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SMX's Loan Agreement Report: $1M Funding with High Stakes & Strict Terms

$SMX
Form 6-K
Filed on: 2024-12-30
Source
SMX's Loan Agreement Report: $1M Funding with High Stakes & Strict Terms

Key Information from the Financial Report (Form 6-K)

  1. Company Overview:
  • Name: SMX (Security Matters) Public Limited Company
  • Address: Mespil Business Centre, Mespil House, Sussex Road, Dublin 4, Ireland
  • Contact: Tel: +353-1-920-1000
  • SEC Commission File Number: 001-41639
  1. Loan Agreement:
  • Date of Agreement: December 27, 2024
  • Lender: Abri Advisors Ltd.
  • Loan Amount: $1,000,000
  • Maturity Date: June 30, 2025
  • Total Repayment Amount: $1,400,000 (includes an original issue discount of 28.57%)
  • Interest Rate: 15% on the total amount due at maturity.
  1. Covenants and Restrictions:
  • The company is restricted from issuing any other debt instruments that rank senior or pari passu to this loan without the lender's consent.
  • If the company raises equity or equity-related securities (defined broadly), it must repay 25% of the then-outstanding loan balance within three business days of the financing's closing date.
  1. Default Provisions:
  • The loan agreement includes standard Events of Default. If a default occurs, the loan balance and any required repayments may be accelerated.
  • Upon default, the total amount due becomes 150% of the outstanding balance, which will accrue interest at a rate of 5% per month until paid.
  1. Representations and Warranties:
  • Both the Company and the Lender are required to make certain representations and warranties as part of the agreement.
  1. Exhibits:
  • The full text of the Loan Agreement is included as Exhibit 10.1.
  1. Signature:
  • The report is signed by Haggai Alon, Chief Executive Officer, on December 30, 2024.

Insights:

  • Financial Strategy: The company is leveraging debt financing with a significant original issue discount, which may indicate a need for immediate liquidity but also suggests costlier repayment obligations in the future.
  • Investor Relations: The restrictions on issuing additional debt and the requirement to repay a portion of the loan upon equity financing highlight the lender's protective measures, which could impact the company's financial flexibility.
  • Risk Assessment: The aggressive terms of default and the potential for high penalties may pose a risk to the financial stability of SMX, especially if future financing is pursued.

This information is crucial for investors and stakeholders assessing the financial health and operational strategy of SMX (Security Matters) Public Limited Company.