This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk02: Good morning, ladies and gentlemen, and welcome to the MetaMaterials, Inc. call to discuss Q4 and fiscal year 2021 results. My name is Mark Komonoski with Integris Communications, MetaMaterials, Inc., Meta's investor relation advisor, and I will be introducing management on today's call. The presentation is being recorded today, March 2nd, 2022, and a replay will be available by the link provided in Meta's press release announcing the webcast and on the IR calendar in the investor section of the Meta website. Joining me on today's call are George Palacaris, Meta's founding president and CEO, Ken Rice, Meta's COO and CFO, and Jonathan Waldron, Meta's chief technology officer. On today's call, we will start with George Palakaris providing some color on three transformative acquisitions which closed in 2021, an overview of Meta's intellectual property and human capital, and some operational updates regarding Meta's expanding global facilities. John and Flynn Waldron will then describe a major milestone in Meta's manufacturing scale-up, the first pilot-scale, roll-to-roll production line of NanoWeb. at the company's Pleasanton, California facility. Provide some color on Meta's presence at the two major trade shows in January, the CSE and the Photonics West. Ken Rice will then cover the development roadmap for GlucoseWise, Meta's non-invasive glucose monitoring technology and summarize the Q4 and fiscal 2021 financial results. Following management's prepared remarks, we will then take questions from analysts and respond to some of the questions which you submitted via the Say Technologies platform prior to this call. Before we begin, I would like to remind you that today's presentation may include forward-looking information or statements within the meaning of the Canadian Securities Law and within the meaning of Section 27A of the Securities Act of 1933 as amended, Section 21E of the Securities Exchange Act of 1934 as amended, and the Provident Securities Litigation Reform Act of 1995 regarding the company and its business, including statements with respect to the business strategies, product development, expansion plans, and operational activities of the company, and the benefits of the company of further investment in product development and manufacturing capacity. We caution you to not put undue reliance on these forward-looking statements as they involve risk and uncertainties that they can cause actual results to differ materially from those anticipated by these statements, as described in our risk factors in our reported file with the SEC. Any forward-looking statements made on this call reflect our analysis as of today only, and we have no plans or duty to update them except by required law. Yesterday, we described or distributed a press release detailing the announcement of Q4 and fiscal year 2021 results which include a link to the 2021 annual report and letter to shareholders which we encourage you to review and and we have the meta files the 10k for the fiscal 2021 year as well for your convenience a copy of the press release is available on our website and a replay of today's webcast regarding this announcement will be available following the presentation in the investor relations section of our website. Unless otherwise stated, all dollar amounts referred to today are in US dollars. I would now like to pass the call to George Palacaris, Metis founding president and CEO. George.
spk03: Thank you very much, Mark. Good morning, ladies and gentlemen. I'm delighted to share with you our first annual report. and since we became the first Nasdaq-listed metamaterials company. When I founded Meta in 2011, I had the vision for how a new class of materials called metamaterials might be used to improve human life. Now, we are pioneering the production of metamaterials at commercial scales. We are poised to bring nanostructured intelligence to surfaces, enabling applications that go beyond what was previously possible, delivering sustainable performance across a wide range of applications and end markets. In 2021, our company was transformed. three acquisitions and significant capital raising. We have used that to expand our capabilities, intellectual property facilities, as well as the size of our multinational team of subject matter experts. On June 28th of last year, 2021, we completed the reverse takeover of Torchlight Energy Resources, becoming a NASDAQ listed company approximately 15 months after we first began trading on the Canadian Securities Exchange in March 2020. The Torchlight transaction was a long process. It started in September of 2020, ultimately bringing significant benefits to our company. Now I will review some of the important points. Number one. Prior to completing the transaction, Torchlight and Meta converted nearly all outstanding debt to equity. Today, we have no debt, except for $3.2 million in various interest-free loans from the Atlantic Canadian Opportunities Agency. It's a federal agency from the government of Canada. So very friendly. Number two, the RTO, the reverse takeover, generated $147 million in cash. Number three, more than $100 million remains available under an existing ATM at the market equity program. Number four, Torchlight shareholders on the record date immediately preceding the transaction received a special dividend of series A preferred shares. Number six, Shareholders of Metamaterial Inc, the Canadian listed company on the CSE, had the option to exchange their shares for MMAT, i.e. the NASDAQ listed shares, or MMAX, the wholly owned subsidiary that's still listed on the CSE. In addition, on December 31st, 2021, there were 88.3 million MM8X shares included in the total of 284,500,000 shares issued and outstanding. During 2021, we took steps to preserve the value of the oil and gas assets in preparation for disposition. This included drilling four wells in Q4 in order to maintain compliance with the oil and gas leases. In February 2021, and as you can see here in this slide, we acquired the assets and IP of a Swiss lens manufacturer called Interglas. forming the foundation of our AR Fusion platform technology for smart augmented reality eyewear with prescription lenses. To be successful, we believe any augmented reality eyewear solution must deliver two things. Number one, a thin, lightweight display with a wide field of view that is comfortable and fashionable so you don't look like a robot. And number two, an integrated prescription lens, which more than half the adult population requires. We believe that Meta is one of the very few companies who can deliver both of these in a one-stop-shop solution for AR eyewear OEMs. As you know, we have partnered with Covestro in support of our holographic materials that helped us enable a new range of solutions. The AR fusion process is highly sustainable using less energy, no water and less material than conventional, less cancelling and grinding. We're able to embed a number of smart technologies into the cast prescription lens, including optical combiners, wave guides, eye tracking sensors and active