Nova Scotia-based nanotech company Meta Materials Inc. (MMAT:NASDAQ; MMAX:CSE; MMAT:FSE) reported a major revenue increase in the third quarter, just as it signed an agreement to help reduce the cost and weight of batteries for electric vehicles (EVs), extend their range, and improve their safety.
Analyst MacMurray Whale of Cormark Securities maintained a Buy rating on the stock.
Total revenue grew YOY in Q3 by 329% to US$2.5 million and 388% to US$8.8 million over the first nine months versus the same period in 2021.
Analyst MacMurray Whale of Cormark Securities wrote in an updated note on Friday that the revenue increase was less than the US$3.4 million Cormark had predicted. However, he maintained a Buy rating on the stock, lowering the target to US$3.50 from US$5.
“We had expected indications of a more rapid ramp in volumes than we previously modeled but recognize the difficulty to model given the rapid changes in the EV space,” Whale wrote. “With the cash balance having declined to (US$31 million), the current quarterly spend gives a shorter runway than we had expected exiting the year.”
The company’s Q3 net loss increased to US$24.5 million, or 7 cents per share, on 362.2 million weighted average shares, compared to US$11.4 million, or 4 cents per share, on 280 million weighted average shares in Q3 2021.
But operating expenses also doubled YOY to US$23.9 million following several important acquisitions, the analyst pointed out.
“MMAT has many early-stage projects across a number of different verticals, most of which have not entered into commercial-scale production,” Whale stated.
The Catalyst
The largest part of the revenue increase was US$1.9 million from a deal with a confidential G10 central bank customer to develop anti-counterfeiting measures for currency, Whale said.
It’s part of an agreement with the bank for a maximum of US$41.5 million in development work over up to five years.
Metamaterials were first developed in the 1960s but only came into their own in the 2000s, when design and manufacturing capabilities caught up to the technology. The company is using them to develop nanotechnology products like self-deicing and defogging car and truck headlights and windows, see-through antennas, augmented reality glasses that look like regular glasses, and special eyewear that protects pilots’ eyes from laser strikes.
META is applying its futuristic technology to the communications, health and wellness, aerospace, automotive, and clean energy sectors.
The company has 472 active patent documents, of which 292 patents have been granted across all its technologies.
Big Strides in EV Battery Tech
Earlier this month, META announced it had entered a memo of understanding with DuPont Teijin Films and Mitsubishi Electric Europe to use Meta’s PLASMAfusion to scale a high-volume manufacturing system for film-based, coated copper current collectors.
The process reduces the amount of the red metal needed for EV batteries at a time when an upcoming copper shortage is threatening the transition to green energy, the company said.
“There has to be a better way,” META President, Chief Executive Officer, and founder George Palikaras said. “What we're proposing here, and that's part of the disruption, is that we have not only invented a way to make current collectors more efficient by reducing the copper content, but we have made an actual machine which we call PLASMAfusion.”
The agreement is focused on developing battery materials, such as coated copper current collectors and solid-state battery electrodes, META said. It will start with a pilot program and evolve into an industrial-scale mass production line.
META will provide the PLASMAfusion technology, DuPont Teijin Films will develop and supply polyester substrates, and Mitsubishi Electric Europe will contribute automation technology, expertise, and interface with machine builders.
“What's very important here (is that) PLASMAfusion is very versatile,” Palikaras said. “It's a platform technology with which we expect to increase productivity not only for batteries but also for nanoweb and other applications.”
Security Tech Set to Launch
The award from the G10 bank is part of an ongoing contract; META could not identify the bank for security reasons. But the company did say it was to work on the currency.
In addition to the US$4.3 million just announced, the bank already awarded the company a total of US$9.2 million.
The company said it is currently testing its anti-counterfeiting technology KolourOptik® Stripe and expects to launch it as early as the first quarter of 2023.
A blog on META’s site describes some of the security measures available through the technology, including images with omnidirectional movement, 3D depth, or holographic security patterns.
Those effects are “the exact visual triggers that millions of years of evolution have optimized human visual receptors to detect and respond to,” the company said. “Our toolkit of innovative nano-optic based visual effects to combat counterfeiting is available to brands and designers that are looking to build . . . extremely secure, custom solutions that (work) well with their brand.”
META also offers the technology for use on documents, smart packaging, and gift cards. The technology can also help prevent loss of life due to counterfeit medication.
Ownership, Coverage, and Share Structure
META had cash and cash equivalents of US$32.2 million in the third quarter and a burn rate of about US$6.5 million per month.
Major shareholders include Thomas Gordon Welch, with 6.64% or 24 million shares; Anne Barber Lambert, with 6.39% or 23.14 million shares; Lamda Guard Technologies Ltd., with 6.35% or 22.98 million shares; and State Street Global Advisors, with 3.54% or 12.82 million shares, according to Reuters. About 14% of META is held institutionally held.
The stock is covered by numerous analysts, including SingularResearch's Christopher J. Sakai, ROTH Capital Partners' Gerry Sweeney, as well as Cormark Securities' MacMurray Whale, and newsletter writer Clive Maund of Clivemaund.com. Click "See More Live Data" in the data box above to review more.
The company has a market cap of $473.6 million with 361.9 million shares outstanding, 267 million of them free-floating. It trades in a 52-week range of US$5.42 and US$0.63.
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