 31, 2023 is 6.03% (December 31, 2022: 5.49%).

There are no variable lease payments resulting from indexed rental payments or other variable rental components. The carrying amounts of lease liabilities and the movements during the period were as follows:

in € thousand	Lease Liability
1/1/2022	1,528
Additions	433
Interest	68
Payments	(676)
Foreign exchange difference	(19)
12/31/2022	1,333
Additions	10,347
Interest	102
Payments	(819)
Foreign exchange difference	(77)
12/31/2023	10,886

F-32

The combined statement of profit or loss and other comprehensive income (loss) included the following amounts of lease related expense:

in € thousand	2023	2022	2021
Depreciation of right of-use-assets	(779)	(642)	(487)
Interest expense on lease liabilities	(103)	(68)	(49)
Short-term lease expenses	(383)	(523)	(341)
Lease expenses for low-value assets	(7)	(28)	(68)
Total amount recognized in expense	(1,273)	(1,260)	(945)

The below table provides information on the total cash outflow from all leases during the year:

in € thousand	2023	2022	2021
Principal paid	(715)	(609)	(451)
Interest paid	(103)	(68)	(49)
Short term and low value leases	(391)	(551)	(409)
Total amount paid	(1,209)	(1,227)	(908)

The below table shows a maturity analysis of undiscounted lease payments for which a right-of-use asset and lease liability were recognized:

in € thousand	12/31/2023	12/31/2022
≤ 1 year	2,108	564
> 1 ≤ 2 years	1,928	465
> 2 ≤ 5 years	4,081	446
> 5 years	6,014	—
Gross lease liabilities – minimum lease payments	14,130	1,476
Discount and foreign currency effects	(3,244)	143
Present value of the lease liabilities	10,886	1,333

Lessor accounting

A part of the office and laboratories buildings located at the headquarter are leased to a related party under an operating lease with rent payable on a monthly basis. Lease income from the operating lease where SCHMID is a lessor is recognized in other income on a straight-line basis over the lease term. The lease income per month amounts to €10 thousand and does not include variable lease payments that depend on an index or rate. The lease contract was fixed until March 31, 2022 and is automatically renewed each year for another 12 months if none of the parties terminates the agreement. As a result, the minimum lease payments to be received are €115 thousand in 2023 (2022: €115 thousand, 2021: €115 thousand). The asset underlying the lease contract is included in property, plant and equipment.

In addition, SCHMID is party to a sublease contract for an office building. SCHMID leases the office from a third party and subleases it to a related party. The lease-out is categorized as operating lease and has an indefinite lease term with a termination option for both parties of six months. The lease income per month amounts to €3 thousand and does not include variable lease payments that depend on an index or rate.

21.FINANCIAL ASSETS

Non-current financial assets mainly comprise deposits for leased buildings.

F-33

22.INVENTORIES

in € thousand	12/31/2023	12/31/2022
Raw materials and supplies	4,386	5,513
Work in progress	6,038	11,098
Finished goods	5,928	8,419
Inventories	16,353	25,029

In fiscal year 2023, write-downs of €1,052 thousand (2022: €833 thousand, 2021: €69 thousand) were recognized. Total reversals of impairment losses amounted to €83 thousand in the fiscal year 2023 (2022: €23 thousand, 2021: €1 thousand). The amount of inventories recognised as an expense during 2023 is €25,026 thousand (2022: €28,954 thousand, 2021: €9,293 thousand).

23.TRADE RECEIVABLES AND OTHER RECEIVABLES

in € thousand	12/31/2023	12/31/2022
Trade receivables	40,626	40,593
Receivables from joint ventures	1,599	2,656
Other receivables	4,807	65,589
Total trade and other receivables	47,032	108,838

Trade receivables have a residual term of less than one year. Receivables from joint ventures refer to SCHMID Avaco Korea, Co. Ltd and Schmid Energy Systems GmbH, an entity of the Arabian joint venture.

The main driver for the decrease in the other receivables is the repayment of a shareholder loan receivable (remaining balance as of December 31, 2023: €107 thousand; December 31, 2022: €65,158 thousand). Other receivables as of year end 2023 include the receivable against Christian Schmid for the Silicon bonus payment (€ 4,700 thousand).

24.OTHER CURRENT ASSETS

Other current non-financial assets are as follows:

in € thousand	12/31/2023	12/31/2022
Advance payments on inventories	1,317	2,635
Restricted cash	89	1,049
Prepaid expenses	3,667	730
Contract assets	—	401
Total other current non-financial assets	5,073	4,815

Restricted cash refers to bank accounts that are used as securities for customer prepayments, mainly in China. In addition, the increase in prepaid expenses is due to the planned business combination with Pegasus.

25.CASH & CASH EQUIVALENTS

Cash and cash equivalents include cash as well as deposits on bank accounts amounting of €5,710 thousand as of December 31, 2023 (December 31, 2022: €8,332 thousand).

26.EQUITY

Owners net investment represents the aggregation of the net assets of all entities that form the reporting entity of SCHMID.

Other reserves comprise loss carried forward, net profit/loss for the year, remeasurement of defined benefit obligation and currency translation differences.

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Non-controlling interest contains the equity, profit/loss carried forward and currency translation differences relating to the minority shareholders of the Group.

For details on the share option please refer to note 28. Financial Liabilities.

27.NON-CONTROLLING INTEREST

Non-controlling interests relate to SCHMID Singapore Pte. Ltd. (10.0%), SCHMID Technology Guangdong Co., Ltd. (STG) (24.1 %) and SCHMID Taiwan Ltd. (STL) (14.0 %).

STG was founded by SCHMID in 2020 and is a manufacturer of printed circuit boards (“PCB”) and photovoltaics (“PV”) production equipment in China. In June 2021 SCHMID concluded an investor agreement with XJ Harbour HK Limited (“XJ”). By way of a unilateral capital increase XJ obtained 20.9% of the registered capital of STG. In 2021 a further capital increase was executed. For further information on potential capital increases please refer to note 28. Financial Liabilities.

The following tables summarizes the information relating to each entity that has material NCI, before any intra-SCHMID eliminations.

			SCHMID
			Technology
	SCHMID		Guangdong Co.,		SCHMID Taiwan
12/31/2023	Singapore Pte. Ltd.		Ltd		Ltd.
NCI percentage	10.0	%	24.1	%	14.0	%
Non-current assets	—		5,118		185
Current assets	2,797		42,569		11,827
Non-current liabilities	—		847		605
Current liabilities	2,062		22,288		5,182
Net assets	736		24,552		6,224
Net assets attributable to NCI	74		5,917		868
Revenue	—		27,750		1,672
Profit	6,188		2,298		(402)
OCI	—		(1,550)		(252)
Total comprehensive income	6,188		748		(654)
Total comprehensive income allocated to NCI	619		180		(91)
Accumulated NCI end of period	77		6,487		794

			SCHMID
			Technology
	SCHMID		Guangdong Co.,		SCHMID Taiwan
12/31/2022	Singapore Pte. Ltd.		Ltd		Ltd.
NCI percentage	10.0	%	24.1	%	14.0	%
Non-current assets	—		4,575		71
Current assets	1,651		46,040		12,704
Non-current liabilities	—		568		694
Current liabilities	7,104		26,244		5,203
Net assets	(5,453)		23,804		6,879
Net assets attributable to NCI	(545)		5,737		960
Revenue	—		38,753		12,873
Profit	(7)		6,068		4,152
OCI	—		(639)		(303)
Total comprehensive income	(7)		5,429		3,849
Total comprehensive income allocated to NCI	(1)		1,308		537
Accumulated NCI end of period	(543)		6,335		889

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			SCHMID
			Technology
	SCHMID		Guangdong Co.,		SCHMID Taiwan
12/31/2021	Singapore Pte. Ltd.		Ltd		Ltd.
NCI percentage	10.0	%	24.1	% *	14.0	%
Non-current assets	—		4,876		197
Current assets	1,698		23,857		4,993
Non-current liabilities	—		841		66
Current liabilities	7,144		9,518		2,095
Net assets	(5,445)		18,374		3,030
Net assets attributable to NCI	(545)		4,428		423
Revenue	—		9,762		3,954
Profit	(33)		(13,359)		424
OCI	—		753		297
Total comprehensive income	(33)		(12,606)		721
Total comprehensive income allocated to NCI	(3)		(2,627)		101
Accumulated NCI end of period	(542)		5,026		352

Cash flow statement SCHMID Technology Guangdong Co., Ltd
in € thousand	2023	2022	2021
Cash flow from operating activities	666	(1,688)	(11,650)
Cash flow from investing activities	(472)	(502)	(16,449)
Cash flow from financing activities	(21)	(452)	32,313
Effect of foreign exchange rate changes on cash and cash equivalents	(119)	116	93
Net increase (decrease) in cash and cash equivalents	262	(2,525)	4,307

28.FINANCIAL LIABILITIES

The following table shows an overview of the financial liabilities of SCHMID:

in € thousand	12/31/2023	12/31/2022
Non-current financial liabilities	22,190	34,406
Current financial liabilities	26,053	128,454
Total financial liabilities	48,244	162,860

The following table presents details on SCHMID’s borrowings.

in € thousand	12/31/2023	12/31/2022
Non-current borrowings	22,190	34,406
Loans from debt funds	—	24,393
Loans from other third parties	2,336	—
Loans from shareholders	19,854	10,013
Current borrowings	26,053	128,454
Loans from banks	1,225	12,003
Loans from debt funds	—	79,773
Loans from other third parties	—	3,540
Loans from shareholders	8,102	16,493
Loans from other related parties	16,726	16,646
Total borrowings	48,244	162,860

Loans from debt funds

The loans from debt funds line item consisted of five loans received from two private debt funds. In 2023, SCHMID repaid all loans from debt funds. For further details see note 5. Significant Events in the Period ended December 31, 2023

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Loans from banks

During 2023, three loans from banks have been repaid. As of December 31, 2023, SCHMID has two loans from banks.

Loans from other third parties

Loans from other third parties mainly consist of loans from two individuals that are not related to SCHMID. In August 2023, one of the third party loans amounting to €1,234 thousand has been repaid. The other loan carries a floating interest rate of EURIBOR plus 3 % margin and had initial term of two years.

Loans from shareholders

The shareholders provided loan facilities of €15 million and €11 million in 2016. At the end of 2016, both shareholders waived part of their claims (€5 million). As the waivers are with debtor warrants, the claims will revive once a certain equity ratio is reached. As of December 31, 2023, SCHMID did not reach the equity ratio, but is expecting to reach the equity ratio within the next year. As a result, for both events the carrying amount was adjusted by recording the change in carrying amount in interest expense. The new carrying amount reflects the new estimated cash flows discounted with the original effective interest rate. For the remaining €19,854 million the shareholders declared their claims as subordinated to all other liabilities of SCHMID to ensure that the satisfaction of their claims will not lead to an over-indebtedness. Interest is floating at EURIBOR plus 1% margin, whereby EURIBOR is floored at 0.25%.

Loans from other related parties

The loans from related parties are provided by key management personnel and Schmid Grundstücke GmbH & Co. KG, which is an entity controlled by a related party. For further details please refer to note 35. Related Party Disclosures.

Share option

In 2021 SCHMID entered into an agreement with an Investor to obtain a shareholding in the entity SCHMID Technology (Guangdong) Co. Ltd. (STG). In the investment agreement, it was agreed that the investor acquire 20.9% of the ownership in STG for €25.0 million in a first step and at the same time SCHMID grants the investor the right to acquire further shares at two occasions. In December 2021 the investor acquired a further 3.2% of the shares in STG for a predetermined price of €5.0 million. In addition, the investor had the right to increase its ownership in STG by a further 5.6% after June 30, 2022. The price of those shares is dependent on the achievement of a certain revenue target and will be adjusted if the target is not met.

As not all capital increases had been executed as of the year-ended 2021 an embedded derivative was recognized under IFRS 9. Given the positive development of the entity a derivative liability was recognized as of year-end 2021 and during 2022. At year-end 2022 the pre-defined time frame for the revenue target ended at which time the price for the shares was fixed. As the fixed-for-fixed criteria for classification as equity was fulfilled at this time, the derivative liability was reclassified to Owners Net Investment at its fair value. Despite the fact that the price became fixed at the end of 2022 the Investor has not transferred the additional required investment. In 2024 a new agreement was signed. For further details please refer to note 36. Events after the Reporting Period.

For the years ended 2023 and 2022 the minority investment was treated as non-controlling interest according to IFRS 10.26

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29.OTHER PROVISIONS

Movement in provisions during the year is as follows:

				Reversal of
				unused
In € thousand	12/31/2022	Additions	Utilization	amounts	12/31/2023
Warranty provision	211	211	(184)	—	238
Jubilee provision	119	482	(603)	—	(2)
Total non-current provisions	330	693	(787)	—	237
Warranty provision	139	152	(66)	—	225
Provision for legal claims	67	44	—	(58)	53
Other provisions	153	2,308	(1,454)	(312)	695
Total current provisions	360	2,504	(1,520)	(370)	973

				Reversal of
				unused
In € thousand	12/31/2021	Additions	Utilization	amounts	12/31/2022
Warranty provision	203	99	(91)	—	211
Jubilee provision	163	(30)	(14)	—	119
Total non-current provisions	366	70	(106)	—	330
Warranty provision	228	25	(114)	—	139
Provision for legal claims	32	123	(88)	—	67
Other provisions	191	7	(45)	—	153
Total current provisions	451	155	(247)	—	360

30.POST-EMPLOYMENT BENEFITS

Defined contribution plans

SCHMID’s expenses for defined contribution plans were €1,677 thousand for the year ended 2023 (2022: €1,552 thousand, 2021: €1,528 thousand). No assets or liabilities are recognized in SCHMID’s balance sheet in respect of such plans, apart from regular prepayments and accruals of the contributions withheld from employees’ wages and salaries and of SCHMID’s contributions.

Defined benefit plan

Corporate post-retirement benefits are provided by SCHMID in Germany through a defined benefit plan with one beneficiary who is also a related party (please refer to 35. Related Party Disclosures). The beneficiary was granted a fixed pension commitment in 2012 as part of a deferred compensation agreement in form of a lump-sum payment in the event of invalidity or reaching the age of 67. The Company has no plan assets in connection with the pension obligation.

The present value of the defined benefit obligation at the end of the fiscal year 2023 amounted to €894 thousand (December 31, 2022: €887 thousand, December 31, 2021: €1,173 thousand)

Reconciliation of the net defined benefit liability:

In € thousand	2023	2022	2021
Net defined liability at January 1	887	1,173	1,189
Defined benefit income recognized in combined statement of profit or loss	33	14	12
Defined benefit cost recognized in other comprehensive income	—	300	28
Net defined liability at December 31	894	887	1,173

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Reconciliation of the amount recognized in the combined statement of financial position:

In € thousand	2023	2022	2021
Employee benefit obligations recognized as of January 1	887	1,173	1,189
Actuarial adjustments	(26)	(300)	(28)
thereof: experience adjustments	(2)	2	2
thereof: adjustments for financial assumptions	(24)	(302)	(30)
Interest expense	33	14	12
Employee benefit obligations recognized as of December 31	894	887	1,173

The expense recognized in the combined statements of profit and loss and other comprehensive income is as follows:

In € thousand	2023	2022	2021
Actuarial gains (-) / losses (+) deriving from changes in financial assumptions	(24)	(302)	(30)
Actuarial gains (-) / losses (+) deriving from experience adjustments	(2)	2	2
Included in other comprehensive income	(26)	(300)	(28)
Interest income	33	14	12
Included in the combined statements of profit or loss	33	14	12
Total included in the combined statements of profit or loss and other comprehensive income (loss)	7	(286)	(16)

The interest cost relating to the obligation is a component of the result from financing activities.

The following were the principal actuarial assumptions as of:

	12/31/2023		12/31/2022
Discount rate	4.00	%	3.75	%

Sensitivity Analysis

The main actuarial assumption is used to calculate the provisions for post-employment benefits the discount rate. A reasonably possible increase, or respectively decrease, in the significant actuarial assumptions would have had the following impact on the present value of the post-employment benefit obligation as of the respective reporting dates:

	12/31/2023		12/31/2022
Discount rate (+0.25%)	4.25	%	4.00	%
Present value of the post-employment benefit obligations (in € thousand)	872		862
Discount rate (-0.25%)	3.75	%	3.50	%
Present value of the post-employment benefit obligations (in € thousand)	918		912

Duration

The duration of the obligation is 12 years as of December 31,2023 (December 31, 2022: 13 years).

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31.OTHER CURRENT LIABILITIES

Other non-financial liabilities are as followed:

in € thousand	12/31/2023	12/31/2022
Personnel related accruals	3,175	2,700
Tax related accruals	1,348	1,481
Audit related accruals	1,297	286
Miscellaneous other current liabilities	7,294	4,239
Total other current liabilities	13,113	8,706

In 2023 miscellaneous other non-financial liabilities include outstanding invoices for legal and consulting fees amounting to €2,707 thousand, installation and transportation costs amounting to €1,344 thousand as well as various smaller items.

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32.FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Carrying Amounts and Fair Values

The following tables disclose the carrying amounts of each class of financial instruments together with its corresponding fair value and the aggregated carrying amount per category.

				12/31/2023
Financial instruments, analyzed by classes and categories		Carrying		Fair value
in € thousand	Category	amount	Fair value	hierarchy
Non-current assets
Financial assets
Other loans and other investments	AC	28	28	n/a
Other non-current financial assets	AC	112	n/a	n/a
Current assets
Trade receivables and other receivables
Trade receivables	AC	40,673	n/a	n/a
Receivables from joint ventures	AC	1,599	n/a	n/a
Other receivables
Exit bonus	AC	4,700	4,700	n/a
Receivables from shareholder	AC	107	n/a	n/a
Other current assets
Restricted cash	AC	89	n/a	n/a
Other	AC	1,317	n/a	n/a
Cash and cash equivalents	AC	5,710	n/a	n/a
Non-current liabilities
Non-current borrowings
Loans from other third parties	FLAC	2,336	2,063	Level 3
Loans from shareholders	FLAC	19,854	17,630	Level 3
Current liabilities
Current borrowings
Loans from banks	FLAC	1,225	n/a	Level 3
Loans from shareholders	FLAC	8,102	n/a	n/a
Loans from other related parties	FLAC	16,726	n/a	Level 3
Trade payables and other liabilities	FLAC	25,899	n/a	n/a

		Carrying
Thereof aggregated by categories	Category	amount
Financial assets measured at amortized cost	AC	54,335
Financial liabilities measured at fair value	FVTPL	—
Financial liabilities measured at amortized cost	FLAC	74,142

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Financial instruments, analyzed by classes and categories				12/31/2022
		Carrying		Fair value
in € thousand	Category	amount	Fair value	hierarchy
Non-current assets
Financial assets
Other non-current financial assets	AC	115	n/a	n/a
Current assets
Trade receivables and other receivables
Trade receivables	AC	40,593	n/a	n/a
Receivables from joint ventures	AC	2,656	n/a	n/a
Other receivables
Receivables from shareholder	AC	65,158	64,028	Level 3
Miscellaneous receivables	AC	431	n/a	n/a
Other current assets
Restricted cash	AC	1,049	n/a	n/a
Other	AC	2,637	n/a	n/a
Cash and cash equivalents	AC	8,332	n/a	n/a
Non-current liabilities
Non-current borrowings
Loans from debt funds	FLAC	24,393	23,072	Level 3
Loans from shareholders	FLAC	10,013	9,307	Level 3
Current liabilities
Current borrowings
Loans from banks	FLAC	12,003	11,508	Level 3
Loans from debt funds	FLAC	79,773	51,678	Level 3
Loans from other third parties	FLAC	3,540	3,483	Level 3
Loans from shareholders	FLAC	16,493	n/a	n/a
Loans from other related parties	FLAC	16,646	14,688	Level 3
Trade payables and other liabilities	FLAC	25,400	n/a	n/a

		Carrying
Thereof aggregated by categories	Category	amount
Financial assets measured at amortized cost	AC	120,971
Financial liabilities measured at fair value	FVTPL	—
Financial liabilities measured at amortized cost	FLAC	188,260

The carrying amounts of cash and cash equivalents, trade and other receivables, loans from banks and of trade payables, are considered reasonable estimates of their fair values because of the short maturities of these items.

The fair value of the loan granted to a shareholder was calculated by discounting future cash flows with a risk-adjusted interest rate curve. As the credit risk of the shareholder is unobservable and assumed to be equivalent to the Standard&Poor’s rating class of CCC, the credit risk is considered to have a material impact on the fair value. Therefore, the fair values of the shareholder loan are categorized in level 3 of the fair value hierarchy.

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Items of income, expenses, gains or losses resulting from financial instruments

The net gains or losses for each of the financial instrument measurement categories differentiated by the respective sources were as follows:

2023	Subsequent measurement
in € thousand	Interest	Fair value	Total
Financial assets - AC	9,499	n/a	9,499
Financial liabilities - FLAC	(9,988)	n/a	(9,988)
Financial assets and liabilities - FVTPL	n/a	—	—
Total	(488)	—	(488)

2022	Subsequent measurement
in € thousand	Interest	Fair value	Total
Financial assets - AC	4,089	n/a	4,089
Financial liabilities - FLAC	(17,650)	n/a	(17,650)
Financial assets and liabilities - FVTPL	n/a	(1,669)	(1,669)
Total	(13,561)	(1,669)	(15,230)

The total interest income for financial assets that are not measured at FVTPL is €9,499 thousand as of the year ended December 31, 2023 (2022: €4,089 thousand). The total interest expense for financial liabilities that are not measured at FVTPL is €9,988 thousand as of the year ended December 31, 2023 (2022: €17,650 thousand).

Financial Instrument Risk Management Objectives and Policies

Due to its international operational businesses, SCHMID is exposed to market risk (especially foreign currency risk) and credit risk. In the area of financing, liquidity risks and interest rate risks play a major role. SCHMID’s senior management oversees the management of these risks. In prior years no formalized risk management system existed, but financial risks as far as identified were handled case-by-case. In connection with the US DE-SPAC SCHMID is currently implementing a standardized risk management process. Equity price risk is considered insignificant for SCHMID.

Credit Risk

Credit risk is the risk that SCHMID might incur a financial loss as a consequence of the non-payment or partial payment of outstanding receivables by counterparties and from replacement risks for open transactions. SCHMID is exposed to credit risks associated with its operating activities, the loan granted to one of its shareholders, trade receivables as well as cash and cash equivalents.

SCHMID applies appropriate measures to manage credit risks inherent to its trade receivables. SCHMID requests customer ratings from well-known rating agencies and responds to higher probabilities of default with modified payment terms. Loss rates are based on actual credit loss experience over the past seven years. These rates are multiplied by scalar factors to reflect differences between economic conditions during the period over which the historical data has been collected, current conditions and SCHMID’s view of economic conditions over the expected lives of the receivables. Until January 1, 2023, to limit the credit risk resulting from its trade receivables, SCHMID has entered into a credit risk insurance that covered all trade receivables besides a small deductible. For the resulting credit risk of the insurance company SCHMID applied the credit default swap spread to the insured trade receivables amount. For the remaining credit risk of the uninsured part of the trade receivables a probability of default for the industry is applied to the exposure and multiplied with the loss given default.

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The allowances for ECL determined for the different classes of financial assets developed as follows:

	Trade receivables		Shareholder and
	- not credit	Trade receivables	other loans -
in € thousand	impaired	- credit impaired	credit impaired
Opening Balance 01/01/2022	(8)	1,952	(4,394)
Additions	(11)	—	—
Utilization	—	1,148	—
Reversal	—	153	2,949
Closing Balance 31/12/2022	(19)	652	(1,445)
Additions	(118)	(198)	—
Utilization	—	(11,425)	—
Reversal	—	11,706	1,445
Closing Balance 31/12/2023	(137)	(569)	—

With regards to cash and cash equivalents SCHMID allocates the credit risk by using several banks. Furthermore, it is SCHMID policy to hold cash and cash equivalents only with financial institutions that have at least an investment grade rating. SCHMID regularly monitors its cash and cash equivalents and takes corrective actions should it identify any possible changes in creditworthiness of these financial institutions. Therefore and due to its short-term character, no significant credit risk arises from cash and cash equivalents, and no ECL allowance has been recorded for 2023 and 2022 respectively.

The following tables provide information about the gross carrying amounts by credit-risk rating classes for the several types of financial assets that are not measured at FVTPL and therefore generally subject to the impairment regulations of IFRS 9.

Gross Carrying Amounts by Rating Class			12/31/2023
in € thousand	Stage 1	Stage 2	Stage 3
General approach
Cash and cash equivalents
AAA to BBB (Investment grade)	5,710	—	—
Receivables from shareholders
BBB- to CCC (Below investment grade)	—	4,807	—
Simplified approach
Trade receivables and other receivables
Current (not past due)	—	27,148	(69)
1-30 days past due	—	1,423	(11)
31-60 days past due	—	597	(6)
61-90 days past due	—	651	(7)
More than 90 days past due	—	3,039	(45)
Total	5,710	37,665	(138)

Gross Carrying Amounts by Rating Class			12/31/2022
in € thousand	Stage 1	Stage 2	Stage 3
General approach
Cash and cash equivalents
AAA to BBB (Investment grade)	8,332	—	—
Receivables from shareholders
BBB- to CCC (Below investment grade)	—	65,158	—
Simplified approach
Trade receivables and other receivables
insured receivables (90%)	—	39,312	—
non-insured receivables (10%)	—	4,368	—
Total	8,332	108,838	—

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Liquidity Risk

Liquidity risk is the risk that a company will encounter difficulty in meeting its obligations associated with its financial liabilities as they fall due. SCHMID is constantly working to ensure that the supply of liquidity is mainly sufficient to settle financial liabilities that are due for payment. Liquidity is evaluated and maintained using forecasts based on fixed planning horizons covering several months and through the cash and cash equivalent balances that are available.

During 2023, the majority of financial liabilities has been repaid. For more detail on the financial situation, please refer to the explanation on Going Concern (included in note 2. Basis of Presentation).

The following table provides details of the (undiscounted) cash outflows of financial liabilities (including interest payments).

					12/31/2023
	Cash outflows within				Total cash
in € thousand	≤ 1 year	> 1 ≤ 2 years	> 2 ≤ 5 years	> 5 years	flows
Lease liabilities	2,073	1,822	3,372	3,758	11,025
Borrowings (including embedded derivatives)	26,053	26,781	—	—	52,835
Loans from banks	1,225	—	—	—	1,225
Loans from debt funds	—	—	—	—	—
Loans from other third parties	—	2,778	—	—	2,778
Loans from shareholders	8,102	24,004	—	—	32,106
Loans from other related parties	16,726	—	—	—	16,726
Trade payables and other liabilities	25,899	—	—	—	25,899

					12/31/2022
	Cash outflows within				Total cash
in € thousand	≤ 1 year	> 1 ≤ 2 years	> 2 ≤ 5 years	> 5 years	flows
Lease liabilities	564	465	446	—	1,476
Borrowings (including embedded derivatives)	111,517	49,914	—	—	161,432
Loans from banks	12,221	—	—	—	12,221
Loans from debt funds	73,262	26,521	—	—	99,783
Loans from other third parties	3,702	—	—	—	3,702
Loans from shareholders	5,000	23,394	—	—	28,394
Loans from other related parties	17,332	—	—	—	17,332
Trade payables and other liabilities	25,400	—	—	—	25,400

Foreign Currency Risk

SCHMID operates globally and is exposed to foreign exchange risk arising from exposure to various currencies in the ordinary course of business. SCHMID’s exposures primarily consist of the Euro (“EUR”), US Dollar (“USD”), Chinese Yen (“CNY”), Hong Kong Dollar (“HKD”), Korean Won (“KRW”) and Canadian Dollar (“CAD”). Foreign exchange risk mainly arises from commercial transactions that resulted in recognized financial assets and liabilities denominated in a currency other than the local functional currency.

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The following table demonstrates the material net exposures SCHMID entities have due to trade receivables and payables, cash and cash equivalents as well as other financial assets in a currency different their local functional currency. Due to consolidation these exposures would also have an impact to SCHMID’s profit or loss.

	currency of exposure ("+" = asset / "()" = liability) - in € thousand
functional currency entity	12/31/2023				12/31/2022
	EUR	CNY	USD	HKD	EUR	CNY	USD	HKD
EUR		5,010	3,597	—		5,500	4,669	—
CNY	27,217		(1,077)	(424)	25,519		(1,139)	—
USD	17	—		—	(5,030)	—		—
TWD	1,481	(238)	—	—	1,378	—	—	—
HKD	2,026	(2,209)	—		—	—	—
KRW	(4,276)	—	—	—	(1,838)	—	—	—
Total	26,464	2,563	2,520	(424)	20,029	5,500	3,530	—

The following table demonstrates the impact that a reasonably possible change in each material currency pair would have on SCHMID’s profit or loss before tax. Therefore for each currency exchange rate the foreign currency is shifted against the respective local entity’s functional currency. The resulting impact in local currency is then translated into EUR.

in € thousand	12/31/2023		12/31/2022
	+10%	-10%	+10%	-10%
CNY/EUR	2,019	(2,467)	1,820	(2,224)
USD/EUR	(325)	398	(882)	1,078
TWD/EUR	135	(165)	130	(159)
HKD/EUR	184	(225)
KRW/EUR	(389)	475	(167)	204
CNY/TWD	22	(26)
CNY/HKD	158	(203)
USD/CNY	98	(120)	104	(127)

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate risks from financial instruments can in general arise in connection with financial liabilities including borrowings under SCHMID existing working capital and equipment financing facilities. Profit or loss is sensitive to higher/ lower interest income/ expense from loans granted and borrowed as a result of changes in interest rates. Considering existing thresholds, a hypothetical reasonable increase or decrease of 100 basis points in interest rates would have the following effect shown in the table on SCHMID financial statements.

	Impact to P/L
in € thousand	(income (+)/ expense (-))
12/31/2023
Change in interest rate +1%	(296)
Change in interest rate -1%	296
12/31/2022
Change in interest rate +1%	(1,164)
Change in interest rate -1%	1,162

Capital Management

For the purpose of SCHMID’s capital management, capital includes all share capital and other equity reserves attributable to the equity holders. The primary objectives of capital management are to support operating activities and maximize the shareholder value through investment in the development activities of SCHMID.

F-46

SCHMID’s finance department reviews the total amount of cash of SCHMID on a monthly basis. As part of this review, management considers the total cash and cash equivalents, the cash outflow, currency translation differences and funding activities.

The Company is not anymore subject to externally imposed capital requirements as all relevant loans have been repaid during 2023, refer to note 28. Financial Liabilities for further details. No changes were made in the objectives, policies or processes for managing cash during the years ended December 31, 2023 and 2022.

Reconciliation of changes in liabilities arising from financing activities

		Lease
In € thousand	Loans	liabilities	Total
Balance at January 1, 2023	167,111	1,333	168,444
Cash flow from financing activities (excluding changes from restricted cash)	(83,812)	(819)	(84,631)
Proceeds from loans	—	—	—
Repayments of loans	(81,871)	—	(81,871)
Principal elements of lease payment	—	(715)	(715)
Interest paid	(1,941)	(103)	(2,044)
Changes in the cash flow from financing activities	(35,055)	10,372	(24,683)
Foreign currency effects	—	(77)	(77)
New leases	—	10,347	10,347
Accrued interest	(35,024)	102	(34,922)
Fair value measurement	(32)	—	(32)
Balance at December 31, 2023	48,244	10,886	59,130

		Lease
In € thousand	Loans	liabilities	Total
Balance at January 1, 2022	153,090	1,528	154,618
Cash flow from financing activities (excluding changes from restricted cash)	(2,625)	(676)	(3,301)
Proceeds from loans	4,895	—	4,895
Repayments of loans	(5,880)	—	(5,880)
Principal elements of lease payment	—	(609)	(609)
Interest paid	(1,640)	(68)	(1,708)
Changes in the cash flow from financing activities	16,645	482	17,127
Foreign currency effects	—	(19)	(19)
New leases	—	433	433
Accrued interest	14,609	68	14,677
Fair value measurement	2,036	—	2,036
Balance at December 31, 2022	167,111	1,333	168,444

F-47

33.EQUITY-ACCOUNTED INVESTEES

Set out below are the investments of SCHMID classified as joint ventures as at December 31, 2023 and 2022. The entities listed below have share capital consisting solely of ordinary shares, which are held directly by SCHMID. The proportion of ownership interest is the same as the proportion of voting rights held. All the entities are private, no quoted prices are available.

		% of ownership interest				Carrying amount (in € thousand)
Name of the entity	Country of incorporation	12/31/2023		12/31/2022		12/31/2023	12/31/2022
Advanced Energy Storage Systems Investment Company (AES)	Kingdom of Saudi Arabia	51	%	51	%	—	—
SCHMID AVACO Korea Co. Ltd. (SAK)	South Korea	50	%	50	%	—	—
Total equity-accounted investments						—	—

The two entities are joint ventures and both are accounted for applying the equity method.

(1) Advanced Energy Storage Systems Investment Company (AES), Saudi Arabia is a joint venture of Nusaned Investment (an investment company owned by SABIC) and SCHMID manufacturing and focuses on technology development in the field of vanadium redox flow batteries (VRFB).

(2) SCHMID AVACO Korea Co. Ltd. (SAK), South Korea is a company that specializes in the manufacture of electrical and electronic components. The company produces a wide range of products such as printed circuit boards, connectors, and wiring harness systems for various industries including automotive, electronics, telecommunications, and medical technology.

The following tables provide financial information on the joint venture Advanced Energy Storage Systems Investment Company (AES) which is material to SCHMID. The information disclosed reflects the amounts presented in the financial statements of the joint venture and not SCHMID’s share of those amounts.

in € thousand	12/31/2023		12/31/2022
% ownership interest	51.3	%	51.3	%
Current Assets
Cash and cash equivalents	16		1,144
Other current assets	22		342
Total current assets	38		1,486
Non-current assets	3,871		6,134
Current liabilities
Current financial liabilities	2,935		2,015
Other current liabilities	216		4,214
Total current liabilities	3,151		6,229
Non-current liabilities
Non-current financial liabilities	—		9,177
Other non-current liabilities	3,894		957
Total non-current liabilities	3,894		10,134
Net assets (100%)	(3,136)		(8,742)
Book value	—		—

F-48

in € thousand	2023		2022
% ownership interest	51.3	%	51.3	%
Revenue	—		—
Interest income	—		—
Administration expense	(221)		—
R&D and Other expense	(351)		—
Depreciation and amortization	(561)		(1,106)
Interest expense	—		(292)
Tax income	61		236
Loss from continuing operations	(1,025)		(3,750)
Other comprehensive income	—		181
Total comprehensive loss	(1,025)		(3,932)
Dividends received	—		—

34.COMMITMENTS AND CONTINGENCIES

As of December 31, 2023, the Company has commitments of €62 thousand (December 31, 2022: €1,086 thousand) to acquire items of property, plant & equipment.

35.RELATED PARTY DISCLOSURES

SCHMID is jointly controlled by Christian Schmid and Anette Schmid via direct shareholding and a community of heirs. Christian Schmid is also the CEO of the Company.

For further information on the sale and leaseback contract, signed in December 2023 with Schmid Grundstücke GmbH Co. KG, an entity controlled by Mrs. Schmid, for production facility and office buildings in Freudenstadt, refer to note 20. Leases.

Transactions with Key Management

Key management personnel are defined as those persons who are responsible for SCHMID´s worldwide operating business, based on their function within SCHMID or the interests of SCHMID. The following individuals belong or belonged to SCHMID´s key management:

Name	Function	Member of key management since/until
Markus Fröhlich	CRO	since summer 2021
Julia Natterer	CFO	since December 2021
Laurent Nicolet	Executive Asia Region	since May 2006
Helmut Rauch	COO	since August 1994
Ulrich Wein	Vice president Finance	until January 2022

The annual remuneration and related compensation costs recognized as expense during the reporting period only includes short-term employee benefits and amounts to €1,562 thousand in 2023 (2022: €1,262 thousand, 2021: €1,332 thousand). Short-term benefits include salaries, bonus, and other benefits such as medical, death and disability coverage, Company car and other usual facilities as applicable. The outstanding balances also include the liability in connection with the defined benefit obligation.

F-49

Transactions with related parties

In addition to the entities included in the combined financial statements (see note 2. Basis of Presentation), SCHMID maintains relationships with other related parties. Related parties comprise the following entities (not individuals):

Company	Relationship
Schmid Grundstücke GmbH & Co. KG	Jointly controlled by shareholders
Schmid Verwaltungs GmbH, Freudenstadt	Controlled by one shareholder
Schmid Silicon Technology Holding GmbH , Freudenstadt	Controlled by one shareholder (until June 2023)
Schmid Silicon Technology GmbH, Freudenstadt	Controlled by one shareholder (until June 2023)
SILIQN GmbH, Freudenstadt	Controlled by one shareholder
Schmid Polysilicon Production GmbH, Spreetal	Controlled by one shareholder
Schmid Energy Systems GmbH, Freudenstadt	Entity of Joint venture
Advanced Energy Storage Systems Investment Company, Saudi Arabia	Joint venture
SCHMID Avaco Korea, Co. Ltd., Korea	Joint venture

The following transactions are proceeded with related parties.

in € thousand	2023	2022	2021
Interest income on loans granted to
Shareholder	1,077	526	159
Interest expense on loans received from
Key management personnel	12	88	88
Other related parties	558	409	400
Shareholder	737	165	53
Purchases of goods or services
Joint ventures	3	2,511	20
Other related parties	236	663	618
Sale of goods or services
Joint ventures	427	505	817
Other related parties	11,801	592	797
Salary and Bonus
Shareholder	1,149	988	910
Key management personnel	1,562	1,262	1,332

in € thousand	12/31/2023	12/31/2022
Outstanding balances - Liabilities
Shareholder	24,102	24,064
Key management personnel	280	2,528
Joint ventures	358	358
Other related parties	25,359	15,345

F-50

in € thousand	12/31/2023	12/31/2022
Outstanding balances - Receivables
Shareholder	107	67,926
Joint ventures	2,655	951
Other related parties	221	23,062

The significant increase in Sale of goods or services as well as in Outstanding balances - Liabilities in 2023 are mainly due to the sale and leaseback transaction (for further information please refer to 20. Leases)

36.EVENTS AFTER THE REPORTING PERIOD

Business combination Saudi Arabia

In October 2023, the shareholders, Nusaned Investment (an investment company owned by SABIC) and SCHMID, mutually agreed to terminate the joint venture Advanced Energy Storage Systems Investment Company (Saudi Arabia) via share exchange. After closing of the transaction on January 1 2024, SCHMID owns 100% of the shares of Schmid Energy Systems GmbH (SES), the only subsidiary owned by the joint venture entity. SCHMID transferred its shares in AES to SABIC and in exchange AES transferred its shares in SES to SCHMID. The transaction falls under the scope of IFRS 3. As SCHMID obtains control over SES through an increase in it´s equity shareholdings in SES the transaction is treated as as step acquisition in accordance with IFRS 3.41.

As the closing of the transaction occurred only recently, the Company has not yet completed the evaluation of the final consideration transferred and performed the detailed purchase price allocation analysis necessary to derive the required estimates of the fair value of the acquired assets and liabilities assumed.

Signing of the XJ repurchase agreement

SCHMID concluded an agreement with XJ Harbour HK Limited to exchange XJ Harbour HK Limited’s minority interest in SCHMID’s Chinese subsidiary for TopCo shares and €30 million in cash payments over a 455 day period after the closing of the Business Combination. The first €10 million payment will come due at the closing of the Business Combination.

Closing Business Combination

SCHMID Group and Pegasus Digital Mobility Acquisition Corp. announced the completion of their business combination. As a result, starting April 30, 2024 the existing company’s legal name is SCHMID Group N.V. SCHMID Group N.V. shares started trading on the Nasdaq Global Select Market under the ticker symbol “SHMD”. SCHMID signed non-redemption and investment agreement for approximately USD 26 million in committed capital with the business combination (before costs).

F-51

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Defined terms included below shall have the same meaning as terms defined and included elsewhere in this Report on Form 20-F and, if not defined in the Form 20-F, in the Proxy Statement/Prospectus.

Introduction

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X.

The unaudited pro forma condensed combined statement of financial position as of December 31, 2023 combines the historical statement of financial position of Schmid and the historical balance sheet of Pegasus on a pro forma basis as if the Business Combination and related transactions had been consummated on December 31, 2023. The unaudited pro forma condensed combined statement of profit or loss for the year ended December 31, 2023 combines the historical statement of profit or loss of Schmid and the historical statements of operations of Pegasus for such periods on a pro forma basis as if the Business Combination and related transactions had been consummated on January 1, 2023, the beginning of the earliest period presented.

The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and is not necessarily indicative of the financial position and results of profit or loss that would have been achieved had the Business Combination and related transactions occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial information may not be useful in predicting the future financial condition and results of profit or loss of the post-combination company. The actual financial position and results of profit or loss may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of the unaudited pro forma condensed combined financial information and is subject to change as additional information becomes available and analyses are performed. This information should be read together with Schmid’s and Pegasus’s audited financial statements and related notes, as applicable, and the sections titled “Schmid’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Pegasus’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information in the Proxy Statement/Prospectus, which are incorporated herein by reference.

Description of the Business Combination

On April 29, 2024, Schmid Group closed the previously announced Business Combination pursuant to the Business Combination Agreement, dated as of May 31, 2023, as amended by a first amendment agreement dated September 26, 2023, and a second amendment agreement dated January 29, 2024, by and among Pegasus, Schmid, Schmid Group, and Merger Sub.

On the Closing Date, several transactions were completed pursuant to the Business Combination Agreement, including:

● Pegasus TopCo B.V. issued 99 new ordinary shares to its shareholder Pegasus;

● The shareholders of Schmid (the “Schmid Shareholders”) purchased the 100 Pegasus TopCo B.V. shares from Pegasus at nominal value;

● The Schmid shareholders subscribed to 28,000,000 Pegasus TopCo B.V. shares, with an additional 5,000,000 earn-out shares at EUR 0.01 nominal value and in consideration contributed 100% of the Gebr. Schmid shares by transferring them to Pegasus TopCo B.V.;

F-52

● Pegasus TopCo B.V. changed its legal form from a Dutch private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) to a Dutch public limited liability company (naamloze vennootschap) and was renamed SCHMID Group N.V.;

● The Schmid Group issued shares for each Pegasus Class A and B share to their holders, and issued 1,406,361 shares to XJ Harbour;

● Pegasus merged with and Merger Sub, with the Pegasus as the surviving company and, after giving effect to the merger, becoming a direct, wholly-owned subsidiary of Schmid Group.

Anticipated Accounting Treatment

The Business Combination will be accounted for as a capital reorganization. Under this method of accounting, Pegasus will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination is treated as the equivalent of Schmid issuing shares at the closing of the Business Combination for the net assets of Pegasus as of the closing date, accompanied by a recapitalization. The net assets of Pegasus are stated at historical cost, with no goodwill or other intangible assets recorded.

Schmid has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

● Schmid’s shareholders have the largest voting interest in TopCo;

● Schmid’s senior management is the senior management of the post-combination company;

● The business of Schmid comprises the ongoing operations of TopCo; and

● Schmid is the larger entity, in terms of substantive operations and employee base.

The Business Combination, which is not within the scope of IFRS 3 since Pegasus does not meet the definition of a business in accordance with IFRS 3, is accounted for within the scope of IFRS 2. Any excess of fair value of TopCo Shares issued over the fair value of Pegasus’s identifiable net assets acquired represents compensation for the service of a stock exchange listing for its shares and is expensed as incurred.

F-53

Basis of Pro Forma Presentation

Pegasus’ public shareholders were offered the opportunity to redeem, upon closing of the Business Combination, Pegasus Class A Ordinary Shares held by them for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account. The unaudited pro forma condensed combined financial statements reflect the actual redemption of 3,038,480 shares of Pegasus Class A Ordinary Shares at $11.13 (€10.60) per share.

The following summarizes the number of TopCo Ordinary Shares outstanding as of April 29, 2024:

	Ownership in shares	Equity and voting	%
Schmid shareholders(1)	28,725,000	75.6	%
XJ Harbour HK Limited	1,406,361	3.7	%
Pegasus public shareholders	4,274,037	11.3	%
Sponsor, directors and management of Pegasus and certain IPO anchor investors(2)	3,569,464	9.4	%
	37,974,862	100	%

(1) Excludes 5,000,000 Earn-Out Shares

(2) Includes 756,964 TopCo shares issued to Sponsor by setting off the promissory notes to Pegasus

F-54

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31, 2023 (IN EURO THOUSANDS)

									As of December
	As of December 31, 2023								31, 2023
	Schmid		Pegasus (US		IFRS Policy and	Transaction
	(IFRS,		GAAP, As		Presentation	Accounting			Pro Forma
	Historical)		Converted)		Alignment (Note 2)	Adjustments			Combined
ASSETS: NON-CURRENT ASSETS
Intangible assets		14,966		—	—		—			14,966
Property, plant and equipment, net		14,767		—	—		—			14,767
Financial assets		140		—	—		—			140
Deferred tax assets		2,543		—	—		—			2,543
Cash and marketable securities held in trust account		—		47,697	—		(47,697)	A
Non-current assets		32,416		47,697	—		(47,697)			32,416
CURRENT ASSETS
Inventories		16,353		—	—		—			16,353
Trade receivables and other receivables		47,032		—	—		—			47,032
Other current assets		5,073		51	—		—			5,124
Cash and cash equivalents		5,710		326	—		47,697	A		11,471
							(32,206)	B
							(974)	C
							952	D
							2,238	E
							(8,511)	F
							1,238	K
							(5,000)	M
Current assets		74,166		377	—		5,435			79,980
TOTAL ASSETS	€	106,582	€	48,074	—	€	(42,262)		€	112,394
EQUITY
Owner’s net investment		70,606		—	—		(70,606)	H		—
Subscribed capital		—		—	—		358	H		431
							50	L
							14	M
							1	D
							8	K
Capital reserves		—		—	—		(1,400)	F		124,741
							951	D
							6,575	G
							85,740	H
							(22,106)	I
							70,106	J
							8,225	K
							(50)	L
							(23,301)	M
Preference shares		—		—	—		—			—
Class B ordinary shares		—		1	—		(1)	H		—
Other reserves		(95,806)		(13,904)	—		1,351	C		(165,639)
							(2,443)	F
							(6,785)	G
							22,106	I
							(70,106)	J
							(53)	K
Non-controlling interest		7,358		—	—		(6,497)	M		861
Equity		(17,841)		(13,903)	—		(7,862)			(39,606)
COMMITMENTS AND CONTINGENCIES
Class A ordinary shares subject to redemption		—		47,697	(47,697)		—			—
LIABILITIES: NON-CURRENT LIABILITIES
Non-current financial liabilities		22,190		—	—		—			22,190
Provisions for pensions		894		—	—		—			894
Non-current provisions		237		—	—		—			237
Deferred tax liabilities		4,388		—	—		—			4,388
Non-current lease liability		9,371		—	—		—			9,371
Warrant liabilities		—		1,391	—		210	G		1,601
Deferred underwriting commissions		—		2,325	—		(2,325)	C		—
Due to related party (non-current)		—		—	—		15,000	M		15,000
Common stock subject to possible redemption		—		—	47,697		(32,206)	B		—
							(15,491)	H
Non-current liabilities		37,081		3,716	47,697		(34,812)			53,681
CURRENT LIABILITIES
Current financial liabilities		26,053		—	—		—			26,053
Current contract liabilities		17,931		—	—		—			17,931
Trade payables and other financial liabilities		25,899		996	—		(875)	F		26,020
Other current liabilities		13,113		2,626	—		(3,793)	F		11,946
Current lease liability		1,515		—	—		—			1,515
Current provisions		973		—	—		—			973
Income tax liabilities		1,858		—	—		—			1,858
Due to related party		—		352			2,238	E		12,024
							(351)	K
							9,785	M
Promissory note-related party		—		6,591	—		(6,591)	K		—
Current liabilities		87,343		10,565	—		412			98,320
TOTAL EQUITY AND LIABILITIES	€	106,582	€	48,075	—	€	(42,262)		€	112,394

See accompanying notes to the unaudited pro forma condensed combined financial information

F-55

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF PROFIT OR LOSS FOR YEAR ENDED DECEMBER 31, 2023 (IN EURO THOUSANDS, EXCEPT PER SHARE DATA)

									Year Ended
	Year Ended December 31, 2023								December 31, 2023
				IFRS Policy and
		Pegasus (US		Presentation		Transaction
	Schmid (IFRS,	GAAP, As		Alignment		Accounting				Pro Forma
	Historical)	Converted)		(Note 2)		Adjustments				Combined
Revenue	90,246	€		€		€				€ 9,506
Cost of sales	(63,849)		—							(63,849)
Gross Profit	26,397		—		—		—			26,397
Selling	(12,577)		—		—		—			(12,577)
General administration	(12,538)		(751)		—		155	BB		(87,424)
							(4,184)	CC
							(70,106)	DD
Research and development	(5,148)		—		—		—			(5,148)
Other income	15,985		—		—		—			15,985
Other expenses	(2,620)		—		—		—			(2,620)
Listing fee amortization expense	—		(89)		—		—			(89)
Legal and accounting expense	—		(4,957)		—		—			(4,957)
Insurance expense	—		(181)		—		—			(181)
(Impairment) / Reversal on impairment on financials assets	22,696		—		—		—			22,696
Operating profit (loss)	32,195		(5,978)		—		(74,135)			(47,918)
Finance income	19,685		—		—		—			19,685
Interest and dividend income on cash and marketable securities held in Trust Account	—		4,851		—		(4,851)	AA		—
Change in fair value of warrant liabilities	—		(1,251)		—		(204)	EE		(1,455)
Loss on foreign exchange conversion	—		(33)		—		—			(33)
Finance expense	(10,091)		—		—		(1,508)	FF		(11,599)
Financial result	9,594		3,567		—		(6,563)			6,598
Share of profit(loss) in joint venture	(1,057)		—		—		—			—
Income (loss) before income tax	40,732		(2,411)		—		(80,698)			(42,378)
Income tax expense	(2,778)		—		—		—			(2,778)
Net income (loss) for the period	37,954		(2,411)		—		(80,698)			(45,156)
Other comprehensive income (loss)	(1,607)		—		—		—			(1,607)
Total comprehensive income	36,346		(2,411)		—		(80,698)			(46,763)
Total Comprehensive income (loss) attributable to
Owners of Schmid Group	35,669		—		—		35,669			—
Owners of TopCo	—		—		—		(47,277)			(47,277)
Non-controlling interest	677		—		—		(163)	GG		514
Pro forma weighted average ordinary shares outstanding – basic and diluted										37,974,862
Pro forma net loss per share – basic and diluted									€	-1.189

F-56

Unaudited Pro Forma Condensed Combined Financial Information (does not form part of the Combined Financials)

F-57

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Basis of Presentation

The unaudited pro forma condensed combined statement of financial position as of December 31, 2023 assumes that the Business Combination occurred on December 31, 2023. The unaudited pro forma condensed combined statements of profit or loss for the year ended December 31, 2023 presents pro forma effect to the Business Combination as if it had been completed on January 1, 2023.

The unaudited pro forma condensed combined statement of financial position as of December 31, 2023 has been prepared using, and should be read in conjunction with, the following:

● Schmid’s audited combined statement of financial position as of December 31, 2023; and

● Pegasus’s audited balance sheet as of December 31, 2023.

The unaudited pro forma condensed combined statement of profit or loss for the year ended December 31, 2023 has been prepared using, and should be read in conjunction with, the following:

● Schmid’s audited combined statement of profit or loss and other comprehensive income (loss) for the year ended December 31, 2023; and

● Pegasus’s audited statement of operations for the twelve months ended December 31, 2023, which is incorporated by reference.

The historical financial statements of Schmid have been prepared in accordance with IFRS as issued by the IASB and in its presentation and reporting currency of the Euro (€). The historical financial statements of Pegasus have been prepared in accordance with generally accepted accounting principles in the United States ("US GAAP") in its presentation and reporting currency of United States dollars ($). The financial statements of Pegasus have been translated into Euros for the purposes of presentation in the unaudited pro forma condensed combined financial information ("As Converted") using the following exchange rates:

● at the period end exchange rate as of December 31, 2023 of $1.00 to €0.9524 for the statement of financial position as of that date;

● the average exchange rate for the year ended December 31, 2023 of $1.00 to €0.9248 for the statement of profit or loss for the period ending on that date; and

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

The pro forma adjustments reflecting the consummation of the Business Combination are based on certain currently available information and certain assumptions and methodologies that Schmid management believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments, and it is possible the differences may be material. Schmid believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination based on information available to Schmid management at this time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

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The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the post-combination company.

The unaudited pro forma condensed combined financial information does not reflect the income tax effects of the pro forma adjustments as based on the statutory rate in effect for the historical periods presented. Schmid management believes this unaudited pro forma condensed combined financial information to not be meaningful given the combined entity incurred significant losses during the historical period presented.

IFRS Policy and Presentation Alignment

The historical financial information of Pegasus has been adjusted to give effect to the differences between US GAAP and IFRS as issued by the IASB (“IFRS”) for the purposes of the unaudited pro forma condensed combined financial information. The only adjustment required to convert Pegasus’s financial statements from US GAAP to IFRS for purposes of the unaudited pro forma condensed combined financial information was to reclassify Pegasus’s common stock subject to redemption from mezzanine equity to non-current financial liabilities in accordance with IFRS.

Further, as part of the preparation of the unaudited pro forma condensed combined financial information, certain reclassifications were made to align Pegasus’s historical financial information in accordance with the presentation of Schmid’s historical financial information.

Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X.

Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Statement of Financial Position

The Transaction Accounting Adjustments included in the unaudited pro forma condensed combined statement of financial position as of December 31, 2023 are as follows:

(A) Reflects the liquidation and reclassification of €47,697 thousand of investments held in the Trust Account to cash and cash equivalents that becomes available following the Business Combination.

(B) Reflects the actual redemption of 3,038,480 Pegasus Class A Ordinary Shares for a total redemption amount of €32,206 thousand at a redemption price of approximately $11.13 (€10.60) based on the investments held in the Trust Account at Closing.

(C) Reflects the cash settlement of €974 thousand of the deferred underwriting commissions following forgiveness of the remaining €1,351 thousand.

(D) Represents the issuance of 87,565 TopCo Ordinary Shares as compensation for certain legal advisors’ total unpaid transaction fees at closing.

(E) Reflects the loan of €2,238 thousand from Validus/StratCap, LLC issued upon Closing, with a maturity of 12 months and an interest rate 9.5%.

(F) Represents preliminary estimated transaction costs expected to be incurred by Pegasus and Schmid of approximately €8,839 thousand and €9,945 thousand, respectively, for advisory, banking, printing, legal, and accounting fees incurred as part of the Business Combination.

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For the Pegasus estimated transaction costs, €5,337 thousand has been incurred and recognized in the statement of operation for the year ended December 31, 2023. As of December 31, 2023, €3,488 thousand remained unpaid and included as trade payables and other liabilities and other current liabilities in the balance sheet. The €3,332 thousand of estimated transaction costs to be incurred after December 31, 2023 have been included as an adjustment in the unaudited pro forma condensed combined statement of profit or loss for the year ended December 31, 2023 as discussed in (CC) below. This amount also impacts the calculation of the IFRS 2 charge described in (J) below by increasing the Total Liabilities Acquired for the additional estimated transaction costs. The Pegasus total estimated transaction costs of €8,839 thousand are not eligible for capitalization. These estimates exclude the deferred underwriting commissions as described in (C) above.

For the Schmid estimated transaction costs, €8,653 thousand has been incurred and recognized in the combined statement of profit or loss for the year ended December 31, 2023 while €218 thousand have been incurred prior to fiscal year 2023. Of the €8,871 thousand incurred prior to December 31, 2023, €1,400 thousand represents equity issuance costs capitalized in capital reserves on a pro rata basis for the portion of new shares issued in exchange for cash. As of December 31, 2023, €3,793 thousand remained unpaid and included as other current liabilities in the combined statement of financial position. €852 thousand expected to be incurred after December 31, 2023 is reflected in the unaudited pro forma condensed combined statement of profit or loss for the year ended December 31, 2023 as discussed in Transaction Accounting Adjustment (CC) below.

The following table summarizes the above mentioned Schmid estimated transaction costs and the related treatment within the unaudited pro forma condensed combined financial information.

		Transaction
Estimated Schmid transaction costs	Pro forma adjustments	sosts
Capitalized equity issuance costs(1)	(F)	€	(1,400)
Historical transaction costs not eligible for capitalization	—		(7,693)
Estimated transaction costs not eligible for capitalization	(F), (CC)		(852)
Total Schmid estimated transaction costs		€	(9,945)

(1) Direct and incremental transaction costs related to the Business Combination were allocated on a pro rata basis between the TopCo Ordinary Shares issued to former shareholders of Pegasus, which were charged directly to equity, and former shareholders of Schmid, which were charged to expense.

(G) Represents the impact of the recognition of compensation expense of €6,785 thousand paid through the sponsor’s transfer of 843,750 Pegasus Class B Ordinary Shares and 2,750,000 Private Placement Warrants to the directors and officers of Pegasus. In order to not forfeit the shares and warrants, the directors and officers were required to maintain employment until the closing of the Business Combination. As such, Pegasus will recognize the associated compensation cost when the closing of the Business Combination becomes probable, which has not occurred during the historical periods presented. As the shares and warrants are compensating the services performed for Pegasus prior to Closing this is not a cost of the combined company. This adjustment also represents the recognition of an addition to the warrant liability of €210 thousand, equal to the December 31, 2023 fair value of the 2,750,000 Private Placement Warrants transferred. These Private Placement Warrants were derecognized by Pegasus historically and therefore must be reflected in the unaudited pro forma condensed combined statement of financial position. The increase in fair value has been reflected in the unaudited pro forma condensed combined statement of profit or loss through Transaction Accounting Adjustment (EE).

F-60

(H) Represents the exchange of 21,604,900 Schmid shares, 1,461,537 Pegasus Class A Ordinary Shares subject to redemption for $15.8 million (€15.0 million), and 5,625,000 Pegasus Class B Ordinary Shares (2,812,500 of which were transferred to Pegasus Class A Ordinary Shareholders as part of non-redemption agreements) into 35,811,537 TopCo Ordinary Shares, at a nominal value of €0.01. Further, 21,000,000 Pegasus warrants will be assumed and replaced with 21,000,000 TopCo Warrants and will remain classified as a liability as the terms will not substantially change. Therefore, this is not shown as an adjustment to the unaudited pro forma condensed combined statement of financial position.

(I) Represents the elimination of Pegasus’ accumulated deficit after the impact of transaction costs to be incurred by Pegasus as described in Transaction Accounting Adjustment (F), the impact of compensation expense as described in Transaction Accounting Adjustment (G) and the impact of settlement of deferred underwriting fees as described in Transaction Accounting Adjustment (C).

(J) Represents the preliminary estimated expense recognized, in accordance with IFRS 2, for the excess of the fair value of the TopCo Ordinary Shares issued over the fair value of Pegasus’ identifiable net assets at the date of the Business Combination, resulting in a €70,106 thousand decrease to other reserves. The fair value of the TopCo Ordinary Shares issued was estimated based on a market price of Class A Common Stock, given the one-to-one conversion upon the Merger, of $10.30 (€9.81) per share as of closing of the Business Combination.

The 5,000,000 TopCo Ordinary Shares, to be issued to existing Schmid Shareholders upon Closing but which are subject to certain vesting conditions (“Earn-out Shares”), should be accounted for as a component of the deemed cost of the listing services upon consummation of the Business Combination. Therefore, the impact of the Earn-out Shares has been considered in calculating the consideration transferred in each redemption scenario presented. However, no separate fair value adjustment is necessary as the fair value of the Earn-out Shares will be inherently reflected within the quoted price of the Class A Common Stock used in valuing the consideration given to Pegasus’ shareholders and in deriving the deemed cost of listing services.

		EUR
	Shares	(thousands)
Estimated fair value of Schmid equity consideration issued (pro forma)
TopCo Ordinary Shares issued in replacement of Pegasus Common Stock	7,843,501	76,941
		76,941
Estimated fair value of Pegasus net assets acquired (pro forma)
Total Assets Acquired		48,074
Total Liabilities Assumed		(14,281)
Adjustments for redemptions, transaction costs, waiver of deferred underwriting fee, and warrant transfers		(34,000)
Adjustments for the conversion of related party liabilities to equity		6,943
		6,835
Excess of fair value of Schmid equity consideration over Pegasus net assets acquired (IFRS 2 Charge)		70,106

(1) 2,812,500 of which were transferred to Pegasus Class A Ordinary Shareholders as part of non-redemption agreements

(K) Reflects the issuance of 756,964 TopCo Ordinary Shares at an assumed value of $11.41 (€10.88) as compensation for the unpaid balances of the promissory note-related party in the amount, with outstanding amounts of €6,591 thousand at December 31, 2023 and €7,829 thousand at Closing, and of the adminstrative support fee, with outstanding amounts of €351 thousand at December 31, 2023 and €404 thousand at Closing.

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(L) Reflects the nominal value of €0.01 per share for the issuance of 5,000,000 TopCo Ordinary Shares at Closing pursuant to the Earn-out Agreement. The fair value of Earn-out Shares is considered in the determination of the IFRS 2 Charge as described in Transaction Accounting Adjustment (J).

(M) Reflects the impact of the Subscription Agreement between XJ Harbour HK Limited and TopCo. As part of this Subscription Agreement, TopCo will acquire XJ’s 24.1% equity interest in Schmid Technology (Guangdong) Co., Ltd. (“STG”) in return for 1,406,361 TopCo Ordinary Shares (at a presumed fair value of $11.12) and €30,000 thousand in cash. The transfer of the STG shares and the cash will happen in three tranches. At Closing, XJ will transfer 8.0233% of its equity interest in STG and TopCo will transfer €5,000 thousand. 30 days after Closing TopCo will transfer an additional €5,000 thousand. 270 days after Closing XJ will transfer 4.0117% of its equity interest in STG while TopCo will transfer EUR €5,000 thousand. 455 days after Closing, XJ will transfer its remaining equity interest in STG and TopCo will transfer €15,000 thousand (plus interest at an annual rate of 6%).

Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Statement of Profit or loss

The transaction accounting adjustments included in the unaudited pro forma condensed combined statement of profit or loss for the year ended December 31, 2023 are as follows:

(AA) Represents the elimination of interest and dividend income on cash and marketable securities held in the Trust Account for the year ended December 31, 2023.

(BB) Reflects the elimination of an administrative expense recognized in accordance with an administrative and support agreement of Pegasus for the year ended December 31, 2023.

(CC) Reflects the estimated transaction costs of €4,184 thousand to be expensed as incurred by Schmid and Pegasus as part of the Business Combination as described in Transaction Accounting Adjustment (F).

(DD) Represents €70,106 thousand of expense recognized in accordance with IFRS 2, for the difference between the fair value of TopCo Ordinary Shares issued and the fair value of Pegasus’s identifiable net assets, as described in Transaction Accounting Adjustment (J). This cost is a nonrecurring item.

(EE) Represents the cost associated with recognizing the Private Placement Warrants that were derecognized in the historical Pegasus Balance Sheet when the warrants were transferred from the Sponsor to directors and officers as compensation for their services through Closing. See Transaction Accounting Adjustment (G) for further detail.

(FF) Reflects the interest expense charge associated with the outstanding payments to XJ Harbour HK Limited under the Subscription Agreement between XJ Harbour HK Limited and TopCo as explained in Transaction Accounting Adjustment (M). Additionally, reflects the interest accrued on the Debt Assumption Agreements with Clifford Chance and Troutman as well as the €2,238 thousand loan as explained in Transaction Accounting Adjustment (E).

(GG) Reflects the reduction of the combined comprehensive income (loss) attributable to the non-controlling interest due to TopCo’s purchase of the STG shares held by XJ Harbour HK Limited prior to Closing. See Transaction Accounting Adjustment (M) for further detail.

