Security Matters SMX

Does anybody follow SMX?

Long term I’m very dubious about the company but have traded it for significant profit including doubling my money last week.

I’m not convinced whether the tech has a massive market or no market. Also the company structure seems very opaque with different companies in different places even though its an absolutely tiny market cap $5million.

After taking a big profit last week I might have just moved on but they announced that they had increased their stake in TrueGold to 51.9% with the option for TrueGold to repurchase the equity within 12 months. The press release on the NASDAQ website states:

"The valuation underpinning this transaction is based on a previous assessment conducted in October 2021, which appraised TrueGold’s worth between US$78.5 million and US$90 million, using the mean value of US$84.3 million. This past valuation was neither audited nor reviewed.

Pursuant to this agreement, SMX and TrueGold will commission an independent third-party appraiser to ascertain an updated valuation of TrueGold by October 31, 2023. This forthcoming appraisal estimates a fair value of TrueGold’s assets and liabilities as of the closing date."

So SMX has a market cap of $5million but owns 51.9% of a company potentially worth over $50million (TrueGold was originally a joint venture between SMX and Perth Mint I think).

There’s also a couple of other things that have given me a positive view that the tech may have potential

Well SMX has done well today (15%) and not sure where its going from here. I doubled my money and totally cashed out last week and then bought back this week so I’ve taken profit at 15% but have left some holding to see what happens now.

I’ve done some further research because there are numerous things that are curious. I don’t like some aspects of the company particularly the structure given that it a tiny market cap why does it need multiple companies in different territories. Also not convinced by the tech but they are clearly bullish about it.

So those things said, they formed a joint venture (TrueGold) with the Perth Mint (gold & currency mint) a few years ago. Then a couple of weeks ago SMX announced that it had increased SMX’s holding to 51.9% and would have an independent valuation by the end of this month.

Originally TrueGold was valued at about $80million. I’ve done some digging and believe that TrueGold (which is a private company and thus difficult to find info) has raised funding since being formed and the last fund raising was (I believe) at $40million.

So SMX has been at $4million market cap. I can see that causes them various issues.

SMX has now said that the new valuation of TrueGold will be used to value SMX’s holding and be reflected on their balance sheet. Thus if it is valued at $40million it would place a $20million asset on SMX’s balance sheet when SMX current market cap is $4-5million.

My assumption is that this is a determined effort to burn shorts and get SMX valued at a market cap they think is more realistic.

It is going to be interesting to see.

EDIT: one of my assumptions is that they aren’t going to commit to an independent valuation of TrueGold if they weren’t pretty confident that the valuation would be about $40million or more given that the last funding was at $40million. They hardly want to tell investors in private fund raising that its worth significantly less (when they didn’t need to commit to a public valuation of the business)

Edit2: I’m posting because I’d really welcome other peoples views and comments

The company said that it was going to commission independent valuation of its joint venture with the Perth Mint (TrueGold) to provide a valuation of TrueGold by the end of Oct. I am assuming they will issue a press release/new at some stage saying what that valuation is because they have said that they will use the valuation in SMX’s balance sheet to value their 51.9% stake in TrueGold so its material information for the company.

Share price has started rising nicely today. Hopefully the rise will continue.

[Note: from what I can find TrueGold last raised funding at a $40 million valuation. SMX own 51.9% of TrueGold and SMX present market cap is circa $4.4 million]

I’ve just found this article about the recent deals

In Focus: SMX PLC’s 51% Stake In True Gold Consortium Is Worth $43 Million, Roughly 10X Its Market Cap ($SMX) -October 17, 2023 at 05:18 am EDT | MarketScreener