SecProbe.io

CORRESP
1
filename1.htm

SMX
(Security Matters) PLC

Mespil
Business Centre, Mespil House, Sussex Road

Dublin
4, Ireland

  October 17,
  2024

VIA
EDGAR

United
States Securities and Exchange Commission

Division
of Corporation Finance

Office
of Technology

100
F Street, N.E.

Washington,
D.C. 20549

Attention:
Mariam Mansaray and Jeff Kauten

    RE:

    SMX
    (Security Matters) PLC

    Registration
    Statement on Form F-1

    Filed
    September 26, 2024

    File
    No. 333-282337

Ladies
and Gentlemen:

This
letter sets forth the response of SMX (Security Matters) PLC (the “Company”) to the comment from the staff of the Securities
and Exchange Commission (the “Staff”) received by letter dated October 10, 2024 (the “Comment Letter”) relating
to the Registration Statement on Form F-1 (File No. 333-282337) (the “Registration Statement”). The Company has also revised
the Registration Statement to update certain information therein and, concurrently with delivery of this response letter, filed with
the Securities and Exchange Commission an amendment to the Registration Statement which reflects these updates (“Amendment No.
1”).

For
convenience, we have set forth below, in bold type, the enumerated written comments provided in the Comment Letter to the Company. The
response of the Company to the comments are set forth immediately following the comments.

Registration
Statement on Form F-1

The
Offering, page 19

1.
Given the nature of the offering and its size relative to the number of shares outstanding held by non-affiliates, it appears that
the selling stockholders may be acting as conduits for the company in an indirect primary offering. Please revise to fix the price
at which the shares will be sold for the duration of the offering and name the selling stockholders as underwriters. In the
alternative, provide an analysis of why you believe this is not an indirect primary offering, taking into consideration each of the
factors identified in Securities Act Rules Compliance and Disclosure Interpretations 612.09, as well as any other factors you deem
relevant.

The
Company acknowledges the Staff’s comment and respectfully submits to the Staff that, for the reasons stated below, the resale of
the ordinary shares of the Company by the Selling Stockholders (collectively, the “Selling Stockholders,” and individually,
a “Selling Stockholder”) as contemplated in the Registration Statement, as amended by Amendment No. 1, is not an indirect
primary offering and is a secondary offering under Rule 415(a)(1)(i) promulgated under the Securities Act of 1933, as amended (the “Securities
Act”).

Rule
415(a)(1)(i) provides that securities may be registered for an offering to be made on a continuous or delayed basis in the future, provided
that the registration statement pertains only to securities “which are to be offered or sold solely by or on behalf of a person
or persons other than the registrant, a subsidiary of the registrant or a person of which the registrant is a subsidiary.” Thus,
Rule 415(a)(1)(i) permits an issuer to register securities to be sold on a delayed or continuous basis by the selling stockholders in
a secondary offering.

The
Company further respectfully submits the Staff that the Company does not believe that any of the Selling Stockholders are acting as statutory
underwriters in connection with the proposed sale of the Company’s common stock as such term is defined under Section 2(a)(11)
of the Securities Act.

Section
2(a)(11) of the Securities Act defines an underwriter as “any person who has purchased from an issuer with a view to, or offers
or sells for an issuer in connection with, the distribution of any security, or participates or has a direct or indirect participation
in any such undertaking, or participates or has a participation in the direct or indirect underwriting of any such underwriting...”
The Division of Corporation Finance (the “Division”) provided guidance in Compliance and Disclosure Interpretations 612.09
(January 26, 2009) on the question of whether a “purported secondary offering is really a primary offering, i.e., the selling stockholders
are actually underwriters selling on behalf of an issuer.” The Division indicated that the determination of whether a selling stockholder
may be considered a statutory underwriter depends on the facts and circumstances and articulated six factors to be considered in determining
whether an offering by selling stockholders is on behalf of an issuer.

The
factors are: (i) how long the selling stockholders have held the shares; (ii) the circumstances under which they received them; (iii)
their relationship to the issuer; (iv) the amount of shares involved; (v) whether the sellers are in the business of underwriting securities;
and (vi) whether under all the circumstances it appears that the seller is acting as a conduit for the issuer.

