Shares of Meta Materials (NASDAQ:MMAT) are falling lower after the company reported its earnings and announced that its largest shareholder, Chairman Gregory McCabe, had purchased Next Bridge Hydrocarbon’s debt to Meta. Under a loan sale agreement, McCabe acquired the 8% secured promissory note issued by Next Bridge to Meta and “certain loans” made to Next Bridge from Meta. In addition, Meta transferred its lien on 25% of the Orogrande Prospect to McCabe.
“The Company’s management team has been working hard to find financing solutions for the short-term and long-term capital needs of Next Bridge,” said McCabe. “I was pleased to be able to purchase the debt of Next Bridge from Meta Materials. I believe in this management team and the long-term upside in the Company and its assets.”
MMAT Stock: Chairman Gregory McCabe Acquires Next Bridge’s Debt to Meta
Meanwhile, shares of MMAT stock have slid lower by about 10% this week. This is largely due to the company’s second-quarter earnings. During the quarter, revenue tallied in at $2.03 million, down by a significant 38.9% year-over-year (YOY).
Both product sales and development revenue experienced major drops. Product sales was just $22,907 compared to $334,113 a year ago. Meanwhile, development revenue was $2 million compared to $2.98 million. Even worse, cost of sales actually increased to $758,618 from $701,283, despite the nearly 40% drop in revenue. That was accompanied by a gross profit of $1.25 million, almost half of last year’s $2.44 million.
The company’s expenses were highlighted by a goodwill impairment of $282.17 million. This resulted in total operating expenses of $295.94 million compared to $22.08 million during the prior year quarter. Meta explained that the massive impairment was due to a “sustained decline in our market capitalization. Based on a quantitative interim goodwill impairment test, we concluded that the carrying value of the reporting unit was higher than its estimated fair value, which was determined using the market valuation method.” MMAT is down by more than 75% in 2023.
The impairment contributed to a net loss of $293.65 million net loss and a basic and diluted loss per share of 65 cents. The company made no mention of its naked short selling investigation in its earnings, which kicked off in late June.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Eddie Pan did not hold (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.
