SMX’s audited financial statements and related notes as of December 2021 and for the years ended December 31, 2021 and 2020;

SMX’s unaudited interim condensed consolidated financial statements and related notes as of June 30, 2022 and for the periods ended June 30, 2022 and 2021

“Security Matters’ Management’s Discussion and Analysis of Financial Condition and Results of Operations”;

Lionheart’s audited financial statements and related notes as of December 31, 2021 and for the period from January 14, 2021 (inception) through December 31, 2021;

Lionheart’s unaudited condensed financial statements and related notes as of June 30, 2022 and for the periods ended June 30, 2022 and 2021;

“Lionheart’s Management’s Discussion and Analysis of Financial Condition and Results of Operations”; and

other financial information incorporated by reference within the Report and included elsewhere in the Proxy Statement/Prospectus.

SMX Shareholders will have the largest voting rights in Parent after giving effect to the Business Combination, under all redemption scenarios;

SMX accounts for the majority of representatives in the governing body of the Parent, the Board of Directors;

SMX’s senior management will continue in their respective roles in the Parent after giving effect to the Business Combination;

SMX’s operations will substantially comprise the ongoing operations of SMX after giving effect to the Business Combination; and

SMX is the larger entity, in terms of substantive operations and employee base.

Assets

Current assets

Cash and cash equivalents

Other receivables

Prepaid expenses and other current assets

Total current assets

Non-current assets

Property and equipment

Intangible assets

Investments in joint ventures

Marketable securities held in Trust Account

Total non-current assets

Total assets

Liabilities

Current liabilities

Trade payables

Other payables

Warrants

Convertible notes

Borrowings from related parties

Total current liabilities

Non-current liabilities

Secured notes

Lease liability

Deferred underwriting payable

Other liabilities

Redeemable shares

Total non-current liabilities

Total liabilities

Equity

Issued capital, additional paid in capital and warrants

Share based payment reserve

Foreign currency translation reserve

Accumulated losses

Total equity

Total liabilities and equity

The Parent was formed in July 2022, and will have no results of operations until the completion of this Transaction. Therefore, its historical results of operations are not shown in a separate column in the unaudited pro forma combined balance sheet and profit or loss.

Derived from Lionheart’s unaudited interim financial statements as of June 30, 2022 which have been prepared in accordance with U.S. GAAP. The $126,250 Class A Common Stock subject to possible redemption are classified in temporary equity under U.S GAAP.

Adjustments made to present Lionheart balance sheet in accordance with IFRS:

Reclassification of Lionheart’s ordinary shares ($ 126,250) subject to redemption as long term liabilities measured at amortized cost using the effective interest method under IFRS.

Reclassification of accretion to amount subject to redemption ($ 12,261) from additional paid in capital ($ 9,647) and from accumulated losses ($ 2,614) to redeemable shares liability ($ 4,087) and accumulated losses ($ 8,174) in order to recognize the accretion on the basis of passage of time using the effective interest method under IFRS, based on updated estimates at balance sheet date.

Reclassification of share warrants ($ 5,747) from equity to derivative financial liabilities at fair value as of the date of filing, $0.09, under IFRS

Represents Lionheart’s balance sheet after adjustments to IFRS.

Derived from Security Matters’ unaudited interim financial statements as of June 30, 2022 which have been prepared in accordance with IFRS.

Represents the release of cash from marketable securities held in the trust account.

Represents the waiver of the payment by the underwriters at Closing.

Represents the conversion of convertible notes to ordinary shares of SMX at Closing.

Represents the cash disbursement from the trust account to public SPAC shareholders resulting from the actual redemption at Closing of 97.58% redeemable ordinary shares, where the remaining amount (representing 303,053 shares) is retained in the trust account and classified to equity.

Represents payables to settle the actual transactions costs of $17.5M to be incurred in connection with the Transactions, of which, as of June 30, 2022, $1.027M have been incurred and $0.734M also paid. The transaction costs related to acquire Lionheart’s net assets are recognized directly in equity and the those related to obtain listing status are charged to profit or loss. The allocation was made on a relative fair value basis of the amounts of consideration attributed to each component.

Represents the effects of the recapitalization at Closing where Security Matters is the accounting acquirer, and the elimination of historical issued capital and additional paid in capital and accumulated losses of Lionheart. The adjustment as a reduction in accumulated losses reflects the difference between the fair value of the shares deemed to have been issued to Lionheart shareholders by Security Matters and the fair value of Lionheart’s net assets acquired, in accordance with IFRS 2. The adjustment reflects the number of shares outstanding following 97.58% Redemptions.

