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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36247

 

Meta Materials Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Nevada

74-3237581

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

1 Research Drive

Dartmouth, Nova Scotia

B2Y 4M9

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (902) 482-5729

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

 

Common Stock, par value $0.001 per share

MMAT

Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of September 30, 2021, the registrant had 281,200,905 shares of common stock, $0.001 par value per share, outstanding.

 


 

Table of Contents

 

PART I—FINANCIAL INFORMATION

3

 

 

Item 1. Financial Statements

3

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

 

 

INTRODUCTION

29

 

 

FORWARD-LOOKING STATEMENTS

29

 

 

OVERVIEW

30

 

 

BUSINESS AND OPERATIONAL OVERVIEW

31

 

 

Holography Technology

32

 

 

Lithography Technology

32

 

 

Wireless Sensing Technology

33

 

 

RESULTS OF OPERATIONS

34

 

 

LIQUIDITY AND CAPITAL RESOURCES

37

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

40

 

 

Item 4. Controls and Procedures

40

 

 

PART II—OTHER INFORMATION

41

 

 

Item 1. Legal Proceedings

41

 

 

Item 1A. Risk Factors

42

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

46

 

 

Item 3. Defaults Upon Senior Securities

46

 

 

Item 4. Mine Safety Disclosures

46

 

 

Item 5. Other Information

46

 

 

Item 6. Exhibits

47

 

 

SIGNATURES

48

 

2


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

META MATERIALS INC.

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS (UNAUDITED)

 

 

 

As of

 

 

As of

 

 

 

September 30, 2021

 

 

December 31, 2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

140,796,052

 

 

$

1,395,683

 

Restricted cash

 

 

421,817

 

 

 

-

 

Grants receivable

 

 

285,063

 

 

 

327,868

 

Accounts receivable

 

 

96,848

 

 

 

22,833

 

Inventory

 

 

358,964

 

 

 

463,382

 

Prepaid expenses and other current assets

 

 

3,262,595

 

 

 

514,204

 

Assets held for sale

 

 

73,650,140

 

 

 

-

 

Due from related parties

 

 

64,708

 

 

 

-

 

Total current assets

 

 

218,936,187

 

 

 

2,723,970

 

Intangible assets, net

 

 

4,642,904

 

 

 

4,476,614

 

Property, plant and equipment, net

 

 

7,525,989

 

 

 

2,761,171

 

Operating lease right-of-use assets

 

 

4,775,130

 

 

 

270,581

 

Goodwill

 

 

218,828,518

 

 

 

-

 

Total assets

 

$

454,708,728

 

 

$

10,232,336

 

Liabilities and stockholders’ equity (deficit)

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

$

6,556,665

 

 

$

2,940,452

 

Due to related party

 

 

-

 

 

 

245,467

 

Current portion of long-term debt

 

 

532,346

 

 

 

290,544

 

Current portion of deferred revenues

 

 

1,186,885

 

 

 

1,239,927

 

Current portion of deferred government assistance

 

 

842,425

 

 

 

779,578

 

Preferred stock liability

 

 

77,906,354

 

 

 

-

 

Current portion of operating lease liabilities

 

 

330,867

 

 

 

150,802

 

Asset retirement obligations

 

 

21,937

 

 

 

-

 

Unsecured convertible promissory notes

 

 

-

 

 

 

1,203,235

 

Secured convertible debentures

 

 

-

 

 

 

5,545,470

 

Total current liabilities

 

 

87,377,479

 

 

 

12,395,475

 

Deferred revenues

 

 

637,559

 

 

 

804,143

 

Deferred government assistance

 

 

38,869

 

 

 

146,510

 

Deferred tax liability

 

 

131,907

 

 

 

318,054

 

Unsecured convertible debentures

 

 

-

 

 

 

1,825,389

 

Long-term operating lease liabilities

 

 

2,423,123

 

 

 

119,779

 

Funding obligation

 

 

868,169

 

 

 

776,884

 

Long-term debt

 

 

2,698,515

 

 

 

2,743,504

 

Total liabilities

 

 

94,175,621

 

 

 

19,129,738

 

Stockholders’ equity (deficit)

 

 

 

 

 

 

Common stock - $0.001 par value; 1,000,000,000 shares authorized, 281,200,905 shares issued and outstanding at September 30, 2021, and $Nil par value; unlimited shares authorized, 154,163,975 shares issued and outstanding at December 31, 2020

 

 

259,384

 

 

 

132,347

 

Additional paid-in capital

 

 

459,129,666

 

 

 

29,021,974

 

Accumulated other comprehensive income (loss)

 

 

7,970

 

 

 

(654,880

)

Accumulated deficit

 

 

(98,863,913

)

 

 

(37,396,843

)

Total stockholders’ equity (deficit)

 

 

360,533,107

 

 

 

(8,897,402

)

Total liabilities and stockholders’ equity (deficit)

 

$

454,708,728

 

 

