Meta is from the Greek, meaning to “go beyond.”
$Meta Materials Inc.(MMAT)$is a developer of high-performance functional materials and nanocomposites. The Company has generated a portfolio of intellectual property and is now moving toward commercializing products at a performance and price point combination that has the potential to be disruptive in multiple market verticals.
The Company’s platform technology includes holography, lithography, and medical wireless sensing. The underlying approach that powers the Company’s platform technologies comprises advanced materials, metamaterials and functional surfaces. These materials include structures that are patterned in ways that manipulate light, heat, and electromagnetic waves in unusual ways. The Company’s advanced structural design technologies and scalable manufacturing methods provide a path to broad commercial opportunities in aerospace and defense, automotive, energy, healthcare, consumer electronics, and data transmission.
MMAT currently has a total of 163 patents In the U.S., it has 37 issued patents and 26 pending applications, and in 24 other countries around the world, it has 126 issued patents and 80 pending applications.
Technologies:
The principal products that employ holography technology are its metaAIR laser glare protection eyewear. In holography technology, MMAT has developed holographic optical elements (HOE) which are a core component in the display of augmented reality smart glasses products, as well as (in their larger version) in Heads-Up Displays, in automobiles and aircraft.
The company’s current principal prototype product in lithography technology is its transparent conductive film, NANOWEB which currently has six applications that are currently in early stages of development. The company has recently installed its first roll-to-roll, NANOWEB pilot scale production line.
The six applications of NANOWEB include:
- Transparent EMI Shielding
- Transparent Antennas
- 5G signal enhancement
- Touch Screen Sensors
- Solar cells
- Transparent Heating to de-ice and de-fog
MMAT’s Wireless Sensing platform enabling non-invasive and safe medical diagnostics. For example, glucoWISE is a completely non-invasive glucose measurement device and metaSURFACE is improving the signal to noise ratio in MRI scans. MMAT is also researching the use of its Radio Wave Imaging technology in breast cancer and stroke diagnosis.
These are the introduction of the company found on its website or its annual report. These sound very great from technological point of view. However, it is a different story from an investing point of view.
Business model:
MMAT operates under a Business-to-Business model. The company’s customers are OEM providers in multiple industries including aerospace, automotive, consumer electronics, communications, energy, banknote and brand security, and medical devices.
Its revenue comes from two sources: Product sales and Development revenue (90% of 2021 total revenue). Product sales include products, components, and samples sold to various customers. Development revenue is comprised of revenue from contract services and other development revenue, which is recognized when it satisfies performance obligations under the terms of its contracts, and control of its products is transferred to its customers.
On 2021, Development revenue (3.67mil) makes up 90% of total revenue. Of 3.67mil Development revenue, 1.7 mil revenue was from Nanotech, a new acquisition in October 2021.
RISK:
- The company has many product concepts currently in various stages of development. Lithography related products have not yet reached required manufacturing maturity.
- The company product may not well accepted by industries as expected. Since the launch of metaAIR in March 2019, the Company has sold fifty units to its distributor Satair. Aviation industry was badly affected by COVID outbreak.
- For the year ended December 31, 2021, the Company had 3 customers that accounted for 81% of total revenue.
- The Company purchases its holographic raw materials from a tier 1 German manufacturer, which is a single source supplier.
- The Company operates in a rapidly evolving industry subject to significant technological change and new product introductions and enhancements. Research and development expenses is about 23% of total operating expenses in 2021.
Non-core business - Oil and Gas assets
Total operating expenses in 2021 was more than double from 2020, due to 5.0 mil increase in legal and audit expenses (primarily resulting from costs associated with the Torchlight reverse acquisition and Nanotech acquisition, as well as costs associated with listing on the NASDAQ), And 4.1 mil of expenses relating to the management of, and maintenance of the Oil and Gas assets acquired via the Torchlight RTO.
The 13mil decrease in net other income in 2021, compared to 2020, is primarily due to costs incurred in relation to certain drilling activity carried out by the company at its Oil and Gas properties.
Oil price was improving in 2021, yet during the year ended December 31, 2021, there was no oil or gas production. With MMAT continues to actively explore the sale of the assets or spinout, the operating expense should be able to reduce. Before that happens, the company may become responsible for the decommissioning costs associated with abandoning and reclaiming of these facilities.
Conclusion:
MMAT’s technologies and products are very interesting and advanced, however, most of them are still in developing stage. And the company will continue to incur additional construction and equipment costs through 2022. It must prove itself that it is able to generate more revenue. Its P/S ratio is 86x at $1.50, is obviously overvalued.
Comments
Overvalued?