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Net Income (Loss) per Share

Represents the net income (loss) per share calculated using the weighted average of TopCo Ordinary Shares outstanding, assuming the shares were outstanding since January 1, 2023. As the Business Combination and related transactions are being reflected as if they had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issued in connection with the Business Combination have been outstanding for the entire period presented. The basic and diluted loss per share for TopCo Ordinary Shares are the same for the year ended December 31, 2023 due to the pro forma net loss position.

The unaudited pro forma condensed combined financial information has been prepared assuming three alternative levels of redemption of Pegasus’s public shares:

	For the Year Ended
	December 31, 2023
Pro forma net loss	€	(45,156)
Weighted average shares outstanding - basic and diluted		37,974,862
Net loss per share - basic and diluted	€	(1.189)
Weighted average shares outstanding-basic and diluted:
Schmid shareholders(1)		28,725,000
XJ Harbour HK Limited		1,406,361
Pegasus public shareholders		4,274,037
Sponsor, managers and directors of Pegasus and certain IPO anchor investors(2)		3,569,464
Total		37,964,862

(1) Excludes 5,000,000 Earn-Out Shares

(2) Includes 756,964 TopCo shares issued to Sponsor by setting off the promissory notes to Pegasus

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EX-1.1

Exhibit 1.1

ARTICLES OF ASSOCIATION

OF

SCHMID GROUP N.V.

Informal translation in the English language of the substance of the original articles of association of SCHMID Group N.V. in the Dutch language. In this translation an attempt has been made to be as literal as possible, without jeopardising the overall continuity. Inevitably, differences may occur in the translation, and if so, the Dutch text will govern.

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ARTICLES OF ASSOCIATION

CHAPTER I

DEFINITIONS

1. DEFINITIONS

1.1 In these articles of association, the following expressions shall have the following meanings:

1.1.1 an “Accountant”: a register-accountant or other accountant referred to in section 2:393 paragraph 1 of the Dutch Civil Code, or an organisation within which such accountants cooperate;

1.1.2 the “Annual Accounts”: the Company’s annual accounts as referred to in section 2:361 of the Dutch Civil Code;

1.1.3 the “Board”: the Company’s board of directors;

1.1.4 the “Company”: the company governed by these articles of association;

1.1.5 a “Conflict of Interest”: a direct or indirect personal interest which conflicts with the interest of the Company and its business within the meaning of section 2:129 paragraph 6 of the Dutch Civil Code;

1.1.6 a “Director”: an Executive Director or a Non-Executive Director;

1.1.7 the “Distributable Part of the Shareholders’ Equity”: the part of the shareholders’ equity exceeding the issued and called-up share capital plus the reserves which must be maintained by law;

1.1.8 an “Executive Director”: a member of the Board appointed as an executive director;

1.1.9 the “General Meeting”: the corporate body of the Company consisting of those in whom as shareholder or otherwise the voting rights on Shares are vested, or a meeting of such persons (or their representatives) and other persons entitled to attend such meeting;

1.1.10 a “Non-Executive Director”: a member of the Board appointed as a non-executive director;

1.1.11 “Persons entitled to attend General Meetings”: all shareholders, holders of a right of usufruct on Shares entitled to vote, holders of a right of pledge entitled

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to vote and holders of depository receipts for Shares issued with the cooperation of the Company; and

1.1.12 “Shares”: ordinary shares in the capital of the Company.

1.2 These articles of association may also contain other definitions in addition to these defined in Clause 1.1.

1.3 The expression “written” or “in writing” shall include any message transmitted via any electronic means of communication, which message is readable and reproducible.

1.4 References to Clauses refer to clauses which are part of these articles of association.

1.5 Unless the context requires otherwise, words and expressions contained and not otherwise defined in these articles of association bear the same meaning as in the Dutch Civil Code. Also, unless otherwise indicated, references in these articles of association to the law are referecens to provisions of Dutch law as it reads from to time.

1.6 Any reference to a gender includes all genders.

CHAPTER II

NAME, SEAT, OBJECTS

2. NAME, SEAT

2.1 The name of the Company is: SCHMID Group N.V.

2.2 The seat (statutaire zetel) of the Company is in Amsterdam, The Netherlands.

3. OBJECTS

The objects of the Company are:

(a) to incorporate, to participate in any manner whatsoever, to manage, to supervise, to cooperate with, to acquire, to maintain, to dispose of, to transfer or to administer in any other manner whatsoever all sorts of participations and interests in businesses, legal entities and companies as well as to enter into joint ventures;

(b) to finance businesses, legal entities and companies;

(c) to borrow, to lend and to raise funds, to participate in all sorts of financial transactions, including the issue of bonds, promissory notes or other securities, to invest in securities in the widest sense of the word, and to enter into

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agreements in connection with the foregoing;

(d) to grant guarantees, to bind the Company and to grant security over the assets of the Company for the benefit of legal entities and companies with which the Company forms a group and for the benefit of third parties;

(e) to advise and to render services to legal entities and companies with which the Company forms a group and to third parties;

(f) to acquire, to administer, to operate, to encumber, to dispose of and to transfer moveable assets and real property and any right to or interest therein; and

(g) to carry out all sorts of industrial, financial and commercial activities, including the import, export, purchase, sale, distribution and marketing of products and raw materials,

and all matters related or conducive to the above, with the objects to be given their most expansive possible interpretation. In pursuing its objects, the Company shall also take into account the interests of the legal entities and companies with which it forms a group.

CHAPTER III

CAPITAL AND SHARES, SHAREHOLDERS’ REGISTER

4. AUTHORISED CAPITAL

4.1 The authorised capital of the Company amounts to one million four hundred thirty-six thousand two hundred fifty euro (EUR 1,436,250.00).

4.2 The authorised capital is divided into one hundred forty-three million six hundred twenty-five thousand (143,625,000) ordinary shares of one eurocent (EUR 0.01) each.

4.3 Shares are numbered consecutively from 1 onwards. The Board may change the numbering of the Shares.

4.4 All Shares are registered shares. No share certificates shall be issued.

5. SHAREHOLDERS’ REGISTER

5.1 Notwithstanding the provisions of the law, a shareholders’ register shall be kept by or

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on behalf of the Company, which register shall be regularly updated and, at the discretion of the Board, may, in whole or in part, be kept in several copies and in several places.

5.2 The form and the contents of the shareholders’ register shall be determined by the Board with due regard to the provisions of Clause 5.1.

5.3 Upon request, a person shall be given free of charge a declaration of what is recorded in the register with regard to Shares or limited rights to Shares registered in his name, which declaration may be signed by one of the specially authorised persons to be appointed by the Board for this purpose.

5.4 The provisions of Clauses 5.1 up to and including 5.3 shall equally apply to those who hold a right of usufruct or a right of pledge on one or more Shares, with the proviso that the other data required by law must be entered in the register.

5.5 All notifications may be sent to shareholders, usufructuaries and pledgees at their respective addresses as set out in the register.

CHAPTER IV

ISSUE OF SHARES, OWN SHARES

6. ISSUE OF SHARES, CONDITIONS OF ISSUANCE

6.1 Shares are issued pursuant to a resolution of the General Meeting. Shares may also be issued pursuant to a resolution of the Board, if and insofar as the General Meeting has designated this authority to the Board for a period not exceeding five (5) years.

6.2 The designation as referred to in Clause 6.1 (i) may be extended, from time to time, for periods not exceeding five (5) years, (ii) must set out how many Shares may be issued and (iii) shall state whether the designation may be withdrawn during the applicable period.

6.3 The foregoing provisions of this Clause 6 apply by analogy to the granting of rights to subscribe for Shares.

6.4 The resolution to issue Shares shall stipulate the price and further conditions of the issue of the relevant Shares.

7. PRE-EMPTIVE RIGHTS

7.1 Upon the issuance of Shares, each holder of Shares will have pre-emptive rights in proportion to the aggregate nominal amount of his existing Shares, unless such right is

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withheld by mandatory provisions of the law.

7.2 Prior to each individual issuance of Shares, pre-emptive rights can be limited or excluded by the General Meeting, or by the Board authorised to issue Shares if it has been given this authority. The provisions of Clause 6.1 and 6.2 apply by analogy.

7.3 The foregoing provisions of this Clause 7 apply by analogy to the granting of rights to subscribe for Shares. The existing shareholders will have no pre-emptive rights in respect of Shares issued to a person exercising a right to subscribe for Shares previously granted.

8. PAYMENTS ON SHARES

8.1 Upon the issue of each Share, at least the nominal value thereof must be paid up in full, as well as the difference between the two amounts if the Share is subscribed for at a higher price, without prejudice to the provisions of section 2:80 paragraph 2 of the Dutch Civil Code.

8.2 Payments on Shares must be made in cash unless an alternative contribution has been agreed upon. Payments in another currency than in which the nominal value of the Shares is denominated can only be made upon approval of the Company.

8.3 If so decided by the corporate body authorised to issue Shares, Shares can be issued at the expense of any reserve.

9. SHARES IN THE COMPANY’S OWN CAPITAL

9.1 The Company may acquire fully paid-up Shares in its own share capital for no consideration. The Company may also acquire Shares in its own share capital for valuable consideration if and in so far as:

9.1.1 its shareholders equity less the purchase price for these Shares is not less than the aggregate amount of the paid up and called up capital and the reserves which must be maintained pursuant to the law;

9.1.2 the aggregate nominal value of the Shares in its capital which the Company acquires, already holds or on which it holds a right of pledge, or which are held by a subsidiary of the Company, does not exceed the applicable statutory threshold of the issued share capital; and

9.1.3 the General Meeting has authorised the Board to acquire such Shares, which authorisation may be given for no more than eighteen (18) months on each occasion,

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notwithstanding the further provisions of the law. The acquisition of Shares in the Company’s own capital which are not fully paid up, is void.

9.2 The Company may, without being authorised thereto by the General Meeting and notwithstanding what is provided in Clauses 9.1.1 and 9.1.2, acquire Shares in its own share capital in order to transfer those Shares to the employees of the Company or to the employees of a group company under a scheme applicable to such employees.

9.3 Shares acquired by the Company may again be disposed of. If depositary receipts for Shares (certificaten van aandelen) in the Company have been issued, such depositary receipts shall for the application of the provisions of this paragraph and the preceding paragraphs be treated as Shares.

9.4 In the General Meeting no votes may be cast in respect of Shares held by the Company or a subsidiary of the Company; no votes may be cast in respect of a Share the depositary receipt for which is held by the Company or a subsidiary of the Company. However, the holders of a right of usufruct (recht van vruchtgebruik) and the holders of a right of pledge (pandrecht) on Shares held by the Company and a subsidiary of the Company, are nonetheless not excluded from the right to vote such Shares, if the right of usufruct or the right of pledge was granted prior to the time such Share was held by the Company or a subsidiary of the Company. Neither the Company nor a subsidiary of the Company may cast votes in respect of a Share on which it holds a right of usufruct or a right of pledge.

9.5 Shares in respect of which voting rights may not be exercised by law or by these articles of association shall not be taken into account, when determining to what extent the shareholders cast votes, to what extent they are present or represented or to what extent the share capital is provided or represented.

10. CAPITAL REDUCTION

10.1 The General Meeting may resolve to reduce the issued share capital of the Company:

10.1.1 by cancellation of Shares held by the Company itself or of which it holds the depositary receipts; or

10.1.2 by reducing the nominal value of Shares by an amendment of these articles of association.

Such resolution will indicate the Shares to which the resolution relates, as well as the provisions for the implementation of such resolution.

10.2 The notice of the General Meeting at which any resolution referred to in Clause 10.1 will be proposed, shall mention the purpose of the capital reduction and the manner in

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which it is to be achieved.

10.3 A reduction of the issued capital of the Company is furthermore subject to the provisions of sections 2:99 and 2:100 of the Dutch Civil Code.

CHAPTER V

TRANSFER OF SHARES, RIGHTS IN REM ON SHARES,DEPOSITORY RECEIPTS

11. TRANSFER, RIGHTS IN REM, DEPOSITORY RECEIPTS

11.1 The transfer of Shares shall be effected by a written instrument of transfer and in accordance with the provisions of section 2:86 of the Dutch Civil Code. If, however, Shares are admitted to trading on a regulated market or a multilateral trading facility or a system comparable to a regulated market or multilateral trading facility from a state which is not a member state of the European Union, or if Shares at the time of the transfer may reasonably be expected to be shortly admitted thereto, the transfer of such Shares shall be effected in accordance with the provisions of section 2:86c of the Dutch Civil Code.

11.2 The provisions of Clause 11.1 shall equally apply to (i) the allotment of Shares in the event of a judicial partition of any community of property, (ii) the transfer of a Share as a consequence of a foreclosure of a right of pledge and (iii) the creation of limited rights in rem on a Share.

11.3 The Board may resolve that Clause 11.1 and Clause 11.2 shall not apply to the Shares, if and as long as one or more Shares are admitted to trading on the New York Stock Exchange, the Nasdaq Stock Market, or another regulated market or multilateral trading facility operating in the United States of America, and that instead, the laws of the State of New York, United States of America or the laws of the State where such other regulated market or multilateral trading facility is operating in the United States of America, shall apply to the property law aspects of such Shares, including to the transfer of such Shares as well as to the withdrawal of such Shares from the relevant book-entry system, without prejudice to the applicable provisions of Chapters 4 and 5 of Title 10 of Book 10 of the Dutch Civil Code. Such resolution, as well as the revocation thereof, shall be (i) made available for inspection at the Company’s offices and the Dutch commercial register (handelsregister) and (ii) published in two (2) national Dutch newspapers.

11.4 The holders of a right of usufruct on Shares, who in conformity with the provisions of section 2:88 of the Dutch Civil Code have no right to vote, and the holders of a right of pledge on Shares, who in conformity with the provisions of section 2:89 of the Dutch

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Civil Code have no right to vote, shall not be entitled to the rights which by law have been conferred on holders of depositary receipts for Shares issued with the cooperation of the Company.

11.5 The Company shall not render its cooperation to the issue of depositary receipts relating to its Shares.

CHAPTER VI

ONE-TIER BOARD

12. BOARD

12.1 The Company shall be managed by a Board consisting of one or more Executive Directors and one or more Non-Executive Directors, who shall be individuals.

12.2 The total number of Directors, as well as the number of Executive Directors and Non-Executive Directors, shall be determined by the Board in accordance with the board rules. The majority of the Directors needs to be Non-Executive Directors.

12.3 The Board may elect an Executive Director as the chief executive officer. The Executive Director so elected shall be granted the title ‘CEO’ by the Board.

12.4 The Board shall be chaired by the chairperson, to be elected by the Board from among the Non-Executive Directors. The Non-Executive Director so elected shall serve as the chairperson of the Board as referred to under Dutch law and shall be granted the title ‘Chairperson’ by the Board.

12.5 The Board may also elect a Non-Executive Director as the vice-chairperson. The Non-Executive Director so elected shall be granted the title ‘Vice-Chairperson’ by the Board.

12.6 The Board may dismiss the CEO, the Chairperson and/or the Vice-Chairperson (if any), provided that the CEO so dismissed shall subsequently continue his term of office as an Executive Director and the Chairperson or the Vice-Chairperson (if any) so dismissed shall subsequently continue his term of office as a Non-Executive Director without having the title of CEO, Chairperson or Vice-Chairperson, respectively.

12.7 The Board may grant any such (additional) title to Directors as the Board deems appropriate and the Board may revoke titles granted to Directors at any time.

13. APPOINTMENT, SUSPENSION AND REMOVAL FROM OFFICE, COMPENSATION BOARD

13.1 The General Meeting shall appoint the Directors. A Director shall be appointed (i)

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either as an Executive Director or as a Non-Executive Director and (ii) in principle for a term lapsing ultimately at the end of the annual General Meeting held in the fourth (4th) year after the year of his appointment or re-appointment, unless otherwise specified by the General Meeting. For the avoidance of doubt, Directors may also be appointed for an indefinite period of time.

13.2 The Board may nominate persons for appointment of a Director on a non-binding basis. A nomination for appointment of a Director shall state the candidate’s age and the positions the person holds or has held, in so far as these are relevant for the performance of the duties of a Director. A nomination for appointment must be accounted for by giving reasons for it. A nomination for appointment should also state the candidate’s term of office. A Director who ceases this term of office is immediately eligible for re-appointment. Executive Directors shall not participate in any consultation and decision-making that concerns a nomination.

13.3 The General Meeting may only vote on a resolution to appoint a Director who is listed as a candidate on the agenda of the meeting or its explanatory notes.

13.4 Each Director may at any time be suspended or removed from the office by the General Meeting. An Executive Director may also be suspended, but not dismissed, by the Board at any time. A suspension may be extended one or more times but may not last longer than three (3) months in aggregate. If, at the end of that period, no decision has been taken on termination of the suspension or on removal, the suspension shall end. A suspension can be ended by the General Meeting at any time.

13.5 A resolution of the General Meeting to suspend or dismiss a Director shall require a resolution adopted with an absolute majority of the votes validly cast. A Director shall not participate in any consultation and decision-making within the Board that concerns his suspension.

13.6 The General Meeting shall determine the compensation policy for the Executive Directors and the Non-Executive Directors. This policy is adopted or amended by the General Meeting with an absolute majority of the votes validly cast.

13.7 The authority to establish compensation and other terms of service for Executive Directors is vested in the Board, with due observance of the compensation policy for the Board referred to in Clause 13.6. The Executive Directors shall not participate in the consultation and decision-making process of the Board on this.

13.8 The authority to establish compensation for Non-Executive Directors is vested in the General Meeting, with due observance of the compensation policy for the Board referred to in Clause 13.6.

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14. DUTIES OF THE BOARD AND COMPANY SECRETARY

14.1 Subject to the restrictions imposed by these articles of association, the Board is charged with the management of the Company.

14.2 While performing their duties, the Directors shall act in accordance with the interest of the Company and the business connected thereto.

14.3 The Executive Directors shall carry out the day-to-day business of the Company. The Non-Executive Directors shall supervise the management and the performance of the duties of the Executive Directors. Each Director is responsible for the general course of affairs.

14.4 With due observance of these articles of association, the Board may adopt board rules governing its internal proceedings and the allocation of responsibility for one or more specific matters of the Board to a certain Director or certain Directors as the Board deems necessary or appropriate, including but not limited to the authority to resolve on such matters.

14.5 The Board may appoint a person to act as secretary of the Company and is authorised to replace or remove such person at any time. The secretary so appointed shall be granted the title ‘Company Secretary’ by the Board. The Company Secretary does not have to be a Director. The Company Secretary holds the duties and powers vested in such role pursuant to these articles of association, the Company’s board rules and/or a resolution of the Board. In absence of the Company Secretary, his duties and powers shall be exercised by a deputy.

14.6 The Board may set up committees, such as an audit committee, a nominating committee, a compensation committee, as well as such other committees as it may deem fit. For each such committee, the Board shall adopt committee rules indicating the role and responsibility of the committee concerned, its composition and the manner in which it performs its duties. The members of each committee shall be appointed from among the Non-Executive Directors.

15. DECISION MAKING PROCESS AND ASSIGNMENT OF TASKS

15.1 The Board shall meet as often as the CEO or the Chairperson deems, or two Directors together deem, necessary. Meetings of the Board are called by the Company Secretary. The meeting is chaired by the Chairperson, or, in the absence of the Chairperson, by any Director elected by the Directors present.

15.2 Unless the board rules determine otherwise, in the meetings of the Board each Director has the right to cast one (1) vote.

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15.3 Resolutions of the Board shall – unless these articles of association or the board rules prescribe more stringent requirements – be adopted by an absolute majority of the votes validly cast.

15.4 To the extent permitted by law, the Board may assign and delegate duties and powers to individual Directors, the Executive Directors, the Non-Executive Directors and/or committees. This may also include a delegation of resolution-making power, provided this is laid down in writing in accordance with section 2:129a paragraph 3 of the Dutch Civil Code. A Director, the Executive Directors and the Non-Executive Directors to whom and a committee to which powers of the Board are delegated, must comply with the rules set in relation thereto by the Board.

15.5 A Director, who thinks that he has or might have a Conflict of Interest, shall notify his fellow Directors thereof as soon as possible. If the Company has a sole Director, he shall be authorised to adopt the board resolution, despite such Conflict of Interest.

15.6 If the Board consists of more than one Director, the fellow Directors shall, upon receipt of the notification meant in Clause 15.5, decide whether the respective Director has a Conflict of Interest. In case it is decided that the respective Director has a Conflict of Interest, he may not participate in the consultation and decision-making of the Board regarding such resolution. A Director who in connection with a Conflict of Interest does not exercise certain duties and powers will insofar be regarded as a Director who is unable to act (belet). If as a consequence none of the Directors may participate in the consultation and decision-making, in deviation from Clause 18.2, all the Directors shall be authorised to adopt the board resolution, despite the Conflict of Interest.

15.7 A Conflict of Interest does not affect the authority concerning representation of the Company set forth in Clause 16.

15.8 Meetings of the Board are generally held at the offices of the Company, but may also take place elsewhere. In addition, meetings may be held by telephone, video conference or other means of communication (whether or not electronic), provided all participants can communicate with each other simultaneously.

15.9 A Director may be represented by one of his fellow Directors at meetings of the Board pursuant to a written power of attorney. Such power of attorney may only relate to the one designated meeting specified therein.

15.10 Resolutions of the Board are normally adopted at formal meetings of the Board. Resolutions of the Board may, however, also be adopted outside of a formal meeting of the Board, provided that (i) this is done in writing, (ii) all Directors required for a valid adoption of the resolution have had the opportunity to express their opinion in respect of the proposal concerned, and (iii) none of the Directors objected to adopting

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resolutions in this manner of decision making process. The provisions with respect to Conflict of Interest laid down in Clauses 15.5 and 15.6 shall also apply.

15.11 The minutes of the meetings of the Board shall in evidence of their adoption be signed by the chairperson of the meeting of the Board and at least one other Director or the Company Secretary.

16. REPRESENTATION

16.1 The Board (meaning all Directors acting jointly) is authorised to represent the Company. The CEO acting solely is also authorised to represent the Company.

16.2 The Board may, on behalf of the Company, grant one or more officers (procuratiehouders) a proxy or other form of continuing authority, with full or limited authority, acting either individually or jointly with one or more other persons, to represent the Company. Each of those officers shall represent the Company within the limits of the specific delegated powers provided to them in such proxy. The Board may grant titles to such officers as it sees fit.

17. APPROVAL OF RESOLUTIONS OF THE BOARD

17.1 Without prejudice to any other appropriate provision of these articles of association or the law, the Board shall obtain the approval of the General Meeting for resolutions regarding a significant change in the identity or nature of the Company or the business, including in any event:

17.1.1 transferring the business or practically the entire business of the Company to a third party;

17.1.2 entering into or terminating any long-term cooperation by the Company or a subsidiary (dochtermaatschappij) with any other legal entity or company or as a fully liable general partner of a limited partnership or a general partnership, provided that such cooperation or the termination thereof is of material significance to the Company; and

17.1.3 acquiring or disposing of a participating interest in the capital of a company with a value of at least one-third of the sum of the assets of the Company according to the balance sheet including the explanatory notes or, if the Company prepares a consolidated balance sheet, according to the consolidated balance sheet including the explanatory notes according to the last adopted annual accounts of the Company, by the Company or a subsidiary (dochtermaatschappij).

17.2 The absence of an approval as referred to in this Clause 17 does not affect the authority

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of the Board or the Directors to represent the Company.

18. ABSENCE OR INABILITY TO ACT

18.1 In the event that a Director is absent or unable to act, such Director may be temporarily replaced by a person whom the Board has designated for that purpose (a ‘stand-in’) and, until then, the other Director(s) shall be charged with the management of the Company.

18.2 In the event that all Directors are absent or unable to act, the following person and/or persons shall be temporarily charged with the management of the Company:

18.2.1 the person who most recently ceased to hold office as the Chairperson, provided that he is willing and able to accept the position; or

18.2.2 if such former Chairperson is unwilling or unable to accept that position, the person who most recently ceased to hold office as the CEO, provided that he is willing and able to accept the position.

In the event the former CEO is unwilling or unable to accept the position, a stand-in/the stand-ins designated by the General Meeting shall be temporarily charged with the management of the Company.

18.3 When determining to which extent Directors are present or represented, consent to a manner of adopting resolutions, or vote, stand-ins will be counted-in and no account will be taken of vacant seats for which no stand-in has been designated.

18.4 Inability to act in this Clause 18 shall mean:

18.4.1 suspension;

18.4.2 illness;

18.4.3 inaccessibility; and

18.4.4 a Conflict of Interest,

in the cases as meant under Clauses 18.4.2 and 18.4.3 without the possibility of contact between the Director and the Company during a period of five (5) days, unless the General Meeting has settled on a different period.

19. INDEMNIFICATION

19.1 To the extent permissible by law, the Company will indemnify and agrees to defend and hold harmless each (current or former) Director and each (current or former) officer (procuratiehouder) as referred to in article 16.2 (each: an “Indemnified Person”),

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against any liabilities, claims, judgments, fines and penalties (“Claims”) incurred by the Indemnified Person as a result of any threatened, pending or completed action, investigation or other proceeding, whether civil, criminal or administrative (each: a “Legal Action”), brought by any party other than the Company or a group company (groepsmaatschappij) thereof, in relation to acts or omissions in or related to his capacity as an Indemnified Person. Claims will include derivative actions brought on behalf of the Company or a group company (groepsmaatschappij) thereof or their respective equity holders or creditors against the Indemnified Person and Claims by the Company or a group company (groepsmaatschappij) thereof or their respective equity holders or creditors for reimbursement for Claims by third parties on the ground that any such Indemnified Person was jointly liable to that third party in addition to the Company or a group company (groepsmaatschappij) thereof or their respective equity holders or creditors.

19.2 The Indemnified Person will not be indemnified with respect to Claims in so far as such Claims relate to fraud (bedrog) committed by such Indemnified Person, or if the Indemnified Person shall have been adjudged to be liable for wilful misconduct (opzet) or gross negligence (bewuste roekeloosheid), provided that such fraud (bedrog), wilful misconduct (opzet) or gross negligence (bewuste roekeloosheid), as the case may be, had been adjudicated to have been the direct and primary cause for the Claim for which indemnification hereunder is sought by a competent court with jurisdiction over the matter, in a final non-appealable judgment, order or decree.

19.3 Any expenses (including reasonable attorneys’ fees and litigation costs) (together the “Expenses”) incurred by the Indemnified Person in connection with any Legal Action, shall be reimbursed by the Company, but only upon receipt of a written undertaking by that Indemnified Person that he shall repay such advanced Expenses if a competent court with jurisdiction over the matter, in a final non-appealable judgment, order or decree, should determine that such Indemnified Person is not entitled to be indemnified hereunder in respect of such Legal Action. Expenses shall be deemed to include any tax liability that the Indemnified Person may incur as a result of his indemnification or reimbursement hereunder.

19.4 If a Legal Action against any Indemnified Person by the Company or a group company (groepsmaatschappij) thereof occurs, the Company will advance to the Indemnified Person his reasonable Expenses, but only upon receipt of a written undertaking by that Indemnified Person that he shall repay such Expenses in the event a competent court with jurisdiction over the matter, in a final non-appealable judgment, order or decree, should resolve the Legal Action in favour of the Company rather than the Indemnified Person.

19.5 The Indemnified Person shall not admit any personal financial liability vis-à-vis third

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parties, or enter into any settlement agreement, with respect to any Legal Action for which he seeks indemnification hereunder, without the prior written authorisation of the Company (not to be unreasonably withheld or delayed). The Company and the Indemnified Person shall use all reasonable endeavours to cooperate with a view to agreeing on the defence of any Claims, but in the event that the Company and the Indemnified Person shall fail to reach such an agreement, the Indemnified Person shall comply with all directions given by the Company in his reasonable discretion.

19.6 The indemnity contemplated by this Clause 19 shall not apply to the extent Claims and Expenses are recoverable by an Indemnified Person under any insurance policy, unless the rights to such recovery are assignable and assigned to the Company, and unless a claim under such policy shall have been made by the Indemnified Person and diligently pursued but the insurance carrier has given written notification of his denial of the relevant claim or any portion thereof. In the event a claim is partially paid by the insurance carrier, any unadjusted portion of such claim (including, without limitation, any applicable deductibles or exclusions) shall not be subject to the foregoing restriction and shall be subject to indemnification by the Company hereunder.

19.7 The Company will provide for and bear the costs of adequate insurance covering Claims against (i) current and former Directors, and (ii) current and former officers (procuratiehouders) as referred to in article 16.2.

19.8 This Clause 19 can be amended without the consent of the Indemnified Persons as such. However, the provisions set forth herein nevertheless continue to apply to Claims and/or Expenses incurred in relation to the acts or omissions by the Indemnified Person during the periods in which this Clause 19 was in effect.

19.9 Whenever in this Clause 19 reference is made to the Company, this shall include, in addition to the resulting or surviving company also any constituent company (including any constituent company of a constituent company) absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power to indemnify its directors, so that any person who is or was a director of such constituent company, or is or was serving at the request of such constituent company as a director, shall stand in the same position under the provisions of this Clause 19 with respect to the resulting or surviving company as he would have with respect to such constituent company if its separate existence had continued.

CHAPTER VII

ANNUAL ACCOUNTS, PROFITS

20. FINANCIAL YEAR, PREPARATION ANNUAL ACCOUNTS, ACCOUNTANT

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20.1 The financial year of the Company shall be equal to the calender year.

20.2 Each year, within the term set by law, the Board shall prepare the Annual Accounts.

20.3 The Annual Accounts shall be signed by the Directors. If the signature of one or more of the Directors is missing, this fact and the reason therefore shall be stated.

20.4 The Company shall cause the Annual Accounts to be examined by one or more Accountant(s) and shall report to the General Meeting on the Annual Accounts, notwithstanding the provisions of the law.

20.5 The language of the Annual Accounts and the report of the Board shall be English.

21. ADOPTION ANNUAL ACCOUNTS, PUBLICATION

21.1 The General Meeting shall be adopted the Annual Accounts.

21.2 Adoption of the Annual Accounts shall not constitute a release from liability of the Directors for their management activities. In the General Meeting where adoption of the Annual Accounts is discussed, a proposal to grant discharge to the Directors for the performance of their duties shall be put on the agenda as a separate item.

21.3 The Company is required to publish the Annual Accounts and the report of the Board taking into account the statutory provisions.

22. PROFITS AND RESERVES

22.1 The profits realized during a financial year shall be put at the disposal of the General Meeting. The General Meeting may decide that the profits realised during a financial year will fully or partially be appropriated to increase and/or form reserves. A proposal to pay a dividend shall be dealt with as a separate agenda item at the General Meeting.

22.2 Distributions from the Company’s distributable reserves shall be made pursuant to a resolution of the General Meeting.

22.3 Provided it appears from an interim statement of assets signed by the Board that the requirement mentioned in Clause 22.5 concerning the position of the Company’s assets has been fulfilled, the General Meeting may make one or more interim distributions to the holders of Shares.

22.4 The General Meeting may decide that a distribution on Shares shall not take place as a cash payment but as a payment in Shares, or decide that holders of Shares shall have the option to receive a distribution as a cash payment and/or as a payment in Shares, out of the profit and/or at the expense of reserves. The General Meeting shall determine

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the conditions applicable to the aforementioned choices.

22.5 Distributions can only be made up to the amount of the Distributable Part of the Shareholders’ Equity.

22.6 Dividends and other distributions will be made payable pursuant to a resolution of the General Meeting within four (4) weeks after adoption, unless the General Meeting sets another date for payment.

22.7 The claim of a shareholder to receive any distributions shall lapse five (5) years after it has become due for payment.

22.8 In calculating the amount of any distribution on Shares, Shares held by the Company shall be disregarded.

22.9 All distributions may be made in euro and in another currency than euro.

CHAPTER VIII

GENERAL MEETINGS

23. ANNUAL MEETING, EXTRAORDINARY MEETINGS, CONVOCATION

23.1 Each year, within six (6) months after the end of the financial year, an annual General Meeting shall be held.

23.2 Extraordinary General Meetings will be held as often as the Board deems, or the Chairperson and the Vice-Chairperson (if any) deem, necessary, but in any event within three (3) months after the Board has considered it plausible that the shareholders’ equity of the Company has decreased to an amount equal to or less than one half of the issued and paid-up part of the capital, in order to discuss any requisite measures, if necessary.

23.3 General Meetings shall be held in the place where the Company has its statutory seat (statutaire zetel) or in Arnhem, Assen, The Hague, Haarlem, ‘s-Hertogenbosch, Groningen, Leeuwarden, Lelystad, Maastricht, Middelburg, Rotterdam, Schiphol (Haarlemmermeer), Utrecht or Zwolle. Notwithstanding the provisions of the previous sentence, and to the extent permitted by Dutch law, the one convening the General Meeting may determine that a General Meeting is also or exclusively accessible by electronic means. The notice convening the meeting shall inform the Persons entitled to attend General Meetings accordingly.

23.4 All Persons entitled to attend General Meetings must be convened for the General Meeting in accordance with applicable law. The shareholders may be convened for the General Meeting by means of convening letters sent to the addresses of those

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shareholders in accordance with Clause 5.5. The previous sentence does not prejudice the possibility of sending a convening notice by electronic means in accordance with section 2:113 paragraph 4 of the Dutch Civil Code.

23.5 The notice convening the General Meeting shall be issued by the Chairperson, or, when the Chairperson is absent or is not able to issue such notice, by the CEO, or by those who are legally entitled thereto with due observance of the provisions of section 2:110 of the Dutch Civil Code.

23.6 The notice convening the General Meeting shall be issued with due observance of the statutory notice period. If the notice period was shorter or if no notice was sent, no valid resolutions may be adopted.

23.7 The agenda shall contain such business as prescribed by law and as may be placed thereon by the person(s) entitled to convene the General Meeting. Substantiated requests to put items on the agenda for the General Meeting, made by one or more shareholders acting jointly representing at least the statutory threshold, shall be effected by the Board, if such a request has been made to the Board in writing or by means of electronic communication at least sixty (60) days prior to the date of the General Meeting. The agenda of the General Meeting shall list which items are for discussion and which items are to be voted upon. No resolution shall be passed at the General Meeting in respect of matters not on the agenda.

23.8 The notice convening the General Meeting shall at least mention the business on the agenda as mentioned under section 2:114 paragraph 1 of the Dutch Civil Code and the information pursuant to section 2:119 paragraph 3 of the Dutch Civil Code.

23.9 General Meetings shall be presided over by one of the following individuals, taking into account the following order of priority:

23.9.1 the Chairperson, if he is present at the General Meeting;

23.9.2 a Non-Executive Director elected by the Directors present.

The Company Secretary will act as secretary of that General Meeting. In case of absence of the Company Secretary, the chairperson of the General Meeting shall appoint the secretary of that General Meeting.

23.10 Unless the chairperson of the General Meeting has requested a civil law notary (notaris) to include the minutes of the General Meeting in a notarial report (notarieel proces-verbaal), the secretary of the General Meeting shall keep the minutes of the business transacted at the General Meeting, which shall be made available, on request, to shareholders no later than three (3) months after the end of the General Meeting, after

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which the shareholders shall have the opportunity to react to the minutes in the following three (3) months. The minutes shall then be adopted by the chairperson of the General Meeting and the secretary of the General Meeting.

23.11 For each General Meeting a statutory record date will be applied, in order to determine in which persons voting rights and meeting rights are vested. The record date and the manner in which persons holding meeting rights can register and exercise their rights will be set out in the notice convening the meeting.

23.12 A Person entitled to attend General Meetings or his proxy will only be admitted to the meeting if he has notified the Company of his intention to attend the meeting in writing at the address and by the date specified in the notice of meeting. The proxy is also required to produce written evidence of his mandate.

23.13 The one convening the General Meeting is authorised to determine that the rights to attend General Meetings and voting rights can, be exercised by also, or, to the extent permitted by Dutch law, exclusively, using an electronic means of communication. If so decided, it will be required that each Person entitled to attend General Meetings, or his proxy holder, can be identified through the electronic means of communication, follow the discussions in the meeting and, to the extent applicable, exercise the voting rights. The one convening the General Meeting may, as far as permitted by Dutch law, and will, if required by Dutch law, also determine that the electronic means of communication used must allow each Person entitled to attend General Meetings or his proxy holder to participate in the discussions.

23.14 The Directors shall, in that capacity, have an advisory vote during the General Meeting.

23.15 The Accountant, who has been appointed to audit the Annual Accounts, is authorised to attend the General Meeting relating to the adoption of the Annual Accounts and to take part in the discussions.

23.16 The General Meeting will be conducted in the English language. The General Meeting may be conducted in a language other than the English language if so determined by the chairperson of the General Meeting.

24. RECORDS

The Board shall keep records of the adopted resolutions. If the Board is not represented at a meeting, the chairperson of the General Meeting shall ensure that a transcript of the adopted resolutions is provided to the Board as soon as possible after the meeting. The records shall be available at the offices of the Company for inspection by the shareholders. Copies or extracts of these records shall be provided to the shareholders at their request free of charge or at cost price.

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25. VOTING RIGHTS

25.1 Each Share carries the right to cast one vote.

25.2 At the General Meeting, all resolutions shall – unless these articles of association or the law prescribe more stringent requirements – be adopted by an absolute majority of the votes validly cast.

25.3 If there is a tie in voting, the proposal shall be rejected.

25.4 The Board may determine that votes validly cast prior to the General Meeting by electronic means of communication or by mail, are equated with votes cast at the time of the General Meeting. Such votes may not be cast before the record date referred to in Clause 23.11. Without prejudice to the provisions of Clause 23 the notice convening the General Meeting must state how shareholders may exercise their rights prior to the meeting.

25.5 Blank votes, invalid votes and abstentions will be regarded as not having been cast.

25.6 The chairperson of the General Meeting will decide whether and to what extent votes are taken orally, in writing, electronically or by acclamation, and shall take into account the Board’s decision as referred to in Clause 25.4.

25.7 When determining how many votes are cast by shareholders, how many shareholders are present or represented, or what portion of the Company’s issued capital is represented, no account will be taken of Shares for which no votes can be cast by law.

25.8 Persons entitled to attend General Meetings may be represented by proxies with written authority to be shown for admittance to a General Meeting. Any shareholder shall have the possibility to electronically submit such proxy to the Company, under the method and conditions as defined by the Board.

CHAPTER IX

MISCELLANEOUS

26. AMENDMENT TO ARTICLES OF ASSOCIATION, LEGAL MERGER, LEGAL DEMERGER AND DISSOLUTION

26.1 The General Meeting may resolve on an amendment to these articles of association, a legal merger, a legal demerger or a dissolution of the Company.

26.2 When a proposal to amend these articles of association, to merge, to demerge or to wind up the Company is made to the General Meeting, the intention to propose such

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resolution must be stated in the relevant notice convening the General Meeting. If it concerns an amendment to the articles of association, a copy of the proposal in which the proposed amendment is quoted verbatim must at the same time be deposited at the Company’s offices and this copy shall be made available for inspection by the shareholders until the end of the General Meeting.

27. LIQUIDATION

27.1 In the event of the dissolution of the Company pursuant to a resolution of the General Meeting, the Directors shall be charged with the liquidation of the affairs of the Company, unless the General Meeting appoints one or more other persons for that purpose.

27.2 During the liquidation the provisions of these articles of association shall remain in force to the extent possible.

27.3 The balance remaining after payment of debts shall be transferred to the shareholders in proportion to the aggregate nominal amount of their Shares.

27.4 The liquidation shall furthermore be subject to the provisions of Title 1, Book 2 of the Dutch Civil Code.

28. FEDERAL FORUM PROVISION

Except as otherwise determined by the Board, the sole and exclusive forum for any complaint asserting as cause of action arising under the United States Securities Act of 1933, as amended, to the extent permitted by applicable law, shall be the federal district courts of the United States of America.

* * *

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EX-2.1

Exhibit 2.1

Description of Securities
Registered Pursuant to Section 12 of the
Securities Exchange Act of 1934

As of May 30, 2024, SCHMID Group N.V. (the “Company,” “Schmid,” “we,” “us” or “our”) had two classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: (a) class A ordinary shares with a nominal value of €0.01 per share (“Class A Shares”) and (b) warrants to purchase Class A Shares at a price of $11.50 per share, subject to adjustment, trading on Nasdaq under the symbol “SHMD.WS” (the “Public Warrants”).

The following descriptions do not purport to be complete and are subject to the Company's amended articles of association (the “articles of association”) and the warrant agreement, as amended pursuant to an assignment, assumption and amendment agreement, relating to the Public Warrants (the “Warrant Agreement”), copies of which have been filed as exhibits to the Company's Annual Report on Form 20-F (the “Annual Report”) of which this Exhibit 2.1 is a part, and, in the case of the articles of association, are subject to provisions of applicable Dutch law. Capitalized terms used but not defined herein have the meanings given to them in the Annual Report.

Overview

We were incorporated as Pegasus Topco B.V. on February 7, 2023 as a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) under Dutch law. In connection with the consummation of the Business Combination, we converted into a Dutch public limited liability company (naamloze vennootschap), SCHMID Group N.V., pursuant to a deed of conversion and amendment of our articles of association adopted on May 30, 2024 (as amended, the “articles of association”). We are registered in the Commercial Register of the Chamber of Commerce (Kamer van Koophandel) in the Netherlands under number 89188276.

Our class A ordinary shares are subject to, and have been created under, Dutch law. Set forth below is a summary of relevant information concerning the material provisions of the articles of association and applicable Dutch law.

Schmid is a Dutch public limited liability company (naamloze vennootschap). Schmid has a one-tier board structure, which consists of six members, one executive director and five non- executive directors, as discussed in more detail under “Item 6. Directors, Senior Management and Employees- A. Directors and Senior Management.”

Share Capital

Authorized Share Capital

As of the date of this Report, the Schmid has an issued share capital in the amount of €0.01 per issued share. Under Dutch law, the Schmid Group’s authorized share capital of a public limited liability company is the maximum capital that the Schmid Group may issue without amending the Schmid Group’s Articles of Association and may be a maximum of five times the issued capital. An amendment of the Schmid Group Articles of Association would require a resolution of Schmid Group’s General Meeting upon proposal by the Schmid Group’s Board. The Schmid Group Articles of Association provide for an authorized share capital amounting to €0.01.

The issued share capital of the Company amounts to €429,748.62, divided into 42,974,862 ordinary shares. The authorized share capital of the Company amounts to €1,686,250.00.

As of the Closing Date, none of the Schmid Group Shares were held by Schmid in treasury. All issued and outstanding Schmid Group Shares are held in registered form. No share certificates may be issued.

Issued and Outstanding Share Capital

Our issued and outstanding share capital as of May 30, 224 consisted of:

42,974,862 Class A Shares

Authorization of Issuance of Shares

Under Dutch law, shares are issued and rights to subscribe for shares are granted pursuant to a resolution of the General Meeting. The articles of association provide that Shares may be issued pursuant to (i) a resolution by the General Meeting or (ii) a resolution of the Board, if and insofar as the General Meeting has designated this authority to the Board for a period not exceeding five (5) years. Pursuant to the articles of association, the General Meeting may authorize the Board to issue Shares or grant rights to subscribe for Shares. The authorization can be granted and extended, in each case for a period not exceeding five years. Pursuant to the articles of association, Shares shall be issued up to the amount of the authorized share capital (from time to time).

Currently, the Board is authorized to

1. (i) issue up to 21,000,000 Class A Shares in the Company's capital in relation to the exercise of warrants and (ii) restrict or exclude pre-emptive rights of existing shareholders in connection with such issuances, in each case for a period of five (5) years (the “Warrants Assumption Delegation”);

2. (i) issue shares and to grant rights to subscribe for shares up to 20% of the total number of shares that will be issued and outstanding as of May 30, 2024 (6,745,000) in respect of issuances of shares to employees of the Company or to former, current or future employees, managing directors, service providers or business associates of a group company of the Company, and (ii) restrict or exclude pre-emptive rights of existing shareholders in connection with such issuances or grants, to the extent applicable, in each case for a period of five (5) years from Closing (the “Employee Delegation”); and

3. (i) issue shares and to grant rights to subscribe for shares other than in the context of issuances of shares to employees of the Company or of a group company of the Company, up to 20% of the total number of shares from time to time and (ii) restrict or exclude pre-emptive rights of existing shareholders in connection with such issuances or grants, in each case for a period of five (5) years from Closing (the “General Delegation”), with effect from Closing.

Transfer of Shares

Under Dutch law, transfers of Shares (other than in book-entry form) require a written deed of transfer and, unless Schmid is a party to the deed of transfer, an acknowledgement by or proper service upon Schmid to be effective.

Under the articles of association, if one or more Shares are admitted to trading on Nasdaq or any other Regulated Market (as defined in the articles of association), Schmid may, by Board resolution, determine that the laws of the State of New York will apply to the property law aspects of the Shares included in the part of the register of shareholders kept by the relevant transfer agent. Such resolution, as well as the revocation thereof, must be made public as required by law and be made available for inspection at our office and the Dutch trade register. The Board adopted such a resolution effective as of the closing of the Business Combination.

There are no restrictions on the transferability of the Shares in the articles of association or under Dutch law. However, the issuance and offering of Shares to persons located or resident in, or who are citizens of, or who have a registered address in certain countries, and the transfer of Shares into certain jurisdictions, may be subject to specific regulations or restrictions.

Form of Shares

Pursuant to the articles of association, Shares are registered shares.

Purchase and Repurchase of Shares

Under Dutch law, Schmid may not subscribe for newly issued Shares. Schmid may acquire Shares, subject to applicable provisions and restrictions of Dutch law and the articles of association, to the extent that:

• such Shares are fully paid-up;

• our equity capital, reduced by the acquisition price of the Shares, is not less than the sum of the issued and paid-up capital and the reserves to be maintained pursuant to Dutch law or the articles of association;

• following the transaction contemplated, at least one Share remains outstanding and is not held by Schmid; and

• since Schmid’s Class A Shares are admitted to trading on a Regulated Market (as defined in the articles of association), the nominal value of the Shares to be acquired, already held by Schmid or already held by Schmid as pledgee or that are held by Schmid subsidiaries, does not exceed 50% of our issued capital.

Other than Shares acquired gratuitously (om niet) or under universal title of succession (onder algemene titel) (e.g., through a merger or demerger) under statutory Dutch or other law, Schmid may acquire Shares pursuant to the restrictions set out above only if the General Meeting has authorized the Board to do so. An authorization by the General Meeting for the acquisition of Shares can be granted for a maximum period of 18 months. Such authorization must specify the number of Shares that may be acquired, the manner in which these shares may be acquired and the price range within which the shares may be acquired. No authorization of the General Meeting is required if Shares are acquired by Schmid on Nasdaq with the intention of transferring such Shares to our employees or employees of a group company pursuant to an arrangement applicable to them. Schmid cannot derive any right to any distribution from Shares or voting rights attached to Shares acquired by it. On the day of Closing, the Board was authorized by the General Meeting to acquire shares in the capital of the Company, either through purchase on a stock exchange or otherwise, for a period of eighteen (18) months, with effect from Closing, and under the following conditions: (a) up to ten percent (10%) of the total number of shares issued from time to time; (b) provided that the Company will not hold more shares in stock than ten percent (10%) of the issued share capital; and (c) at a price (excluding expenses) not less than the nominal value of the shares and not higher than the opening price on NASDAQ on the day of repurchase plus ten percent (10%).

Capital Reduction

The General Meeting may resolve to reduce our issued share capital by (i) cancelling Shares or (ii) reducing the nominal value of the Shares by amending the articles of association (provided that the nominal value of a Share cannot be less than €0.01). In either case, this reduction would be subject to applicable statutory provisions. A resolution to cancel Shares may only relate to Shares held by Schmid itself or in respect of which Schmid holds the depository receipts. Under Dutch law, a resolution of the General Meeting to reduce the number of Shares must designate the Shares to which the resolution applies and must lay down rules for the implementation of the resolution. A resolution of the General Meeting to reduce the capital requires a majority of at least two-thirds of the votes cast, if less than half of the issued capital is represented at the General Meeting.

General Meetings and Voting Rights

General Meetings

General Meetings are held in the Netherlands. All of our shareholders and others entitled to attend the General Meetings are authorized to address the meeting and, in so far as they have such right, to vote, either in person or by proxy.

We shall hold at least one General Meeting each year, to be held within six months after the end of our financial year, or later, as may be permitted by Dutch law. A General Meeting shall also be held within three months after the Board has determined it to be likely that our equity has decreased to an amount equal to or lower than half of its paid up and called up capital, in order to discuss the measures to be taken if so required. If the Board fails to hold such General Meeting in a timely manner, each shareholder and other person entitled to attend the General Meeting may be authorized by the Dutch court to convene the General Meeting.

The Board may convene additional extraordinary General Meetings at its discretion, subject to the notice requirements described below. Pursuant to Dutch law, one or more shareholders, alone or jointly representing at least 10% of our issued share capital, may request that a General Meeting be convened, the request setting out in detail the matters to be considered. If no General Meeting has been held within eight weeks of the shareholder(s) making such request, that/those shareholder(s) will be authorized to request in summary proceedings a Dutch district court to convene a General Meeting.

The General Meeting is convened by a notice, which includes an agenda stating the items to be discussed and the location and time of the General Meeting. For the annual General Meeting, the agenda will generally include, among other things, the management report (as far as required by law), the adoption of our annual accounts and the granting of discharge from liability to members of the Board for actions in respect of their management during the preceding financial year. In addition, the agenda for a General Meeting includes such additional items as determined by the Board. Pursuant to Dutch law, one or more shareholders and/or others entitled to attend General Meetings, alone or jointly representing at least 3% of the issued share capital, have the right to request the inclusion of additional items on the agenda of General Meetings. Such requests must be made in writing, and may include a proposal for a shareholder resolution, and must be received by us no later than on the 60th day before the day the relevant General Meeting is scheduled to be held. In accordance with the DCGC (as defined below), a shareholder is expected to exercise the right of putting an item on the agenda only after consulting the Board in that respect. If one or more shareholders intend to request that an item be put on the agenda that may result in a change in the Company's strategy, the Board may invoke a response time of a maximum of 180 days from the moment the Board is informed of the request. No resolutions may be adopted on items other than those that have been included in the agenda (unless the resolution would be adopted unanimously during a meeting where the entire issued capital of the Company is present or represented).

In addition to the DCGC, the Board may invoke a statutory cooling-off period up to a maximum of 250 days (wettelijke bedenktijd) as set out in the Dutch Civil Code. For the Company, the statutory cooling-off period will apply in case:

• shareholders requesting the Board to have the General Meeting consider a proposal for the appointment, suspension or dismissal of one or more directors, or a proposal for the amendment of one or more provisions in the articles of association relating thereto; or

• a public offer for shares in the capital of the Company is announced or made without the bidder and the Company having been reached agreement about the offer; and

• only if the Board also considers the relevant situation to be substantially contrary to the interests of the Company and its affiliated enterprises.

If the Board invokes such cooling-off period, this causes the powers of the General Meeting to appoint, suspend or dismiss directors (and to amend the articles of association in this respect) being suspended.

The Board must use the reflection period to obtain all necessary information for a careful determination of policy it wishes to pursue in the given situation. The Board shall thereby, in any event, consult those shareholders that represent at least 3% of the issued capital at the time the cooling-off period is invoked and the works council (to the extent established). The position of these shareholders and the works council shall, but only with their approval, be published on the Company’s website. The Board shall report on the course of events and the policy that has been pursued since the cooling-off period was invoked. No later than one week after the last day of the cooling-off period, the Company shall have to publicly disclose the report. The report shall also be discussed at the first General Meeting after the expiry of the cooling-off period.

The cooling-off period has a maximum term of 250 days, calculated from:

• the day after the latest date on which shareholders may request an item to be placed on the agenda of the next General Meeting (which is 60 days before the day of the meeting);

• the day after the day on which the public offer is made; or

• the day the court in preliminary relief proceedings has granted authority to shareholders holding at least 10% of the issued share capital to convoke a General Meeting.

All shareholders who solely or jointly hold 3% of the issued share capital may request the Enterprise Chamber of the Court of Appeal in Amsterdam (Ondernemingskamer van het Gerechtshof te Amsterdam) (the “Enterprise Chamber”) to terminate the cooling-off period. The Enterprise Chamber must rule in favor of the request if the shareholders can demonstrate that:

• the Board, in light of the circumstances at hand when the cooling-off period was invoked, could not reasonably have concluded that the relevant proposal or hostile offer constituted a material conflict with the interests of our Company and its business;

• the Board cannot reasonably believe that a continuation of the cooling-off period would contribute to careful policy-making; and

• other defensive measures, having the same purpose, nature and scope as the cooling- off period, have been activated during the cooling-off period and have not since been terminated or suspended within a reasonable period at the relevant shareholders' request (i.e., no “stacking” of defensive measures).

We will give notice of each General Meeting by publication on our website and, to the extent required by applicable law, in a Dutch daily newspaper with national distribution and in any other manner that we may be required to follow in order to comply with Dutch law and applicable stock exchange and SEC requirements. We will observe the statutory minimum convening notice period for a General Meeting.

Holders of registered shares may further be provided notice of the meeting in writing at their addresses as stated in our shareholders’ register.

Pursuant to the articles of association and Dutch law, the Board may determine a record date (registratiedatum) of 28 calendar days prior to a General Meeting to establish which shareholders and others with meeting rights are entitled to attend and, if applicable, vote at the General Meeting. The record date, if any, and the manner in which shareholders can register and exercise their rights will be set out in the notice of the General Meeting.

Pursuant to the articles of association, the General Meeting is presided over by the Chairman of the Board or, if he is absent, by one of the other non-executive directors designated for

that purpose by the Board. If no non-executive directors are present at the meeting, the General Meeting shall be presided by one of the executive director designated for that purpose by the Board.

Voting Rights and Quorum

In accordance with Dutch law and the articles of association, and in each case without prejudice to the Voting Cap (as defined hereinafter) being applicable to any shareholder:

• each Class A Share confers the right to cast 1 vote in a General Meeting.

No votes may be cast at a General Meeting in respect of Shares that are held by the Company or any subsidiary, nor in respect of Shares for which the Company or any subsidiary holds depositary receipts. However, holders of a right of pledge or a right of usufruct on Shares held by the Company or a subsidiary are not excluded from voting, if the right of pledge or the usufruct was created before the Share belonged to the Company or the subsidiary. The Company or the subsidiary may not cast a vote in respect of a Share on which it holds a right of pledge or a right of usufruct.

Voting rights may be exercised by shareholders or by a duly appointed proxy holder (the written proxy being acceptable to the chairman of the General Meeting) of a shareholder, which proxy holder does not need to be a shareholder.

Under the articles of association, blank votes (votes where no choice has been made) and invalid votes shall not be counted as votes cast.

Resolutions of the shareholders are adopted at a General Meeting by a majority of votes cast, except where Dutch law or the articles of association provide for a special majority in relation to specified resolutions. Subject to any provision of mandatory Dutch law, the articles of association do not provide for a quorum requirement other than for the following:

(i)    a resolution to amend the articles of association as result of which one or more of the following articles is amended or abolished requires the prior approval of the Class A Shares, which approval can only be granted by a majority of the votes cast in a meeting in which at least 50% of the issued and outstanding Class A Shares are present or represented:

• article 1 subsections j, n, s, aa, bb, dd, mm or nn;

• article 4 paragraph 2 or paragraph 3, to the extent it concerns a change of the nominal value of the Shares;

• article 4A;

• article 7 paragraph 1 or paragraph 2;

• article 16 paragraph 10, paragraph 11 or paragraph 12;

• article 22 paragraph 5;

• article 26 paragraph 4; and

(ii)   a resolution to amend the articles of association as a result of which article 14 paragraph 3 or article 26 paragraph 5 is amended or abolished, which requires within the first three years after the Closing Date a majority of at least 85% of the votes cast in a meeting in which at least 85% of the issued and outstanding share capital is present of represented.

Subject to certain restrictions in the articles of association, the determination during the General Meeting made by the chairman of that General Meeting with regard to the results of a vote shall be decisive. The Board will keep a record of the resolutions taken at each General Meeting.

Amendment of Articles of Association – Merger, Demerger and Dissolution

The General Meeting may resolve on an amendment to these articles of association, a legal merger, a legal demerger or a dissolution of the Company. When a proposal to amend these articles of association, to merge, to demerge or to wind up the Company is made to the General Meeting, the intention to propose such resolution must be stated in the relevant notice convening the General Meeting. If it concerns an amendment to the articles of association, a copy of the proposal in which the proposed amendment is quoted verbatim must at the same time be deposited at the Company's offices and this copy shall be made available for inspection by the shareholders until the end of the General Meeting.

Squeeze Out

A shareholder who for its own account (or together with its group companies) holds at least 95% of our issued share capital may institute proceedings against the other shareholders jointly for the transfer of their shares to the shareholder who holds such 95% majority. The proceedings are held before the Enterprise Chamber and can be instituted by means of a writ of summons served upon each of the minority shareholders in accordance with the provisions of the Dutch Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering). The Enterprise Chamber may grant the claim for squeeze-out in relation to all minority shareholders and will determine the price to be paid for the shares, if necessary after appointment of one or three expert(s) who will offer an opinion to the Enterprise Chamber on the value of the shares of the minority shareholders. Once the order to transfer by the Enterprise Chamber becomes final and irrevocable, the majority shareholder that instituted the squeeze-out proceedings shall give written notice of the date and place of payment and the price to the holders of the shares to be acquired whose addresses are known to the majority shareholder.

Unless the addresses of all minority shareholders are known to the majority shareholder acquiring the shares, the majority shareholder is required to publish the same in a newspaper with a national circulation.

Any sale or transfer of all of our assets (see “- Certain Other Major Transactions” below) and our dissolution or liquidation is subject to approval by a majority of the votes cast in our General Meeting (see “- Merger, Demerger and Dissolution” above).

Certain Other Major Transactions

The articles of association and Dutch law provide that resolutions of the Board concerning a material change in our identity, character or business are subject to the approval of the General Meeting. Such changes include:

• a transfer of all or materially all of our business/enterprise to a third party;

• the entry into or termination of a long-lasting cooperation of the Company or of a subsidiary either with another legal person or company, or as a fully liable general partner of a limited partnership or a general partnership, if this cooperation or termination is of essential importance to the Company; and

• the acquisition or disposition of a participating interest in the capital of a company by the Company or by one of our subsidiaries with a value of at least one third of the value of our assets, according to the balance sheet with explanatory notes or, if we prepare a consolidated balance sheet, according to the consolidated balance sheet with explanatory notes in our most recently adopted annual accounts.

Notices

We will give notice of each General Meeting by publication on our website and, to the extent required by applicable law, in a Dutch daily newspaper with national distribution, and in any other manner that we may be required to follow to comply with Dutch law and applicable stock exchange and SEC requirements. Holders of registered shares may further be provided notice of the meeting in writing at their addresses as stated in our shareholders' register.

Dividends and Other Distributions

Under the Articles of Association, the Board may decide that all or part of the profits shown in our adopted statutory annual accounts will be added to our reserves. After reservation of any such profits, any remaining profits will be at the disposal of the General Meeting at the proposal of the Board for distribution on the Ordinary Shares, subject to applicable restrictions of Dutch law.

The Board is permitted, subject to certain requirements and applicable restrictions of Dutch law, to declare interim dividends without the approval of the General Meeting. Dividends and other distributions shall be made payable no later than a date determined by the Board. Claims to dividends and other distributions not made within five years from the date that such dividends or distributions became payable will lapse and any such amounts will be considered to have been forfeited to us (verjaring). We do not anticipate paying any dividends on Shares for the foreseeable future. See the section entitled “Dividend Policy.”

Exchange Controls and other Provisions relating to non-Dutch Shareholders

Under Dutch law, subject to the 1977 Sanction Act (Sanctiewet 1977) or otherwise by international sanctions, there are no exchange control restrictions on investments in, or payments on, Shares (except as to cash amounts). There are no special restrictions in the articles of association or Dutch law that limit the right of shareholders who are not citizens or residents of the Netherlands to hold or vote Shares.

Public Warrants

As of May 30, 2024, there were 21,000,000 Public Warrants outstanding.

The Public Warrants, which entitle the holder to purchase one Class A Share at an exercise price of $11.50 per Class A Share, become exercisable thirty days after the completion of the Business Combination. The Public Warrants will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation in accordance with their terms.

We will not be obligated to deliver any Class A Shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A Shares underlying the Public Warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration, or a valid exemption from registration is available. No Public Warrant will be exercisable and we will not be obligated to issue a Class A Share upon exercise of a Public Warrant unless the Class A Share issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a Public Warrant, the holder of such Public Warrant will not be entitled to exercise such Public Warrant and such Public Warrant may have no value and expire worthless. In no event will we be required to net cash settle any Public Warrant.

Under the terms of the warrant agreement relating to the Public Warrants (the “Warrant Agreement”), we were obligated, as soon as practicable, but in no event later than 15 business days after the closing of the Business Combination, to use commercially reasonable efforts to file with the SEC a registration statement covering the Class A Shares issuable upon exercise of the Public Warrants. We were obligated to use commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of the Business Combination, and we are

obligated to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A Shares until the Public Warrants expire or are redeemed, as specified in the Warrant Agreement; provided that if the Class A Shares are at the time of any exercise of a Public Warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so appoint, we will not be required to file or maintain in effect a registration statement. If a registration statement covering the Class A Shares issuable upon exercise of the Public Warrants is not effective, Public Warrant holders may, until such time as there is an effective registration statement and during any period when we will have failed to maintain an effective registration statement, exercise Public Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption, but we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Redemption of Public Warrants for cash when the price per Class A Share equals or exceeds $18.00. We may call the outstanding Public Warrants for redemption:

• in whole and not in part;

• at a price of $0.01 per warrant;

• upon not less than 30 days' prior written notice of redemption to each Public Warrant holder; and

• if, and only if, the closing price of the Class A Shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which notice of the redemption is given to the Public Warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (subject to adjustment as described below).

We will not redeem the Public Warrants as described above unless a registration statement under the Securities Act covering the issuance of the Class A Shares issuable upon exercise of the Public Warrants is then effective and a current prospectus relating to those shares is available throughout the 30-day redemption period. If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. As a result, we may redeem the Public Warrants as set forth above even if the holders are otherwise unable to exercise the Public Warrants.

If the foregoing conditions are satisfied and we issue a notice of redemption of the Public Warrants, each Public Warrant holder will be entitled to exercise his, her or its Public Warrant prior to the scheduled redemption date.

Redemption of Public Warrants for cash when the price per Class A Share equals or exceeds $10.00. We may redeem the outstanding Public Warrants:

• in whole and not in part;

• at $0.10 per warrant upon a minimum of 30 days' prior written notice of redemption; provided that holders will be able to exercise their Public Warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based on the redemption date and the “fair market value” of the Class A Shares (as defined below);

• if, and only if, the Reference Value equals or exceeds $10.00 per share (subject to adjustment as described below); and

• if the Reference Value is less than $18.00 per share (subject to adjustment as described below), the Private Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.

The numbers in the table below represent the number of Class A Shares that a Public Warrant holder will receive upon exercise in connection with a redemption by us pursuant to this redemption feature, based on the “fair market value” of the Class A Shares on the corresponding redemption date (assuming holders elect to exercise their Public Warrants and such are not redeemed for $0.10 per warrant), determined based on volume-weighted average price of the Class A Shares as reported during the 10 trading days immediately following the date on which the notice of redemption is sent to the affected holders of Public Warrants, and the number of months that the corresponding redemption date precedes the expiration date of the Public Warrants, each as set forth in the table below. We will provide our Public Warrant holders with the final fair market value no later than one business day after the 10-trading day period described above ends.

The share prices set forth in the column headings of the table below will be adjusted as of any date on which the number of Class A Shares issuable upon exercise of a Public Warrant or the exercise price of the Public Warrant is adjusted as set forth under the heading “-Anti-dilution Adjustments” below. If the number of shares issuable upon exercise of a Public Warrant is adjusted, the adjusted share prices in the column headings will equal the share prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the exercise price of the Public Warrant after such adjustment and the denominator of which is the price of the Public Warrant immediately prior to such adjustment. In such an event, the number of shares in the table below shall be adjusted by multiplying such share amounts by a fraction, the numerator of which is the number of shares deliverable upon exercise of a Public Warrant immediately prior to such adjustment and the denominator of which is the number of shares deliverable upon exercise of a Public Warrant as so adjusted.

