Hello everyone. Welcome to Meta Materials Corporate Update, April 3, 2024. We have Uzi Sasson, President and CEO, and Dan Eaton, Chief Legal Officer, presenting today. We'll kick this off with Dan Eaton. Go ahead, Dan. Thank you.
Good afternoon and welcome to Meta Materials' fourth quarter and fiscal year-ended December 31, 2023, earnings conference call. I am joined by Uzi Sasson, our President and CEO. Uzi will lead us through the financial discussion later in the call. First, to review the formalities, our discussion today contains forward-looking statements, including statements related to potential future results. Any statements in this conference call that are not statements of historical fact may be deemed to be forward-looking statements. There are a number of important factors that could cause the results of Meta Materials to differ materially from those indicated by these forward-looking statements, including, among others, risks detailed from time to time in our SEC reports, including our annual report on Form 10-K for the period ended December 31, 2023. Meta Materials does not undertake any obligation to update forward-looking statements.
Also, please be advised that the financial data related to today's webcast is available on our website, www.metamaterial.com. Click on Investors and then click on News and Events. I will now turn the call over to Uzi Sasson, President and CEO, who will discuss the financials in more detail.
Thanks, Dan. I would first discuss fourth quarter 2023 results. Net revenues for the quarter were $2.3 million versus $1.4 million in net revenues for the same period in the prior fiscal year. This is an increase of 61% over the December 2022 quarter. Gross profit for the quarter-ended December 31, 2023, was $1.4 million, or 58.4% of net revenues as compared to gross profit of $763,000, or 52.8% of net revenues for the same quarter in the prior fiscal year. GAAP operating expenses were $82 million for the quarter compared to $24.8 million in the December 2022 quarter. On a non-GAAP basis, excluding $65.6 million of non- cash impairment of long-term assets during the quarter, non-GAAP operating expenses were $16.4 million for the quarter compared to $24.8 million in the December 2022 quarter.
On a non-GAAP basis, we reduced the December 2023 quarter expenses by 34% compared to the 2022 comparable period. When reverting to the topic of expenses, we want to provide shareholders with transparency on spending patterns. R&D spending for the quarter was $4 million as compared to $4.3 million in the prior year quarter. SG&A expenses for the quarter were $7 million as compared to $13.2 million in the prior year quarter. CapEx was approximately $409,000 for the December quarter. The vast majority of capital expenditures were manufacturing equipment purchases and leasehold improvements. We recorded $1.6 million in restructuring expenses for the three months ended December 31, 2023. GAAP operating loss was $80.7 million for the quarter compared to $24 million in the December 2022 quarter.
On a non-GAAP basis, which excludes the $65.6 million of known cash impairment of long-term assets, non-GAAP operating loss in December 2023 was $15.1 million, which was much improved from the $24 million non- GAAP operating loss of the prior year comparable quarter. GAAP net loss for the quarter-ended December 31, 2023, was $77.2 million as compared to net loss of $15.2 million in the December 31, 2022 quarter. This wide differential was almost entirely due to the recording of $65.6 million impairment of long-term assets in the quarter following the GAAP rules. The December 2023 quarter non- GAAP loss, which excludes the impact of the non-cash impairment expenses, the depreciation and amortization, and stock-based compensation, was $7.6 million compared favorably to the non- GAAP net loss of $7.8 million from the December 2022 quarter.
Adjusted EBITDA, which excludes known cash items such as impairment expenses, depreciation and amortization, and stock-based compensation expense, was $11.1 million for the quarter-ended December 31, 2023. Lastly, cash and cash equivalents were at $10.3 million, similar to the prior sequential quarter of September 2023. This demonstrates a much improved cash burn rate compared to the prior quarters and years. For the 12 months-ended December 31, 2023, Meta Materials reported net revenue of $8 million as compared to net revenue of $10.2 million for the prior fiscal year. This is indicative of the overhauled product portfolio pipeline and refocus on four core products toward commercialization. We would like to outline a few fiscal year items. Gross profit for the 12 months-ended December 31, 2023, was $4.7 million as compared to gross profit of $7.2 million for the prior fiscal year.
