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FINANCIAL INSTRUMENTS AND RISK MANAGEMENT | 12 Months Ended
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Dec. 31, 2024
Financial Instruments And Risk Management |
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT | NOTE 26 - FINANCIAL INSTRUMENTS AND RISK MANAGEMENT: Composition of the Group’s financial assets and financial liabilities: SCHEDULE OF FINANCIAL ASSETS AND IMPACT OF CREDIT EXPOSURE
|  | 2024 |  |  | 2023 |
|  | December 31, |
|  | 2024 |  |  | 2023 |
Financial assets at amortized cost: |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 2,343 |  |  |  | 168 |
Other current receivables |  |  | 1,993 |  |  |  | 424 |
Total financial assets |  |  | 4,336 |  |  |  | 592 |
SCHEDULE OF FINANCIAL LIABILITIES FAIR VALUE THROUGH PROFIT OR LOSS
|  | 2024 |  |  | 2023 |
|  | December 31, |
|  | 2024 |  |  | 2023 |
Financial liabilities at fair value through profit or loss: |  |  |  |  |  |  |  |
Short term loan |  |  | 1,000 |  |  |  | - |
Convertible notes |  |  | 391 |  |  |  | 377 |
Convertible Features |  |  | 791 |  |  |  | - |
Warrants - derivative financial liability |  |  | 1,384 |  |  |  | 1,143 |
Pre-paid advance |  |  | - |  |  |  | 700 |
Bridge loans liabilities |  |  | 902 |  |  |  | 2,233 |
Total financial liabilities at fair value through profit or loss |  |  | 4,468 |  |  |  | 4,453 |
Financial liabilities at amortized cost: |  |  |  |  |  |
Trade and other payables |  |  | 13,605 |  |  |  | 12,487 |
Convertible notes |  |  | 2,469 |  |  |  | 1,013 |
Lease liabilities |  |  | 418 |  |  |  | 649 |
Government grants |  |  | 177 |  |  |  | 153 |
Total financial liabilities at amortized cost |  |  | 16,669 |  |  |  | 14,302 |
Total financial liabilities |  |  | 21,137 |  |  |  | 18,755 |
Financial risk management objectives The Group’s activities expose it to a variety of financial risks such as market risks (foreign currency risk), credit risk and liquidity risk. The Company’s management oversees the management of these risks, focusing on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Group. The Group uses different methods to monitor different types of risk to which it is exposed. These methods include sensitivity analysis in the case of foreign exchange, ageing analysis for credit risk and maturity analysis in respect of liquidity risk. Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices, which in the group’s case refers only to foreign currency risk. Financial instruments affected by this risk include, loans and borrowings and short-term payables and receivables.
SMX (SECURITY MATTERS) PUBLIC LIMITED COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (US$ in thousands) |
NOTE 26 - FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONT.): Foreign currency risk Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the functional currency. The Group is exposed to foreign exchange risk arising from currency exposure primarily with respect to the NIS and Euro. As of December 31, 2024, the Group has excess financial liabilities over financial assets in foreign currencies in relation to the NIS, AUD, SGD and EUR totaling approximately $2,745, $376, $103 and $163, respectively (December 31, 2023: approximately $1,651, $185, $142 and $101, respectively). Foreign currency sensitivity analysis The following table demonstrates the sensitivity test to a reasonably possible change of 10% in EUR and NIS exchange rates against the USD, with all other variables held constant. The impact on the Group’s net loss (tax effect is not relevant) and equity is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives and embedded derivatives. The Company’s exposure to foreign currency changes for all other currencies is immaterial. SCHEDULE OF FOREIGN CURRENCY SENSITIVITY ANALYSIS
|  | Change in NIS rate |  |  | Effect on net loss |
December 31, 2024 |  |  | 10 | % |  |  | 275 |
December 31, 2023 |  |  | 10 | % |  |  | 165 |
|  | Change in AUD rate |  |  | Effect on net loss |
December 31, 2024 |  |  | 10 | % |  |  | 38 |
December 31, 2023 |  |  | 10 | % |  |  | 19 |
|  | Change in SGD rate |  |  | Effect on net loss |
December 31, 2024 |  |  | 10 | % |  |  | 10 |
December 31, 2023 |  |  | 10 | % |  |  | 14 |
|  | Change in EUR rate |  |  | Effect on net loss |
December 31, 2024 |  |  | 10 | % |  |  | 16 |
December 31, 2023 |  |  | 10 | % |  |  | 10 |
Credit risk Credit risk is the risk that a counterparty will not meet its obligations as a customer or under a financial instrument leading to a loss to the Group. The Group is exposed to credit risk from its operating activity (other receivables and cash balances). The Group’s main financial assets are cash and cash equivalents as well as other receivables and their carrying amounts represent the Group’s maximum exposure to credit risk. Credit risk from balances with banks and financial institutions is managed by the Group’s management in accordance with the Group’s policy. Wherever possible and commercially practical, the Group holds cash with major financial institutions in Israel and Australia which the Company’s management regards as financially solid.
SMX (SECURITY MATTERS) PUBLIC LIMITED COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (US$ in thousands) |
NOTE 26 - FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONT.): Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Group has procedures to minimize such loss by maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities. As of the balance sheet date, the Group has a positive working capital. The following tables detail the Group’s remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. As of December 31, 2024 SCHEDULE OF CONTRACTUAL MATURITY FOR FINANCIAL LIABILITIES
|  | Less than one year |  |  | 1 to 2 years |  |  | 2 to 3 years |  |  | 3 to 4 years |  |  | 4 to 5 years |  |  | >5 years |  |  | Total |
Trade and other payables |  |  | 13,605 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 13,605 |
Short term loan |  |  | 1,000 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,000 |
Bridge loans |  |  | 902 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 902 |
Government grants |  |  | 177 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 177 |
Lease liability |  |  | 81 |  |  |  | 74 |  |  |  | 74 |  |  |  | 74 |  |  |  | 74 |  |  |  | 41 |  |  |  | 418 |
Convertible note |  |  | 3,651 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,651 |
Financial derivatives |  |  | 1,384 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,384 |
Financial liabilities undiscounted cashflows |  |  | 20,800 |  |  |  | 74 |  |  |  | 74 |  |  |  | 74 |  |  |  | 74 |  |  |  | 41 |  |  |  | 21,137 |
As of December 31, 2023
|  | Less than one year |  |  | 1 to 2 years |  |  | 2 to 3 years |  |  | 3 to 4 years |  |  | 4 to 5 years |  |  | > 5 years |  |  | Total |
Trade and other payables |  |  | 12,487 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12,487 |
Bridge loans |  |  | 1,750 |  |  |  | 453 |  |  |  | 15 |  |  |  | 15 |  |  |  | - |  |  |  | - |  |  |  | 2,233 |
Government grants |  |  | 153 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 153 |
Lease liability |  |  | 81 |  |  |  | 81 |  |  |  | 74 |  |  |  | 74 |  |  |  | 74 |  |  |  | 265 |  |  |  | 649 |
Convertible promissory note |  |  | 1,013 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,013 |
Pre-paid advance |  |  | 700 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 700 |
Convertible note |  |  | 377 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 377 |
Financial derivatives |  |  | 1,143 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,143 |
Financial liabilities undiscounted cashflows |  |  | 17,704 |  |  |  | 534 |  |  |  | 89 |  |  |  | 89 |  |  |  | 74 |  |  |  | 265 |  |  |  | 18,755 |
SMX (SECURITY MATTERS) PUBLIC LIMITED COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (US$ in thousands) |

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