layers based on our NanoWeb transparent conductive film. For example, an antenna that is made out of NanoWeb could be included in the lens. Next slide, please. On October 5th, 2021, we closed the acquisition of Nanotech Security Corporation. Nanotech is a developer and manufacturer of secure and memorable nano optic security features used for anti-counterfeiting for banknotes, government documents, and to provide protection for brands. Nanotech contributed to our Q4 results, as Ken will detail later in his presentation. On the top right of the slide, you can see an image of our color optic stripe, a new technology which we previewed at the Banknote and Currency Conference in Washington, D.C. a few days ago. Color optic is a patented visual technology that is exclusive to the government and banknote markets, and it combines sub-wavelength nanostructures and microstructures, also known as metamaterials, to create modern, overt security features with a unique and customizable optical effect. When introduced, color optic stripe will be the latest in a line of plasmonic technology products following the M2 and color depth and is expected to be one of the highest volume applications in the history of optical metamaterials. We invested $66.1 million in the nanotech acquisition, net of capacity acquired to accelerate and de-risk our own manufacturing scale-up. We added an approximately 8,000 square foot facility in R&D in Burnaby, Vancouver, British Columbia, and a 105,000 square foot production facility in Thurso, Quebec on 11 acres of land. We gained access to e-beam lithography and nano-imprint roll-to-roll lithography equipment, UV casting, roll-to-roll coating equipment, and a team with decades of roll-to-roll production experience with nanostructures. Just before the acquisition closed, Nanotech renewed its frame agreement with a confidential G10 central bank for up to $41.5 million in development over a period of five years. I will come over to some of the details of our plans for expansion of Nanotech later in this presentation. Next slide, please. Meta has come a long way since filing its first patent application, 2011. As you know, In September 2021, we added a highly experienced chief intellectual property officer, Dr. Kerner, to the executive team. Today, we own a large and rapidly growing portfolio of 269 active utility and design patent documents, of which 163 patents have already been issued. In the United States, we have 37 issued patents and 26 pending applications. And in 24 other countries around the world, we have 126 issued patents and 80 pending applications. Our IP portfolio is intended to enhance and protect our competitive and leadership position as we pioneer metal materials production at scale. At the top level, Meta has 263 active utility patent documents, of which 163 have been issued, and we have additional design patent applications, roughly six. A utility pattern is directed to the composition of matter, article of manufacture, and methods of making and using the same, while a design pattern is directed to the ornamental, let's say, non-functioning characteristics of a composition or article of manufacture. Meta's utility patterns are in basically 74 different pattern families, of which 47 include at least one issued pattern. A patent family is a collection of patents and patent applications covering the same or similar technical content. The documents in a patent family are related to each other by priority claims. The number of different patent families relative to the total number of patent documents is one measure of the breadth of content covered. Since 2020, Meta has added 46 patent families. Since the last quarter report in Q3, seven patents have been issued and 19 new applications were filed in the US, Canada, Europe, China, and Hong Kong. Amongst these new filed applications, three are directed to designs, 11 to devices and components, one in fabrication origination, and four are directed to scale manufacturing. Now, very important to highlight the human capital. Our people are a key strength of Meta, and I feel very fortunate to lead such a talented and diverse multidisciplinary and multinational team. As a company, we have 37 spoken languages. As a team, we all speak the same language to develop and deliver functionality driven by curiosity and guided by sustainability to improve the world as we execute. As of February 28, we have 135 employees, approximately 90% of whom are located in Canada and the United States. We have 48 people in research and development, 28 employees involved in operations, manufacturing, service, and quality assurance, and 54 employees are involved in sales and marketing, finance, IT, general management, and other admin functions. So in this slide, there's a couple of floor plans. What's important to state here is that we have already outgrown our current headquarters facility at one research drive, which was about 8,800 square feet. While renovations at our new 68,000 square foot state-of-the-art facility in Highfield Park are being completed, some of our finance and administration teams are temporary offices provided by our landlord at another location. And I'm very much looking forward to moving everyone in a single location, which is custom designed for our purposes, which you see depicted here. The lower level includes 11 clean rooms, labs, and the 15,000 square foot customer center for demonstrations, which has the clean room number 12, training and technology transfer. On the upper level, we have plenty of offices, conference rooms, and common areas to accommodate our current team and plans for future growth. Now, as I mentioned before, the Nanotech acquisition added 105,000 square foot of production facility. This is a company-owned building on 11 acres of land in Thurso, Quebec. About 35,000 square feet are currently occupied by this secure production facility with a balance configured as a warehouse space. The nanotech facility has capacity to produce about 7.5 million square meters of nano optic security films per year. We plan to double that to about 15 million meters square per year. We have begun renovations to add about 15,000 square feet of production space, which will also provide room for future capacity expansion as we scale up nanoweb roll-to-roll equipment from 300 millimeters to 500 millimeters wide substrates. In November, 2021, we signed a 10 year lease on about 15 and a half thousand square feet of space in Athens, Greece for a new European R&D and sales head office facility. It is a multi-level building which we will accommodate labs, offices, demonstration and conference areas as you see illustrated here. We are in the planning process for innovations, and we secured a nine-month rent-free period while the work is underway. Locating an operation in Athens provides us access to European and Greek government support programs. It broadens our talent pool at competitive costs. And very importantly, Athens is also one of five European platform cities for showcasing the 5G network innovations. I will now pass the call to Jonathan Waldron, our Chief Technology Officer.