GAAP operating expenses was $413.5 million for the 12 months-ended December 31, 2023, compared to $90.4 million in the 12 months-ended December 31, 2022. On a non-GAAP basis, which excluding known cash impairment of goodwill and long-term assets, known GAAP operating expenses were $65.8 million compared to $90.4 million in 2022. Known GAAP operating expenses declined by more than 27% from fiscal year 2022 to fiscal year 2023. To further elaborate on operating expenses, we offer the following data. For the year, R&D spending was $19.2 million as compared to $16.5 million in the prior fiscal year. For the year, SG&A expenses were $29.5 million, a welcome decrease from the 2022 fiscal year SG&A expenses of $51.1 million. We recorded $3.9 million in restructuring expenses for the 12 months-ended December 31, 2023.
GAAP operating loss was $408 million for the 12 months ended December 31, 2023, compared to $83.3 million for the 12 months ended December 31, 2022. On a non-GAAP basis, which excludes non-cash impairment of goodwill and long-term assets, we reduced non-GAAP operating loss to $61.1 million for the fiscal year 2023 versus $83.3 million non-GAAP operating loss from 2022. For the 12 months ended December 31, 2023, GAAP net loss was $398.2 million as compared to net loss of $79.1 million for the prior fiscal year. Excluding the impact of non-cash impairment of goodwill and long-term assets, the depreciation and amortization, and stock-based compensation, non-GAAP net loss was $36.9 million for 2023, which compared favorably to non-GAAP net loss of $55.7 million for the prior fiscal year.
Adjusted EBITDA, which excludes known cash items such as impairment expenses, depreciation and amortization, and stock-based compensation expense, was $47.5 million for the fiscal year-ended December 31, 2023. I will now turn the call back to our Chief Legal Officer, Dan Eaton, who will be discussing the share authorization proposal.
As previously communicated in our shareholder letter from March 6, 2024, commercialization requires capital. That premise has not changed. We noted that new products and applications are driving some organic growth. However, the cost of commercialization outstrips current sales. We need increased investment in CapEx and inventory to support production efforts across our product lines. As a result, we have analyzed any number of alternative sources of capital. Sale of non-core assets is time-consuming and may be insufficient to cover our capital requirements, while debt capital may be difficult to service and repay. At this juncture, the best source of capital would be an increase in authorized shares, a proposal upon which shareholders will be voting on April 15th. Our goal is to issue the fewest number of shares on a measured timeline to minimize dilution. Failure to increase authorized shares could lead the company to halt operations.
The share authorization proposal was not considered lightly. However, we believe this to be the best course of action.
Thank you, Dan. We made significant inroads this year in right-sizing the business, refocusing on four core divisions, reducing overhead, and dispatching of expensive and underutilized facilities. We have become very lean in spending, and we will continue to be cost-conscious without compromising the integrity of our technology. As a result of these efforts, our non-GAAP operating expenses and net losses all pointed in the right direction, while product commercialization remains underway. However, liquidity remains a challenge. As such, the company is exploring all options for financing and restructuring. We will now open the floor for any analyst questions.
Hi, Uzi and team. Thanks for taking my questions.
Hi, Jake.
Just looking at the reorganization efforts, are you able to touch on the remaining non-core verticals that you're looking at monetizing and maybe some color on the range of outcomes we might see there?
Yeah. So as Dan mentioned in his remarks, divesting non-core assets is time-consuming. We're a very lean organization today. But that said, we're putting efforts in trying to find the right partners. We're certainly not going to do a fire sale or give the assets just to get rid of them. We have employees in those non-core assets, and they're very important to the company. And we're going to be taking our time and finding the right partners to continue doing, putting efforts into our products, the technology, because we believe those technologies are very, very important. And I'm sure they will be important for somebody. We just need to find the right home for them.
That makes sense. Then in that same vein, I'm curious if you're seeing any opportunities to explore any forms of strategic financing with partners or other forms of working capital facilities as you move toward commercialization here.
So let me submit to you that no day goes by that not only management but also our board of directors putting efforts in discussing potential strategic partners. We're having meetings. We're having discussions. But again, those things take time. Usually, the strategic partners that we are having a dialogue with are first-tier companies, and they're very strategic to what we're doing. And I'm sure that given the fact that some of which are very bureaucratic organizations and they follow protocol, it takes time. It's just going to happen. The question is when.