$

10,232,336

 

Commitments and contingencies (note 21)

Subsequent events (note 22)

The accompanying notes are an integral part of these condensed consolidated interim financial statements

3


 

META MATERIALS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

 

 

 

Three months ended
September 30,

 

 

Nine months ended
September 30,

 

 

 

2021

 

 

2020

 

 

 (Recast - note 11) 2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

 

297,431

 

 

 

982

 

 

 

321,431

 

 

 

2,904

 

Development revenue

 

 

275,181

 

 

 

197,193

 

 

 

1,471,804

 

 

 

845,954

 

Total Revenue

 

 

572,612

 

 

 

198,175

 

 

 

1,793,235

 

 

 

848,858

 

Cost of goods sold

 

 

145,103

 

 

 

935

 

 

 

146,209

 

 

 

3,095

 

Gross Profit

 

 

427,509

 

 

 

197,240

 

 

 

1,647,026

 

 

 

845,763

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling & Marketing

 

 

427,004

 

 

 

196,276

 

 

 

1,122,469

 

 

 

520,804

 

General & Administrative

 

 

9,776,850

 

 

 

1,463,255

 

 

 

16,217,012

 

 

 

4,620,907

 

Research & Development

 

 

1,816,547

 

 

 

1,043,915

 

 

 

5,229,456

 

 

 

2,936,516

 

Total operating expenses

 

 

12,020,401

 

 

 

2,703,446

 

 

 

22,568,937

 

 

 

8,078,227

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(215,116

)

 

 

(376,776

)

 

 

(1,093,833

)

 

 

(893,001

)

(Loss) Gain on foreign exchange, net

 

 

(440,157

)

 

 

(175,514

)

 

 

(770,542

)

 

 

81,159

 

(Loss) Gain on financial instruments, net

 

 

 

 

 

(118,455

)

 

 

(40,540,091

)

 

 

1,167,310

 

Other income, net

 

 

739,260

 

 

 

562,443

 

 

 

1,673,124

 

 

 

974,112

 

Total other income (expense)

 

 

83,987

 

 

 

(108,302

)

 

 

(40,731,342

)

 

 

1,329,580

 

Loss before income taxes

 

 

(11,508,905

)

 

 

(2,614,508

)

 

 

(61,653,253

)

 

 

(5,902,884

)

Income tax recovery

 

 

83,657

 

 

 

33,304

 

 

 

186,183

 

 

 

87,651

 

Net loss

 

 

(11,425,248

)

 

 

(2,581,204

)

 

 

(61,467,070

)

 

 

(5,815,233

)

Other Comprehensive Income (Loss) net of tax

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

 

(125,976

)

 

 

167,941

 

 

 

(17,328

)

 

 

8,693

 

Fair value gain (loss) on changes of own credit risk

 

 

 

 

 

(223,221

)

 

 

680,178

 

 

 

(588,429

)

Total Other Comprehensive Income (Loss)

 

 

(125,976

)

 

 

(55,280

)

 

 

662,850

 

 

 

(579,736

)

Comprehensive loss

 

 

(11,551,224

)

 

 

(2,636,484

)

 

 

(60,804,220

)

 

 

(6,394,969

)

Basic and diluted loss per share (1)

 

 

(0.04

)

 

 

(0.02

)

 

 

(0.28

)

 

 

(0.04

)

Weighted average number of shares outstanding - basic and
   diluted
(1)

 

 

280,080,786

 

 

 

155,913,202

 

 

 

216,135,190

 

 

 

131,557,607

 

(1)
Retroactively restated for the three and nine months ended September 30, 2021 and 2020 for the Torchlight RTO (“Reverse Acquisition”) and CPM RTO (“Reverse Recapitalization”) as described in Note 3

The accompanying notes are an integral part of these condensed consolidated interim financial statements

4


 

META MATERIALS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (loss)

 

 

Deficit

 

 

Equity

 

Balance, July 1, 2021 (Recast - note 11)

 

 

 

 

 

 

 

 

279,782,854

 

 

 

257,966

 

 

 

454,961,102

 

 

 

133,946

 

 

 

(87,438,665

)

 

 

367,914,349

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,425,248

)

 

 

(11,425,248

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(125,976

)

 

 

 

 

 

(125,976

)

Exercise of stock options

 

 

 

 

 

 

 

 

1,226,375

 

 

 

1,226

 

 

 

335,271

 

 

 

 

 

 

 

 

 

336,497

 

Exercise of warrants

 

 

 

 

 

 

 

 

43,308

 

 

 

43

 

 

 

(43

)

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

148,368

 

 

 

149

 

 

 

3,833,336

 

 

 

 

 

 

 

 

 

3,833,485

 

Balance, September 30, 2021

 

 

 

 

 

 

 

 

281,200,905

 

 

 

259,384

 

 

 

459,129,666

 

 

 

7,970

 

 

 

(98,863,913

)

 

 

360,533,107

 