spk05: Great. Well, good morning, everybody. It's a pleasure to be with you today. In Pleasanton, California, we've expanded operations by nearly four times to 19,500 square feet. We've recently reached an important milestone. That's installing a first-of-its-kind roll-to-roll line to produce nanoweb transparent conductive film. Scaling up Meta's proprietary moling mask lithography, that's RML process from wafer scale substrates we were previously to a 300 millimeter wide web fed system enables much higher volume, greatly reduces cost per square meter and supports large area applications for a wide range of end markets. The nanoweb line comprises six process steps, which are illustrated here. The first is loading, and here our substrate is prerecorded with photoresist and loaded onto a spool. The second is exposure. Now a pattern is transferred into the photoresist via RML, rolling mass lithography. Step three, baking, stabilizes the printed design in the photoresist. And the development of step four creates 3D structures in the photoresist. Metallization fills the 3D pattern creating continuous metal mesh and finally lift off, which removes residual metal and photoresist. All the equipment passed factory acceptance tests prior to the delivery and installation. And the line is now in the process of being optimized. Now let's look at some photos of the equipment. The next slide. In the photos on the top row of the slide, you can see the RML machine. In the center image, you can see where the UV lamp inside the rolling, rotating RML mask transfers the pattern into the photoresist. The pictures on the bottom row show the baking and development stages of the line. We're developing a number of nanoweb applications which should be enabled by higher volume roll-to-roll production capability, including 5G reflective films, de-icing and de-fogging for automotive windshields, highlights and headlights and sensors, and EMI shielding for LIDAR sensors and transparent microwave oven doors. From this pilot line system, we intend to next scale web width to 500 millimeters, and then ultimately to reach one meter or more, further driving down costs and enlarging our addressable markets. On the top left of this slide, you can see the metalization machine. Metal from a source is evaporated inside the vacuum chamber where it fills the grooves in the photoresist, creating the 3D metal mesh. The liftoff stage, shown in the top right, involves two large tanks in the background, which remove the residual metal and the photoresist. And finally, finished nanoweb is inspected for quality with a microscope and tested also for sheet resistance. Due to the flexibility of the mesh pattern design, NanoWeb has superior conductivity, 1 to 10 ohms per square, and transparency, 95 to 99% transparent compared to alternative technologies, and provides optimum performance for transparent heaters and EMI shielding applications. As in the case with all transparent conductors there's a control trade off between the conductivity and the optical quality. Nevertheless, the two key advantages of nano web compared to conventional transparent conductors are firstly. higher optical transparency in a visible spectrum for a given conductivity or sheet resistance. And importantly, for a desired set of optical properties like haze and transparency, NanoWeb offers higher conductivity. Secondly, the ability to customize and optimize the fill function for different application areas. And this is possible because the nanoweb has a controlled, precisely engineered structure rather than being a uniform, homogeneous material without degrees of freedom to control. In January, despite the challenges of COVID-19, we at Meta exhibited in person and demonstrated our wide range of applications at two major trade shows. One in Las Vegas, CES 2022, and then followed by SPIE Photonics West 2022 in San Francisco. We met with major OEMs across all of our verticals and generated nearly 300 leads. Pictured here is our booth from CES, where you can see six demo stations featured, one for AR fusion, one for nanoweb, 5G reflectors, EMI shielding for consumer electronics, medical wireless sensing, and our GlucoWise, non-invasive glucose monitoring technology. NanoWeb for automotive and other de-icing and defogging applications. And finally, transparent 5G and digital TV antennas. A perfect example of the promise of metamaterials to help our customers produce products that do more with less, using sustainable materials and consuming less energy. This is our NanoWeb 5G reflector, for which Meta was named a Lux Research Innovator of the Year in 2021. It is perfectly transparent, yet the visible metal mesh structures reflect radio waves as effectively and as efficiently as a solid metal plate. Changing the pattern metal material structure allows signals to be generated at unusual design specific angles. And our solution can aesthetically improve outdoor and indoor network coverage without requiring power or a network connection. And it's faster to deploy than wiring in additional network hardware. We demonstrated all of our technologies live at CES. In the two top photos, you can see that the signal strength from the transparent nanoweb reflector exactly matches the same signal reflected from a solid aluminum plate. And of course, you can't cover a building windows and interiors with metal reflectors. It's impossible. The true power of metamaterials is illustrated in the bottom two photos. Notice that when the signal reaches the reflector at a nearly perpendicular angle, the signal from the metal reflector is almost entirely lost. But by using the specially designed nanoweb reflector, simply by engineering the design of the invisible metal mesh, we're able to redirect the signal so that it reaches the receiver at full strength. As illustrated in the diagram on the left, transparent nanoweb reflectors may be placed throughout the inside of a building, like a factory or a hospital, all to guide the signals from the tower and ensure good reception for all. Now I'll pass the call over to Ken Rice, Meta's COO and CFO.