Redemption Date	Fair Market Value of Class A Shares
(period to expiration of Public Warrants)	≤$10.00	$11.00	$12.00	$13.00	$14.00	$15.00	$16.00	$17.00	≥$18.00
60 months	0.261	0.281	0.297	0.311	0.324	0.337	0.348	0.358	0.361
57 months	0.257	0.277	0.294	0.310	0.324	0.337	0.348	0.358	0.361
54 months	0.252	0.272	0.291	0.307	0.322	0.335	0.347	0.357	0.361
51 months	0.246	0.268	0.287	0.304	0.320	0.333	0.346	0.357	0.361
48 months	0.241	0.263	0.283	0.301	0.317	0.332	0.344	0.356	0.361
45 months	0.235	0.258	0.279	0.298	0.315	0.330	0.343	0.356	0.361
42 months	0.228	0.252	0.274	0.294	0.312	0.328	0.342	0.355	0.361
39 months	0.221	0.246	0.269	0.290	0.309	0.325	0.340	0.354	0.361
36 months	0.213	0.239	0.263	0.285	0.305	0.323	0.339	0.353	0.361
33 months	0.205	0.232	0.257	0.280	0.301	0.320	0.337	0.352	0.361
30 months	0.196	0.224	0.250	0.274	0.297	0.316	0.335	0.351	0.361
27 months	0.185	0.214	0.242	0.268	0.291	0.313	0.332	0.350	0.361
24 months	0.173	0.204	0.233	0.260	0.285	0.308	0.329	0.348	0.361
21 months	0.161	0.193	0.223	0.252	0.279	0.304	0.326	0.347	0.361
18 months	0.146	0.179	0.211	0.242	0.271	0.298	0.322	0.345	0.361
15 months	0.130	0.164	0.197	0.230	0.262	0.291	0.317	0.342	0.361
12 months	0.111	0.146	0.181	0.216	0.250	0.282	0.312	0.339	0.361
9 months	0.090	0.125	0.162	0.199	0.237	0.272	0.305	0.336	0.361
6 months	0.065	0.099	0.137	0.178	0.219	0.259	0.296	0.331	0.361
3 months	0.034	0.065	0.104	0.150	0.197	0.243	0.286	0.326	0.361
0 months	—	—	0.042	0.115	0.179	0.233	0.281	0.323	0.361

The exact fair market value and redemption date may not be set forth in the table above, in which case, if the fair market value is between two values in the table or the redemption date is between two redemption dates in the table, the number of Class A Shares to be issued for each

Public Warrant exercised will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower fair market values and the earlier and later redemption dates, as applicable, based on a 365 or 366-day year, as applicable. For example, if the volume- weighted average price of the Class A Shares as reported during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of the Public Warrants is $11.00 per share, and at such time there are 57 months until the expiration of the Public Warrants, holders may choose to, in connection with this redemption feature, exercise their warrants for 0.277 Class A Shares for each Public Warrant. For an example where the exact fair market value and redemption date are not as set forth in the table above, if the volume-weighted average price of the Class A Shares as reported during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of the Public Warrants is $13.50 per share, and at such time there are 38 months until the expiration of the Public Warrants, holders may choose to, in connection with this redemption feature, exercise their Public Warrants for 0.298 Class A Shares for each Public Warrant. In no event will the Public Warrants be exercisable in connection with this redemption feature for more than 0.361 Class A Shares per warrant (subject to adjustment).

No fractional Class A Shares will be issued upon exercise. If, upon exercise, a holder would be entitled to receive a fractional interest in a share, we will round down to the nearest whole number of the number of Class A Shares to be issued to the holder.

Anti-Dilution Adjustments

If the number of issued and outstanding Class A ordinary shares is increased by a capitalization or share dividend payable in Class A ordinary shares, or by a split-up of Class A ordinary shares or other similar event, then, on the effective date of such capitalization or share dividend, split-up or similar event, the number of Class A ordinary shares issuable on exercise of each warrant will be increased in proportion to such increase in the issued and outstanding Class A ordinary shares. A rights offering to holders of Class A ordinary shares entitling holders to purchase Class A ordinary shares at a price less than the “historical fair market value” (as defined below) will be deemed a share dividend of a number of Class A ordinary shares equal to the product of (1) the number of Class A ordinary shares actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A ordinary shares) and (2) one minus the quotient of (x) the price per Class A ordinary share paid in such rights offering and (y) the historical fair market value. For these purposes, (1) if the rights offering is for securities convertible into or exercisable for Class A ordinary shares, in determining the price payable for Class A ordinary shares, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (2) “historical fair market value” means the volume weighted average price of Class A ordinary shares during the 10 trading day period ending on the trading day prior to the first date on which the Class A ordinary shares trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.

In addition, if we, at any time while the warrants are outstanding and unexpired, pay to all or substantially all of the holders of Class A ordinary shares a dividend or make a distribution in cash, securities or other assets to the holders of Class A ordinary shares on account of such Class A ordinary shares (or other securities into which the warrants are convertible), other than (a) as described above, (b) any cash dividends or cash distributions which, when combined on a per share basis with all other cash dividends and cash distributions paid on the Class A ordinary shares during the 365-day period ending on the date of declaration of such dividend or distribution does not exceed $0.50 (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) but only with respect to the amount of the aggregate cash dividends or cash distributions equal to or less than $0.50 per share, (c) to satisfy the redemption rights of the holders of Class A ordinary shares in connection with a proposed initial business combination, (d) to satisfy the redemption rights of the holders of Class A ordinary shares in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 15 months from the closing of this offering or (B) with respect to any other provision relating to the rights of our Class A ordinary shares, or (e) in connection with the redemption of our public shares upon our failure to complete our initial business combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the

fair market value of any securities or other assets paid on each Class A ordinary share in respect of such event.

If the number of issued and outstanding Class A ordinary shares is decreased by a consolidation, combination, reverse share sub-division or reclassification of Class A ordinary shares or other similar event, then, on the effective date of such consolidation, combination, reverse share sub-division, reclassification or similar event, the number of Class A ordinary shares issuable on exercise of each warrant will be decreased in proportion to such decrease in issued and outstanding Class A ordinary shares.

Whenever the number of Class A ordinary shares purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of Class A ordinary shares purchasable upon the exercise of the warrants immediately prior to such adjustment and (y) the denominator of which will be the number of Class A ordinary shares so purchasable immediately thereafter.

In case of any reclassification or reorganization of the issued and outstanding Class A ordinary shares (other than those described above or that solely affects the par value of such Class A ordinary shares), or in the case of a merger or consolidation of us with or into another corporation (other than a merger or consolidation in which we are the continuing corporation and that does not result in any reclassification or reorganization of our issued and outstanding Class A ordinary shares), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of our Class A ordinary shares immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares, stock or other equity securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. However, if such holders were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such merger or consolidation, then the kind and amount of securities, cash or other assets for which each warrant will become exercisable will be deemed to be the weighted average of the kind and amount received per share by such holders in such merger or consolidation that affirmatively make such election, and if a tender, exchange or redemption offer has been made to and accepted by such holders under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of the issued and outstanding Class A ordinary shares, the holder of a warrant will be entitled to receive the highest amount of cash, securities or other property to which such holder would actually have been entitled as a shareholder if such warrant holder had exercised the warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the Class A ordinary shares held by such holder had been purchased pursuant to such tender or exchange offer, subject to adjustment (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in the warrant agreement. Additionally, if less than 70% of the consideration receivable by the holders of Class A ordinary shares in such a transaction is payable in the form of ordinary shares in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the warrant properly exercises the warrant within 30 days following public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the per share consideration minus Black- Scholes Warrant Value (as defined in the warrant agreement) of the warrant.

The warrant agreement provides that (a) the terms of the warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or correct any mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant agreement set forth in this prospectus, or defective provision or (ii) adding or changing any provisions with respect to matters or questions arising under the warrant agreement as the parties to the

warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the warrants and (b) all other modifications or amendments require the vote or written consent of at least 65% of the then outstanding public warrants and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants, at least 65% of the then outstanding private placement warrants.

Voting Rights of Public Warrant Holders

The warrant holders do not have the rights or privileges of holders of ordinary shares and any voting rights until they exercise their warrants and receive Class A ordinary shares. After the issuance of Class A ordinary shares upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by shareholders.

Certain Disclosure Obligations

We are subject to certain disclosure obligations under Dutch and U.S. law and the rules of Nasdaq. The following is a description of the general disclosure obligations of public companies under Dutch and U.S. law and the rules of Nasdaq as such laws and rules exist as of the date of this document and should not be viewed as legal advice for specific circumstances.

Financial Reporting Under Dutch Law

The Dutch Financial Reporting Supervision Act (Wet toezicht financiële verslaggeving, the “FRSA”) applies to our financial reporting. Under the FRSA, the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, the “AFM”) supervises the application of financial reporting standards by, among others, companies whose corporate seats are in the Netherlands and whose securities are listed on a regulated market within the EU or on an equivalent third (non-EU) country market. As our corporate seat is in the Netherlands and our Class A Shares are listed on Nasdaq, the FRSA will be applicable to the Company.

Pursuant to the FRSA, the AFM has an independent right to (i) request an explanation from the Company regarding the application of the applicable financial reporting standards if, based on publicly known facts or circumstances, it has reason to doubt our financial reporting meets such standards and (ii) recommend to the Company that we make available further explanations and file these with the AFM. If we do not comply with such a request or recommendation, the AFM may request that the Enterprise Chamber order us to (i) make available further explanations as recommended by the AFM, (ii) provide an explanation of the way we have applied the applicable financial reporting standards to our financial reports or (iii) prepare our financial reports in accordance with the Enterprise Chamber's instructions.

Periodic Reporting Under U.S. Securities Law

We are a “foreign private issuer” under the securities laws of the United States and the rules of Nasdaq. Under the securities laws of the United States, “foreign private issuers” are subject to different disclosure requirements than U.S. registrants. We intend to take all actions necessary to maintain compliance as a foreign private issuer with the applicable corporate governance requirements of the Sarbanes-Oxley Act of 2002, the rules adopted by the SEC and Nasdaq's listing standards. Under the Nasdaq rules, a “foreign private issuer” is subject to less stringent corporate governance requirements. Subject to certain exceptions, the Nasdaq rules permit a “foreign private issuer” to comply with our home country rules in lieu of the listing requirements of Nasdaq.

Nasdaq Rules

For so long as our shares are listed on Nasdaq, we will be required to meet certain requirements relating to ongoing communication and disclosure to Schmid shareholders, including a requirement to make any annual report filed with the SEC available on or through our website and to comply with the “prompt disclosure” requirement of Nasdaq with respect to earnings and dividend announcements, combination transactions, stock splits, major management changes and

any substantive items of an unusual or non-recurrent nature. Issuers listing shares on Nasdaq must also meet certain corporate governance standards, such as those relating to annual meetings, board independence, the formation and composition of nominating/ corporate governance, compensation and audit committees and shareholder approval of certain transactions.

Certain Insider Trading and Market Manipulation Laws

Dutch and U.S. law each contain rules intended to prevent insider trading and market manipulation. The following is a general description of those laws as such laws exist as of the date of this document and should not be viewed as legal advice for specific circumstances. In connection with our listing on Nasdaq, we have adopted an insider trading policy. This policy provides for, among other things, rules on transactions by members of the Board and our employees in Shares or in financial instruments the value of which is determined by the value of the shares.

The Netherlands

On July 3, 2016, the Regulation (EU) No 596/2014 of the European Parliament and of the Council of April 16, 2014 (the “MAR”) replaced all of the Dutch market abuse rules. It could be that in future the Class A Shares will be traded on certain open markets (Freiverkehr) in Germany (being a member state of the EU). The trading of these Class A Shares on certain open markets (Freiverkehr) in Germany can be implemented without our approval. These open markets in Germany are qualified as multilateral trading facilities (“MTFs”) or organized trading facilities (“OTFs”) within the scope of the MAR.

Under the MAR, certain provisions of the MAR apply to the securities of companies whose securities are traded on MTFs or OTFs irrespective of whether such company has approved the trading of its securities on such open market (for example, the provisions under the MAR relating to unlawful disclosure of inside information and market manipulation). Certain (other) provisions of the MAR are only applicable to the securities of companies who have approved and/or have requested admission to trading of its financial instruments on a regulated market, an MTF or OTF (for example, the provisions under the MAR relating to public disclosure of inside information and notification rules for director dealings), which provisions of the MAR do not apply to the Company given that it did not approve the trading of its securities on certain open markets (Freiverkehr) in Germany.

United States

The United States securities laws generally prohibit any person from trading in a security while in possession of material, non-public information or assisting someone who is engaged in doing the same. The insider trading laws cover not only those who trade based on material, non- public information, but also those who disclose material non-public information to others who might trade on the basis of that information (known as “tipping”). A “security” includes not just equity securities, but any security (e.g., derivatives). Thus, members of the Board, officers and other employees of the Company may not purchase or sell shares or other securities of the Company when in possession of material, non-public information about the Company (including our business, prospects or financial condition), nor may they tip any other person by disclosing material, non-public information about the Company.

We have identified those persons working for us who could have access to inside information on a regular or incidental basis and have informed such persons of the prohibitions on insider trading and market manipulation imposed by U.S. laws, including the sanctions that can be imposed in the event of a violation of those rules.

Certain Disclosure and Reporting Obligations of Directors, Officers and Shareholders of Schmid

Our directors, officers and shareholders are subject to certain disclosure and reporting obligations under Dutch and U.S. law. The following is a description of the general disclosure

obligations of directors, officers and shareholders under Dutch law as such laws exist as of the date of this document and should not be viewed as legal advice for specific circumstances.

DCGC

As we have our registered seat in the Netherlands and have our Class A Shares listed on a third (non-EU) country market equivalent to a regulated market (e.g., Nasdaq), we are subject to the Dutch Corporate Governance Code, the updated version of which was published on December 20, 2022, and which entered into force on January 1, 2023, and finds its statutory basis in Book 2 of the Dutch Civil Code (the “DCGC”). The DCGC contains both principles and best practice provisions for the Board, shareholders and the General Meeting, financial reporting, auditors, disclosure compliance and enforcement standards.

The DCGC is based on a “comply or explain” principle. Accordingly, we are required to disclose in our management report publicly filed in the Netherlands whether or not we are complying with the various provisions of the DCGC. If we do not comply with one or more of those provisions (e.g., because of a conflicting Nasdaq requirement or U.S. market practice), we are required to explain the reasons for such non-compliance.

Dutch Civil Code

The Dutch Civil Code provides for certain disclosure obligations in our annual accounts. Information on directors' remuneration and rights to acquire Shares must be disclosed in our annual accounts.

Transfer Agent and Warrant Agent

Under the articles of association, the Board may resolve, with due observation of the statutory requirements, that the laws of the State of New York apply to the property law aspects of the Shares for as long as the Shares are in book-entry form, as included in the part of the register of shareholders kept by the relevant transfer agent and/or listed on a Regulated Market (as defined in our articles of association).

We have listed the Shares in book-entry form and such Shares, through the transfer agent, are not certificated. We have appointed Continental Stock Transfer & Trust Company as our agent in New York to maintain our shareholders' and warrant holders' register on behalf of the Board and to act as transfer agent and registrar for the Shares. Our Class A Shares and the Public Warrants trade on Nasdaq in book-entry form.

Rule 144

Pursuant to Rule 144, a person who has beneficially owned restricted Shares for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required to file reports) preceding the sale.

Persons who have beneficially owned restricted Shares for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale would be subject to additional restrictions, by which such person would be entitled to sell within any three- month period only a number of securities that does not exceed the greater of:

• 1% of the total number of ordinary shares then outstanding; or

• the average weekly reported trading volume of the ordinary shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Sales by our affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us.

Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies

Rule 144 is not available for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:

• the issuer of the securities that was formerly a shell company has ceased to be a shell company;

• the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;

• the issuer of the securities has filed all Exchange Act reports and materials required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports; and

• at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. As a result, our initial shareholders became able to sell their Shares pursuant to Rule 144 without registration one year after the Closing Date.

Listing of Securities

Our Class A Shares and the Public Warrants are listed on Nasdaq under the symbols “SHMD” and “SHMD.WS,” respectively. Holders of our securities should obtain current market quotations for their securities. There can be no assurance that our Class A Shares will remain listed on Nasdaq. If we fail to comply with the Nasdaq listing requirements, our Class A Shares and/or warrants could be delisted from Nasdaq. A delisting of our Class A Shares and warrants will likely affect the liquidity of our Class A Shares and warrants and could inhibit or restrict our ability to raise additional financing.

EX-2.3

Exhibit 2.3

CLIFFORD CHANCE PARTNERSCHAFT MIT BESCHRÄNKTER BERUFSHAFTUNG

PEGASUS DIGITAL MOBILITY ACQUISIITON CORP.

PEGASUS TOPCO B.V.

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

WARRANT ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT

FORM OF WARRANT ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT

THIS WARRANT ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (this “Agreement”) dated as of April 30, 2024, is made and entered into by and among Pegasus Digital Mobility Acquisition Corp., a Cayman Islands exempted company (the “Company”),Pegasus TopCo B.V., a Dutch private limited liability company, to be converted into a Dutch public limited liability company and to be renamed SCHMID Group N.V. promptly following the Transactions as defined below (the “TopCo”), and Continental Stock Transfer & Trust Company, a New York limited purpose trust company (the “Warrant Agent”).

RECITALS

(A) WHEREAS, The Company and the Warrant Agent are parties to a warrant agreement, dated as of October 21, 2021, and filed with the United States Securities and Exchange Commission (including all Exhibits thereto, the “Existing Warrant Agreement”),

(B) The Company has issued and sold (a) 9,750,000 warrants to Pegasus Digital Mobility Sponsor LLC (collectively, the “Private Placement Warrants”) to purchase the Company’s Class A ordinary shares, par value $0.0001 per share (the “Class A Shares”), with each Private Placement Warrant being exercisable for one Class A Share and with an exercise price of $11.50 per share, and (b) 11,250,000 warrants as part of units to public investors in a public offering (the “Public Warrants” and together with the Private Placement Warrants the “Warrants”) to purchase Class A Shares, with each whole Public Warrant being exercisable for one Class A Share and with an exercise price of $11.50 per share, subject to adjustment as described in the Existing Warrant Agreement;

(C) All of the Warrants are governed by the Existing Warrant Agreement;

(D) The Company, Gebr. Schmid GmbH, a German limited liability company, TopCo and Pegasus MergerSub Corp., a Cayman Islands exempted company (the “Merger Sub”) entered into a Business Combination Agreement, dated as of May 31, 2023 (the “Original BCA”) which was subsequently amended by the First Amendment to Business Combination Agreement dated September 26, 2023 (the “First Amendment to BCA”) and further amended by the Second Amendment to Business Combination Agreement dated January 29, 2024 (the “Second Amendment to BCA”, and the Original BCA as amended by the First Amendment to BCA and the Second Amendment to BCA, the “Business Combination Agreement”);

(E) On April 30, 2024, pursuant to the provisions of the Business Combination Agreement, Merger Sub merged with and into the Company (the “Merger”), with the Company as the surviving company in the Merger, and immediately following the Merger, TopCo acquired as a contribution in kind in exchange of certain claims issued to each holder of ordinary shares in the capital of the Company prior to the Merger (the “Merger Claims”) that entitles each of them to a claim for a certain number of ordinary shares of TopCo (the “TopCo Shares”) the only Class A ordinary share of a par value

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US$0.0001 of the Company that was issued in the Merger (the “Transaction”) and the Company became a wholly owned subsidiary of TopCo;

(F) As provided in Section 4.5 of the Existing Warrant Agreement, the Warrants are no longer exercisable for Class A Shares but instead are exercisable (subject to the terms and conditions of the Existing Warrant Agreement as amended hereby) for TopCo Shares;

(G) The Board of Directors of the Company has determined that the consummation of the transactions contemplated by the Business Combination Agreement constitutes a “Business Combination” (as such term is defined in the Existing Warrant Agreement);

(H) TopCo has obtained all necessary corporate approvals to enter into this Agreement and to consummate the transactions contemplated herein (including the assignment and assumption of the Existing Warrant Agreement and the related issuance of each Warrant, and exchange thereof for a warrant to subscribe for TopCo Shares on the conditions set out herein, and the exclusion of any pre-emptive rights in that respect) and by the Existing Warrant Agreement;

(I) The Company desires to assign all of its right, title and interest in the Existing Warrant Agreement to TopCo and TopCo wishes to accept such assignment; and

(J) Section 9.8 of the Existing Warrant Agreement provides that the Company and the Warrant Agent may amend the Existing Warrant Agreement without the consent of any registered holders for the purpose of curing any ambiguity or correcting any mistake or defective provision thereof or adding or changing any provisions with respect to matters or questions arising under the Existing Warrant Agreement as the Company and the Warrant Agent may deem necessary or desirable and that the Company and the Warrant Agent deem shall not adversely affect the rights of the registered holders of the Warrants under the Existing Warrant Agreement.

NOW, THEREFORE, in consideration of the mutual agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows.

1. ASSIGNMENT AND ASSUMPTION; CONSENT

1.1 Assignment and Assumption

The Company hereby assigns to TopCo all of the Company’s right, title and interest in and to the Existing Warrant Agreement (as amended hereby) and TopCo hereby assumes, and agrees to pay, perform, satisfy and discharge in full, as the same become due, all of the Company’s liabilities and obligations under the Existing Warrant Agreement (as amended hereby) arising from and after the execution of this Agreement, in each case, effective immediately following the completion of the Transaction. As a result of the preceding sentence, effective immediately following the completion of the Transaction, each Warrant will be exchanged for a warrant to subscribe for TopCo Shares pursuant to the terms and conditions of the Existing Warrant Agreement (as amended hereby). TopCo consents to payment of the Warrant Price (as defined in the Existing Warrant Agreement) in a currency other than Euro upon an exercise of such

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warrants for TopCo Shares in accordance with the terms of the Existing Warrant Agreement.

1.2 Consent

The Warrant Agent hereby consents to the assignment of the Existing Warrant Agreement by the Company to TopCo pursuant to Section 1.1 hereof effective immediately following the completion of the Transaction, and the assumption of the Existing Warrant Agreement by TopCo from the Company pursuant to Section 1.1 hereof effective immediately the completion of the Transaction, and to the continuation of the Existing Warrant Agreement in full force and effect from and after the Transaction, subject at all times to the Existing Warrant Agreement (as amended hereby) and to all of the provisions, covenants, agreements, terms and conditions of the Existing Warrant Agreement and this Agreement.

2. AMENDMENT OF EXISTING WARRANT AGREEMENT

2.1 The Company and the Warrant Agent hereby amend the Existing Warrant Agreement as provided in this Section 2, effective immediately upon the completion of the Transaction, and acknowledge and agree that the amendments to the Existing Warrant Agreement set forth in this Section 2 are necessary or desirable and that such amendments do not adversely affect the interests of the registered holders.

2.2 Preamble

All references to “Pegasus Digital Mobility Acquisition Corp., a Cayman Islands exempted company” in the Existing Warrant Agreement shall refer instead to “Pegasus TopCo B.V., a private limited liability company incorporated under the laws of the Netherlands” or “SCHMID Group N.V., a public limited liability company incorporated under the laws of the Netherlands”, as applicable. As a result thereof, all references to the “Company” in the Existing Warrant Agreement shall be references to TopCo rather than to Pegasus Digital Acquisition Mobility Corp.

2.3 Reference to TopCo Shares

All references to “Class A ordinary shares” and “$0.0001 par value” in the Existing Warrant Agreement shall refer instead to “ordinary shares in the capital of TopCo” and “with a par value of EUR 0.01 per share”, respectively. As a result thereof, all references to “Ordinary Shares” in the Existing Warrant Agreement shall be references to TopCo Shares rather than to Class A ordinary shares.

2.4 Notice

The address for notices to the Company set forth in Section 9.2 of the Existing Warrant Agreement is hereby amended and restated in its entirety as follows:

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Schmid Group

Robert-Bosch-Str. 32-36

72250 Freudenstadt Germany

Attn: Julia Natterer

Email: Natterer.Ju@schmid-group.com

3. MISCELLANEOUS PROVISIONS

3.1 Effectiveness of Agreement

Each of the parties hereto acknowledges and agrees that the effectiveness of this Agreement shall be contingent upon the occurrence of the Transaction.

3.2 Examination of the Existing Warrant Agreement

A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent in the United States of America, for inspection by the Registered Holder (as such term is defined in the Existing Warrant Agreement) of any Warrant. The Warrant Agent may require any such holder to submit such holder’s Warrant for inspection by the Warrant Agent.

3.3 Governing Law and Exclusive Forum

This Agreement, the entire relationship of the parties hereto, and any dispute between the parties (whether grounded in contract, tort, statute, law or equity) shall be governed by, construed in accordance with, and interpreted pursuant to the laws of the State of New York, without giving effect to its choice of laws principles. The parties hereby agree that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submit to such jurisdiction. This Clause 3.3 shall not apply to any action or suits brought to enforce any liability or duty created by the U.S. Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or any claim for which the federal district courts of the United States of America are, as a matter of the laws of the United States, the sole and exclusive forum for determination of such a claim.

3.4 Counterparts

This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument.

3.5 Entire Agreement

Except to the extent specifically amended or superseded by the terms of this Agreement, all of the provisions of the Existing Warrant Agreement shall remain in full force and effect, as assigned and assumed by the parties hereto, to the extent in effect on the date hereof, and shall apply to this Agreement, mutatis mutandis. This Agreement and the Existing Warrant Agreement, as assigned and modified by this Agreement, constitutes the complete agreement between the parties and supersedes any prior written or oral

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agreements, writings, communications or understandings with respect to the subject matter hereof.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the Company, TopCo and the Warrant Agent have duly executed this Agreement, all as of the date first written above.

PEGUSUS DIGITAL MOBILITY ACQUISITION CORP.

By:

/s/ Jeremey Mistry

Name: Jeremey Mistry

Title: Chief Financial Officer

PEGASUS TOPCO B.V.

By:

/s/ Stefan Berger

Name: Stefan Berger

Title: Director

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

By:

Name:

Title:

[Signature Page to Warrant Assumption Agreement]

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IN WITNESS WHEREOF, the Company, TopCo and the Warrant Agent have duly executed this Agreement, all as of the date first written above.

PEGUSUS DIGITAL MOBILITY ACQUISITION CORP.
By:
Name: Jeremey Mistry
Title: Chief Financial Officer
PEGASUS TOPCO B.V.
By:
Name: Stefan Berger
Title: Director
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By:	/s/ Michael Goedecke
Name: Michael Goedecke
Title: Vice President

[Signature Page to Warrant Assumption Agreement]

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EX-4.5

Exhibit 4.5

CLIFFORD CHANCE PARTNERSCHAFT MIT BESCHRÄNKTER BERUFSHAFTUNG

SCHMID GROUP N.V.

PEGASUS DIGITAL MOBILITY ACQUISITION CORP

PEGASUS DIGITAL MOBILITY SPONSOR LLC

CHRISTIAN SCHMID

ANETTE SCHMID

REGISTRATION RIGHTS AGREEMENT

CONTENTS

Clause	Page
1.    Definitions	1
2.    Registrations And Offerings	5
3.    Company Procedures	10
4.    Indemnification And Contribution	16
5.    Miscellaneous	18

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”), dated as of April 30, 2024, is made and entered into by and among SCHMID Group N.V., a Dutch public limited liability company (the “Company”), Pegasus Digital Mobility Acquisition Corp, a Cayman Islands exempted company (“Pegasus”), Pegasus Digital Mobility Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor”), Anette Schmid and Christian Schmid, which are the shareholders of Gebr. Schmid GmbH, a German limited liability company (“Schmid GmbH”, such stockholders, the “Schmid Holders” and collectively with the Sponsor and any person or entity who hereafter becomes a party to this Agreement pursuant to Clause 5.2 or Clause 5.10 of this Agreement, the “Holders” and each, a “Holder”).

RECITALS

(1) WHEREAS, Pegasus, Schmid GmbH, the Company and Pegasus MergerSub Corp., a Cayman Islands exempted company limited by shares and a direct, wholly owned subsidiary of Pegasus (“MergerSub”) have entered into that certain Business Combination Agreement dated as May 31, 2024 (as amended by the First Amendment to the Business Combination Agreement dated as of September 26, 2023 and the Second Amendment to the Business Combination Agreement dated as of January 29, 2024, the “BCA”), pursuant to which, among other things, Pegasus intends to merge with and into Merger Sub, with Pegasus as the surviving company in the merger and, after giving effect to such merger, will become a subsidiary of the Company, on the terms and subject to the conditions therein (the “Merger”);

(2) WHEREAS, the Parties desire and enter into this Agreement, pursuant to which the Company shall grant the Holders certain registration rights with respect to certain securities of the Company, as set forth in this Agreement.

NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. DEFINITIONS

1.1 Definitions

The terms defined in this Clause 1 shall, for all purposes of this Agreement, have the respective meanings set forth below:

“Additional Holder” shall have the meaning given in Clause 5.10.

“Additional Holder Ordinary Shares” shall have the meaning given in Clause 5.10.

“Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer, any other principal executive officer, or the principal financial officer of the Company, after consultation with counsel to the Company, (a) would be

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required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (b) would not be required to be made at such time if the Registration Statement were not being filed, declared effective or used, as the case may be, and (c) the Company has a bona fide business purpose for not making such information public.

“Agreement” shall have the meaning given in the Preamble hereto. “BCA” shall have the meaning given in the Recitals hereto.

“Block Trade” shall have the meaning given in Clause 2.3.1. “Board” shall mean the Board of Directors of the Company. “Closing” shall have the meaning given in the BCA. “Closing Date” shall have the meaning given in the BCA.

“Commission” shall mean the Securities and Exchange Commission.

“Company” shall have the meaning given in the Preamble hereto and includes the Company’s successors by recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.

“Demanding Holder” shall have the meaning given in Clause 2.1.4.

“Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as it may be amended from time to time.

“Form F-1 Shelf” shall have the meaning given in Clause 2.1.1. “Form F-3 Shelf” shall have the meaning given in Clause 2.1.1. “Holder Information” shall have the meaning given in Clause 4.1.2.

“Holders” shall have the meaning given in the Preamble hereto, for so long as such person or entity holds any Registrable Securities.

“Joinder” shall have the meaning given in Clause 5.10. “Merger” shall have the meaning given in the Recitals hereto.

“Merger Sub” shall have the meaning given in the Recitals hereto. “Minimum Takedown Threshold” shall have the meaning given in Clause 2.1.4.

“Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus or necessary to make the statements in a Registration Statement or

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Prospectus (in the case of a Prospectus, in the light of the circumstances under which they were made) not misleading.

“Ordinary Shares” shall have the meaning given in the Recitals hereto. “Other Coordinated Offering” shall have the meaning given in Clause 2.3.1. “Pegasus” shall have the meaning given in the Recitals hereto.

“Permitted Transferees” shall mean (i) any person or entity to whom a Holder of Registrable Securities is permitted to transfer such Registrable Securities or (ii) any other person or entity with the prior written consent of the Company, including prior to the expiration of any lock-up period applicable to such Registrable Securities, subject to and in accordance with any applicable agreement between such Holder and/or their respective Permitted Transferees and the Company and any transferee thereafter.

“Private Placement Warrants” shall mean the warrants held by certain Holders, purchased by such Holders in the private placement that occurred concurrently with the closing of Pegasus’s initial public offering, including any Ordinary Shares issued or issuable upon conversion or exchange of such warrants.

“Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.

“Registrable Security” shall mean (a) any outstanding Ordinary Shares and any other equity security (including the Private Placement Warrants and any other warrants to purchase Ordinary Shares and Ordinary Shares issued or issuable upon the exercise of any other equity security) of the Company held by a Holder immediately following the Closing (including any securities distributable pursuant to the BCA); (b) any outstanding Ordinary Shares or any other equity security (including warrants to purchase Ordinary Shares and Ordinary Shares issued or issuable upon the exercise of any other equity security) of the Company acquired by a Holder following the date hereof to the extent that such securities are “restricted securities” (as defined in Rule 144) or are otherwise held by an “affiliate” (as defined in Rule 144) of the Company; (c) any Additional Holder Ordinary Shares; and (d) any other equity security of the Company or any of its subsidiaries issued or issuable with respect to any securities referenced in clause (a), (b) or (c) above by way of a stock dividend or stock split or in connection with a conversion, distribution, exchange, reclassification, recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; provided, however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities upon the earliest to occur of: (A) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement by the applicable Holder; (B) new certificates for such securities not bearing (or book entry positions not subject to) a legend restricting further transfer shall have been delivered to the Holder by the Company; (C) such securities shall have ceased to be outstanding; (D) such

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securities shall have been sold, transferred, disposed of or exchanged without registration pursuant to Rule 144 or any successor rule promulgated under the Securities Act (but with no volume or other restrictions or limitations including as to manner or timing of sale); and (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.

“Registration” shall mean a registration, including any related Shelf Takedown, effected by preparing and filing a registration statement, Prospectus or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.

“Registration Expenses” shall mean the documented, out-of-pocket expenses of a Registration, including, without limitation, the following:

(a) all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc.) and any national securities exchange on which the Ordinary Shares are then listed;

(b) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of outside counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);

(c) printing, messenger, telephone and delivery expenses;

(d) reasonable fees and disbursements of counsel for the Company;

(e) reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and

(f) reasonable fees and expenses of one (1) legal counsel (not to exceed $75,000 in the aggregate for each Registration without prior approval of the Company) selected by the majority-in-interest of the Demanding Holders.

“Registration Statement” shall mean any registration statement that covers Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post- effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.

“Schmid GmbH” shall have the meaning given in the Preamble hereto. “Schmid Holders” shall have the meaning given in the Preamble hereto.

“SEC Statement” shall mean the Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies promulgated by the Commission on April 12, 2021 and any subsequent guidance, statements or interpretations issued by the Commission, the Staff or otherwise relating thereto.

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“Securities Act” shall mean the U.S. Securities Act of 1933, as amended from time to time.

“Shelf” shall mean the Form F-1 Shelf, the Form F-3 Shelf or any Subsequent Shelf Registration Statement, as the case may be.

“Shelf Registration” shall mean a registration of securities pursuant to a registration statement filed with the Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect).

“Shelf Takedown” shall mean an Underwritten Shelf Takedown or any proposed transfer or sale using a Registration Statement.

“Sponsor” shall have the meaning given in the Preamble hereto.

“Subsequent Shelf Registration Statement” shall have the meaning given in Clause 2.1.2.

“Transfer” shall mean the (a) sale or assignment of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause (a) or (b).

“Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.

“Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.

“Underwritten Shelf Takedown” shall have the meaning given in Clause 2.1.4. “Withdrawal Notice” shall have the meaning given in Clause 2.1.5.

2. REGISTRATIONS AND OFFERINGS

2.1 Shelf Registration

2.1.1 Filing

As soon as practicable but no later than thirty (30) calendar days following the Closing Date, the Company shall submit to or file with the Commission a Registration Statement for a Shelf Registration on Form F-1 (the “Form F-1 Shelf”) or a Registration Statement for a Shelf Registration on Form F-3 (the

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“Form F-3 Shelf”), if the Company is then eligible to use a Form F-3 Shelf, in each case, covering the resale of all the Registrable Securities (determined as of two (2) business days prior to such submission or filing) on a delayed or continuous basis and shall use its commercially reasonable efforts to have such Shelf declared effective as soon as practicable after the filing thereof, but no later than the earlier of (a) the ninetieth (90th) calendar day following the filing date thereof if the Commission notifies the Company that it will “review” the Registration Statement and (b) the tenth (10th) business day after the date the Company is notified (orally or in writing, whichever is earlier) by the Commission that the Registration Statement will not be “reviewed” or will not be subject to further review. Such Shelf shall provide for the resale of the Registrable Securities included therein pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. The Company shall maintain a Shelf in accordance with the terms hereof, and shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements as may be necessary to keep a Shelf continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. In the event the Company files a Form F-1 Shelf, the Company shall use its commercially reasonable efforts to convert the Form F-1 Shelf (and any Subsequent Shelf Registration Statement) to a Form F-3 Shelf as soon as practicable after the Company is eligible to use Form F-3. The Company’s obligation under this Clause 2.1.1, shall, for the avoidance of doubt, be subject to Clause 3.4.

2.1.2 Subsequent Shelf Registration

If any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, the Company shall, subject to Clause 3.4, use its commercially reasonable efforts to as promptly as is reasonably practicable cause such Shelf to again become effective under the Securities Act (including using its commercially reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness of such Shelf), and shall use its commercially reasonable efforts to as promptly as is reasonably practicable amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf or file an additional registration statement as a Shelf Registration (a “Subsequent Shelf Registration Statement”) registering the resale of all Registrable Securities (determined as of two (2) business days prior to such filing), and pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. If a Subsequent Shelf Registration Statement is filed, the Company shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration Statement to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration Statement shall be an automatic shelf registration statement (as defined in Rule 405 promulgated under the Securities Act) if the Company is a well-known

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seasoned issuer (as defined in Rule 405 promulgated under the Securities Act) at the most recent applicable eligibility determination date) and (ii) keep such Subsequent Shelf Registration Statement continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. Any such Subsequent Shelf Registration Statement shall be on Form F-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration Statement shall be on another appropriate form. The Company’s obligation under this Clause 2.1.2, shall, for the avoidance of doubt, be subject to Clause 3.4.

2.1.3 Additional Registrable Securities

Subject to Clause 3.4, in the event that any Holder holds Registrable Securities that are not registered for resale on a delayed or continuous basis, the Company, upon written request of (i) the Sponsor or (ii) a Holder of at least five percent (5.0%) of the Registrable Securities, shall promptly use its commercially reasonable efforts to cause the resale of such Registrable Securities to be covered by either, at the Company’s option, any then available Shelf (including by means of a post-effective amendment) or by filing a Subsequent Shelf Registration Statement and cause the same to become effective as soon as practicable after such filing and such Shelf or Subsequent Shelf Registration Statement shall be subject to the terms hereof; provided, however, that the Company shall only be required to cause such additional Registrable Securities to be so covered once per calendar year for each of the Sponsor and the Schmid Holders for an aggregate of not more than four (4) additional registrations per calendar year pursuant to this Agreement.

2.1.4 Requests for Underwritten Shelf Takedowns

Subject to Clause 3.4, at any time and from time to time when an effective Shelf is on file with the Commission, the Sponsor or a Schmid Holder (any of the Sponsor or a Schmid Holder being in such case, a “Demanding Holder”) may request to sell all or any portion of its Registrable Securities in an Underwritten Offering that is registered pursuant to the Shelf (each, an “Underwritten Shelf Takedown”); provided that the Company shall only be obligated to effect an Underwritten Shelf Takedown if such offering shall

(i) include Registrable Securities proposed to be sold by the Demanding Holder, either individually or together with other Demanding Holders, with a total offering price reasonably expected to exceed, in the aggregate, $20 million or (ii) cover all of the remaining Registrable Securities held by the Demanding Holder (each of the circumstances described in (i) and (ii), the “Minimum Takedown Threshold”). All requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. Subject to Clause 2.3.3, the Company shall have the right to select the Underwriters for such offering (which shall consist of one or more reputable internationally recognized investment banks), subject to the initial Demanding Holder’s prior approval

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(which shall not be unreasonably withheld, conditioned or delayed). The Sponsor and the Schmid Holders may each demand not more than two (2) Underwritten Shelf Takedowns pursuant to this Clause 2.1.4 in any twelve

(12) month period, for an aggregate of not more than four (4) Underwritten Shelf Takedowns pursuant to this Clause 2.1.4 in any twelve (12) month period. Notwithstanding anything to the contrary in this Agreement, the Company may effectuate any Underwritten Offering pursuant to any then effective Registration Statement, including a Form F-3, that is then available for such offering.

2.1.5 Withdrawal

Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used for marketing such Underwritten Shelf Takedown, a majority-in-interest of the Demanding Holders initiating an Underwritten Shelf Takedown shall have the right to withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Underwritten Shelf Takedown; provided that the Sponsor or a Schmid Holder may elect to have the Company continue an Underwritten Shelf Takedown if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Underwritten Shelf Takedown by the Sponsor, the Schmid Holders or any of their respective Permitted Transferees, as applicable. If withdrawn, a demand for an Underwritten Shelf Takedown shall constitute a demand for an Underwritten Shelf Takedown by the withdrawing Demanding Holder for purposes of Clause 2.1.4, unless either (i) such Demanding Holder has not previously withdrawn any Underwritten Shelf Takedown or (ii) such Demanding Holder reimburses the Company for all Registration Expenses with respect to such Underwritten Shelf Takedown (or, if there is more than one Demanding Holder, a pro rata portion of such Registration Expenses based on the respective number of Registrable Securities that each Demanding Holder has requested be included in such Underwritten Shelf Takedown); provided that, if the Sponsor or a Schmid Holder elects to continue an Underwritten Shelf Takedown pursuant to the proviso in the immediately preceding sentence, such Underwritten Shelf Takedown shall instead count as an Underwritten Shelf Takedown demanded by the Sponsor or such Schmid Holder, as applicable, for purposes of Clause 2.1.4. Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice to any other Holders that had elected to participate in such Shelf Takedown. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Shelf Takedown prior to its withdrawal under this Clause 2.1.5, other than if a Demanding Holder elects to pay such Registration Expenses pursuant to clause (ii) of the second sentence of this Clause 2.1.5.

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2.2 Market Stand-off

In connection with any Underwritten Offering of equity securities of the Company (other than a Block Trade or Other Coordinated Offering), if requested by the managing Underwriters, each Holder that is (a) an executive officer, (b) a director or (c) Holder in excess of five percent (5%) of the outstanding Ordinary Shares (and for which it is customary for such a Holder to agree to a lock-up) agrees that it shall not Transfer any Ordinary Shares or other equity securities of the Company (other than those included in such offering pursuant to this Agreement), without the prior written consent of the Company, during the seven (7) days prior (to the extent notice of an Underwritten Offering has been provided) to and the ninety (90)-day period (or such shorter time agreed to by the managing Underwriters) beginning on the date of pricing of such offering, except as expressly permitted by such lock-up agreement or in the event the managing Underwriters otherwise agree by written consent. Each such Holder agrees to execute a customary lock-up agreement in favor of the Underwriters to such effect (in each case on substantially the same terms and conditions as all such Holders). Notwithstanding the foregoing, with respect to an Underwritten Offering, a Holder shall not be subject to this Clause 2.2 with respect to an Underwritten Offering unless each shareholder of the Company that (together with their Affiliates) hold at least 5% of the issued and outstanding Ordinary Shares and each of the Company’s directors and executive officers have agreed to a lock-up on terms at least as restrictive with respect to such Underwritten Offering as requested of the Holders. A Holder’s obligations under the second sentence of this Clause 2.2 shall only apply for so long as such Holder (together with its Affiliates) holds at least 5% of the issued and outstanding Ordinary Shares.

2.3 Block Trades; Other Coordinated Offerings.

2.3.1 Notwithstanding any other provision of this Clause 2, but subject to Clause 3.4, at any time and from time to time when an effective Shelf is on file with the Commission, if a Demanding Holder wishes to engage in (a) an underwritten registered offering not involving a “roadshow,” an offer commonly known as a “block trade” (a “Block Trade”), or (b) an “at the market” or similar registered offering through a broker, sales agent or distribution agent, whether as agent or principal (an “Other Coordinated Offering”), in each case, (x) with a total offering price reasonably expected to exceed $20 million in the aggregate, net of underwriting discounts and commissions or (y) with respect to all remaining Registrable Securities held by the Demanding Holder, then such Demanding Holder only needs to notify the Company of the Block Trade or Other Coordinated Offering at least three (3) business days prior to the day such offering is to commence and the Company shall use its commercially reasonable efforts to facilitate such Block Trade or Other Coordinated Offering; provided that the Demanding Holders representing a majority of the Registrable Securities wishing to engage in the Block Trade or Other Coordinated Offering shall use commercially reasonable efforts to work with the Company and any Underwriters, brokers, sales agents or placement agents prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Block Trade or Other Coordinated Offering.

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2.3.2 Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used in connection with a Block Trade or Other Coordinated Offering, a majority-in-interest of the Demanding Holders initiating such Block Trade or Other Coordinated Offering shall have the right to submit a Withdrawal Notice to the Company, the Underwriter or Underwriters (if any) and any brokers, sales agents or placement agents (if any) of their intention to withdraw from such Block Trade or Other Coordinated Offering. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Block Trade or Other Coordinated Offering prior to its withdrawal under this Clause 2.3.2.

2.3.3 The Demanding Holder in a Block Trade or Other Coordinated Offering shall have the right to select the Underwriters and any brokers, sales agents or placement agents (if any) for such Block Trade or Other Coordinated Offering (in each case, which shall consist of one or more reputable nationally recognized investment banks).

2.3.4 A Demanding Holder in the aggregate may demand no more than two (2) Block Trades or Other Coordinated Offerings pursuant to this Clause 2.3 in any twelve

(12) month period. For the avoidance of doubt, any Block Trade or Other Coordinated Offering effected pursuant to this Clause 2.3 shall not be counted as a demand for an Underwritten Shelf Takedown pursuant to Clause 2.1.4 hereof.

3. COMPANY PROCEDURES

3.1 General Procedures

In connection with any Shelf and/or Shelf Takedown and/or other disposition of Registrable Securities pursuant to a registration statement contemplated herein (to the extent applicable), the Company shall use its commercially reasonable efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall:

3.1.1 prepare and file with the Commission as soon as practicable a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or have ceased to be Registrable Securities;

3.1.2 prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, (i) as may be reasonably requested by (x) the Sponsor or (y) any Holder that holds at least five percent (5%) of the Registrable Securities registered on such Registration Statement or (z) any Underwriter of Registrable Securities or (ii) as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement

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effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus or have ceased to be Registrable Securities;

3.1.3 prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holders; provided that the Company shall have no obligation to furnish any documents publicly filed or furnished with the Commission pursuant to the Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”);

3.1.4 prior to any public offering of Registrable Securities, use its commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request (or provide evidence satisfactory to such Holders that the Registrable Securities are exempt from such registration or qualification) and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;

3.1.5 cause all such Registrable Securities to be listed on each national securities exchange or automated quotation system on which similar securities issued by the Company are then listed;

3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;

3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use

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its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;

3.1.8 at least five (5) days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus (or such shorter period of time as may be (a) necessary in order to comply with the Securities Act, the Exchange Act, and the rules and regulations promulgated under the Securities Act or Exchange Act, as applicable or (b) advisable in order to reduce the number of days that sales are suspended pursuant to Clause 3.4), furnish a copy thereof to each seller of such Registrable Securities or its counsel (excluding any exhibits thereto and any filing made under the Exchange Act that is to be incorporated by reference therein);

3.1.9 notify the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Clause 3.4;

3.1.10 in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering, or sale by a broker, placement agent or sales agent pursuant to such Registration, in each of the following cases to the extent customary for a transaction of its type, permit a representative of the Holders, the Underwriters or other financial institutions facilitating such Underwritten Offering, Block Trade, Other Coordinated Offering or other sale pursuant to such Registration, if any, and any attorney, consultant or accountant retained by such Holders or Underwriter to participate, at each such person’s or entity’s own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, financial institution, attorney, consultant or accountant in connection with the Registration; provided, however, that such representatives, Underwriters or financial institutions agree to confidentiality arrangements in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;

3.1.11 obtain a “cold comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering or sale by a broker, placement agent or sales agent pursuant to such Registration (subject to such broker, placement agent or sales agent providing such certification or representation reasonably requested by the Company’s independent registered public accountants and the Company’s counsel) in customary form and covering such matters of the type customarily covered by “cold comfort” letters for a transaction of its type as the managing Underwriter may reasonably request, and reasonably satisfactory to a majority- in-interest of the participating Holders;

3.1.12 in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering or sale by a broker, placement agent or sales agent pursuant to such Registration, on the date the Registrable Securities are delivered for sale pursuant to such Registration, to the extent customary for a transaction of its type, obtain an opinion and negative assurance letter, each dated such date, of

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counsel representing the Company for the purposes of such Registration, addressed to the participating Holders, the broker, placement agents or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion or negative assurance letter, as applicable, is being given as the participating Holders, broker, placement agent, sales agent or Underwriter may reasonably request and as are customarily included in such opinions and negative assurance letters, as applicable;

3.1.13 in the event of any Underwritten Offering, a Block Trade, an Other Coordinated Offering or sale by a broker, placement agent or sales agent pursuant to such Registration, enter into and perform its obligations under an underwriting or other purchase or sales agreement, in usual and customary form, with the managing Underwriter or the broker, placement agent or sales agent of such offering or sale;

3.1.14 make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule then in effect);

3.1.15 with respect to an Underwritten Offering pursuant to Clause 2.1.4, use its commercially reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in such Underwritten Offering; and

3.1.16 otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the participating Holders, consistent with the terms of this Agreement, in connection with such Registration.

Notwithstanding the foregoing, the Company shall not be required to provide any documents or information to an Underwriter, broker, sales agent or placement agent if such Underwriter, broker, sales agent or placement agent has not then been selected with respect to the applicable Underwritten Offering or other offering involving a registration as an Underwriter, broker, sales agent or placement agent, as applicable.

3.2 Registration Expenses

The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses”, all fees and expenses of any legal counsel representing the Holders.

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3.3 Requirements for Participation in Registration Statement in Offerings

Notwithstanding anything in this Agreement to the contrary, if any Holder does not provide the Company with its requested Holder Information, the Company may exclude such Holder’s Registrable Securities from the applicable Registration Statement or Prospectus if the Company determines, based on the advice of counsel, that it is necessary to include such information in the applicable Registration Statement or Prospectus and such Holder continues thereafter to withhold such information. In addition, no person or entity may participate in any Underwritten Offering or other offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such person or entity (i) agrees to sell such person’s or entity’s securities on the basis provided in any underwriting, sales, distribution or placement arrangements approved by the Company and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting or other agreements and other customary documents as may be reasonably required under the terms of such underwriting, sales, distribution or placement arrangements. For the avoidance of doubt, the exclusion of a Holder’s Registrable Securities as a result of this Clause 3.3 shall not affect the registration of the other Registrable Securities to be included in such Registration.

3.4 Suspension of Sales; Adverse Disclosure; Restrictions on Registration Rights

3.4.1 Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as reasonably practicable after the time of such notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed.

3.4.2 Subject to Clause 3.4.4, if (i) the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would (a) require the Company to make an Adverse Disclosure, (b) require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, or (c) in the good faith judgment of the majority of the Board such Registration, be seriously detrimental to the Company and the majority of the Board concludes as a result that it is essential to defer such filing, initial effectiveness or continued use at such time, or (ii) the majority of the Board determines to delay the filing or initial effectiveness of, or suspend use of, a Registration Statement and such delay or suspension arises out of, or is a result of, or is related to or is in connection with the SEC Statement or other accounting matters, or any related disclosure or other matters, then the Company may, upon giving prompt written notice of such action to the Holders (which notice shall not specify the nature of the event giving rise to such delay or suspension), delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises its rights under this Clause 3.4.2, the Holders agree to suspend, immediately upon their receipt of the notice

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referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities until such Holder receives written notice from the Company that such sales or offers of Registrable Securities may be resumed, and in each case maintain the confidentiality of such notice and its contents.

3.4.3 Subject to Clause 3.4.4, (a) during the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) days after the effective date of, a Company-initiated Registration and provided that the Company continues to actively employ, in good faith, all commercially reasonable efforts to maintain the effectiveness of the applicable Shelf Registration Statement, or (b) if, pursuant to Clause 2.1.4, Holders have requested an Underwritten Shelf Takedown and the Company and Holders are unable to obtain the commitment of underwriters to firmly underwrite such offering, the Company may, upon giving prompt written notice of such action to the Holders, delay any other registered offering pursuant to Clause 2.1.4 or 2.3.

3.4.4 The right to delay or suspend any filing, initial effectiveness or continued use of a Registration Statement pursuant to Clause 3.4.2 or a registered offering pursuant to Clause 3.4.3 shall be exercised by the Company, in the aggregate, for not more than ninety (90) consecutive calendar days or more than one hundred and twenty (120) total calendar days in each case, during any twelve (12)-month period.

3.5 Reporting Obligations

As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders with true and complete copies of all such filings; provided that any documents publicly filed or furnished with the Commission pursuant to EDGAR shall be deemed to have been furnished or delivered to the Holders pursuant to this Clause 3.5. The Company further covenants that it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Ordinary Shares held by such Holder without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act (or any successor rule then in effect). In connection with a sale or transfer of Registrable Securities exempt from Section 5 of the Securities Act or through any broker-dealer transactions described in the plan of distribution set forth within the Prospectus and pursuant to the Registration Statement of which such Prospectus forms a part, the Company shall, subject to the receipt of any customary documentation reasonably required from the applicable Holders and/or their broker(s) in connection therewith, (a) promptly instruct its transfer agent to remove any restrictive legends applicable to the Registrable Securities being sold or transferred and (b) to the extent required by the transfer agent deliver the necessary legal opinions or instruction letters, as applicable, to the transfer agent in connection with the instruction under subclause (a). Following such time as Rule 144 is available, with a view to making available to the Holders

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the benefits of Rule 144 promulgated under the Securities Act, the Company covenants that it will (a) make available information necessary to comply with Rule 144, if available with respect to resales of the Registrable Securities under the Securities Act, at all times, and (b) take such further action as the Holders may reasonably request, all to the extent required from time to time to enable such Holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act (if available with respect to resales of the Registrable Securities), as such rule may be amended from time to time. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.

4. INDEMNIFICATION AND CONTRIBUTION

4.1 Indemnification.

4.1.1 The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers, directors and agents and each person or entity who controls such Holder (within the meaning of the Securities Act), against all losses, claims, damages, liabilities and out-of-pocket expenses (including, without limitation, reasonable and documented outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained in or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information or affidavit so furnished in writing to the Company by such Holder expressly for use therein.

4.1.2 In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish (or cause to be furnished) to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus (the “Holder Information”) and, to the extent permitted by law, shall indemnify the Company, its directors, officers and agents and each person or entity who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and out-of-pocket expenses (including, without limitation, reasonable and documented outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement is contained in (or not contained in, in the case of an omission) any information or affidavit so furnished in writing by or on behalf of such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such

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Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person or entity who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.

4.1.3 Any person or entity entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s or entity’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement includes a statement or admission of fault and culpability on the part of such indemnified party or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

4.1.4 The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person or entity of such indemnified party and shall survive the transfer of securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or such Holder’s indemnification is unavailable for any reason.

4.1.5 If the indemnification provided under Clause 4.1 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and out-of-pocket expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and out-of-pocket expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and

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indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made by, in the case of an omission), or relates to information supplied by (or not supplied by in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of any Holder under this Clause 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in Clauses 4.1.1,

4.1.2 and 4.1.3 above, any legal or other fees, charges or out-of-pocket expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Clause 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this Clause 4.1.5. No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Clause 4.1.5 from any person or entity who was not guilty of such fraudulent misrepresentation.

5. MISCELLANEOUS

5.1 Notices

Any notice or communication under this Agreement must be in writing and given by (i) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in person or by courier service providing evidence of delivery, or (iii) transmission by hand delivery, electronic mail or facsimile. Each notice or communication that is mailed, delivered, or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered by courier service, hand delivery, electronic mail or facsimile, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger) or at such time as delivery is refused by the addressee upon presentation. Any notice or communication under this Agreement must be addressed, if to the Company, to: Pegasus Digital Mobility Acquisition Corp. Attention: Jeremy Mistry; Stefan Berger, or by email: jmistry@pegasusdm.com; sberger@pegasusdm.com, with a copy (which shall not constitute notice) to Clifford Chance, Junghofstrasse 14, 60311 Frankfurt am Main, Germany, Attn: George Hacket; Axel Wittmann, or by email: george.hacket@cliffordchance.com; axel.wittmann@cliffordchance.com, and if to any Holder, at such Holder’s address or electronic mail address as set forth in the Company’s books and records. Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective ten (10) days after delivery of such notice as provided in this Clause 5.1.

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5.2 Assignment; No Third Party Beneficiaries

5.2.1 This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.

5.2.2 Subject to Clause 5.2.4 and Clause 5.2.5, this Agreement and the rights, duties and obligations of a Holder hereunder may be assigned in whole or in part to such Holder’s Permitted Transferees to which it transfers Registrable Securities; provided that with respect to the Schmid Holders and the Sponsor, the rights hereunder that are personal to such Holders may not be assigned or delegated in whole or in part, except that (i) each of the Schmid Holders shall be permitted to transfer its rights hereunder as the Schmid Holders to one or more affiliates or any direct or indirect partners, members or equity holders of such Schmid Holder (it being understood that no such transfer shall reduce or multiply any rights of such Schmid Holder or such transferees), and (ii) the Sponsor shall be permitted to transfer its rights hereunder as the Sponsor to one or more affiliates or any direct or indirect partners, members or equity holders of the Sponsor (it being understood that no such transfer shall reduce or multiply any rights of the Sponsor or such transferees).

5.2.3 This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holders, which shall include Permitted Transferees.

5.2.4 This Agreement shall not confer any rights or benefits on any persons or entities that are not parties hereto, other than as expressly set forth in this Agreement and Clause 5.2.

5.2.5 No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment as provided in Clause 5.1 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement, including the joinder in the form of Exhibit A attached hereto). Any transfer or assignment made other than as provided in this Clause 5.2 shall be null and void.

5.3 Counterparts

This Agreement may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.

5.4 Governing Law; Venue

NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT (1) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK

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AND (2) THE VENUE FOR ANY ACTION TAKEN WITH RESPECT TO THIS AGREEMENT SHALL BE ANY STATE OR FEDERAL COURT IN NEW YORK COUNTY IN THE STATE OF NEW YORK.

5.5 TRIAL BY JURY

EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

5.6 Amendments and Modifications

Upon the written consent of (a) the Company and (b) the Holders of a majority of the total Registrable Securities, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof shall also require the written consent of the Sponsor so long as the Sponsor and its affiliates hold, in the aggregate, at least two percent (2%) of the outstanding Ordinary Shares; provided, further, that notwithstanding the foregoing, any amendment hereto or waiver hereof shall also require the written consent of each Schmid Holder so long as such Schmid Holder and its respective affiliates hold, in the aggregate, at least two percent (2%) of the outstanding Ordinary Shares; and provided, further, that any amendment hereto or waiver hereof that adversely affects one Holder, solely in its capacity as a holder of Ordinary Shares, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No provision of this Agreement may be waived unless such waiver is in writing and signed by the party or parties against whom such waiver is to be effective. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.

5.7 Other Registration Rights

Other than as provided in the Warrant Agreement, dated as of April 30, 2024 between the Company and Continental Stock Transfer & Trust Company, the Company represents and warrants that no person or entity, other than a Holder of Registrable Securities, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration Statement filed by the Company for the sale of securities for its

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own account or for the account of any other person or entity. The Company hereby agrees and covenants that it will not grant rights to register any Ordinary Shares (or securities convertible into or exchangeable for Ordinary Shares) pursuant to the Securities Act that are more favorable or senior to those granted to the Holders hereunder without (a) the prior written consent of (i) the Sponsor, for so long as the Sponsor and its affiliates hold, in the aggregate, at least two percent (2%) of the outstanding Ordinary Shares, and (ii) a Schmid Holder, for so long as such Target Stockholder and its affiliates hold, in the aggregate, at least two percent (2%) of the outstanding Ordinary Shares; or (b) granting economically and legally equivalent rights to the Holders hereunder such that the Holders shall receive the benefit of such more favorable or senior terms and/or conditions. Further, the Company represents and warrants that this Agreement supersedes any other registration rights agreement or agreement with similar terms and conditions and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall prevail.

5.8 Term

This Agreement shall terminate on the earlier of (a) the 5th anniversary of the date of this Agreement and (b) with respect to any Holder, on the date that such Holder no longer holds any Registrable Securities. The provisions of Clause 3.5 and Clause 4 shall survive any termination.

5.9 Holder Information

Each Holder agrees, if requested in writing, to represent to the Company the total number of Registrable Securities held by such Holder in order for the Company to make determinations hereunder.

5.10 Additional Holders; Joinder

In addition to persons or entities who may become Holders pursuant to Clause 5.2 hereof, subject to the prior written consent of each of the Sponsor and each Schmid Holder (in each case, so long as such Holder and its affiliates hold at least two percent (2%) of the outstanding Ordinary Shares), the Company may make any person or entity who acquires Ordinary Shares or rights to acquire Ordinary Shares after the date hereof a party to this Agreement (each such person or entity, an “Additional Holder”) by obtaining an executed joinder to this Agreement from such Additional Holder in the form of Exhibit A attached hereto (a “Joinder”). Such Joinder shall specify the rights and obligations of the applicable Additional Holder under this Agreement. Upon the execution and delivery and subject to the terms of a Joinder by such Additional Holder, the Ordinary Shares then owned, or underlying any rights then owned, by such Additional Holder (the “Additional Holder Ordinary Shares”) shall be Registrable Securities to the extent provided herein and therein and such Additional Holder shall be a Holder under this Agreement with respect to such Additional Holder Ordinary Shares.

5.11 Severability

It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied

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in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

5.12 Entire Agreement; Restatement

This Agreement constitutes the full and entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter.

5.13 Further Assurances

From time to time, at another party’s request and without further consideration, each party shall execute and deliver such additional documents and take all such further action as may be reasonably necessary to consummate the transactions contemplated by this Agreement.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.

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SCHMID Group N.V.

a Dutch public limited liability company

By:	/s/ Christian Schmid
	Name:	Christian Schmid
	Title:	CEO

{Thu u a slgnatu page forthe Regtstralion Rights Agreement}

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PEGASUS DIGITAL MOBILITY ACQUISITION CORP

a Cayman Islands exempted company

By:	/s/ F. Jeremey Mistry
	Name:
	Title:

[This is a signature page for the Registration Rights Agreement]

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PEGASUS DIGITAL MOBILITY SPONSOR LLC

a Cayman Islands limited liability company

By:	/s/ Patrick Miller
	Name:
	Title:

[This is a signature page for the Registration Rights Agreement]

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CHRISTIAN SCHMID

/s/ Christian Schmid

ANETTE SCHMID

[This is a signature page for the Registration Rights Agreement]

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CHRISTIAN SCHMID

ANETTE SCHMID

/s/ Anette Schmid

[This is a signature page for the Registration Rights Agreement}

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EXHIBIT A

FORM OF REGISTRATION RIGHTS AGREEMENT JOINDER

The undersigned is executing and delivering this joinder (this “Joinder”) pursuant to the Amended and Restated Registration Rights Agreement, dated as of [·], 2023 (as the same may hereafter be amended, the “Registration Rights Agreement”), among SCHMID Group N.V. (the “Company”), and the other persons or entities named as parties therein. Capitalized terms used but not otherwise defined herein shall have the meanings provided in the Registration Rights Agreement.

By executing and delivering this Joinder to the Company, and upon acceptance hereof by the Company upon the execution of a counterpart hereof, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the Registration Rights Agreement as a Holder of Registrable Securities in the same manner as if the undersigned were an original signatory to the Registration Rights Agreement, and the undersigned’s Ordinary Shares shall be included as Registrable Securities under the Registration Rights Agreement to the extent provided therein; provided, however, that the undersigned and its permitted assigns (if any) shall not have any rights as a Holder, and the undersigned’s (and its transferees’) Ordinary Shares shall not be included as Registrable Securities, for purposes of the Excluded Sections.

For purposes of this Joinder, “Excluded Sections” shall mean [·].

Accordingly, the undersigned has executed and delivered this Joinder as of the          day of         , 20         .

Signature of Stockholder:

Print Name of Stockholder:

Address:

Agreed and Accepted as of             ,20

SCHMID Group N.V.

