SMX (Security Matters) Public Limited Company Closes $5.35 Million Private Placement

Rhea-AI Summary

SMX (Security Matters) Public Company has closed a $5.35 million private placement of Ordinary Shares and warrants. The offering included 5,350,000 Common Units at $1.00 per unit, each consisting of one Ordinary Share or Pre-Funded Warrant and two Series A Common Warrants at $1.00 exercise price, plus one Series B Common Warrant. Gross proceeds were $5.35 million, with 20% ($1,072,000) held in escrow for potential warrant obligations. The company plans to use the net proceeds for general corporate purposes and working capital. Aegis Capital Corp. acted as lead Placement Agent, with ClearThink Securities as co-Placement Agent. The securities were sold in a private placement to accredited investors and are not registered under the Securities Act.

Positive

• Raised $5.35 million in gross proceeds through private placement
• Strengthened cash position for general corporate purposes and working capital
• Warrants provide potential for additional future funding

Negative

• 20% of proceeds ($1,072,000) held in escrow for potential warrant obligations
• Potential dilution for existing shareholders due to new share issuance and warrants
• Securities not registered, limiting resale options for investors

Financial Analyst

SMX's $5.35 million private placement provides a important cash injection, but it comes with significant dilution risks. The complex structure involving ordinary shares, pre-funded warrants and two series of common warrants at a $1.00 per unit price suggests the company struggled to raise capital through conventional means. The $1,072,000 held in escrow for potential warrant obligations further reduces immediate available funds. While this financing buys SMX some runway, it's a double-edged sword. The low warrant exercise prices and potential for significant dilution could put downward pressure on the stock. Investors should closely monitor SMX's burn rate and progress in utilizing these funds for "general corporate purposes and working capital" to assess the company's ability to create value before potentially needing additional financing.

Legal Expert

This private placement raises several legal considerations. First, the use of a private placement structure limits SMX to accredited investors, potentially to avoid more stringent public offering requirements. The company's commitment to file registration statements for resale suggests a strategy to provide future liquidity for investors. However, the complex warrant structure, especially the Series B warrants with a $0.00001 exercise price, could face scrutiny from regulators concerned about potential market manipulation. The registration rights agreement adds another layer of obligation for SMX. Investors should be aware that until effective registration, these securities remain restricted, which could impact their ability to trade. The multiple law firms involved indicate the transaction's complexity and the need for careful navigation of securities laws across jurisdictions.

Market Research Analyst

SMX's private placement reflects broader market trends in the small-cap tech sector. With a focus on digitizing physical objects for a circular economy, SMX operates in an emerging field with significant potential but also substantial cash burn. The $5.35 million raise at $1.00 per unit suggests investor interest, but also implies a valuation constraint. The inclusion of warrants, especially those with very low exercise prices, indicates a high-risk, high-reward scenario typical of early-stage tech companies. This financing structure is often seen when companies struggle to attract traditional equity investments. The market's reception to this deal will be crucial; if SMX can demonstrate progress with these funds, it could pave the way for more favorable future financing. However, the potential dilution from warrant exercises could create an overhang on the stock price, potentially limiting upside in the near term.

NEW YORK, NY / ACCESSWIRE / September 12, 2024 / SMX (Security Matters) Public Limited Company (NASDAQ:SMX) (the "Company"), a pioneer in digitizing physical objects for a circular economy, today announced the closing of its previously announced private placement of approximately $5,350,000 of Ordinary Shares and pre-funded and investor warrants at a price of $1.00 per Common Unit.

The offering consisted of the sale of 5,350,000 Common Units (or Pre-Funded Units), each consisting of one Ordinary Share or Pre-Funded Warrant and two (2) Series A Common Warrants, each to purchase one (1) Ordinary Share per warrant at an exercise price of $1.00, and one (1) Series B Common Warrant to purchase such number of Ordinary Shares as determined in the Series B Warrant. The public offering price per Common Unit was $1.00 (or $0.9999 for each Pre-Funded Unit, which is equal to the public offering price per Common Unit to be sold in the offering minus an exercise price of $0.0001 per Pre-Funded Warrant). The Pre-Funded Warrants are immediately exercisable subject to registration and may be exercised at any time until exercised in full. For each Pre-Funded Unit sold in the offering, the number of Common Units in the offering will be decreased on a one-for-one basis. The initial exercise price of each Series A Common Warrant is $1.00 per Ordinary Share. The Series A Common Warrants are exercisable immediately subject to registration and expire 66 months after the initial issuance date. The number of securities issuable under the Series A Common Warrant is subject to adjustment as described in more detail in the report on Form 6-K filed in connection with the offering. The initial exercise price of eachSeries B Common Warrant is $0.00001. The Series B Common Warrants are exercisable immediately subject to registration.The number of securities issuable under the Series B Common Warrant is subject to adjustment as described in more detail in the Report on Form 6-K filed in connection with the offering.

