Business Context and Reporting Period
This Form 6-K filing by SMX (Security Matters) Public Limited Company covers the month of December 2025, specifically detailing a financing transaction entered into on December 1, 2025. The Company, a foreign private issuer, executed a Standby Equity Purchase Agreement (SEPA) and issued promissory notes to institutional investors to secure capital for working capital, debt reduction, and cryptocurrency acquisition.
Key Financial Metrics and Capital Structure
- Debt Financing: The Company issued promissory notes with an aggregate principal amount of up to $14,375,000, carrying a 20% original issue discount (OID). This results in aggregate gross proceeds of up to $11.5 million.
- Cash Proceeds Received: $5,750,000 was received at the First Closing on December 3, 2025. A second tranche of $5,750,000 is contingent on the effectiveness of a Form F-1 registration statement.
- Equity Line of Credit: The Company secured an equity line of credit allowing for the issuance of up to $100 million worth of ordinary shares to a designated SEPA Investor.
- Transaction Costs: The Company paid approximately $360,000 in cash fees to the Placement Agent at the First Closing and expects to pay an additional $560,000 at the Second Closing. A facility fee of $2,000,000 (2% of the $100 million commitment) is payable in shares.
- Use of Proceeds: Net proceeds are designated for working capital, paying down indebtedness, and acquiring bitcoin or other cryptocurrencies (approximately 50% of net proceeds) to serve as a reserve asset securing the notes.
Material Changes and Transaction Terms
The filing discloses a material change in the Company's capital structure through the introduction of convertible debt and an equity line. Key terms include:
- Note Maturity: The notes mature six months after issuance.
- Conversion Rights: Investors may convert notes into ordinary shares at a price equal to the greater of a "Floor Price" (minimum $1.50 or 20% of the Nasdaq Minimum Price) or 15% of the lowest closing price in the five trading days prior to conversion.
- Default Penalties: Upon an Event of Default, the principal amount automatically increases by 20%, and interest accrues at 20% per annum.
- Equity Line Pricing: Shares sold under the equity line are priced at 94% of the lowest VWAP over three trading days following notice, or 98% of the lowest traded price for intraday purchases.
- Lock-up: The Company is restricted from selling equity or equity-linked securities during the term of the notes without investor consent, subject to specific exemptions.
Outlook, Risks, and Management Commentary
Management intends to use the financing to bolster liquidity and establish a cryptocurrency reserve. The Company is committed to filing a Form F-1 registration statement within fifteen business days of December 1, 2025, to register the resale of shares issuable upon conversion or under the equity line. The filing highlights significant risks, including the potential for substantial dilution due to the low conversion price (15% of market price) and the equity line pricing mechanism. Additionally, the automatic increase in principal and high default interest rates upon an Event of Default pose significant financial risks. The filing does not provide specific revenue, profit, or cash flow metrics for the period, as the document focuses exclusively on the financing transaction.
Investor Verification Checklist
- Verify the status and expected effectiveness date of the Form F-1 registration statement, as the second tranche of debt proceeds depends on this.
- Assess the impact of the 15% conversion discount and 94% equity line discount on existing shareholder dilution.
- Review the Company's current liquidity position to determine the necessity of the 20% OID and high default interest rates.
- Confirm the specific cryptocurrency acquisition strategy and the valuation of the proposed reserve asset.
- Monitor the Company's ability to meet the 6-month maturity date of the notes without triggering default penalties.