By:

Name:

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EX-4.7

Exhibit 4.7

EXECUTION VERSION

PEGASUS DIGITAL MOBILITY ACQUISITION CORP.,

GEBR. SCHMID GMBH,

PEGASUS TOPCO B.V.,

PEGASUS MERGERSUB CORP.,

AND

VALIDUS/STRATCAP, LLC

WARRANTY AGREEMENT

WARRANTY AGREEMENT

THIS WARRANTY AGREEMENT (this “Agreement”), dated as of April 29, 2024 (the “Effective Date”), is by and among (i) Pegasus Digital Mobility Acquisition Corp., a Cayman Islands exempted company (“Pegasus”), (ii) Gebr. Schmid GmbH, a German limited liability company (the “Company”), (iii) Pegasus TopCo B.V., a Dutch private limited liability company (“TopCo”), (iv) Pegasus MergerSub Corp., a Cayman Islands exempted company (“Merger Sub”) Validus/StratCap, LLC (the “Guarantor”) (collectively, the “Parties” and each, a “Party”). Capitalized terms used but not otherwise defined in this Agreement shall have respective meanings ascribed to such terms in the Business Combination Agreement (as defined below).

RECITALS

WHEREAS, the Parties, expect the Guarantor, previously entered into a Business Combination Agreement, dated as of May 31, 2023 as amended by the first amendment to the Business Combination Agreement dated September 26, 2023 and the second amendment to the Business Combination Agreement dated January 26, 2024 (together, the “Business Combination Agreement”).

WHEREAS, in Section 3.3 of the Business Combination Agreement, the Parties have agreed that

One Business Day prior to the Special Meeting and, in any event, not earlier than the time that the holders of Pegasus Class A Shares may no longer elect to redeem their Pegasus Class A Shares in accordance with the Pegasus Shareholder Redemption Right, Pegasus shall deliver to the Company and the Company Shareholders a statement (the “Pegasus Closing Statement”) setting forth: (a) the aggregate amount of cash in the Trust Account (prior to giving effect to the Pegasus Shareholder Redemption Right), (b) the aggregate amount of all payments required to be made in connection with the Pegasus Shareholder Redemption Right, (c) the Available Closing Pegasus Cash resulting therefrom, (d) the Pegasus Transaction Expenses, (e) the number of Pegasus Shares to be outstanding as of immediately prior to the Effective Time after giving effect to the Pegasus Shareholder Redemption Right, and (f) the number of Pegasus Class A Shares that may be issued upon the exercise of all Pegasus Warrants issued and outstanding as of immediately prior to the Effective Time and the exercise prices therefor. From and after the delivery of the Company Closing Statement or the Pegasus Closing Statement, as the case may be, until the Closing Date, each of Company and Pegasus shall provide the other Parties and their Representatives with reasonable access to information reasonably requested by Pegasus or the Company or any of their respective Representatives in connection with the review of the Company Closing Statement or the Pegasus Closing Statement, as the case may be, (ii) consider in good faith any comments to the Company Closing Statement or the Pegasus Closing Statement, as the case may be, provided by any other Party at least two Business Days prior to the Closing Date and (iii) revise the Company Closing Statement or Pegasus Closing Statement as needed to reflect any reasonable comments and any other comments that, based on its good faith assessment, are warranted or appropriate and deliver such revised Company Closing Statement or Pegasus Closing Statement, as the case may be, to any other Party prior to the Closing Date reflecting any such changes.

1

WHEREAS, the Pegasus and the Guarantor intend to represent and warrant to the Company that certain circumstances, representations, warranties and undertakings are correct and are or will be brought about by Pegasus and that the Guarantor will procure this.

NOW, THEREFORE, in consideration of the mutual covenants, agreements and understandings herein contained, the receipt and sufficiency of which are acknowledged, on the terms and subject to the conditions set forth in this Agreement, the Parties, intending to be legally bound, agree as follows:

1. Representations, Warranties and Undertakings

Business Combination Agreement

1.1 Pegasus undertakes to comply with the representations and warranties in particular as set out in clauses 6 and 8 of the Business Combination Agreement.

Trust Account

1.2 Pegasus and the Guarantor hereby represent and warrant by a standalone guarantee promise (selbstständiges Garantieversprechen) that the Available Closing Pegasus Cash resulting from the Trust Account is at least USD 16.3 million (in words: sixteen million three hundred thousand).

1.3 Provided that the Available Closing Pegasus Cash resulting from the Trust Account is less than USD 16.3 million (in words: sixteen million three hundred thousand), the Guarantor undertakes to provide to the Trust Account any amount in difference to USD 16.3 million (in words: sixteen million three hundred thousand).

1.4 The Guarantor undertakes to provide at least USD 6 million (in words: six million) to the Trust Account.

Transaction Costs

1.5 Pegasus and the Guarantor hereby represent and warrant by a standalone guarantee promise (selbstständiges Garantieversprechen) that Exhibit A includes a complete and true statement of all costs incurred in connection with the Transaction on the part of Pegasus or any party affiliated with Pegasus.

1.6 Pegasus and the Guarantor hereby represent and warrant by a standalone guarantee promise (selbstständiges Garantieversprechen) that (i) the costs incurred in connection with the Transaction as well as any Indebtedness on the part of Pegasus or any party affiliated with Pegasus will not exceed USD 4.65 million (in words: four million six hundred fifty thousand) and (ii) that costs are deferred in the amount of not more than USD 2.75 million (in words: two million seven hundred fifty thousand) the conditions of which are set out below.

1.7 Provided that the costs incurred in connection with the Transaction or any Indebtedness on the part of Pegasus or any party affiliated with Pegasus at the Closing in total exceed USD 7.4 million (in words: seven million four hundred thousand), the Guarantor undertakes to provide to the Trust Account any amount in excess of USD 7.4 million (in words: seven million four hundred thousand).

2

1.8 Pegasus and the Guarantor hereby represent and warrant by a standalone guarantee promise (selbstständiges Garantieversprechen) that, after the Closing, there will be no further costs incurred in connection with the Transaction on the part of Pegasus or any party affiliated with Pegasus, notwithstanding for the Company and any subsidiary of the Company (not even in the sense of deferred payments or similar).

1.9 As set out in Exhibit A, Pegasus and the Guarantor hereby represent and warrant by a standalone guarantee promise (selbstständiges Garantieversprechen) that costs incurred in connection with the Transaction totalling at least USD 2.75 million (in words: two million seven hundred fifty thousand) (the “Deferred Costs”) are deferred by nine (9) months from the date of the Closing of the Transaction at a 9.5% p.a. interest rate – however, should the Company enter into a new loan agreement with a principal amount of more than EUR 10 million (the “New Loan”) before the end of the nine (9) months period, the Company shall repay such costs promptly after having received such loan proceeds.

1.10 As set out in Exhibit A, the Guarantor hereby represent and warrant by a standalone guarantee promise (selbstständiges Garantieversprechen) that it will pay USD 2.35 million (in words: two million three hundred fifty thousand) (the “Bridge Loan”) to the Company within 30 days of the Closing of the Transaction, such Bridge Loan having a maturity ending twelve (12) months after the Closing of the Transaction. The Bridge Loan will bear interest at a 9.5% p.a. interest rate – however, should the Company enter into the New Loan before the end of the twelve (12) months period, the Company shall repay such costs promptly after having received such loan proceeds.

Cap Table

1.11 Pegasus and the Guarantor hereby represent and warrant by a standalone guarantee promise (selbstständiges Garantieversprechen) that Exhibit B contains a fully diluted CAP table which reflects, inter alia, all Pegasus Ordinary Class A Shares, Pegasus Ordinary Class B Shares and Pegasus Public Warrants immediately preceding the Closing as well as all TopCo Shares and TopCo Warrants and the names of the shareholders and the shareholder structure following the Closing of the Transaction.

2. Pegasus Waivers

Pegasus will procure that Stefan Berger, Sir Ralf Speth and F. Jeremey Mistry submit to the Company waivers of their respective retention fee in the amount of USD 0.5 million (in words: zero point five million).

3. Amdendment of Warranty Transfer Agreement

In order to protect Christian Schmid and Anette Schmid, the shareholders of the Company (together, the “Transferees” and each a “Transferee”) against further dilution in case of the issuance of new shares of TopCo to further investors following the listing of the shares of TopCo, Pegasus, TopCo, Merger Sub and Guarantor will procure that Pegasus Digital Mobility Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor” or the “Trasnferor”), will agree to amend the Warrant Transfer Agreement between the Sponsor and the Transferess with the effect that the Transferor, subject to the conditions of the Warrant Transfer Agreement, will transfer at the Closing in total 4,000,000 Transfer

3

Warrants instead of only 2,000,000 Transfer Warrants to the Transferees, thereof 2,000,000 Transfer Warrants to Christian Schmid and 2,000,000 Transfer Warrants to Anette Schmid. The additional 2,000,000 Transfer Warrants shall be transferred to Christian Schmid and Anette Schmid only when the Deferred Costs are paid by the Company.

4. Miscellaneous

4.1 Except for (i) clause 12.16, (ii) if provided for differently in this Agreement and (iii) if in contradiction to this Agreement, clause 12 of the Business Combination Agreement is referenced.

4.2 This Agreement and all claims or causes of action based upon, arising out of, or related to this Agreement or the Transaction shall be governed by and construed in accordance with the Laws of the Germany without regard to the conflict of laws principles thereof. The exclusive place of jurisdiction for all disputes under or in connection with this Agreement is Stuttgart.

[Signature pages follow]

4

Signature Page of Warranty Agreement

IN WITNESS WHEREOF, the parties hereto have hereunto caused this Agreement to be duly executed as of the date hereof.

PEGASUS DIGITAL MOBILITY ACQUISITION CORP.

By:	/s/ F Jeremey Mistry
Name:
Title:

5

Signature Page of Warranty Agreement

GEBR. SCHMID GMBH

By:	/s/ Christian Schmid
Name:	Christian Schmid
Title:	CEO

By:

Name:

Title:

6

Signature Page of Warranty Agreement

GEBR. SCHMID GMBH

By:

Name:

Title:

By:	/s/ Anette Schmid
Name:	Anette Schmid
Title:

7

Signature Page of Warranty Agreement

PEGASUS MERGERSUB CORP.

By:	/s/ Stefan Berger
Name:
Title:

8

Signature Page of Warranty Agreement

PEGASUS TOPCO B.V.

By:	/s/ Stefan Berger
Name:
Title:

9

Signature Page of Warranty Agreement

Validus/StratCap, LLC

By:	/s/ Jim Condon
Name:	Jim Condon
Title:	Managing Partner

10

Exhibit A

Table Transaction Costs

Exhibit B

Cap Table

EX-4.12

Exhibit 4.12

NON-REDEMPTION AND INVESTMENT AGREEMENT

This Non-Redemption and Investment Agreement (this “Agreement”) is entered as of April 26, 2024 by and among Pegasus Digital Mobility Acquisition Corp., a Cayman Islands exempted company (“Pegasus”), Pegasus Digital Mobility Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor”) and Pegasus TopCo B.V. (“TopCo”).

RECITALS

WHEREAS, the Sponsor currently holds Class B ordinary shares, par value $0.0001 per share, of Pegasus (the “Founder Shares”);

WHEREAS, Pegasus expects to hold an extraordinary general meeting of its shareholders (the “Meeting”) for the purpose of approving, among other things, the business combination transaction (the “Business Combination”) contemplated by that certain Business Combination Agreement, dated as of May 31, 2023 (and as amended by the First Amendment to Business Combination Agreement dated September 26, 2023, and the Second Amendment to Business Combination Agreement dated January 29, 2024, and as may be further amended from time to time, the “Business Combination Agreement”), between, among others, Pegasus and Gebr. Schmid GmbH (“Schmid”);

WHEREAS, Pegasus has issued several promissory notes to the Sponsor in an amount of a maximum of USD 8,220,390 (the “Promissory Notes”), which will become immediately due and payable to Sponsor on the closing of the Business Combination Agreement;

WHEREAS, Sponsor has entered into an assignment and assumption agreement whereby StratCap Investment Management, LLC (f/k/a Strategic Capital Management Holdings, LLC) (“StratCap”) will assign all of its rights in the administrative services agreement dated 2021 entered into in connection with the IPO of Pegasus to Sponsor amounting to USD 424,139 in accrued payments due at closing by Pegasus to StratCap (the “Assigned Pegasus Debt”);

WHEREAS, Pegasus, TopCo, the Sponsor and Schmid separately agreed that the Sponsor shall not transfer the number of Founder Shares attributable to its investment in accordance with Exhibit A to this Agreement and that this number of Founder Shares shall not be cancelled at the closing of the Business Combination Agreement;

WHEREAS, the shareholders of Pegasus may redeem their Class A ordinary shares, par value $0.0001 per share, of Pegasus initially sold as part of the units in Pegasus’s initial public offering (whether they were purchased in Pegasus’s initial public offering or thereafter in the open market) (the “Public Shares” and together with the Founder Shares, the “Ordinary Shares”) in connection with the shareholder vote on the Business Combination, on the terms set forth in the Pegasus Memorandum and Articles of Association (“Redemption Rights”);

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, TopCo and the Sponsor hereby agree as follows:

1. Subscription of New Shares of TopCo by Sponsor

1.1. Upon the terms and subject to the conditions of this Agreement, Sponsor hereby commits itself to subscribe for, at a purchase price equal to the redemption price for Public Shares for each share, an amount of unrestricted TopCo shares up to a maximum of the investor shares set out in Exhibit A (“New Shares”), subject to the following limitation (as well as the limitation set out in Section 2.2): the maximum amount of New Shares to be issued by TopCo to all investors entering into non-redemption and investment agreements shall not exceed (i) 4,500,017 Class A Ordinary Shares less (ii) the amount of Public Shares which were not redeemed in connection with the Meeting (where the number of such New Shares were to exceed the number of shares available for issue by TopCo under such maximum amount, the New Shares shall be issued pro rata to all investors who entered into non-redemption and investment agreements subscribing to New Shares).

1.2. As part of the consideration for the Sponsor committing to subscribe for the New Shares, TopCo and the Sponsor hereby confirm their agreement that Sponsor will not transfer the number of Founder Shares

set out in Exhibit A to investors and that such Founder Shares will not be cancelled at the closing of the Business Combination, which means Sponsor will remain the legal owner of such shares at the closing of the Business Combination.

1.3. Termination. This Agreement and each of the obligations of the undersigned shall terminate on the earlier of (a) the failure of Pegasus’s shareholders to approve the Required Shareholder Approval Matters at the Meeting, (b) Pegasus’s abandonment of the Business Combination prior to consummation, (c) the fulfilment of all obligations of parties hereto, (d) the liquidation or dissolution of Pegasus, (e) the mutual written agreement of the parties hereto; or (f) on April 30, 2024.

2. Set-off with Claims from the Promissory Notes and Assigned Pegasus Debt

2.1. Pegasus, TopCo and the Sponsor hereby agree that the purchase price for the New Shares payable by Sponsor at the time the Sponsor subscribes for the New Shares will be set-off against the obligations of Pegasus to repay the Promissory Notes to the Sponsor and the Assigned Pegasus Debt to Sponsor in an amount set out in Exhibit A (Pegasus and TopCo will separately agree that TopCo assumes the obligations under such Promissory Notes of Pegasus in order to accommodate the set-off against the issuance of the TopCo shares as set out in Exhibit A). In the amount of such set-off (USD 8,644,529), the Promissory Notes and the Assigned Pegasus Debt will be cancelled in full.

3. Governing Law; Jurisdiction; Waiver of Jury Trial.

3.1. This Agreement and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of New York.

3.2. Any proceeding or action based upon, arising out of or related to this Agreement or the transactions contemplated hereby must be brought in the U.S. District Court for the Southern District of New York (or, to the extent such court does not have subject matter jurisdiction, any state court located in The City and County of New York ), and each of the parties irrevocably (a) submits to the exclusive jurisdiction of each such court in any such proceeding or action, (b) waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, (c) agrees that all claims in respect of the proceeding or action shall be heard and determined only in any such court and (d) agrees not to bring any proceeding or action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by law or to commence an action or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any action, suit or proceeding brought pursuant to this section.

3.3. The parties each hereby waive, to the fullest extent permitted by law, any right to trial by jury of any claim, demand, action or cause of action arising under this Agreement or the transactions contemplated hereby, in each case, whether now existing or hereafter arising, and whether in contract, tort, equity, or otherwise. The parties each hereby agrees and consents that any such claim, demand, action or cause of action shall be decided by court trial without a jury and that the parties may file an original counterpart of a copy of this Agreement with any court as written evidence of the consent of the parties hereto to the waiver of their right to trial by jury. Each party certifies and acknowledges that (a) no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver, (b) each such party understands and has considered the implications of this waiver, (c) each such party makes this waiver voluntarily and (d) each such party has been induced to enter into this agreement by, among other things, the mutual waivers and certifications in this section.

4. Assignment; Entire Agreement; Amendment.

4.1. Entire Agreement. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them relating to the subject matter hereof.

4.2. Amendment. Except as expressly provided in this Agreement, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought.

4.3. Binding upon Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and permitted assigns.

5. Notices. Unless otherwise provided herein, any notice or other communication to a party hereunder shall be sufficiently given if in writing and personally delivered or sent by facsimile or other electronic transmission with copy sent in another manner herein provided or sent by courier (which for all purposes of this Agreement shall include Federal Express or another recognized overnight courier) or mailed to said party by certified mail, return receipt requested, at its address provided for herein or such other address as either may designate for itself in such notice to the other. Communications shall be deemed to have been received when delivered personally, on the scheduled arrival date when sent by next day or 2nd-day courier service, or if sent by facsimile upon receipt of confirmation of transmittal or, if sent by mail, then three days after deposit in the mail. If given by electronic transmission, such notice shall be deemed to be delivered (a) if by electronic mail, when directed to an electronic mail address at which the party has provided to receive notice; and (b) if by any other form of electronic transmission, when directed to such party.

6. Counterparts. This Agreement may be executed in counterparts, which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

7. Survival; Severability.

7.1. Survival. The representations, warranties, covenants and agreements of the parties hereto shall survive the closing of the transactions contemplated hereby.

7.2. Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.

8. Headings. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

SPONSOR:
Pegasus Digital Mobility Sponsor LLC
By:	/s/ PATRICK MILLER
Name:	PATRICK MILLER
Title:
TOPCO:
Pegasus TopCo B.V.
By:
Name:
Title:
PEGASUS:
Pegasus Digital Mobility Acquisition Corp.
By:
Name:
Title:

[Signature Page to Non-Redemption Agreement]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

[INVESTOR]
By:
Name:
Title:
SPONSOR:
Pegasus Digital Mobility Sponsor LLC
By:
Name:
Title:
TOPCO:
Pegasus TopCo B.V.
By:	/s/ Dr. Stefan Berger
Name:	Dr. Stefan Berger
Title:

Pegasus is signatory to this Agreement solely for the purposes of receiving the benefit of the undertakings by the Investor in Section 1 and the representations from the Investor in Section 3.

PEGASUS:
Pegasus Digital Mobility Acquisition Corp.
By:	/s/ F Jeremey Mistry
Name:	F Jeremey Mistry
Title:

[Signature Page to Non-Redemption Agreement]

Exhibit A
Investor:	Assigned Securities /	Number of Public Shares (Class
	Class B Ordinary Shares	A Ordinary Shares) and/or New
		Shares
Address:
	921,544 Class B Ordinary Shares	756,964 Class A Ordinary Shares

EX-8.1

Exhibit 8.1

List of Subsidiaries of SCHMID Group N.V.

SUBSIDIARY NAME	JURISDICTION OF INCORPORATION
GEBR. SCHMID GMBH	Germany
SCHMID SYSTEMS, INC.	USA
SCHMID TECHNOLOGY SYSTEMS GMBH	Germany
SCHMID SINGAPORE PTE. LTD.	Singapore
SCHMID KOREA CO., LTD	South Korea
SCHMID ASIA LTD.	Hong Kong
SCHMID TECHNOLOGY GUANGDONG CO., LTD.	China
SCHMID CHINA LTD.	Hong Kong
SCHMID SHENZHEN LTD.	China
SCHMID (KUNSHAN) CO., LTD.	China
SCHMID TAIWAN LTD.	Taiwan
SCHMID AUTOMATION (ZHUHAI) CO., LTD.	China
SCHMID SOLAR (SHENZHEN) LTD.	China
SCHMID TRADING (ZHONGSHAN) CO., LTD.	China
SCHMID ASIA PACIFIC SDN. BHD.	Malaysia
SCHMID ENERGY SYSTEMS GMBH	Germany
PEGASUS DIGITAL MOBILITY CORP.	Cayman Islands
PEGASUS MERGERSUB CORP.	Cayman Islands

EX-11.1

Exhibit 11.1

Code of Conduct 1 | 30 Code of Conduct H-i ' M r ®—i II J / / / ■■ii ‘♦xTr V/.l; # «.• = , E zrTflifir :S |ll 0 \ 11 i. S[ « r1 ■Piila as ,-■' o

Code of Conduct 2 | 30 Content Foreword................................................................................................................................................................ 3 SCHMID Code of Conduct .................................................................................................................................. 4 Acting responsibly in accordance with the law and ethics as the central guiding principle of our action 5 Acting responsibly as a member of society ...................................................................................................... 7 Human Rights................................................................................................................................................ 8 Sustainability ................................................................................................................................................. 9 Donations and Sponsoring........................................................................................................................10 Acting with integrity in everyday business ......................................................................................................11 Anti- Corruption ..........................................................................................................................................12 Fair Competition .........................................................................................................................................13 Correct documentation..............................................................................................................................14 Prohibition of money laundering and financing of terrorism ................................................................15 Foreign trade law and export control.......................................................................................................16 Tax and Customs Regulations ..................................................................................................................17 Gifts, Entertainment, and Invitations ........................................................................................................18 Avoiding conflicts of interest.....................................................................................................................19 Prohibition of insider trading.....................................................................................................................20 Product Compliance and Product Safety................................................................................................21 Communication and marketing.................................................................................................................22 Cooperation with each other.....................................................................................................................23 Occupational safety and health protection .............................................................................................24 How to deal with company assets ............................................................................................................25 Secrecy........................................................................................................................................................26 Security and protection of information, knowledge, and intellectual property/protection of secret27 IT Security/ Cyber Security .......................................................................................................................28 Data Protection ...........................................................................................................................................29 Compliance with our Code of Conduct ...........................................................................................................30 How can I report a concern? ....................................................................................................................30 What happens after a notice has been reported?..................................................................................30

Code of Conduct 3 | 30 Foreword In times like these, it is important as a company to show responsibility, to be transparent in all its values and decisions, and to present itself to the market with a good image. SCHMID wants to be perceived not only as a market and technology leader, but above all as a serious, credible, and reliable partner. We1 want to ensure that at all times our actions are impeccable, correct, and exemplary. The Code of Conduct is based on our corporate mission statement. The aim of this Code is to ensure compliance with laws, standards, and guidelines throughout the company to create a working environment characterized by integrity, respect and fair and responsible conduct. At the same time, it serves to establish a reliable compliance culture in the company and to encourage employees to uncover wrongdoing. It is valid and binding for every employee and everybody in the company - worldwide. The requirements of the Code of Conduct should not only be formally observed, but should also be practiced and lived in accordance with their meaning and purpose. That is why we have decided to provide the form of presentation and also the mandatory training courses with examples accordingly, in order to get the reality of life closer to our Code of Conduct. This is the reason why we provide this written document in addition to mandatory training courses. Let us bring an open and legally compliant corporate and compliance culture to life each day. The General Management Christian Schmid CEO 1 In this Code of Conduct, 'we' always means all employees, executives, and members of the management of any company of the SCHMID Group.

Code of Conduct 4 | 30 SCHMID Code of Conduct Why do we have a Code of Conduct? At SCHMID, the Code of Conduct serves as a binding guideline in our day-to-day work. It is supplemented by internal guidelines and regulations as well as contractual agreements. The contents of the Code of Conduct are embedded in concrete case studies and scenarios to illustrate possible risk situations in the company in a practical way. It therefore reflects the essential rules of conduct for everyday business. Failure to comply with the Code of Conduct can result in significant damage, not only to our company but also to us as employees and to our business partners and other stakeholders such as investors. The Code of Conduct is therefore binding for all of us, irrespective of whether we act as employees, managers, or directors in the company. We do not tolerate violations of the Code of Conduct. Anyone who violates the Code of Conduct must face appropriate consequences. To ensure that this does not happen, it is the responsibility of every SCHMID employee to familiarize themselves with the contents of the Code of Conduct, to incorporate it into their own behavior and to take it into account when making decisions. In cases of doubt, we should ask for competent advice. To whom does the Code of Conduct apply? The Code of Conduct applies to ALL AT SCHMID - no matter in which function, no matter where in the world. In addition, all managers must provide guidance and support so that all employees can make the right decisions and behave properly. How is the Code of Conduct structured? The Code of Conduct comprises the following three key areas: - Acting responsibly in accordance with the law and ethics as a central guiding principle of our actions - Acting responsibly as a member of society - Acting with integrity in everyday business

Code of Conduct 5 | 30 Acting responsibly in accordance with the law and ethics as the central guiding principle of our actions

Code of Conduct 6 | 30 Our principle Compliance with applicable law as well as internal guidelines is a matter of course for SCHMID - in all companies, in all countries in which we operate. As a globally active company, SCHMID must observe a wide range of social, political, and legal framework conditions in all its business processes, market activities and relationships with business partners and third parties. Therefore, SCHMID's basic principle is to conduct our business consistently in accordance with legal regulations, norms, industry standards and our own internal regulations. All actions that would lead to a violation of the law are to be refrained from. There are no exceptions to this, not even based on customary industry or regional practices. Employees who act unlawfully must be aware that they themselves may be threatened with criminal prosecution. Law-abiding conduct therefore also serves the employee's own protection. My Contribution I inform myself about the regulations applicable in my area of responsibility and comply with them. In cases of doubt, I contact my manager, the Compliance Officer, or the experts responsible for the respective topic.

Code of Conduct 7 | 30 Acting responsibly as a member of society

Code of Conduct 8 | 30 Human Rights Our principle We as SCHMID - respect, protect and promote worldwide the applicable regulations for the protection of human and children's rights as fundamental and universally valid specifications. We reject any use of child, forced and compulsory labor as well as any form of modern slavery and human trafficking. Every employee is instructed not to ignore any indications of human rights violations in his or her professional environment, but to actively bring them to the attention of his or her supervisor. This does not only apply internally at SCHMID, but of course also to the behavior of and towards business partners. Example You are active in purchasing and receive information that one of the sub-suppliers uses children for the production of goods or employees under inhumane conditions (e.g., forced labor). Problem Such an approach is not in line with our understanding of values and highest principle of action. Solution The business relationship with this business partner must be reviewed and, if necessary, measures derived from this. My Contribution As an employee, I too can contribute to the observance of human rights. I observe human rights as a fundamental guideline and am alert to human rights violations that happen in my environment. If I have indications of human rights violations in my professional environment, I ensure that these violations are prevented or stopped. If necessary, I inform my supervisor or the relevant contact persons.

Code of Conduct 9 | 30 Sustainability To identify potential risks for employees, the environment or society at an early stage, to reduce the ecological footprint and to continuously expand the positive impact on society, sustainability must always be considered in all major decisions. Our principle As a commercial enterprise, we have responsibility for the environmental compatibility and sustainability of our products, sites, and services. We are committed to environmentally compatible, advanced, and efficient technologies and implement them throughout the entire life cycle of our products. Already during development and production, we pay attention to the careful use of natural resources, a continuous reduction of environmental impact, and compliance with environmental protection laws and regulations. Example Because an internal process is to be adapted, an on-site appointment is first planned with colleagues from a subsidiary. Problem A business trip is always associated with costs and environmentally harmful CO2 emissions. Solution Before booking a business trip, please check whether a flight is necessary or whether a video conference would also serve its purpose. In this way, you avoid environmentally harmful CO2 emissions - and save additional costs. My Contribution Sustainability requires conscious, appropriate, and responsible action. I carefully consider my decisions. I take environmental protection concerns into account in my activities and use resources and energy appropriately and economically.

Code of Conduct 10 | 30 Donations and Sponsoring SCHMID is a family business that thinks long-term and acts responsibly. Based on this conviction, SCHMID on the one hand makes donations, i.e., contributions on a voluntary basis without consideration, with the aim of creating added value for all of us as well as for society. On the other hand, SCHMID can provide sponsorships, i.e., donations based on a contractually agreed quid pro quo, thereby pursuing its own company-related goals. Our principle Donations and sponsoring measures are only granted in accordance with the statutory regulations. The basis for this is the respective current donation guideline. Example A local politician asks for a donation for his election campaign. Problem Such a donation does not comply with SCHMID's desired neutrality. Solution Deny the request. Donations may only be granted after the designated approval procedure has been carried out. Approval of the donation cannot be granted in this specific case, as the current donation policy excludes donations to parties, party-affiliated institutions, or politicians. My Contribution In the case of a planned donation or sponsorship, I will comply with the regulations applicable to donations and sponsorships.

Code of Conduct 11 | 30 Acting with integrity in everyday business

Code of Conduct 12 | 30 Anti- Corruption Corruption is any abuse of a position of trust to gain personal advantage. It leads to decisions made for subjective reasons, distorts competition, and thereby harms society. Our principle We reject corruption. We do not grant our business partners any improper advantages, nor do we accept any such advantages. To avoid even the appearance of corruption, our actions are always transparent. Neither monetary payments nor other benefits may be made or received in this sense. Corruption carries a high risk of criminal prosecution and damage to reputation. Example As a sales employee, you prepare a quotation for the major order requested by a potential customer. The responsible decision-maker at the customer's offers to influence the award of the contract in favor of your company in return for an appropriate consideration. Problem This constitutes corrupt behavior, which can result in reputational damage and can also be punishable by law. Solution Immediately inform your supervisor and the responsible compliance officer. My Contribution I never bribe others and never allow myself to be bribed, either directly or indirectly. I inform myself on my own responsibility about the internal regulations before I give or receive gifts, extend, or accept invitations and hospitality. If I receive indications of corruption, I report them immediately.

Code of Conduct 13 | 30 Fair Competition Fair and free competition is protected by the applicable competition and antitrust laws. These ensure that there is no distortion of competition in the market through unlawful restrictions on competition. In particular, the fixing of prices and conditions, the sharing of markets, customers or territories, and the coordination of business strategies are prohibited. Our principle We conduct business exclusively according to the principle of performance and based on the market economy and free, unrestrained competition. We are prepared to compete with our competitors and always comply with the law. We do not enter into any anti-competitive agreements with competitors, suppliers, or customers. Example At a trade show, you are talking to a competitor's employee. Your conversation partner tries to arrange a price agreement. Problem Such a conversation may constitute a violation of applicable competition and antitrust laws and could have drastic consequences for you and for SCHMID. Solution Make it immediately and unmistakably clear to your conversation partner that you will not discuss this topic with him or her and subsequently document such conversations to the Compliance Officer. My Contribution I always aim to comply with the applicable rules and regulations for fair and free competition in business and to inform myself about them accordingly. The Compliance Officer is available to answer any questions.

Code of Conduct 14 | 30 Correct documentation Only through proper accounting and correct financial reporting can SCHMID create and maintain public trust. If irregularities occur, this may have serious consequences for the company and for those persons responsible. Our principle We keep our books and records complete, accurate, timely, factually allocated and in accordance with the legal framework. We adhere to a correct and clear presentation of the facts. Internal controls must ensure the complete and correct recording of information relevant to accounting. Transparency and correctness are our top priorities. With this in mind, we regularly inform our stakeholders about the current financial situation and business performance. We publish our periodic financial statements on schedule, which are prepared in accordance with national and international accounting standards. Example A customer asks you, as a sales representative, to issue an invoice not on delivery but in a later month. Problem Postings must always be made on a timely basis. SCHMID's reporting depend on the date of delivery and - if the invoice is not issued on delivery - would be understated and thus not give a fair picture of the financial situation. Solution The customer's request will not be immediately granted. After consultation with a supervisor, in the spirit of a good customer relationship an attempt may be made to find a compromise with the customer; for example, a longer payment term could be offered. My Contribution I organize the processes in a way that all business financial data can be entered correctly and on time in the accounting department. I contact my supervisor or the relevant finance department if I have any questions about the correct recording of data.

Code of Conduct 15 | 30 Prohibition of money laundering and financing of terrorism Almost all countries in the world have laws against money laundering and terrorist financing. Money laundering occurs when funds or other assets originating directly or indirectly from criminal acts are brought into the legal economic cycle and their origin is thus concealed. Terrorist financing is defined as the provision of funds or other resources for terrorist offenses or to support terrorist organizations. Even unintentional involvement in such incidents can lead to severe sanctions. Our principle We comply with the statutory regulations. Our goal is to maintain business relationships only with reputable partners who also comply with anti-money laundering and anti-terrorism regulations. We immediately allocate incoming payments to the corresponding services and book them. We ensure transparent and open payment flows. Example A supplier based in Hungary requests payment of its invoice to an account in Ireland. Problem In this way, SCHMID could be aiding and abetting the evasion of taxes and possibly contributing to the concealment of the origin of illegally acquired money. Such a request therefore requires explanation. Solution Do not immediately accept the proposal but ask the supplier why he does not want the transfer to an account in Hungary. Coordinate with the compliance officer on how to proceed. My Contribution I do not take any actions that may violate domestic or foreign money laundering regulations. I am attentive and investigate suspicious behavior on the part of customers and business partners. If there are indications that could give rise to such suspicions, I immediately contact my supervisor and the Compliance Officer. In my area of responsibility, I comply with all applicable regulations on recording and accounting for transactions and contracts.

Code of Conduct 16 | 30 Foreign trade law and export control Compliance with foreign trade regulations is elementary for a globally active company like SCHMID. Violations of foreign trade law or of applicable export restrictions (such as embargos) can result in severe penalties and further exports by SCHMID could be subject to a ban. Our principle We comply with all regulations applicable to international trade. This concerns above all the observance of existing import and export restrictions as well as the obtaining of necessary permits. Example You receive a request from a potential customer to ship some equipment to a country that, to your knowledge, is under embargo. Problem All business dealings (including the submission of a quote) may be prohibited. Solution Use the embargo list check. My Contribution In coordination with the relevant department, I clarify which export restrictions apply to the country to be supplied, do not submit offers, and do not conclude contracts before a complete review.

Code of Conduct 17 | 30 Tax and Customs Regulations As a result of SCHMID's worldwide activities, a wide range of legal regulations under foreign trade, tax and customs law must be complied with. Tax regulations include, among others, regulations on corporate income tax, payroll tax and value added tax; while customs regulations include, among others, customs duties payable on the import of goods. Our principle We comply with the applicable tax and customs regulations. For this purpose, it is necessary that we submit the declaration of taxes and customs duties to be paid correctly and in time and pay the assessed taxes and customs duties properly. Example A customer who imports the machine himself asks us to invoice for a lower value than we charged for the import. He claims he can have the machine imported at a lower value. Problem SCHMID would be aiding and abetting the evasion of taxes / duties if this would be done. Solution Please make it clear to the customer that SCHMID cannot issue an invoice that does not correspond in value to the contractually agreed sums. My Contribution I design the internal structures and processes in such a way that taxes and customs duties payable can be determined completely, correctly and on time, recorded in reporting and paid to the responsible tax authorities. If there are indications of possible violations of tax or customs regulations, I contact my manager, the relevant specialist department, or the Compliance Officer.

Code of Conduct 18 | 30 Gifts, Entertainment, and Invitations Accepting and giving gifts, invitations, and other benefits from or to business partners and public officials in return for improper favors is prohibited. But: Customary gestures of courtesy, hospitality or general appreciation of a business partner are permitted. However, expensive, or clandestine gratuities are generally suspect. Our principle Gifts, invitations, and other gratuities are permitted within generally accepted standards but must never be given or accepted in a manner that could be interpreted as undue influence. An extremely restrictive approach must be taken in connection with public officials. When assessing appropriateness, such benefits must not influence the business transaction in a reasonable commercial view or lie outside the limits of customary hospitality. In Germany, this limit is usually 50 Euro for gifts and 100 Euro for invitations. If the employee concerned is in any doubt about the appropriateness of such gifts, he or she must immediately discuss the matter with the relevant manager. If the limits just mentioned are exceeded, we will disclose and document them. Particularly when dealing with public officials, particularly restrictive attention must be paid to the value limits. In case of doubt, the expenses that are deductible under tax legislation should be used as a guide for donations. Example You are working in the purchasing department. A supplier invites you to the annual exchange of experiences for a weekend in a mid-range hotel, combined with an extensive leisure program. The value of the weekend is 200 Euro. For Saturday, the program includes a golf course, while the exchange of experiences is to take place in the last hour before departure on Sunday. Problem Due to the focus of the program, the impression of bribery and venality can arise, although such forms of experience sharing are common and can also be useful for the company. Solution If you are concerned that non-participation may be taken the wrong way, contact your supervisor and coordinate a solution with him or her. My Contribution I always pay attention to the appropriateness of gifts, both when giving and accepting them.

Code of Conduct 19 | 30 Avoiding conflicts of interest A potential conflict of interest exists if the personal interests of an employee are or may conflict with the interests of SCHMID. Conflicts of interest may arise from secondary activities of an employee or from personal relationships between SCHMID employees and business partners. Our principle We strictly separate business and personal interests and do not use our activities at SCHMID to gain personal advantages. We take care to avoid conflicts between private and business interests or even the appearance of such. We make our decisions exclusively based on factual criteria and do not allow ourselves to be influenced by personal interests and relationships. Any potential conflict of interest (e.g., in the selection of consultants, selection of business partners, selection of employees, by accepting, offering, or granting gifts and invitations, etc.) must be disclosed to find a solution together with the manager. Secondary activities must be approved in advance. SCHMID cooperates with external partners in all areas of the company. Commissions and fees paid to consultants or sales representatives and other commission recipients must be reasonable in relation to the services provided and agreed in writing. Business partners or commission recipients must be selected very carefully. The dual control principle must always be observed when concluding contracts (for further information, please see the signature policy). Commissions and fees may not be paid in cash under any circumstances. They may also not be transferred to regions which do not correspond to the country of delivery of the products or to which there is no clear connection according to commercial judgement. In case of doubt, the company activity of the commission recipient is to be checked or detailed company information is to be obtained. Example As part of your job, you check the offers of several suppliers. You notice that the best offer is from your best friend's company. Problem In this case, there is a risk that you put private interests above the interests of SCHMID. Solution Inform your supervisor of the situation and step back from the decision-making process to avoid any appearance of a conflict of interest. My Contribution I already avoid the appearance of a conflict of interest and disclose any apparent or actual conflict of interest to my supervisor and the responsible human resources department. Together, we will seek a solution that does not compromise the interests of the company.

Code of Conduct 20 | 30 Prohibition of insider trading During our business activities, we frequently obtain sensitive data which is not (yet) available to the public. So-called insider information is precise information about circumstances not known to the public which, if it became known, would be capable of significantly influencing the stock market price of the security concerned, e.g., a share, or of a financial instrument. Our principle We treat insider information relevant to the stock market price in accordance with the provisions of capital market law and do not tolerate insider trading. We may only use knowledge of insider-relevant plans and transactions internally under the applicable internal regulations and may not pass it on to outside parties, including family members (e.g., spouses). Example You have learned through your job that the acquisition of a new company by a customer will be announced soon. A friend asks you for an assessment of the shares of this customer. Problem Since the share price is likely to rise after the announcement of the successful acquisition of the new business unit, this is insider information or, if the knowledge is exploited, insider trading. Solution You do not pass on information about customers or suppliers to outsiders. You may be liable to prosecution if you disclose such information. My Contribution As a general rule, I do not disclose to outsiders any information about other companies that I have obtained in the course of my professional activities at SCHMID. In my own securities transactions, I comply with the regulations under capital market law, in particular the regulations on insider trading.

Code of Conduct 21 | 30 Product Compliance and Product Safety Everyone who brings products to market must comply with high safety standards. This is the only way to ensure that a product is safe when used as intended and that it does not pose any risks to health, safety, or the environment. Our principle For us as SCHMID, it is our goal that the regulations as well as standards applicable to our products are complied with. We place the highest demands on the safety of our products. We develop our products and their safety concepts according to the latest state of the art. We monitor our products in the markets worldwide. We initiate appropriate measures in the event of any anomalies that may arise. Example A customer reports problems with a safety-relevant function of a machine to you. You are not sure whether the cause is an operating error on the part of the customer or a production or design error. Problem A machine malfunction can cause property damage and, especially if it is safety-related, physical harm to the machine operator. Solution Raise the issue. Ensure that a problem for which our company is responsible is corrected. Operating errors by a customer may also require a response by the company (e.g. adaptation of operating instructions or application training). My Contribution If I discover or have concerns that our products may pose hazards or that regulations are not being complied with, I take action to counteract this. I report the case to my supervisor and the relevant departments in the company, for example the product safety officer.

Code of Conduct 22 | 30 Communication and marketing The SCHMID brand is our main asset. To maintain this, uniform and clear communication is essential. Each of our employees has the responsibility to follow the internal regulations in communication to ensure a uniform and consistent appearance of our company. Our principle To maintain the trust of customers, investors, and other stakeholders, we are committed to consistent and clear communication. Before agreeing to and carrying out planned communication and marketing measures, we coordinate these with the relevant specialist department. Therefore, all employees are required not to make any public statements (especially regarding confidential and/or operational information), but to forward any inquiries to the Marketing Department. This also applies to inquiries to authorities. On the Internet and at public, professional or cultural events, employees are always required to make it clear that these are the personal opinions of the respective employee. Corrections of facts, comments or similar misrepresented on the Internet also require consultation with the marketing department in every case. Example You see a comment on the Internet in which someone criticizes the production methods in Asia, and you know that the information is baseless. Problem Refrain from making individual counterstatements, as these are usually influenced by an emotional reaction. Solution Even if you feel an immediate urge to correct the misrepresentation, contact the Marketing Department as they can make an appropriate response. My Contribution I do not make any statements in public on behalf of my company and always refer inquiries to the proper department. If I express myself at public, professional, or cultural events and on the Internet, I make it clear that it is only my personal opinion. I obtain information on proper conduct in social networks from the marketing department and in the Social Media Guideline.

Code of Conduct 23 | 30 Cooperation with each other SCHMID expects its employees to assume responsibility within the scope of their duties, to show initiative and to learn from mistakes. Every employee at SCHMID should see himself as a representative of the company. Managers bear special responsibility and act as role models. For questions and problems, they are always the first contacts for their employees. It is the manager's responsibility to ensure that the applicable laws are complied with. In addition, it is part of their duties to make it clear that compliance with laws and the guidelines has top priority. SCHMID managers also give their employees as much personal responsibility as possible. Our principle The working atmosphere must be characterized by professionalism, fairness, honesty, integrity, respect, and trust. We at SCHMID ask our employees not to tolerate, support or encourage any kind of insults, discrimination, and similar behavior among each other and to report any incidents to the appropriate authorities. Example In my department, I notice that a colleague is being insulted by other colleagues because of his background. Problem Insulting a colleague because of his or her origin constitutes intolerable behavior on the part of a colleague. Solution We do not close our eyes here, but first try to mediate ourselves or confidentially turn to my manager, the Human Resources department, the employees of SCHMID “Mitarbeiter Mitverantwortung” (employees’ co-responsibility) or the responsible Compliance Officer to remedy this grievance. My Contribution I do not tolerate, support, or encourage in any way any kind of insults, discrimination, and similar behavior among each other and report any incidents to my supervisor as well as Compliance Officer.

Code of Conduct 24 | 30 Occupational safety and health protection In addition to the physical wellbeing of all employees as a top priority, occupational safety has an important influence on productivity and quality, but also on SCHMID's external image and customers' trust in the brand. Our principle We maintain and promote the health, performance, and job satisfaction of our employees by constantly improving working conditions and through a wide range of preventive and health promotion measures. When in doubt, safety always comes first. Example You notice that a machine in your department appears to have a defect in its electronics. Problem This presents a hazard to you as well as to the company and other employees (e.g., due to the risk of fire). Solution Immediately take the machine out of operation and notify the responsible supervisor. It is not permitted and can be dangerous to repair electrical equipment on your own. My Contribution If I am aware of any irregularities in occupational safety and health protection, I report them to my superiors.

Code of Conduct 25 | 30 How to deal with company assets SCHMID has company property at its worldwide production, sales, and business locations, such as tools, laptops, office materials and pool vehicles. Our principle We handle SCHMID's tangible and intangible assets responsibly. We do not use SCHMID's assets for non-business purposes unless this is expressly permitted. The property of third parties (e.g., business partners) to which SCHMID employees have access must be treated with the same care. It may only be used for business purposes within the agreed and necessary scope. Our information systems are to be used exclusively for business purposes and applied in such a way that SCHMID's rights or interests are not infringed. Unauthorized or unlicensed software may not be included in SCHMID's information systems. In this regard, the IT - Guideline of the SCHMID Group must also be observed. Example Your friend is planning to move at the weekend. He asks you if you, as a SCHMID employee, could organize a company vehicle from the fleet. Problem Company property such as vehicles or office supplies, cell phones and laptops are generally only used for company business. Unauthorized removal or use of company property without permission could be interpreted adversely to the employee (theft). In addition, payroll tax problems could arise (taxation of a non-cash benefit). Solution If in doubt, speak to your supervisor to assess the individual case and resolve it together. Transparency is also the top priority here. My Contribution I use company-owned work equipment exclusively for company purposes and not for private use. I protect them from access by third parties and treat them with care. I never remove company-owned items for private use without permission, even if they appear to be of little value (e.g., parts from the scrap container, old tools or equipment). In exceptional cases, I may borrow tools, equipment, or a vehicle for private purposes - but only after consulting my manager. Wage tax regulations must be considered. Here, too, transparency is the top priority. For clarification For company cars that are expressly also provided for private use, the regulations agreed in individual contracts, or the company car policy apply. For electronic information and communication equipment provided by SCHMID, the regulations of the IT policy apply.

Code of Conduct 26 | 30 Secrecy New technologies such as cloud services, social media and digital communications have fundamentally changed the way we communicate and do business. However, this entails new dangers, in particular the risk of carelessly disseminating information that is not intended for the public. Our principle The protection of our customers and our own know-how as the basis of our market and technology leadership has absolute priority. The principle of confidentiality applies to all internal, confidential, and proprietary information. Information from suppliers, customers, employees, consultants and other third parties that is not communicated publicly must be protected in accordance with legal and contractual requirements. The protection of confidential information is taken very seriously at SCHMID. Thus, even in social networks, the confidentiality and secrecy regulated by the employment contract applies. Example In a conversation, a friend would like to get an assessment from you about a customer's ability to pay or obtain information about their production workload. Problem Information obtained in the course of your duties that is not publicly available is generally confidential and may not be disclosed to third parties. Solution No confidential information will be released to third parties. My Contribution I handle all company information carefully and do not pass it on without authorization; I am aware of the duty of confidentiality stipulated in my employment contract. I always comply with this basic principle, even after termination of my contract. To this end, I also comply with the conduct instructions for the safe handling of information, e.g. - Confidential documents must be properly stored when leaving the workplace and not be freely accessible to anyone. - Consistent locking of screens - Employees must wear their company badge in a clearly visible manner. Visitors shall be issued a visitor badge, which must also be worn visibly. - Visitors are to be picked up at the reception desk and never left unattended. - Unknown callers or e-mail senders must be authenticated clearly before passing on confidential information. - No photos, posts, or the like on social networks about company and trade secrets, such as new machines, customer visits (unless authorized by them) or similar. In case of doubt, I contact the data protection officer or the compliance officer.

Code of Conduct 27 | 30 Security and protection of information, knowledge, and intellectual property/protection of secrets As a technology company with a high expenditure in research and development, SCHMID is particularly dependent on the protection of its inventions, its trade and business secrets and its technical know-how. But non-technical information (e.g., sales data or purchasing prices) can also be valuable trade secrets. The unauthorized disclosure of such knowledge can cause losses for the company and may have consequences under labor, civil and criminal law for the employee concerned. Our principle We are aware of the value of proprietary know-how and protect it very carefully. We recognize the intellectual property of competitors, business partners and other third parties. This means that every employee is responsible for protecting SCHMID's intellectual property, such as licenses, patents, and know-how, from attack or loss; and our employees must take equal care to ensure that the intellectual property of others is also not infringed upon. Example A customer has sent you confidential information for a joint project. You are currently on your way to this customer by train and intend to review the documents on the way. Problem Unless it is ensured that third parties cannot gain access to the confidential documents, this may constitute a breach of signed non-disclosure agreements, which may be associated with considerable consequences for SCHMID. Solution You must ensure that no unauthorized person gains knowledge of this confidential information. This could not only be construed to be a breach of the signed non-disclosure agreement, but additionally might very well jeopardize the relationship with the customer. Measures that should be considered can be, for example: blocking the screen; installation of a view protection filter; use of an encrypted hard disk; storing data in protected areas of the company, not locally (to prevent theft). My Contribution I handle all company information with care and do not pass it on without authorization. I pay attention to information concerning technical know-how, patents, trade, and business secrets.

Code of Conduct 28 | 30 IT Security / Cyber Security Information technology (IT) is now an integral part of SCHMID's business model and processes in everyday work, but it harbors many risks. These include the impairment by malware (viruses, Trojans, phishing software), the loss of data due to program errors or the misuse of data (e.g., by hackers) or the attack on our system with the aim of targeted extortion e.g., ransomware). Our principle We place the highest demands on the security of our IT systems and act accordingly. We identify the need to protect information in our business processes and products and implement appropriate technical and organizational security measures. Example You are on the road and get a USB stick to share a document at a meeting. Problem Malware can get onto your hardware and into the company network via the USB stick. Solution Only use data carriers or systems provided by SCHMID for data exchange. Have the document sent to you by e-mail, for example. However, never open e-mails and their attachments that seem suspicious to you or that you receive from unknown persons; in this way, you prevent malware from entering the company network. My Contribution I familiarize myself with the applicable IT security regulations and adhere to the specifications made therein. I am aware that unencrypted data exchange (e.g., by e-mail or USB stick) is not a secure means of communication. If I determine that there is potential for danger or that security-relevant regulations are being violated, I counteract this and inform the responsible contact person.

Code of Conduct 29 | 30 Data Protection The aim of data protection is to protect individuals from the arbitrary handling of their personal data. Personal data is any data that makes a person directly or indirectly identifiable. The processing and other use of personal data is subject to special legal regulations. Our principle We protect the personal data of employees, former employees, customers, suppliers and other data subjects. We collect, gather, process, use and store personal data only in accordance with legal requirements. Example You have noticed that you can see the time data of all colleagues in your department. Problem Time data is also personal data, as it includes the name of colleagues and other characteristics that make a person identifiable. Solution In this case, it must be ensured that only your manager or employees of the HR department have access to the data. Speak directly to your supervisor about this so that the issue can be rectified immediately. My Contribution I consider that the collection, storage, processing, and other use of personal data may only take place with the consent of the person concerned, with a contractual regulation or other legal basis. These data must be secured in such a way as to ensure the confidentiality, integrity, availability, verifiability, and resilience of the information requiring protection and to prevent unauthorized internal and external use. In cases of doubt, I contact my supervisor or the office responsible for data protection.

Code of Conduct 30 | 30 Compliance with our Code of Conduct How can I report a concern? It should be the intention of all employees to report grievances, in particular violations of applicable law and the Code of Conduct. In this way, we help to clarify and eliminate misconduct and grievances and protect ourselves as employees, but also the company, from risks and damages that may arise as a result. A report can be made • Via our anonymous whistleblower system for reporting suspected compliance cases or • By e-mail to compliance@schmid-group.com or • Directly to Karl Reismüller + 49 7441 538 634 Reismueller.ka@schmid-group.com Information on suspected compliance cases and questions is sent to the legal department via the compliance e-mail address and the whistleblower system. The identity of the whistleblower or questioner is treated confidentially, provided he or she does not deliberately report false facts or allegations. Obviously, the respective manager is also available as a contact person for compliance issues (notes and questions). For further questions regarding this Code of Conduct, please contact. Karl Reismüller + 49 7441 538 634 Reismueller.ka@schmid-group.com What happens after a notice has been reported? SCHMID will investigate all reports and take appropriate action if necessary. Violations of applicable law and this Code of Conduct will not be tolerated and will result in disciplinary action. Of course, the presumption of innocence applies in favor of accused persons until the contrary is proven. SCHMID does not tolerate any disadvantages against whistleblowers. Whistleblower system: https://schmid-group.hintbox.eu/ E-Mail: compliance@schmid-group.com Karl Reismüller + 49 7441 538 634 Reismueller.ka@schmid-group.com Karl Reismüller + 49 7441 538 634 Reismueller.ka@schmid-group.com

EX-11.2

Exhibit 11.2

Schmid Group N.V. Insider Trading Conduct Policy

Schmid Group N.V. Insider Trading Policy

I. PURPOSE

Anyone who has knowledge of material non-public information may be considered an “Insider” for purposes of the U.S. federal securities laws prohibiting insider trading. As a result, it is a violation of the policy of Schmid Group N.V. (the “Company” and together with its subsidiaries “SCHMID”) and the federal securities laws for any officer, director or employee of SCHMID to (a) trade in securities of the Company while aware of “material non-public information” concerning SCHMID or (b) communicate, “tip” or disclose material non-public information concerning SCHMID to outsiders so that they may trade in securities of the Company based on that information. To prevent even the appearance of improper insider trading or tipping, SCHMID has adopted this Insider Trading Conduct Policy (“Policy”) for all of its directors, officers and employees and their family members, as well as for others who have access to information through business relationships with SCHMID.

SCHMID may maintain a separate insider trading policy to be published and provided to vendors, suppliers, partners or other third parties, or it may directly reference such third parties in the general insider trading policy.

The consequences of prohibited insider trading or tipping can be severe. Violation of this Policy by any officer, director or employee of SCHMID may result in disciplinary action by SCHMID up to and including immediate termination for cause. Moreover, persons violating insider trading or tipping rules may be required to:

· Disgorge the profit made or the loss avoided by the trading, whether received by the insider or someone receiving a tip;

· Pay significant civil penalties; and

· Pay a criminal penalty and serve time in jail.

In addition to individual sanctions, SCHMID may also be required to pay civil or criminal penalties.

II. SCOPE

A. Covered Persons

This Policy covers all directors, officers and employees of SCHMID and their respective immediate family members and any person (whether or not related) sharing the same household as well as any outsiders whom SCHMID may designate as Insiders because they have access to material non-public information concerning SCHMID (“Insiders”).

B. Covered Transactions

The Policy applies to any and all transactions in the Company’s securities. For purposes of the Policy, the Company’s securities include its common stock, options to purchase or sell common stock and any other type of securities that the Company may issue, such as preferred stock, convertible debentures, warrants and exchange-traded options or other derivative securities and short sales (collectively, “Company Securities”). Transactions in Company Securities include not only market transactions, but also private sales of Company Securities, pledges of Company Securities to secure a loan or margin account, as well as charitable donations of Company Securities.

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C. Policy Delivery

The Policy will be delivered to all directors, officers and employees and other designated persons at the start of their relationship with SCHMID. Upon first receiving a copy of the Policy or any revised versions, each recipient must sign an acknowledgment that he or she has received a copy of the Policy and agrees to comply with the Policy’s terms. The receipt of this Policy as well as the acknowledgement can also take place in a digital form.

III. DEFINITION OF “MATERIAL NON-PUBLIC INFORMATION”

A. “Material” Information

“Material Information” is any information about SCHMID that a reasonable investor would consider important in making an investment decision to buy or sell Company Securities. If an investor would want to buy or sell securities based in part on the information, the information should be considered material. In simple terms, material information is any type of information that could reasonably be expected to affect the price of Company Securities. While it is not possible to identify all information that would be deemed “material,” the following types of information ordinarily would be considered material:

· Financial performance, especially quarterly and year-end earnings;

· Significant changes in financial performance outlook or liquidity of SCHMID as a whole or of a reporting segment of SCHMID’s business;

· SCHMID projections that significantly differ from external expectations;

· Potential mergers and acquisitions or the sale of significant SCHMID assets or subsidiaries;

· New major contracts, orders, suppliers, customers or finance sources, or the loss thereof;

· Major discoveries or significant changes or developments in products or product lines, research or technologies;

· Approvals or denials of requests for regulatory approval by government agencies of products, patents or trademarks;

· Significant changes or developments in supplies or inventory, including significant product defects, recalls or product returns;

· Significant pricing changes;

· Stock splits, public or private securities/debt offerings or changes in Company dividend policies or amounts;

· Significant changes in management;

· Significant labor disputes or negotiations, including possible strikes;

· Actual or potential exposure to major litigation, or the resolution of such litigation;

· Possible proxy contests;

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· Imminent or potential changes in the SCHMID’s credit rating by a rating agency;

· Voluntary calls of debt or preferred stock of the Company;

· The contents of forthcoming publications that may affect the market price of Company Securities;

· Statements by stock market analysts regarding SCHMID and/or its securities;

· Significant changes in sales volumes, market share, production scheduling, product pricing or mix of sales;

· Analyst upgrades or downgrades of a Company Security;

· Significant changes in accounting treatment, write-offs or effective tax rate;

· Impending bankruptcy or financial liquidity problems of SCHMID or one of its subsidiaries or significant business partners;

· Gain or loss of a substantial customer or supplier; or

· A significant cybersecurity incident experienced by SCHMID that has not yet been made public.

B. “Non-public” Information

Information is considered “non-public” until it has been widely disseminated to the public through SEC filings, major newswire services, national news services and financial news services and there has been sufficient time for the market to digest that information. For the purposes of this Policy, information will be considered public after the close of trading on the second full trading day after the Company’s widespread public release of the information. Thus, no transaction should take place until the second trading day after the disclosure of the material information.

IV. STATEMENT OF COMPANY POLICY AND PROCEDURES

A. Prohibited Activities

No Insider may trade in Company Securities while aware of material non-public information concerning SCHMID.

No Insider may trade in Company Securities during any special trading blackout periods as designated by the Legal Affairs department of SCHMID or CFO. The deviation of any blackout period as well as those Insiders subject to the blackout shall be determined by the Legal Affairs department of SCHMID or CFO. Moreover, the Insider will not disclose to any person the applicability of a special blackout period without prior permission of the Legal Affairs department of SCHMID or CFO.

No Insider may trade in Company Securities outside of the applicable “trading windows” described below.

No Insider may “tip” or disclose material non-public information concerning the Company to any person, including family members or colleagues, even if that person is expected to hold such “tip” in confidence, unless required as part of that Insider’s regular duties for SCHMID or authorized by the Legal Affairs department of SCHMID or CFO. In the case of inadvertent disclosure to an outside person, the Insider must advise the Legal Affairs department of SCHMID or CFO as soon as the inadvertent disclosure has been discovered. To protect against inadvertent disclosures, all inquiries from outsiders

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regarding material non-public information about SCHMID must be forwarded to the Legal Affairs department of SCHMID or CFO.

No Insider may give trading advice of any kind about SCHMID to anyone, whether or not such Insider is aware of material non-public information about SCHMID.

No Insider may trade in any interest or position relating to the future price of Company Securities, such as a put, call or short sale.

Without the specific prior approval of the Legal Affairs department, the CEO or the audit committee of the Board (the “Audit Committee”), no Insider shall accept outside employment, as a consultant, independent contractor or employee, where the Insider is being compensated for the Insider’s knowledge of SCHMID or the industry or potential products of SCHMID.

Without the specific prior approval of the Legal Affairs department of SCHMID, the CEO or the Audit Committee, no Insider shall respond to market rumors or otherwise make any public statements regarding SCHMID or its prospects. This includes responding to or commenting on Internet-based bulletin boards or social media platforms. If you become aware of any rumors or false statements, you should report them to the Legal Affairs department of SCHMID or CFO.

B. Trading Windows and Blackout Periods

Provided that no other restrictions on trading in Company Securities apply, Insiders may trade in Company Securities during and only during the period beginning at the close of trading three full trading days following the Company’s widespread public release of quarterly or year-end earnings and ending on the last trading day of the second month following the end of the preceding quarter.

Notwithstanding the above provisions, any Insider who is aware of material non-public information concerning SCHMID may not trade in Company Securities even during a trading window until two trading days after such material non-public information has been subject to the Company’s widespread public release of the information.

No Insiders identified by the Legal Affairs department of SCHMID or CFO as being subject to a special blackout period (the Legal Affairs department of SCHMID and/or the CFO may, in their sole discretion, maintain a list of such Insiders) may trade in Company Securities during such special blackout period. The Legal Affairs department or CFO may, following consultation with the CEO, declare such special blackout periods from time-to-time as conditions warrant. No Insider, whether or not subject to a special blackout period, may disclose to any outside third party that a special blackout period has been designated.

V. EXCEPTIONS TO APPLICATION OF POLICY

A. Employee Benefit Plans / Stock Option Plans

The trading prohibitions and restrictions set forth in this Policy do not apply to periodic contributions by the Company or employees to the Schmid Stock Option Plan (“SSOP”) pursuant to the terms and conditions of those plans. However, no officer or employee of SCHMID may alter his or her instructions regarding the purchase or sale of Company Securities in such plans while they are aware of material non-public information. The sale of Company Securities received under a certain Option Plan is subject to the terms of this Policy.

Insiders may exercise company stock options where no company stock is sold in the market. Cashless sales - e.g., “cashless sales” where company stock is sold to pay for exercising the options - are considered under this Policy to be transactions in Company Securities and must comply with the provisions of this Policy, including the applicability of any prior approval, trading window or blackout

4

period requirements as they may apply to an Insider. No cashless sale is permitted when the insider is in possession of material non-public information, except as provided below.

C. Rule 10b5-1 Plans

Exchange Act Rule 10b5-l was adopted by the SEC to protect persons from insider trading liability for transactions under a written trading plan previously established at a time when the insider did not possess material non-public information. Under a properly established 10b5-1 plan with respect to securities (a “10b5-1 Plan”), Insiders may complete transactions in Company Securities at any time, including during blackout periods and outside trading windows or even when the Insider possesses material non-public information. Thus, a 10b5-1 Plan offers an opportunity for Insiders to establish a systematic program of transactions in Company Securities over periods of time that might include periods in which such transactions would otherwise be prohibited under the federal securities laws or this policy. A variety of arrangements can be structured to meet the requirements of Rule 10b5-1. In particular, a 10b5-1 Plan can take the form of a blind trust, other trust, pre-scheduled stock option exercises and sales, pre-arranged trading instructions and other brokerage and third-party arrangements over which the Insider has no control once the plan takes effect.

Insiders who desire to implement a 10b5-1 Plan must first obtain approval of the plan by the Legal Affairs department of SCHMID. To be eligible for approval, the 10b5-1 Plan:

· Must be established during a trading window (and not during any blackout period);

· Must be in writing;

· Must either irrevocably set forth the future date or dates on which purchase or sale of securities are to be made, the prices at which the securities are to be purchased or sold, the broker who will be responsible for effecting the transactions (or method of transaction if not through a broker), or provide a formula for determining the price of the securities to be purchased or sold and the date or dates on which the transactions are to be completed;

· May not permit the direct or indirect exercise of any influence over the timing or terms of the purchase or sale by the Insider; and

· May not take effect until two days after the plan is approved by the Legal department of SCHMID.

The Legal Affairs department of SCHMID will maintain a copy of all 10b5-1 Plans.

The Insider must provide the Legal Affairs department of SCHMID written notice of any termination or modification (in which case, the modification must be approved in writing by the Legal Affairs department of SCHMID prior to effectiveness and may not take effect until two days after the plan is approved by the Legal Affairs department of SCHMID.

VI. REPORTING OF VIOLATIONS

Any Insider who violates this Policy or any U.S. federal, state or stock exchange rules or law governing insider trading or tipping, or knows of any such violation by any other Insider, must report the violation immediately to the Legal Affairs department of SCHMID via SCHMID’s whistleblowing system (https://schmid-group.hintbox.eu/) or to the Legal Affairs department of SCHMID. Upon receipt of notice of a potential violation of this Policy, the Legal Affairs department of SCHMID:

· Shall determine whether a violation may have occurred;

5

· Shall report the potential violation of this Policy to the Audit Committee if the Legal Affairs department of SCHMID concludes a violation occurred or if the Legal Affairs department of SCHMID is unable to conclude that no violation occurred; and

· Upon determining that any such violation has occurred, in consultation with the Chair of the Audit Committee of the Board, will determine whether the Company should release any material non-public information.

