SMX PLC. (NASDAQ: SMX) stock has been on a roller coaster ride, with the ebbs and flows of the market pushing SMX stock sharply higher as well as lower as investors work to get a better understanding of how this company intends to be the pivotal contributor to helping create a global circular economy. Perhaps no other company can provide as much to that mission as SMX.
As they should, savvy investors are taking notice. More importantly, many are capitalizing on an opportunity to purchase shares at ground-floor prices. Some of its most prominent and earliest investors are taking things further. In an update yesterday, SMX said it has amended its loan agreement dated September 7, 2015, by and between Degania A. Business AGSHAH Ltd. and Kibbutz Degania and Kamea-the United Kibbutz Movement Ltd. And one dated September 7, 2015 (as amended to date, "Ketura Agreement" and, with the Degania Agreement, the "Loan Agreements"), between Ketura International Energy AGSHAH Ltd. and Kibbutz Ketura. Unlike amendments asking for allowances, this one benefits SMX. And it's immediately accretive to its balance sheet.
Expressly, under the amendment to the Loan Agreements (the "Amendment"), among other things, Kamea agreed to convert $657,203 of indebtedness under the Loan Agreements into 487,281 ordinary shares of SMX as payment in full for such debt. There is some additional language related to particular pricing, but those hurdles are cleared with SMX trading above the floor minimum. Thus, the after-hours filing made it official- SMX has removed over $657k worth of debt from its balance sheet. That's not all.
In addition to turning that debt into equity, SMX said that on September 15, 2023, it paid $250,000 to EF Hutton, a division of Benchmark Investments, LLC, pursuant to a Satisfaction and Discharge of Indebtedness under a Promissory Note Dated March 7, 2023. That payment was agreed on to cure the promissory note dated March 7, 2023, in the principal sum of $900,000. In other words, another $900,000 in debt is off the books, positioning SMX ideally to take on the back half of 2023 in a significantly better financial position compared to what investors knew just two days ago.
Reasons To Be Bullish
While better positioned financially, the biggest attraction to SMX is its invisible "marking" technology. Keep in mind that SMX's use of the term "marking" is not referring to anything close to resembling superficial bar-code type adhesion. Its use of the word is on the other side of the meaning spectrum, with SMX "marking" technology providing a means to invisibly mark plastics, precious metals, rummer, and liquids with specific signatures that become a part of that material's DNA.
In a word, it's revolutionary. SMX has developed and marketed technology that can be used pre, mid, and post-production to keep a record of origin, the number of times a product has been used, how many times and where it's been recycled, and as importantly, provides a transparent accounting and authentication tool for companies committed to global circular economy initiatives. No other company can do what SMX does. And just as important to its value proposition going forward, its IP protects the likelihood that none ever will.
That matters now and more so in the future as the global mission to create a circular and sustainable manufacturing economy becomes more intense. There are reasons why that's important. Foremost is that SMX technology is a transparency, accountability, and sustainability initiatives game changer. Again, it doesn't produce a number code for marketing purposes. It goes much deeper than that, with SMX developing an invisible marking technology to track raw materials from virgin use through pre-, pro, and post-production life cycles.
Moreover, that value is not a one-and-done proposition. Rigorous testing shows it can't be altered and survives melting, grinding, burning, water immersion, and other potentially disintegrating processes. That inherent strength makes its applications virtually unlimited.
Proving Its Value In Multiple Industries
Already, SMX has proved its viability to mark plastics, rubber, precious metals, oil, and other liquids. The technology is more than innovative and unique to SMX; it also goes beyond what people generally call 21st-century advancements. A more accurate description is to call it 21st-century technology on steroids, providing its users a verifiable means to act as authenticators, validators, and facilitators of an entire supply chain process. Moreover, with its integration into blockchain technology, the legacy of materials mined, used, or wasted maintains a historical record. In other words, miners, producers, suppliers, and recyclers, for the first time ever, can have the means to track commitments made and kept.
Industries are taking notice, and they should. SMX's B2B white label platforms can be the most potent contributor to facilitating a circular global economy, with its use applications extending to timber, rubber, palm oil, cocoa, steel, gold, luxury goods, leather, plastics, and non-ferrous metals providing a verifiable means to reduce their carbon footprints and waste. So far, SMX announced working with The Perth Mint, Continental Rubber, and a major steel manufacturer, utilizing SMX marking technology as its product life cycle transparency and supply chain validation source. And more are expected to follow. Here's why.