Balance, July 1, 2020

 

 

 

 

 

 

 

 

154,236,692

 

 

 

132,420

 

 

 

28,262,051

 

 

 

(588,335

)

 

 

(29,019,613

)

 

 

(1,213,477

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,581,204

)

 

 

(2,581,204

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55,280

)

 

 

 

 

 

(55,280

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

406,345

 

 

 

 

 

 

 

 

 

406,345

 

Balance September 30, 2020

 

 

 

 

 

 

 

 

154,236,692

 

 

 

132,420

 

 

 

28,668,396

 

 

 

(643,615

)

 

 

(31,600,817

)

 

 

(3,443,616

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (loss)

 

 

Deficit

 

 

Equity

 

Balance, January 1, 2021

 

 

 

 

 

 

 

 

154,163,975

 

 

 

132,347

 

 

 

29,021,974

 

 

 

(654,880

)

 

 

(37,396,843

)

 

 

(8,897,402

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(61,467,070

)

 

 

(61,467,070

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

662,850

 

 

 

 

 

 

662,850

 

Conversion of promissory notes

 

 

 

 

 

 

 

 

20,391,239

 

 

 

20,391

 

 

 

23,635,974

 

 

 

 

 

 

 

 

 

23,656,365

 

Conversion of secured debentures

 

 

 

 

 

 

 

 

14,155,831

 

 

 

14,156

 

 

 

22,104,626

 

 

 

 

 

 

 

 

 

22,118,782

 

Conversion of unsecured debentures

 

 

 

 

 

 

 

 

5,105,338

 

 

 

5,105

 

 

 

5,764,370

 

 

 

 

 

 

 

 

 

5,769,475

 

Conversion of long-term debt

 

 

 

 

 

 

 

 

124,716

 

 

 

125

 

 

 

221,718

 

 

 

 

 

 

 

 

 

221,843

 

Conversion of payable to related party

 

 

 

 

 

 

 

 

150,522

 

 

 

151

 

 

 

225,835

 

 

 

 

 

 

 

 

 

225,986

 

Exercise of stock options

 

 

 

 

 

 

 

 

1,640,294

 

 

 

1,640

 

 

 

448,012

 

 

 

 

 

 

 

 

 

449,652

 

Exercise of warrants

 

 

 

 

 

 

 

 

282,114

 

 

 

282

 

 

 

93,712

 

 

 

 

 

 

 

 

 

93,994

 

Exercise of broker warrants

 

 

 

 

 

 

 

 

61,331

 

 

 

61

 

 

 

16,194

 

 

 

 

 

 

 

 

 

16,255

 

Effect of reverse acquisition

 

 

 

 

 

 

 

 

82,813,994

 

 

 

82,814

 

 

 

369,548,188

 

 

 

 

 

 

 

 

 

369,631,002

 

Shares issued in lieu of operating lease liability

 

 

 

 

 

 

 

 

1,832,989

 

 

 

1,833

 

 

 

2,780,135

 

 

 

 

 

 

 

 

 

2,781,968

 

Stock-based compensation

 

 

 

 

 

 

 

 

478,562

 

 

 

479

 

 

 

5,268,928

 

 

 

 

 

 

 

 

 

5,269,407

 

Balance, September 30, 2021

 

 

 

 

 

 

 

 

281,200,905

 

 

 

259,384

 

 

 

459,129,666

 

 

 

7,970

 

 

 

(98,863,913

)

 

 

360,533,107

 

Balance, January 1, 2020

 

 

58,153,368

 

 

 

58,153

 

 

 

53,297,568

 

 

 

31,480

 

 

 

19,896,611

 

 

 

(63,879

)

 

 

(25,785,584

)

 

 

(5,863,219

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,815,233

)

 

 

(5,815,233

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(579,736

)

 

 

 

 

 

(579,736

)

Issuance of common stock, net

 

 

 

 

 

 

 

 

2,613,321

 

 

 

2,613

 

 

 

429,795

 

 

 

 

 

 

 

 

 

432,408

 

Issuance of warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

149,994

 

 

 

 

 

 

 

 

 

149,994

 

Issuance of broker warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,144

 

 

 

 

 

 

 

 

 

16,144

 

Conversion of deferred share units

 

 

 

 

 

 

 

 

522,596

 

 

 

523

 

 

 

(523

)

 

 

 

 

 

 

 

 

 

Conversion of promissory notes

 

 

 

 

 

 

 

 

17,752,163

 

 

 

17,752

 

 

 

3,921,695

 

 

 

 

 

 

 

 

 

3,939,447

 

Conversion of preferred stock

 

 

(58,153,368

)

 

 

(58,153

)

 

 

58,153,368

 

 

 

58,153

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of reverse recapitalization

 

 

 

 

 

 

 

 

21,599,223

 

 

 

21,599

 

 

 

3,089,235

 

 

 

 

 

 

 

 

 

3,110,834

 

Stock-based compensation