If the Legal Affairs department of SCHMID or the Audit Committee determines that a violation of the Policy occurred, they may discipline the Insider, including immediate termination. The Audit Committee may also report the violation to federal or state law enforcement agencies and/or applicable SRO.

VII. INQUIRIES

Please direct all inquiries regarding any of the provisions or procedures of this Policy to the Legal Affairs department of SCHMID.

VIII. LEGAL AFFAIRS DEPARTMENT OF SCHMID

The Legal Affairs department of SCHMID can be contacted as follows:

Gebr. SCHMID GmbHLegal Affairsattn: Karl ReismüllerRobert-Bosch-Str. 32 – 3672250 FreudenstadtGermanyTel.: +49 07441/538-634E-Mail: reismueller.ka@schmid-group.com

The Legal Affairs department of SCHMID may designate one or more individuals who may perform its duties in the event that the department is unable or unavailable to perform such duties.

6

EX-97.1

Exhibit 97.1

SCHMID Group N.V.

EXECUTIVE COMPENSATION CLAWBACK POLICY

1. Purpose. The purpose of this Policy is to set forth the circumstances under which Executive Officers of the Company will be required to repay or return certain Excess Awarded Compensation to members of the Company Group. The Company has adopted this Policy in accordance with the Clawback Rule and the Listing Rule and it is intended to comply with, and shall be interpreted to be consistent with, each of the foregoing.

2. Definitions. As used in this Policy, the following words and phrases have the meanings specified below:

(a)“Accounting Restatement” means an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under applicable securities laws, including (i) any required accounting restatement to correct an error in previously issued financial statements of the Company that is material to the previously issued financial statements of the Company, or (ii) that corrects an error that is not material to previously issued financial statements of the Company, but would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

(b)“Board” means the Board of Directors of the Company.

(c)“Clawback Rule” means Section 10D of the Exchange Act and the rules and regulations promulgated thereunder, each as may be amended from time to time.

(d)“Commission” means the U.S. Securities and Exchange Commission.

(e)“Committee” means the Compensation Committee of the Board, or if so designated by the Board, any other committee of the Board (or group of Board members) consisting entirely of independent directors, in which case references herein to the Committee shall be deemed to be references to such committee of the Board.

(f)“Company” means SCHMID Group N.V., a Dutch public limited liability company (naamloze vennootschap).

(g)“Company Group” means the Company, together with each of its direct and indirect parents and subsidiaries.

(h)“Covered Executive Officer” means, with respect to any Incentive-Based Compensation, each current and former Executive Officer who serves, or served, as an Executive Officer at any time during the performance period in respect of which such Performance-Based Compensation is Received by such Executive Officer.

(i)“Covered Period” means, with respect to any Accounting Restatement, the three (3) completed Fiscal Years of the Company immediately preceding the Restatement Date and any Transition Period of less than nine (9) months within or immediately following those three (3) completed Fiscal Years.

(j)“Effective Date” means April 30, 2024.

(k)“Excess Awarded Compensation” means, with respect to a Covered Executive Officer, the amount of Incentive-Based Compensation Received by the Covered Executive Officer (after the Covered Executive Officer became an Executive Officer) during a Covered Period that exceeds the amount of Incentive-Based Compensation that the Covered Executive Officer would have Received had it been determined based on the Accounting Restatement, and computed without regard to any taxes paid by the Covered Executive; provided that, for Incentive-Based Compensation that is based on or otherwise derived from the Company’s stock price or total shareholder return where the amount of Excess Awarded Compensation is not subject to mathematical recalculation directly from information in the applicable Accounting Restatement, the amount that would have been Received shall be determined by the Committee based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return, as applicable, upon which the Incentive-Based Compensation was Received (in which case, the Company shall maintain documentation of such determination of that reasonable estimate and provide such documentation to the Exchange). Notwithstanding the foregoing, compensation amounts shall only be considered “Excess Awarded Compensation” for purposes of the Policy if such compensation is Received (i) while the Company has a class of securities listed on a national securities exchange or a national securities association and (ii) on or after October 2, 2023.

(l)“Exchange” means the Nasdaq Stock Market.

(m)“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

(n)“Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person who performs similar policymaking functions for the Company, including any employee or service provider of the Company who is subject to Section 16 of the Exchange Act. Individuals who serve in such roles or perform such functions for the Company’s parent(s) or subsidiaries shall be deemed Executive Officers of the Company if they perform such policy making functions for the Company.

(o)“Financial Reporting Measure” means (i) any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any other measure that is derived wholly or in part from such measure, (ii) the Company’s stock price and (iii) the Company’s total shareholder return (in each case, regardless of whether such measure is presented within the Company’s financial statements or included in a filing with the Commission).

(p)“Fiscal Year” means the Company’s fiscal year; provided that a Transition Period between the last day of the Company’s previous fiscal year end and the first day of its new fiscal year that comprises a period of nine (9) to twelve (12) months will be deemed a completed fiscal year.

(q)“Incentive-Based Compensation” means any compensation (whether cash or equity-based) that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure, and may include, but shall not be limited to, performance bonuses, commissions, or long-term incentive awards such as stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units or other equity-based awards, whether or not granted under the Company’s equity incentive plans. For the avoidance of doubt, Performance-Based Compensation does not include any compensation that is (i) granted, earned, or vested exclusively upon completion of a specified employment period, without any performance condition, (ii) discretionary, or (iii) based on subjective goals or goals that do not constitute Financial Reporting Measures.

(r)“Listing Rule” means Listing Rule 5608, as promulgated by The Nasdaq Stock Market LLC, as such rule may be amended from time to time.

( )“Policy” means this SCHMID Group's N.V. Executive Compensation Clawback Policy, as may be amended from time to time.

(s)“Received” means, with respect to Incentive-Based Compensation, the date of deemed receipt, and for purposes of the foregoing, Incentive-Based Compensation shall be deemed Received in the Fiscal Year during which the applicable Financial Reporting Measure is attained, even if payment or grant of the Incentive-Based Compensation occurs after the end of that period.

(t)“Restatement Date” means the earlier to occur of (i) the date that the Board, a committee of the Board, or an officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement or (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare an Accounting Restatement.

(u)“Transition Period” means any transition period that results from a change in the Company’s Fiscal Year within or immediately following the three (3) completed Fiscal Years immediately preceding the Restatement Date.

3.Administration.

This Policy shall be administered by the Committee. The Committee has full authority to interpret, construe and enforce this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy. Any determinations made by the Committee shall be final, conclusive and binding on all interested parties and need not be uniform with respect to each individual covered by this Policy. Any members of the Committee, and any other members of the Board who assist in the administration of this Policy, shall not be personally liable for any action, determination or interpretation made with respect to this Policy and shall be fully indemnified by the Company to the fullest extent under applicable law and Company policy with respect to any such action, determination or interpretation. The foregoing sentence shall not limit any other rights to indemnification of the members of the Board under applicable law or Company policy.

4.Recovery of Excess Awarded Compensation.

(a)Recovery of Excess Awarded Compensation. In the event of an Accounting Restatement, the Committee shall reasonably promptly determine the amount of any Excess Awarded Compensation for each Covered Executive Officer in connection with such Accounting Restatement and shall promptly thereafter provide each Covered Executive Officer with a written notice identifying the amount of Excess Awarded Compensation and a demand for repayment or return, as applicable.

(b)Forms of Recovery. The Committee shall determine, in its sole discretion, and in a manner that effectuates the purpose of the Clawback Rule and the Listing Rule, the method(s) for recovering any Excess Awarded Compensation hereunder in accordance with Section 4(a) above, which may include: (i) requiring cash reimbursement; (ii) seeking recovery or forfeiture of any gain realized on the vesting, exercise, settlement, sale, transfer or other disposition of any equity-based awards; (iii) offsetting the amount to be recouped from any compensation otherwise owed by the Company to the applicable Covered Executive Officer; (iv) cancelling outstanding vested or unvested equity awards; or (v) taking any other remedial and recovery action permitted by law, as determined by the Committee. Any reduction, cancellation or forfeiture of any compensation shall be done in compliance with Section 409A of the Internal Revenue Code of 1986, as amended. For the avoidance of doubt, except as set forth in Section 4(e) below, in no event may the Company Group accept an amount that is less than the amount of Excess Awarded Compensation in satisfaction of a Covered Executive Officer’s obligations hereunder.

(c)Covered Executive Officer’s Failure to Repay. If a Covered Executive Officer fails to repay all Excess Awarded Compensation to the Company Group when due (as determined in accordance with Section 4(b) above), the Company shall, or shall cause one or more other members of the Company Group to, take all actions reasonable and appropriate to recover such Excess Awarded Compensation from the applicable Covered Executive Officer (including suing for repayment and/or enforcing such Covered Executive Officer’s obligation to make payment through the reduction or cancellation of outstanding and future compensation). The applicable Covered Executive Officer shall be required to reimburse the Company Group for any and all expenses reasonably incurred (including legal fees) by the Company Group in recovering such Excess Awarded Compensation in accordance with the immediately preceding sentence.

(d)No Indemnification. No member of the Company Group shall be permitted to indemnify any Covered Executive Officer against (i) the loss of any Excess Awarded Compensation that is repaid, returned or recovered pursuant to the terms of this Policy, or (ii) any claims relating to the Company’s enforcement of its rights under this Policy (including, for the avoidance of doubt, any advancement of costs related to such enforcement). Further, no member of the Company Group shall enter into any agreement that exempts any Incentive-Based Compensation from the application of this Policy or that waives the Company’s right to recovery of any Excess Awarded Compensation and this Policy shall supersede any such agreement (whether entered into before, on or after the Effective Date).

(e)Exceptions to Recovery. Notwithstanding anything herein to the contrary, the Company shall not be required to take the actions contemplated by Section 4(b) above if the following conditions are met and the Committee determines that recovery would be impracticable:

(i)The direct expenses paid to a third party to assist in enforcing the Policy against a Covered Executive Officer would exceed the amount to be recovered, after the Company has made a reasonable attempt to recover the applicable Excess Awarded Compensation, and the Committee has documented such attempt(s) and provided such documentation to the Exchange;

(ii)Recovery would violate the home country law of the Company, where that law was adopted prior to November 28, 2022, provided that, before determining that it would be impracticable to recover any amount of Excess Awarded Compensation based on violation of home country law, the Company has obtained an opinion of home country counsel, acceptable to the Exchange, that recovery would result in such a violation and a copy of the opinion is provided to the Exchange; or

(iii)Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company Group, to fail to meet the requirements of 26 U.S.C. 401(a)(13), and the regulations thereunder, or 26 U.S.C. 411(a), and the regulations thereunder.

5.Amendment; Termination. The Board may amend this Policy from time to time in its discretion and shall amend this Policy as it deems necessary, including as and when it determines that it is legally required by any United States securities laws (including the Clawback Rule), Commission rule or the Listing Rule. The Board may terminate this Policy at any time. Notwithstanding anything in this Section 5 to the contrary, no amendment or termination of this Policy shall be effective if such amendment or termination would (after taking into account any actions taken by the Company contemporaneously with such amendment or termination) cause the Company to violate any federal securities laws (including the Clawback Rule), Commission rule or the Listing Rule. This Policy automatically shall terminate upon a “Change in Control”, which results in the Company’s securities no longer being traded on an established securities exchange.

6.Inducement of Executive Officers. The Committee may require that any employment agreement, equity award agreement, or any other agreement entered into on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require an Executive Officer to agree to abide by the terms of this Policy.

7.Filing Requirements. The Company shall file all disclosures with respect to this Policy in accordance with the requirements of the U.S. federal securities laws, including disclosures required by Commission filings.

8.Non-Exclusivity. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company Group under applicable law, regulation or rule or pursuant to the terms of any similar policy in any employment agreement, equity award agreement, or similar agreement and any other legal remedies available to the Company Group; provided, however, that any amounts recouped under

any other policy that are subject to clawback under this Policy shall be considered recovered by the Company Group for purposes of this Policy and vice versa.

9.Effective Date. This Policy shall be effective as of the Effective Date.

10.Successors. This Policy shall be binding and enforceable against all Covered Executive Officers and their beneficiaries, heirs, executors, administrators or other legal representatives.

*****

XML

Document and Entity Information - shares	12 Months Ended
	Dec. 31, 2023	Apr. 30, 2024
Document Type	20-F
Document Registration Statement	false
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false
Document Period End Date	Dec. 31, 2023
Entity File Number	001-42040
Entity Registrant Name	SCHMID Group N.V.
Entity Incorporation, State or Country Code	P7
Entity Address, Address Line One	Robert-Bosch-Str. 32-36
Entity Address, City or Town	Freudenstadt
Entity Address, Country	DE
Entity Address, Postal Zip Code	72250
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
ICFR Auditor Attestation Flag	false
Document Financial Statement Error Correction [Flag]	false
Document Accounting Standard	International Financial Reporting Standards
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		42,974,862
Entity Central Index Key	0001987240
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	FY
Amendment Flag	false
Auditor Name	KPMG AG
Auditor Location	Munich, Germany
Auditor Firm ID	1021
Business Contact
Contact Personnel Name	Julia Natterer
Contact Personnel Email Address	natterer.ju@schmid-group.com
Entity Address, Address Line One	Robert-Bosch-Str. 32-36
Entity Address, City or Town	Freudenstadt
Entity Address, Country	DE
Entity Address, Postal Zip Code	72250
City Area Code	+49
Local Phone Number	7441 538 0
Class A Ordinary Shares, par value €0.01 per share
Title of 12(b) Security	Class A Ordinary Shares, par value €0.01 per share
Trading Symbol	SHMD
Security Exchange Name	NASDAQ
Redeemable Warrants, each exercisable for one Class A Ordinary Share at an exercise price of $11.50 per share
Title of 12(b) Security	Redeemable Warrants, eachexercisable for one Class A OrdinaryShare at an exercise price of $11.50per share
Trading Symbol	SHMD.WS
Security Exchange Name	NASDAQ

XML

Combined Statements of Profit or Loss and Other Comprehensive Income (Loss) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Combined Statements of Profit or Loss and Other Comprehensive Income (Loss)
Revenue	€ 90,246	€ 95,058	€ 39,481
Cost of sales	(63,849)	(61,721)	(30,506)
Gross profit	26,397	33,337	8,975
Selling	(12,577)	(11,369)	(7,851)
General administration	(12,538)	(6,973)	(6,298)
Research and development	(5,148)	(4,818)	(2,733)
Other income	15,985	3,375	1,924
Other expenses	(2,620)	(2,988)	(4,779)
(Impairment) / Reversal on impairment on financial assets	22,696	3,091	3,333
Operating profit (loss)	32,195	13,654	(7,427)
Finance income	19,685	5,758	3,360
Finance expenses	(10,091)	(17,746)	(18,014)
Financial result	9,594	(11,988)	(14,654)
Share of profit (loss) in joint ventures	(1,057)
Income (loss) before income tax	40,732	1,667	(22,082)
Income tax benefit (expense)	(2,778)	1,924	(5,195)
Net income (loss) for the period	37,954	3,591	(27,277)
Other comprehensive income (loss) that may be reclassified to profit or loss	(1,625)	(503)	130
Exchange differences on translation of foreign business units	(1,625)	(503)	130
Items that will not be subsequently reclassified to profit or loss	18	213	20
Remeasurement of defined pension benefit obligation	25	300	28
Income tax on remeasurement of defined pension benefit obligation	(7)	(88)	(8)
Other comprehensive income (loss)	(1,607)	(290)	150
Total combined comprehensive income (loss) for the reporting period	36,346	3,301	(27,127)
Net income (loss) attributable to
Owners of SCHMID	36,868	1,550	(24,452)
Non-controlling interests	1,086	2,041	(2,825)
Total combined comprehensive income (loss) attributable to
Owners of SCHMID	35,669	1,456	(24,597)
Non-controlling interests	€ 677	€ 1,845	€ (2,530)

XML

Combined Statements of Financial Position - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
ASSETS
Intangible assets	€ 14,966	€ 15,828
Property, plant and equipment including right-of-use	14,767	14,695
Financial assets	140	115
Deferred tax assets	2,543	2,594
Non-current assets	32,416	33,232
Inventories	16,353	25,029
Trade receivables and other receivables	47,032	108,838
Other current assets	5,073	4,815
Cash and cash equivalents	5,710	8,332
Current assets	74,166	147,014
Total assets	106,582	180,247
EQUITY AND LIABILITIES
Owner's net investment	70,606	70,479
Other reserves	(95,806)	(131,474)
Equity attributable to owners of SCHMID	(25,198)	(60,996)
Non-controlling interest	7,358	6,681
Equity	(17,841)	(54,315)
Non-current financial liabilities	22,190	34,406
Provisions for pensions	894	887
Non-current provisions	237	330
Deferred tax liabilities	4,388	2,504
Non-current lease liability	9,371	841
Non-current liabilities	37,081	38,968
Current financial liabilities	26,053	128,454
Current contract liabilities	17,931	30,569
Trade payables and other liabilities	25,899	25,400
Other current liabilities	13,113	8,706
Current lease liability	1,515	491
Current provisions	973	360
Income tax liabilities	1,858	1,615
Current liabilities	87,343	195,594
Total equity and liabilities	€ 106,582	€ 180,247

XML

Combined Statements of Changes in Equity - EUR (€) € in Thousands	Equity attributable to owners of SCHMID	Owner's net investment	Accumulated loss	Accumulated other comprehensive income (loss)	Non-controlling interest	Total
Beginning balance at Dec. 31, 2020	€ (75,129)	€ 33,204	€ (108,333)		€ (287)	€ (75,417)
Income (loss) for the period	(24,452)		(24,452)		(2,825)	(27,277)
Other comprehensive income (loss)	(145)			€ (145)	295	150
Total comprehensive income (loss)	(24,597)		(24,452)	(145)	(2,530)	(27,127)
Capital increase minority shareholder	22,776	22,776			7,653	30,429
Transactions with shareholder	13,100	13,100				13,100
Ending balance at Dec. 31, 2021	(63,851)	69,080	(132,785)	(145)	4,836	(59,015)
Income (loss) for the period	1,550		1,550		2,041	3,591
Other comprehensive income (loss)	(94)			(94)	(196)	(290)
Total comprehensive income (loss)	1,456		1,550	(94)	1,845	3,301
Transactions with shareholder	1,974	1,974				1,974
Ending balance at Dec. 31, 2022	(60,996)	70,479	(131,235)	(239)	6,681	(54,315)
Income (loss) for the period	36,868		36,868		1,086	37,954
Other comprehensive income (loss)	(1,199)			(1,199)	(409)	(1,607)
Total comprehensive income (loss)	35,669		36,868	(1,199)	677	36,346
Transactions with shareholder	128	128				128
Ending balance at Dec. 31, 2023	€ (25,198)	€ 70,606	€ (94,367)	€ (1,438)	€ 7,358	€ (17,841)

XML

Combined Statements of Cash Flows - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Combined Statements of Cash Flows
Net income (loss) from continued operations	€ 37,954	€ 3,591	€ (27,277)
Adjustments to reconcile condensed net profit (loss) to net cash
Income tax expense (benefit)	2,778	(1,924)	5,195
Financial result	(8,537)	11,988	14,654
Depreciation and amortization	6,904	6,283	4,893
Net losses from the disposal of intangibles and PP&E	(602)	228	785
Reversal of impairments of financial assets, net	(22,696)	(3,091)	(3,333)
Other non-cash expenses	182	370	(2,541)
Working capital adjustments:
Changes in trade and other receivables	(6,729)	(16,610)	7,698
Changes in inventories	8,244	(5,821)	(6,678)
Change in working capital liabilities	(6,823)	5,674	(3,706)
Change in provisions	382	(408)	23
Taxes paid	(1,161)
Cash provided by (used in) operating activities	9,897	280	(10,285)
Purchases of intangible assets and property, plant and equipment	(6,907)	(4,616)	(5,040)
Receipts from sale and leasback transaction	8,926
Investments in financial assets			(89)
Payment for loan to shareholder		(2,552)	(2,408)
Repayment of loan to shareholder	70,000
Cash used in investing activities	72,019	(7,168)	(7,537)
Proceeds from debt financing		4,895
Proceeds from debt financing		4,100	55
Payments for debt financing	(81,871)	(5,880)	(1,911)
Proceeds from equity contributions by minority shareholders			30,429
Proceeds from shareholder loans		795	2,782
Payment of lease liabilities	(819)	(609)	(451)
Interest paid	(1,941)	(1,708)	(799)
Transaction with shareholder			5,298
Decrease in restricted cash	917	137	270
Cash (used in) provided by financing activities	(83,714)	(3,165)	35,674
Net increase (decrease) in cash and cash equivalents	(1,798)	(10,053)	17,852
Effect of foreign exchange rate changes on cash and cash equivalents	(824)
Cash and cash equivalents at the beginning of the period	8,332	18,384	533
Cash and cash equivalents at the end of the period	€ 5,710	€ 8,332	€ 18,384

XML

BUSINESS DESCRIPTION

12 Months Ended

Dec. 31, 2023

BUSINESS DESCRIPTION

BUSINESS DESCRIPTION

1.BUSINESS DESCRIPTION

Gebr. SCHMID GmbH (“the Company” or “SCHMID”) is a global supplier of equipment and services for various industries such as printed circuit boards (“PCB”), substrate manufacturing, photovoltaics, and glass and energy storage with a focus on the highest end of this market in terms of technology and developing performance including automation, wet processes (horizontal, vertical and single panel) and vacuum processes. This includes production techniques and building machines as well as extensive work with customers on development projects. SCHMID is also providing customer service through which customers are assisted with upgrades, spare parts, logistics, customer training in multiple languages, on-site management, maintenance contracts and project management.

SCHMID located in Freudenstadt, Germany, was founded in 1864. SCHMID employs over 700 employees worldwide. Manufacturing sites are located in Germany and China. SCHMID products are distributed worldwide by the SCHMID companies directly and by external trading partners. The customers of SCHMID include well-known companies from the hardware and software sector, the electronics industry and the solar and photovoltaic industry, which are located worldwide.

Research and development is a crucial factor for SCHMID’s business success. The majority of research work and the development of SCHMID technologies are conducted in Freundenstadt.

On May 31, 2023, Pegasus Digital Mobility Acquisition Corp., a Cayman Islands exempted company (“Pegasus”), entered into a Business Combination Agreement (the “Business Combination Agreement”), by and among Pegasus ,Gebr. SCHMID GmbH, Pegasus Topco B.V., a Dutch private limited liability company and wholly-owned entity of Pegasus (“TopCo”) and Pegasus MergerSub Corp., a Cayman Islands exempted company and wholly-owned entity of TopCo (“Merger Sub”). On April 30, 2024 TopCo was converted into a Dutch public limited liability company and renamed SCHMID Group N.V. concurrent with the closing of the Business Combination. The Company is presenting combined financial statements including Gebr. SCHMID GmbH and certain entities subject to the Business Combination Agreement. Historically, the reporting entity including the legal entities, which are disclosed in note 2. Basis of Presentation, has not prepared consolidated financial information. All such entities were under common control of Gebr. SCHMID GmbH for all periods presented, except for two joint ventures which are accounted for using the equity method. As described in footnote 35. Related Party Disclosures, Gebr. Schmid GmbH is jointly controlled by Christian Schmid and Anette Schmid.

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BASIS OF PREPARATION

12 Months Ended

Dec. 31, 2023

BASIS OF PREPARATION

BASIS OF PREPARATION

2.BASIS OF PRESENTATION

The financial statements as of and for the years ended December 31, 2023 and 2022 have been prepared on a combined basis.

These combined financial statements have been prepared on a going concern basis in conformity with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

The basis of preparation and presentation is aimed at providing users with the most relevant and useful financial information about the reporting entity and by considering the objectives of financial reporting as defined and contemplated by the IASB’s Conceptual Framework and IAS 1, Financial Statements Presentation.

The legal entities which comprise the combined financial statements and its certain investments in joint ventures accounted for using the equity method are as follows:

	Country of	Ownership Interest
Name	incorporation	12/31/2023		12/31/2022
Gebr. Schmid GmbH	Germany	100	%	100	%
SCHMID Systems, Inc.	USA	100	%	100	%
SCHMID Singapore Pte. Ltd.	Singapore	90	%	90	%
SCHMID Korea Co., Ltd	South Korea	100	%	100	%
SCHMID Asia Ltd.	Hong Kong	100	%	100	%
SCHMID Technology Guangdong Co., Ltd.	China	76	%	76	%
SCHMID China Ltd.	Hong Kong	100	%	100	%
SCHMID Shenzhen Ltd.	China	100	%	100	%
SCHMID (Kunshan) Co., Ltd.	China	100	%	100	%
SCHMID Taiwan Ltd.	Taiwan	86	%	86	%
SCHMID Automation (Zhuhai) Co., Ltd.	China	100	%	100	%
SCHMID Solar (Shenzhen) Ltd.	China	100	%	100	%
SCHMID Trading (Zhongshan) Co. Ltd.	China	100	%	—	%
Joint ventures
Advanced Energy Storage Systems Investment Company	Saudi Arabia	51	%	51	%
SCHMID Avaco Korea, Co. Ltd.	South Korea	50	%	50	%

SCHMID presents its combined financial statements in Euros which is the Company’s presentation currency.

All amounts are presented in thousands of Euros (“€ thousand”), unless otherwise stated. Due to rounding, numbers presented may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

The combined financial statements of SCHMID were authorized for issuance by the management board on May 15, 2024.

Intra-reporting entity transactions and balances

Intra-SCHMID balances and transactions, and any unrealized income and expenses (except for foreign currency transaction gains or losses) arising from intra-SCHMID transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of SCHMID’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

The legal entities comprising the reporting entity historically have been recognizing overhead costs in their books and records. There have not been any other corporate functions outside of these group of legal entities providing central services. As such no additional allocations of expenses were necessary during the preparation of these combined financial statements.

Foreign Currency

The combined financial statements are presented in Euro. The Company’s foreign entities identified that the local currency is their functional currency and therefore the financial statements of these entities are translated to Euro using year-end exchange rates for assets and liabilities, and average exchange rates for income and expenses. Adjustments resulting from translating foreign functional currency financial statements into Euro are recorded as a separate component in the combined statements of comprehensive income.

Monetary assets and liabilities that are denominated in currencies other than the respective functional currencies are remeasured at the foreign currency rates as of the reporting date. Foreign currency transaction gains and losses from the remeasurement are included in other income and other expenses, as appropriate, in the combined statements of profit and loss for the period.

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MATERIAL ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2023

MATERIAL ACCOUNTING POLICIES

MATERIAL ACCOUNTING POLICIES

3.MATERIAL ACCOUNTING POLICIES

Business combination

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

● fair values of the assets transferred

● liabilities incurred to the former owners of the acquired business

● equity interests issued by the group, and

● fair value of any asset or liability resulting from a contingent consideration arrangement,

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Company recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred.

The excess of the:

● consideration transferred

● amount of any non-controlling interest in the acquired entity, and

● acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss.

Intangible assets

General

Intangible assets are measured at cost upon initial recognition. In subsequent periods, intangible assets are recognized at cost less any accumulated amortization and impairment losses. Intangible assets with finite useful lives are amortized on a straight-line basis. The estimated (remaining) useful lives as well as the amortization method are subject to annual reviews. If necessary, adjustments due to changes of the expected useful life or of the amortization method are accounted for prospectively as changes in accounting estimates. Amortization expenses for intangible assets are included in cost of sales.

Research and development (R&D) costs

In accordance with IAS 38 (Intangible Assets), expenses incurred during the R&D phase must be accounted for separately. Research is defined as original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. Such costs are expensed in the period incurred. Development is defined as the technical and commercial implementation of research findings.

In accordance with IAS 38, development costs must be capitalized if the criteria set out in IAS 38.57 are fulfilled. The Company starts to capitalize costs when management board approval is obtained. The approval is only provided when it is ensured that adequate technical, financial and other resources are available to complete the project and that the Company intends to complete and use the intangible asset. Furthermore, prior to approval, the development project leader provides the management board with an overview of the future economic benefits based on external market studies and internal analysis, as well as the documentation of technical feasibility. The Company has an R&D controlling system in place which enables management to determine expenditures attributable to specific technologies during their development.

The Company capitalizes costs for the development of a technology until the time that development of such technology is completed. The capitalized development costs are amortized on a straight-line basis over the economic useful life of 4–10 years based on the expected useful life of such technology. Amortization of capitalized development costs commences upon completion of the development project (technology).

Intangible assets with indefinite useful lives or intangible assets not yet available for use are not amortized; however, they are tested for impairment annually and whenever there is an indication that the intangible asset may be impaired based on the individual asset or on the level of the related cash-generating unit.

Patents and licenses

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated straight-line amortization and accumulated impairment losses. The useful life for patents and licenses is 5–8 years.

Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time (> 12 months) to get ready for their intended use or sale. Other borrowing costs are expensed in the period in which they are incurred.

Impairment tests

At the end of each reporting period, SCHMID assesses whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, SCHMID estimates the asset’s recoverable amount. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. An asset’s recoverable amount is the higher of an asset’s or cash generating unit (“CGU”)’s fair value less costs of disposal and its value in use. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

Property, Plant and Equipment

Property, plant and equipment are measured at cost, net of accumulated depreciation and any accumulated impairment losses. Costs of construction capitalized include all attributable direct costs including material and production overheads, and, where applicable, an initial estimate of the cost of dismantling and removing the item and restoring the site on which it is located.

Subsequent expenditures on assets are capitalized only when it is probable that future economic benefits associated with the expenditure will flow to SCHMID. Repairs and maintenance are expensed in profit or loss in the period the costs are incurred.

If items of property, plant and equipment are sold or disposed of, the gain or loss arising from the disposal is recognized as other operating income or expense in the combined statement of profit or loss and other comprehensive income (loss).

Depreciation is calculated on a straight-line basis based on the following useful lives:

	Useful life
Buildings and building improvements	10 - 50 years
Technical equipment and machinery	2 - 21 years
Office and other equipment	3 - 13 years

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Leases

SCHMID’s lease obligations primarily relate to rights to buildings mainly for its office, R&D and production premises as well as to leased vehicles. As lease contracts are negotiated on an individual basis, lease terms contain a range of different terms and conditions. Lease contracts are typically entered for a period of 1–10 years.

As a lessee, at the inception of a contract, SCHMID assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration.

SCHMID recognizes right of use assets which represent a right to use the underlying leased assets and corresponding lease liabilities which represent the present value of future lease payments, excluding short-term leases (lease term of 12 months or less from commencement date and do not contain a purchase options) and leases of low value assets acquisition costs less than €6 thousand), in the combined statement of financial position at the date at which the leased asset is available for use.

Liabilities arising from a lease are initially measured at present value of lease payments discounted using interest rate implicit in the lease or incremental borrowing rate in case interest rate implicit in the lease is not readily determinable.

Main components of the lease payments included in the measurement of the lease liability comprise the following:

● fixed lease payments;

● variable lease payments that depend on an index or rate, initially measured using the index or rate as at the commencement date;

● lease payments in an optional renewal period if SCHMID is reasonably certain to exercise an extension option;

● non-lease components are not separated from lease components but accounted for as a single lease components.

Lease payments contain principal elements and interest. Interest is presented as part of finance costs in the combined statements of profit and loss and other comprehensive income using the effective interest method. Principal and interest portion of lease payments have been presented within financing activities in the statement of cash flow. The carrying amount of lease liabilities is remeasured if there is change in the future lease payments due to change in index or rate.

Right of use assets at the lease commencement date are measured at cost less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities recognized. Cost of right of use assets includes lease liabilities, initial direct costs, prepayments made on or before the commencement date and less any lease incentives received. The right of use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to SCHMID by the end of the lease term or the cost of the right of use asset reflects that SCHMID will exercise a purchase option. In that case the right of use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. The right of use asset is assessed for impairment in case of a triggering event.

Assets related to retirement obligations for leased buildings are included in the cost of right of use assets for the respective underlying building lease.

If SCHMID acts as a lessor and the contract is classified as a finance lease, it is accounted for as a financing transaction. A receivable is valued at the amount of the net investment in the lease and the resulting interest income is recognized as income. The classification of a contract as an operating lease with SCHMID acting as the lessor means that the asset remains on SCHMID`s balance sheet. The income from it is recognized in the income statement over the term of the lease. The asset is amortized in accordance with the applicable IFRS standard, if necessary.

Sale and Leaseback Transaction

When SCHMID sells its assets and leases them back, it needs to be determined whether the sales part of the transaction qualifies as a true sale according to IFRS 15. If the transfer of an asset does not meet the requirements of IFRS 15 to be recognized as a sale, the asset remains on the balance sheet, and a financial liability is recognized equal to the transfer proceeds in accordance with IFRS 9.

In the case of a qualified sale, SCHMID measures the right of use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained. Consequently, SCHMID only recognizes any gain or loss that pertains to the rights transferred to the buyer-lessor.

If the amount received for selling an asset is not the same as the value of the asset, or if the lease payments are not in line with market rates, SCHMID will make adjustments to ensure that the sale proceeds are measured at a fair value. If the lease terms are below market rates, the difference will be treated as a prepayment of future lease payments. Conversely, if the lease terms are above market rates, the excess amount will be considered as additional financing provided by the buyer-lessor to the seller-lessee (IFRS 16.101).

Cash and Cash Equivalents

Cash and cash equivalents in the statement of financial position and statement of cash flows comprise cash at banks and short-term highly liquid deposits with original maturities of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.

Financial Instruments

Financial instruments are contracts that give rise to a financial asset for one entity and to a financial liability or equity instrument for another entity. SCHMID recognizes a financial instrument when it becomes a party to its contractual provisions. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the settlement date.

Financial assets and financial liabilities are offset, and the net amount is reported in the combined statement of financial position if there is a currently enforceable legal right to set off the recognized amounts and there is an intention to settle on a net basis or to realize the assets and settle the liabilities simultaneously. SCHMID currently has no such assets and liabilities.

Financial assets

SCHMID’s financial assets include cash and cash equivalents, trade and other receivables as well as other financial assets. Other financial assets consist of a loan to one shareholder and other loans.

Financial assets are initially measured at fair value plus, in the case of a financial asset not measured at fair value through profit or loss, transaction costs. As an exception of this general rule, trade receivables are measured at their transaction price.

Financial assets are classified at initial recognition as either measured at amortized cost (“AC”), fair value through other comprehensive income (“FVOCI”), or fair value through profit or loss (“FVTPL”) depending on the contractual cash flows and SCHMID’s business model for managing them. For all financial assets SCHMID has the objective to hold financial assets in order to collect the contractual cash flows. If the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, SCHMID will measure these financial assets at amortized cost under consideration of impairment (see following section). If the contractually agreed cash flows of a financial asset are not solely payments of principal and interest on principal amount outstanding, the respective financial asset has to be classified as measured at FVTPL. Currently all financial assets are measured at amortized cost that are determined by applying the effective interest rate (EIR) method. Effects resulting from impairment of financial assets that are not classified as FVTPL (including reversals of impairment losses on financial assets) are presented in a separate line item in profit or loss in accordance with IAS 1.82(ba), while changes in amortized cost due to the application of the EIR method are presented in finance income / expense.

A financial asset is derecognized (i.e., removed from SCHMID’s combined statement of financial position) when the rights to receive cash flows from the financial asset have expired or have been transferred and SCHMID has transferred substantially all risks and rewards of ownership.

Impairment of financial assets – expected credit losses (“ECLs”)

All financial assets subsequently measured at amortized cost are required to be impaired at initial recognition in the amount of their expected credit loss (“ECL”). ECLs are based on the difference between the cash flows due in accordance with the contract and all the cash flows that SCHMID expects to receive. ECLs are a probability-weighted estimate of credit losses.

For trade receivables with no significant financing component SCHMID applies the simplified approach as required by IFRS 9, which requires lifetime ECLs to be recognized from initial recognition of the receivables instead of monitoring the development of the customers’ credit risk. As a result, trade receivables are clustered into stage 2. In case of objective evidence of impairment, trade receivables have to be clustered into stage 3. The ECL for the uninsured proportion of the trade receivables is based on the probability of default of its customers provided by an external source.

For cash and cash equivalents advantage is taken of the simplification available for financial instruments with a low credit risk (“low credit risk exemption”) as of the reporting date. Factors that can contribute to a low credit risk assessment are debtor-specific rating information and related outlooks. The requirement for classification with a low credit risk is regarded to be fulfilled for counterparties that have at least an investment grade rating; in this case there is no need to monitor credit risks for financial instruments with a low credit risk. The default probabilities applied to determine the expected credit losses for cash and cash equivalents are based on credit default swap spreads that are quoted on markets, which take future-oriented macroeconomic data into account.

For the other financial assets, primarily the loan granted to one of SCHMID’s shareholder, the low credit risk exemption is not applied. Instead, it was considered credit-impaired as there was no repayment. The loan was repaid during 2023. For the determination of the ECL allowance the term-specific rating-based probability of default rates and historical recovery rates were applied.

In general, SCHMID defines a default event as a situation in which the debt is no longer recoverable. If the financial instrument is perceived to be unrecoverable, then the expectation is that future contractual cash flows will not occur. At this point in time, the balance is written off after giving consideration to any possible security that is available.

Financial liabilities

SCHMID’s financial liabilities include trade payables and other liabilities, lease liabilities (see note 20. Leases), a share option and borrowings. Borrowings consist of loans from financial institutions and other third parties, debt funds and related parties (including bifurcated embedded derivatives).

Financial liabilities are classified as measured at amortized cost ("FLAC") or fair value through profit or loss (“FVTPL”). All financial liabilities are recognized initially at fair value less, in the case of a financial liability not measured at FVTPL, directly attributable transaction costs.

Financial liabilities at FVTPL are measured at fair value and gains and losses are recognized in finance income / expense. Currently, SCHMID only accounts for a share option as well as separated embedded derivatives of loans as a financial liability at FVTPL. All other financial liabilities are subsequently measured at amortized cost using the Effective Interest (“EIR”) method. When applying the EIR method, SCHMID generally amortizes any fees, transaction costs and other premiums or discounts that are included in the calculation of the effective interest rate over the expected life of the financial instrument. Gains and losses are recognized in interest expense when the liabilities are derecognized as well as through the EIR amortization process. If SCHMID revises its estimates of the cash flows used for the initial EIR method of a financial liability, the carrying amount of the financial liability is being adjusted to reflect that fact.

An embedded derivative in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. The assessment whether to separate an embedded derivative is done only once at initial recognition of the hybrid contract. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows. If there are multiple embedded derivatives in a single hybrid contract that share the same risk exposure and are interdependent, they have to be treated as a combined embedded derivative. The (combined) embedded derivative is measured at fair value with changes in fair value recognized in profit or loss. The remaining host contract is measured at amortized cost.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The resulting gain or loss is recognized in the Combined Statements of Profit or Loss and Other Comprehensive Income (Loss).

Income Taxes

Current income taxes

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. This includes liabilities and/or receivables for the current period as well as for prior periods. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the reporting entity SCHMID operates and generates taxable income.

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred taxes

SCHMID uses the liability method of accounting for income taxes. Deferred income tax assets and liabilities represent temporary differences between the carrying amounts of assets and liabilities in the combined financial statements and their corresponding tax basis used in the computation of taxable income. Deferred tax however is not recognized on the initial recognition of goodwill, or the initial recognition of an asset or liability (other than in a business combination) in a transaction that affects neither tax nor accounting income.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and any unused tax losses to the extent it is probable that taxable profit will be available against which the deductible temporary differences, the carry forward of unused tax credits and the unused tax losses can be utilized.

Deferred tax liabilities are recognized for all taxable temporary differences associated with investments in entities and associates, except where SCHMID is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the asset is realized, or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax liabilities and assets are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and SCHMID intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax items are recognized similar to the underlying transaction either in profit or loss, other comprehensive income or directly in equity. Changes in deferred tax assets or liabilities are recognized as a component of tax expense (income) in the combined statement of profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

Deferred tax assets and deferred tax liabilities are not discounted and are always classified as non-current asset or liabilities in the balance-sheet.

SCHMID’s business activities are complex, and the related domestic and foreign tax interpretations, regulations, laws and case law are constantly changing. These issues can lead to uncertain tax positions. In accordance with IFRIC 23, uncertain tax positions are accounted for if it is probable that the tax authorities will not accept the income tax treatment applied. The better forecast of the "most likely amount" and the "expected value" has to be recognized.

Provisions

Provisions are recognized when SCHMID has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Fair Values of Assets and Liabilities

Fair value is a market-based measurement. For some assets and liabilities, observable market transactions or market information is available. For other assets and liabilities, observable market transactions or market information might not be available. When a price for an identical asset or liability is not observable, another valuation technique is used. To increase consistency and comparability in fair value measurements, there are three levels of the fair value hierarchy:

● Level 1: contains the use of unadjusted quoted prices in active markets for identical assets or liabilities

● Level 2: inputs are other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly

● Level 3: inputs are based on unobservable market data

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

SCHMID recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Pension benefits

SCHMID operates one defined benefit pension plan relating to one person. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. The defined benefit obligation is recognized within non-current provisions for pensions.

Remeasurements, comprising of actuarial gains and losses, are recognized immediately in the statement of financial position with a corresponding debit or credit in Other comprehensive income ("OCI") in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Net interest is calculated by applying the discount rate to the net defined benefit liability. SCHMID recognizes the changes in the net defined benefit obligation under OCI.

Revenue Recognition

The Company records revenue in accordance with IFRS 15 “Revenue from Contracts with Customers". The core principle of the guidance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. This guidance defines a five-step process to achieve this core principle and, in doing so, judgment and estimates are required within the revenue recognition process including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Revenue amounts are presented net of discounts.

Revenue from sales of machines and spare parts is recognized when the customer obtains control over the products sold upon delivery. Sales of machines sometimes include installation services and extended warranty services which, when requested, are priced as a bundle. However, when sold together, these promises qualify as separate performance obligations as they are capable of being distinct and distinct within the context of the contract. The Company allocates transaction prices to these performance obligations based on their relative standalone selling price using a cost-plus margin approach. The respective revenue is recognized after the installation is complete, which is usually after a period of two to three weeks. When selling machines, customers payments are typically divided into an advanced payment on receipt of order confirmation, an advance payment upon delivery and, when installation services are requested, a final payment after installation and customer acceptance of the services. Invoices are according to contractual terms typically payable within 30 – 90 days. Revenue from the sale of extended warranties is recognized overtime on a straight-line basis over the extended warranty period as there is no certain pattern of warranty cases over time and therefore, the benefit to the customer transfers ratably throughout the extension period.

The Company offers repair services, inspections and installations of modifications (“Services”), which are optional for customers and priced separately. When these promises are included in a contract with others, the Company considers these to be distinct performance obligations and allocates transaction prices based on their relative standalone selling price. Service revenue is recognized after the Company has satisfied the performance obligation by transferring the promised service to the customer which is usually not more than a period of two to three weeks. Services are invoiced after the service has been rendered and according to contractual terms and are typically payable within 30 days.

Certain of the Company’s contracts include the provision of development services over an extended period of up to three years (long-term development contracts). The Company develops machinery according to specific requirements provided by the Customer in exchange for nonrefundable consideration provided at fixed points throughout the contract and additional consideration based on the achievement of milestones.

In case of these long-term development contracts, revenue is recognized over time as these contracts meet the criteria of IFRS 15.35. Revenue resulting from fixed payments that the Company receives — which is not connected to certainly defined results — is recognized on a straight-line basis over the term of the contract as the Company efforts and inputs needed are expected to be relatively consistent overtime. Moreover, the Company receives variable consideration at the completion of certain milestones. Due to the high degree of uncertainty with respect to such payments, these are not included in the transaction price recognized overtime and instead are recorded as revenue upon completion of the relevant milestone. If the advance payments invoiced/received exceed the services already provided, the overpayment will be recognized and disclosed under contract liabilities. A contract asset is recognized if the services rendered exceed the advance payments invoiced/received. If the right to consideration is unconditional, a contract asset becomes a trade receivable. This is the case if the due date of the consideration is only dependent on the passage of time. Impairment of contract assets is measured, recognized and disclosed on the same basis as for financial assets within the scope of IFRS 9. SCHMID applies industry-standard payment terms when invoicing.

Inventories

SCHMID capitalizes and measures existing inventory at the lower of cost or net realizable value. The average cost method is used as the measurement standard for acquisition and production costs. The production costs include not only the direct unit costs but also an appropriate share of material and production overheads. Where necessary, impairments to reflect lower net realizable values as well as other inventory risks are recorded. An impairment loss is reversed, if the reasons for the write-down in the past no longer exist.

Government Grants

The Company has received various government grants related to innovation projects encouraged by governmental authorities which generally reimburse a specified amount or proportion of the costs related to such projects. As these grants are not received in the course of the normal trading transactions, these grants are treated as government grants in accordance with IAS 20. Government grants related to assets are recognized on the date on which the conditions for receipt of the grant are met and are deducted from the carrying amount of the asset; they are recognized in profit or loss over the life of a depreciable asset as a reduced depreciation expense.

Government grants related to costs incurred by SCHMID are recognized in profit or loss as other operating income in the period in which the Company recognizes as expenses the related costs to be compensated by the grants.

Joint Arrangements

Under IFRS 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. SCHMID only has investments in joint ventures. These are accounted for using the equity method, after initially being recognized at cost in the combined balance sheet.

Under the equity method of accounting, the investments are initially recognized at cost and adjusted thereafter to recognize SCHMID’s share of the post-acquisition profits or losses of the investee in profit or loss, and SCHMID’s share of movements in other comprehensive income of the investee in other comprehensive income. Where SCHMID’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, SCHMID does not recognize further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealized gains on transactions between SCHMID and its associates and joint ventures are eliminated to the extent of SCHMID’s interest in these entities. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by SCHMID.

The carrying amount of equity-accounted investments are tested for impairment in accordance with the policy described above.

New and amended standards adopted by SCHMID

The Company has applied the following standards and amendments for the first time for its annual reporting period commencing 1 January 2023:

● IFRS 17 Insurance Contracts

● Definition of Accounting Estimates – amendments to IAS 8

● International Tax Reform – Pillar Two Model Rules – amendments to IAS 12

● Deferred Tax related to Assets and Liabilities arising from a Single Transaction – amendments to IAS 12

● Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

New Standards and Interpretations not yet adopted by SCHMID

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning on or after January 1, 2023 and have not been applied in preparing these combined financial statements. None of these standards are expected to have a significant effect on the combined financial statements of SCHMID.

Standard	Effective date
Amendment to IFRS 16 – Leases on sale and leaseback	1/1/2024
Amendments to IAS 1:
- Classification of liabilities as current or non-current
- Non-current liabilities with covenants	1/1/2024
Amendment to IAS 7 and IFRS 7 – Supplier finance	1/1/2024
Amendment to IAS 21 – Lack of Exchangeability	1/1/2025

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SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

12 Months Ended

Dec. 31, 2023

SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

4.SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of SCHMID’s combined financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts. 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 period 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.

Accounting Judgments

R&D Costs

The area of R&D is of crucial importance for the sustainable and long-term success of SCHMID. For each project, management assesses whether the capitalization criteria for an internally generated intangible asset is fulfilled. Especially the distinction between research and development phase includes accounting judgement by the management.

Leasing

In the area of leasing, judgment is required when assessing renewal options. Especially if the options have to be executed over several years. The development of the business, the market and the macroeconomic situation are taken into account by management.

Sale and Leaseback

In evaluating a sale and leaseback transaction, the initial step is to verify if a sale has occurred according to the definition provided by IFRS 15. Accounting judgment is applied by management when reviewing the transfer of control.

Accounting Estimates

Impairment test

An impairment test on R&D costs capitalized on assets that are not yet ready for use is performed at each reporting date. For detailed information on key assumptions underlying recoverable amounts please refer to note 18. Intangible Assets.

Inventories

Inventories are recognized at the lower of historical cost and net realizable value. Net realizable value is the estimated selling price less estimated costs of completion and estimated costs necessary to finalize the sale. Reserves for inventories, e.g. slow moving items are calculated based on experience in the past. Management estimates are used in determining the expected selling price as well as estimations about slow moving items.

Deferred tax assets

Deferred tax assets are recognized if sufficient future taxable profit is available, including income from forecasted operating earnings and the reversal of existing taxable temporary differences. At each period-end, management evaluates the recoverability of deferred tax assets. As future developments are uncertain and partly beyond management’s control, assumptions are necessary to estimate future taxable profits as well as the period in which deferred tax assets will be recovered. Estimates are revised in the period in which there is sufficient evidence to revise assumptions.

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SIGNIFICANT EVENTS IN THE PERIOD ENDED DECEMBER 31, 2023

12 Months Ended

Dec. 31, 2023

SIGNIFICANT EVENTS IN THE PERIOD ENDED DECEMBER 31, 2023

SIGNIFICANT EVENTS IN THE PERIOD ENDED DECEMBER 31, 2023

5.SIGNIFICANT EVENTS IN THE PERIOD ENDED DECEMBER 31, 2023

Transactions related to the sale of Schmid Silicon Technology Group

In March 2023, a Stock Purchase Agreement (hereinafter referred to as "SPA") was entered into to sell Schmid Silicon Technology Holding GmbH and subsidiaries (hereinafter referred to as "the Silicon Group") to the Group 14 Technologies Group (hereinafter referred to as "G14"). Prior to the closing of the SPA on June 29, 2023, the Silicon Group was a related party of SCHMID and controlled by Christian Schmid (hereinafter referred to as "CS"), one of the owners of SCHMID. The proceeds from the sale of the Silicon Group were, among other things, used to repay the shareholder loan between CS and SCHMID. The proceeds from the shareholder loan were used to repay certain borrowings of SCHMID.

(a) Additionally, receivables from the Silicon Group which had been impaired in 2017 by SCHMID became recoverable as a result of the SPA resulting in an impairment reversal of €21,375 thousand.

(b) Also, as part of the SPA, certain liabilities of the Silicon Group due to SCHMID were settled with the transfer of shares of G14 to SCHMID valued at €17,664 thousand.

(c) Based on an agreement reached between CS, the Silicon Group and SCHMID in 2021, SCHMID was granted a bonus payment (hereinafter referred to as “Silicon exit bonus”) to be paid upon a successful sale of the Silicon Group to a third party. The Silicon exit bonus of €4,700 thousand was determined based on 5% of the net proceeds (after repayment of third party debt) received from a sale.

(d) In June 2023, CS repaid the shareholder loan to SCHMID with a total cash amount of €70,000 thousand.

(e) The expected credit loss of €1,418 thousand was therefore reversed.

Debt funds

During the year ended December 31, 2023, SCHMID signed agreements with both of the debt funds to repay the loans during 2023.

(f) The parties have agreed to modify certain terms of the loan, including amount and nature of repayments and interest rates resulting in loan extinguishment gains of €15,852 thousand. The extinguishment gains have been recorded in finance income.

(g) In addition, SCHMID and one of debt funds have agreed upon an additional payment of € 2,800 thousand to be paid by the Company, which resulted in finance expense at the same amount.

(h) One of the two loans was repaid in cash in June 2023.

(i) The second loan was repaid in September 2023 by transferring G14 shares amounting to €17,664 thousand to the debt fund by SCHMID. In addition, Schmid Verwaltungs GmbH transferred G14 shares to the debt fund to settle the complete loan liability of SCHMID. Schmid Verwaltungs GmbH (related party to SCHMID), by transferring G14 shares, repaid a loan receivable  from SCHMID towards Schmid Verwaltungs GmbH.

The following table shows the significant impacts of the transactions described above on the financial statements as of and for the year ended December 31, 2023:

			Shareholder		Receivable
	Silicon		receivable		Silicon exit		Group14		Debt
in € thousand	receivables		CS		bonus		shares		funds
01/01/2023	—		65,589		—		—		(104,166)
Other income	—				4,700	(c)	—		—
Reversal of impairment	21,375	(a)	1,418	(e)	—		—		—
Finance income	—		3,173		—		—		15,852	(f)
Finance expense	—		—		—		—		(4,302)
Cash payments	—		(70,000)	(d)	—		—		70,000	(h)
Non-cash settlement of receivables	(17,664)	(b)	—		—		17,664		—
Non-cash settlement of loans	(2,800)	(g)	—		—		(17,664)	(i)	22,616
Other	(911)		(73)		—		—		—
12/31/2023	—		107		4,700		—		—

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SEGMENT AND GEOGRAPHIC INFORMATION

12 Months Ended

Dec. 31, 2023

SEGMENT AND GEOGRAPHIC INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

6.SEGMENT AND GEOGRAPHIC INFORMATION

In accordance with IFRS 8, Operating Segments, the Company’s operating segments are based on the management approach. Accordingly, segments must be classified and disclosed based on the criteria used internally by the chief operating decision maker (CODM) for the allocation of resources and the evaluation of performance of the components of SCHMID. The Chief Executive Officer, who allocates resources and evaluates segment performance based on the reports regularly submitted to him is the CODM.

During the first half of 2023, in connection with the planned Business Combination transaction, management established a new management reporting and governance structure. The segment reporting of the historical combined financial statements as of and for the years ended December 31, 2023, 2022 and 2021 reflects the current management reporting structure.

As the CODM examines the Company’s performance from a product perspective and has therefore identified two operating segments:

(1) Technical equipment and processes includes mainly the sale of machines including installation and extended warranties.

(2) Spare parts and services includes the sale of spare parts as well as services including repairs, modifications of machines and inspections.

The operating segments are also the reporting segments of the Company.

The performance of the operating segments is measured on the basis of revenue and segment adjusted EBITDA, as measured for management reporting purposes. The measure is defined as net profit (loss) calculated in accordance with IFRS before financial result, including result from at equity investments, taxes, depreciation and amortization.

Assets are neither allocated to the operating segments nor regularly provided to the CODM.

SCHMID’s key financial metrics by segment are as follows:

	2023
	Technical			Total
	equipment	Spare parts		management
in € thousand	and processes	and services	Other	reporting
Revenues	78,743	11,503	—	90,246
Segment adjusted EBITDA	12,872	3,787	22,440	39,099

	2022
	Technical			Total
	equipment	Spare parts		management
in € thousand	and processes	and services	Other	reporting
Revenues	78,778	16,280	—	95,058
Segment adjusted EBITDA	14,155	9,329	(3,546)	19,937

	2021
	Technical			Total
	equipment	Spare parts		management
in € thousand	and processes	and services	Other	reporting
Revenues	27,587	11,894	—	39,481
Segment adjusted EBITDA	1,868	6,873	(11,276)	(2,534)

The column “Other” includes costs related to head office and group services as well as certain effects not directly attributable to the operating segments. In the financial year ended December 31, 2023 the increase in “Other” is mainly due to the reversal of the impairment of the Silicon receivables (see notes 5. Significant Events in the Period ended December 31, 2023 and 13. Reversal of Impairment of Financial Assets, net) and the gain resulting from bonus payments relating to disposals of several entities (see note 5. Significant Events in the Period ended December 31, 2023 ).

Reconciliation from total segment adjusted EBITDA to income (loss) for the period according to IFRS:

in € thousand	2023	2022	2021
Total segment adjusted EBITDA	39,099	19,937	(2,534)
Financial result	9,594	(11,988)	(14,654)
Amortization and depreciation	(6,904)	(6,283)	(4,893)
Share of profit (loss) in joint ventures	(1,057)	—	—
Income tax benefit (expense)	(2,778)	1,924	(5,195)
Net income (loss) for the period	37,953	3,591	(27,277)

Revenue can be split into the following geographical areas:

in € thousand	2023	2022	2021
China	15,308	39,424	17,652
Taiwan	1,634	12,846	3,814
USA	17,522	11,478	3,375
Germany	9,577	10,743	5,390
Malaysia	16,681	7,915	—
Austria	17,810	3,928	3,793
Other	11,714	8,724	5,457
Total	90,246	95,058	39,481

The revenues are allocated based on the country of the customer receiving the service or goods.

There are three customers in 2023 with a revenue share of more than 10 % individually of the total revenues. The revenue with the first customer amounts to €17,649 thousand (2022: €25,092 thousand, 2021: €9,931 thousand), €16,361 thousand for the second customer (2022: €11,876 thousand, 2021: €— thousand) and €12,280 thousand for the third customer (2022: €— thousand, 2021:€— thousand). Revenue for these three customers is recognized within both the “Technical equipment and processes” and “Spare parts and services” operating segments.

Non-current assets are distributed among geographical areas as follows:

in € thousand	12/31/2023	12/31/2022
Germany	26,853	28,334
China	2,504	1,922
Other	376	266
Total	29,733	30,523

The non-current assets include property, plant and equipment as well as intangible assets.

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REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES

12 Months Ended

Dec. 31, 2023

REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES

REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES

7.REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES

The split of SCHMID revenues according to types of sales categories is as follows:

in € thousand	2023	2022	2021
Machines1	77,554	73,151	25,626
Spare Parts	9,722	14,302	8,081
Service2	1,781	1,978	3,802
Other	1,189	5,627	1,971
Total	90,246	95,058	39,481

(1) Included within the “Machines” category is revenue from the sale and installation of machines, long-term development and extended warranties.

(2) Included within the “Services” category is revenue from repair services, installations of modifications and inspections.

Revenue recognized at a point in time was €81,761 thousand, €89,316 thousand and €36,832 thousand for the fiscal years ended December 31, 2023, 2022 and 2021, respectively. Revenue recognized over time was €8,485 thousand, €5,742 thousand and €2,649 thousand for the fiscal years ended December 31, 2023, 2022 and 2021, respectively.

At the end of fiscal year 2023, SCHMID had contract liabilities in connection with the sale of machines, spare parts and installations resulting from prepayments made by customers of €17,931 (December 31, 2022: €30,569 thousand, December 31, 2021: €25,682 thousand). The decrease in 2023 mainly results from a long-term development contract for which revenue is recognized over time in 2022. The services provided by SCHMID and the timing of payments made by the customer during the contract term may differ. In those cases, the contract is recognized in the Combined Statements of Financial Position as either a contract asset or a contract liability. Apart from contract liabilities in connection with customer prepayments, SCHMID recognizes long-term development contracts over time, which leads to a recognition of contract liabilities.

Changes to contract liabilities for years ended December 31, 2023, 2022 and 2021 are as follows:

in € thousand	2023	2022	2021
Balance at January 1	30,569	25,682	17,378
Sales revenues included in contractual liabilities at the beginning of the period	(30,406)	(25,682)	(17,378)
Increase due to customer payments received	17,769	30,569	25,682
Balance at December 31	17,931	30,569	25,682

At the end of fiscal year 2023, the Order Backlog for the machine sales amounts to €48,651 thousand (December 31, 2022: €79,571 thousand, December 31, 2021: €60,982 thousand). The Order Backlog for spare parts and services amounts to €6,380 thousand (December 31, 2022: €6,535 thousand, December 31, 2021: €7,239 thousand). All Order Backlog is expected to be realized within 1 to 3 years.

Order Backlog represents the goods or services ordered by customers but not delivered/provided as of the date of the statement of financial position.

SCHMID’s cost of sales include the following cost types:

in € thousand	2023	2022	2021
Personnel expenses	(16,690)	(16,221)	(14,094)
Material expenses	(35,767)	(34,274)	(9,519)
Depreciation/amortization	(4,904)	(4,147)	(2,746)
Other expenses	(6,488)	(7,079)	(4,147)
Total cost of sales	(63,849)	(61,721)	(30,506)

Other expenses include a variety of positions such as cost for outward freight, production related short-term leases and facility costs.

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SELLING

12 Months Ended

Dec. 31, 2023

SELLING

SELLING

8.SELLING

Selling expenses consist of the following:

in € thousand	2023	2022	2021
Personnel expenses	(8,295)	(8,017)	(5,535)
Legal and consulting fees	(834)	(873)	(581)
Sales Commission	(241)	(475)	(95)
Distribution related external administration	(1,537)	(582)	(801)
Advertisement	(649)	(428)	(294)
Other expenses	(1,021)	(995)	(545)
Total selling expenses	(12,577)	(11,369)	(7,851)

Distribution-related external administration comprises costs including utilities, insurance, travel expenses or expenses for short-term leases. Other expenses include mainly depreciation.

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GENERAL ADMINISTRATION

12 Months Ended

Dec. 31, 2023

RESEARCH AND DEVELOPMENT EXPENSES

GENERAL ADMINISTRATION

9.GENERAL ADMINISTRATION

General administrative expenses consist of the following:

in € thousand	2023	2022	2021
Personnel expenses	(4,131)	(3,992)	(3,692)
Legal and consulting fees	(4,401)	(1,681)	(1,584)
External administrative expenses	(965)	(692)	(529)
Other administrative expenses	(3,042)	(607)	(493)
Total administrative expenses	(12,538)	(6,973)	(6,298)

External administrative expenses comprises allocated cost such as utilities, insurances, travel expenses or expenses for short-term leases. Other administrative expenses mainly include legal and consulting fees which increased significantly in 2023 due to the planned SPAC transaction.

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RESEARCH AND DEVELOPMENT EXPENSES

12 Months Ended

Dec. 31, 2023

RESEARCH AND DEVELOPMENT EXPENSES

RESEARCH AND DEVELOPMENT EXPENSES

10.RESEARCH AND DEVELOPMENT EXPENSES

R&D expenses that do not fulfill the recognition criteria according to IAS 38 consist of the following:

in € thousand	2023	2022	2021
Personnel expenses	(2,261)	(1,888)	(1,319)
Depreciation/amortization	(877)	(910)	(627)
Legal and consulting fees	(587)	(614)	(422)
R&D related external administration	(906)	(856)	(282)
Other research and development expenses	(517)	(549)	(83)
Total research and development expenses	(5,148)	(4,818)	(2,733)

R&D related administration comprises allocated cost such as utilities, insurance, travel expenses or expenses for short-term leases.

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OTHER INCOME

12 Months Ended

Dec. 31, 2023

OTHER INCOME

OTHER INCOME

11.OTHER INCOME

Other income consists of the following:

in € thousand	2023	2022	2021
Foreign currency gains	2,969	1,503	538
Bonus payments	9,200	—	—
Other miscellaneous income	3,815	1,871	1,387
Total other income	15,985	3,375	1,924

The bonus payments are comprised of the Silicon exit bonus of €4,700 thousand (see note 5. Significant Events in the Period ended December 31, 2023) as well as an exit bonus related to Montratec. In 2018, the Company sold one of its subsidiaries, Montratec GmbH, to Montratec Sarl. The underlying stock purchase agreement included a clause on potential exit events, which requires Montratec Sarl to pay SCHMID up to €4,500 thousand (hereinafter referred to as “Montratec exit bonus”) upon a future exit of Montratec Sarl from Montractec GmbH. Additionally, SCHMID entered into a guarantee agreement with Schmid Grundstücke GmbH & Co. KG (referred to as “SGG”), an entity jointly controlled by shareholders of SCHMID, wherein SGG would reimburse the difference between the exit sale consideration actually received from Montratec Sarl and €4,500 thousand (hereinafter referred to as “Montratec guarantee”) in the event that the exit sale consideration is below €4,500 thousand. As a remuneration for this guarantee, SCHMID was required to pay SGG an amount equal to 1.5% p.a. of the €4,500 thousand per year until an exit event would occur. SCHMID was informed in April 2023 about this exit event, i.e. that Montratec GmbH was sold by Montratec Sarl in April 2023 which resulted in an exit bonus of €3,954 thousand being owed by Montratec Sarl to SCHMID and €546 thousand being owed by SGG. The bonus from Montratec has been received in cash during 2023, the payment from SGG as been netted with payables of SCHMID against SGG.

Other miscellaneous income includes a gain resulting from a cancelled sale and leaseback agreement with a third party (€1,875 thousand for the fiscal year ended December 31, 2023) as well as government grants related to income in an amount of €356 thousand for the fiscal year ended December 31, 2023 (2022: €519 thousand, 2021: €123 thousand). The grants are received in cash to compensate for expenses incurred in relation to research projects. In addition, other miscellaneous income includes income from asset disposals, mainly from the sale and leasback transaction (€508 thousand).

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OTHER EXPENSES

12 Months Ended

Dec. 31, 2023

OTHER EXPENSES

OTHER EXPENSES

12.OTHER EXPENSES

Other expenses consist of the following:

in € thousand	2023	2022	2021
Foreign currency losses	(2,388)	(2,399)	(2,942)
Other taxes	(166)	(122)	(776)
Disposal of assets	—	(231)	(154)
Miscellaneous other items	(65)	(236)	(908)
Total other expenses	(2,620)	(2,988)	(4,779)

Miscellaneous other items mainly include banking fees and other service charges.