A Milestone Agreement With Continental Rubber
Working with Continental, SMX announced success in verifying a marker substance for natural rubber in a tire for the first time, with the marking surviving throughout the entire production process. The dedicated marker technology, which both companies optimized for use in natural rubber, is designed to create greater transparency along the value chain of tires and technical rubber products from Continental. Embedding special security features, using the marker substances enables the invisible marking of natural rubber with information on its geographical origin.
This established precedent means that responsibly sourced natural rubber and its origin can be verified at every stage of the supply chain all the way through to the customer. By doing so, Continental further strengthens its pioneering role in its commitment to greater transparency along its supply chain. SMX noted in its release that by 2050 at the latest, Continental expects that all materials it uses in its tire production will originate from responsible sources. The marker technology could be the most excellent means to ensure that the natural rubber used in its tires is grown and responsibly sourced.
The deal was certainly earned. In the successfully completed field test, SMX's marker substance underwent and passed a real test of resilience. Specifically, the marker substance was added to responsibly grown latex during harvesting and withstood the intensive preparations involved in producing natural rubber and the tire manufacturing process itself. In the manufactured tire, the data was retrieved using special, purpose-built software and a reader and correctly interpreted. The appearance and performance of a bicycle tire containing the invisible marker remained unchanged.
The most excellent news for SMX, its clients, investors, and even the world in many respects is that with the technology passing its first test of resilience, Continental already intends on using the new marker technology on a larger scale during the process of sourcing its rubber and also to integrate it in other rubber products. For SMX, that intent could drive revenues higher faster than many expected. Moreover, as part of the industrialization of this technology, the value inherent to SMX technology can increase by its potential linking of the markers with blockchain technology, which is generally considered tamper-proof.
Inclusion in the blockchain would provide additional support for tamper-free monitoring, compliance with quality standards, and an exchange record along the complex natural rubber supply chain. The information is so valuable that few should be surprised if Goodyear (NasdaqGS: GT) and/or Bridgestone Corp (OTC Other: BRDCY) follow Continental's lead. That proposition is more than likely; it's probable.
A Meaningful Precedent Applicable To Virtually Any Material
And it could happen faster than many expect. Why? Because in layperson's terms, SMX offers a robust, innovative, and scalable solution for supply chain authentication, traceability, and transparency to transform businesses for participation in the circular economy. Its technology gives materials in solid, liquid, and gas forms the ability to maintain a virtual memory of origination, processing, and supply chain journey, including the ability to authenticate provenance, as well as to track recycling loop counts and the percentage of certified and/or recycled materials contained.
It's also easy to implement. Attractive to any industry, the SMX solution is an efficient, cost-effective drop-in solution within an existing supply chain, enabling substantial benefits for manufacturers, consumers, and others in the value chain – and the planet, including providing the necessary data for product recycling and reuse. In addition, the SMX technology addresses the issue of the increase in waste globally by enabling the rise in demand for verified, usable recycled materials by creating a commoditized, tradable certified asset, which is the recycled material, which can be traded and sold to other players in the value chain and ecosystem.
Notably, while only recently getting its introduction to the US markets, the SMX technology has been in active operational use on a national scale by the Israeli Government for more than ten years, proving its environmentally sustainable platform through a proven track record.
Targeting A Global Market Need And Opportunity
All told, SMX's marking technology applications create almost incalculable revenue-generating potential. Remember that while SMX has discussed rubber in the headlines, it's not the only market in play. SMX has also highlighted the technology's use in marking gold, timber, plastics, leather, and other non-ferrous metals. Simply said, the manufacturing landscape is wide open for SMX to continue validating processes and strengthen its opportunities beyond its stake in rubber and steel.
And post-validation, the revenue-generating potential can score billions. This path is being paved faster than ever from SMX continuing to earn validations for its technology's use for different applications. From an investor's perspective, updates should be taken as more than milestones reached; they set up the company for catalysts that could trigger enormous revenue growth quickly. Remember, SMX is more than in the sector; they created it.
And no other known company is even close to providing the marking technology that SMX can do, which ensures manufacturing transparency in a world demanding accountability. Indeed, that puts SMX in an enviable position today and in the future. And while the manufacturing world may just be getting its introduction to SMX, more likely than not, SMX will become a familiar name to many sooner rather than later. Therefore, trading ahead of that growth may be a wise and timely consideration.
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