Blueprint
LOOP
INDUSTRIES REPORTS SECOND QUARTER CONSOLIDATED FINANCIAL RESULTS OF
FISCAL 2020
CAPITAL TO FINANCE NEXT PHASE OF GROWTH STRATEGY IN
PLACE
MONTREAL, October 8, 2019 (GLOBE NEWSWIRE) -- Loop Industries, Inc. (NASDAQ: LOOP)
(the “Company” or “Loop”),
a leading
sustainable plastics technology innovator, today announced its consolidated financial
results for the second quarter ended August 31, 2019 of its 2020
fiscal year, and provided an update on its continuing progress in
implementing its business plan.
“The engineering work for our first facility in Spartanburg,
South Carolina with our joint venture partner, Indorama Ventures,
to produce Loop™ PET resin made from 100% recycled materials
continues to progress. With our financing now in place we have
turned our attention to identifying locations to deploy our
Waste-to-Resin greenfield facilities as we continue to experience
strong demand for our product.” said
Daniel Solomita, Loop’s Founder & Chief Executive
Officer.
Results of Operations
The
following tables summarize our operating results for the
three-month period ended August 31, 2019 and 2018, in U.S.
Dollars.
|
|
Three Months
Ended August 31
|
|
|
|
|
|
|
Revenues
|
$-
|
$-
|
$-
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
Research and
development
|
|
|
|
|
Stock-based
compensation
|
317,353
|
250,242
|
67,111
|
|
Other
research and development
|
652,860
|
816,050
|
(163,190)
|
|
Total
research and development
|
970,213
|
1,066,292
|
(96,079)
|
|
|
|
|
General and
administrative
|
|
|
|
|
Stock-based
compensation
|
485,975
|
755,229
|
(269,254)
|
|
Other
general and administrative
|
1,232,638
|
1,639,169
|
(406,531)
|
|
Total
general and administrative
|
1,718,613
|
2,394,398
|
(675,785)
|
|
|
|
|
Depreciation and
amortization
|
201,403
|
110,589
|
90,814
|
|
Interest and other
finance costs
|
622,183
|
13,443
|
608,740
|
|
Interest
income
|
(192,259)
|
(122)
|
(192,137)
|
|
Foreign exchange
(gain) loss
|
21,890
|
(46,190)
|
68,080
|
|
Total
operating expenses
|
3,342,043
|
3,538,410
|
(196,367)
|
|
Net
loss
|
$(3,342,043)
|
$(3,538,410)
|
$196,367
|
Second Quarter Ended August 31, 2019
The net
loss for the three-month period ended August 31, 2019 decreased to
$3.34 million, as compared to the net loss for the three-month
period ended August 31, 2018 which was $3.54 million. The
decrease of $0.20 million is primarily attributable to lower
research and development expenses of $0.10 million, by lower
general and administrative expenses of $0.68 million and by an
increase in interest income of $0.19 million, offset by higher
depreciation and amortization expenses of $0.09 million, by higher
interest and other finance costs of $0.61 million and by a higher
foreign exchange loss of $0.07 million.
Research
and development expenses for the three-month period ended August
31, 2019 amounted to $0.97 million compared to $1.07 million for
the three-month period ended August 31, 2018, representing a
decrease of $0.10 million, or representing a decrease of $0.16
million excluding stock-based compensation. The decrease of $0.16
million was primarily attributable to lower legal and professional
fees of $0.32 million and by higher research and development tax
credits of $0.06 million offset by higher employee compensation
costs of $0.20 million. The increase in non-cash stock-based
compensation expense of $0.07 million is mainly attributable to the
timing of stock awards provided to certain employees.
General
and administrative expenses for the three-month period ended August
31, 2019 amounted to $1.72 million compared to $2.39 million for
the three-month period ended August 31, 2018, representing a
decrease of $0.68 million, or a decrease of $0.41 million excluding
stock-based compensation. The decrease of $0.41 million was mainly
attributable to lower legal and professional fees of $0.56 million
offset by higher employee compensation costs of $0.08 million and
by higher commercial insurance expenses of $0.06 million.
Stock-based compensation expense for the three-month period ended
August 31, 2019 amounted to $0.49 million compared to $0.76 million
for the three-month period ended August 31, 2018, representing a
decrease of $0.27 million, which was mainly attributable lower
stock awards provided to executives.
Depreciation
and amortization for the three-month period ended August 31, 2019
totaled $0.20 million compared to $0.11 million for the three-month
period ended August 31, 2018, representing an increase of $0.09
million. This increase is mainly attributable to the addition of
fixed assets at the Company’s pilot plant and corporate
offices.
