United States securities and exchange commission logo
October 4, 2022
Haggai Alon
Chief Executive Officer
Empatan Public Limited Company
Mespil Business Centre
Mespil House, Sussex Road
Dublin 4, Ireland
Re: Empatan Public
Limited Company
Registration
Statement on Form F-4
Filed September 6,
2022
File No. 333-267301
Dear Haggai Alon:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form F-4 Filed September 6, 2022
General
1. Please tell us whether
the "Independent Expert's Report" is a report, opinion or appraisal
materially relating to
the transaction to be received from an outside party and, if so, revise
to summarize the
analyses and provide disclosure consistent with Item 4(b) of Form F-4
and Item 1015 of
Regulation M-A.
2. You state on page 20
that if a redemption "were to occur after December 31, 2022, an
excise tax may apply to
the Business Combination which may have a material impact on a
holder s economic
return." Please clarify whether the "excise tax" you refer to was
included in the
Inflation Reduction Act of 2022. Expand your risk factor disclosure to
Haggai Alon
FirstName LastNameHaggai Alon
Empatan Public Limited Company
Comapany
October NameEmpatan Public Limited Company
4, 2022
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further discuss the material consequences and possible impacts as a
result of such excise
tax and advise whether you may be a "covered corporation" under the
Inflation Reduction
Act of 2022.
3. With a view towards revised disclosure, please advise whether the
ratio at which shares of
Class B common stock will convert into shares of Class A common stock
in connection
with the closing of the initial business combination is subject to
adjustment. If the
sponsor will receive additional securities pursuant to an
anti-dilution adjustment based on
any additional financing activities, please quantify the number and
value of securities the
sponsor will receive. In addition, disclose the ownership percentages
in the company
before and after any such additional financing to highlight dilution
to public stockholders.
4. Quantify the value of warrants, based on recent trading prices, that
may be retained by
redeeming stockholders assuming maximum redemptions and identify any
material
resulting risks.
5. With a view toward disclosure, please tell us whether your sponsor is,
is controlled by, or
has substantial ties with a non-U.S. person. Please also tell us
whether anyone or any
entity associated with or otherwise involved in the transaction, is,
is controlled by, or has
substantial ties with a non-U.S. person. If so, also include risk
factor disclosure that
addresses how this fact could impact your ability to complete your
initial business
combination. For instance, discuss the risk to investors that you may
not be able to
complete an initial business combination with a U.S. target company
should the
transaction be subject to review by a U.S. government entity, such as
the Committee on
Foreign Investment in the United States (CFIUS), or ultimately
prohibited. Further,
disclose that the time necessary for government review of the
transaction or a decision to
prohibit the transaction could prevent you from completing an initial
business
combination and require you to liquidate. Disclose the consequences of
liquidation to
investors, such as the losses of the investment opportunity in a
target company, any price
appreciation in the combined company, and the warrants, which would
expire worthless.
Frequently Used Terms, page 1
6. Please clarify why you refer to the Australian Accounting Standards
and any authoritative
interpretation issued by the Australian Accounting Standards Board
under your definition
of Accounting Standards. In this regard, we note the historical
financial statements of
Lionheart were prepared in accordance with U.S. GAAP and the
historical financial
statements of SMX were prepared in accordance with International
Financial Reporting
Standards.
Questions and Answers About the Business Combination and the Special Meeting
What Equity Stake Will Current Stockholders, the Initial Stockholders, and the
Company Public
Stockholders Hold. . ., page 8
7. Please disclose the sponsor and its affiliates total potential
ownership interest in the
Haggai Alon
Empatan Public Limited Company
October 4, 2022
Page 3
combined company, assuming exercise and conversion of all securities.
Provide this
disclosure at each of the redemption levels described in your
"Comparative Per Share
Information" disclosure.
Q: Do any of the Company's Officers or Directors have Interests in the Business
Combination . .
.., page 16
8. In listing the interests of the sponsor and the Company's officers and
directors, you note
that certain individuals will serve as directors of the
Post-Combination Company. Please
further clarify which of these individuals are currently affiliated
with the sponsor or are
officers and directors of the Company (i.e. the SPAC) or have other
ties that give rise to a
conflict of interest. Further, it appears a different set of
individuals and additional
conflicts are listed in similar disclosure on page 125. Please
reconcile and revise as
appropriate.
9. We note your disclosure that the sponsor and your directors and
officers will lose their
entire investment in you and will not be reimbursed for any
out-of-pocket expenses if an
initial business combination is not consummated by November 8, 2022.
Please quantify
the aggregate dollar amount and describe the nature of what the
sponsor and its affiliates
have at risk that depends on completion of a business combination.
Include the current
value of securities held, loans extended, fees due, and out-of-pocket
expenses for which
the sponsor and its affiliates are awaiting reimbursement. Provide
similar disclosure for
the company s officers and directors, if material.