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REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET

12 Months Ended

Dec. 31, 2023

REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET

REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET

13.REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET

The reversal of impairments of financial assets includes the following amounts:

In € thousand	12/31/2023	12/31/2022	12/31/2021
Reversal of receivables from the Silicon Group	21,375	—	—
Reversal of impairment of shareholder loan (included in trade and other receivables)	1,418	3,091	3,284
Other	(97)	—	49
Total	22,696	3,091	3,333

For additional information on the Silicon Group impairment reversal refer to note 5. Significant Events in the Period ended December 31, 2023. The reversals of impairment of the shareholder loan in prior years are due to the fact that the estimated repayment date is getting closer every year.

The shareholder loan was repaid during the financial year ended December 31, 2023. Therefore, the expected credit loss that was previously recognized on the shareholder loan was reversed during the financial year ended December 31, 2023.

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FINANCIAL RESULT

12 Months Ended

Dec. 31, 2023

FINANCIAL RESULT

FINANCIAL RESULT

14.FINANCIAL RESULT

Financial result includes the following:

in € thousand	2023	2022	2021
Finance income	19,685	5,758	3,360
thereof fair value changes	—	1,669	124
thereof interest income and similar proceeds	3,883	4,089	3,236
thereof gain from loan extinguishment	15,802	—	—
Finance expenses	(10,091)	(17,746)	(18,014)
thereof interest portion of lease payments	(103)	(68)	(49)
thereof interest expense	(9,988)	(17,678)	(17,965)
Financial result	9,594	(11,988)	(14,654)

Interest income includes in 2023 the interest received on loans, mainly the shareholder loan. For further information on the extinguishment, see note 28. Financial Liabilities. Fair value changes in 2022 result from the fair value measurement of the share option (see note 28. Financial Liabilities) and the embedded derivatives that were bifurcated from certain borrowings. For further information on the interest on of lease liabilities please see note 20. Leases. Interest expenses are mainly resulting from changes in the book value of the loans by using the effective interest method.

Interest expenses are mainly resulting from financial liabilities and is recognized based on the effective interest method and the additional payment for the debt fund during 2023, see note 5. Significant Events in the Period ended December 31, 2023.

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SHARE OF PROFIT (LOSS) IN JOINT VENTURES

12 Months Ended

Dec. 31, 2023

SHARE OF PROFIT (LOSS) IN JOINT VENTURES

SHARE OF PROFIT (LOSS) IN JOINT VENTURES

15.SHARE OF PROFIT (LOSS) IN JOINT VENTURES

The share of profit (loss) in joint ventures is relating to a capital injection in the Saudi Arabian joint venture in 2023 that was immediately expensed due to the book value of €0 thousand.

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INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES

INCOME TAXES

16.INCOME TAXES

Income Tax Benefit (Expense)

Income taxes recognized in the Combined Statement of Profit or Loss and Other Comprehensive Income are as follows:

in € thousand	2023	2022	2021
Current income tax (expense) / income	(1,044)	(2,908)	(1,839)
thereof prior years	168	(6)	(35)
Deferred tax (expense) / income	(1,735)	4,832	(3,357)
thereof temporary differences	(1,853)	12,693	(12,367)
thereof tax loss/interest carryforwards	118	(7,861)	9,010
Income tax as per statement of profit or loss	(2,778)	1,924	(5,195)

For entities domiciled within Germany a corporation tax rate of 15% was used for the calculation of deferred taxes. In addition, a solidarity surcharge of 5.5% on corporation tax and a trade tax rate of 13.3% were taken into account. This resulted in an overall tax rate of 29.125% (2022: 29.125%, 2021: 29.125%) for German companies, which is also SCHMID’s tax rate. At international SCHMID companies, the respective country-specific tax rates were used for the calculation of current and deferred taxes.

Tax Rate Reconciliation

The following table presents the reconciliation of expected tax expense and reported tax expense. Expected tax expense is determined by multiplying combined profit before tax from continuing operations by the total SCHMID tax rate of 29.125%:

in € thousand	2023		2022		2021
Income (loss) before income tax	40,732		1,667		(22,082)
Income tax rate	29.125	%	29.125	%	29.125	%
Expected income tax income (expense)	(11,863)		(485)		6,431
Tax rate differences	891		911		(2,270)
Non-deductible expenses	(79)		(573)		(1,204)
Tax -free income	1,263		495		2,755
Trade tax modifications	(116)		(269)		(417)
Tax effects from withholding tax	(166)		(370)		(1,485)
Tax effects from prior years	488		642		634
Permanent differences resulting from the statement of financial position	2,912		(8)		(2,486)
Loss utilisation of previously not recognized tax loss carryforwards	0		1,152		556
Change in valuation allowance from temporary differences and tax loss carryforwards	3,598		927		(4,904)
Change from interest carryforwards	333		(957)		(2,827)
Other reconciling items	(38)		460		21
Income tax benefit (expense)	(2,778)		1,924		(5,195)
Effective tax rate in %	6.82	%	(115.46)	%	(23.53)	%

Deferred Taxes

The deferred tax assets ("DTA") and deferred tax liabilities ("DTL") recognition on the financial statement line items in the Statement of Financial Position are summarized below:

	Deferred taxes	Deferred taxes in
	in statement of	other comprehensive	Currency translation
	profit or loss	income	adjustments	DTA	DTL
in € thousand				2023	2023
Non-current assets	(13,373)	—	(116)	3,628	(6,970)
Intangible assets	239	—	(126)	1,843	(4,193)
Property, plant and equipment	(2,167)	—	9	155	(2,542)
Financial assets	(11,444)	—	1	1,630	(235)
Current assets	14,109	—	49	382	(5,584)
Inventories	(487)	—	(6)	220	(598)
Receivables and other assets	15,526	—	52	149	(3,985)
Other current assets	(899)	—	3	—	(956)
Cash and cash equivalents	(31)	—	1	13	(44)
Non-current liabilities	3,288	(7)	(8)	2,813	(7,757)
Non-current borrowings	868	—	4	17	(7,433)
Provisions for pensions	52	(7)	(7)	140	(67)
Non-current provisions	(161)	—	—	60	(257)
Non-current lease liability	2,529	—	(5)	2,596	—
Current liabilities	(8,820)	—	(124)	8,472	(2,998)
Current borrowings	(7,995)	—	—	3,803	(575)
Current contract liabilities	(929)	—	(10)	1,525	—
Trade payables and other liabilities	520	—	(109)	1,600	(665)
Other current liabilities	629	—	(20)	1,104	(30)
Current lease liability	121	—	(4)	210	—
Current provisions	(1,166)	—	19	230	(1,727)
Tax loss/interest carryforward	3,061	—	(2)	6,167	—
Tax Loss Carryforward (CIT)	1,693	—	(2)	3,408	—
Tax Loss Carryforward (Trade Tax)	1,368	—	—	2,759	—
Interest Carryforward	—	—	—	—	—
Gross value	(1,735)	(7)	(194)	21,463	(23,308)
Netting				(18,920)	18,920
Recognition in the statement of financial position				2,543	(4,388)

	Deferred taxes	Deferred taxes in
	in statement of	other comprehensive	Currency translation
	profit or loss	income	adjustments	DTA	DTL
in € thousand				2022	2022
Non-current assets	9,460	—	(44)	15,085	(4,937)
Intangible assets	(28)	—	45	2,084	(4,547)
Property, plant and equipment	(78)	—	1	153	(381)
Financial assets	9,566	—	—	12,848	(9)
Current assets	(18,238)	—	70	1,801	(21,161)
Inventories	51	—	(3)	246	(131)
Trade receivables and other receivables	(18,193)	—	70	1,554	(20,969)
Other current assets	(96)	—	2	—	(60)
Cash and cash equivalents	—	—	—	—	—
Non-current liabilities	8,138	(88)	(577)	348	(8,571)
Non-current financial liabilities	7,334	—	—	—	(8,287)
Provisions for pensions	513	(88)	(575)	93	(65)
Non-current provisions	256	—	(1)	120	(155)
Non-current lease liability	35	—	(1)	136	(64)
Current liabilities	13,333	—	(67)	15,871	(1,453)
Current financial liabilites	8,367	—	—	11,223	—
Current contract liabilities	2,351	—	(4)	2,464	—
Trade payables and other liabilities	1,209	—	(51)	1,281	(757)
Other current liabilities	676	—	(5)	545	(80)
Current lease liability	27	—	(1)	93	—
Current provisions	704	—	(5)	266	(616)
Tax loss/interest carryforward	(7,861)	—	12	3,108	—
Tax Loss Carryforward (CIT)	(4,535)	—	12	1,717	—
Tax Loss Carryforward (Trade Tax)	(3,326)	—	—	1,392	—
Interest Carryforward	—	—	—	—	—
Gross value	4,832	(88)	(606)	36,213	(36,122)
Netting				(33,619)	33,619
Recognition in the statement of financial position				2,594	(2,504)

No deferred tax assets were recognized for the following tax attributes (gross):

	2023		2022		2021
in € thousand	Tax base	DTA	Tax base	DTA	Tax base	DTA
Deductible temporary differences	41,498	10,805	34,149	8,984	65,199	18,070
Tax loss carryforward (CIT)	91,405	14,701	108,229	17,415	75,903	12,641
Tax loss carryforward (trade tax)	49,147	6,536	65,308	8,686	45,834	6,096
Interest carryforward	35,229	9,089	36,956	9,535	33,209	8,568

The maturities of the tax loss carryforwards for which no deferred tax assets were recognized are as follows:

in € thousand	2023	2022	2021
Up to 5 years	2,685	5,107	3,310
Up to 10 years	1,772	1,064	927
Up to 15 years	4,508	5,187	3,943
Up to 20 years	—	—	340
unlimited	131,586	162,177	113,216

The reported tax loss and interest carryforwards mainly relate to the German SCHMID entities and can be carried forward indefinitely (German minimum taxation rules and interest stripping rules apply), however, they may be subject to restrictions of the German change in ownership rules (Sec. 8c Körperschaftsteuergesetz) going forward.

The tax loss and interest carryforwards mainly relate to entities that have a history of losses which have been accumulated in the previous years. The respective entities neither have any taxable temporary difference exceeding the deductible temporary differences nor any tax planning opportunities and documentation available that could partly support the recognition of these tax attributes as deferred tax assets. On this basis, SCHMID has determined that it cannot recognize deferred tax assets on the majority of tax attributes carried forward.

Taxable temporary differences associated with investments in entities, branches and associates and interests in joint arrangements in the amount of €931 thousand as of December 31, 2023 (December 31, 2022: €937 thousand) have not been recognized.

Deferred tax assets exceeding deferred tax liabilities in the amount of €522 thousand as of December 31, 2023 (December 31, 2022: €2,594 thousand) for companies that generated a loss in the current or previous period were recognized as these are considered to be recoverable.

On 27 March 2024, the German Growth Opportunities Act (Wachstumschancengesetz) was substantively enacted. As part of this act, the German minimum taxation rule has been temporarily changed for the fiscal years 2024-2027. As a result, the loss deduction has been increased from 60% to 70%. As a result SCHMID Group could benefit by a maximum amount of €522 thousand.

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EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2023

EARNINGS PER SHARE

EARNINGS PER SHARE

17.EARNINGS PER SHARE

The information on earnings per share pursuant to IAS 33 has not been presented, as the combined entities have not formed a statutory group and, as such, SCHMID has no historical capital structure.

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INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2023

INTANGIBLE ASSETS

INTANGIBLE ASSETS

18.INTANGIBLE ASSETS

Intangible assets comprise the following:

	Development	Patents and
in € thousand	Costs	licenses	Total
Costs of acquisition
1/1/2023	22,832	1,042	23,874
Additions	2,915	359	3,274
Disposals/Retirements	—	—	—
Foreign exchange differences	(17)	(28)	(46)
12/31/2023	25,729	1,372	27,102
Accumulated amortization/write downs
1/1/2023	7,495	552	8,046
Amortization	3,975	158	4,133
Disposals/Retirements	—	—	—
Foreign exchange differences	(17)	(26)	(44)
12/31/2023	11,452	684	12,136
Carrying amount:
1/1/2023	15,337	490	15,828
12/31/2023	14,278	689	14,966

	Development	Patents and
in € thousand	Costs	licenses	Total
Costs of acquisition
1/1/2022	22,968	6,461	29,429
Additions	3,219	389	3,607
Disposals/Retirements	(3,355)	(5,807)	(9,162)
Foreign exchange differences	—	(1)	(1)
12/31/2022	22,832	1,042	23,874
Accumulated amortization/write downs
1/1/2022	7,174	6,280	13,454
Amortization	3,529	80	3,609
Disposals/Retirements	(3,208)	(5,807)	(9,015)
Foreign exchange differences	—	(2)	(2)
12/31/2022	7,495	552	8,046
Carrying amount:
1/1/2022	15,794	181	15,976
12/31/2022	15,337	490	15,828

Retirements relate to intangibles assets with a net book value of zero that are no longer in use by SCHMID and have therefore been eliminated from the asset register.

Development costs represent internally generated intangible assets related to process and manufacturing technologies for various industries such as printed circuit board ("PCB"), substrate manufacturing, photovoltaics, and glass and energy storage, wet processes (horizontal, vertical and single panel) and vacuum processes. Patents and licenses include software licenses, licenses for the use of know-how and acquired patents. The amount of borrowing costs capitalised during the period 2023 is €494 thousand (December 31, 2022: €640 thousand) with a capitalisation rate of 10% (December 31, 2022: 10%).

SCHMID receives government grants that are related to self-developed technology and processes recognized as intangible assets. The grants are received to compensate for incurred expenses that are capitalized as intangible assets and therefore SCHMID reduces the asset value by the amount of the grant. An amount of €159 thousand was deducted from the capitalized book value during 2023, €268 thousand during 2022 and €723 thousand during 2021.

Impairment test on development cost

At each balance sheet date SCHMID performs an impairment test on development costs that are capitalized but not yet ready for use. The impairment test is performed on a CGU level. The recoverable amount of the CGU that includes these development costs (the entity using those technologies) was estimated based on the present value of the future cashflows expected to be derived from the CGU (fair value less cost to sell), using a pre-tax discount rate of 12.89% (December 31, 2022: 11.17%). The recoverable amount of the CGU was estimated to be higher than its carrying amount and no impairment was required.

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PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2023

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

19.PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is comprised of the following:

	Land,
	buildings and	Technical	Office and
	leasehold	equipment and	other	Assets under
in € thousand	improvements	machinery	equipment	construction	Total
Costs of acquisition or construction:
1/1/2023	21,303	18,263	14,561	—	54,127
Additions	—	1,679	1,410	513	3,602
Disposals/Retirements	(21,085)	(3,448)	(458)	—	(24,991)
Foreign exchange differences	1	(164)	(126)	—	(289)
12/31/2023	220	16,330	15,386	513	32,449
Accumulated depreciation:
1/1/2023	11,581	15,892	13,293	—	40,766
Depreciation	483	982	583	—	2,048
Disposals/Retirements	(11,995)	(3,447)	(414)	—	(15,856)
Foreign exchange differences	1	(114)	(101)	—	(214)
12/31/2023	71	13,314	13,359	—	26,744
Carrying amount:
1/1/2023	9,722	2,371	1,268	—	13,361
12/31/2023	149	3,016	2,027	513	5,704

	Land,
	buildings and	Technical	Office and
	leasehold	equipment and	other	Assets under
in € thousand	improvements	machinery	equipment	construction	Total
Costs of acquisition or construction:
1/1/2022	21,143	18,692	15,139	345	55,318
Additions	161	940	323	—	1,423
Disposals/Retirements	—	(1,638)	(858)	(12)	(2,507)
Transfers	—	333	—	(333)	—
Foreign exchange differences	—	(64)	(43)	—	(107)
12/31/2022	21,303	18,263	14,561	—	54,127
Accumulated depreciation:
1/1/2022	11,097	16,566	13,756	—	41,419
Depreciation	484	964	417	—	1,865
Disposals/Retirements	—	(1,585)	(842)	—	(2,426)
Foreign exchange differences	—	(53)	(38)	—	(92)
12/31/2022	11,581	15,892	13,293	—	40,766
Carrying amount:
1/1/2022	10,046	2,126	1,383	345	13,899
12/31/2022	9,722	2,371	1,268	—	13,361

Property, plant and equipment includes right-of-use assets amounting to €9,063 thousand as of December 31, 2023 (December 31, 2022: €1,334 thousand). For further information refer to note 20. Leases. Security pledges have been released in 2023 as the respective property has been sold.

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LEASES

12 Months Ended

Dec. 31, 2023

LEASES

LEASES

20.LEASES

Lessee accounting

SCHMID’s lease obligations primarily relate to rights to buildings mainly for its office, R&D and production premises as well as to leased vehicles. The carrying amounts of right-of-use assets recognized and the movements during the period were as follows:

in € thousand	Real Estate	Vehicles	Total
1/1/2022	1,207	306	1,513
Additions to right-of-use assets	144	336	480
Depreciation	(430)	(211)	(642)
Foreign exchange differences	(15)	(2)	(17)
12/31/2022	906	428	1,334
Additions to right-of-use assets	8,402	178	8,581
Depreciation	(543)	(236)	(779)
Foreign exchange differences	(68)	(5)	(73)
12/31/2023	8,697	365	9,063

In December 2023, SCHMID signed a sale and leaseback contract with Schmid Grundstücke GmbH Co. KG, an entity controlled by Mrs. Schmid, for production facility and office buildings in Freudenstadt. The purchase price is €11,400 thousand. The lease term is 10 years. There is an extension option that can be exercised by the lessee 12 months before the end of the term. SCHMID can extend the lease term three times by 5 years each time. A lease payment of €100 thousand (excl. VAT) is due in advance each month. This resulted in an increase in the right-of-use asset in the amount of €7,092 thousand and a lease liability in the amount of €8,895 thousand. The gain on sale equals €507 thousand. As the sale and leaseback was concluded with a related party the rate implicit to the lease was used.

For other leases SCHMID cannot readily determine the interest rate implicit in the leases, therefore, it uses its incremental borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that SCHMID would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBRs used by SCHMID are calculated based on the risk-free rate, individual country risk premiums of underlying country and credit spread. The weighted average IBR on December 31, 2023 is 6.03% (December 31, 2022: 5.49%).

There are no variable lease payments resulting from indexed rental payments or other variable rental components. The carrying amounts of lease liabilities and the movements during the period were as follows:

in € thousand	Lease Liability
1/1/2022	1,528
Additions	433
Interest	68
Payments	(676)
Foreign exchange difference	(19)
12/31/2022	1,333
Additions	10,347
Interest	102
Payments	(819)
Foreign exchange difference	(77)
12/31/2023	10,886

The combined statement of profit or loss and other comprehensive income (loss) included the following amounts of lease related expense:

in € thousand	2023	2022	2021
Depreciation of right of-use-assets	(779)	(642)	(487)
Interest expense on lease liabilities	(103)	(68)	(49)
Short-term lease expenses	(383)	(523)	(341)
Lease expenses for low-value assets	(7)	(28)	(68)
Total amount recognized in expense	(1,273)	(1,260)	(945)

The below table provides information on the total cash outflow from all leases during the year:

in € thousand	2023	2022	2021
Principal paid	(715)	(609)	(451)
Interest paid	(103)	(68)	(49)
Short term and low value leases	(391)	(551)	(409)
Total amount paid	(1,209)	(1,227)	(908)

The below table shows a maturity analysis of undiscounted lease payments for which a right-of-use asset and lease liability were recognized:

in € thousand	12/31/2023	12/31/2022
≤ 1 year	2,108	564
> 1 ≤ 2 years	1,928	465
> 2 ≤ 5 years	4,081	446
> 5 years	6,014	—
Gross lease liabilities – minimum lease payments	14,130	1,476
Discount and foreign currency effects	(3,244)	143
Present value of the lease liabilities	10,886	1,333

Lessor accounting

A part of the office and laboratories buildings located at the headquarter are leased to a related party under an operating lease with rent payable on a monthly basis. Lease income from the operating lease where SCHMID is a lessor is recognized in other income on a straight-line basis over the lease term. The lease income per month amounts to €10 thousand and does not include variable lease payments that depend on an index or rate. The lease contract was fixed until March 31, 2022 and is automatically renewed each year for another 12 months if none of the parties terminates the agreement. As a result, the minimum lease payments to be received are €115 thousand in 2023 (2022: €115 thousand, 2021: €115 thousand). The asset underlying the lease contract is included in property, plant and equipment.

In addition, SCHMID is party to a sublease contract for an office building. SCHMID leases the office from a third party and subleases it to a related party. The lease-out is categorized as operating lease and has an indefinite lease term with a termination option for both parties of six months. The lease income per month amounts to €3 thousand and does not include variable lease payments that depend on an index or rate.

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FINANCIAL ASSETS

12 Months Ended

Dec. 31, 2023

FINANCIAL ASSETS

FINANCIAL ASSETS

21.FINANCIAL ASSETS

Non-current financial assets mainly comprise deposits for leased buildings.

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INVENTORIES

12 Months Ended

Dec. 31, 2023

INVENTORIES

INVENTORIES

22.INVENTORIES

in € thousand	12/31/2023	12/31/2022
Raw materials and supplies	4,386	5,513
Work in progress	6,038	11,098
Finished goods	5,928	8,419
Inventories	16,353	25,029

In fiscal year 2023, write-downs of €1,052 thousand (2022: €833 thousand, 2021: €69 thousand) were recognized. Total reversals of impairment losses amounted to €83 thousand in the fiscal year 2023 (2022: €23 thousand, 2021: €1 thousand). The amount of inventories recognised as an expense during 2023 is €25,026 thousand (2022: €28,954 thousand, 2021: €9,293 thousand).

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TRADE RECEIVABLES AND OTHER RECEIVABLES

12 Months Ended

Dec. 31, 2023

TRADE RECEIVABLES AND OTHER RECEIVABLES

TRADE RECEIVABLES AND OTHER RECEIVABLES

23.TRADE RECEIVABLES AND OTHER RECEIVABLES

in € thousand	12/31/2023	12/31/2022
Trade receivables	40,626	40,593
Receivables from joint ventures	1,599	2,656
Other receivables	4,807	65,589
Total trade and other receivables	47,032	108,838

Trade receivables have a residual term of less than one year. Receivables from joint ventures refer to SCHMID Avaco Korea, Co. Ltd and Schmid Energy Systems GmbH, an entity of the Arabian joint venture.

The main driver for the decrease in the other receivables is the repayment of a shareholder loan receivable (remaining balance as of December 31, 2023: €107 thousand; December 31, 2022: €65,158 thousand). Other receivables as of year end 2023 include the receivable against Christian Schmid for the Silicon bonus payment (€ 4,700 thousand).

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OTHER CURRENT ASSETS

12 Months Ended

Dec. 31, 2023

OTHER CURRENT ASSETS

OTHER CURRENT ASSETS

24.OTHER CURRENT ASSETS

Other current non-financial assets are as follows:

in € thousand	12/31/2023	12/31/2022
Advance payments on inventories	1,317	2,635
Restricted cash	89	1,049
Prepaid expenses	3,667	730
Contract assets	—	401
Total other current non-financial assets	5,073	4,815

Restricted cash refers to bank accounts that are used as securities for customer prepayments, mainly in China. In addition, the increase in prepaid expenses is due to the planned business combination with Pegasus.

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CASH & CASH EQUIVALENTS

12 Months Ended

Dec. 31, 2023

CASH & CASH EQUIVALENTS

CASH & CASH EQUIVALENTS

25.CASH & CASH EQUIVALENTS

Cash and cash equivalents include cash as well as deposits on bank accounts amounting of €5,710 thousand as of December 31, 2023 (December 31, 2022: €8,332 thousand).

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EQUITY

12 Months Ended

Dec. 31, 2023

EQUITY

EQUITY

26.EQUITY

Owners net investment represents the aggregation of the net assets of all entities that form the reporting entity of SCHMID.

Other reserves comprise loss carried forward, net profit/loss for the year, remeasurement of defined benefit obligation and currency translation differences.

Non-controlling interest contains the equity, profit/loss carried forward and currency translation differences relating to the minority shareholders of the Group.

For details on the share option please refer to note 28. Financial Liabilities.

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NON-CONTROLLING INTEREST

12 Months Ended

Dec. 31, 2023

NON-CONTROLLING INTEREST

NON-CONTROLLING INTEREST

27.NON-CONTROLLING INTEREST

Non-controlling interests relate to SCHMID Singapore Pte. Ltd. (10.0%), SCHMID Technology Guangdong Co., Ltd. (STG) (24.1 %) and SCHMID Taiwan Ltd. (STL) (14.0 %).

STG was founded by SCHMID in 2020 and is a manufacturer of printed circuit boards (“PCB”) and photovoltaics (“PV”) production equipment in China. In June 2021 SCHMID concluded an investor agreement with XJ Harbour HK Limited (“XJ”). By way of a unilateral capital increase XJ obtained 20.9% of the registered capital of STG. In 2021 a further capital increase was executed. For further information on potential capital increases please refer to note 28. Financial Liabilities.

The following tables summarizes the information relating to each entity that has material NCI, before any intra-SCHMID eliminations.

			SCHMID
			Technology
	SCHMID		Guangdong Co.,		SCHMID Taiwan
12/31/2023	Singapore Pte. Ltd.		Ltd		Ltd.
NCI percentage	10.0	%	24.1	%	14.0	%
Non-current assets	—		5,118		185
Current assets	2,797		42,569		11,827
Non-current liabilities	—		847		605
Current liabilities	2,062		22,288		5,182
Net assets	736		24,552		6,224
Net assets attributable to NCI	74		5,917		868
Revenue	—		27,750		1,672
Profit	6,188		2,298		(402)
OCI	—		(1,550)		(252)
Total comprehensive income	6,188		748		(654)
Total comprehensive income allocated to NCI	619		180		(91)
Accumulated NCI end of period	77		6,487		794

			SCHMID
			Technology
	SCHMID		Guangdong Co.,		SCHMID Taiwan
12/31/2022	Singapore Pte. Ltd.		Ltd		Ltd.
NCI percentage	10.0	%	24.1	%	14.0	%
Non-current assets	—		4,575		71
Current assets	1,651		46,040		12,704
Non-current liabilities	—		568		694
Current liabilities	7,104		26,244		5,203
Net assets	(5,453)		23,804		6,879
Net assets attributable to NCI	(545)		5,737		960
Revenue	—		38,753		12,873
Profit	(7)		6,068		4,152
OCI	—		(639)		(303)
Total comprehensive income	(7)		5,429		3,849
Total comprehensive income allocated to NCI	(1)		1,308		537
Accumulated NCI end of period	(543)		6,335		889

			SCHMID
			Technology
	SCHMID		Guangdong Co.,		SCHMID Taiwan
12/31/2021	Singapore Pte. Ltd.		Ltd		Ltd.
NCI percentage	10.0	%	24.1	% *	14.0	%
Non-current assets	—		4,876		197
Current assets	1,698		23,857		4,993
Non-current liabilities	—		841		66
Current liabilities	7,144		9,518		2,095
Net assets	(5,445)		18,374		3,030
Net assets attributable to NCI	(545)		4,428		423
Revenue	—		9,762		3,954
Profit	(33)		(13,359)		424
OCI	—		753		297
Total comprehensive income	(33)		(12,606)		721
Total comprehensive income allocated to NCI	(3)		(2,627)		101
Accumulated NCI end of period	(542)		5,026		352

Cash flow statement SCHMID Technology Guangdong Co., Ltd
in € thousand	2023	2022	2021
Cash flow from operating activities	666	(1,688)	(11,650)
Cash flow from investing activities	(472)	(502)	(16,449)
Cash flow from financing activities	(21)	(452)	32,313
Effect of foreign exchange rate changes on cash and cash equivalents	(119)	116	93
Net increase (decrease) in cash and cash equivalents	262	(2,525)	4,307

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FINANCIAL LIABILITIES

12 Months Ended

Dec. 31, 2023

FINANCIAL LIABILITIES

FINANCIAL LIABILITIES

28.FINANCIAL LIABILITIES

The following table shows an overview of the financial liabilities of SCHMID:

in € thousand	12/31/2023	12/31/2022
Non-current financial liabilities	22,190	34,406
Current financial liabilities	26,053	128,454
Total financial liabilities	48,244	162,860

The following table presents details on SCHMID’s borrowings.

in € thousand	12/31/2023	12/31/2022
Non-current borrowings	22,190	34,406
Loans from debt funds	—	24,393
Loans from other third parties	2,336	—
Loans from shareholders	19,854	10,013
Current borrowings	26,053	128,454
Loans from banks	1,225	12,003
Loans from debt funds	—	79,773
Loans from other third parties	—	3,540
Loans from shareholders	8,102	16,493
Loans from other related parties	16,726	16,646
Total borrowings	48,244	162,860

Loans from debt funds

The loans from debt funds line item consisted of five loans received from two private debt funds. In 2023, SCHMID repaid all loans from debt funds. For further details see note 5. Significant Events in the Period ended December 31, 2023

Loans from banks

During 2023, three loans from banks have been repaid. As of December 31, 2023, SCHMID has two loans from banks.

Loans from other third parties

Loans from other third parties mainly consist of loans from two individuals that are not related to SCHMID. In August 2023, one of the third party loans amounting to €1,234 thousand has been repaid. The other loan carries a floating interest rate of EURIBOR plus 3 % margin and had initial term of two years.

Loans from shareholders

The shareholders provided loan facilities of €15 million and €11 million in 2016. At the end of 2016, both shareholders waived part of their claims (€5 million). As the waivers are with debtor warrants, the claims will revive once a certain equity ratio is reached. As of December 31, 2023, SCHMID did not reach the equity ratio, but is expecting to reach the equity ratio within the next year. As a result, for both events the carrying amount was adjusted by recording the change in carrying amount in interest expense. The new carrying amount reflects the new estimated cash flows discounted with the original effective interest rate. For the remaining €19,854 million the shareholders declared their claims as subordinated to all other liabilities of SCHMID to ensure that the satisfaction of their claims will not lead to an over-indebtedness. Interest is floating at EURIBOR plus 1% margin, whereby EURIBOR is floored at 0.25%.

Loans from other related parties

The loans from related parties are provided by key management personnel and Schmid Grundstücke GmbH & Co. KG, which is an entity controlled by a related party. For further details please refer to note 35. Related Party Disclosures.

Share option

In 2021 SCHMID entered into an agreement with an Investor to obtain a shareholding in the entity SCHMID Technology (Guangdong) Co. Ltd. (STG). In the investment agreement, it was agreed that the investor acquire 20.9% of the ownership in STG for €25.0 million in a first step and at the same time SCHMID grants the investor the right to acquire further shares at two occasions. In December 2021 the investor acquired a further 3.2% of the shares in STG for a predetermined price of €5.0 million. In addition, the investor had the right to increase its ownership in STG by a further 5.6% after June 30, 2022. The price of those shares is dependent on the achievement of a certain revenue target and will be adjusted if the target is not met.

As not all capital increases had been executed as of the year-ended 2021 an embedded derivative was recognized under IFRS 9. Given the positive development of the entity a derivative liability was recognized as of year-end 2021 and during 2022. At year-end 2022 the pre-defined time frame for the revenue target ended at which time the price for the shares was fixed. As the fixed-for-fixed criteria for classification as equity was fulfilled at this time, the derivative liability was reclassified to Owners Net Investment at its fair value. Despite the fact that the price became fixed at the end of 2022 the Investor has not transferred the additional required investment. In 2024 a new agreement was signed. For further details please refer to note 36. Events after the Reporting Period.

For the years ended 2023 and 2022 the minority investment was treated as non-controlling interest according to IFRS 10.26

XML

OTHER PROVISIONS

12 Months Ended

Dec. 31, 2023

OTHER PROVISIONS

OTHER PROVISIONS

29.OTHER PROVISIONS

Movement in provisions during the year is as follows:

				Reversal of
				unused
In € thousand	12/31/2022	Additions	Utilization	amounts	12/31/2023
Warranty provision	211	211	(184)	—	238
Jubilee provision	119	482	(603)	—	(2)
Total non-current provisions	330	693	(787)	—	237
Warranty provision	139	152	(66)	—	225
Provision for legal claims	67	44	—	(58)	53
Other provisions	153	2,308	(1,454)	(312)	695
Total current provisions	360	2,504	(1,520)	(370)	973

				Reversal of
				unused
In € thousand	12/31/2021	Additions	Utilization	amounts	12/31/2022
Warranty provision	203	99	(91)	—	211
Jubilee provision	163	(30)	(14)	—	119
Total non-current provisions	366	70	(106)	—	330
Warranty provision	228	25	(114)	—	139
Provision for legal claims	32	123	(88)	—	67
Other provisions	191	7	(45)	—	153
Total current provisions	451	155	(247)	—	360

XML

POST-EMPLOYMENT BENEFITS

12 Months Ended

Dec. 31, 2023

POST-EMPLOYMENT BENEFITS

POST-EMPLOYMENT BENEFITS

30.POST-EMPLOYMENT BENEFITS

Defined contribution plans

SCHMID’s expenses for defined contribution plans were €1,677 thousand for the year ended 2023 (2022: €1,552 thousand, 2021: €1,528 thousand). No assets or liabilities are recognized in SCHMID’s balance sheet in respect of such plans, apart from regular prepayments and accruals of the contributions withheld from employees’ wages and salaries and of SCHMID’s contributions.

Defined benefit plan

Corporate post-retirement benefits are provided by SCHMID in Germany through a defined benefit plan with one beneficiary who is also a related party (please refer to 35. Related Party Disclosures). The beneficiary was granted a fixed pension commitment in 2012 as part of a deferred compensation agreement in form of a lump-sum payment in the event of invalidity or reaching the age of 67. The Company has no plan assets in connection with the pension obligation.

The present value of the defined benefit obligation at the end of the fiscal year 2023 amounted to €894 thousand (December 31, 2022: €887 thousand, December 31, 2021: €1,173 thousand)

Reconciliation of the net defined benefit liability:

In € thousand	2023	2022	2021
Net defined liability at January 1	887	1,173	1,189
Defined benefit income recognized in combined statement of profit or loss	33	14	12
Defined benefit cost recognized in other comprehensive income	—	300	28
Net defined liability at December 31	894	887	1,173

Reconciliation of the amount recognized in the combined statement of financial position:

In € thousand	2023	2022	2021
Employee benefit obligations recognized as of January 1	887	1,173	1,189
Actuarial adjustments	(26)	(300)	(28)
thereof: experience adjustments	(2)	2	2
thereof: adjustments for financial assumptions	(24)	(302)	(30)
Interest expense	33	14	12
Employee benefit obligations recognized as of December 31	894	887	1,173

The expense recognized in the combined statements of profit and loss and other comprehensive income is as follows:

In € thousand	2023	2022	2021
Actuarial gains (-) / losses (+) deriving from changes in financial assumptions	(24)	(302)	(30)
Actuarial gains (-) / losses (+) deriving from experience adjustments	(2)	2	2
Included in other comprehensive income	(26)	(300)	(28)
Interest income	33	14	12
Included in the combined statements of profit or loss	33	14	12
Total included in the combined statements of profit or loss and other comprehensive income (loss)	7	(286)	(16)

The interest cost relating to the obligation is a component of the result from financing activities.

The following were the principal actuarial assumptions as of:

	12/31/2023		12/31/2022
Discount rate	4.00	%	3.75	%

Sensitivity Analysis

The main actuarial assumption is used to calculate the provisions for post-employment benefits the discount rate. A reasonably possible increase, or respectively decrease, in the significant actuarial assumptions would have had the following impact on the present value of the post-employment benefit obligation as of the respective reporting dates:

	12/31/2023		12/31/2022
Discount rate (+0.25%)	4.25	%	4.00	%
Present value of the post-employment benefit obligations (in € thousand)	872		862
Discount rate (-0.25%)	3.75	%	3.50	%
Present value of the post-employment benefit obligations (in € thousand)	918		912

Duration

The duration of the obligation is 12 years as of December 31,2023 (December 31, 2022: 13 years).

XML

OTHER CURRENT LIABILITIES

12 Months Ended

Dec. 31, 2023

OTHER CURRENT LIABILITIES

OTHER CURRENT LIABILITIES

31.OTHER CURRENT LIABILITIES

Other non-financial liabilities are as followed:

in € thousand	12/31/2023	12/31/2022
Personnel related accruals	3,175	2,700
Tax related accruals	1,348	1,481
Audit related accruals	1,297	286
Miscellaneous other current liabilities	7,294	4,239
Total other current liabilities	13,113	8,706

In 2023 miscellaneous other non-financial liabilities include outstanding invoices for legal and consulting fees amounting to €2,707 thousand, installation and transportation costs amounting to €1,344 thousand as well as various smaller items.

XML

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

12 Months Ended

Dec. 31, 2023

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

32.FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Carrying Amounts and Fair Values

The following tables disclose the carrying amounts of each class of financial instruments together with its corresponding fair value and the aggregated carrying amount per category.

				12/31/2023
Financial instruments, analyzed by classes and categories		Carrying		Fair value
in € thousand	Category	amount	Fair value	hierarchy
Non-current assets
Financial assets
Other loans and other investments	AC	28	28	n/a
Other non-current financial assets	AC	112	n/a	n/a
Current assets
Trade receivables and other receivables
Trade receivables	AC	40,673	n/a	n/a
Receivables from joint ventures	AC	1,599	n/a	n/a
Other receivables
Exit bonus	AC	4,700	4,700	n/a
Receivables from shareholder	AC	107	n/a	n/a
Other current assets
Restricted cash	AC	89	n/a	n/a
Other	AC	1,317	n/a	n/a
Cash and cash equivalents	AC	5,710	n/a	n/a
Non-current liabilities
Non-current borrowings
Loans from other third parties	FLAC	2,336	2,063	Level 3
Loans from shareholders	FLAC	19,854	17,630	Level 3
Current liabilities
Current borrowings
Loans from banks	FLAC	1,225	n/a	Level 3
Loans from shareholders	FLAC	8,102	n/a	n/a
Loans from other related parties	FLAC	16,726	n/a	Level 3
Trade payables and other liabilities	FLAC	25,899	n/a	n/a

		Carrying
Thereof aggregated by categories	Category	amount
Financial assets measured at amortized cost	AC	54,335
Financial liabilities measured at fair value	FVTPL	—
Financial liabilities measured at amortized cost	FLAC	74,142

Financial instruments, analyzed by classes and categories				12/31/2022
		Carrying		Fair value
in € thousand	Category	amount	Fair value	hierarchy
Non-current assets
Financial assets
Other non-current financial assets	AC	115	n/a	n/a
Current assets
Trade receivables and other receivables
Trade receivables	AC	40,593	n/a	n/a
Receivables from joint ventures	AC	2,656	n/a	n/a
Other receivables
Receivables from shareholder	AC	65,158	64,028	Level 3
Miscellaneous receivables	AC	431	n/a	n/a
Other current assets
Restricted cash	AC	1,049	n/a	n/a
Other	AC	2,637	n/a	n/a
Cash and cash equivalents	AC	8,332	n/a	n/a
Non-current liabilities
Non-current borrowings
Loans from debt funds	FLAC	24,393	23,072	Level 3
Loans from shareholders	FLAC	10,013	9,307	Level 3
Current liabilities
Current borrowings
Loans from banks	FLAC	12,003	11,508	Level 3
Loans from debt funds	FLAC	79,773	51,678	Level 3
Loans from other third parties	FLAC	3,540	3,483	Level 3
Loans from shareholders	FLAC	16,493	n/a	n/a
Loans from other related parties	FLAC	16,646	14,688	Level 3
Trade payables and other liabilities	FLAC	25,400	n/a	n/a

		Carrying
Thereof aggregated by categories	Category	amount
Financial assets measured at amortized cost	AC	120,971
Financial liabilities measured at fair value	FVTPL	—
Financial liabilities measured at amortized cost	FLAC	188,260

The carrying amounts of cash and cash equivalents, trade and other receivables, loans from banks and of trade payables, are considered reasonable estimates of their fair values because of the short maturities of these items.

The fair value of the loan granted to a shareholder was calculated by discounting future cash flows with a risk-adjusted interest rate curve. As the credit risk of the shareholder is unobservable and assumed to be equivalent to the Standard&Poor’s rating class of CCC, the credit risk is considered to have a material impact on the fair value. Therefore, the fair values of the shareholder loan are categorized in level 3 of the fair value hierarchy.

Items of income, expenses, gains or losses resulting from financial instruments

The net gains or losses for each of the financial instrument measurement categories differentiated by the respective sources were as follows:

2023	Subsequent measurement
in € thousand	Interest	Fair value	Total
Financial assets - AC	9,499	n/a	9,499
Financial liabilities - FLAC	(9,988)	n/a	(9,988)
Financial assets and liabilities - FVTPL	n/a	—	—
Total	(488)	—	(488)

2022	Subsequent measurement
in € thousand	Interest	Fair value	Total
Financial assets - AC	4,089	n/a	4,089
Financial liabilities - FLAC	(17,650)	n/a	(17,650)
Financial assets and liabilities - FVTPL	n/a	(1,669)	(1,669)
Total	(13,561)	(1,669)	(15,230)

The total interest income for financial assets that are not measured at FVTPL is €9,499 thousand as of the year ended December 31, 2023 (2022: €4,089 thousand). The total interest expense for financial liabilities that are not measured at FVTPL is €9,988 thousand as of the year ended December 31, 2023 (2022: €17,650 thousand).

Financial Instrument Risk Management Objectives and Policies

Due to its international operational businesses, SCHMID is exposed to market risk (especially foreign currency risk) and credit risk. In the area of financing, liquidity risks and interest rate risks play a major role. SCHMID’s senior management oversees the management of these risks. In prior years no formalized risk management system existed, but financial risks as far as identified were handled case-by-case. In connection with the US DE-SPAC SCHMID is currently implementing a standardized risk management process. Equity price risk is considered insignificant for SCHMID.

Credit Risk

Credit risk is the risk that SCHMID might incur a financial loss as a consequence of the non-payment or partial payment of outstanding receivables by counterparties and from replacement risks for open transactions. SCHMID is exposed to credit risks associated with its operating activities, the loan granted to one of its shareholders, trade receivables as well as cash and cash equivalents.

SCHMID applies appropriate measures to manage credit risks inherent to its trade receivables. SCHMID requests customer ratings from well-known rating agencies and responds to higher probabilities of default with modified payment terms. Loss rates are based on actual credit loss experience over the past seven years. These rates are multiplied by scalar factors to reflect differences between economic conditions during the period over which the historical data has been collected, current conditions and SCHMID’s view of economic conditions over the expected lives of the receivables. Until January 1, 2023, to limit the credit risk resulting from its trade receivables, SCHMID has entered into a credit risk insurance that covered all trade receivables besides a small deductible. For the resulting credit risk of the insurance company SCHMID applied the credit default swap spread to the insured trade receivables amount. For the remaining credit risk of the uninsured part of the trade receivables a probability of default for the industry is applied to the exposure and multiplied with the loss given default.

The allowances for ECL determined for the different classes of financial assets developed as follows:

	Trade receivables		Shareholder and
	- not credit	Trade receivables	other loans -
in € thousand	impaired	- credit impaired	credit impaired
Opening Balance 01/01/2022	(8)	1,952	(4,394)
Additions	(11)	—	—
Utilization	—	1,148	—
Reversal	—	153	2,949
Closing Balance 31/12/2022	(19)	652	(1,445)
Additions	(118)	(198)	—
Utilization	—	(11,425)	—
Reversal	—	11,706	1,445
Closing Balance 31/12/2023	(137)	(569)	—

With regards to cash and cash equivalents SCHMID allocates the credit risk by using several banks. Furthermore, it is SCHMID policy to hold cash and cash equivalents only with financial institutions that have at least an investment grade rating. SCHMID regularly monitors its cash and cash equivalents and takes corrective actions should it identify any possible changes in creditworthiness of these financial institutions. Therefore and due to its short-term character, no significant credit risk arises from cash and cash equivalents, and no ECL allowance has been recorded for 2023 and 2022 respectively.

The following tables provide information about the gross carrying amounts by credit-risk rating classes for the several types of financial assets that are not measured at FVTPL and therefore generally subject to the impairment regulations of IFRS 9.

Gross Carrying Amounts by Rating Class			12/31/2023
in € thousand	Stage 1	Stage 2	Stage 3
General approach
Cash and cash equivalents
AAA to BBB (Investment grade)	5,710	—	—
Receivables from shareholders
BBB- to CCC (Below investment grade)	—	4,807	—
Simplified approach
Trade receivables and other receivables
Current (not past due)	—	27,148	(69)
1-30 days past due	—	1,423	(11)
31-60 days past due	—	597	(6)
61-90 days past due	—	651	(7)
More than 90 days past due	—	3,039	(45)
Total	5,710	37,665	(138)

Gross Carrying Amounts by Rating Class			12/31/2022
in € thousand	Stage 1	Stage 2	Stage 3
General approach
Cash and cash equivalents
AAA to BBB (Investment grade)	8,332	—	—
Receivables from shareholders
BBB- to CCC (Below investment grade)	—	65,158	—
Simplified approach
Trade receivables and other receivables
insured receivables (90%)	—	39,312	—
non-insured receivables (10%)	—	4,368	—
Total	8,332	108,838	—

Liquidity Risk

Liquidity risk is the risk that a company will encounter difficulty in meeting its obligations associated with its financial liabilities as they fall due. SCHMID is constantly working to ensure that the supply of liquidity is mainly sufficient to settle financial liabilities that are due for payment. Liquidity is evaluated and maintained using forecasts based on fixed planning horizons covering several months and through the cash and cash equivalent balances that are available.

During 2023, the majority of financial liabilities has been repaid. For more detail on the financial situation, please refer to the explanation on Going Concern (included in note 2. Basis of Presentation).

The following table provides details of the (undiscounted) cash outflows of financial liabilities (including interest payments).

					12/31/2023
	Cash outflows within				Total cash
in € thousand	≤ 1 year	> 1 ≤ 2 years	> 2 ≤ 5 years	> 5 years	flows
Lease liabilities	2,073	1,822	3,372	3,758	11,025
Borrowings (including embedded derivatives)	26,053	26,781	—	—	52,835
Loans from banks	1,225	—	—	—	1,225
Loans from debt funds	—	—	—	—	—
Loans from other third parties	—	2,778	—	—	2,778
Loans from shareholders	8,102	24,004	—	—	32,106
Loans from other related parties	16,726	—	—	—	16,726
Trade payables and other liabilities	25,899	—	—	—	25,899

					12/31/2022
	Cash outflows within				Total cash
in € thousand	≤ 1 year	> 1 ≤ 2 years	> 2 ≤ 5 years	> 5 years	flows
Lease liabilities	564	465	446	—	1,476
Borrowings (including embedded derivatives)	111,517	49,914	—	—	161,432
Loans from banks	12,221	—	—	—	12,221
Loans from debt funds	73,262	26,521	—	—	99,783
Loans from other third parties	3,702	—	—	—	3,702
Loans from shareholders	5,000	23,394	—	—	28,394
Loans from other related parties	17,332	—	—	—	17,332
Trade payables and other liabilities	25,400	—	—	—	25,400

Foreign Currency Risk

SCHMID operates globally and is exposed to foreign exchange risk arising from exposure to various currencies in the ordinary course of business. SCHMID’s exposures primarily consist of the Euro (“EUR”), US Dollar (“USD”), Chinese Yen (“CNY”), Hong Kong Dollar (“HKD”), Korean Won (“KRW”) and Canadian Dollar (“CAD”). Foreign exchange risk mainly arises from commercial transactions that resulted in recognized financial assets and liabilities denominated in a currency other than the local functional currency.

The following table demonstrates the material net exposures SCHMID entities have due to trade receivables and payables, cash and cash equivalents as well as other financial assets in a currency different their local functional currency. Due to consolidation these exposures would also have an impact to SCHMID’s profit or loss.

	currency of exposure ("+" = asset / "()" = liability) - in € thousand
functional currency entity	12/31/2023				12/31/2022
	EUR	CNY	USD	HKD	EUR	CNY	USD	HKD
EUR		5,010	3,597	—		5,500	4,669	—
CNY	27,217		(1,077)	(424)	25,519		(1,139)	—
USD	17	—		—	(5,030)	—		—
TWD	1,481	(238)	—	—	1,378	—	—	—
HKD	2,026	(2,209)	—		—	—	—
KRW	(4,276)	—	—	—	(1,838)	—	—	—
Total	26,464	2,563	2,520	(424)	20,029	5,500	3,530	—

The following table demonstrates the impact that a reasonably possible change in each material currency pair would have on SCHMID’s profit or loss before tax. Therefore for each currency exchange rate the foreign currency is shifted against the respective local entity’s functional currency. The resulting impact in local currency is then translated into EUR.

in € thousand	12/31/2023		12/31/2022
	+10%	-10%	+10%	-10%
CNY/EUR	2,019	(2,467)	1,820	(2,224)
USD/EUR	(325)	398	(882)	1,078
TWD/EUR	135	(165)	130	(159)
HKD/EUR	184	(225)
KRW/EUR	(389)	475	(167)	204
CNY/TWD	22	(26)
CNY/HKD	158	(203)
USD/CNY	98	(120)	104	(127)

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate risks from financial instruments can in general arise in connection with financial liabilities including borrowings under SCHMID existing working capital and equipment financing facilities. Profit or loss is sensitive to higher/ lower interest income/ expense from loans granted and borrowed as a result of changes in interest rates. Considering existing thresholds, a hypothetical reasonable increase or decrease of 100 basis points in interest rates would have the following effect shown in the table on SCHMID financial statements.

	Impact to P/L
in € thousand	(income (+)/ expense (-))
12/31/2023
Change in interest rate +1%	(296)
Change in interest rate -1%	296
12/31/2022
Change in interest rate +1%	(1,164)
Change in interest rate -1%	1,162

Capital Management

For the purpose of SCHMID’s capital management, capital includes all share capital and other equity reserves attributable to the equity holders. The primary objectives of capital management are to support operating activities and maximize the shareholder value through investment in the development activities of SCHMID.

SCHMID’s finance department reviews the total amount of cash of SCHMID on a monthly basis. As part of this review, management considers the total cash and cash equivalents, the cash outflow, currency translation differences and funding activities.

The Company is not anymore subject to externally imposed capital requirements as all relevant loans have been repaid during 2023, refer to note 28. Financial Liabilities for further details. No changes were made in the objectives, policies or processes for managing cash during the years ended December 31, 2023 and 2022.

Reconciliation of changes in liabilities arising from financing activities

		Lease
In € thousand	Loans	liabilities	Total
Balance at January 1, 2023	167,111	1,333	168,444
Cash flow from financing activities (excluding changes from restricted cash)	(83,812)	(819)	(84,631)
Proceeds from loans	—	—	—
Repayments of loans	(81,871)	—	(81,871)
Principal elements of lease payment	—	(715)	(715)
Interest paid	(1,941)	(103)	(2,044)
Changes in the cash flow from financing activities	(35,055)	10,372	(24,683)
Foreign currency effects	—	(77)	(77)
New leases	—	10,347	10,347
Accrued interest	(35,024)	102	(34,922)
Fair value measurement	(32)	—	(32)
Balance at December 31, 2023	48,244	10,886	59,130

		Lease
In € thousand	Loans	liabilities	Total
Balance at January 1, 2022	153,090	1,528	154,618
Cash flow from financing activities (excluding changes from restricted cash)	(2,625)	(676)	(3,301)
Proceeds from loans	4,895	—	4,895
Repayments of loans	(5,880)	—	(5,880)
Principal elements of lease payment	—	(609)	(609)
Interest paid	(1,640)	(68)	(1,708)
Changes in the cash flow from financing activities	16,645	482	17,127
Foreign currency effects	—	(19)	(19)
New leases	—	433	433
Accrued interest	14,609	68	14,677
Fair value measurement	2,036	—	2,036
Balance at December 31, 2022	167,111	1,333	168,444

XML

EQUITY-ACCOUNTED INVESTEES

12 Months Ended

Dec. 31, 2023

EQUITY-ACCOUNTED INVESTEES

EQUITY-ACCOUNTED INVESTEES

33.EQUITY-ACCOUNTED INVESTEES

Set out below are the investments of SCHMID classified as joint ventures as at December 31, 2023 and 2022. The entities listed below have share capital consisting solely of ordinary shares, which are held directly by SCHMID. The proportion of ownership interest is the same as the proportion of voting rights held. All the entities are private, no quoted prices are available.

		% of ownership interest				Carrying amount (in € thousand)
Name of the entity	Country of incorporation	12/31/2023		12/31/2022		12/31/2023	12/31/2022
Advanced Energy Storage Systems Investment Company (AES)	Kingdom of Saudi Arabia	51	%	51	%	—	—
SCHMID AVACO Korea Co. Ltd. (SAK)	South Korea	50	%	50	%	—	—
Total equity-accounted investments						—	—

The two entities are joint ventures and both are accounted for applying the equity method.

(1) Advanced Energy Storage Systems Investment Company (AES), Saudi Arabia is a joint venture of Nusaned Investment (an investment company owned by SABIC) and SCHMID manufacturing and focuses on technology development in the field of vanadium redox flow batteries (VRFB).

(2) SCHMID AVACO Korea Co. Ltd. (SAK), South Korea is a company that specializes in the manufacture of electrical and electronic components. The company produces a wide range of products such as printed circuit boards, connectors, and wiring harness systems for various industries including automotive, electronics, telecommunications, and medical technology.

The following tables provide financial information on the joint venture Advanced Energy Storage Systems Investment Company (AES) which is material to SCHMID. The information disclosed reflects the amounts presented in the financial statements of the joint venture and not SCHMID’s share of those amounts.

in € thousand	12/31/2023		12/31/2022
% ownership interest	51.3	%	51.3	%
Current Assets
Cash and cash equivalents	16		1,144
Other current assets	22		342
Total current assets	38		1,486
Non-current assets	3,871		6,134
Current liabilities
Current financial liabilities	2,935		2,015
Other current liabilities	216		4,214
Total current liabilities	3,151		6,229
Non-current liabilities
Non-current financial liabilities	—		9,177
Other non-current liabilities	3,894		957
Total non-current liabilities	3,894		10,134
Net assets (100%)	(3,136)		(8,742)
Book value	—		—

in € thousand	2023		2022
% ownership interest	51.3	%	51.3	%
Revenue	—		—
Interest income	—		—
Administration expense	(221)		—
R&D and Other expense	(351)		—
Depreciation and amortization	(561)		(1,106)
Interest expense	—		(292)
Tax income	61		236
Loss from continuing operations	(1,025)		(3,750)
Other comprehensive income	—		181
Total comprehensive loss	(1,025)		(3,932)
Dividends received	—		—

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2023

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

34.COMMITMENTS AND CONTINGENCIES

As of December 31, 2023, the Company has commitments of €62 thousand (December 31, 2022: €1,086 thousand) to acquire items of property, plant & equipment.

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RELATED PARTY DISCLOSURES

12 Months Ended

Dec. 31, 2023

RELATED PARTY DISCLOSURES

RELATED PARTY DISCLOSURES

35.RELATED PARTY DISCLOSURES

SCHMID is jointly controlled by Christian Schmid and Anette Schmid via direct shareholding and a community of heirs. Christian Schmid is also the CEO of the Company.

For further information on the sale and leaseback contract, signed in December 2023 with Schmid Grundstücke GmbH Co. KG, an entity controlled by Mrs. Schmid, for production facility and office buildings in Freudenstadt, refer to note 20. Leases.

Transactions with Key Management

Key management personnel are defined as those persons who are responsible for SCHMID´s worldwide operating business, based on their function within SCHMID or the interests of SCHMID. The following individuals belong or belonged to SCHMID´s key management:

Name	Function	Member of key management since/until
Markus Fröhlich	CRO	since summer 2021
Julia Natterer	CFO	since December 2021
Laurent Nicolet	Executive Asia Region	since May 2006
Helmut Rauch	COO	since August 1994
Ulrich Wein	Vice president Finance	until January 2022

The annual remuneration and related compensation costs recognized as expense during the reporting period only includes short-term employee benefits and amounts to €1,562 thousand in 2023 (2022: €1,262 thousand, 2021: €1,332 thousand). Short-term benefits include salaries, bonus, and other benefits such as medical, death and disability coverage, Company car and other usual facilities as applicable. The outstanding balances also include the liability in connection with the defined benefit obligation.

Transactions with related parties

In addition to the entities included in the combined financial statements (see note 2. Basis of Presentation), SCHMID maintains relationships with other related parties. Related parties comprise the following entities (not individuals):

Company	Relationship
Schmid Grundstücke GmbH & Co. KG	Jointly controlled by shareholders
Schmid Verwaltungs GmbH, Freudenstadt	Controlled by one shareholder
Schmid Silicon Technology Holding GmbH , Freudenstadt	Controlled by one shareholder (until June 2023)
Schmid Silicon Technology GmbH, Freudenstadt	Controlled by one shareholder (until June 2023)
SILIQN GmbH, Freudenstadt	Controlled by one shareholder
Schmid Polysilicon Production GmbH, Spreetal	Controlled by one shareholder
Schmid Energy Systems GmbH, Freudenstadt	Entity of Joint venture
Advanced Energy Storage Systems Investment Company, Saudi Arabia	Joint venture
SCHMID Avaco Korea, Co. Ltd., Korea	Joint venture

The following transactions are proceeded with related parties.

in € thousand	2023	2022	2021
Interest income on loans granted to
Shareholder	1,077	526	159
Interest expense on loans received from
Key management personnel	12	88	88
Other related parties	558	409	400
Shareholder	737	165	53
Purchases of goods or services
Joint ventures	3	2,511	20
Other related parties	236	663	618
Sale of goods or services
Joint ventures	427	505	817
Other related parties	11,801	592	797
Salary and Bonus
Shareholder	1,149	988	910
Key management personnel	1,562	1,262	1,332

in € thousand	12/31/2023	12/31/2022
Outstanding balances - Liabilities
Shareholder	24,102	24,064
Key management personnel	280	2,528
Joint ventures	358	358
Other related parties	25,359	15,345

in € thousand	12/31/2023	12/31/2022
Outstanding balances - Receivables
Shareholder	107	67,926
Joint ventures	2,655	951
Other related parties	221	23,062

The significant increase in Sale of goods or services as well as in Outstanding balances - Liabilities in 2023 are mainly due to the sale and leaseback transaction (for further information please refer to 20. Leases)

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EVENTS AFTER THE REPORTING PERIOD

12 Months Ended

Dec. 31, 2023

EVENTS AFTER THE REPORTING PERIOD

EVENTS AFTER THE REPORTING PERIOD

36.EVENTS AFTER THE REPORTING PERIOD

Business combination Saudi Arabia

In October 2023, the shareholders, Nusaned Investment (an investment company owned by SABIC) and SCHMID, mutually agreed to terminate the joint venture Advanced Energy Storage Systems Investment Company (Saudi Arabia) via share exchange. After closing of the transaction on January 1 2024, SCHMID owns 100% of the shares of Schmid Energy Systems GmbH (SES), the only subsidiary owned by the joint venture entity. SCHMID transferred its shares in AES to SABIC and in exchange AES transferred its shares in SES to SCHMID. The transaction falls under the scope of IFRS 3. As SCHMID obtains control over SES through an increase in it´s equity shareholdings in SES the transaction is treated as as step acquisition in accordance with IFRS 3.41.

As the closing of the transaction occurred only recently, the Company has not yet completed the evaluation of the final consideration transferred and performed the detailed purchase price allocation analysis necessary to derive the required estimates of the fair value of the acquired assets and liabilities assumed.

Signing of the XJ repurchase agreement

SCHMID concluded an agreement with XJ Harbour HK Limited to exchange XJ Harbour HK Limited’s minority interest in SCHMID’s Chinese subsidiary for TopCo shares and €30 million in cash payments over a 455 day period after the closing of the Business Combination. The first €10 million payment will come due at the closing of the Business Combination.

Closing Business Combination

SCHMID Group and Pegasus Digital Mobility Acquisition Corp. announced the completion of their business combination. As a result, starting April 30, 2024 the existing company’s legal name is SCHMID Group N.V. SCHMID Group N.V. shares started trading on the Nasdaq Global Select Market under the ticker symbol “SHMD”. SCHMID signed non-redemption and investment agreement for approximately USD 26 million in committed capital with the business combination (before costs).

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MATERIAL ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2023

MATERIAL ACCOUNTING POLICIES

Business combination

Business combination

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

● fair values of the assets transferred

● liabilities incurred to the former owners of the acquired business

● equity interests issued by the group, and

● fair value of any asset or liability resulting from a contingent consideration arrangement,

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Company recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred.

The excess of the:

● consideration transferred

● amount of any non-controlling interest in the acquired entity, and

● acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss.

Intangible assets

Intangible assets

General

Intangible assets are measured at cost upon initial recognition. In subsequent periods, intangible assets are recognized at cost less any accumulated amortization and impairment losses. Intangible assets with finite useful lives are amortized on a straight-line basis. The estimated (remaining) useful lives as well as the amortization method are subject to annual reviews. If necessary, adjustments due to changes of the expected useful life or of the amortization method are accounted for prospectively as changes in accounting estimates. Amortization expenses for intangible assets are included in cost of sales.

Research and development (R&D) costs

In accordance with IAS 38 (Intangible Assets), expenses incurred during the R&D phase must be accounted for separately. Research is defined as original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. Such costs are expensed in the period incurred. Development is defined as the technical and commercial implementation of research findings.

In accordance with IAS 38, development costs must be capitalized if the criteria set out in IAS 38.57 are fulfilled. The Company starts to capitalize costs when management board approval is obtained. The approval is only provided when it is ensured that adequate technical, financial and other resources are available to complete the project and that the Company intends to complete and use the intangible asset. Furthermore, prior to approval, the development project leader provides the management board with an overview of the future economic benefits based on external market studies and internal analysis, as well as the documentation of technical feasibility. The Company has an R&D controlling system in place which enables management to determine expenditures attributable to specific technologies during their development.

The Company capitalizes costs for the development of a technology until the time that development of such technology is completed. The capitalized development costs are amortized on a straight-line basis over the economic useful life of 4–10 years based on the expected useful life of such technology. Amortization of capitalized development costs commences upon completion of the development project (technology).

Intangible assets with indefinite useful lives or intangible assets not yet available for use are not amortized; however, they are tested for impairment annually and whenever there is an indication that the intangible asset may be impaired based on the individual asset or on the level of the related cash-generating unit.

Patents and licenses

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated straight-line amortization and accumulated impairment losses. The useful life for patents and licenses is 5–8 years.

Borrowing costs

Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time (> 12 months) to get ready for their intended use or sale. Other borrowing costs are expensed in the period in which they are incurred.

Impairment tests

Impairment tests

At the end of each reporting period, SCHMID assesses whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, SCHMID estimates the asset’s recoverable amount. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. An asset’s recoverable amount is the higher of an asset’s or cash generating unit (“CGU”)’s fair value less costs of disposal and its value in use. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are measured at cost, net of accumulated depreciation and any accumulated impairment losses. Costs of construction capitalized include all attributable direct costs including material and production overheads, and, where applicable, an initial estimate of the cost of dismantling and removing the item and restoring the site on which it is located.

Subsequent expenditures on assets are capitalized only when it is probable that future economic benefits associated with the expenditure will flow to SCHMID. Repairs and maintenance are expensed in profit or loss in the period the costs are incurred.

If items of property, plant and equipment are sold or disposed of, the gain or loss arising from the disposal is recognized as other operating income or expense in the combined statement of profit or loss and other comprehensive income (loss).

Depreciation is calculated on a straight-line basis based on the following useful lives:

	Useful life
Buildings and building improvements	10 - 50 years
Technical equipment and machinery	2 - 21 years
Office and other equipment	3 - 13 years

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Leases

Leases

SCHMID’s lease obligations primarily relate to rights to buildings mainly for its office, R&D and production premises as well as to leased vehicles. As lease contracts are negotiated on an individual basis, lease terms contain a range of different terms and conditions. Lease contracts are typically entered for a period of 1–10 years.