Interest
and other finance costs for the three-month period ended August 31,
2019 totaled $0.62 million compared to $0.01 million the
three-month period ended August 31, 2018, representing an increase
of $0.61 million. The increase is mainly attributable to an
increase in accretion expense of $0.49 million, an increase in
interest expense of $0.10 million and by an increase in
amortization of deferred financing costs of $0.02
million.
Six Months Ended August 31, 2019
The
following table summarizes our operating results for the six-month
periods ended August 31, 2019 and 2018, in U.S.
Dollars.
|
|
Six Months Ended
August 31
|
|
|
|
|
|
|
Revenues
|
$-
|
$-
|
$-
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
Research and
development
|
|
|
|
|
Stock-based
compensation
|
629,788
|
660,455
|
(30,667)
|
|
Other
research and development
|
1,338,286
|
1,471,916
|
(133,630)
|
|
Total
research and development
|
1,968,074
|
2,132,371
|
(164,297)
|
|
|
|
|
General and
administrative
|
|
|
|
|
Stock-based
compensation
|
1,104,230
|
1,530,686
|
(426,456)
|
|
Other
general and administrative
|
2,517,013
|
3,219,262
|
(702,249)
|
|
Total
general and administrative
|
3,621,243
|
4,749,948
|
(1,128,705)
|
|
|
|
|
Depreciation and
amortization
|
365,739
|
211,658
|
154,081
|
|
Interest and other
finance costs
|
1,124,064
|
26,481
|
1,097,583
|
|
Interest
income
|
(192,291)
|
(247)
|
(192,044)
|
|
Foreign exchange
(gain) loss
|
9,764
|
(52,271)
|
62,035
|
|
Total
operating expenses
|
6,896,593
|
7,067,940
|
(171,347)
|
|
Net
loss
|
$(6,896,593)
|
$(7,067,940)
|
$171,347
|
The net
loss for the six-month period ended August 31, 2019 decreased by
$0.17 million to $6.90 million, as compared to the net loss for the
six-month period ended August 31, 2018 which was $7.07
million. The decrease of $0.17 million is primarily due to
lower research and development expenses of $0.16 million, by lower
general and administrative expenses of $1.13 million and by an
increase in interest income of $0.19 million, offset by an increase
in interest and other finance costs of $1.10 million, an increase
in depreciation and amortization of $0.15 million and by an
increase in the foreign exchange loss of $0.06
million.
Research
and development expenses for the six-month period ended August 31,
2019 amounted to $1.97 million compared to $2.13 million for the
six-month period ended August 31, 2018, representing a decrease of
$0.16 million, or representing a decrease of $0.13 million
excluding stock-based compensation. The decrease of $0.13 million
was primarily attributable to lower legal and professional fees of
$0.29 million offset by higher employee compensation costs of $0.17
million. The decrease in non-cash stock-based compensation expense
of $0.03 million is mainly attributable to the timing of stock
awards provided to certain employees.
General
and administrative expenses for the six-month period ended August
31, 2019 amounted to $3.62 million compared to $4.75 million for
the six-month period ended August 31, 2018, representing a decrease
of $1.13 million, or a decrease of $0.70 million excluding
stock-based compensation. The decrease of $0.70 million was mainly
attributable to lower legal and professional fees of $1.15 million,
offset by higher employee compensation costs of $0.34 million and
by higher commercial insurance expenses totaling $0.09 million.
Stock-based compensation expense for the six-month period ended
August 31, 2019 amounted to $1.10 million compared to $1.53 million
for the six-month period ended August 31, 2018, representing a
decrease of $0.43 million, which was mainly attributable lower
stock awards provided to executives.
Depreciation
and amortization for the six-month period ended August 31, 2019
totaled $0.37 million compared to $0.21 million for the six-month
period ended August 31, 2018, representing an increase of $0.16
million. This increase is mainly attributable to the addition of
fixed assets at the Company’s pilot plant and corporate
offices.
Interest
and other finance costs for the six-month period ended August 31,
2019 totaled $1.13 million compared to $0.03 million the six-month
period ended August 31, 2018, representing an increase of $1.10
million. The increase is mainly attributable to an increase in
accretion expense of $1.04 million, an increase in interest expense
of $0.22 million and by an increase in amortization of deferred
financing costs of $0.07 million, offset by a gain on conversion of
the November 2018 Notes of $0.23 million.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Loop is a development stage company with no revenues, and our
ongoing operations are being financed by raising new equity and
debt capital. To date, we have been successful in raising capital
to finance our ongoing operations, reflecting the potential for
commercializing our branded resin and the progress made to date in
implementing our business plans.