Q: What are the Material U.S. Federal Income Tax Consequences . . ., page 20
10. We note your representation on page 20 that if the business combination
qualifies as a
reorganization under either Section 368(a) or 351(a) of the Code then
U.S. holders
"should not generally recognize gain or loss" for U.S. federal income
tax purposes on their
shares. Elsewhere in your registration statement, you advise that a tax
opinion will not be
provided. Please note that a tax opinion is required where the tax
consequences are
material to an investor and a representation as to tax consequences is
set forth in the
filing. Refer to Item 601(b)(8) of Regulation S-K. To support your
conclusions about the
tax consequences of the business combination, please have counsel
provide an opinion
that expresses a conclusion for each material federal tax consequence,
including each
consequence set forth in "Certain Material U.S. Federal Income Tax
Considerations."
See Staff Legal Bulletin No. 19. If there is uncertainty regarding the
tax treatment of the
FirstName LastNameHaggai Alon
transactions, counsel may (1) issue a "should" or "more likely than not"
opinion to make
Comapany
clearNameEmpatan
that the opinionPublic Limited
is subject to aCompany
degree of uncertainty and (2)
explain why it cannot
give a firm opinion.
October 4, 2022 Page 3
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Haggai Alon
FirstName LastNameHaggai Alon
Empatan Public Limited Company
Comapany
October NameEmpatan Public Limited Company
4, 2022
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Summary of the Proxy Statement/Prospectus, page 22
11. Please revise your registration statement to provide an organizational
diagram that depicts
the structure of the Company and SMX (and its subsidiaries) before and
after the business
combination. Include the jurisdiction of incorporation for each entity
in your diagram.
12. It appears that the deferred underwriting fees remain constant and are
not adjusted based
on redemptions. Revise your disclosure to disclose the effective
underwriting fee on a
percentage basis for shares at each redemption level presented in your
selected pro forma
information.
Other Agreements Related to the Business Combination Agreement
Lock-up Agreements, page 27
13. Please disclose the exceptions set forth in the lock-up agreements.
PIPE Subscription Agreements, page 28
14. We note you are actively pursuing the entry of subscription agreements
with PIPE
investors for an amount up to $25 million in the aggregate. Revise to
highlight any
material differences in the terms and price of securities issued at
the time of the IPO as
compared to private placements that are contemplated to be entered
into at the time of the
business combination. Disclose if the SPAC s sponsors, directors,
officers or their
affiliates will participate in the private placement. If this
information is not known at this
time, please clarify whether you intend to circulate a new or amended
proxy
statement/prospectus with this information prior to the special
meeting or how you will
inform shareholders the amount of PIPE financing that has been
subscribed to before the
special meeting to approve the business combination.
Impact of the Business Combination on Parent's Public Float, page 34
15. Please provide tabular disclosure showing all possible sources and the
extent of dilution
that shareholders who elect not to redeem their shares may experience
in connection with
the business combination. Provide disclosure of the impact of each
significant source of
dilution, including the amount of equity held by founders, any
convertible securities,
including warrants retained by redeeming shareholders (and those
issued to certain
investors in August and September 2022, which you disclose are
redeemable at the
closing of the business combination against 50% of the amount lent),
at each of the
redemption levels detailed in your selected pro forma information,
including any needed
assumptions.
Risk Factors, page 49
16. To the extent material, disclose any new or heightened risk of
potential cyberattacks by
state actors or others since Russia s invasion of Ukraine, and
whether you have taken any
actions to mitigate such potential risks.
Haggai Alon
FirstName LastNameHaggai Alon
Empatan Public Limited Company
Comapany
October NameEmpatan Public Limited Company
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Our operations in foreign jurisdictions will subject us to risks associated
with operating in those
jurisdictions. . ., page 89
17. We note your disclosure that "[p]rior to the Russian-Ukrainian dispute
some of our R&D
activity was based in the Ukraine and we had commenced business
activities related to the
countries in dispute and their surroundings, all of which were
affected by the dispute."
Please clarify the extent of SMX's business activities with the
"countries in dispute and
their surroundings" and specify the countries. Elaborate on how SMX's
R&D and
business activities were affected and disclose if it had to end its
R&D activity in Ukraine
or how it was otherwise impacted. For example, disclose whether SMX
needed to move
its R&D activities to another jurisdiction and whether this may delay
its development or
generate additional costs or otherwise have a material adverse effect
on SMX's business.
In addition, please also consider any impact:
resulting from sanctions, limitations on obtaining relevant
government approvals,
currency exchange limitations, or export or capital controls,
including the impact of
any risks that may impede SMX's ability to sell assets located in
Russia, Belarus, or
Ukraine, including due to sanctions affecting potential
purchasers;
resulting from the reaction of SMX's investors, employees,
customers, and/or other
stakeholders to any action or inaction arising from or relating
to the invasion,
including the payment of taxes to the Russian Federation; and
that may result if Russia or another government nationalizes SMX's
assets or
operations in Russia, Belarus, or Ukraine.