spk08: Thank you. So good morning, all. Thank you for joining us today. Meta's medical wireless sensing platform uses infrared and radio frequency, otherwise known as RF transmitters and receivers to collect and measure a variety of biological information. This collection enables non-invasive and safe medical diagnostics. The platform requires the ability to cancel reflections, anti-reflection from the skin and to reduce the natural impedance the skin provides to such signals while at the same time increasing the signal to noise ratio of certain diagnostic instruments that are used in connection with the platform. This reflection canceling requirement is satisfied using our proprietary metamaterial films that employ pattern designs printed on metal dielectric structures or flexible substrates that act as an anti-reflection impedance matching coating when placed over human skin in combination with medical diagnostic modalities such as MRI scanners and non-invasive glucometers. We're developing a number of medical products that employ this proprietary technology. GlucoEyes is in development as a completely non-invasive glucose monitoring device. It's being developed first as a benchtop medical device product to be followed by a portable pocket-sized product and ultimately as a wearable. In magnetic resonance imaging, increasing the signal to noise ratio by orders of magnitude has been demonstrated to produce much higher resolution images with significant increases in imaging speed. This results in better patient throughput, potentially more accurate diagnoses in imaging clinics. For example, the company is developing MetaSurface, which we also refer to as Radiwise. This is an innovation which allows an improvement in signal to noise ratio of up to 40 times for MRI scans. The MetaSurface device consists of proprietary non-ferrous metallic and dielectric layers that are exactingly designed to interact or resonate with radio waves, increasing the signal to noise ratio. Meta is also researching the use of this radio wave imaging technology in breast cancer and stroke diagnosis. Companies developing wireless sensing and radio wave imaging applications from its London, UK office and its newly established Athens, Greece office. In 2021, we completed a 27 month long UK funded project to develop a non-invasive glucose sensing prototype. This combined radio wave and optical sensors to improve accuracy in predicting glucose level changes. The developed biosensor prototype is a critical step towards a home hub system targeted at monitoring biological parameters. Initial human studies have been completed and the next phase of prototypes are in development. Now I'll provide a few highlights of our Q4 and FY21 results. Meta is an early growth stage platform company. We're moving toward volume production for applications in multiple markets. In 2021, our total revenues grew 264% to 4.1 million compared to 1.1 million in 2020. Our fourth quarter 21 revenues of 2.3 million compared to about 300,000 in 2020. This reflects a contribution of 1.8 million from nanotech and the remainder from growth in Meta's other offerings. The company relies on a few key customers for a significant portion of its revenues. For the year ended December 31, 21, three customers accounted for about 3.3 million or 81% of total revenue. For the year ended December 31, 2020, three customers accounted for 800,000 or 72% of total revenue. We expect that development programs including the contract with a confidential G10 central bank, will account for most of our revenues over the next 12 months. Meta is currently pursuing multi-year, multi-million dollar contracts with several OEMs. For 2021, the net loss was approximately $91 million, or $0.39 per share, on 232.9 million weighted average shares, compared to a 2020 net loss of $11.6 million, or $0.08 per share on 137 million shares. Operating expenses and other expenses for 21 included several non-cash items, a $40.5 million loss on financial instruments, most of which were related to our debt conversions as was mentioned earlier, $6.5 million of non-cash consulting expenses, $3.5 million of depreciation and amortization, $1.6 million of stock-based compensation, $400,000 of non-cash lease expenses, and our net cash used in operating activities for the year 2021 totaled $34.7 million compared to $7.9 million in 2020. At the end of 2021, our cash and cash equivalents totaled $50.3 million, including $800,000 of restricted cash and $2.8 million of short-term investments. As George mentioned, we have no debt except for the $3.2 million in various interest-free loans from ACOA. The company believes that its existing cash will be sufficient to meet our working capital and capital expenditure needs as production capacity begins to come online for at least the next 12 months and probably longer. The company may need to raise additional capital to expand the commercialization of its products, fund its operations, and further its R&D activities. Future capital requirements may vary materially from period to period, and that will depend on many factors, including the timing and extent of spending on research and development activities, the capital expansion of our facilities in Halifax and California, and ongoing investments to support the growth of our business. At Meta, inventing, designing, developing, and manufacturing Meta materials, much of what we do is too small to see. As we scale up to reproduce these tiny structures in high-volume, and at low cost, bringing intelligence to surfaces all around us, I believe the world is beginning to see our potential. We'll now take some questions from the research analysts that are on the call with us, and then we'll respond to some of the questions which were submitted on the Say Technology platform. Our first question comes from McMurray Whale of Cormark. Mac, please go ahead. I don't hear you. Mac, are you muted? Okay. Well, we seem to be having technical difficulty with McMurray Whale. Our next questions would come from Jerry Sweeney of Roth Capital. Jerry, are you there? Ken, I am.