As at
August 31, 2019, the Company had cash on hand of $37.9
million. On May 29, 2019, the Company entered into a Securities Purchase Agreement
(“Purchase Agreement”) with Northern Private Capital
Fund I Limited Partnership (“Northern Capital”)
pursuant to which the Company issued to Northern Capital in a
registered direct offering (“Offering”) an aggregate of
4,093,567 shares of the Company’s common stock at a per share
purchase price of $8.55 per share, for aggregate net proceeds of
approximately $34.6 million, after deducting offering expenses
payable by the Company of approximately $400,000. Concurrently with
the Offering and pursuant to the Purchase Agreement, the Company
issued to Northern Capital options to purchase up to an additional
4,093,567 shares of the Company’s common stock at an exercise
price of $11.00 per share, which will vest on December 15, 2019,
and are exercisable for three years following the closing date of
the Offering and which would result in further total net proceeds
of approximately $45 million. The proceeds from the Offering
will be used to finance the start-up of its joint venture
commercial operations, which is estimated to be between
$15,000,000-$20,000,000, and further fund the development of its
technology and new technologies and its ongoing pre-revenue
operations.
On February 27, 2019, Loop entered into a Securities Purchase
Agreement with a single institutional investor, pursuant to which
the Company agreed to issue and sell to the Purchaser, in a
registered direct offering (“Offering”), an aggregate
of 600,000 shares (“Shares”) of the Company’s
common stock at a per share purchase price of $8.55 per share, for
aggregate net proceeds of approximately $4.2 million, after
deducting placement agent fees and offering expenses payable by the
Company of approximately $0.9 million. The Offering closed on March
1, 2019. The Company intends to use the net proceeds from the
Offering for general corporate purposes and working
capital.
As at
August 31, 2019, we have a long-term debt obligation to a Canadian
bank in connection with the purchase, in Fiscal 2018, of the land
and building where our pilot plant and corporate offices are
located, at 480 Fernand-Poitras, Terrebonne, Québec, Canada J6Y 1Y4. On January 24,
2018, the Company obtained a CDN$1,400,000 20-year term instalment
loan (the “Loan”), from a Canadian bank. The Loan
bears interest at the bank’s Canadian prime rate plus 1.5%. By
agreement, the Loan is repayable in monthly payments of CDN $5,833
plus interest, until January 2021, at which time it will be subject
be renewal. It includes an option allowing for the prepayment of
the Loan without penalty.
Flow of Funds
Summary of Cash Flows
A
summary of cash flows for the six-month period ended August 31,
2019 and 2018 was as follows:
|
|
Six Months Ended
August 31
|
|
|
|
|
|
Net cash used in
operating activities
|
$(5,235,429)
|
$(3,908,623)
|
|
Net cash used in
investing activities
|
(1,785,198)
|
(1,104,970)
|
|
Net cash provided
from (used in) financing activities
|
39,141,055
|
(26,808)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(22,778)
|
(191,846)
|
|
Net increase
(decrease) in cash and cash equivalents
|
$32,097,650
|
$(5,232,247)
|
Net Cash Used in Operating Activities
During
the six months ended August 31, 2019, we used $5.2 million in
operations compared to $3.9 million during the six months ended
August 31, 2018. The Company continued to invest in research and
development on its existing technologies and new technologies,
particularly on the evolution of its GEN II technology as the
Company moves to the next phase of commercialization.
Net Cash Used in Investing Activities
During
the six months ended August 31, 2019, the Company made investments
of $1.2 million in property, plant and equipment as compared to
$1.0 million for the six months ended August 31, 2018, primarily in
connection with the upgrade of its GEN II industrial pilot
plant.
During
the six months ended August 31, 2019, the Company made investments
in intangible assets of $0.08 million as compared to $0.07 million
for the six months ended August 31, 2018, particularly in its GEN
II patent technology in the United States and around the
world.
During
the six months ended August 31, 2019, the Company also made its
initial contribution of $500,000
to Indorama Loop Technologies, LLC, the joint venture with
Indorama Ventures Holdings LP, USA.
Net Cash Provided from (Used in) Financing Activities
During
the six months ended August 31, 2019, we raised net proceeds of
$39.2 million through the sale of common stock.
As at
August 31, 2019, the Company was in compliance with its financial
covenants.
Loop Industries, Inc.