If the impact is not material, please explain why.
Purchases of Shares, page 106
18. We note your disclosure that the sponsor, underwriters, SMX and/or
their respective
affiliates may purchase shares in privately negotiated transaction,
including from
shareholders who would have otherwise elected to redeem their shares
in advance of the
stockholder vote, in addition to your disclosure of "Open Market
Purchases." With a view
towards revised disclosure, please tell us how such purchases are
consistent with the
requirements of Rule 14e-5 under the Exchange Act. Refer to Tender
Offer Rules and
Schedules Compliance and Disclosure Interpretation Question 166.01 for
guidance.
The Business Combination
The Background of the Business Combination, page 108
19. Please expand the description of the transaction timeline to include
any relevant disclosure
to address:
whether the sponsor and management and affiliates have a track
record with SPACs
and, if so, balanced disclosure about this record and the
outcomes of the prior
transactions;
whether the sponsor has other SPACs in the process of searching
for a target
company and whether the sponsor considered more than one active
SPAC to be the
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potential acquirer and how the final decision was reached;
whether there have been any valuations or other material
information about
Lionheart, SMX, or the business combination provided to potential
PIPE investors
that have not been disclosed publicly;
the negotiation of any arrangements whereby any shareholder
agreed to waive its
redemption rights;
any discussions involving continuing employment or involvement
for any persons
affiliated with Lionheart before the merger, any formal or
informal commitment to
retain any financial advisors after the merger, and any
pre-existing relationships
between Lionheart (or individuals affiliated with Lionheart) and
additional investors.
20. We note your disclosure that the "parties subsequently decided not to
include the non-
redemption incentives in the definitive transaction agreements and to
address any
potential non-redemption incentives at a future date." Please disclose
how you will
inform shareholders of any non-redemption incentives prior to the
special meeting.
Fairness Opinion of Scura Partners, page 114
21. You disclose on page 121 that Scura Partners expects to deliver a
"bringdown" Fairness
Opinion in connection with closing. Please reconcile your disclosure
of the "bringdown"
opinion with your risk factor disclosure on page 60 suggesting that
the Lionheart
board will not ask the financial advisor to update its opinion prior
to closing.
22. We note your disclosure that "Scura Partners assumed, with Lionheart
s consent, that the
transaction contemplated by the SID and BCA will qualify as a tax free
reorganization for
income tax purposes in the United States, Australia, and Ireland."
With a view towards
revised disclosure, please tell us how the Lionheart board evaluated
this assumption and
the conclusions of the fairness opinion in light of your disclosure on
page 79 and
elsewhere that there is uncertainty regarding the tax treatment of the
business
combination.
23. Please add cautionary language that the fairness opinion addresses
fairness to all
shareholders as a group as opposed to only those shareholders
unaffiliated with the
sponsor or its affiliates.
24. We note your disclosure that "[i]n the two-year period prior to the
date of Scura Partners
opinion, Scura Partners has not provided any investment banking
services to Lionheart."
Please clarify if Scura Partners provided any financial advisory or
other services to
Lionheart or if there was any other material relationship that existed
between Lionheart
and Scura Partners during this period. If so, disclose the information
required by Item
1015(b)(4) of Regulation M-A.
25. Please disclose the criteria Scura Partners used to select comparable
companies, including
any quantitative metrics. Disclose if there were any criteria used to
exclude companies
from the analysis and if any companies meeting the selection criteria
were excluded.
Haggai Alon
FirstName LastNameHaggai Alon
Empatan Public Limited Company
Comapany
October NameEmpatan Public Limited Company
4, 2022
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26. We note your disclosure that in preparing its analyses, Scura Partners
utilized "certain
internal information relating to the business, earnings, cash flow,
assets, liabilities and
prospects of SMX furnished to Scura Partners by the Company, including
financial and
other forecasts provided to, or discussed with Scura Partners by the
management of the
Company and the management of SMX." Please disclose any financial
projections
provided by Lionheart or SMX and relied upon by Scura Partners.
Certain Material Irish Tax Considerations to Non-Irish Holders, page 160
27. We note your disclosure that Non-Irish Holders will not be subject to
certain Irish tax
consequences with respect to the transactions. Please file a tax
opinion as an exhibit to
your registration statement that addresses and expresses a conclusion
for each material
Irish tax consequence. Refer to Item 601(b)(8) of Regulation S-K and,
for guidance,
Section III.A.2 (including footnote 40) of Staff Legal Bulletin No.
19.