As a lessee, at the inception of a contract, SCHMID assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration.

SCHMID recognizes right of use assets which represent a right to use the underlying leased assets and corresponding lease liabilities which represent the present value of future lease payments, excluding short-term leases (lease term of 12 months or less from commencement date and do not contain a purchase options) and leases of low value assets acquisition costs less than €6 thousand), in the combined statement of financial position at the date at which the leased asset is available for use.

Liabilities arising from a lease are initially measured at present value of lease payments discounted using interest rate implicit in the lease or incremental borrowing rate in case interest rate implicit in the lease is not readily determinable.

Main components of the lease payments included in the measurement of the lease liability comprise the following:

● fixed lease payments;

● variable lease payments that depend on an index or rate, initially measured using the index or rate as at the commencement date;

● lease payments in an optional renewal period if SCHMID is reasonably certain to exercise an extension option;

● non-lease components are not separated from lease components but accounted for as a single lease components.

Lease payments contain principal elements and interest. Interest is presented as part of finance costs in the combined statements of profit and loss and other comprehensive income using the effective interest method. Principal and interest portion of lease payments have been presented within financing activities in the statement of cash flow. The carrying amount of lease liabilities is remeasured if there is change in the future lease payments due to change in index or rate.

Right of use assets at the lease commencement date are measured at cost less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities recognized. Cost of right of use assets includes lease liabilities, initial direct costs, prepayments made on or before the commencement date and less any lease incentives received. The right of use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to SCHMID by the end of the lease term or the cost of the right of use asset reflects that SCHMID will exercise a purchase option. In that case the right of use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. The right of use asset is assessed for impairment in case of a triggering event.

Assets related to retirement obligations for leased buildings are included in the cost of right of use assets for the respective underlying building lease.

If SCHMID acts as a lessor and the contract is classified as a finance lease, it is accounted for as a financing transaction. A receivable is valued at the amount of the net investment in the lease and the resulting interest income is recognized as income. The classification of a contract as an operating lease with SCHMID acting as the lessor means that the asset remains on SCHMID`s balance sheet. The income from it is recognized in the income statement over the term of the lease. The asset is amortized in accordance with the applicable IFRS standard, if necessary.

Sale and Leaseback Transaction

Sale and Leaseback Transaction

When SCHMID sells its assets and leases them back, it needs to be determined whether the sales part of the transaction qualifies as a true sale according to IFRS 15. If the transfer of an asset does not meet the requirements of IFRS 15 to be recognized as a sale, the asset remains on the balance sheet, and a financial liability is recognized equal to the transfer proceeds in accordance with IFRS 9.

In the case of a qualified sale, SCHMID measures the right of use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained. Consequently, SCHMID only recognizes any gain or loss that pertains to the rights transferred to the buyer-lessor.

If the amount received for selling an asset is not the same as the value of the asset, or if the lease payments are not in line with market rates, SCHMID will make adjustments to ensure that the sale proceeds are measured at a fair value. If the lease terms are below market rates, the difference will be treated as a prepayment of future lease payments. Conversely, if the lease terms are above market rates, the excess amount will be considered as additional financing provided by the buyer-lessor to the seller-lessee (IFRS 16.101).

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents in the statement of financial position and statement of cash flows comprise cash at banks and short-term highly liquid deposits with original maturities of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.

Financial Instruments

Financial Instruments

Financial instruments are contracts that give rise to a financial asset for one entity and to a financial liability or equity instrument for another entity. SCHMID recognizes a financial instrument when it becomes a party to its contractual provisions. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the settlement date.

Financial assets and financial liabilities are offset, and the net amount is reported in the combined statement of financial position if there is a currently enforceable legal right to set off the recognized amounts and there is an intention to settle on a net basis or to realize the assets and settle the liabilities simultaneously. SCHMID currently has no such assets and liabilities.

Financial assets

SCHMID’s financial assets include cash and cash equivalents, trade and other receivables as well as other financial assets. Other financial assets consist of a loan to one shareholder and other loans.

Financial assets are initially measured at fair value plus, in the case of a financial asset not measured at fair value through profit or loss, transaction costs. As an exception of this general rule, trade receivables are measured at their transaction price.

Financial assets are classified at initial recognition as either measured at amortized cost (“AC”), fair value through other comprehensive income (“FVOCI”), or fair value through profit or loss (“FVTPL”) depending on the contractual cash flows and SCHMID’s business model for managing them. For all financial assets SCHMID has the objective to hold financial assets in order to collect the contractual cash flows. If the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, SCHMID will measure these financial assets at amortized cost under consideration of impairment (see following section). If the contractually agreed cash flows of a financial asset are not solely payments of principal and interest on principal amount outstanding, the respective financial asset has to be classified as measured at FVTPL. Currently all financial assets are measured at amortized cost that are determined by applying the effective interest rate (EIR) method. Effects resulting from impairment of financial assets that are not classified as FVTPL (including reversals of impairment losses on financial assets) are presented in a separate line item in profit or loss in accordance with IAS 1.82(ba), while changes in amortized cost due to the application of the EIR method are presented in finance income / expense.

A financial asset is derecognized (i.e., removed from SCHMID’s combined statement of financial position) when the rights to receive cash flows from the financial asset have expired or have been transferred and SCHMID has transferred substantially all risks and rewards of ownership.

Impairment of financial assets – expected credit losses (“ECLs”)

All financial assets subsequently measured at amortized cost are required to be impaired at initial recognition in the amount of their expected credit loss (“ECL”). ECLs are based on the difference between the cash flows due in accordance with the contract and all the cash flows that SCHMID expects to receive. ECLs are a probability-weighted estimate of credit losses.

For trade receivables with no significant financing component SCHMID applies the simplified approach as required by IFRS 9, which requires lifetime ECLs to be recognized from initial recognition of the receivables instead of monitoring the development of the customers’ credit risk. As a result, trade receivables are clustered into stage 2. In case of objective evidence of impairment, trade receivables have to be clustered into stage 3. The ECL for the uninsured proportion of the trade receivables is based on the probability of default of its customers provided by an external source.

For cash and cash equivalents advantage is taken of the simplification available for financial instruments with a low credit risk (“low credit risk exemption”) as of the reporting date. Factors that can contribute to a low credit risk assessment are debtor-specific rating information and related outlooks. The requirement for classification with a low credit risk is regarded to be fulfilled for counterparties that have at least an investment grade rating; in this case there is no need to monitor credit risks for financial instruments with a low credit risk. The default probabilities applied to determine the expected credit losses for cash and cash equivalents are based on credit default swap spreads that are quoted on markets, which take future-oriented macroeconomic data into account.

For the other financial assets, primarily the loan granted to one of SCHMID’s shareholder, the low credit risk exemption is not applied. Instead, it was considered credit-impaired as there was no repayment. The loan was repaid during 2023. For the determination of the ECL allowance the term-specific rating-based probability of default rates and historical recovery rates were applied.

In general, SCHMID defines a default event as a situation in which the debt is no longer recoverable. If the financial instrument is perceived to be unrecoverable, then the expectation is that future contractual cash flows will not occur. At this point in time, the balance is written off after giving consideration to any possible security that is available.

Financial liabilities

SCHMID’s financial liabilities include trade payables and other liabilities, lease liabilities (see note 20. Leases), a share option and borrowings. Borrowings consist of loans from financial institutions and other third parties, debt funds and related parties (including bifurcated embedded derivatives).

Financial liabilities are classified as measured at amortized cost ("FLAC") or fair value through profit or loss (“FVTPL”). All financial liabilities are recognized initially at fair value less, in the case of a financial liability not measured at FVTPL, directly attributable transaction costs.

Financial liabilities at FVTPL are measured at fair value and gains and losses are recognized in finance income / expense. Currently, SCHMID only accounts for a share option as well as separated embedded derivatives of loans as a financial liability at FVTPL. All other financial liabilities are subsequently measured at amortized cost using the Effective Interest (“EIR”) method. When applying the EIR method, SCHMID generally amortizes any fees, transaction costs and other premiums or discounts that are included in the calculation of the effective interest rate over the expected life of the financial instrument. Gains and losses are recognized in interest expense when the liabilities are derecognized as well as through the EIR amortization process. If SCHMID revises its estimates of the cash flows used for the initial EIR method of a financial liability, the carrying amount of the financial liability is being adjusted to reflect that fact.

An embedded derivative in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. The assessment whether to separate an embedded derivative is done only once at initial recognition of the hybrid contract. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows. If there are multiple embedded derivatives in a single hybrid contract that share the same risk exposure and are interdependent, they have to be treated as a combined embedded derivative. The (combined) embedded derivative is measured at fair value with changes in fair value recognized in profit or loss. The remaining host contract is measured at amortized cost.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The resulting gain or loss is recognized in the Combined Statements of Profit or Loss and Other Comprehensive Income (Loss).

Income Taxes

Income Taxes

Current income taxes

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. This includes liabilities and/or receivables for the current period as well as for prior periods. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the reporting entity SCHMID operates and generates taxable income.

Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred taxes

SCHMID uses the liability method of accounting for income taxes. Deferred income tax assets and liabilities represent temporary differences between the carrying amounts of assets and liabilities in the combined financial statements and their corresponding tax basis used in the computation of taxable income. Deferred tax however is not recognized on the initial recognition of goodwill, or the initial recognition of an asset or liability (other than in a business combination) in a transaction that affects neither tax nor accounting income.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and any unused tax losses to the extent it is probable that taxable profit will be available against which the deductible temporary differences, the carry forward of unused tax credits and the unused tax losses can be utilized.

Deferred tax liabilities are recognized for all taxable temporary differences associated with investments in entities and associates, except where SCHMID is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the asset is realized, or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax liabilities and assets are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and SCHMID intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax items are recognized similar to the underlying transaction either in profit or loss, other comprehensive income or directly in equity. Changes in deferred tax assets or liabilities are recognized as a component of tax expense (income) in the combined statement of profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

Deferred tax assets and deferred tax liabilities are not discounted and are always classified as non-current asset or liabilities in the balance-sheet.

SCHMID’s business activities are complex, and the related domestic and foreign tax interpretations, regulations, laws and case law are constantly changing. These issues can lead to uncertain tax positions. In accordance with IFRIC 23, uncertain tax positions are accounted for if it is probable that the tax authorities will not accept the income tax treatment applied. The better forecast of the "most likely amount" and the "expected value" has to be recognized.

Provisions

Provisions

Provisions are recognized when SCHMID has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Fair Values of Assets and Liabilities

Fair Values of Assets and Liabilities

Fair value is a market-based measurement. For some assets and liabilities, observable market transactions or market information is available. For other assets and liabilities, observable market transactions or market information might not be available. When a price for an identical asset or liability is not observable, another valuation technique is used. To increase consistency and comparability in fair value measurements, there are three levels of the fair value hierarchy:

● Level 1: contains the use of unadjusted quoted prices in active markets for identical assets or liabilities

● Level 2: inputs are other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly

● Level 3: inputs are based on unobservable market data

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

SCHMID recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Pension benefits

Pension benefits

SCHMID operates one defined benefit pension plan relating to one person. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. The defined benefit obligation is recognized within non-current provisions for pensions.

Remeasurements, comprising of actuarial gains and losses, are recognized immediately in the statement of financial position with a corresponding debit or credit in Other comprehensive income ("OCI") in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Net interest is calculated by applying the discount rate to the net defined benefit liability. SCHMID recognizes the changes in the net defined benefit obligation under OCI.

Revenue Recognition

Revenue Recognition

The Company records revenue in accordance with IFRS 15 “Revenue from Contracts with Customers". The core principle of the guidance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. This guidance defines a five-step process to achieve this core principle and, in doing so, judgment and estimates are required within the revenue recognition process including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Revenue amounts are presented net of discounts.

Revenue from sales of machines and spare parts is recognized when the customer obtains control over the products sold upon delivery. Sales of machines sometimes include installation services and extended warranty services which, when requested, are priced as a bundle. However, when sold together, these promises qualify as separate performance obligations as they are capable of being distinct and distinct within the context of the contract. The Company allocates transaction prices to these performance obligations based on their relative standalone selling price using a cost-plus margin approach. The respective revenue is recognized after the installation is complete, which is usually after a period of two to three weeks. When selling machines, customers payments are typically divided into an advanced payment on receipt of order confirmation, an advance payment upon delivery and, when installation services are requested, a final payment after installation and customer acceptance of the services. Invoices are according to contractual terms typically payable within 30 – 90 days. Revenue from the sale of extended warranties is recognized overtime on a straight-line basis over the extended warranty period as there is no certain pattern of warranty cases over time and therefore, the benefit to the customer transfers ratably throughout the extension period.

The Company offers repair services, inspections and installations of modifications (“Services”), which are optional for customers and priced separately. When these promises are included in a contract with others, the Company considers these to be distinct performance obligations and allocates transaction prices based on their relative standalone selling price. Service revenue is recognized after the Company has satisfied the performance obligation by transferring the promised service to the customer which is usually not more than a period of two to three weeks. Services are invoiced after the service has been rendered and according to contractual terms and are typically payable within 30 days.

Certain of the Company’s contracts include the provision of development services over an extended period of up to three years (long-term development contracts). The Company develops machinery according to specific requirements provided by the Customer in exchange for nonrefundable consideration provided at fixed points throughout the contract and additional consideration based on the achievement of milestones.

In case of these long-term development contracts, revenue is recognized over time as these contracts meet the criteria of IFRS 15.35. Revenue resulting from fixed payments that the Company receives — which is not connected to certainly defined results — is recognized on a straight-line basis over the term of the contract as the Company efforts and inputs needed are expected to be relatively consistent overtime. Moreover, the Company receives variable consideration at the completion of certain milestones. Due to the high degree of uncertainty with respect to such payments, these are not included in the transaction price recognized overtime and instead are recorded as revenue upon completion of the relevant milestone. If the advance payments invoiced/received exceed the services already provided, the overpayment will be recognized and disclosed under contract liabilities. A contract asset is recognized if the services rendered exceed the advance payments invoiced/received. If the right to consideration is unconditional, a contract asset becomes a trade receivable. This is the case if the due date of the consideration is only dependent on the passage of time. Impairment of contract assets is measured, recognized and disclosed on the same basis as for financial assets within the scope of IFRS 9. SCHMID applies industry-standard payment terms when invoicing.

Inventories

Inventories

SCHMID capitalizes and measures existing inventory at the lower of cost or net realizable value. The average cost method is used as the measurement standard for acquisition and production costs. The production costs include not only the direct unit costs but also an appropriate share of material and production overheads. Where necessary, impairments to reflect lower net realizable values as well as other inventory risks are recorded. An impairment loss is reversed, if the reasons for the write-down in the past no longer exist.

Government Grants

Government Grants

The Company has received various government grants related to innovation projects encouraged by governmental authorities which generally reimburse a specified amount or proportion of the costs related to such projects. As these grants are not received in the course of the normal trading transactions, these grants are treated as government grants in accordance with IAS 20. Government grants related to assets are recognized on the date on which the conditions for receipt of the grant are met and are deducted from the carrying amount of the asset; they are recognized in profit or loss over the life of a depreciable asset as a reduced depreciation expense.

Government grants related to costs incurred by SCHMID are recognized in profit or loss as other operating income in the period in which the Company recognizes as expenses the related costs to be compensated by the grants.

Joint Arrangements

Joint Arrangements

Under IFRS 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. SCHMID only has investments in joint ventures. These are accounted for using the equity method, after initially being recognized at cost in the combined balance sheet.

Under the equity method of accounting, the investments are initially recognized at cost and adjusted thereafter to recognize SCHMID’s share of the post-acquisition profits or losses of the investee in profit or loss, and SCHMID’s share of movements in other comprehensive income of the investee in other comprehensive income. Where SCHMID’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, SCHMID does not recognize further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealized gains on transactions between SCHMID and its associates and joint ventures are eliminated to the extent of SCHMID’s interest in these entities. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by SCHMID.

The carrying amount of equity-accounted investments are tested for impairment in accordance with the policy described above.

New and amended standards adopted by SCHMID

New and amended standards adopted by SCHMID

The Company has applied the following standards and amendments for the first time for its annual reporting period commencing 1 January 2023:

● IFRS 17 Insurance Contracts

● Definition of Accounting Estimates – amendments to IAS 8

● International Tax Reform – Pillar Two Model Rules – amendments to IAS 12

● Deferred Tax related to Assets and Liabilities arising from a Single Transaction – amendments to IAS 12

● Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

New Standards and Interpretations not yet adopted by SCHMID

New Standards and Interpretations not yet adopted by SCHMID

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning on or after January 1, 2023 and have not been applied in preparing these combined financial statements. None of these standards are expected to have a significant effect on the combined financial statements of SCHMID.

Standard	Effective date
Amendment to IFRS 16 – Leases on sale and leaseback	1/1/2024
Amendments to IAS 1:
- Classification of liabilities as current or non-current
- Non-current liabilities with covenants	1/1/2024
Amendment to IAS 7 and IFRS 7 – Supplier finance	1/1/2024
Amendment to IAS 21 – Lack of Exchangeability	1/1/2025

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BASIS OF PREPARATION (Tables)

12 Months Ended

Dec. 31, 2023

BASIS OF PREPARATION

Schedule of legal entities which comprise combined financial statements and certain investments in joint ventures accounted for using equity method

	Country of	Ownership Interest
Name	incorporation	12/31/2023		12/31/2022
Gebr. Schmid GmbH	Germany	100	%	100	%
SCHMID Systems, Inc.	USA	100	%	100	%
SCHMID Singapore Pte. Ltd.	Singapore	90	%	90	%
SCHMID Korea Co., Ltd	South Korea	100	%	100	%
SCHMID Asia Ltd.	Hong Kong	100	%	100	%
SCHMID Technology Guangdong Co., Ltd.	China	76	%	76	%
SCHMID China Ltd.	Hong Kong	100	%	100	%
SCHMID Shenzhen Ltd.	China	100	%	100	%
SCHMID (Kunshan) Co., Ltd.	China	100	%	100	%
SCHMID Taiwan Ltd.	Taiwan	86	%	86	%
SCHMID Automation (Zhuhai) Co., Ltd.	China	100	%	100	%
SCHMID Solar (Shenzhen) Ltd.	China	100	%	100	%
SCHMID Trading (Zhongshan) Co. Ltd.	China	100	%	—	%
Joint ventures
Advanced Energy Storage Systems Investment Company	Saudi Arabia	51	%	51	%
SCHMID Avaco Korea, Co. Ltd.	South Korea	50	%	50	%

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MATERIAL ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2023

MATERIAL ACCOUNTING POLICIES

Schedule of useful lives of property, plant and equipment

	Useful life
Buildings and building improvements	10 - 50 years
Technical equipment and machinery	2 - 21 years
Office and other equipment	3 - 13 years

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SIGNIFICANT EVENTS IN THE PERIOD ENDED DECEMBER 31, 2023 (Tables)

12 Months Ended

Dec. 31, 2023

SIGNIFICANT EVENTS IN THE PERIOD ENDED DECEMBER 31, 2023

Summary of significant impacts of the significant events on the financial statements

			Shareholder		Receivable
	Silicon		receivable		Silicon exit		Group14		Debt
in € thousand	receivables		CS		bonus		shares		funds
01/01/2023	—		65,589		—		—		(104,166)
Other income	—				4,700	(c)	—		—
Reversal of impairment	21,375	(a)	1,418	(e)	—		—		—
Finance income	—		3,173		—		—		15,852	(f)
Finance expense	—		—		—		—		(4,302)
Cash payments	—		(70,000)	(d)	—		—		70,000	(h)
Non-cash settlement of receivables	(17,664)	(b)	—		—		17,664		—
Non-cash settlement of loans	(2,800)	(g)	—		—		(17,664)	(i)	22,616
Other	(911)		(73)		—		—		—
12/31/2023	—		107		4,700		—		—

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SEGMENT AND GEOGRAPHIC INFORMATION (Tables)

12 Months Ended

Dec. 31, 2023

SEGMENT AND GEOGRAPHIC INFORMATION

Summary of key financial metrics by segment and reconciliation from total segment adjusted EBITDA to loss before income tax

	2023
	Technical			Total
	equipment	Spare parts		management
in € thousand	and processes	and services	Other	reporting
Revenues	78,743	11,503	—	90,246
Segment adjusted EBITDA	12,872	3,787	22,440	39,099

	2022
	Technical			Total
	equipment	Spare parts		management
in € thousand	and processes	and services	Other	reporting
Revenues	78,778	16,280	—	95,058
Segment adjusted EBITDA	14,155	9,329	(3,546)	19,937

	2021
	Technical			Total
	equipment	Spare parts		management
in € thousand	and processes	and services	Other	reporting
Revenues	27,587	11,894	—	39,481
Segment adjusted EBITDA	1,868	6,873	(11,276)	(2,534)

in € thousand	2023	2022	2021
Total segment adjusted EBITDA	39,099	19,937	(2,534)
Financial result	9,594	(11,988)	(14,654)
Amortization and depreciation	(6,904)	(6,283)	(4,893)
Share of profit (loss) in joint ventures	(1,057)	—	—
Income tax benefit (expense)	(2,778)	1,924	(5,195)
Net income (loss) for the period	37,953	3,591	(27,277)

Summary of revenue and non-current assets that can be split into geographical areas

in € thousand	2023	2022	2021
China	15,308	39,424	17,652
Taiwan	1,634	12,846	3,814
USA	17,522	11,478	3,375
Germany	9,577	10,743	5,390
Malaysia	16,681	7,915	—
Austria	17,810	3,928	3,793
Other	11,714	8,724	5,457
Total	90,246	95,058	39,481

in € thousand	12/31/2023	12/31/2022
Germany	26,853	28,334
China	2,504	1,922
Other	376	266
Total	29,733	30,523

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REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES (Tables)

12 Months Ended

Dec. 31, 2023

REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES

Schedule of revenues by types of sales

in € thousand	2023	2022	2021
Machines1	77,554	73,151	25,626
Spare Parts	9,722	14,302	8,081
Service2	1,781	1,978	3,802
Other	1,189	5,627	1,971
Total	90,246	95,058	39,481

(1) Included within the “Machines” category is revenue from the sale and installation of machines, long-term development and extended warranties.

(2) Included within the “Services” category is revenue from repair services, installations of modifications and inspections.

Schedule of changes to contract liabilities

in € thousand	2023	2022	2021
Balance at January 1	30,569	25,682	17,378
Sales revenues included in contractual liabilities at the beginning of the period	(30,406)	(25,682)	(17,378)
Increase due to customer payments received	17,769	30,569	25,682
Balance at December 31	17,931	30,569	25,682

Summary of cost of sales included in cost types

in € thousand	2023	2022	2021
Personnel expenses	(16,690)	(16,221)	(14,094)
Material expenses	(35,767)	(34,274)	(9,519)
Depreciation/amortization	(4,904)	(4,147)	(2,746)
Other expenses	(6,488)	(7,079)	(4,147)
Total cost of sales	(63,849)	(61,721)	(30,506)

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SELLING (Tables)

12 Months Ended

Dec. 31, 2023

SELLING

Schedule of selling expenses

in € thousand	2023	2022	2021
Personnel expenses	(8,295)	(8,017)	(5,535)
Legal and consulting fees	(834)	(873)	(581)
Sales Commission	(241)	(475)	(95)
Distribution related external administration	(1,537)	(582)	(801)
Advertisement	(649)	(428)	(294)
Other expenses	(1,021)	(995)	(545)
Total selling expenses	(12,577)	(11,369)	(7,851)

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GENERAL ADMINISTRATION (Tables)

12 Months Ended

Dec. 31, 2023

RESEARCH AND DEVELOPMENT EXPENSES

Schedule of general administrative expenses

in € thousand	2023	2022	2021
Personnel expenses	(4,131)	(3,992)	(3,692)
Legal and consulting fees	(4,401)	(1,681)	(1,584)
External administrative expenses	(965)	(692)	(529)
Other administrative expenses	(3,042)	(607)	(493)
Total administrative expenses	(12,538)	(6,973)	(6,298)

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RESEARCH AND DEVELOPMENT EXPENSES (Tables)

12 Months Ended

Dec. 31, 2023

RESEARCH AND DEVELOPMENT EXPENSES

Schedule of research and development expenses

in € thousand	2023	2022	2021
Personnel expenses	(2,261)	(1,888)	(1,319)
Depreciation/amortization	(877)	(910)	(627)
Legal and consulting fees	(587)	(614)	(422)
R&D related external administration	(906)	(856)	(282)
Other research and development expenses	(517)	(549)	(83)
Total research and development expenses	(5,148)	(4,818)	(2,733)

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OTHER INCOME (Tables)

12 Months Ended

Dec. 31, 2023

OTHER INCOME

Schedule of other income

in € thousand	2023	2022	2021
Foreign currency gains	2,969	1,503	538
Bonus payments	9,200	—	—
Other miscellaneous income	3,815	1,871	1,387
Total other income	15,985	3,375	1,924

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OTHER EXPENSES (Tables)

12 Months Ended

Dec. 31, 2023

OTHER EXPENSES

Schedule of other expenses

in € thousand	2023	2022	2021
Foreign currency losses	(2,388)	(2,399)	(2,942)
Other taxes	(166)	(122)	(776)
Disposal of assets	—	(231)	(154)
Miscellaneous other items	(65)	(236)	(908)
Total other expenses	(2,620)	(2,988)	(4,779)

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REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET (Tables)

12 Months Ended

Dec. 31, 2023

REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET

Schedule of reversal of impairments of financial assets

In € thousand	12/31/2023	12/31/2022	12/31/2021
Reversal of receivables from the Silicon Group	21,375	—	—
Reversal of impairment of shareholder loan (included in trade and other receivables)	1,418	3,091	3,284
Other	(97)	—	49
Total	22,696	3,091	3,333

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FINANCIAL RESULT (Tables)

12 Months Ended

Dec. 31, 2023

FINANCIAL RESULT

Schedule of financial results

in € thousand	2023	2022	2021
Finance income	19,685	5,758	3,360
thereof fair value changes	—	1,669	124
thereof interest income and similar proceeds	3,883	4,089	3,236
thereof gain from loan extinguishment	15,802	—	—
Finance expenses	(10,091)	(17,746)	(18,014)
thereof interest portion of lease payments	(103)	(68)	(49)
thereof interest expense	(9,988)	(17,678)	(17,965)
Financial result	9,594	(11,988)	(14,654)

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

INCOME TAXES

Summary of income taxes recognized in the Combined Statement of Profit or Loss and Other Comprehensive Income

in € thousand	2023	2022	2021
Current income tax (expense) / income	(1,044)	(2,908)	(1,839)
thereof prior years	168	(6)	(35)
Deferred tax (expense) / income	(1,735)	4,832	(3,357)
thereof temporary differences	(1,853)	12,693	(12,367)
thereof tax loss/interest carryforwards	118	(7,861)	9,010
Income tax as per statement of profit or loss	(2,778)	1,924	(5,195)

Summary of reconciliation of expected tax expense and reported tax expense

in € thousand	2023		2022		2021
Income (loss) before income tax	40,732		1,667		(22,082)
Income tax rate	29.125	%	29.125	%	29.125	%
Expected income tax income (expense)	(11,863)		(485)		6,431
Tax rate differences	891		911		(2,270)
Non-deductible expenses	(79)		(573)		(1,204)
Tax -free income	1,263		495		2,755
Trade tax modifications	(116)		(269)		(417)
Tax effects from withholding tax	(166)		(370)		(1,485)
Tax effects from prior years	488		642		634
Permanent differences resulting from the statement of financial position	2,912		(8)		(2,486)
Loss utilisation of previously not recognized tax loss carryforwards	0		1,152		556
Change in valuation allowance from temporary differences and tax loss carryforwards	3,598		927		(4,904)
Change from interest carryforwards	333		(957)		(2,827)
Other reconciling items	(38)		460		21
Income tax benefit (expense)	(2,778)		1,924		(5,195)
Effective tax rate in %	6.82	%	(115.46)	%	(23.53)	%

Summary of deferred tax assets ("DTA") and deferred tax liabilities ("DTL") recognition on the financial statement line items and deferred tax assets not recognized

	Deferred taxes	Deferred taxes in
	in statement of	other comprehensive	Currency translation
	profit or loss	income	adjustments	DTA	DTL
in € thousand				2023	2023
Non-current assets	(13,373)	—	(116)	3,628	(6,970)
Intangible assets	239	—	(126)	1,843	(4,193)
Property, plant and equipment	(2,167)	—	9	155	(2,542)
Financial assets	(11,444)	—	1	1,630	(235)
Current assets	14,109	—	49	382	(5,584)
Inventories	(487)	—	(6)	220	(598)
Receivables and other assets	15,526	—	52	149	(3,985)
Other current assets	(899)	—	3	—	(956)
Cash and cash equivalents	(31)	—	1	13	(44)
Non-current liabilities	3,288	(7)	(8)	2,813	(7,757)
Non-current borrowings	868	—	4	17	(7,433)
Provisions for pensions	52	(7)	(7)	140	(67)
Non-current provisions	(161)	—	—	60	(257)
Non-current lease liability	2,529	—	(5)	2,596	—
Current liabilities	(8,820)	—	(124)	8,472	(2,998)
Current borrowings	(7,995)	—	—	3,803	(575)
Current contract liabilities	(929)	—	(10)	1,525	—
Trade payables and other liabilities	520	—	(109)	1,600	(665)
Other current liabilities	629	—	(20)	1,104	(30)
Current lease liability	121	—	(4)	210	—
Current provisions	(1,166)	—	19	230	(1,727)
Tax loss/interest carryforward	3,061	—	(2)	6,167	—
Tax Loss Carryforward (CIT)	1,693	—	(2)	3,408	—
Tax Loss Carryforward (Trade Tax)	1,368	—	—	2,759	—
Interest Carryforward	—	—	—	—	—
Gross value	(1,735)	(7)	(194)	21,463	(23,308)
Netting				(18,920)	18,920
Recognition in the statement of financial position				2,543	(4,388)

	Deferred taxes	Deferred taxes in
	in statement of	other comprehensive	Currency translation
	profit or loss	income	adjustments	DTA	DTL
in € thousand				2022	2022
Non-current assets	9,460	—	(44)	15,085	(4,937)
Intangible assets	(28)	—	45	2,084	(4,547)
Property, plant and equipment	(78)	—	1	153	(381)
Financial assets	9,566	—	—	12,848	(9)
Current assets	(18,238)	—	70	1,801	(21,161)
Inventories	51	—	(3)	246	(131)
Trade receivables and other receivables	(18,193)	—	70	1,554	(20,969)
Other current assets	(96)	—	2	—	(60)
Cash and cash equivalents	—	—	—	—	—
Non-current liabilities	8,138	(88)	(577)	348	(8,571)
Non-current financial liabilities	7,334	—	—	—	(8,287)
Provisions for pensions	513	(88)	(575)	93	(65)
Non-current provisions	256	—	(1)	120	(155)
Non-current lease liability	35	—	(1)	136	(64)
Current liabilities	13,333	—	(67)	15,871	(1,453)
Current financial liabilites	8,367	—	—	11,223	—
Current contract liabilities	2,351	—	(4)	2,464	—
Trade payables and other liabilities	1,209	—	(51)	1,281	(757)
Other current liabilities	676	—	(5)	545	(80)
Current lease liability	27	—	(1)	93	—
Current provisions	704	—	(5)	266	(616)
Tax loss/interest carryforward	(7,861)	—	12	3,108	—
Tax Loss Carryforward (CIT)	(4,535)	—	12	1,717	—
Tax Loss Carryforward (Trade Tax)	(3,326)	—	—	1,392	—
Interest Carryforward	—	—	—	—	—
Gross value	4,832	(88)	(606)	36,213	(36,122)
Netting				(33,619)	33,619
Recognition in the statement of financial position				2,594	(2,504)

	2023		2022		2021
in € thousand	Tax base	DTA	Tax base	DTA	Tax base	DTA
Deductible temporary differences	41,498	10,805	34,149	8,984	65,199	18,070
Tax loss carryforward (CIT)	91,405	14,701	108,229	17,415	75,903	12,641
Tax loss carryforward (trade tax)	49,147	6,536	65,308	8,686	45,834	6,096
Interest carryforward	35,229	9,089	36,956	9,535	33,209	8,568

Summary of maturities of the tax loss carryforwards for which no deferred tax assets were recognized

in € thousand	2023	2022	2021
Up to 5 years	2,685	5,107	3,310
Up to 10 years	1,772	1,064	927
Up to 15 years	4,508	5,187	3,943
Up to 20 years	—	—	340
unlimited	131,586	162,177	113,216

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INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2023

INTANGIBLE ASSETS

Schedule of intangible assets

	Development	Patents and
in € thousand	Costs	licenses	Total
Costs of acquisition
1/1/2023	22,832	1,042	23,874
Additions	2,915	359	3,274
Disposals/Retirements	—	—	—
Foreign exchange differences	(17)	(28)	(46)
12/31/2023	25,729	1,372	27,102
Accumulated amortization/write downs
1/1/2023	7,495	552	8,046
Amortization	3,975	158	4,133
Disposals/Retirements	—	—	—
Foreign exchange differences	(17)	(26)	(44)
12/31/2023	11,452	684	12,136
Carrying amount:
1/1/2023	15,337	490	15,828
12/31/2023	14,278	689	14,966

	Development	Patents and
in € thousand	Costs	licenses	Total
Costs of acquisition
1/1/2022	22,968	6,461	29,429
Additions	3,219	389	3,607
Disposals/Retirements	(3,355)	(5,807)	(9,162)
Foreign exchange differences	—	(1)	(1)
12/31/2022	22,832	1,042	23,874
Accumulated amortization/write downs
1/1/2022	7,174	6,280	13,454
Amortization	3,529	80	3,609
Disposals/Retirements	(3,208)	(5,807)	(9,015)
Foreign exchange differences	—	(2)	(2)
12/31/2022	7,495	552	8,046
Carrying amount:
1/1/2022	15,794	181	15,976
12/31/2022	15,337	490	15,828

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PROPERTY, PLANT AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2023

PROPERTY, PLANT AND EQUIPMENT

Schedule of property, plant and equipment

	Land,
	buildings and	Technical	Office and
	leasehold	equipment and	other	Assets under
in € thousand	improvements	machinery	equipment	construction	Total
Costs of acquisition or construction:
1/1/2023	21,303	18,263	14,561	—	54,127
Additions	—	1,679	1,410	513	3,602
Disposals/Retirements	(21,085)	(3,448)	(458)	—	(24,991)
Foreign exchange differences	1	(164)	(126)	—	(289)
12/31/2023	220	16,330	15,386	513	32,449
Accumulated depreciation:
1/1/2023	11,581	15,892	13,293	—	40,766
Depreciation	483	982	583	—	2,048
Disposals/Retirements	(11,995)	(3,447)	(414)	—	(15,856)
Foreign exchange differences	1	(114)	(101)	—	(214)
12/31/2023	71	13,314	13,359	—	26,744
Carrying amount:
1/1/2023	9,722	2,371	1,268	—	13,361
12/31/2023	149	3,016	2,027	513	5,704

	Land,
	buildings and	Technical	Office and
	leasehold	equipment and	other	Assets under
in € thousand	improvements	machinery	equipment	construction	Total
Costs of acquisition or construction:
1/1/2022	21,143	18,692	15,139	345	55,318
Additions	161	940	323	—	1,423
Disposals/Retirements	—	(1,638)	(858)	(12)	(2,507)
Transfers	—	333	—	(333)	—
Foreign exchange differences	—	(64)	(43)	—	(107)
12/31/2022	21,303	18,263	14,561	—	54,127
Accumulated depreciation:
1/1/2022	11,097	16,566	13,756	—	41,419
Depreciation	484	964	417	—	1,865
Disposals/Retirements	—	(1,585)	(842)	—	(2,426)
Foreign exchange differences	—	(53)	(38)	—	(92)
12/31/2022	11,581	15,892	13,293	—	40,766
Carrying amount:
1/1/2022	10,046	2,126	1,383	345	13,899
12/31/2022	9,722	2,371	1,268	—	13,361

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LEASES (Tables)

12 Months Ended

Dec. 31, 2023

LEASES

Schedule of carrying amounts of right-of-use assets recognized and movements during period

in € thousand	Real Estate	Vehicles	Total
1/1/2022	1,207	306	1,513
Additions to right-of-use assets	144	336	480
Depreciation	(430)	(211)	(642)
Foreign exchange differences	(15)	(2)	(17)
12/31/2022	906	428	1,334
Additions to right-of-use assets	8,402	178	8,581
Depreciation	(543)	(236)	(779)
Foreign exchange differences	(68)	(5)	(73)
12/31/2023	8,697	365	9,063

Schedule of carrying amounts of lease liabilities and movements during period

in € thousand	Lease Liability
1/1/2022	1,528
Additions	433
Interest	68
Payments	(676)
Foreign exchange difference	(19)
12/31/2022	1,333
Additions	10,347
Interest	102
Payments	(819)
Foreign exchange difference	(77)
12/31/2023	10,886

Schedule of combined statement of profit or loss and other comprehensive income (loss) included amounts of lease related expense

in € thousand	2023	2022	2021
Depreciation of right of-use-assets	(779)	(642)	(487)
Interest expense on lease liabilities	(103)	(68)	(49)
Short-term lease expenses	(383)	(523)	(341)
Lease expenses for low-value assets	(7)	(28)	(68)
Total amount recognized in expense	(1,273)	(1,260)	(945)

Schedule of information on total cash outflow from all leases

in € thousand	2023	2022	2021
Principal paid	(715)	(609)	(451)
Interest paid	(103)	(68)	(49)
Short term and low value leases	(391)	(551)	(409)
Total amount paid	(1,209)	(1,227)	(908)

Schedule of maturity analysis of undiscounted lease payments for which right-of-use asset and lease liability

in € thousand	12/31/2023	12/31/2022
≤ 1 year	2,108	564
> 1 ≤ 2 years	1,928	465
> 2 ≤ 5 years	4,081	446
> 5 years	6,014	—
Gross lease liabilities – minimum lease payments	14,130	1,476
Discount and foreign currency effects	(3,244)	143
Present value of the lease liabilities	10,886	1,333

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INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2023

INVENTORIES

Schedule of inventories

in € thousand	12/31/2023	12/31/2022
Raw materials and supplies	4,386	5,513
Work in progress	6,038	11,098
Finished goods	5,928	8,419
Inventories	16,353	25,029

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TRADE RECEIVABLES AND OTHER RECEIVABLES (Tables)

12 Months Ended

Dec. 31, 2023

TRADE RECEIVABLES AND OTHER RECEIVABLES

Schedule of trade receivables and other receivables

in € thousand	12/31/2023	12/31/2022
Trade receivables	40,626	40,593
Receivables from joint ventures	1,599	2,656
Other receivables	4,807	65,589
Total trade and other receivables	47,032	108,838

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OTHER CURRENT ASSETS (Tables)

12 Months Ended

Dec. 31, 2023

OTHER CURRENT ASSETS

Schedule of other current assets

in € thousand	12/31/2023	12/31/2022
Advance payments on inventories	1,317	2,635
Restricted cash	89	1,049
Prepaid expenses	3,667	730
Contract assets	—	401
Total other current non-financial assets	5,073	4,815

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NON-CONTROLLING INTEREST (Tables)

12 Months Ended

Dec. 31, 2023

NON-CONTROLLING INTEREST

Schedule of the information relating to each entity that has material NCI, before any intra-SCHMID eliminations

			SCHMID
			Technology
	SCHMID		Guangdong Co.,		SCHMID Taiwan
12/31/2023	Singapore Pte. Ltd.		Ltd		Ltd.
NCI percentage	10.0	%	24.1	%	14.0	%
Non-current assets	—		5,118		185
Current assets	2,797		42,569		11,827
Non-current liabilities	—		847		605
Current liabilities	2,062		22,288		5,182
Net assets	736		24,552		6,224
Net assets attributable to NCI	74		5,917		868
Revenue	—		27,750		1,672
Profit	6,188		2,298		(402)
OCI	—		(1,550)		(252)
Total comprehensive income	6,188		748		(654)
Total comprehensive income allocated to NCI	619		180		(91)
Accumulated NCI end of period	77		6,487		794

			SCHMID
			Technology
	SCHMID		Guangdong Co.,		SCHMID Taiwan
12/31/2022	Singapore Pte. Ltd.		Ltd		Ltd.
NCI percentage	10.0	%	24.1	%	14.0	%
Non-current assets	—		4,575		71
Current assets	1,651		46,040		12,704
Non-current liabilities	—		568		694
Current liabilities	7,104		26,244		5,203
Net assets	(5,453)		23,804		6,879
Net assets attributable to NCI	(545)		5,737		960
Revenue	—		38,753		12,873
Profit	(7)		6,068		4,152
OCI	—		(639)		(303)
Total comprehensive income	(7)		5,429		3,849
Total comprehensive income allocated to NCI	(1)		1,308		537
Accumulated NCI end of period	(543)		6,335		889

			SCHMID
			Technology
	SCHMID		Guangdong Co.,		SCHMID Taiwan
12/31/2021	Singapore Pte. Ltd.		Ltd		Ltd.
NCI percentage	10.0	%	24.1	% *	14.0	%
Non-current assets	—		4,876		197
Current assets	1,698		23,857		4,993
Non-current liabilities	—		841		66
Current liabilities	7,144		9,518		2,095
Net assets	(5,445)		18,374		3,030
Net assets attributable to NCI	(545)		4,428		423
Revenue	—		9,762		3,954
Profit	(33)		(13,359)		424
OCI	—		753		297
Total comprehensive income	(33)		(12,606)		721
Total comprehensive income allocated to NCI	(3)		(2,627)		101
Accumulated NCI end of period	(542)		5,026		352

Cash flow statement SCHMID Technology Guangdong Co., Ltd
in € thousand	2023	2022	2021
Cash flow from operating activities	666	(1,688)	(11,650)
Cash flow from investing activities	(472)	(502)	(16,449)
Cash flow from financing activities	(21)	(452)	32,313
Effect of foreign exchange rate changes on cash and cash equivalents	(119)	116	93
Net increase (decrease) in cash and cash equivalents	262	(2,525)	4,307

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FINANCIAL LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2023

FINANCIAL LIABILITIES

Schedule of overview of the financial liabilities

in € thousand	12/31/2023	12/31/2022
Non-current financial liabilities	22,190	34,406
Current financial liabilities	26,053	128,454
Total financial liabilities	48,244	162,860

Schedule of borrowings

in € thousand	12/31/2023	12/31/2022
Non-current borrowings	22,190	34,406
Loans from debt funds	—	24,393
Loans from other third parties	2,336	—
Loans from shareholders	19,854	10,013
Current borrowings	26,053	128,454
Loans from banks	1,225	12,003
Loans from debt funds	—	79,773
Loans from other third parties	—	3,540
Loans from shareholders	8,102	16,493
Loans from other related parties	16,726	16,646
Total borrowings	48,244	162,860

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OTHER PROVISIONS (Tables)

12 Months Ended

Dec. 31, 2023

OTHER PROVISIONS

Schedule of movement in provisions

				Reversal of
				unused
In € thousand	12/31/2022	Additions	Utilization	amounts	12/31/2023
Warranty provision	211	211	(184)	—	238
Jubilee provision	119	482	(603)	—	(2)
Total non-current provisions	330	693	(787)	—	237
Warranty provision	139	152	(66)	—	225
Provision for legal claims	67	44	—	(58)	53
Other provisions	153	2,308	(1,454)	(312)	695
Total current provisions	360	2,504	(1,520)	(370)	973

				Reversal of
				unused
In € thousand	12/31/2021	Additions	Utilization	amounts	12/31/2022
Warranty provision	203	99	(91)	—	211
Jubilee provision	163	(30)	(14)	—	119
Total non-current provisions	366	70	(106)	—	330
Warranty provision	228	25	(114)	—	139
Provision for legal claims	32	123	(88)	—	67
Other provisions	191	7	(45)	—	153
Total current provisions	451	155	(247)	—	360

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POST-EMPLOYMENT BENEFITS (Tables)

12 Months Ended

Dec. 31, 2023

POST-EMPLOYMENT BENEFITS

Schedule of reconciliation of the net defined benefit liability

In € thousand	2023	2022	2021
Net defined liability at January 1	887	1,173	1,189
Defined benefit income recognized in combined statement of profit or loss	33	14	12
Defined benefit cost recognized in other comprehensive income	—	300	28
Net defined liability at December 31	894	887	1,173

Schedule of reconciliation of the amount recognized in the combined statement of financial position

In € thousand	2023	2022	2021
Employee benefit obligations recognized as of January 1	887	1,173	1,189
Actuarial adjustments	(26)	(300)	(28)
thereof: experience adjustments	(2)	2	2
thereof: adjustments for financial assumptions	(24)	(302)	(30)
Interest expense	33	14	12
Employee benefit obligations recognized as of December 31	894	887	1,173

Schedule of expense recognized in the combined statements of profit and loss and other comprehensive income

In € thousand	2023	2022	2021
Actuarial gains (-) / losses (+) deriving from changes in financial assumptions	(24)	(302)	(30)
Actuarial gains (-) / losses (+) deriving from experience adjustments	(2)	2	2
Included in other comprehensive income	(26)	(300)	(28)
Interest income	33	14	12
Included in the combined statements of profit or loss	33	14	12
Total included in the combined statements of profit or loss and other comprehensive income (loss)	7	(286)	(16)

Schedule of principal actuarial assumptions

	12/31/2023		12/31/2022
Discount rate	4.00	%	3.75	%

Schedule of sensitivity analysis for actuarial assumptions

	12/31/2023		12/31/2022
Discount rate (+0.25%)	4.25	%	4.00	%
Present value of the post-employment benefit obligations (in € thousand)	872		862
Discount rate (-0.25%)	3.75	%	3.50	%
Present value of the post-employment benefit obligations (in € thousand)	918		912

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OTHER CURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2023

OTHER CURRENT LIABILITIES

Schedule of other non-financial liabilities

in € thousand	12/31/2023	12/31/2022
Personnel related accruals	3,175	2,700
Tax related accruals	1,348	1,481
Audit related accruals	1,297	286
Miscellaneous other current liabilities	7,294	4,239
Total other current liabilities	13,113	8,706

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Tables)

12 Months Ended

Dec. 31, 2023

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Summary of carrying amounts of each class of financial instruments together with its corresponding fair value and the aggregated carrying amount

				12/31/2023
Financial instruments, analyzed by classes and categories		Carrying		Fair value
in € thousand	Category	amount	Fair value	hierarchy
Non-current assets
Financial assets
Other loans and other investments	AC	28	28	n/a
Other non-current financial assets	AC	112	n/a	n/a
Current assets
Trade receivables and other receivables
Trade receivables	AC	40,673	n/a	n/a
Receivables from joint ventures	AC	1,599	n/a	n/a
Other receivables
Exit bonus	AC	4,700	4,700	n/a
Receivables from shareholder	AC	107	n/a	n/a
Other current assets
Restricted cash	AC	89	n/a	n/a
Other	AC	1,317	n/a	n/a
Cash and cash equivalents	AC	5,710	n/a	n/a
Non-current liabilities
Non-current borrowings
Loans from other third parties	FLAC	2,336	2,063	Level 3
Loans from shareholders	FLAC	19,854	17,630	Level 3
Current liabilities
Current borrowings
Loans from banks	FLAC	1,225	n/a	Level 3
Loans from shareholders	FLAC	8,102	n/a	n/a
Loans from other related parties	FLAC	16,726	n/a	Level 3
Trade payables and other liabilities	FLAC	25,899	n/a	n/a

		Carrying
Thereof aggregated by categories	Category	amount
Financial assets measured at amortized cost	AC	54,335
Financial liabilities measured at fair value	FVTPL	—
Financial liabilities measured at amortized cost	FLAC	74,142

Financial instruments, analyzed by classes and categories				12/31/2022
		Carrying		Fair value
in € thousand	Category	amount	Fair value	hierarchy
Non-current assets
Financial assets
Other non-current financial assets	AC	115	n/a	n/a
Current assets
Trade receivables and other receivables
Trade receivables	AC	40,593	n/a	n/a
Receivables from joint ventures	AC	2,656	n/a	n/a
Other receivables
Receivables from shareholder	AC	65,158	64,028	Level 3
Miscellaneous receivables	AC	431	n/a	n/a
Other current assets
Restricted cash	AC	1,049	n/a	n/a
Other	AC	2,637	n/a	n/a
Cash and cash equivalents	AC	8,332	n/a	n/a
Non-current liabilities
Non-current borrowings
Loans from debt funds	FLAC	24,393	23,072	Level 3
Loans from shareholders	FLAC	10,013	9,307	Level 3
Current liabilities
Current borrowings
Loans from banks	FLAC	12,003	11,508	Level 3
Loans from debt funds	FLAC	79,773	51,678	Level 3
Loans from other third parties	FLAC	3,540	3,483	Level 3
Loans from shareholders	FLAC	16,493	n/a	n/a
Loans from other related parties	FLAC	16,646	14,688	Level 3
Trade payables and other liabilities	FLAC	25,400	n/a	n/a

		Carrying
Thereof aggregated by categories	Category	amount
Financial assets measured at amortized cost	AC	120,971
Financial liabilities measured at fair value	FVTPL	—
Financial liabilities measured at amortized cost	FLAC	188,260

Summary of net gains or losses for each of the financial instrument measurement categories differentiated by the respective sources

2023	Subsequent measurement
in € thousand	Interest	Fair value	Total
Financial assets - AC	9,499	n/a	9,499
Financial liabilities - FLAC	(9,988)	n/a	(9,988)
Financial assets and liabilities - FVTPL	n/a	—	—
Total	(488)	—	(488)

2022	Subsequent measurement
in € thousand	Interest	Fair value	Total
Financial assets - AC	4,089	n/a	4,089
Financial liabilities - FLAC	(17,650)	n/a	(17,650)
Financial assets and liabilities - FVTPL	n/a	(1,669)	(1,669)
Total	(13,561)	(1,669)	(15,230)

Summary of allowances for ECL determined for the different classes of financial assets developed

	Trade receivables		Shareholder and
	- not credit	Trade receivables	other loans -
in € thousand	impaired	- credit impaired	credit impaired
Opening Balance 01/01/2022	(8)	1,952	(4,394)
Additions	(11)	—	—
Utilization	—	1,148	—
Reversal	—	153	2,949
Closing Balance 31/12/2022	(19)	652	(1,445)
Additions	(118)	(198)	—
Utilization	—	(11,425)	—
Reversal	—	11,706	1,445
Closing Balance 31/12/2023	(137)	(569)	—

Summary of the gross carrying amounts by credit-risk rating classes for the several types of financial assets that are not measured at FVTPL

Gross Carrying Amounts by Rating Class			12/31/2023
in € thousand	Stage 1	Stage 2	Stage 3
General approach
Cash and cash equivalents
AAA to BBB (Investment grade)	5,710	—	—
Receivables from shareholders
BBB- to CCC (Below investment grade)	—	4,807	—
Simplified approach
Trade receivables and other receivables
Current (not past due)	—	27,148	(69)
1-30 days past due	—	1,423	(11)
31-60 days past due	—	597	(6)
61-90 days past due	—	651	(7)
More than 90 days past due	—	3,039	(45)
Total	5,710	37,665	(138)

Gross Carrying Amounts by Rating Class			12/31/2022
in € thousand	Stage 1	Stage 2	Stage 3
General approach
Cash and cash equivalents
AAA to BBB (Investment grade)	8,332	—	—
Receivables from shareholders
BBB- to CCC (Below investment grade)	—	65,158	—
Simplified approach
Trade receivables and other receivables
insured receivables (90%)	—	39,312	—
non-insured receivables (10%)	—	4,368	—
Total	8,332	108,838	—

Summary of reconciliation of changes in liabilities arising from financing activities

		Lease
In € thousand	Loans	liabilities	Total
Balance at January 1, 2023	167,111	1,333	168,444
Cash flow from financing activities (excluding changes from restricted cash)	(83,812)	(819)	(84,631)
Proceeds from loans	—	—	—
Repayments of loans	(81,871)	—	(81,871)
Principal elements of lease payment	—	(715)	(715)
Interest paid	(1,941)	(103)	(2,044)
Changes in the cash flow from financing activities	(35,055)	10,372	(24,683)
Foreign currency effects	—	(77)	(77)
New leases	—	10,347	10,347
Accrued interest	(35,024)	102	(34,922)
Fair value measurement	(32)	—	(32)
Balance at December 31, 2023	48,244	10,886	59,130

		Lease
In € thousand	Loans	liabilities	Total
Balance at January 1, 2022	153,090	1,528	154,618
Cash flow from financing activities (excluding changes from restricted cash)	(2,625)	(676)	(3,301)
Proceeds from loans	4,895	—	4,895
Repayments of loans	(5,880)	—	(5,880)
Principal elements of lease payment	—	(609)	(609)
Interest paid	(1,640)	(68)	(1,708)
Changes in the cash flow from financing activities	16,645	482	17,127
Foreign currency effects	—	(19)	(19)
New leases	—	433	433
Accrued interest	14,609	68	14,677
Fair value measurement	2,036	—	2,036
Balance at December 31, 2022	167,111	1,333	168,444

Liquidity Risk

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Summary of undiscounted cash outflows of financial liabilities

					12/31/2023
	Cash outflows within				Total cash
in € thousand	≤ 1 year	> 1 ≤ 2 years	> 2 ≤ 5 years	> 5 years	flows
Lease liabilities	2,073	1,822	3,372	3,758	11,025
Borrowings (including embedded derivatives)	26,053	26,781	—	—	52,835
Loans from banks	1,225	—	—	—	1,225
Loans from debt funds	—	—	—	—	—
Loans from other third parties	—	2,778	—	—	2,778
Loans from shareholders	8,102	24,004	—	—	32,106
Loans from other related parties	16,726	—	—	—	16,726
Trade payables and other liabilities	25,899	—	—	—	25,899

					12/31/2022
	Cash outflows within				Total cash
in € thousand	≤ 1 year	> 1 ≤ 2 years	> 2 ≤ 5 years	> 5 years	flows
Lease liabilities	564	465	446	—	1,476
Borrowings (including embedded derivatives)	111,517	49,914	—	—	161,432
Loans from banks	12,221	—	—	—	12,221
Loans from debt funds	73,262	26,521	—	—	99,783
Loans from other third parties	3,702	—	—	—	3,702
Loans from shareholders	5,000	23,394	—	—	28,394
Loans from other related parties	17,332	—	—	—	17,332
Trade payables and other liabilities	25,400	—	—	—	25,400

Foreign Currency Risk

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Summary of net exposure

	currency of exposure ("+" = asset / "()" = liability) - in € thousand
functional currency entity	12/31/2023				12/31/2022
	EUR	CNY	USD	HKD	EUR	CNY	USD	HKD
EUR		5,010	3,597	—		5,500	4,669	—
CNY	27,217		(1,077)	(424)	25,519		(1,139)	—
USD	17	—		—	(5,030)	—		—
TWD	1,481	(238)	—	—	1,378	—	—	—
HKD	2,026	(2,209)	—		—	—	—
KRW	(4,276)	—	—	—	(1,838)	—	—	—
Total	26,464	2,563	2,520	(424)	20,029	5,500	3,530	—

Summary of impact on profit or loss before tax due to reasonably possible change in each material currency

in € thousand	12/31/2023		12/31/2022
	+10%	-10%	+10%	-10%
CNY/EUR	2,019	(2,467)	1,820	(2,224)
USD/EUR	(325)	398	(882)	1,078
TWD/EUR	135	(165)	130	(159)
HKD/EUR	184	(225)
KRW/EUR	(389)	475	(167)	204
CNY/TWD	22	(26)
CNY/HKD	158	(203)
USD/CNY	98	(120)	104	(127)

Interest Rate Risk

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Summary of impact on profit or loss before tax due to reasonably possible change in each material currency

	Impact to P/L
in € thousand	(income (+)/ expense (-))
12/31/2023
Change in interest rate +1%	(296)
Change in interest rate -1%	296
12/31/2022
Change in interest rate +1%	(1,164)
Change in interest rate -1%	1,162

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EQUITY-ACCOUNTED INVESTEES (Tables)

12 Months Ended

Dec. 31, 2023

EQUITY-ACCOUNTED INVESTEES

Summary of investments classified as joint ventures

		% of ownership interest				Carrying amount (in € thousand)
Name of the entity	Country of incorporation	12/31/2023		12/31/2022		12/31/2023	12/31/2022
Advanced Energy Storage Systems Investment Company (AES)	Kingdom of Saudi Arabia	51	%	51	%	—	—
SCHMID AVACO Korea Co. Ltd. (SAK)	South Korea	50	%	50	%	—	—
Total equity-accounted investments						—	—

Summary of financial information on the joint venture which is material to the entity

in € thousand	12/31/2023		12/31/2022
% ownership interest	51.3	%	51.3	%
Current Assets
Cash and cash equivalents	16		1,144
Other current assets	22		342
Total current assets	38		1,486
Non-current assets	3,871		6,134
Current liabilities
Current financial liabilities	2,935		2,015
Other current liabilities	216		4,214
Total current liabilities	3,151		6,229
Non-current liabilities
Non-current financial liabilities	—		9,177
Other non-current liabilities	3,894		957
Total non-current liabilities	3,894		10,134
Net assets (100%)	(3,136)		(8,742)
Book value	—		—

in € thousand	2023		2022
% ownership interest	51.3	%	51.3	%
Revenue	—		—
Interest income	—		—
Administration expense	(221)		—
R&D and Other expense	(351)		—
Depreciation and amortization	(561)		(1,106)
Interest expense	—		(292)
Tax income	61		236
Loss from continuing operations	(1,025)		(3,750)
Other comprehensive income	—		181
Total comprehensive loss	(1,025)		(3,932)
Dividends received	—		—

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RELATED PARTY DISCLOSURES (Tables)

12 Months Ended

Dec. 31, 2023

RELATED PARTY DISCLOSURES

Summary of transactions are proceeded with related parties

in € thousand	2023	2022	2021
Interest income on loans granted to
Shareholder	1,077	526	159
Interest expense on loans received from
Key management personnel	12	88	88
Other related parties	558	409	400
Shareholder	737	165	53
Purchases of goods or services
Joint ventures	3	2,511	20
Other related parties	236	663	618
Sale of goods or services
Joint ventures	427	505	817
Other related parties	11,801	592	797
Salary and Bonus
Shareholder	1,149	988	910
Key management personnel	1,562	1,262	1,332

in € thousand	12/31/2023	12/31/2022
Outstanding balances - Liabilities
Shareholder	24,102	24,064
Key management personnel	280	2,528
Joint ventures	358	358
Other related parties	25,359	15,345

in € thousand	12/31/2023	12/31/2022
Outstanding balances - Receivables
Shareholder	107	67,926
Joint ventures	2,655	951
Other related parties	221	23,062

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BUSINESS DESCRIPTION (Details)	Dec. 31, 2023 employee
BUSINESS DESCRIPTION
Number of employees worldwide	700

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BASIS OF PREPARATION (Details)	12 Months Ended		24 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023
Advanced Energy Storage Systems Investment Company
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of joint ventures			Advanced Energy Storage Systems Investment Company
Country of incorporation, joint ventures			Saudi Arabia
Percent of ownership interest in joint ventures	51.00%	51.00%
SCHMID Avaco Korea, Co. Ltd
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of joint ventures			SCHMID Avaco Korea, Co. Ltd.
Country of incorporation, joint ventures			South Korea
Percent of ownership interest in joint ventures	50.00%	50.00%
Gebr. Schmid GmbH
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			Gebr. Schmid GmbH
Country of incorporation, subsidiaries			Germany
Percent of ownership interest in subsidiaries	100.00%	100.00%
SCHMID Systems. Inc.
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID Systems, Inc.
Country of incorporation, subsidiaries			USA
Percent of ownership interest in subsidiaries	100.00%	100.00%
SCHMID Singapore Pte. Ltd.
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID Singapore Pte. Ltd.
Country of incorporation, subsidiaries			Singapore
Percent of ownership interest in subsidiaries	90.00%	90.00%
SCHMID Korea Co. Ltd
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID Korea Co., Ltd
Country of incorporation, subsidiaries			South Korea
Percent of ownership interest in subsidiaries	100.00%	100.00%
SCHMID Asia Ltd. [Member]
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID Asia Ltd.
Country of incorporation, subsidiaries			Hong Kong
Percent of ownership interest in subsidiaries	100.00%	100.00%
SCHMID Technology Guangdong Co. Ltd.
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID Technology Guangdong Co., Ltd.
Country of incorporation, subsidiaries			China
Percent of ownership interest in subsidiaries	76.00%	76.00%
SCHMID China Ltd.
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID China Ltd.
Country of incorporation, subsidiaries			Hong Kong
Percent of ownership interest in subsidiaries	100.00%	100.00%
SCHMID Shenzhen Ltd.
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID Shenzhen Ltd.
Country of incorporation, subsidiaries			China
Percent of ownership interest in subsidiaries	100.00%	100.00%
SCHMID (Kunshan) Co., Ltd
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID (Kunshan) Co., Ltd.
Country of incorporation, subsidiaries			China
Percent of ownership interest in subsidiaries	100.00%	100.00%
SCHMID Taiwan Ltd.
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID Taiwan Ltd.
Country of incorporation, subsidiaries			Taiwan
Percent of ownership interest in subsidiaries	86.00%	86.00%
SCHMID Automation (Zhuhai) Co. Ltd.
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID Automation (Zhuhai) Co., Ltd.
Country of incorporation, subsidiaries			China
Percent of ownership interest in subsidiaries	100.00%	100.00%
SCHMID Solar (Shenzhen) Ltd.
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID Solar (Shenzhen) Ltd.
Country of incorporation, subsidiaries			China
Percent of ownership interest in subsidiaries	100.00%	100.00%
SCHMID Trading (Zhongshan) Co. Ltd.
Legal entities which comprise combined financial statements and its certain investments in joint ventures accounted for using equity method
Name of subsidiaries			SCHMID Trading (Zhongshan) Co. Ltd.
Country of incorporation, subsidiaries			China
Percent of ownership interest in subsidiaries	100.00%

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BASIS OF PREPARATION - Additional Information (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
BASIS OF PREPARATION
Borrowings remaining amount	€ 48,244	€ 162,860
Outstanding borrowings	€ 26,053	€ 128,454

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MATERIAL ACCOUNTING POLICIES (Details)	12 Months Ended
	Dec. 31, 2023
Research and development (R&D) costs | Minimum
MATERIAL ACCOUNTING POLICIES
Intangible assets, useful life	4 years
Research and development (R&D) costs | Maximum
MATERIAL ACCOUNTING POLICIES
Intangible assets, useful life	10 years
Patents and licenses | Minimum
MATERIAL ACCOUNTING POLICIES
Intangible assets, useful life	5 years
Patents and licenses | Maximum
MATERIAL ACCOUNTING POLICIES
Intangible assets, useful life	8 years

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MATERIAL ACCOUNTING POLICIES - Property, Plant and Equipment (Details)	12 Months Ended
	Dec. 31, 2023
Buildings and building improvements | Minimum
MATERIAL ACCOUNTING POLICIES
Useful lives of property, plant and equipment	10 years
Buildings and building improvements | Maximum
MATERIAL ACCOUNTING POLICIES
Useful lives of property, plant and equipment	50 years
Technical equipment and machinery | Minimum
MATERIAL ACCOUNTING POLICIES
Useful lives of property, plant and equipment	2 years
Technical equipment and machinery | Maximum
MATERIAL ACCOUNTING POLICIES
Useful lives of property, plant and equipment	21 years
Office and other equipment | Minimum
MATERIAL ACCOUNTING POLICIES
Useful lives of property, plant and equipment	3 years
Office and other equipment | Maximum
MATERIAL ACCOUNTING POLICIES
Useful lives of property, plant and equipment	13 years

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MATERIAL ACCOUNTING POLICIES - Leases (Details)	Dec. 31, 2023
Minimum
MATERIAL ACCOUNTING POLICIES
Term of lease contracts	1 year
Maximum
MATERIAL ACCOUNTING POLICIES
Term of lease contracts	10 years

