Meta (NASDAQ:META) Materials Inc., a semiconductor company, has reported a significant disruption to its IT systems due to actions taken by a former executive, according to a recent SEC filing. The incident, which occurred on July 25, 2024, involved the deliberate deactivation of the company's website and the cancellation of its renewal, leading to substantial IT system outages, including email communications.
The company's internal and external cybersecurity experts, along with legal counsel, managed to reinstate the website and restore email systems by July 29, 2024. However, Meta Materials noted that its systems continue to experience stress and delays as they return to full functionality. The company is actively working to mitigate any further impact from the incident and to evaluate any unauthorized access to sensitive information.
Despite the disruption, Meta Materials stated that the incident does not seem to have materially affected the protection of its intellectual property or resulted in unauthorized access to customer or stakeholder proprietary information. The company is still investigating any ongoing security issues and assessing additional responses to the security and operational incident. The potential impact on the company’s financial condition or results of operations has not yet been determined.
In a related event, on July 26, 2024, Metamaterial Technologies Canada Inc. ("MTCI"), a subsidiary of Meta Materials, filed for bankruptcy in the District Court of Ontario. Grant Thornton Limited has been appointed as the trustee to oversee the bankruptcy process, which will involve winding down MTCI's operations and distributing assets to creditors under the Bankruptcy and Insolvency Act (Canada).
In other recent news, Meta Materials Inc. has faced several significant developments. The semiconductor company recently completed the sale of its authentication business to Authentix, Inc. and Authentix Canada Solutions, Inc. for a total of $10 million, according to an 8-K filing. This transaction comes as part of the company's strategic efforts to improve liquidity amid financial difficulties.
Simultaneously, Meta Materials has been actively investigating allegations of illegal short selling of its stock. The company's inquiry, assisted by Shareholder Intelligence Services, LLC, and law firms Christian Attar and Warshaw Burstein, has led to substantial claims for market manipulation against various entities. Legal action against the responsible financial service firms is expected in the upcoming quarters.
Furthermore, the company announced a significant workforce reduction plan, intending to cut approximately 80% of its employees in the coming weeks. This decision is part of a broader effort to address the company's financial situation, which may include selling assets or seeking further financing.
InvestingPro Insights
As Meta Materials Inc. grapples with the aftermath of its recent cybersecurity incident and the bankruptcy of its subsidiary, investors are closely monitoring the company's financial health and stock performance. According to real-time data from InvestingPro, Meta Materials has a market capitalization of $16.49 million, reflecting the size of the company in the current market landscape. Despite a notable revenue growth of 13.75% over the last twelve months as of Q1 2024, the company's operating income margin remains deeply negative at -451.09%, indicating significant operational challenges.
InvestingPro Tips suggest that the stock is currently in oversold territory based on the RSI, which may interest traders looking for potential rebounds. However, the company's short-term obligations exceeding its liquid assets and the lack of profitability over the last twelve months raise concerns about its financial stability. With high price volatility and a significant decline in stock price over the last year, investors should approach with caution. For those considering Meta Materials as an investment, there are 15 additional InvestingPro Tips available, offering deeper insights into the company's performance and prospects.
Given the current situation, these metrics and tips from InvestingPro could provide valuable context for investors trying to assess the potential risks and opportunities associated with Meta Materials Inc. during this turbulent period.
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