spk07: Can you hear me?
spk08: Yes.
spk07: Thanks for taking my question. So and just a question for you and a couple questions, but obviously scaling down costs are a critical component of success. And I think the roll to roll technology that you're working on is pleasant and is key to this. Can you give us a little bit of insight into where costs are today for just generally for the technology and where the roll-to-roll technology can take it, as well as maybe some of the key critical steps that you still have to go through to prove the line out?
spk08: Sure. Jonathan, can you handle that?
spk05: Yes, I can. I'd be delighted to. Thank you. To a certain extent, we are kind of quoting range of costs at the moment as we're locking things down and improving the process. But what I can say on cost is that it's substantially supported by our retailers, if you like, our sellers of our materials to the end market. So in the case, for example, of the functional film, the 5G film for telecommunications applications, There's the cost of the production of the film, the roll-to-roll film that we're producing is likely already well south of the anticipated cost of its launch onto the market. and that is calculated by the replacement cost for alternative methods to achieve similar 5G improvement in buildings and as I mentioned earlier. So without being too specific on the costs, we're very confident with regard to the margin and also the cost of the product to market as substantiated by our third party partners in bringing it to market.
spk04: Maybe, Jonathan, if you can maybe make a comment about what our partners bring to the table with regards to cost reduction strategies.
spk05: Yeah, with respect to that. our partners bring a substantial opportunity with regard to scaling volume, pre-ordering and stocking, and also partnering their customers, which are the major carriers in terms of proactive deployment into situ. So the value add is not only in being, you know, industry acknowledged experts in functional film, which in the case of our publicly announced company partner, Sakasui, but also to their customers, which again, publicly announced one is DoCoMo, you know, we're working between the three of us to ensure that we support a pipeline to get the product to market as fast as possible. And so, as you heard, the status is that the roll-to-roll is coming up online. And as we produce that functional film, it'll go straight through that pipeline enabled by that partnership. So we think that's a substantial value and overcoming any form of impediment to get it to market and in the slip tube as quickly as possible.
spk07: Gotcha. So actually that was really helpful, especially, I know you couldn't give any specifics on calls, but it's helpful just to understand relatively where they stand with where your partners are looking for. But just taking the next step further, are there any key hurdles left in the role to roll line and getting it up and running and proving it out? Or is there a degree of confidence that, it should be operational and work appropriately.
spk05: Yeah, I think one of the important things to appreciate is that our roll-to-roll line is or has been evolved from a wafer-based line. Now, although a wafer-based line versus roll-to-roll might seem a million miles away, the actual fact is those specific steps that I outlined in the earlier introduction are copied, if you like, or replicated directly from And so in terms of the process of making our functional film and the metallization of the nanoweb, we don't expect too much difficulty. And I think right now we remain pretty confident having tested the individual steps. It's quite another thing in manufacturing, though, to be overly bullish before you've actually achieved the requisite goal. And also, it's worth saying that notwithstanding, production meets what we call our golden sample quality from the wafer line. As we go forward, clearly, the speed of the line, think of it like a printing press of newspapers. The more faster you go, the more newspapers you produce, and hence more product for us. So the speed of the line and the quality and what we call the rolled yield from the line, meaning that it has very high yield. These are important steps for us yet to go through and verify. So this is where we do differ from the wafer line. And I'm sorry, that was a little bit of a complex and long answer, but I wanted to be very specific with you.
spk07: No, actually, the detail is actually excellent. It gives a little bit better view and vision as to what you're working on. So I do appreciate that. And then maybe one more, and then maybe, well, we can get back online. But, you know, a little bit newer to the story, or I shouldn't say that exactly, but it appears that you bring forward some of the medical equipment, like the GlucoWise products. You know, at one point, I think it was a little bit further out on the horizon, but it feels as though you're accelerating that development, anything specific driving that, you know, speed and speed up in development. If, if that is a correct assumption, I'm not sure if it's partners or demand opportunity, just curious on that front.
spk08: Sure. It's a combination, Jerry. The medical products, if you go back in the history of the company, the medical products were at the core of the company's foundation. That said, as, Until last year, when we were able to get the company public and have access to significant amounts of capital, we were going a bit more slowly on the development of medical products in favor of products that might have felt a little bit closer to the market from an OEM standpoint. So I think it's fair to say that the reason we're accelerating them now is because we've, at the end of the Diabat project, which I described as the UK funded project, we concluded that GlucoWise was not only an important product, but it was highly feasible. And you may or may not know, but non-invasive glucose monitoring is a very tough space to play. There's been a lot of attempts at it. And what we think differentiates us from the rest of the companies that didn't quite make it is the whole metamaterial ability to make the skin lower the increased signal to noise ratio and remove impedance. So we proved to ourselves that we could actually do this. And now we can do it in a world where we have resources. And as we spoke preliminarily with potential partners and or distribution partners last year, we found that they were quite interested as well. So that's basically what prompted the acceleration.
