$150,000 Non-Cash Adjustment to Fair Value of Unsecured Convertible Debentures
HALIFAX, NS, Jan. 8, 2021 /CNW/ – Metamaterial Inc. (“Company” or “META”) (CSE: MMAT) a developer of high-performance functional materials and nanocomposites, today announced restated third quarter 2020 results. Subsequent to the issuance of the previously reported financial statements for the three and nine months ended September 30, 2020 and 2019 (filed on SEDAR on November 30, 2020), management determined that the fair value of unsecured convertible debentures was overstated by $150,000 as at September 30, 2020. The difference has been recorded as unrealized gain on FVTPL liabilities in the unaudited restated interim financial statements. There was no impact on the comparative figures.
The restated interim financial statements and the associated management discussion and analysis for the quarter and nine months ended September 30, 2020 are available on the Investors section of our website as well as under the Company’s profile on SEDAR at www.sedar.com.
| Metamaterial Inc. (formerly Continental Precious Minerals Inc.) | ||
| Amended and restated Interim condensed consolidated statements of financial position (unaudited) | ||
| [expressed in Canadian dollars] | ||
| As at | (As restated) | |
| September 30, 2020 | December 31, 2019 | |
| $ | $ | |
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | 3,208,911 | 528,691 |
| Grants receivable | 487,771 | 242,705 |
| Other receivables | 76,071 | 79,072 |
| Inventory | 615,225 | 438,726 |
| Prepaid expenses | 461,071 | 365,602 |
| HST receivable | 97,932 | 262,512 |
| Right-of-use assets | 6,708 | 66,951 |
| Total current assets | 4,953,689 | 1,984,259 |
| Intangible assets, net | 5,796,302 | 6,404,812 |
| Property and equipment, net | 3,065,960 | 3,558,675 |
| Total non-current assets | 8,862,262 | 9,963,487 |
| Total assets | 13,815,951 | 11,947,746 |
| Liabilities and shareholders’ deficiency | ||
| Current liabilities | ||
| Trade payables | 1,706,788 | 3,176,642 |
| Due to related parties | 333,182 | 345,033 |
| Current portion of long-term debt | 249,168 | 104,376 |
| Current portion of deferred revenue | 1,900,357 | 1,819,797 |
| Derivative liability | – | 1,175,056 |
| Promissory notes | – | 4,595,975 |
| Current portion of lease liabilities | 7,616 | 71,947 |
| Total current liabilities | 4,197,111 | 11,288,826 |
| Deferred revenue | 2,527,044 | 3,089,921 |
| Deferred government assistance | 232,207 | 369,221 |
| Deferred tax liability | 512,461 | 658,481 |
| Unsecured convertible debentures | 1,344,958 | 760,145 |
| Unsecured convertible promissory note | 657,448 | – |
| Secured convertible debentures | 4,891,844 | – |
| Funding obligation | 904,215 | 808,298 |
| Long-term debt | 3,107,099 | 3,139,301 |
| Total non-current liabilities | 14,177,276 | 8,825,367 |
| Total liabilities | 18,374,387 | 20,114,193 |
| Shareholders’ deficiency | ||
| Common shares | 34,296,403 | 7,598,670 |
| Preferred shares | – | 12,748,100 |
| Contributed surplus | 5,290,939 | 3,753,211 |
| Warrants | 571,555 | 175,095 |
| Accumulated other comprehensive loss | -349,972 | -159,512 |
| Deficit | -44,367,361 | -32,282,011 |
| Total shareholders’ deficiency | -4,558,436 | -8,166,447 |
| Total liabilities and shareholders’ deficiency | 13,815,951 | 11,947,746 |
| Metamaterial Inc. (formerly Continental Precious Minerals Inc.) | ||||
| Amended and restated interim condensed consolidated statement of loss and comprehensive loss | ||||
| (unaudited) | ||||
| [expressed in Canadian dollars] | ||||
| Three months ended September 30 | Nine months ended September 30 | |||
| (As restated) | (As restated) | |||
| 2020 | 2019 | 2020 | 2019 | |
| $ | $ | $ | $ | |
| Product sales | – | 627 | 2,615 | 11,315 |
| Development revenue | 263,014 | 215,873 | 1,147,702 | 664,078 |
| Revenue, net | 263,014 | 216,500 | 1,150,317 | 675,393 |
| Cost of goods sold | 1,240 | 245 | 4,201 | 4,268 |
| Gross Profit | 261,774 | 216,255 | 1,146,116 | 671,125 |
| Expenses (income) | ||||
| Salaries and benefits | 487,491 | 719,602 | 2,601,077 | 2,203,035 |
| Depreciation and amortization | 786,736 | 838,360 | 2,508,636 | 2,312,811 |
| Travel and entertainment | 1,444 | 81,722 | 89,629 | 305,764 |
| Other expenses | 213,825 | 107,947 | 523,402 | 395,716 |
| Listing expenses | – | – | 3,370,249 | – |
| Stock exchange fees | 3,750 | – | 7,500 | – |
| Rent and utilities | 116,050 | 141,594 | 331,110 | 346,252 |
| Interest and bank charges | 350,815 | 141,339 | 785,228 | 336,207 |
| Consulting | 306,770 | 97,091 | 665,947 | 323,614 |
| Investor related expense | 42,752 | – | 111,579 | – |
| Research and development | 159,143 | 215,128 | 384,270 | 524,837 |
| Professional fees | 305,876 | 357,856 | 1,148,823 | 544,511 |