Consolidated Statements of Operations and Comprehensive
Loss
(in United States dollars)
|
|
Three
Months
Ended August
31
|
Six
Months
Ended August
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$-
|
$-
|
$-
|
$-
|
|
|
|
|
|
|
|
Operating Expenses
-
|
|
|
|
|
|
Research and
development
|
970,213
|
1,066,292
|
1,968,074
|
2,132,371
|
|
General and
administrative
|
1,718,613
|
2,394,398
|
3,621,243
|
4,749,948
|
|
Depreciation and
amortization
|
201,403
|
110,589
|
365,739
|
211.658
|
|
Interest and other
finance costs
|
622,183
|
13,443
|
1,124,064
|
26,481
|
|
Interest
income
|
(192,259)
|
(122)
|
(192,291)
|
(247)
|
|
Foreign exchange
(gain) loss
|
21,890
|
(46,190)
|
9,764
|
(52,271)
|
|
Total operating
expenses
|
3,342,043
|
3,538,410
|
6,896,593
|
7,067,940
|
|
|
|
|
|
|
|
Net
Loss
|
(3,342,043)
|
(3,538,410)
|
(6,896,593)
|
(7,067,940)
|
|
|
|
|
|
|
|
Other comprehensive
loss -
|
|
|
|
|
|
Foreign currency
translation adjustment
|
102,457
|
(59,321)
|
(37,685)
|
(111,589)
|
|
Comprehensive
Loss
|
$(3,239,586)
|
$(3,597,731)
|
$(6,934,278)
|
$(7,179,529)
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
- Basic and
Diluted
|
$(0.09)
|
$(0.10)
|
$(0.19)
|
$(0.21)
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
- Basic and
Diluted
|
38,383,156
|
33,805,706
|
36,548,832
|
33,768,516
|
Loop Industries, Inc.
Condensed Consolidated Balance Sheets
(in United States dollars)
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash
and cash equivalents
|
$37,931,040
|
$5,833,390
|
|
Sales
tax, tax credits and other receivables
|
716,314
|
599,000
|
|
Prepaid
expenses
|
248,712
|
226,521
|
|
Total
current assets
|
38,896,066
|
6,658,911
|
|
Investment
in joint venture
|
500,000
|
-
|
|
Property,
plant and equipment, net
|
6,428,004
|
5,371,263
|
|
Intangible assets,
net
|
200,351
|
127,672
|
|
Total
assets
|
$46,024,421
|
$12,157,846
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable and accrued liabilities
|
$1,511,976
|
$2,670,233
|
|
Convertible
notes
|
4,259,759
|
5,636,172
|
|
Warrants
|
-
|
219,531
|
|
Current
portion of long-term debt
|
52,651
|
53,155
|
|
Total
current liabilities
|
5,824,386
|
8,579,091
|
|
Long-term
debt
|
917,012
|
952,363
|
|
Total
liabilities
|
6,741,398
|
9,531,454
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
Series
A Preferred stock, par value $0.0001; 25,000,000 shares authorized;
one share issued and outstanding
|
-
|
-
|
|
Common stock, par value $0.0001: 250,000,000
shares authorized; 39,032,528 shares issued and outstanding
(February 28, 2019 – 33, 805,706)
|
3,903
|
3,381
|
|
Additional
paid-in capital
|
74,414,197
|
38,966,208
|
|
Additional paid-in
capital – Warrants
|
9,700,102
|
757,704
|
|
Additional paid-in
capital – Beneficial conversion feature
|
1,200,915
|
1,200,915
|
|
Common stock
issuable, 1,000,000 shares
|
-
|
800,000
|
|
Accumulated
deficit
|
(45,708,185)
|
(38,811,592)
|
Accumulated
other comprehensive loss
|
(327,909)
|
(290,224)
|
|
Total
stockholders' equity
|
39,283,023
|
2,626,392
|
|
Total
liabilities and stockholders' equity
|
$46,024,421
|
$12,157,846
|
Loop Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(in United States dollars)
|
|
Six Months Ended August 31
|
|
|
|
|
|
Cash Flows from Operating Activities
|
|
|
|
Net
loss
|
$(6,896,593)
|
$(7,067,940)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation
and amortization
|
365,739
|
211,658
|
|
Stock-based
compensation expense
|
1,734,018
|
2,191,139
|
|
Accrued
interest
|
215,433
|
-
|
|
Loss
on revaluation of warrants
|
8,483
|
-
|
|
Debt
accretion
|
1,035,888
|
-
|
|
Deferred
financing costs
|
66,327
|
-
|
|
Gain
on conversion of convertible notes
|
(232,565)
|
-
|
|
Changes
in operating assets and liabilities:
|
|
|
|
Sales
tax and tax credits receivable
|
(123,194)
|
47,725
|
|
Prepaid
expenses
|
(22,987)
|
359,072
|
Accounts
payable and accrued liabilities
|
(1,385,978)
|
349,723
|
|
Net
cash used in operating activities
|
(5,235,429)
|
(3,908,623)
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
Investment
in joint venture
|
(500,000)
|
-
|
|
Additions
to property, plant and equipment
|
(1,202,766)
|
(1,038,775)
|
|
Additions
to intangible assets
|
(82,432)
|
(66,195)
|
|
Net