spk07: Okay. Then one more quick one I think is kind of important that I'm always interested in. So obviously you're building, I believe, a library of maybe this may be unscientific, we'll call it designs or prototypes. As that library builds, how does that sort of position you for other areas or other technologies that you can build into adjacent markets over time?
spk08: George?
spk04: Yes.
spk03: And Jerry, if you could refine that a little bit more, can I ask? Sure. Is your question related to kind of near-term opportunities, long-term?
spk07: I think maybe for more of a strategic first mover advantage. I mean, we've had a couple of discussions just, you know, as you build this library, I think you get a better understanding of some designs that can maybe be used in adjacent markets and it could help future efforts in different markets. Does that help?
spk03: Yeah, makes sense. Yes. So our extensive technology platform has been built on three core capabilities, holography, lithography and wireless sensing. And because we use software and AI design to develop this library of solutions, it's very fast for us to build functional prototypes and at a reduced cost than traditional chemical synthesis. And what happens is once we have an application, typically we go and test it in aerospace and defense. And aerospace and defense is a very interesting industry because number one, they actually understand the value of metamaterials better than any other industry I have ever come across. Because at the beginning, 20 years ago, metamaterials had applications in reducing the radar signature, making things invisible to radar. and stealth applications. So early on, 20 years ago, aerospace and defense hired as many metamaterial scientists as they can get. So today, these programs have existed, let's say, in all kinds of companies. And one example I can offer you is our EMI shielding application. So we developed one of the best performing materials to block EMI radiation, electromagnetic interference, EMI. And we did that with a very transparent material that met and exceeded the expectations of a large OEM aerospace manufacturer. The OEM paid us about $10,000 per part. It was a small size part. And then we took that forward into the consumer electronics market where we are currently working with one of the largest manufacturers home appliance companies to take basically the same film, the same technology and apply it on one of the most commonly used items in the kitchen, the microwave oven. And this is going to obviously much larger volumes, but obviously at the unexpected price point, that's not $10,000. So the good news here is that we are testing our performance we are getting investments from the aerospace and defense industry to advance prototypes and then quickly go to the adjacent markets, whether it's automotive, where LIDAR, for example, has the same issue with EMI shielding, where a home appliance has the same issue. These are the key elements where we start thinking strategically. And recently we hired Ms. Elsa Keita from corporate strategy of Airbus she's helping us map these portfolios of products and once we have one category we can very quickly with you know obviously partners move into adjacent markets and that's really the exciting thing that library as it gets developed the next industry comes along we are faster even than the first time around because we now have validation at the aerospace quality level. And that gets us through the door in many situations because they understand that if we pass aerospace standards for safety, for environmental properties, et cetera, then we have something that's valuable enough that has been proven enough, and that makes the conversations move faster. And then the question, of course, becomes cost. And that's one of the key focus areas right now, scaling the volumes, reducing the cost. And we have our targets, which we believe will open up every industry that we go for. I hope that covers it.
spk07: No, this is actually very good. It sheds a little bit more light on in detail on some of my thoughts. So I appreciate it. I'll jump back in queue and thank you. Thank you, Jerry.
spk08: Next, Chris, do you have any questions for us?
spk06: Oh, yes. Good morning. I have a question just basically, you know, for 2022, what What are the main catalysts or revenue drivers? You know, which of your products is closest to, you know, revenue, revenue generation? And, you know, can you provide any timing on that?
spk08: Okay, well, I'm going to this question came up a couple, couple different ways. So I'll answer yours. And then I have one. I get to the next set of questions, I'll even provide more color. But the short answer to your question, Chris, is 2022 for us is about a few focus areas. As you know, we're not in a position yet to give financial guidance. We're still in a lot of ways an early stage company in that sense. What we see the revenues being generated predominantly from in 22 is the ongoing work that's going on with the G10 banknote company. And that's a big, a big portion of 22's revenue and we're excited about it because it's already booked and we're delivering it on a routine basis. from the meta platforms of 5G is likely to be generating some revenue. We don't know exactly how much yet in 22, but that would be sort of next. And I think as George just mentioned, some of the work that we're doing in EMI is also likely to generate some revenue in 22. But the primary focus of 22 for us is operational. We want to, as Jonathan described, we want to make sure that our roll-to-roll line is optimized and running and producing equivalent product to what we produce on our wafer line. We want to do that as fast as we can. And that's going to take it to a certain degree of precedence. The other revenues that we will have in 22 are more along the development line of non-recurring engineering. I hope that helps.
spk06: Okay, great. Thanks. And then I've got a question on your GNA and R&D expense for the quarter and how, I mean, at what level do you see this expense in the future, in next quarter and the year? Are we at the levels about what you think will be or can you shed any light there?
