Meta Materials (NASDAQ:MMAT) stock is plunging lower on its first day of trading on a 1-for-100 reverse stock split-adjusted basis. This follows Meta’s announcement on Jan. 23 that it would distribute one share of Series C preferred stock for each share of common MMAT stock held and “each voting right represented by the Company’s Series B Preferred Stock” as of the record date of Feb. 2. Meta also reported its preliminary fourth-quarter results on Jan. 26.
The Series C preferred stock will not be transferable by shareholders unless they transfer their common stock as well. An equal number of Series C preferred stock in comparison to common stock will be transferred in this event. Additionally, the Series C preferred stock will carry 1,000 votes per share and will not pay a dividend.
MMAT Stock: Meta Prepares to Issue Series C Preferred Stock
Meta will count Series C votes together with common stock votes in regards to any proposal that seeks to increase shares outstanding from 10 million to a minimum of 250 million. The same will go for any proposal that seeks to adjourn a meeting of stockholders due to a share increase proposal that does not receive enough votes.
“The Series C Preferred Stock will not be entitled to vote on any other matter, except to the extent required under the Nevada law,” said Meta. Furthermore, in the event of a dissolution or wind down of the company, the Series C shares will have distribution priority over common stock and Series B preferred stock.
Meta had just wrapped up its last annual meeting, which resulted in the 1-for-100 reverse split and shares outstanding decreasing to 5.64 million from 564 million. Authorized common stock also decreased to 10 million from 1 billion. Meta’s Series C announcement hints that the company wants to increase authorized shares in order to raise capital. That unfortunately equates to dilution for shareholders. Meta will distribute the shares after the market close on Feb. 2.
Meta has stated that it will soon file a special meeting notice and a preliminary proxy statement with an authorized share count increase proposal.
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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.
