Shares of Meta Materials (NASDAQ:MMAT) stock have been in full focus, as the company will soon spin off its fully-owned subsidiary Next Bridge Hydrocarbons to shareholders of Meta Materials Preferred Shares (OTCMKTS:MMTLP). The date of record will fall on Dec. 12, while the distribution date will be on Dec. 14.
Next Bridge engages in the acquisition, exploration, and development of oil and natural gas. The company’s primary project is an oil and gas project in the Orogrande Basin in West Texas. As of Dec. 31, Next Bridge has interests in three projects, with the remaining two projects in Texas and Central Oklahoma.
Following the distribution, shares of MMTLP will not be tradable on the over-the-counter (OTC) market and lose all of their rights. Meanwhile, Next Bridge will operate as an independent reporting company with shares that will not be tradable on public exchanges or eligible for electronic transfer through clearing corporations.
MMAT Stock: MMTLP Shareholders Prepare for Spinoff
Shareholders of MMTLP who sell their shares on or before Dec. 12 will not be eligible for the spinoff. Shareholders who sell their shares after Dec. 12 but before Dec. 14 will be required to transfer their shares of Next Bridge to the buyer of the MMTLP shares. A total of 165,472,241 shares will be distributed and shareholders will receive one share of Next Bridge for each share of MMTLP owned
For the nine months that ended Sept. 30, the energy company reported revenue of just $30,124, while operating expenses totaled $3.84 million. During that period, Next Bridge reported a net loss of $4.76 million, bringing its total accumulated deficit to $72.95 million. In addition, the company had a cash and cash equivalents balance of $2.1 million and short-term debt of $21.15 million as of Sept. 30.
Next Bridge has also warned that it will need to raise capital in the immediate future. These could be collected through joint venturing of projects or equity or debt financing. This will provide the company with funds but dilute existing shareholders in the process. Next Bridge’s consistent losses have also caused its auditors to issue a “‘going concern’ audit qualification.”
It seems that Next Bridge is just getting off the ground and investing heavily in projects while collecting minimal revenue. Investors would be better off putting their capital in a less speculative company.
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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.