The
Company believes that the following analysis, in light of the definition of “underwriter” in the Securities Act, the Division’s
guidance on what offerings should appropriately be classified as a valid secondary offering and not a primary offering, and whether selling
stockholders are actually underwriters selling on behalf of an issuer, establishes that none of the Selling Stockholders are acting as
statutory underwriters or selling on behalf of the Company.

(i)
How long the selling stockholders have held the shares.

On
September 11, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with the
Selling Stockholders, who are institutional accredited investors, pursuant to which, among other things, the Company sold to the Selling
Stockholders an aggregate of 5,350,000 Common Units (or Pre-Funded Units), each consisting of one Ordinary Share or Pre-Funded Warrant
and two Series A Common Warrants, each to purchase one Ordinary Share per warrant at an exercise price of $1.00, subject to adjustment,
and one Series B Common Warrant to purchase such number of Ordinary Shares as determined in the Series B Warrant (collectively, the “Common
Units”). The offering price per Common Unit was $1.00 and $0.9999 for each Pre-Funded Unit (equal to the offering price per Common
Unit to be sold in the offering minus an exercise price of $0.0001 per Pre-Funded Warrant). The Pre-Funded Warrants were immediately
exercisable subject to registration and may be exercised at any time until exercised in full. The initial exercise price of each Series
A Common Warrant is $1.00 per Ordinary Share. The Series A Common Warrants are exercisable immediately subject to registration and expire
66 months after the initial issuance date. The number of securities issuable under the Series A Common Warrant is subject to adjustment.
The initial exercise price of each Series B Common Warrant is $0.00001 per Ordinary Share. The number of Ordinary Shares issuable under
the Series B Warrant, if any, is subject to adjustment to be determined pursuant to the trading price of the Ordinary Shares following
the effectiveness of the Registration Statement.

Pursuant
to the terms of the Securities Purchase Agreement, the Company also entered into a Registration Rights Agreement with the Selling Stockholders
and agreed to use its best efforts to prepare and file with the Securities and Exchange Commission a registration statement providing
for registration and resale, on a continuous or delayed basis pursuant to Rule 415, of all of the ordinary shares included in the Common
Units (including the shares of Common Stock that may be issuable upon exercise of the Series A Warrants and the Series B Warrants) (collectively,
the “Registrable Securities”).

The
Company notes that there is no mandatory holding period for the registration for resale on a continuous basis of securities issued in,
or issuable upon exercise of warrants issued in, a private-investment in public-equity transaction (“PIPE”) transaction.
As noted by the Staff in Securities Act Sections, Compliance and Disclosure Interpretations, Question 139.11 (“Interpretation 139.11”),
which allows inclusion of the securities sold after a registration statement is filed if the registration statement is not yet effective,
a valid secondary offering may occur immediately following the closing of a private placement.

While
generally speaking, the longer shares are held, the less likely it is that selling stockholders are acting as a mere conduit for a company,
there is no mandatory holding period for a PIPE, and the Company is not aware of any Staff guidance on Rule 415 addressing the appropriate
length of time shares must be held in order to determine whether a purported secondary offering is really a primary offering or that
the period of time elapsing between a closing and effectiveness of a registration statement would result in the offering not being a
valid secondary offering; and the Company believes such positions would be inconsistent with Interpretation 139.11. Because the purchase
price has already been paid and the Common Units have already been delivered to the Selling Stockholders, the Selling Stockholders bear
the investment risk of holding all of these Common Units issued under the Securities Purchase Agreement. The Selling Stockholders participated
in the transactions contemplated by the Securities Purchase Agreement (the “Private Placement”) with the knowledge that they
might not be able to exit their positions at a profit, and they provided evidence, and specifically made certain representations, that
they purchased the Common Units with the intent to invest, rather than to effect a distribution, as an underwriter would have.

The
Selling Stockholders have already been subject to the full investment risk associated with ownership of the Common Units since the closing
of the transaction on September 12, 2024, and even if the Registration Statement were to have been immediately declared effective it
would be several months, and likely longer, before the Selling Stockholders could resell all of the Registrable Securities, that the
Company is seeking to register, given the historically low trading volume and price volatility of the Company’s ordinary shares.
Accordingly, the Selling Stockholders cannot be compared to underwriters as underwriters (by definition) do not take long term risk on
an issuer’s equity securities.