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MATERIAL ACCOUNTING POLICIES - Revenue Recognition (Details)	12 Months Ended
	Dec. 31, 2023
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Long term development contract term	3 years
Sales of machines and spare parts | Minimum
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Revenue recognition term	14 days
Invoice payable, contractual terms	30 days
Sales of machines and spare parts | Maximum
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Revenue recognition term	21 days
Invoice payable, contractual terms	90 days
Repair services
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Invoice payable, contractual terms	30 days
Repair services | Minimum
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Revenue recognition term	14 days
Repair services | Maximum
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Revenue recognition term	21 days

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SIGNIFICANT EVENTS IN THE PERIOD ENDED DECEMBER 31, 2023 (Details) - EUR (€) € in Thousands	1 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Financial instruments
Other income		€ 15,985	€ 3,375	€ 1,924
Finance income		19,685	5,758	3,360
Finance expenses		10,091	17,746	18,014
Cash payments		81,871	5,880	€ 1,911
Debt funds
Financial instruments
Beginning balance		(104,166)
Finance income		15,852
Finance expenses		(4,302)
Cash payments		70,000
Non-cash settlement of loans		22,616
Ending balance			(104,166)
Silicon receivables
Financial instruments
Reversal of impairment		21,375
Non-cash settlement of receivables		(17,664)
Non-cash settlement of loans		(2,800)
Other		(911)
Shareholder receivable
Financial instruments
Beginning balance		65,589
Reversal of impairment		1,418
Finance income		3,173
Cash payments	€ 70,000	70,000
Other		(73)
Ending balance		107	€ 65,589
Receivable Silicon exit bonus
Financial instruments
Other income		4,700
Ending balance		4,700
Group14 shares
Financial instruments
Non-cash settlement of receivables		17,664
Non-cash settlement of loans		€ (17,664)

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SEGMENT AND GEOGRAPHIC INFORMATION (Details)	12 Months Ended
	Dec. 31, 2023 segment
SEGMENT AND GEOGRAPHIC INFORMATION
Number of operating segments	2

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SEGMENT AND GEOGRAPHIC INFORMATION - Key financial metrics by segment (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
BASIS OF PREPARATION
Revenue	€ 90,246	€ 95,058	€ 39,481
Segment adjusted EBITDA	39,099	19,937	(2,534)
Technical equipment and processes
BASIS OF PREPARATION
Revenue	78,743	78,778	27,587
Segment adjusted EBITDA	12,872	14,155	1,868
Spare parts and services
BASIS OF PREPARATION
Revenue	11,503	16,280	11,894
Segment adjusted EBITDA	3,787	9,329	6,873
Total management reporting
BASIS OF PREPARATION
Revenue	90,246	95,058	39,481
Segment adjusted EBITDA	39,099	19,937	(2,534)
Other
BASIS OF PREPARATION
Segment adjusted EBITDA	€ 22,440	€ (3,546)	€ (11,276)

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SEGMENT AND GEOGRAPHIC INFORMATION - Reconciliation from total segment adjusted EBITDA to loss before income tax (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
SEGMENT AND GEOGRAPHIC INFORMATION
Total segment adjusted EBITDA	€ 39,099	€ 19,937	€ (2,534)
Financial result	9,594	(11,988)	(14,654)
Depreciation and amortization	(6,904)	(6,283)	(4,893)
Share of profit (loss) in joint ventures	(1,057)
Income tax benefit (expense)	(2,778)	1,924	(5,195)
Income (loss) before income tax	40,732	1,667	(22,082)
Net income (loss) for the period	€ 37,954	€ 3,591	€ (27,277)

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SEGMENT AND GEOGRAPHIC INFORMATION - Revenue can be split into the following geographical areas (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
SEGMENT AND GEOGRAPHIC INFORMATION
Revenue	€ 90,246	€ 95,058	€ 39,481
China
SEGMENT AND GEOGRAPHIC INFORMATION
Revenue	15,308	39,424	17,652
Taiwan
SEGMENT AND GEOGRAPHIC INFORMATION
Revenue	1,634	12,846	3,814
USA
SEGMENT AND GEOGRAPHIC INFORMATION
Revenue	17,522	11,478	3,375
Germany
SEGMENT AND GEOGRAPHIC INFORMATION
Revenue	9,577	10,743	5,390
Malaysia
SEGMENT AND GEOGRAPHIC INFORMATION
Revenue	16,681	7,915
Austria
SEGMENT AND GEOGRAPHIC INFORMATION
Revenue	17,810	3,928	3,793
Other
SEGMENT AND GEOGRAPHIC INFORMATION
Revenue	€ 11,714	€ 8,724	€ 5,457

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SEGMENT AND GEOGRAPHIC INFORMATION - Major customers (Details) € in Thousands	12 Months Ended
	Dec. 31, 2023 EUR (€) customer	Dec. 31, 2022 EUR (€)	Dec. 31, 2021 EUR (€)
Major customers
Number of major customers | customer	3
Revenue	€ 90,246	€ 95,058	€ 39,481
First customer
Major customers
Revenue	17,649	25,092	€ 9,931
Second customer
Major customers
Revenue	16,361	€ 11,876
Third customer
Major customers
Revenue	€ 12,280

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SEGMENT AND GEOGRAPHIC INFORMATION - Non-current assets (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
SEGMENT AND GEOGRAPHIC INFORMATION
Non-current assets	€ 29,733	€ 30,523
Germany
SEGMENT AND GEOGRAPHIC INFORMATION
Non-current assets	26,853	28,334
China
SEGMENT AND GEOGRAPHIC INFORMATION
Non-current assets	2,504	1,922
Other
SEGMENT AND GEOGRAPHIC INFORMATION
Non-current assets	€ 376	€ 266

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REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES - Disaggregation of Revenues (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Revenue	€ 90,246	€ 95,058	€ 39,481
Revenue recognized at a point in time
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Revenue	81,761	89,316	36,832
Revenue recognized over time
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Revenue	8,485	5,742	2,649
Machines
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Revenue	77,554	73,151	25,626
Spare Parts
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Revenue	9,722	14,302	8,081
Service
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Revenue	1,781	1,978	3,802
Other
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Revenue	€ 1,189	€ 5,627	€ 1,971

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REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES - Changes to contract liabilities (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Changes to contract liabilities
Beginning balance	€ 30,569	€ 25,682	€ 17,378
Decrease in Contract Liabilities Attributable to Sales Revenues Included in Contractual Liabilities at the Beginning of the Period	(30,406)	(25,682)	(17,378)
Increase in Contract Liabilities Attributable to Customer Payments Received	17,769	30,569	25,682
Ending balance	€ 17,931	€ 30,569	€ 25,682

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REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES - Order backlog (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Minimum
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Order backlog revenue recognition period	1 year
Maximum
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Order backlog revenue recognition period	3 years
Machines
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Amount of goods or services ordered by customers but not delivered or provided	€ 48,651	€ 79,571	€ 60,982
Spare Parts and Service
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Amount of goods or services ordered by customers but not delivered or provided	€ 6,380	€ 6,535	€ 7,239

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REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES - Cost of sales (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
REVENUE FROM CONTRACTS WITH CUSTOMERS AND COST OF SALES
Personnel expenses	€ (16,690)	€ (16,221)	€ (14,094)
Material expenses	(35,767)	(34,274)	(9,519)
Depreciation/amortization	(4,904)	(4,147)	(2,746)
Other expenses	(6,488)	(7,079)	(4,147)
Total cost of sales	€ (63,849)	€ (61,721)	€ (30,506)

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SELLING (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
SELLING
Personnel expenses	€ (8,295)	€ (8,017)	€ (5,535)
Legal and consulting fees	(834)	(873)	(581)
Sales Commission	(241)	(475)	(95)
Distribution related external administration	(1,537)	(582)	(801)
Advertisement	(649)	(428)	(294)
Other expenses	(1,021)	(995)	(545)
Total selling expenses	€ (12,577)	€ (11,369)	€ (7,851)

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GENERAL ADMINISTRATION (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
RESEARCH AND DEVELOPMENT EXPENSES
Personnel expenses	€ (4,131)	€ (3,992)	€ (3,692)
Legal and consulting fees	(4,401)	(1,681)	(1,584)
External administrative expenses	(965)	(692)	(529)
Other administrative expenses	(3,042)	(607)	(493)
Total administrative expenses	€ (12,538)	€ (6,973)	€ (6,298)

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RESEARCH AND DEVELOPMENT EXPENSES (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
RESEARCH AND DEVELOPMENT EXPENSES
Personnel expenses	€ (2,261)	€ (1,888)	€ (1,319)
Depreciation/amortization	(877)	(910)	(627)
Legal and consulting fees	(587)	(614)	(422)
R&D related external administration	(906)	(856)	(282)
Other research and development expenses	(517)	(549)	(83)
Total research and development expenses	€ (5,148)	€ (4,818)	€ (2,733)

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OTHER INCOME (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Apr. 30, 2023
OTHER INCOME
Foreign currency gains	€ 2,969	€ 1,503	€ 538
Bonus payments	9,200
Other miscellaneous income	3,815	1,871	1,387
Total other income	€ 15,985	3,375	1,924
Annual percentage to be paid	1.50%
Exit bonus receivable	€ 4,500
Sale leaseback cancellation gain	1,875
Government grant income	356	€ 519	€ 123
Income from asset disposals	508
Silicon
OTHER INCOME
Exit bonus income	4,700
Exit bonus receivable	4,700
Montratec GmbH
OTHER INCOME
Exit bonus income	4,500
Exit bonus receivable				€ 3,954
Montratec Sarl
OTHER INCOME
Exit bonus income	4,500
Securities purchase agreement guarantee	€ 4,500
Schmid Grundstcke GmbH & Co. KG
OTHER INCOME
Exit bonus receivable				€ 546

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OTHER EXPENSES (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
OTHER EXPENSES
Foreign currency losses	€ (2,388)	€ (2,399)	€ (2,942)
Other taxes	(166)	(122)	(776)
Disposal of assets		(231)	(154)
Miscellaneous other items	(65)	(236)	(908)
Total other expenses	€ (2,620)	€ (2,988)	€ (4,779)

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REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET
(Impairment) / Reversal on impairment on financial assets	€ 22,696	€ 3,091	€ 3,333
Reversal of receivables from the Silicon Group
REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET
(Impairment) / Reversal on impairment on financial assets	21,375
Shareholder loan (included in trade and other receivables)
REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET
(Impairment) / Reversal on impairment on financial assets	1,418	€ 3,091	3,284
Other
REVERSAL OF IMPAIRMENT OF FINANCIAL ASSETS, NET
(Impairment) / Reversal on impairment on financial assets	€ (97)		€ 49

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FINANCIAL RESULT (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
FINANCIAL RESULT
Finance income	€ 19,685	€ 5,758	€ 3,360
thereof fair value changes		1,669	124
thereof interest income and similar proceeds	3,883	4,089	3,236
thereof gain from loan extinguishment	15,802
Finance expenses	(10,091)	(17,746)	(18,014)
thereof interest portion of lease payments	(103)	(68)	(49)
thereof interest expense	(9,988)	(17,678)	(17,965)
Financial result	€ 9,594	€ (11,988)	€ (14,654)

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SHARE OF PROFIT (LOSS) IN JOINT VENTURES (Details) € in Thousands	Dec. 31, 2023 EUR (€)
SHARE OF PROFIT (LOSS) IN JOINT VENTURES
Investment in joint venture	€ 0

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INCOME TAXES - Income Tax Benefit (Expense) (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
INCOME TAXES
Current income tax (expense) / income	€ (1,044)	€ (2,908)	€ (1,839)
thereof prior years	168	(6)	(35)
Deferred tax (expense) / income	(1,735)	4,832	(3,357)
thereof temporary differences	(1,853)	12,693	(12,367)
thereof tax loss/interest carryforwards	118	(7,861)	9,010
Income tax as per statement of profit or loss	€ (2,778)	€ 1,924	€ (5,195)

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INCOME TAXES - (Details)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
INCOME TAXES
Corporation tax rate	15.00%
Solidarity surcharge	5.50%
Trade tax rate	13.30%
Overall tax rate	29.125%	29.125%	29.125%

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INCOME TAXES - Tax Rate Reconciliation (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
INCOME TAXES
Income (loss) before income tax	€ 40,732	€ 1,667	€ (22,082)
Income tax rate	29.125%	29.125%	29.125%
Corporation tax rate	15.00%
Expected income tax income (expense)	€ (11,863)	€ (485)	€ 6,431
Tax rate differences	891	911	(2,270)
Non-deductible expenses	(79)	(573)	(1,204)
Tax -free income	1,263	495	2,755
Trade tax modifications	(116)	(269)	(417)
Tax effects from withholding tax	(166)	(370)	(1,485)
Tax effects from prior years	488	642	634
Permanent differences resulting from the statement of financial position	2,912	(8)	(2,486)
Loss utilisation of previously not recognized tax loss carryforwards	0	1,152	556
Change in valuation allowance from temporary differences and tax loss carryforwards	3,598	927	(4,904)
Change from interest carryforwards	333	(957)	(2,827)
Other reconciling items	(38)	460	21
Income tax as per statement of profit or loss	€ (2,778)	€ 1,924	€ (5,195)
Effective tax rate in %	6.82%	(115.46%)	(23.53%)

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INCOME TAXES - Deferred tax assets ("DTA") and deferred tax liabilities ("DTL") recognition (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
INCOME TAXES
Deferred tax (expense) / income	€ (1,735)	€ 4,832	€ (3,357)
Deferred tax assets	2,543	2,594
Deferred tax liabilities	(4,388)	(2,504)
DTA, Netting	(18,920)	(33,619)
DTL, Netting	18,920	33,619
DTA, Recognition in the statement of financial position	2,543	2,594
DTL, Recognition in the statement of financial position	(4,388)	(2,504)
Non-current assets
INCOME TAXES
Deferred tax (expense) / income	(13,373)	9,460
Currency translation adjustments	(116)	(44)
Deferred tax assets	3,628	15,085
Deferred tax liabilities	(6,970)	(4,937)
Intangible assets
INCOME TAXES
Deferred tax (expense) / income	239	(28)
Currency translation adjustments	(126)	45
Deferred tax assets	1,843	2,084
Deferred tax liabilities	(4,193)	(4,547)
Property, plant and equipment
INCOME TAXES
Deferred tax (expense) / income	(2,167)	(78)
Currency translation adjustments	9	1
Deferred tax assets	155	153
Deferred tax liabilities	(2,542)	(381)
Financial assets
INCOME TAXES
Deferred tax (expense) / income	(11,444)	9,566
Currency translation adjustments	1
Deferred tax assets	1,630	12,848
Deferred tax liabilities	(235)	(9)
Inventories
INCOME TAXES
Deferred tax (expense) / income	(487)	51
Currency translation adjustments	(6)	(3)
Deferred tax assets	220	246
Deferred tax liabilities	(598)	(131)
Trade receivables and other receivables
INCOME TAXES
Deferred tax (expense) / income	15,526	(18,193)
Currency translation adjustments	52	70
Deferred tax assets	149	1,554
Deferred tax liabilities	(3,985)	(20,969)
Other current assets
INCOME TAXES
Deferred tax (expense) / income	(899)	(96)
Currency translation adjustments	3	2
Deferred tax liabilities	(956)	(60)
Cash and cash equivalents
INCOME TAXES
Deferred tax (expense) / income	(31)
Currency translation adjustments	1
Deferred tax assets	13
Deferred tax liabilities	(44)
Current assets
INCOME TAXES
Deferred tax (expense) / income	14,109	(18,238)
Currency translation adjustments	49	70
Deferred tax assets	382	1,801
Deferred tax liabilities	(5,584)	(21,161)
Non-current liabilities
INCOME TAXES
Deferred tax (expense) / income	3,288	8,138
Deferred taxes in other comprehensive income	(7)	(88)
Currency translation adjustments	(8)	(577)
Deferred tax assets	2,813	348
Deferred tax liabilities	(7,757)	(8,571)
Non-current financial liabilities
INCOME TAXES
Deferred tax (expense) / income		7,334
Deferred tax liabilities		(8,287)
Non-current borrowings
INCOME TAXES
Deferred tax (expense) / income	868
Currency translation adjustments	4
Deferred tax assets	17
Deferred tax liabilities	(7,433)
Provisions for pensions
INCOME TAXES
Deferred tax (expense) / income	52	513
Deferred taxes in other comprehensive income	(7)	(88)
Currency translation adjustments	(7)	(575)
Deferred tax assets	140	93
Deferred tax liabilities	(67)	(65)
Non-current provisions
INCOME TAXES
Deferred tax (expense) / income	(161)	256
Currency translation adjustments		(1)
Deferred tax assets	60	120
Deferred tax liabilities	(257)	(155)
Non-current lease liability
INCOME TAXES
Deferred tax (expense) / income	2,529	35
Currency translation adjustments	(5)	(1)
Deferred tax assets	2,596	136
Deferred tax liabilities		(64)
Current liabilities
INCOME TAXES
Deferred tax (expense) / income	(8,820)	13,333
Currency translation adjustments	(124)	(67)
Deferred tax assets	8,472	15,871
Deferred tax liabilities	(2,998)	(1,453)
Current financial liabilites
INCOME TAXES
Deferred tax (expense) / income		8,367
Deferred tax assets		11,223
Current borrowings
INCOME TAXES
Deferred tax (expense) / income	(7,995)
Deferred tax assets	3,803
Deferred tax liabilities	(575)
Current contract liabilities
INCOME TAXES
Deferred tax (expense) / income	(929)	2,351
Currency translation adjustments	(10)	(4)
Deferred tax assets	1,525	2,464
Trade payables and other liabilities
INCOME TAXES
Deferred tax (expense) / income	520	1,209
Currency translation adjustments	(109)	(51)
Deferred tax assets	1,600	1,281
Deferred tax liabilities	(665)	(757)
Other current liabilities
INCOME TAXES
Deferred tax (expense) / income	629	676
Currency translation adjustments	(20)	(5)
Deferred tax assets	1,104	545
Deferred tax liabilities	(30)	(80)
Current lease liability
INCOME TAXES
Deferred tax (expense) / income	121	27
Currency translation adjustments	(4)	(1)
Deferred tax assets	210	93
Current provisions
INCOME TAXES
Deferred tax (expense) / income	(1,166)	704
Currency translation adjustments	19	(5)
Deferred tax assets	230	266
Deferred tax liabilities	(1,727)	(616)
Tax loss/interest carryforward
INCOME TAXES
Deferred tax (expense) / income	3,061	(7,861)
Currency translation adjustments	(2)	12
Deferred tax assets	6,167	3,108
Tax Loss Carryforward (CIT)
INCOME TAXES
Deferred tax (expense) / income	1,693	(4,535)
Currency translation adjustments	(2)	12
Deferred tax assets	3,408	1,717
Tax Loss Carryforward (Trade Tax)
INCOME TAXES
Deferred tax (expense) / income	1,368	(3,326)
Deferred tax assets	2,759	1,392
Gross value
INCOME TAXES
Deferred tax (expense) / income	(1,735)	4,832
Deferred taxes in other comprehensive income	(7)	(88)
Currency translation adjustments	(194)	(606)
Deferred tax assets	21,463	36,213
Deferred tax liabilities	€ (23,308)	€ (36,122)

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INCOME TAXES - Deferred tax assets not recognized (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
INCOME TAXES
Deductible temporary differences, Tax base	€ 41,498	€ 34,149	€ 65,199
Tax loss carryforward (CIT), Tax base	91,405	108,229	75,903
Tax loss carryforward (trade tax), Tax base	49,147	65,308	45,834
Interest carryforward, Tax base	35,229	36,956	33,209
Deductible temporary differences, DTA	10,805	8,984	18,070
Tax loss carryforward (CIT), DTA	14,701	17,415	12,641
Tax loss carryforward (trade tax), DTA	6,536	8,686	6,096
Interest carryforward, DTA	€ 9,089	€ 9,535	€ 8,568

XML

INCOME TAXES - Maturities of the tax loss carryforwards (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
INCOME TAXES
Tax loss carryforwards for which no deferred tax assets, subject to expiration	€ 0
Unlimited tax loss carryforwards for which no deferred tax assets	131,586	€ 162,177	€ 113,216
Up to 5 years
INCOME TAXES
Unlimited tax loss carryforwards for which no deferred tax assets	2,685	5,107	3,310
Up to 10 years
INCOME TAXES
Unlimited tax loss carryforwards for which no deferred tax assets	1,772	1,064	927
Up to 15 years
INCOME TAXES
Unlimited tax loss carryforwards for which no deferred tax assets	€ 4,508	€ 5,187	3,943
Up to 20 years
INCOME TAXES
Unlimited tax loss carryforwards for which no deferred tax assets			€ 340

XML

INCOME TAXES - Additional information (Details) - EUR (€) € in Thousands	Mar. 27, 2024	Dec. 31, 2023	Dec. 31, 2022
Income Tax Disclosure [Line Items]
Taxable temporary differences associated with investments in entities, branches and associates and interests in joint arrangements not been recognized		€ 931	€ 937
Deferred tax assets exceeding deferred tax liabilities for companies that generated a loss in the current or previous period recognized		€ 522	€ 2,594
Maximum amount of benefit that could be recognized due to change in loss deduction rate	€ 522
Minimum
Income Tax Disclosure [Line Items]
Loss deduction rate	60.00%
Maximum
Income Tax Disclosure [Line Items]
Loss deduction rate	70.00%

XML

INTANGIBLE ASSETS (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
MATERIAL ACCOUNTING POLICIES
Beginning balance	€ 15,828	€ 15,976
Ending balance	14,966	15,828
Costs of acquisition
MATERIAL ACCOUNTING POLICIES
Beginning balance	23,874	29,429
Additions	3,274	3,607
Disposals/Retirements		(9,162)
Foreign exchange differences	(46)	(1)
Ending balance	27,102	23,874
Accumulated amortization/write downs
MATERIAL ACCOUNTING POLICIES
Beginning balance	(8,046)	(13,454)
Amortization	4,133	3,609
Disposals/Retirements		9,015
Foreign exchange differences	(44)	(2)
Ending balance	(12,136)	(8,046)
Development Costs
MATERIAL ACCOUNTING POLICIES
Beginning balance	15,337	15,794
Ending balance	14,278	15,337
Development Costs | Costs of acquisition
MATERIAL ACCOUNTING POLICIES
Beginning balance	22,832	22,968
Additions	2,915	3,219
Disposals/Retirements		(3,355)
Foreign exchange differences	(17)
Ending balance	25,729	22,832
Development Costs | Accumulated amortization/write downs
MATERIAL ACCOUNTING POLICIES
Beginning balance	(7,495)	(7,174)
Amortization	3,975	3,529
Disposals/Retirements		3,208
Foreign exchange differences	(17)
Ending balance	(11,452)	(7,495)
Patents and licenses
MATERIAL ACCOUNTING POLICIES
Beginning balance	490	181
Ending balance	689	490
Patents and licenses | Costs of acquisition
MATERIAL ACCOUNTING POLICIES
Beginning balance	1,042	6,461
Additions	359	389
Disposals/Retirements		(5,807)
Foreign exchange differences	(28)	(1)
Ending balance	1,372	1,042
Patents and licenses | Accumulated amortization/write downs
MATERIAL ACCOUNTING POLICIES
Beginning balance	(552)	(6,280)
Amortization	158	80
Disposals/Retirements		5,807
Foreign exchange differences	(26)	(2)
Ending balance	€ (684)	€ (552)

XML

INTANGIBLE ASSETS - Additional Information (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
INTANGIBLE ASSETS
Retirements relate to intangibles assets with a net book value	€ 0
Amount of borrowing costs capitalised	€ 494	€ 640
Capitalisation rate	10.00%	10.00%
Amount deducted from the capitalized book value	€ 159	€ 268	€ 723
Pre-tax discount rate	12.89%	11.17%

XML

PROPERTY, PLANT AND EQUIPMENT (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
MATERIAL ACCOUNTING POLICIES
Beginning balance	€ 13,361	€ 13,899
Ending balance	5,704	13,361
Gross carrying amounts
MATERIAL ACCOUNTING POLICIES
Beginning balance	54,127	55,318
Additions	3,602	1,423
Disposals/Retirements	24,991	2,507
Foreign exchange differences	(289)	(107)
Ending balance	32,449	54,127
Accumulated depreciation
MATERIAL ACCOUNTING POLICIES
Beginning balance	(40,766)	(41,419)
Depreciation	2,048	1,865
Disposals/Retirements	(15,856)	(2,426)
Foreign exchange differences	(214)	(92)
Ending balance	(26,744)	(40,766)
Land, buildings and leasehold improvements
MATERIAL ACCOUNTING POLICIES
Beginning balance	9,722	10,046
Ending balance	149	9,722
Land, buildings and leasehold improvements | Gross carrying amounts
MATERIAL ACCOUNTING POLICIES
Beginning balance	21,303	21,143
Additions		161
Disposals/Retirements	21,085
Foreign exchange differences	1
Ending balance	220	21,303
Land, buildings and leasehold improvements | Accumulated depreciation
MATERIAL ACCOUNTING POLICIES
Beginning balance	(11,581)	(11,097)
Depreciation	483	484
Disposals/Retirements	(11,995)
Foreign exchange differences	1
Ending balance	(71)	(11,581)
Technical equipment and machinery
MATERIAL ACCOUNTING POLICIES
Beginning balance	2,371	2,126
Ending balance	3,016	2,371
Technical equipment and machinery | Gross carrying amounts
MATERIAL ACCOUNTING POLICIES
Beginning balance	18,263	18,692
Additions	1,679	940
Disposals/Retirements	3,448	1,638
Transfers		333
Foreign exchange differences	(164)	(64)
Ending balance	16,330	18,263
Technical equipment and machinery | Accumulated depreciation
MATERIAL ACCOUNTING POLICIES
Beginning balance	(15,892)	(16,566)
Depreciation	982	964
Disposals/Retirements	(3,447)	(1,585)
Foreign exchange differences	(114)	(53)
Ending balance	(13,314)	(15,892)
Office and other equipment
MATERIAL ACCOUNTING POLICIES
Beginning balance	1,268	1,383
Ending balance	2,027	1,268
Office and other equipment | Gross carrying amounts
MATERIAL ACCOUNTING POLICIES
Beginning balance	14,561	15,139
Additions	1,410	323
Disposals/Retirements	458	858
Foreign exchange differences	(126)	(43)
Ending balance	15,386	14,561
Office and other equipment | Accumulated depreciation
MATERIAL ACCOUNTING POLICIES
Beginning balance	(13,293)	(13,756)
Depreciation	583	417
Disposals/Retirements	(414)	(842)
Foreign exchange differences	(101)	(38)
Ending balance	(13,359)	(13,293)
Assets under construction
MATERIAL ACCOUNTING POLICIES
Beginning balance		345
Ending balance	513
Assets under construction | Gross carrying amounts
MATERIAL ACCOUNTING POLICIES
Beginning balance		345
Additions	513
Disposals/Retirements		12
Transfers		€ (333)
Ending balance	€ 513

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PROPERTY, PLANT AND EQUIPMENT - Additional Information (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
PROPERTY, PLANT AND EQUIPMENT
Right-of-use assets	€ 9,063	€ 1,334	€ 1,513

XML

LEASES - Carrying amounts of right-of-use assets recognized and the movements during period (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
MATERIAL ACCOUNTING POLICIES
Beginning balance	€ 1,334	€ 1,513
Additions to right-of-use assets	8,581	480
Depreciation	(779)	(642)	€ (487)
Foreign exchange differences	(73)	(17)
Ending balance	9,063	1,334	1,513
Real Estate
MATERIAL ACCOUNTING POLICIES
Beginning balance	906	1,207
Additions to right-of-use assets	8,402	144
Depreciation	(543)	(430)
Foreign exchange differences	(68)	(15)
Ending balance	8,697	906	1,207
Vehicles
MATERIAL ACCOUNTING POLICIES
Beginning balance	428	306
Additions to right-of-use assets	178	336
Depreciation	(236)	(211)
Foreign exchange differences	(5)	(2)
Ending balance	€ 365	€ 428	€ 306

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LEASES - Additional Information (Details)	1 Months Ended	12 Months Ended
	Dec. 31, 2023 EUR (€) lease	Dec. 31, 2023 EUR (€) lease	Dec. 31, 2022 EUR (€)	Dec. 31, 2021 EUR (€)
LEASES
Purchase price	€ 11,400,000	€ 11,400,000
Lease term	10 years
Number of times that lease term can be extended by 5 years each time | lease	3	3
Lease payment	€ 100,000	€ 100,000
Increase in right-of-use asset	7,092,000	7,092,000
Lease liability	8,895,000	€ 8,895,000
Gain on sale	€ 507,000
Weighted average IBR (Percentage)	6.03%	6.03%	5.49%
Variable lease payments		€ 0
Lease income per month		10,000
Minimum lease payments to be received	€ 115,000	115,000	€ 115,000	€ 115,000
Sublease income per month		€ 3,000

XML

LEASES - Lease Liabilities (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
LEASES
Beginning balance	€ 1,333	€ 1,528
Additions	10,347	433
Interest	102	68
Payment of lease liabilities	(819)	(676)
Foreign exchange difference	(77)	(19)
Ending balance	€ 10,886	€ 1,333

XML

LEASES - Lease related expense (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
LEASES
Depreciation	€ (779)	€ (642)	€ (487)
Interest expense on lease liabilities	(103)	(68)	(49)
Short-term lease expenses	(383)	(523)	(341)
Lease expenses for low-value assets	(7)	(28)	(68)
Total amount recognized in expense	€ (1,273)	€ (1,260)	€ (945)

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LEASES - Information on total cash outflow from all leases (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
LEASES
Principal paid	€ (715)	€ (609)	€ (451)
Interest paid	(103)	(68)	(49)
Short term and low value leases	(391)	(551)	(409)
Total amount paid	€ (1,209)	€ (1,227)	€ (908)

XML

LEASES - Maturity analysis (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Disclosure of Maturity Analysis of Lease Payments [Line Items]
Gross lease liabilities - minimum lease payments	€ 14,130	€ 1,476
Discount and foreign currency effects	(3,244)	143
Present value of the lease liabilities	10,886	1,333	€ 1,528
Not later than 1 year
Disclosure of Maturity Analysis of Lease Payments [Line Items]
Gross lease liabilities - minimum lease payments	2,108	564
Later than 1 year and not later than 2 years
Disclosure of Maturity Analysis of Lease Payments [Line Items]
Gross lease liabilities - minimum lease payments	1,928	465
Later than 2 year and not later than five years
Disclosure of Maturity Analysis of Lease Payments [Line Items]
Gross lease liabilities - minimum lease payments	4,081	€ 446
Later than 5 years
Disclosure of Maturity Analysis of Lease Payments [Line Items]
Gross lease liabilities - minimum lease payments	€ 6,014

XML

INVENTORIES (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
INVENTORIES
Raw materials and supplies	€ 4,386	€ 5,513
Work in progress	6,038	11,098
Finished goods	5,928	8,419
Inventories	16,353	25,029
Inventory write-downs	1,052	833	€ 69
Reversals of impairment, inventories	83	23	1
Inventories recognized as expense	€ 25,026	€ 28,954	€ 9,293

XML

TRADE RECEIVABLES AND OTHER RECEIVABLES (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
TRADE RECEIVABLES AND OTHER RECEIVABLES
Trade receivables	€ 40,626	€ 40,593
Receivables from joint ventures	1,599	2,656
Other receivables	4,807	65,589
Total trade and other receivables	47,032	108,838
Decrease in other receivables attributable to repayment of shareholder loan receivable	107	€ 65,158
Receivable for Silicon bonus payment	€ 4,500

XML

TRADE RECEIVABLES AND OTHER RECEIVABLES - Additional Information (Details) € in Thousands	Dec. 31, 2023 EUR (€)
TRADE RECEIVABLES AND OTHER RECEIVABLES
Exit bonus receivable	€ 4,500
Silicon
TRADE RECEIVABLES AND OTHER RECEIVABLES
Exit bonus receivable	€ 4,700

XML

OTHER CURRENT ASSETS (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
OTHER CURRENT ASSETS
Advance payments on inventories	€ 1,317	€ 2,635
Restricted cash	89	1,049
Prepaid expenses	3,667	730
Contract assets		401
Total other current non-financial assets	€ 5,073	€ 4,815

XML

CASH & CASH EQUIVALENTS (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
CASH & CASH EQUIVALENTS
Deposits on bank accounts	€ 5,710	€ 8,332

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NON-CONTROLLING INTEREST (Details)	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Jun. 30, 2021
XJ Harbour HK Limited
NON-CONTROLLING INTEREST
NCI percentage				20.90%
SCHMID Singapore Pte. Ltd.
NON-CONTROLLING INTEREST
NCI percentage	10.00%	10.00%	10.00%
SCHMID Technology Guangdong Co. Ltd.
NON-CONTROLLING INTEREST
NCI percentage	24.10%	24.10%	24.10%
SCHMID Taiwan Ltd.
NON-CONTROLLING INTEREST
NCI percentage	14.00%	14.00%	14.00%

XML

NON-CONTROLLING INTEREST - Entity that has material NCI (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
NON-CONTROLLING INTEREST
Non-current assets	€ 32,416	€ 33,232
Current assets	74,166	147,014
Non-current liabilities	37,081	38,968
Current liabilities	87,343	195,594
Revenue	90,246	95,058	€ 39,481
Income (loss) for the period	37,954	3,591	(27,277)
Other comprehensive income (loss)	(1,607)	(290)	150
Total comprehensive income (loss)	36,346	3,301	(27,127)
Total comprehensive income allocated to NCI	677	1,845	€ (2,530)
Accumulated NCI end of period	€ 7,358	€ 6,681
SCHMID Singapore Pte. Ltd.
NON-CONTROLLING INTEREST
NCI percentage	10.00%	10.00%	10.00%
Current assets	€ 2,797	€ 1,651	€ 1,698
Current liabilities	2,062	7,104	7,144
Net assets	736	(5,453)	(5,445)
Net assets attributable to NCI	74	(545)	(545)
Income (loss) for the period	6,188	(7)	(33)
Total comprehensive income (loss)	6,188	(7)	(33)
Total comprehensive income allocated to NCI	619	(1)	(3)
Accumulated NCI end of period	€ 77	€ (543)	€ (542)
SCHMID Technology Guangdong Co. Ltd.
NON-CONTROLLING INTEREST
NCI percentage	24.10%	24.10%	24.10%
Non-current assets	€ 5,118	€ 4,575	€ 4,876
Current assets	42,569	46,040	23,857
Non-current liabilities	847	568	841
Current liabilities	22,288	26,244	9,518
Net assets	24,552	23,804	18,374
Net assets attributable to NCI	5,917	5,737	4,428
Revenue	27,750	38,753	9,762
Income (loss) for the period	2,298	6,068	(13,359)
Other comprehensive income (loss)	(1,550)	(639)	753
Total comprehensive income (loss)	748	5,429	(12,606)
Total comprehensive income allocated to NCI	180	1,308	(2,627)
Accumulated NCI end of period	€ 6,487	€ 6,335	€ 5,026
SCHMID Taiwan Ltd.
NON-CONTROLLING INTEREST
NCI percentage	14.00%	14.00%	14.00%
Non-current assets	€ 185	€ 71	€ 197
Current assets	11,827	12,704	4,993
Non-current liabilities	605	694	66
Current liabilities	5,182	5,203	2,095
Net assets	6,224	6,879	3,030
Net assets attributable to NCI	868	960	423
Revenue	1,672	12,873	3,954
Income (loss) for the period	(402)	4,152	424
Other comprehensive income (loss)	(252)	(303)	297
Total comprehensive income (loss)	(654)	3,849	721
Total comprehensive income allocated to NCI	(91)	537	101
Accumulated NCI end of period	€ 794	€ 889	€ 352

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NON-CONTROLLING INTEREST - Cash flow statement (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
NON-CONTROLLING INTEREST
Cash flow from operating activities	€ 9,897	€ 280	€ (10,285)
Cash flow from investing activities	72,019	(7,168)	(7,537)
Cash flow from financing activities	(83,714)	(3,165)	35,674
Effect of foreign exchange rate changes on cash and cash equivalents	(824)
SCHMID Technology Guangdong Co. Ltd.
NON-CONTROLLING INTEREST
Cash flow from operating activities	666	(1,688)	(11,650)
Cash flow from investing activities	(472)	(502)	(16,449)
Cash flow from financing activities	(21)	(452)	32,313
Effect of foreign exchange rate changes on cash and cash equivalents	(119)	116	93
Net increase (decrease) in cash and cash equivalents	€ 262	€ (2,525)	€ 4,307

XML

FINANCIAL LIABILITIES (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
FINANCIAL LIABILITIES
Non-current financial liabilities	€ 22,190	€ 34,406
Current financial liabilities	26,053	128,454
Total financial liabilities	€ 48,244	€ 162,860

XML

FINANCIAL LIABILITIES - Borrowings (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
Non-current borrowings
Non-current borrowings	€ 22,190	€ 34,406
Current borrowings
Current borrowings	26,053	128,454
Total borrowings	48,244	162,860
Loans from banks
Current borrowings
Current borrowings	1,225	12,003
Loans from debt funds
Non-current borrowings
Non-current borrowings		24,393
Current borrowings
Current borrowings		79,773
Loans from other third parties
Non-current borrowings
Non-current borrowings	2,336
Current borrowings
Current borrowings		3,540
Loans from shareholders
Non-current borrowings
Non-current borrowings	19,854	10,013
Current borrowings
Current borrowings	8,102	16,493
Total borrowings	19,854,000
Loans from other related parties
Current borrowings
Current borrowings	€ 16,726	€ 16,646

XML

FINANCIAL LIABILITIES - Narratives (Details) € in Thousands	1 Months Ended	12 Months Ended
	Aug. 31, 2023 EUR (€)	Dec. 31, 2023 EUR (€) loan item	Dec. 31, 2022 EUR (€)	Dec. 31, 2021 EUR (€)	Dec. 31, 2016 EUR (€)
FINANCIAL LIABILITIES
Cash payments		€ 81,871	€ 5,880	€ 1,911
Borrowings remaining amount		€ 48,244	€ 162,860
Loans from debt funds
FINANCIAL LIABILITIES
Number of loans | loan		5
Number of loan providers | item		2
Loans from banks
FINANCIAL LIABILITIES
Number of loans | loan		2
Number of loans repaid | loan		3
Loans from other third parties
FINANCIAL LIABILITIES
Cash payments	€ 1,234
Interest rate margin	3.00%
Debt term	2 years
Loans from shareholders
FINANCIAL LIABILITIES
Interest rate margin		1.00%
Loans waived					€ 5,000
Borrowings remaining amount		€ 19,854,000
Borrowing floor rate		0.25%
Loans from Shareholder One
FINANCIAL LIABILITIES
Loan facilities					15,000
Loans from Shareholder Two
FINANCIAL LIABILITIES
Loan facilities					€ 11,000

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FINANCIAL LIABILITIES - Share option (Details) - SCHMID Technology Guangdong Co. Ltd. - EUR (€) € in Millions	Jul. 01, 2022	Dec. 31, 2021
FINANCIAL LIABILITIES
Percentage of interest acquired		20.90%
Consideration transferred		€ 25.0
Investor
FINANCIAL LIABILITIES
Percentage of interest acquired	5.60%	3.20%
Consideration transferred		€ 5.0

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OTHER PROVISIONS (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Non-current provisions
Beginning balance, non-current	€ 330	€ 366
Additions, non-current	693	70
Utilization, non-current	(787)	(106)
Ending balance, non-current	237	330
Current provisions
Beginning balance, current	360	451
Additions, current	2,504	155
Utilization, current	(1,520)	(247)
Reversal of unused amount, current	(370)
Ending balance, current	973	360
Warranty provision
Non-current provisions
Beginning balance, non-current	211	203
Additions, non-current	211	99
Utilization, non-current	(184)	(91)
Ending balance, non-current	238	211
Current provisions
Beginning balance, current	139	228
Additions, current	152	25
Utilization, current	(66)	(114)
Ending balance, current	225	139
Jubilee provision
Non-current provisions
Beginning balance, non-current	119	163
Additions, non-current	482	(30)
Utilization, non-current	(603)	(14)
Ending balance, non-current	2	119
Provision for legal claims
Current provisions
Beginning balance, current	67	32
Additions, current	44	123
Utilization, current		(88)
Reversal of unused amount, current	(58)
Ending balance, current	53	67
Other provisions
Current provisions
Beginning balance, current	153	191
Additions, current	2,308	7
Utilization, current	(1,454)	(45)
Reversal of unused amount, current	(312)
Ending balance, current	€ 695	€ 153

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POST-EMPLOYMENT BENEFITS (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
POST-EMPLOYMENT BENEFITS
Expenses for defined contribution plans	€ 1,677	€ 1,552	€ 1,528

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POST-EMPLOYMENT BENEFITS - Defined benefit plan (Details) € in Thousands	12 Months Ended
	Dec. 31, 2023 EUR (€)
POST-EMPLOYMENT BENEFITS
Eligible age	67 years
Plan assets	€ 0

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POST-EMPLOYMENT BENEFITS - Reconciliation of the net defined benefit liability (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
POST-EMPLOYMENT BENEFITS
Net defined liability at January 1	€ 887	€ 1,173	€ 1,189
Defined benefit income recognized in combined statement of profit or loss	33	14	12
Defined benefit cost recognized in other comprehensive income		300	28
Net defined liability at December 31	894	887	1,173
Present value of the defined benefit obligation
POST-EMPLOYMENT BENEFITS
Net defined liability at January 1	887	1,173
Net defined liability at December 31	€ 894	€ 887	€ 1,173

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POST-EMPLOYMENT BENEFITS - Reconciliation of the amount recognized in the combined statement of financial position (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
POST-EMPLOYMENT BENEFITS
Net defined liability at January 1	€ 887	€ 1,173	€ 1,189
Actuarial adjustments	25	300	28
thereof: experience adjustments	(2)	2	2
thereof: adjustments for financial assumptions	(24)	(302)	(30)
Interest expense	33	14	12
Net defined liability at December 31	894	887	1,173
Present value of the defined benefit obligation
POST-EMPLOYMENT BENEFITS
Net defined liability at January 1	887	1,173
Net defined liability at December 31	€ 894	€ 887	€ 1,173

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POST-EMPLOYMENT BENEFITS - Expenses (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
POST-EMPLOYMENT BENEFITS
Actuarial gains (-) / losses (+) deriving from changes in financial assumptions	€ (24)	€ (302)	€ (30)
Actuarial gains (-) / losses (+) deriving from experience adjustments	(2)	2	2
Included in other comprehensive income	25	300	28
Interest income	33	14	12
Included in the combined statements of profit or loss	33	14	12
Total included in the combined statements of profit or loss and other comprehensive income (loss)	€ 7	€ (286)	€ (16)

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POST-EMPLOYMENT BENEFITS - Actuarial assumptions (Details)	Dec. 31, 2023	Dec. 31, 2022
POST-EMPLOYMENT BENEFITS
Discount rate	4.00%	3.75%

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POST-EMPLOYMENT BENEFITS - Sensitivity Analysis (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
POST-EMPLOYMENT BENEFITS
Discount rate (+0.25%)	4.25%	4.00%
Present value of the post-employment benefit obligations (in € thousand)	€ 872	€ 862
Discount rate (-0.25%)	3.75%	3.50%
Present value of the post-employment benefit obligations (in € thousand)	€ 918	€ 912
Actuarial assumption of discount rates
POST-EMPLOYMENT BENEFITS
Discount rate increase	0.25%	0.25%
Discount rate decrease	(0.25%)	(0.25%)

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POST-EMPLOYMENT BENEFITS - Duration (Details)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
POST-EMPLOYMENT BENEFITS
Duration of the obligation	12 years	13 years

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OTHER CURRENT LIABILITIES (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
OTHER CURRENT LIABILITIES
Personnel related accruals	€ 3,175	€ 2,700
Tax related accruals	1,348	1,481
Audit related accruals	1,297	286
Miscellaneous other current liabilities	7,294	4,239
Total other current liabilities	13,113	€ 8,706
Legal and consulting fees	2,707
Installation and transportation costs	€ 1,344

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Carrying Amounts and Fair Values (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
Financial instruments
Carrying amount, financial liabilities	€ 48,244	€ 162,860
FLAC
Financial instruments
Carrying amount, financial liabilities	74,142	188,260
FLAC | Loans from debt funds | Level 3
Financial instruments
Carrying amount, financial liabilities		24,393
Fair value, financial liabilities		23,072
FLAC | Loans from other third parties | Level 3
Financial instruments
Carrying amount, financial liabilities	2,336
Fair value, financial liabilities	2,063
FLAC | Loans from shareholders | Level 3
Financial instruments
Carrying amount, financial liabilities	19,854	10,013
Fair value, financial liabilities	17,630	9,307
FLAC | Loans from banks | Level 3
Financial instruments
Carrying amount, financial liabilities	1,225	12,003
Fair value, financial liabilities		11,508
FLAC | Loans from debt funds | Level 3
Financial instruments
Carrying amount, financial liabilities		79,773
Fair value, financial liabilities		51,678
FLAC | Loans from other third parties | Level 3
Financial instruments
Carrying amount, financial liabilities		3,540
Fair value, financial liabilities		3,483
FLAC | Loans from shareholders
Financial instruments
Carrying amount, financial liabilities	8,102	16,493
FLAC | Loans from other related parties | Level 3
Financial instruments
Carrying amount, financial liabilities	16,726	16,646
Fair value, financial liabilities		14,688
FLAC | Trade payables and other liabilities
Financial instruments
Carrying amount, financial liabilities	25,899	25,400
AC
Financial instruments
Carrying amount, financial assets	54,335	120,971
AC | Other loans and other investments
Financial instruments
Carrying amount, financial assets	28
Fair value, financial assets	28
AC | Other non-current financial assets
Financial instruments
Carrying amount, financial assets	112	115
AC | Trade receivables
Financial instruments
Carrying amount, financial assets	40,673	40,593
AC | Receivables from joint ventures
Financial instruments
Carrying amount, financial assets	1,599	2,656
AC | Exit bonus
Financial instruments
Carrying amount, financial assets	4,700
Fair value, financial assets	4,700
AC | Receivables from shareholder
Financial instruments
Carrying amount, financial assets	107
AC | Receivables from shareholder | Level 3
Financial instruments
Carrying amount, financial assets		65,158
Fair value, financial assets		64,028
AC | Miscellaneous receivables
Financial instruments
Carrying amount, financial assets		431
AC | Restricted cash
Financial instruments
Carrying amount, financial assets	89	1,049
AC | Other
Financial instruments
Carrying amount, financial assets	1,317	2,637
AC | Cash and cash equivalents
Financial instruments
Carrying amount, financial assets	€ 5,710	€ 8,332

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Items of income, expenses, gains or losses resulting from financial instruments (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Items of income, expenses, gains or losses resulting from financial instruments
Financial assets - AC, Interest	€ 9,499	€ 4,089
Financial liabilities - FLAC, Interest	(9,988)	(17,650)
Financial assets and liabilities - FVTPL, Fair value		(1,669)
Total income, expenses, gains or losses resulting from financial instruments	(488)	(15,230)
Financial instruments that are not measured at FVTPL
Total interest income for financial assets that are not measured at FVTPL	9,499	4,089
Total interest expense for financial liabilities that are not measured at FVTPL	9,988	17,650
Interest [Member]
Items of income, expenses, gains or losses resulting from financial instruments
Financial assets - AC, Interest	9,499	4,089
Financial liabilities - FLAC, Interest	(9,988)	(17,650)
Total income, expenses, gains or losses resulting from financial instruments	€ (488)	(13,561)
Fair value[Member]
Items of income, expenses, gains or losses resulting from financial instruments
Financial assets and liabilities - FVTPL, Fair value		(1,669)
Total income, expenses, gains or losses resulting from financial instruments		€ (1,669)

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Allowances for ECL determined for the different classes of financial assets developed (Details) - Allowances - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Trade receivables | - not credit impaired
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Opening Balance	€ (19)	€ (8)
Additions	(118)	(11)
Closing Balance	(137)	(19)
Trade receivables | - credit impaired
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Opening Balance	(652)	(1,952)
Additions	(198)
Utilization	(11,425)	1,148
Reversal	11,706	153
Closing Balance	(569)	(652)
Shareholder and other loans
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Opening Balance	(1,445)	(4,394)
Reversal	€ 1,445	2,949
Closing Balance		€ (1,445)

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Gross Carrying Amounts by Rating Class (Details) - Gross carrying amounts - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
Stage 3
Credit-risk rating
Carrying amount, financial assets	€ (138)
Stage 1
Credit-risk rating
Carrying amount, financial assets	5,710	€ 8,332
Stage 2/ Stage 3
Credit-risk rating
Carrying amount, financial assets	37,665	108,838
Cash and cash equivalents | AAA to BBB (Investment grade) | Stage 1
Credit-risk rating
Carrying amount, financial assets	5,710	8,332
Shareholder receivable | BBB- to CCC (Below investment grade) | Stage 2/ Stage 3
Credit-risk rating
Carrying amount, financial assets	4,807	65,158
Trade receivables and other receivables | insured receivables (90%) | Stage 2/ Stage 3
Credit-risk rating
Carrying amount, financial assets		39,312
Trade receivables and other receivables | non-insured receivables (10%) | Stage 2/ Stage 3
Credit-risk rating
Carrying amount, financial assets		€ 4,368
Trade receivables and other receivables | Current (not past due) | Stage 3
Credit-risk rating
Carrying amount, financial assets	(69)
Trade receivables and other receivables | Current (not past due) | Stage 2/ Stage 3
Credit-risk rating
Carrying amount, financial assets	27,148
Trade receivables and other receivables | 1-30 days past due | Stage 3
Credit-risk rating
Carrying amount, financial assets	(11)
Trade receivables and other receivables | 1-30 days past due | Stage 2/ Stage 3
Credit-risk rating
Carrying amount, financial assets	1,423
Trade receivables and other receivables | 31-60 days past due | Stage 3
Credit-risk rating
Carrying amount, financial assets	(6)
Trade receivables and other receivables | 31-60 days past due | Stage 2/ Stage 3
Credit-risk rating
Carrying amount, financial assets	597
Trade receivables and other receivables | 61-90 days past due | Stage 3
Credit-risk rating
Carrying amount, financial assets	(7)
Trade receivables and other receivables | 61-90 days past due | Stage 2/ Stage 3
Credit-risk rating
Carrying amount, financial assets	651
Trade receivables and other receivables | More than 90 days past due | Stage 3
Credit-risk rating
Carrying amount, financial assets	(45)
Trade receivables and other receivables | More than 90 days past due | Stage 2/ Stage 3
Credit-risk rating
Carrying amount, financial assets	€ 3,039

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Liquidity Risk (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
Credit-risk rating
Carrying amount, financial liabilities	€ 48,244	€ 162,860
Liquidity Risk | Lease liabilities
Credit-risk rating
Carrying amount, financial liabilities	11,025	1,476
Liquidity Risk | Borrowings (including embedded derivatives)
Credit-risk rating
Carrying amount, financial liabilities	52,835	161,432
Liquidity Risk | Loans from banks
Credit-risk rating
Carrying amount, financial liabilities	1,225	12,221
Liquidity Risk | Loans from debt funds
Credit-risk rating
Carrying amount, financial liabilities		99,783
Liquidity Risk | Loans from other third parties
Credit-risk rating
Carrying amount, financial liabilities	2,778	3,702
Liquidity Risk | Loans from shareholders
Credit-risk rating
Carrying amount, financial liabilities	32,106	28,394
Liquidity Risk | Loans from other related parties
Credit-risk rating
Carrying amount, financial liabilities	16,726	17,332
Liquidity Risk | Trade payables and other liabilities
Credit-risk rating
Carrying amount, financial liabilities	25,899	25,400
Liquidity Risk | Not later than 1 year | Lease liabilities
Credit-risk rating
Carrying amount, financial liabilities	2,073	564
Liquidity Risk | Not later than 1 year | Borrowings (including embedded derivatives)
Credit-risk rating
Carrying amount, financial liabilities	26,053	111,517
Liquidity Risk | Not later than 1 year | Loans from banks
Credit-risk rating
Carrying amount, financial liabilities	1,225	12,221
Liquidity Risk | Not later than 1 year | Loans from debt funds
Credit-risk rating
Carrying amount, financial liabilities		73,262
Liquidity Risk | Not later than 1 year | Loans from other third parties
Credit-risk rating
Carrying amount, financial liabilities		3,702
Liquidity Risk | Not later than 1 year | Loans from shareholders
Credit-risk rating
Carrying amount, financial liabilities	8,102	5,000
Liquidity Risk | Not later than 1 year | Loans from other related parties
Credit-risk rating
Carrying amount, financial liabilities	16,726	17,332
Liquidity Risk | Not later than 1 year | Trade payables and other liabilities
Credit-risk rating
Carrying amount, financial liabilities	25,899	25,400
Liquidity Risk | Later than 1 year and not later than 2 years | Lease liabilities
Credit-risk rating
Carrying amount, financial liabilities	1,822	465
Liquidity Risk | Later than 1 year and not later than 2 years | Borrowings (including embedded derivatives)
Credit-risk rating
Carrying amount, financial liabilities	26,781	49,914
Liquidity Risk | Later than 1 year and not later than 2 years | Loans from debt funds
Credit-risk rating
Carrying amount, financial liabilities		26,521
Liquidity Risk | Later than 1 year and not later than 2 years | Loans from other third parties
Credit-risk rating
Carrying amount, financial liabilities	2,778
Liquidity Risk | Later than 1 year and not later than 2 years | Loans from shareholders
Credit-risk rating
Carrying amount, financial liabilities	24,004	23,394
Liquidity Risk | Later than 2 year and not later than five years | Lease liabilities
Credit-risk rating
Carrying amount, financial liabilities	3,372	€ 446
Liquidity Risk | Later than 5 years | Lease liabilities
Credit-risk rating
Carrying amount, financial liabilities	€ 3,758

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Foreign Currency Risk (Details) - Foreign Currency Risk € in Thousands, ¥ in Thousands, $ in Thousands, $ in Thousands	Dec. 31, 2023 CNY (¥)	Dec. 31, 2023 USD ($)	Dec. 31, 2023 EUR (€)	Dec. 31, 2023 HKD ($)	Dec. 31, 2022 CNY (¥)	Dec. 31, 2022 USD ($)	Dec. 31, 2022 EUR (€)
Credit-risk rating
Impact on profit or loss from change in functional currency	¥ 2,563	$ 2,520	€ 26,464	$ (424)	¥ 5,500	$ 3,530	€ 20,029
EUR
Credit-risk rating
Impact on profit or loss from change in functional currency	5,010	3,597			¥ 5,500	4,669
CNY
Credit-risk rating
Impact on profit or loss from change in functional currency		$ (1,077)	27,217	$ (424)		$ (1,139)	25,519
USD
Credit-risk rating
Impact on profit or loss from change in functional currency			17				(5,030)
TWD
Credit-risk rating
Impact on profit or loss from change in functional currency	(238)		1,481				1,378
HKD
Credit-risk rating
Impact on profit or loss from change in functional currency	¥ (2,209)		2,026
KRW
Credit-risk rating
Impact on profit or loss from change in functional currency			€ (4,276)				€ (1,838)

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Impact on profit or loss before tax (Details) - Foreign Currency Risk - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
Credit-risk rating
Percentage of reasonable increase	10.00%	10.00%
Percentage of reasonable decrease	(10.00%)	(10.00%)
CNY/EUR
Credit-risk rating
Impact on profit or loss before tax due to reasonable increase in material currency pair	€ 2,019	€ 1,820
Impact on profit or loss before tax due to reasonable decrease in material currency pair	(2,467)	(2,224)
USD/EUR
Credit-risk rating
Impact on profit or loss before tax due to reasonable increase in material currency pair	(325)	(882)
Impact on profit or loss before tax due to reasonable decrease in material currency pair	398	1,078
TWD/EUR
Credit-risk rating
Impact on profit or loss before tax due to reasonable increase in material currency pair	135	130
Impact on profit or loss before tax due to reasonable decrease in material currency pair	(165)	(159)
HKD/EUR
Credit-risk rating
Impact on profit or loss before tax due to reasonable increase in material currency pair	184
Impact on profit or loss before tax due to reasonable decrease in material currency pair	(225)
KRW/EUR
Credit-risk rating
Impact on profit or loss before tax due to reasonable increase in material currency pair	(389)	(167)
Impact on profit or loss before tax due to reasonable decrease in material currency pair	475	204
CNY/TWD
Credit-risk rating
Impact on profit or loss before tax due to reasonable increase in material currency pair	22
Impact on profit or loss before tax due to reasonable decrease in material currency pair	(26)
CNY/HKD
Credit-risk rating
Impact on profit or loss before tax due to reasonable increase in material currency pair	158
Impact on profit or loss before tax due to reasonable decrease in material currency pair	(203)
USD/CNY
Credit-risk rating
Impact on profit or loss before tax due to reasonable increase in material currency pair	98	104
Impact on profit or loss before tax due to reasonable decrease in material currency pair	€ (120)	€ (127)

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Interest Rate Risk (Details) - Interest Rate Risk - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Increase in interest rate (as a percent)	1.00%	1.00%
Decrease in interest rate (as a percent)	1.00%	1.00%
Impact to P&L due to increase in interest rate	€ (296)	€ (1,164)
Impact to P&L due to decrease in interest rate	€ 296	€ 1,162

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FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Reconciliation of changes in liabilities arising from financing activities (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Reconciliation of changes in liabilities arising from financing activities
Balance at the beginning	€ 59,130	€ 168,444	€ 154,618
Cash flow from financing activities	(84,631)	(3,301)
Proceeds from loans		4,895
Repayments of loans	(81,871)	(5,880)	(1,911)
Principal elements of lease payment	(715)	(609)
Interest paid	(2,044)	(1,708)
Changes in the cash flow from financing activities	(24,683)	17,127
Foreign currency effects	(77)	(19)
New leases	10,347	433
Accrued interest	(34,922)	14,677
Fair value measurement	(32)	2,036
Balance at the ending	59,130	168,444	154,618
Loans
Reconciliation of changes in liabilities arising from financing activities
Balance at the beginning	48,244	167,111	153,090
Cash flow from financing activities	(83,812)	(2,625)
Proceeds from loans		4,895
Repayments of loans	(81,871)	(5,880)
Interest paid	(1,941)	(1,640)
Changes in the cash flow from financing activities	(35,055)	16,645
Accrued interest	(35,024)	14,609
Fair value measurement	(32)	2,036
Balance at the ending	48,244	167,111	153,090
Lease liabilities
Reconciliation of changes in liabilities arising from financing activities
Balance at the beginning	10,886	1,333	1,528
Cash flow from financing activities	(819)	(676)
Principal elements of lease payment	(715)	(609)
Interest paid	(103)	(68)
Changes in the cash flow from financing activities	10,372	482
Foreign currency effects	(77)	(19)
New leases	10,347	433
Accrued interest	102	68
Balance at the ending	€ 10,886	€ 1,333	€ 1,528

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EQUITY-ACCOUNTED INVESTEES (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
EQUITY-ACCOUNTED INVESTEES
Investment in joint venture	€ 0
Advanced Energy Storage Systems Investment Company (AES)
EQUITY-ACCOUNTED INVESTEES
Percent of ownership interest in joint ventures	51.30%	51.30%
SCHMID AVACO Korea Co. Ltd. (SAK)
EQUITY-ACCOUNTED INVESTEES
Percent of ownership interest in joint ventures	50.00%	50.00%

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EQUITY-ACCOUNTED INVESTEES - Financial information on the joint venture (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Current Assets
Cash and cash equivalents	€ 5,710	€ 8,332	€ 18,384	€ 533
Current assets	74,166	147,014
Non-current assets	32,416	33,232
Current liabilities
Current financial liabilities	26,053	128,454
Other current liabilities	13,113	8,706
Current liabilities	87,343	195,594
Non-current liabilities
Non-current financial liabilities	22,190	34,406
Non-current liabilities	37,081	€ 38,968
Investment in joint venture	€ 0
Advanced Energy Storage Systems Investment Company (AES)
EQUITY-ACCOUNTED INVESTEES
Percent of ownership interest in joint ventures	51.30%	51.30%
Current Assets
Cash and cash equivalents	€ 16	€ 1,144
Other current assets	22	342
Current assets	38	1,486
Non-current assets	3,871	6,134
Current liabilities
Current financial liabilities	2,935	2,015
Other current liabilities	216	4,214
Current liabilities	3,151	6,229
Non-current liabilities
Non-current financial liabilities		9,177
Other non-current liabilities	3,894	957
Non-current liabilities	3,894	10,134
Net assets (100%)	€ (3,136)	€ (8,742)

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EQUITY-ACCOUNTED INVESTEES - Joint venture (Details) - EUR (€)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Disclosure of joint ventures [line items]
Revenue	€ 90,246,000	€ 95,058,000	€ 39,481,000
Interest income	3,883,000	4,089,000	3,236,000
Depreciation and amortization	(6,904,000)	(6,283,000)	(4,893,000)
Tax income	(2,778,000)	1,924,000	(5,195,000)
Other comprehensive income	(1,607,000)	(290,000)	150,000
Total combined comprehensive income (loss) for the reporting period	€ 36,346,000	€ 3,301,000	€ (27,127,000)
Advanced Energy Storage Systems Investment Company (AES) [Member]
Disclosure of joint ventures [line items]
Percent of ownership interest in joint ventures	51.30%	51.30%
Administration expense	€ (221,000)
R&D and Other expense	(351,000)
Depreciation and amortization	(561,000)	€ (1,106,000)
Interest expense		(292,000)
Tax income	61,000	236,000
Loss from continuing operations	(1,025,000)	(3,750,000)
Other comprehensive income		181,000
Total combined comprehensive income (loss) for the reporting period	€ (1,025,000)	€ (3,932,000)

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COMMITMENTS AND CONTINGENCIES (Details) - EUR (€) € in Thousands	Dec. 31, 2023	Dec. 31, 2022
COMMITMENTS AND CONTINGENCIES
Commitments to acquire items of property, plant and equipment	€ 62	€ 1,086

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RELATED PARTY DISCLOSURES - Transactions with Key Management (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
RELATED PARTY DISCLOSURES
Short-term employee benefits	€ 1,562	€ 1,262	€ 1,332

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RELATED PARTY DISCLOSURES - Transactions are proceeded with related parties (Details) - EUR (€) € in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Shareholder
RELATED PARTY DISCLOSURES
Interest income on loans granted to	€ 1,077	€ 526	€ 159
Interest expense on loans received from	737	165	53
Salary and Bonus	1,149	988	910
Outstanding balances - Liabilities	24,102	24,064
Outstanding balances - Receivables	107	67,926
Key management personnel
RELATED PARTY DISCLOSURES
Interest expense on loans received from	12	88	88
Salary and Bonus	1,562	1,262	1,332
Outstanding balances - Liabilities	280	2,528
Joint ventures
RELATED PARTY DISCLOSURES
Purchases of goods or services	3	2,511	20
Sale of goods or services	427	505	817
Outstanding balances - Liabilities	358	358
Outstanding balances - Receivables	2,655	951
Other related parties
RELATED PARTY DISCLOSURES
Interest expense on loans received from	558	409	400
Purchases of goods or services	236	663	618
Sale of goods or services	11,801	592	€ 797
Outstanding balances - Liabilities	25,359	15,345
Outstanding balances - Receivables	€ 221	€ 23,062

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EVENTS AFTER THE REPORTING PERIOD (Details)	Jan. 01, 2024
Major business | Schmid Energy Systems GmbH
EVENTS AFTER THE REPORTING PERIOD
Percent of ownership interest in subsidiaries	100.00%

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EVENTS AFTER THE REPORTING PERIOD - Signing of the XJ repurchase agreement (Details) € in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2023 EUR (€)	Apr. 30, 2024 USD ($)
Signing of repurchase agreement | XJ Harbour HK Limited | SCHMID Technology Guangdong Co. Ltd.
EVENTS AFTER THE REPORTING PERIOD
Cash payments agreed for acquiring non-controlling interest	€ 30
Payments term after the closing of business combination	455 days
Cash due at the closing of business combination	€ 10
Major business
EVENTS AFTER THE REPORTING PERIOD
Committed Capital Before Costs | $		$ 26