Metamaterial Inc. (CNSX:MMAT) signed a non-binding letter of intent to acquire Torchlight Energy Resources, Inc. (NasdaqCM:TRCH) from Tom Welch and others for approximately $140 million in a reverse merger transaction on September 15, 2020. Metamaterial Inc. signed a definitive agreement to acquire Torchlight Energy Resources, Inc. in a reverse merger transaction on December 14, 2020. Torchlight will acquire 100% of Metamaterial through the issuance of common stock, such that at closing, the former equity holders of Torchlight would own 25% of the combined company with the former equity holders of Metamaterial owning the remaining 75%. Torchlight will issue 455 million shares in connection with the arrangement. Torchlight will divest within the first half of 2021 Torchlight's oil and gas assets for the benefit of Torchlight's legacy shareholders. Torchlight legacy shareholders will be entitled to a distribution of any values attributable to the sale of Torchlight's existing oil and gas business asset. Torchlight has loaned $0.5 million to Metamaterial pursuant to an unsecured convertible promissory note and has agreed to loan an additional $0.5 million to Metamaterial within 5 days of signing the definitive agreement. An entity owned by Greg McCabe, Torchlight's Chairman, provided a bridge loan to Torchlight for $1.5 million with a conversion feature of $0.375 per common share of Torchlight. As of February 4, 2021,Torchlight will use a portion of the net proceeds to provide $5 million of additional bridge financing to Metamaterial in the form of a third unsecured promissory note. Metamaterial will become a wholly owned subsidiary of Torchlight. If Torchlight and Metamaterial enter into a definitive agreement by the later of November 2, 2020 or such later date that is agreed to by Torchlight and Metamaterial in writing, the $0.5 million from the escrow account will be released to Torchlight and Torchlight will lend this amount to Metamaterial pursuant to another convertible promissory note. If Torchlight does not enter into a definitive agreement by the later of November 2, 2020 or such later date, that is agreed to by Torchlight and Metamaterial in writing, the $0.5 million from this escrow account will be released back to Greg McCabe and deducted from the principal amount outstanding under the Greg McCabe Note. The combined company, formerly known as Torchlight Energy Resources, Inc., will at closing focus its business to align with the current business of Metamaterial. The combined entity will be named as 'Meta Materials Inc.' and trade under the ticker "MMAT”. In case of termination, terminating party will be liable to pay a fee of $2 million.

Following the closing of the transaction the Board of Directors of the combined company shall be comprised of seven members one of whom shall be appointed by Torchlight, subject to the approval of Metamaterial and one of whom shall be jointly agreed to by Metamaterial and Torchlight. Metamaterial shall appoint the five remaining members of the board, which members must include the required number of independent members to maintain the NASDAQ listing requirement. The current management of Torchlight will resign and be replaced Metamaterial's Chief Executive Officer, George Palikaras will be appointed Chief Executive Officer and President and Jonathan Waldern as the Chief Technical Officer of the combined company, along with the appointment of Kenneth Rice as Chief Financial Officer and Executive Vice President and Ram Ramkumar will serve as the Chairman of the Board of Directors. Allison Christilaw, Eric Leslie, Maurice Guitton, Ken Hannah and Steen Karsbo are expected to be appointed as Directors upon completion. Torchlight's management is to remain in an advisory role focused on winding down the Torchlight legacy business and maximizing the value obtained from the divestiture of the Torchlight oil and gas assets. Pursuant to the letter of intent, both Torchlight and Metamaterial are prohibited from directly or indirectly soliciting or participating in any discussions regarding a sale of their business until November 2, 2020, unless extended in writing by both parties.

The transaction remains subject to completion of a due diligence review by each party and negotiation of definitive agreements, audits of Torchlight and Metamaterial and the structure may change due to tax or other transaction considerations. If a definitive agreement is entered into, it is expected that the closing of a transaction will include customary closing conditions including approval of Ontario Superior Court of Justice, dissenters rights limited, lock-up agreement, execution of support agreement, NASDAQ and CSE approval and approval by the shareholders of both companies. The transaction is also conditional on Torchlight raising gross proceeds of at least $10 million through the issuance of common stock or securities convertible into or exercisable for common stock prior to the effective time of the arrangement, all of our Torchlight is converted into shares of our common stock or repaid in full and the shares issuable in connection with the arrangement have been approved for listing on Nasdaq. The transaction has been unanimously approved by the directors of both Metamaterial and Torchlight. As of November 2, 2020, the non-binding letter of intent is extended to November 30, 2020 including without limitation the non-solicitation period. As of November 30, 2020, Torchlight and Metamaterial Inc. announced the extension of the non-binding letter of intent to December 11, 2020. On December 18, 2020, Torchlight loaned $0.5 million to Metamaterial pursuant to an unsecured convertible promissory note. As of February 4, 2021, the date by when the Metamaterial shareholders meeting must be held has been extended to March 31, 2021, and the date by when Metamaterial must apply to the Ontario Court has been extended to February 28, 2021. As of February 8, 2021, Torchlight carried out public offering of its shares, which constitutes the pre-closing financing condition for consummation of the transaction. On February 22, 2021, Torchlight loaned $10 million to Metamaterial evidenced by an unsecured convertible promissory note. As of June 11, 2021, the transaction is approved by the shareholders of Torchlight on the special meeting. The transaction is expected to close in the first half of 2021. The transaction is expected to be completed by March 19, 2021. As of March 15, 2021, the transaction is expected to close in the second quarter of 2021. As of June 21, 2021, the transaction is expected to close to June 30, 2021. As of June 25, 2021, the transaction is expected to close June 28, 2021.

Roth Capital Partners acted as financial advisor and fairness opinion provider to Torchlight. Michael G. Urbani of Stikeman Elliott LLP and Michael A. Hedge and Jason C. Dreibelbis of K&L Gates LLP and Axelrod & Smith acted as legal advisors to Torchlight. Hamilton Clark and Cormark Securities acted as financial advisors and as fairness opinion provider to Metamaterial. John Sabetti, Tracy L. Hooey and Samuel R. Rickett of Fasken Martineau DuMoulin LLP; and Martin Waters and Ethan Lutske of Wilson Sonsini Goodrich & Rosati, P.C. acted as legal advisors to Metamaterial. D.F. King & Co., Inc. acted as the proxy solicitor to Torchlight and will be paid a fee of $10,000. Roth is entitled to receive a fee of $0.175 million for rendering its opinion to Torchlight and in addition, Torchlight agreed to reimburse Roth for its out of pocket expenses incurred in connection with its services, including fees and disbursements of its legal counsel, up to $0.035 million in the aggregate.

Metamaterial Inc. (CNSX:MMAT) completed the acquisition of Torchlight Energy Resources, Inc. (NasdaqCM:TRCH) in a reverse merger transaction from Tom Welch and others on June 28, 2021. Roth is entitled to receive a fee of $0.175 million for rendering its opinion to Torchlight and in addition, Torchlight agreed to reimburse Roth for its out of pocket expenses incurred in connection with its services, including fees and disbursements of its legal counsel, up to $0.035 million in the aggregate.