Represents the warrants in the Parent forming part of Lionheart’s net assets. The warrants are derivative financial liabilities in accordance with IFRS. The fair value is the market price of $0.12 as of the date of filing. As reflected from the Business Combination Agreement, the Parent’s warrants have the same fair value as Lionheart’s warrants prior to Closing.

Represents Security Matters’ share based payment schemes. Upon Transaction, some fully vested options are converted to ordinary shares of the Parent ($1,532) and for other unvested options, acceleration of vesting as a result of becoming fully vested for which the future remaining expenses ($43) are recognized immediately in accordance with IFRS 2. The remaining reserve balance represents the total of outstanding fully vested options over the Parent shares.

Represents the liability payble for the loan bonus to related parties upon completion of the Transactions, for the amount of ILS 2.5M (USD 714 thousand as converted to US dollar by using the ILS/USD exchange rate of 0.2857 for the balance sheet). As of June 30, 2022 the carrying amount of the liability for the bonus is nil. Refer also to Note 10 of SMX financial statements for 2021.

Represents notes issued to finance the Transactions, payable according to the schedule agreed with the lenders that is in effect at Closing Date.

Research and development expenses, net

Selling and marketing expenses

General and administrative expenses

Operating Loss

Finance expenses

Finance income

Income taxes

Net loss for the period

Adjustment made to record the periodic charge of the accretion amount on the redeemable shares in profit or loss using the effective interest method in accordance with IFRS based on updated estimates at balance sheet date.

Elimination of finance income net of tax earned from securities held in the Trust Account

The adjustment reflects acceleration of vesting of unvested options as a result of becoming fully vested upon Transactions for which the future remaining expenses are recognised immediately in accordance with IFRS 2

Research and development expenses, net

Selling and marketing expenses

General and administrative expenses

Operating Loss

Finance expenses

Finance income

Share of losses of joint ventures

Net loss (profit) for the year

Adjustments made to record the periodic charge ($ 1,362) of the accretion amount on the redeemable shares ($ 12,261) in profit or loss using the effective interest method and to record the gain from revaluation of warrants to fair value ($ 4,480) in accordance with IFRS.

Represents the transaction costs related to listing service that are charged to general and administrative expenses.

The adjustment to general and administrative expenses reflects the service of obtaining a stock exchange listing in accordance with IFRS 2 and is calculated as the difference between the fair value of the shares deemed to have been issued to Lionheart shareholders by Security Matters and the fair value of Lionheart’s net assets acquired, in accordance with IFRS 2. The adjustment reflects the number of shares outstanding following 97.58% Redemptions.

The adjustment reflects acceleration of vesting for unvested options as a result of becoming fully vested upon Transactions for which the future remaining expenses are recognised immediately in accordance with IFRS 2

Represents the difference between the payables for the loan bonus to related parties and the carrying amount of the liability for the bonus as of 31 December, 2021. Refer also to Note 10 of SMX financial statements for 2021.

Six months ended June 30, 2022

Pro forma net loss attributable to equity holders of the Parent

Pro forma weighted average number of Parent Ordinary Shares outstanding

Parent Ordinary Shares issued to Security Matters Shareholders

Parent Ordinary Shares issued to Lionheart Class A and Class B shareholders

Pro forma weighted average number of Parent Ordinary Shares outstanding – basic and diluted

Pro forma net loss per share – basic and diluted ($)

Year ended December 31, 2021

Pro forma net loss attributable to equity holders of the Parent

Pro forma weighted average number of Parent Ordinary Shares outstanding

Parent Ordinary Shares issued to Security Matters Shareholders

Parent Ordinary Shares issued to Lionheart Class A and Class B shareholders

Pro forma weighted average number of Parent Ordinary Shares outstanding – basic and diluted

Pro forma net loss per share – basic and diluted ($)

Assets

Cash and cash equivalents

Prepaid expenses and other current assets

Prepaid expenses

Marketable securities held in Trust Account

Total assets

Liabilities

Trade payables

Other payables

Warrants

Deferred underwriting payable

Redeemable shares

Total liabilities

Net Assets

Former type of Spac shares

Class A

Class B

Fair value of share consideration

Fair value of Lionheart’s net assets

Excess of fair value of consideration over fair value of Lionheart’s net assets (listing service expense)