spk08: No, I think in particular, R&D is probably a little bit high in 21 relative to what we're expecting in 22. Again, we did some things up front to make sure that the roll-to-roll line was designed and in place at a time when COVID was blocking supply lines and things and we needed to accelerate some stuff to make sure that we got what we needed there. G&A for the lion's share of 2021 was driven by the cost of converting our debt to equity and the acquisition related costs. We did two major merger transactions in 2022 that brought with them millions of dollars of legal fees and auditing fees and all kinds of things like that. And so I would expect that the fixed burn rate in GNA in 22 is likely to drop. It won't be at the level that you saw in 21.
spk06: Okay, great. And then one last question for me. As far as... Patent pending applications and that are, can you, do you have any idea on that and any, and how many are going to come to fruition in 2022? Well, as George mentioned, we have more than 160 applications.
spk08: pending applications in various jurisdictions, it's very difficult to predict the pace at which the patent offices around the world will work. When we submitted those applications, we think we did a very, very good job of laying the claims out. The typical timeframe for an application to come to issuance is anywhere from two years to five to six years. And most of these are relatively recent filings. So we really have no way to sit here today and predict what's going to be issued in 2022. What we can do is, and we do this every quarter, is we update our investors in the street on where we are from a status standpoint and how many applications we've received office actions on and that sort of thing. But I can't sit here today and predict how many will get issued in 2022.
spk06: Okay, all right, great, thanks.
spk08: Okay, so with the little bit of time we have left, Mac, are you here?
spk01: I am here, yes.
spk08: Oh, good, okay. So if you had questions, we'll take some questions from you.
spk01: I was actually, it was a little bit late getting on, so I don't wanna ask stuff that had been asked already, but so far, most of the questions I have had written down have actually been answered since I logged on.
spk08: Okay, great. Then if it's okay, we have about five minutes left in the call. Many of the people listening took time and asked questions on the Say platform in advance of the meeting. And we had multiple hundreds of questions come through that platform. And so what we did was we went through them with the help of that software and grouped them into categories. And there's about seven categories of questions. questions that i'm going to try to answer um and and what you have to understand is that these are not just single questions these are you know groups and groups of questions um so i'll start with one that that actually was very very recent it came in last night for any of you listening to the call um there's a question that came up which is why was metas 10k uh five filed late and why did we apply for uh an extension to file After the merger with Torchlight occurred, the company was deemed to be a large accelerated filer based on our market value at June 30th of 21. That status in the US mandates that we be fully compliant with SOX 404, which are the rules governing internal controls for US listed companies. When we planned the merger with Torchlight, we were planning to be fully compliant with SOX 404. by the end of 2022 on the assumption that we wouldn't be classified as a large accelerated filer. That's a very large market cap, but we were there. So although we made and we continue to make progress on the compliance requirement, we found that the internal controls of the company at year end did have material deficiencies. These were reported in the 10K that we filed. And the finding resulted in significant additional audit work very late in the schedule. So although the target filing was 5.30 p.m. Eastern yesterday, we could not have everything Edgarized, XBRL coded and ready to file with the SEC by that time. We were unable to do it until 8 p.m. last night. And so what we did with the advice of our lawyers and our own internal accounting folks is we said, all right, we're going to file the automatic extension that the SEC gives. It's a 15-day extension. We didn't need 15 days. We only needed two and a half hours. So we filed the extension request to cover that period and filed the 10K, and now it's on the SEC site and active so everybody can see it. Next group of questions, and there were a lot of these, is what is the status of the Series A preferred stock dividend? As we reported in the call, when we did the merger with Torch, the shareholders of Torch as of two days before the closing were entitled to receive Series A preferred stock in Meta as a placeholder, entitling them to whatever net proceeds there were from the ultimate sale or other disposition of the oil and gas assets that were brought to the merger by Torchlight. post-merger. So in January of this year, we reported updates and in our 10K, we updated even further. We are continuing to pursue the steps that are required to enable a sale or a spin-out of the oil and gas assets this year acquired as a result of the torchlight transaction. We have a huge amount of legal and regulatory work underway now to transfer ownership of the assets and make sure the leases are in full force and effect and we can't provide specific timing today, given the amount of work that's there and underway. We expect to provide a more detailed update on progress and plans later this month, based on the results of the work that's currently in process. The other part of this question that came up over and over and over again in this database was that we want to know, what about MMTLP, the new ticker that was established related to the Series A preferred stock? Unfortunately, Meta can't comment on trading activity or other matters related to that ticker symbol, since it's not a company-sponsored symbol or a supported trading symbol. When we issued the Series A preferred shares, they were issued as unregistered, unlisted shares, and that was intentional. And our understanding is that purchases of MMTLP receive Series A preferred shares that were previously owned by either the original holders of the Series A shares that got them in June of last year or prior holders of MMTLP. And it's also our understanding that the rights associated with those shares, including the right to receive any ultimate dividend, travel with the shares to the new owners. The next group of questions were about current investors and what are our plans to attract new and different investors to the company and potentially change the mix of shareholders that we have. So META has been listed on NASDAQ for just over eight months, and there's been a lot of volatility in our stock, as everyone