| Non-cash interest accretion | 151,466 | 121,416 | 435,594 | 152,306 |
| Share-based compensation expense | 538,806 | 676,460 | 1,492,637 | 1,319,362 |
| Unrealized (gain) loss on FVTPL liabilities | 453,054 | 145,977 | (655,194) | 381,998 |
| Technology license fees | – | 12,130 | 25,885 | 37,962 |
| Realized foreign currency exchange (gain) loss | 8,705 | (4,605) | 73,212 | 758 |
| Interest income | (1,827) | (236) | (8,448) | (726) |
| Unrealized foreign currency exchange (gain) loss | 235,865 | (95,741) | (214,181) | 267,155 |
| Government assistance | (147,069) | (45,671) | (297,539) | (767,280) |
| 4,013,652 | 3,510,369 | 13,379,416 | 8,684,282 | |
| Net loss before tax | (3,751,878) | (3,294,114) | (12,233,300) | (8,013,157) |
| Income tax recovery | 44,161 | 44,901 | 147,950 | 244,411 |
| Net loss for the period | (3,707,717) | (3,249,213) | (12,085,350) | (7,768,746) |
| Other comprehensive loss, net of income taxes | ||||
| Items that may be subsequently reclassified to income: | ||||
| Unrealized foreign currency translation adjustment | 243,637 | (165,863) | (190,460) | (104,149) |
| Comprehensive loss for the period | (3,464,080) | (3,415,076) | (12,275,810) | (7,872,895) |
| Basic and diluted loss per share | (0.04) | (0.33) | (0.14) | (0.80) |
| Weighted average number of shares outstanding | ||||
| – basic and diluted | 83,597,092 | 9,724,476 | 83,597,092 | 9,724,476 |
| Metamaterial Inc. (formerly Continental Precious Minerals Inc.) | ||
| Amended and restated interim condensed consolidated statement of cash flows (unaudited) | ||
| [expressed in Canadian dollars] | ||
| (As restated) | ||
| Nine months ended September 30 | 2020 | 2019 |
| $ | $ | |
| Operating activities | ||
| Net loss for the period | (12,085,350) | (7,768,746) |
| Add (deduct) items not affecting cash: | ||
| Government assistance | (154,582) | (767,280) |
| Deferred income tax recovery | (147,950) | (244,410) |
| Depreciation and amortization | 2,508,636 | 2,359,308 |
| Non-cash interest accretion | 435,594 | 152,306 |
| Unrealized foreign currency exchange (gain) loss | (340,771) | 267,155 |
| Interest expense | 392,936 | 186,813 |
| Share-based payment expense | – | 25,000 |
| Listing expenses | 3,370,249 | – |
| Unrealized (gain) loss on FVTPL liabilities | (655,194) | 381,998 |
| Change in deferred revenue | (482,317) | (669,533) |
| Share-based compensation expense | 1,578,114 | 1,319,362 |
| Net change in non-cash working capital items | (1,832,955) | 408,028 |
| Cash used in operating activities | (7,413,590) | (4,349,999) |
| Investing activities | ||
| Additions to intangible assets | (124,519) | (128,622) |
| Additions to property and equipment | (1,106,870) | (767,149) |
| Reverse takeover, net cash | 4,174,979 | – |
| Cash provided by (used in) investing activities | 2,943,590 | (895,771) |
| Financing activities | ||
| Proceeds from long-term debt | 50,784 | 1,129,860 |
| Repayment of long-term debt | (262,258) | (53,568) |
| Proceeds from unsecured convertible promissory notes | 666,950 | 3,185,760 |
| Proceeds from funding obligation | – | 325,000 |
| Proceeds from units, net | 814,270 | 470,083 |
| Proceeds from unsecured convertible debentures | 950,000 | – |
| Proceeds from secured convertible debentures | 5,000,000 | – |
| Payment of lease liabilities | (69,526) | (54,526) |
| Cash provided by financing activities | 7,150,220 | 5,002,609 |
| Net increase (decrease) in cash and cash equivalents | 2,680,220 | (243,161) |
| Cash and cash equivalents, beginning of the period | 528,691 | 850,623 |
| Cash and cash equivalents, end of the period | 3,208,911 | 607,462 |
| Supplemental cash flow information | ||
| Interest on debt paid | 252,987 | 15,609 |
About Metamaterial Inc.
META is changing the way we use, interact with, and benefit from light and other forms of energy. META designs and manufactures advanced materials and performance functional films which are engineered at the nanoscale to control light and other forms of energy. META is an award winning Global Cleantech 100 company with products that support sustainability by doing more with less; they encompass lightweight, sustainable raw materials and processes which consume less energy and offer more performance. META has a growing patent portfolio and is currently developing new materials with diverse applications in concert with companies in the automotive, aerospace, energy, consumer electronics and medical industries. META is headquartered in Halifax, Nova Scotia and has R&D and Sales offices in London, UK and Silicon Valley. For additional information on META, please visit www.metamaterial.com
The CSE has neither approved nor disapproved the contents of this news release.
Investor inquiries:
Mark Komonoski
Director Capital Markets and IR
Metamaterial Inc.
phone: 1-877-255-8483
[email protected]