Filing Overview
SMX (Security Matters) Public Limited Company filed a Form 6-K for September 2023. On September 6, 2023, the Company completed a private placement with an institutional investor under a Securities Purchase Agreement dated September 5, 2023.
Financing and Key Terms
| Item | Terms |
|---|---|
| Gross proceeds | Approximately $2.5 million, before fees and expenses |
| Promissory note principal | $4.29 million |
| Actual amount loaned | $2.574 million after a 40% original issue discount |
| Interest | 12% annually, payable at maturity, acceleration, prepayment, or otherwise |
| Maturity | September 5, 2024, the 12-month anniversary of the Effective Date |
| Conversion price | $1.6378 per ordinary share, subject to customary adjustments |
| Use of proceeds | Working capital, general corporate purposes, and rollout of technology in gold, silver, steel, aluminum, and cobalt |
| Placement fee | Approximately $155,000 paid in cash to EFHutton, division of Benchmark Investments, LLC |
Warrants and Potential Dilution
- The A Warrant covers 3,929,051 ordinary shares at an exercise price of $0.0022 per share and expires five years after issuance.
- The B Warrant covers 2,619,367 ordinary shares at an exercise price of $1.6378 per share and expires five years after issuance.
- The investor may convert the note and exercise the warrants subject to a 4.99% beneficial ownership limitation.
- The Company also has a right to convert the note into ordinary shares, subject to the same ownership limitation.
- The Company agreed to register for resale the ordinary shares underlying the note and warrants.
Material Changes and Financial Metrics
This filing reports a financing transaction and does not provide revenue, net income, operating cash flow, cash balance, margins, total debt, or liquidity metrics for the current or prior comparable period. Accordingly, the filing text does not provide a clear basis for period-over-period financial comparisons.
Guidance, Risks, and Unusual Terms
- The investor agreed to reinvest 50% of any realized Net Profit, as defined in the Purchase Agreement, directly into the Company.
- The note contains customary events of default. Unpaid principal or interest after default accrues interest at the lesser of 24.5% annually or the maximum lawful rate.
- Upon an event of default, the filing states that the outstanding principal and accrued interest increase to 120% of the applicable amount through full repayment, multiplied by 150%, plus collection costs.
- The agreements impose restrictions on transactions involving variable securities and include other covenants, participation and first-refusal rights, most-favored-nation rights, and indemnification obligations.
- The securities were issued in a private placement under Section 4(a)(2) and Regulation D and were not registered under the Securities Act. Resales require registration or an applicable exemption.
- The filing provides no formal revenue, earnings, cash flow, or operational guidance.
Investor Verification Items
- Verify the definitive Purchase Agreement, promissory note, A Warrant, B Warrant, and Registration Rights Agreement filed as exhibits.
- Assess the maturity obligation, including the $4.29 million principal amount, 12% interest, original issue discount, and default provisions.
- Evaluate potential dilution from note conversions and the issuance of up to 6,548,418 warrant shares, subject to adjustments and ownership limits.
- Confirm the registration status and resale restrictions applicable to the underlying ordinary shares.
- Reconcile the stated approximately $2.5 million gross proceeds with the $2.574 million amount loaned after the 40% original issue discount and transaction expenses.