Got it. Okay. And then lastly, just from a revenue standpoint, the authentication business is a large portion today. Can you just touch on the core business lines that you see stepping up to the plate next, I guess, from a near-term revenue contribution standpoint?
Sure. So we have a lot of plans for VLEPSIS. It's led by my colleague, Mr. Dave Chester. They're making a tremendous amount of progress. At the same time, those things take time. It's extremely complex technology. There are a lot of technological barriers that we have to overcome. So we're counting on the wide-area imaging business that Dave is leading. We're also counting on the authentication and have very aggressive plans for them. That organization is led by Mr. Alan Newman, who is an extremely, extremely well-seasoned executive from the industry. He spent 30 years at one of the largest organizations that does something similar. We're counting on them. I got to be honest with you. I'm very optimistic about the batteries in terms of but the batteries is a long term.
It's not going to happen before 2026 at the earliest because those take a long time. It's a very complex technology. As we said, liquidity is an issue for us.
Makes sense. Okay. That's all for me. Thanks again.
Thank you, Jake.
Hi. Hello. Can you hear me?
Yes.
Hi. This is Asho k with Think Equity. First, as you rationalize your operating structure, where do you foresee your cash burn for 2024, right? You dropped it from low $60s to low $40s. What's your forecast for cash burn this year? As we look at your product application areas on the authentication nano-optic structure, right, could you talk about your competitive differentiation and the sales cycle and some of the different subgroups, right, including currency and other adjacent areas? As it relates to WAMI, could you also talk about the opportunity in big data, sensor, and market sizing?
Yeah. So the sales cycle regarding the authentication is a very lengthy one. So imagine various governments with, say, banknotes and other products. How often do they change banknotes? So that's an extremely lengthy product I mean, lengthy cycle. But at the same time, the products have a very long life, if you will. But nonetheless, I think that what we are offering is some proprietary technology, some cutting-edge nuances to some of the things that our partners and various institutions like to see. We also started launching back in December, we launched a new product to go into the branding protection or the brand protection. And that takes time. As you know, counterfeiting is a big deal around the world. So that's on the authentication. And with regard to the WAMI, we see a tremendous amount of opportunities.
We disclosed in a 10-K that our team made a tremendous amount of efforts with respect to where they got in 2023. They met with various potential customers. But again, we need to have a product, and that manifests itself in our ability to spend money on investing in that product to getting it to the finish line. It takes a lot of software and engineering part of it. In addition, as it relates to data, it has a lot of opportunities with regard to data because it's not only that we sell the product, but we would offer services as it relates to the data. And that's going to be a component later offered to go with the product.
On the competitive roadmap, do you feel that you're at par with Elbit, or who do you see as your primary competitor?
Elbit, certainly yeah. Yeah. It's a great question. It's a fantastic question. Elbit certainly has a competing product. But from all the discussions that I've had with the team, Elbit is lacking some of the intricacies and the proprietary technology that we have. As you know, Elbit is very much targeted. It's almost a defense contractor, for lack of a better term. And it's predominantly for defense systems. But we're also targeting not only defense or governments, but also commercialization and whatnot.
Got it. And you're giving some broad-level indications in terms of battery materials, right, joint venture with a large Asian OEM. And I mean, that's a good housekeeping seal of approval. I was wondering, what's the timeline in terms of commercialization there? Thank you.
Yeah. Also a very good question. As I mentioned earlier, it's very lengthy. Whichever way we're looking at, it's a very lengthy process given the fact that we are a very lean organization nowadays. Liquidity is an issue. It takes a lot of investing in that area. That's something that we're dealing with on a daily basis. We're also, at the same time, looking for strategic partners to help us get to commercialization and to the finish line. As soon as we'll have additional information to announce, we'll do that.
Okay. Great. Thank you very much and all the best.
Absolutely. Thank you, Ashok.
All right. As there are no more questions and in closing the conference call, we need to remind you that our discussions contain forward-looking statements and that there are a number of important factors that could cause our results to differ materially from those indicated by these forward-looking statements, including, among others, risks detailed from time to time in our SEC reports, including our annual report on Form 10-K for the period ended December 31, 2023. We do not undertake any obligation to update forward-looking statements. Thank you all for your time. We would also like to take this opportunity to thank our suppliers, customers, employees, and stockholders for their support of Meta Materials.
Thank you, everyone, for joining.