cash used in investing activities
|
(1,785,198)
|
(1,104,970)
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
Proceeds
from sale of common shares
|
40,273,751
|
-
|
|
Share
issuance costs
|
(1,106,370)
|
-
|
|
Repayment
of long-term debt
|
(26,326)
|
(26,808)
|
|
Net
cash provided from (used in) financing activities
|
39,141,055
|
(26,808)
|
|
|
|
|
|
Effect
of exchange rate changes
|
(22,778)
|
(191,846)
|
|
Net
change in cash and cash equivalents
|
32,097,650
|
(5,232,247)
|
|
Cash
and cash equivalents, beginning of period
|
5,833,390
|
8,149,713
|
|
Cash
and cash equivalents, end of period
|
$37,931,040
|
$2,917,466
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
Income
tax paid
|
$-
|
$-
|
|
Interest
paid
|
$30,497
|
$26,234
|
About Loop
Loop is a technology company whose mission is to accelerate the
world’s shift toward sustainable PET plastic and polyester
fiber and away from our dependence on fossil fuels. Loop owns
patented and proprietary technology that depolymerizes no and low
value waste PET plastic and polyester fiber, including plastic
bottles and packaging, carpets and textiles of any color,
transparency or condition and even ocean plastics that have been
degraded by the sun and salt, to its base building blocks
(monomers). The monomers are filtered, purified and polymerized to
create virgin-quality Loop™ branded PET resin and polyester
fiber suitable for use in food-grade packaging, thus enabling our
customers to meet their sustainability objectives. Loop is
contributing to the global movement toward a circular economy by
raising awareness about the importance of preventing and recovering
waste plastic from the environment to ensure plastic stays in the
economy for a more sustainable future for all.
Common
shares of the Company are listed on the Nasdaq Global Market under
the symbol “LOOP.”
For
more information, please visit www.loopindustries.com.
Follow us on Twitter: @loopindustries, Instagram: loopindustries,
Facebook: www.facebook.com/Loopindustrie/
and LinkedIn: www.linkedin.com/company/loop-industries/
Forward-Looking Statements
This
news release contains "forward-looking statements." Such statements
may be preceded by the words "intends," "may," "will," "plans,"
"expects," "anticipates," "projects," "predicts," "estimates,"
"aims," "believes," "hopes," "potential" or similar words.
Forward-looking statements are not guarantees of future
performance, are based on certain assumptions and are subject to
various known and unknown risks and uncertainties, many of which
are beyond Loop's control, and cannot be predicted or quantified
and consequently, actual results may differ materially from those
expressed or implied by such forward-looking statements. Such risks
and uncertainties include, without limitation, risks and
uncertainties associated with (i) commercialization of our
technology and products, (ii) our status of relationship with
partners, (iii) development and protection of our intellectual
property and products, (iv) industry competition, (v) our need for
and ability to obtain additional funding, (vi) building our
manufacturing facility, (vii) our ability to sell our products in
order to generate revenues, (viii) our proposed business model and
our ability to execute thereon, (ix) adverse effects on the
Company’s business and operations as a result of increased
regulatory, media or financial reporting issues and practices,
rumors or otherwise, and (x) other factors discussed in our
subsequent filings with the SEC. More detailed information
about Loop and the risk factors that may affect the realization of
forward-looking statements is set forth in our filings with the
Securities and Exchange Commission (SEC). Investors and
security holders are urged to read these documents free of charge
on the SEC's web site at http://www.sec.gov. Loop assumes no
obligation to publicly update or revise its forward-looking
statements as a result of new information, future events or
otherwise.
For More Information:
Investors:
Nelson
Gentiletti
Loop
Industries, Inc.
+1
(450) 951 8555 ext. 223
ngentiletti@loopindustries.com
Media Inquiries:
Stephanie
Corrente
Loop
Industries, Inc.
+1
(450) 951-8555 ext. 226
scorrente@loopindustries.com