On Aug. 5, Meta Materials announced an indirect acquisition of Nanotech Security for CAD 90.8 million.
Meta, whose technology platform delivers highly functional and sustainable materials, wants Nanotech for its authentication and brand protection solutions.
Nanotech has two main products. KolourOptik is a patent visual technology. Governments and the banknote market use its security features with an optical effect.
LiveOptik is a multi-color, 3D depth solution for providing customers with secure brand protection stripes.
Meta is buying Nanotech in an all-cash deal. It will also acquire Nanotech’s restricted share units. Once acquired, Meta will expand Nanotech’s facility in Quebec.
This will double the location’s production capacity to 15 million square meters in the next 1-2 years. Meta has a new 68,000 square foot facility in Nova Scotia that supports large OEM licensing opportunities.
At first, markets sent MMAT stock up by 11% in the morning that the company announced the deal. The positive response did not last and the stock continued its downtrend.
Ahead of Meta buying it, Nano posted revenue of $2.6 million. The gross margin fell to 76%, compared to 83% the year before. Nano faced additional labor and “other expenditures” needed to meet contract services deliverables.
Nano’s CEO, Troy Bullock, said that the expansion in manufacturing capabilities would help it meet potential opportunities ahead. The contract with a confidential G10 central bank should benefit Meta post-acquisition.
Nano’s product development in nano-optic products allows MMAT to expand its offering in the banknote and brand protection markets.
Reverse Split With Torchlight Energy
Reverse stock splits are rarely good for shareholders. It signals that the stock price action is too weak. So, the reverse split is a temporary solution.
On June 25, Torchlight Energy reverses its stock in a 1 for 2 ratio. It then combined its business with Meta Materials. At the time, MMAT stock benefited from social media chatter about its non-invasive glucose sensing system.
On July 6, Meta announced the conclusion of a 27-month long project, which had the objective of developing a “non-invasive glucose sensing prototype, which combined radio wave and optical sensors to improve accuracy in predicting glucose level changes.”
The company received USD 1.25 million from the non-departmental public body that the UK government funded.
MMAT developed a few prototypes. Diabetic patients would use a “Home Hub” to compliment various wearable elements overnight.
Using multiwavelength biosensing technology, the project demonstrated that it could improve the accuracy in predicting glucose level changes over standard sensors.
Themos Kallos, Co-Founder and Chief Science Officer of META, said “we have demonstrated that combining optical and radio wave sensors with data processing using artificial intelligence improves accuracy compared to standalone sensors.”
Meme Status and MMAT Stock
MMAT’s mention of the Internet of Things, artificial intelligence, and medical device are catchphrases that may have caught the internet’s attention. In June, MMAT shares soared to as high as $21.76 before crashing.
The stock fell to the 50-day moving average of $6.00 only to fall again. In the last week, shares found support at the 200-day simple moving average in the low $3.00 range.
Speculators who got caught up in the meme trading frenzy in June are unlikely to get their money back. The stock rose on positive one-time trading momentum.
Those who lost their money probably sold their stock at a loss and will invest elsewhere. Conversely, insiders took advantage of the stock’s rise. The three insider sales transactions would suggest that Meta shares traded at a premium in the last month.
Meta Materials has many shareholders sitting in big losses after the June spike. Chances are very low that the stock will trade that high again. By the end of the year, speculators who want to write off the loss will sell the stock.
Despite the limited upside potential, the Nanotech Security acquisition may help Meta grow. The firm will have a bigger factory to address higher demand. Customers may increase purchase orders since Meta offers more products.
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On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.