knows. That said, we're still trading at a very attractive valuation. We were fortunate to have Cormark Securities and Sinclair initiate research coverage on the company in the fourth quarter. with very attractive one-year price targets of between 650 and 660 per share. Our goals for 2022 and beyond are focused on a few things. One, we want to attract additional research coverage for the company. We want to diversify our investor base to include a significant portion of new institutional investors. We will accomplish these goals by continuing to deliver on our operating objectives, accelerating our investor relations activity, to be focused on new investors and new investor classes, forming relationships with additional investment banks that are focused on our target investors and focusing our capital raising activities on high quality transactions with straightforward terms. Another large group of questions that came up is related to the fact that we're a B2B company. The questions can be grouped as who are Meta's partners and or customers. We, as everyone knows, are a business-to-business company. Our customers and partners generally are leaders in the vertical markets that we're focused on. Most of them view our products as providing a significant competitive advantage to them. And because of this, they're very reluctant to announce to the world that they're using our products and technologies in their businesses. They will ultimately do it, but it's in their control. We have to honor this position of our customers. Whenever we're able, we announce relationships and our partnerships with our customers. It's simply not possible given the sensitivity of this information to routinely discuss our customers, our partners, and our prospects. That said, our investors can be confident that our sales and business development teams are aggressively pursuing long-term relationships with numerous leaders in each of our vertical markets. We'll share as much information as we are able to about these relationships. And one thing I would caution, though, it is likely to be better for all of us if we can do our best collectively to minimize the rumors around specific prospects, since often these rumors make their way to the prospects we are in discussions with and they can derail valuable conversations. There were a lot of questions about GlucoWise. I can give a tiny bit more color to what I already said. Our GlucoWise development commercialization plan has evolved a great deal over the past year. We're committed to developing the product, as I said, in a series of three form factors, a benchtop unit, a pocket size unit, and ultimately a wearable. Our goal is to ensure that this product requires no intrusive procedure at all. And our intent is to use it to keep an electronic record of glucose measurements locally and in the cloud. We expect that the first version of the product will require approximately 36 months to reach marketing approval. The market for GlucoWise is a very large market, and we're already in discussions with a number of potential commercialization partners for the benchtop unit. Once the benchtop unit is complete, we'll move on to a pocket-sized portable that can be used by a broader array of patients. It's difficult today to predict exactly when that product will be available, but what is fair to assume is that the ultimate goal of the pocket-sized product is to literally miniaturize the bench top product. So once we get the mechanism and the methodology right, and especially the software algorithms that do the actual measurements, then we're talking about a production job that's about miniaturization and power. And ultimately, we'll, as I said, develop it into a wearable as well. Chris asked in one way about forecasts for 22 and 23 and beyond, and others have asked. At this point, Meta is kind of an anomaly. We are, on the one hand, a large accelerated filer. On the other hand, we're best described as an emerging growth platform company without a lot of track record of predictable top line. So we believe that despite that high market value that we have, we're still very much an earlier stage company. And that makes any guidance that we give difficult to rely on both internally and definitely externally. So we've decided to continue a no guidance policy regarding near-term sales and profits. What we have stated is that our long-term goal is to reach approximately $600 million in revenues by 2026. It's important to note. that even with today's products, we have products spanning banknote security, brand security through the functional films that we call NanoWeb and the AR products, the pricing and the margins in those products are quite variable. So what we can say is that we will produce very large quantities of material in the banknote space, as George described, because that's why we're doubling the size of Thurso, but those products don't sell at high retail prices. They by definition have to sell it at fairly low retail prices and we need to be able to produce very large quantities of them. Whereas NanoWeb in the retail space seems to have average retail prices between 300 and $450 per square meter. And we want to make 60 to 70% margin on those products. So what we're doing is we're building balanced capacity in each of our production areas to satisfy not only the demand, but also the product mix. So our long-term revenue goal requires that we continue to grow production capability in all of our facilities. We have to achieve demonstrable customer successes with our near-term products offering in 5G and consumer electronics, banknote, brand security, and medical products. And Our longer-term goal is to ensure that we are the low-cost producer of our own products. The last group of questions that came up have to do with the SEC investigation and the filed lawsuits. These are discussed in more detail in the 10-K. We'll say a lot more about what's there. But as we reported, it's too early today to assess what risk, if any, is presented by the SEC investigation. It's a fairly open-ended set of questions with no real end game in mind or articulated by the SEC. So our position is that we have completely complied with their requests, we continue to comply with their requests for documents, and we plan to continue this cooperation until the matter is resolved. With regard to the filed lawsuits, we believe that the claims in the filed lawsuits are Without merit, we intend to vigorously defend the company and our staff against those claims. And again, it's not possible today to determine what risk, if any, exists as a result of these lawsuits. With that, I'll turn the call back over to Mark Komunoski.
spk02: Thank you, Ken, and thanks to all for joining us today. We appreciate your interest in META. You can reach us by email at ir at metamaterial.com. This concludes today's presentation. Thank you very much.
spk08: Thank you.
Disclaimer