Aggregate gross proceeds to the Company were approximately $5,350,000, of which 20%, or $1,072,000, are being held in escrow to satisfy potential obligations of the Company under the terms of the Warrants. The transaction closed on September 12, 2024. The Company expects to use the net proceeds from the offering, together with its existing cash, for general corporate purposes and working capital.

Aegis Capital Corp. is acting as lead Placement Agent for the private placement. ClearThink Securities is acting as co-Placement Agent. Dickinson Wright, Ruskin Moscou Faltischek, PC and Arthur Cox acted as counsel to the Company. Kaufman & Canoles, P.C. is acting ascounsel to Aegis Capital Corp.

The securities described above were sold in a private placement transaction not involving a public offering and have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or applicable state securities laws. Accordingly, the securities may not be reoffered or resold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. The securities were offered only to accredited investors. Pursuant to a registration rights agreement with the investors, the Company has agreed to file one or more registration statements with the SEC covering the resale of the Ordinary Shares and the Shares issuable upon exercise of the pre-funded warrants and warrants.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About SMX (Security Matters) Public Limited Company
As global businesses face new and complex challenges relating to carbon neutrality and meeting new governmental and regional regulations and standards, SMX is able to offer players along the value chain access to its marking, tracking, measuring and digital platform technology to transition more successfully to a low-carbon economy.

For further information contact:
E: info@securitymattersltd.com

Forward-Looking Statements
The foregoing material may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. Forward-looking statements include all statements that do not relate solely to historical or current facts, including without limitation statements regarding the Company's product development and business prospects, and can be identified by the use of words such as "may," "will," "expect," "project," "estimate," "anticipate," "plan," "believe," "potential," "should," "continue" or the negative versions of those words or other comparable words. Forward-looking statements are not guarantees of future actions or performance. These forward-looking statements are based on information currently available to the Company and its current plans or expectations and are subject to a number of risks and uncertainties that could significantly affect current plans. Should one or more of these risks or uncertainties materialize, or the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, performance, or achievements. Except as required by applicable law, including the security laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Forward-Looking Statements
The information in this press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "forecast," "intends," "may," "will," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this press release may include, for example: matters relating to the Company's fight against abusive and possibly illegal trading tactics against the Company's stock; successful launch and implementation of SMX's joint projects with manufacturers and other supply chain participants of steel, rubber and other materials; changes in SMX's strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; SMX's ability to develop and launch new products and services, including its planned Plastic Cycle Token; SMX's ability to successfully and efficiently integrate future expansion plans and opportunities; SMX's ability to grow its business in a cost-effective manner; SMX's product development timeline and estimated research and development costs; the implementation, market acceptance and success of SMX's business model; developments and projections relating to SMX's competitors and industry; and SMX's approach and goals with respect to technology. These forward-looking statements are based on information available as of the date of this press release, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing views as of any subsequent date, and no obligation is undertaken to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. As a result of a number of known and unknown risks and uncertainties, actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include: the ability to maintain the listing of the Company's shares on Nasdaq; changes in applicable laws or regulations; any lingering effects of the COVID-19 pandemic on SMX's business; the ability to implement business plans, forecasts, and other expectations, and identify and realize additional opportunities; the risk of downturns and the possibility of rapid change in the highly competitive industry in which SMX operates; the risk that SMX and its current and future collaborators are unable to successfully develop and commercialize SMX's products or services, or experience significant delays in doing so; the risk that the Company may never achieve or sustain profitability; the risk that the Company will need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all; the risk that the Company experiences difficulties in managing its growth and expanding operations; the risk that third-party suppliers and manufacturers are not able to fully and timely meet their obligations; the risk that SMX is unable to secure or protect its intellectual property; the possibility that SMX may be adversely affected by other economic, business, and/or competitive factors; and other risks and uncertainties described in SMX's filings from time to time with the Securities and Exchange Commission.

SOURCE: SMX (Security Matters)

View the original press release on accesswire.com

FAQ

How much did SMX raise in its recent private placement?

SMX (Security Matters) raised $5.35 million in gross proceeds through its recent private placement of Ordinary Shares and warrants.

What was the price per Common Unit in SMX's private placement?

The price per Common Unit in SMX's private placement was $1.00.

What are the terms of the Series A Common Warrants issued by SMX?

The Series A Common Warrants have an initial exercise price of $1.00 per Ordinary Share, are exercisable immediately subject to registration, and expire 66 months after the initial issuance date.

How does SMX plan to use the proceeds from the private placement?

SMX plans to use the net proceeds from the offering, together with existing cash, for general corporate purposes and working capital.