Since its reverse merger with Torchlight Energy in late June, Meta Materials Inc. (NASDAQ: MMAT) has watched its share price collapse by more than 60%. There have been a couple of spikes, primarily related to expectations that the company will pay a promised special dividend to its Series A preferred shareholders. For many retail investors, a cash dividend of significant size was all but in the bank.

Meta Materials provided an update last Friday on its special dividend and its oil and gas operations. The company must drill four wells this year in order to retain leases it inherited from Torchlight. Meta said it expects to complete the required drilling this month. Once the leases are secure, the company said it is preparing to spin out the energy assets in a new wholly owned subsidiary. Meta also said it is targeting a spin-out “or a disposition of the oil and gas assets for early Q1 2022 pending process approvals by all parties involved.”

Holders of the company’s Series A preferred stock were enthusiastic when trading began this past Monday, following the Friday afternoon announcement. Shares rose by about 5.7% and added another 2.2% on Tuesday before dropping by more than 6% on Wednesday. As of Thursday’s close, the stock traded less than 1% below its price on Monday morning, and the stock traded down more than 1.5% in the noon hour Friday.

This past August, we took a look at the oil and gas assets Meta acquired in the merger with Torchlight. Here’s the short version based on the company’s second-quarter earnings report:

… Meta reported $72.8 million in [assets held for sale] compared with none at the end of the first quarter. Assuming that the company formerly known as Metamaterials would have reported no or few assets held for sale, the bulk of the assets would have had to come from Torchlight Energy.

At the end of 2020, Torchlight reported total production for the year of 5,445 barrels of oil and 5 million cubic feet of natural gas. Total oil and gas sales last year amounted to $193,379. This is peanuts.

The total value of the company’s oil & gas properties was $30.86 million. Torchlight reported no proved reserves as of December 31. The company had sold its last reserves in November.

At the end of the third quarter, the value of Meta’s assets held for sale had increased from $72.8 million to $73.65 million. The company also reported preferred stock liability of $77.9 million. Exactly how that translates into a windfall for preferred shareholders is understood by only a select few.

On the same day the company released the operations update, Meta also held its annual shareholders’ meeting (virtually) and elected the company’s current seven board members to another one-year term, approved the appointment of KPMG as its auditing firm and approved the company’s 2021 equity incentive plan to reserve a total of nearly 35 million shares for possible issuance under the plan. That number is slightly more than 12% of Meta’s outstanding shares and 19% of the total float.

Meta Materials stock traded down about 3% in the late morning Friday, at $3.11 in a 52-week range of $0.84 to $21.76.

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