Submission of Business Combination to a Stockholder Vote, page 189
28. You refer on page 189 only to your intention to waive any obligations
of Nomura to vote
its shares of common stock obtained in any Open Market Purchases in
favor of the
Proposals, but on page 15 refer to such obligation of the
Underwriters. Please reconcile
and revise your calculation of the number of votes of the public
shares needed to approve
the business combination disclosed in these two sections for
consistency.
Conflicts of Interest, page 202
29. Please revise the conflicts of interest discussion to elaborate on how
the board
considered those conflicts in negotiating and recommending the
business combination.
We also note your charter waived the corporate opportunities doctrine.
Please address
whether this potential conflict of interest impacted your search for
an acquisition target.
Business of Security Matters
Platform, page 217
30. We note SMX's solution comprises of a "blockchain digital platform."
To help investors
better understand SMX's business, please further clarify and disclose
whether SMX's
applications (1) are or will be dependent on another blockchain and,
if so, the risks and
challenges related to such reliance or (2) run or will run on its own
blockchain and, if so,
the risks and challenges related to developing and maintaining the
blockchain. Advise
whether SMX's business entails, or will entail, the creation, issuance
or use of any crypto
assets and, if so, how those crypto assets will be used.
31. We note that SMX's use of blockchain technology uses cryptography from
third party
infrastructure and it has developed an algorithm that connects its
reader to an existing
platform "licensed from a SaaS provider." To the extent SMX has any
material contracts
with third parties for such services, please include a brief
description of the material terms
of any agreements, including the term and termination provisions.
Haggai Alon
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Research and Development, page 219
32. We note that you have entered into joint venture arrangements in
connection with your
ownership in both Yahaloma Technologies and trueGold. Please disclose
the material
terms of these arrangements in your registration statement, including
the term and
termination provisions.
Intellectual Property, page 220
33. Please expand your disclosure to provide additional description of
your patent portfolio.
For each material patent and patent application, please disclose the
scope and technology
of each patent or patent application, the type of patent protection,
jurisdiction and
expiration dates. Consider including tabular disclosure for ease of
use.
Security Matters' Management's Discussion and Analysis of Financial Condition
and Results of
Operations, page 229
34. Please discuss whether supply chain disruptions materially affect
SMX's outlook or
business goals. Specify whether these challenges have materially
impacted its results of
operations or capital resources and quantify, to the extent possible,
how its sales, profits,
and/or liquidity have been impacted. Discuss whether SMX has
experienced higher costs
due to constrained capacity or increased commodity prices or
challenges sourcing specific
materials or is exposed to supply chain risk in light of Russia s
invasion of Ukraine and/or
related geopolitical tension. Explain whether any mitigation efforts
introduce new
material risks, including those related to product quality,
reliability, or regulatory approval
of products.
35. Please disclose any known trends or uncertainties that have had or are
reasonably likely to
have a material impact on SMX's cash flows, liquidity, capital
resources, cash
requirements, financial position, or results of operations arising
from, related to, or caused
by the global disruption from, Russia s invasion of Ukraine. Trends
or uncertainties may
include impairments of financial assets or long-lived assets; declines
in the value of
inventory, investments, or recoverability of deferred tax assets; the
collectability of
consideration related to contracts with customers; and modification of
contracts with
customers.
Notes to Consolidated Financial Statements
Note 2 - Significant Accounting Policies
Intangible assets, page F-56
36. Please tell us and disclose in more detail how you met the criteria in
IAS 38.57 for the
capitalized development costs, in particular how you determine when a
product
development project has reached a defined milestone. Please further
expand your policy
to disclose the circumstances that would allow you to begin
amortization of development
costs.
Haggai Alon
Empatan Public Limited Company
October 4, 2022
Page 9
Note 3 - Critical Accounting Estimates and Judgements
Share based payments, page F-58
37. Please provide us with a breakdown of all equity awards granted starting
on January 1,
2022 and leading up to your filing, including the fair value of the
underlying common
stock used to value such awards as determined by your board of
directors. To the extent
there were any significant fluctuations in the fair values from
period-to-period, please
describe for us the factors that contributed to these fluctuations,
including any intervening
events within the Company or changes in your valuation assumptions or
methodology.
Compare the most recent valuations for options granted to the fair value
of the shares of
commons stock as determined by the exchange ratio in the merger
agreement.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Ryan Rohn, Senior Staff Accountant, at (202) 551-3739 or
Stephen
Krikorian, Accounting Branch Chief, at (202) 551-3488 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Patrick Faller, Staff
Attorney, at (202) 551-4438 or Jeff Kauten, Staff Attorney, at (202) 551-3447
with any other
questions.
Sincerely,
FirstName LastNameHaggai Alon
Division of
Corporation Finance
Comapany NameEmpatan Public Limited Company
Office of
Technology
October 4, 2022 Page 9
cc: Julie Rizzo
FirstName LastName