Furthermore,
at the time of the purchase of the Common Units, the market for the Company’s ordinary shares was not sufficiently liquid to accommodate
sales of a significant portion of the Securities, and the Company believes that the Selling Stockholders are sufficiently sophisticated
to have known this fact. Trading volume in the Company’s ordinary shares is limited and sporadic. Based on the size of the Selling
Stockholders’ respective investments, it is unlikely that any of them would consider selling their Securities unless there was
sufficient liquidity at a trading price substantially above their respective investment amounts, which may not be the case.

The
Common Units were issued to the Selling Stockholders in a bona fide private placement exempt from registration under Section 4(a)(2)
of the Securities Act and Regulation D promulgated thereunder. Each of the Selling Stockholders, subject to a negotiated hold-back held
in escrow, paid the full purchase price for the Common Units in cash upon acquisition, such purchase price was set and not based on a
fluctuating market price or ratio, and the Selling Stockholders have been subject to the full economic and market risks of their investment
since the date of the acquisition of the Common Units. The Selling Stockholders acquired the Common Units with no assurance that a liquid
market would be available in which the Registrable Securities could be sold.

Even
to the extent that the Selling Stockholders have held their Common Units since September 12, 2024, the Selling Stockholders, when they
entered into the Securities Purchase Agreement, were not assured that the Registration Statement will be declared effective. The Company
believes that the period of time that each Selling Stockholder will have held their shares and borne the economic and market risk of
their respective ownership, in combination with the additional factors set forth herein, evidences that each Selling Stockholder is acting
on its own behalf and is not acting as a statutory underwriter, and supports the conclusion that the offering pursuant to the Registration
Statement is a valid secondary offering.

(ii)
The circumstances under which the selling stockholders received the shares.

As
stated above, the Common Units were issued to the Selling Stockholders pursuant to the Securities Purchase Agreement in the Private Placement,
an arm’s-length private placement transaction, pursuant to an exemption from registration under Section 4(a)(2) of the Securities
Act and Regulation D promulgated thereunder. The Selling Stockholders were introduced to the Company by, solicited to make an investment
with the Company by, and worked with Aegis Capital Corp. (“Aegis”) as lead Placement Agent for the Private Placement, a registered
broker-dealer and member firm of the Financial Industry Regulatory Authority, Inc. (“FINRA”), acting on behalf of the Company
pursuant to the Company’s engagement letter agreement with Aegis, dated September 11, 2024 (the “Engagement Letter”).

In
the Securities Purchase Agreement, the Selling Stockholders made certain representations to the Company, including that each of them
(i) was an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated thereunder; (ii) was acquiring the
Common Units and, upon exercise of the Pre-Funded Warrants, Series A Common Warrants and the Series B Common Warrants, will acquire the
ordinary shares issuable upon exercise thereof, in each case, for its own account and not with a view towards, or for resale in connection
with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted
under the Securities Act; (iii) understood that the Common Units were offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws and that the Company was relying in part upon the truth
and accuracy of, and the Selling Stockholder’s compliance with, the representations, warranties, agreements, acknowledgments and
understandings of the Selling Stockholder set forth therein in order to determine the availability of such exemptions and the eligibility
of the Selling Stockholder to acquire the Common Units; and (iv) had sought such accounting, legal and tax advice as it had considered
necessary to make an informed investment decision with respect to its acquisition of the Common Units. The Company is neither aware of
any evidence that would indicate that these representations were false nor aware of any evidence that any of the Selling Stockholders
has any plan to act in concert with a third party to effect a distribution of the Common Units or the Registrable Securities.

Pursuant
to the Securities Purchase Agreement, the Company was required to enter into the Registration Rights Agreement. The Registration Statement
was filed by the Company to comply with its obligations under the Registration Rights Agreement. The Company did not enter into the Registration
Rights Agreement for the purposes of conducting an indirect primary offering, as such a registration rights agreement is customary in
private placements similar to the Private Placement and other PIPEs transactions.

None
of the Selling Stockholders have entered into any underwriting relationship or arrangement with the Company, received or will receive
any commission, fee or other payment from the Company in connection with the resale of any of their Securities, and the Company will
receive no proceeds from the resale of the Securitie