Corporate Governance and Compliance - The Company is classified as an "emerging growth company" and will maintain this status until it reaches total annual gross revenue of $1.07 billion or other specified conditions [143]. - The Company has received three deficiency letters from Nasdaq regarding non-compliance with the Minimum Bid Price Requirement, as the bid price was below $1.00 for 30 consecutive business days [148]. - The Company is subject to less stringent corporate governance requirements as a foreign private issuer, which may result in less publicly available information [159]. - If the Company is delisted from Nasdaq, it may face significant adverse consequences, including reduced liquidity and increased regulatory scrutiny [151]. - The Company intends to follow Irish corporate governance practices instead of Nasdaq standards, which may lead to less stringent oversight [161]. - The Company may lose its foreign private issuer status in the future, which could result in significant additional costs and compliance challenges [162]. - The Company has elected to take advantage of extended transition periods for complying with new accounting standards under the JOBS Act [143]. - There is no guarantee that the exemptions under the JOBS Act will result in significant savings, and opting out of these exemptions may incur additional compliance costs [144]. Financial Position and Capital Needs - The Company may need to raise additional capital to fund operations, pay existing liabilities, and finance future growth, which may not be available on favorable terms [145]. - Future capital raising efforts may dilute existing shareholders and could reduce the market price of Ordinary Shares [156]. - The Company’s liquidity risk is managed by maintaining sufficient cash and liquid assets, alongside committed credit facilities [413]. - The Company’s credit risk is monitored closely, with main financial assets being cash and cash equivalents, ensuring prompt collection from counterparties [412]. Business Operations and Innovations - The Company successfully completed the marking of 21 tons of natural rubber sourced in Latin America, achieving a 100% success rate for origin authentication and full traceability from tree to tire [421]. - In 2022, the Company conducted successful trials for marking recycled plastics, demonstrating the ability to manage the process remotely, indicating potential for industrial scale adoption [415]. - The Company announced the planned launch of a plastic cycle token, scheduled for release at the end of 2025, aimed at creating a reliable digital credit platform for recyclable plastics [422]. - The Company has marked 2.2 tons of silver in cooperation with Sunshine, successfully completing proof of concept for ethical sourcing and authentication of silver [435]. - Security Matters PTY achieved a 100% success rate on all marked products throughout the production process, ensuring quality and brand authentication for stakeholders [438]. - Security Matters PTY has a target to reach $35 million in sales over the coming years through its exclusive distribution agreement with Sumitomo [441]. - The company has advanced source tracing technology for alcoholic beverages, focusing on key ingredients and packaging solutions [442]. - Security Matters PTY is part of the Circular Electronics Partnership, aiming to reduce e-waste and promote a circular economy for electronics by 2030 [450]. - The company launched a Fashion Sustainability Competence Centre to help fashion brands transition to a sustainable circular economy [451]. - Security Matters PTY's technology is applicable across various materials, including leather and plastics, for recycling and sustainability efforts [451]. - The company plans to integrate its markers in wearable technology and active wear, with a coating that withstands temperatures up to 150 degrees Celsius [452]. Intellectual Property and Technology - The company has over 20 patent families and more than 100 patents filed globally, crucial for maintaining proprietary technology [453]. - The company has a total of 20 patent families related to X-ray fluorescence (XRF) technology, with several patents granted and pending in various countries [456][457][458][459][460][461][462][463]. - Patent Family 1 includes a system for reading XRF markings, with patents granted that expire in 2036 [458]. - Patent Family 2 focuses on an anti-counterfeit marking technique for verifying the authenticity of metallic objects, with a patent expiring in 2040 [459]. - Patent Family 4 presents a method for verifying compatibility of electronic system components using XRF signatures, with patents expiring in 2037 [461]. - Patent Family 5 introduces a novel XRF analyzer capable of identifying multiple solid objects simultaneously, with a patent expiring in 2037 [462]. - Patent Family 6 details a method for marking and authenticating precious stones, with patents expiring in 2038 [463]. - The company has filed applications for new technologies, including a method for detecting mishandling of food products and a system for virtual currency based on blockchain architecture [456][457]. - The company is actively pursuing market expansion through innovative product development and strategic patent filings across multiple jurisdictions [456][457]. - The company aims to enhance its product offerings by integrating advanced XRF technology into various applications, including supply chain management and authentication systems [460][461]. - The company is focused on maintaining a robust intellectual property portfolio to support its growth and competitive advantage in the market [456][457]. Mergers and Acquisitions - The merger with Security Matters PTY resulted in the Company owning the entire share capital of Security Matters PTY, with a deemed issuance of shares valued at $11,599 thousand [482]. - The difference of $16,802 thousand between the fair value of shares deemed issued and the fair value of the Company's identifiable net assets is expensed immediately to profit or loss [483]. - The Company acquired an additional 7.5% of trueGold, increasing its holdings to 51.9%, gaining control over trueGold and diversifying operations into research and development [485]. - The fair value of the previous investment in trueGold was remeasured at $22,164 thousand upon obtaining control, resulting in a recognized gain of the same amount [487]. - The consolidated financial statements for the year ended December 31, 2023, reflect the retained earnings and equity balances of Security Matters PTY immediately before the Business Combination [486]. - Substantially all assets of the Company comprised marketable securities valued at $4,921 thousand and trade payables and warrants valued at $10,127 thousand [484]. - The Company’s financial statements post-acquisition include the full period results of Security Matters PTY along with the post-acquisition results from the Closing Date [486]. - The equity structure of Security Matters PTY is restated to reflect the number and par value of shares of the Company issued in the reverse acquisition transaction [486]. - The Company’s consolidated financial statements for 2023 include the results of Security Matters PTY for the full period and the post-acquisition results [486]. - The fair value of non-controlling interests in trueGold was estimated using the discounted cash flow method, reflecting the entire goodwill of trueGold [488]. - The total cost of the business combination included a full forgiveness of outstanding payables from trueGold to the Company amounting to AUD 475 thousand (approximately $307 thousand) at acquisition date [488]. - The Company's ownership percentage in trueGold increased from 51.9% to 52.9% after restructuring $1.3 million of debt owed to PMB [490]. - PMB exchanged its shares in trueGold for 1,022 (1%) Company shares as part of the restructuring agreement [490]. Market Trends and Economic Factors - As of December 31, 2024, the ILS increased against the U.S. dollar by approximately 0.6%, while the AUD, EUR, and SGD decreased by approximately 8.5%, 5.5%, and 2.6% respectively [410]. - The company’s policy is not to enter into any currency hedging transactions, exposing it to potential adverse effects from future currency fluctuations [411]. - The Company is not aware of any trends or events likely to materially affect its revenue, income, profitability, liquidity, or capital resources [480].
Security Matters(SMX) - 2024 Q4 - Annual Report