Security Matters had a strong Q2 underscored by its NASDAQ listing. Now it wants to take the business to the next level by accelerating its path to commercialisation.

Security Matters (ASX:SMX) has had a very productive Q2, underscored by its listing on the NASDAQ.

Earlier this week, the company announced that it will merge with Lionheart, a SPAC company on NASDAQ, to form one listed company that will be traded on the NASDAQ exchange.

Under the agreement, SMX will list on NASDAQ via a newly-formed Irish company (SMX Ireland) to be named “SMX Public Limited Company”.

The shares and warrants will trade under the ticker symbols SMX and SMXW respectively, and Security Matters shall cease to be quoted on the ASX.

The merger was completed following the strategic review process conducted by Clearthink Capital LLC.

The review concluded that the NASDAQ listing will accelerate its technological applications and growth opportunities to maximise shareholder value for the company.

“SMX is thrilled to join Lionheart in our entry into the US public market,” says SMX founder and CEO, Haggai Alon.

“Together we will create a premier ESG company and a sustainable technology leader to transform global supply chains into intelligent ecosystems,” he said.

It’s anticipated that the merger transaction will close in the fourth quarter of this year.

On the operational side, total invoice amount for the first half of FY22 has reached US$1.018 million, an increase of 91% compared to the first half.

During the quarter, SMX also signed a binding term sheet for a bridge loan of US$3 million, which it expects to close over the coming weeks.

The company has also received $828k through the issue of Convertible Notes to sophisticated and professional investors. Per the agreements, these notes will also be converted in the coming few weeks.


What the proposed merger will bring

The total merger value of the transaction is estimated at US$360 million, comprised of the following:

  • US$200 million pre-money value for SMX
  • US$126 million of cash in trust with the SPAC if no redemptions
  • US$31 million SPAC sponsor position

The transaction is anticipated to generate proceeds of up to US$116 million of cash, and SMX shareholders will own approximately 55.5% of the combined company (assuming there are low redemptions by Lionheart’s public stockholders).

The board of SMX says that it considers the transaction to be in the best interest of SMX shareholders and has unanimously recommended that they vote for the deal.


SMX’s value proposition

The value proposition for SMX’s products is clear cut.

The company’s trademarked blockchain automated auditing technology provides materials a memory of its origination and history, so it can be recycled, reused, and authenticated multiple times.

Its products are built for the 21st century, ensuring that our transition to a circular economy is positive, productive, and profitable for everyone in the value chain, including the planet.

Alon said that SMX is revolutionising the way that global brands operate their production line, from raw to reused/recycled materials to end-to-end traceability and marking technology.

Its vision is to enable clients to track and authenticate their production from raw material to finished product through every stage of the supply chain.

“By giving materials a memory and tangibly linking parts of the value chain, SMX will enable multiple use and reuse of materials, where nothing is wasted,” he said.


Outlook ahead

During this time of continuing economic and health uncertainties, there is an ever‐increasing ESG requirement for businesses and industries to adhere to.

This pressure comes not only from various regulatory bodies, but also from NGOs, stakeholders, shareholders, and the wider public community.

With more global companies seeking to meet their ESG responsibilities, SMX is well placed to become the enabler for organisations to meet these obligations.

To capture this huge market, SMX says it will continue to build its resilience by strengthening its cost controls and balance sheet.

The company will maintain a strategy focused on its key market segments, and work towards accelerating the speed of adoption and commercialisation of its technology.

To do this, SMX will rely on the strong momentum, agility and capability of its unique technological and digital platform offering ESG solutions to its clients.

Looking ahead, SMX will also increase R&D activities with near-term commercial opportunities relating to palm oil, cocoa and soybean.

“The roadmap ahead will be supported and driven by strong innovation and technology commercialisation, while putting sustainability at the core of everything we do,” said Alon.

“We believe this will make SMX the enabler and de-facto industry standard.”


This article was developed in collaboration with Security Matters, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.