Fri, 07 Aug 2020

MONTREAL, QC / ACCESSWIRE / January 9, 2020 / Loop Industries, Inc. (NASDAQ:LOOP) (the 'Company' or 'Loop'), a leading sustainable plastics technology innovator, today announced its consolidated financial results for the third quarter ended November 30, 2019 of its 2020 fiscal year, and provided an update on its continuing progress in implementing its business plan.

'Our focus this quarter has been on executing the engineering work for the Spartanburg facility and further developing our technology.' said Daniel Solomita, Loop's Founder & Chief Executive Officer.

'We also rebranded our Waste to Resin ('WtR™') greenfield facilities solution to Infinite Loop™. Infinite Loop™ is our fully integrated and reimagined manufacturing facility for sustainable Loop™ PET plastic resin and polyester fiber. We are continuing to develop the engineering of the Infinite LoopTM platform and we have increased our efforts on the development of Infinite Loop™ projects, in Europe and in North America.'

Results of Operations

The following tables summarize our operating results for the three-month period ended November 30, 2019 and 2018, in U.S. Dollars.

Three Months Ended November 30
2019 2018 $ Change
Revenues
$ - $ - $ -
Operating expenses
Research and development
Stock-based compensation
311,353 249,548 61,805
Other research and development
966,819 542,563 424,256
Total research and development
1,278,172 792,111 486,061
General and administrative
Stock-based compensation
565,440 721,358 (155,918)
Other general and administrative
1,260,373 1,250,489 9,884
Total general and administrative
1,825,813 1,971,847 (146,034)
Depreciation and amortization
219,628 155,053 64,575
Interest and other finance costs
693,027 14,883 678,144
Interest income
(171,274) - (171,274)
Foreign exchange (gain) loss
5,533 (20,132) 25,665
Total operating expenses
3,850,899 2,913,762 937,137
Net loss
$ (3,850,899) $ (2,913,762) $ (937,137)

Third Quarter Ended November 30, 2019

Following the decision of the joint venture with Indorama Ventures Holdings LP to double the capacity of the Spartanburg plant due to customer demand to 40,000 metric tons per year, as disclosed in our 10-Q for the period ended August 31, 2019, we identified a number of enhancements to the plant design to improve the operability and lower the total construction cost of the plant. The additional engineering is underway and management anticipates it will be completed by the end of this calendar quarter and as a result, the commissioning of the facility is anticipated to occur in the third quarter of the calendar year 2021.

The net loss for the three-month period ended November 30, 2019 increased $0.94 million to $3.85 million, as compared to the net loss for the three-month period ended November 30, 2018 which was $2.91 million. The increase of $0.94 million is primarily attributable to an increase in interest and other finance costs of $0.68 million, an increase in research and development expenses of $0.49 million, an increase in depreciation and amortization expenses of $0.06 million and an increase in foreign exchange loss of $0.03 million, partially offset by lower general and administrative expenses of $0.15 million, and by an increase in interest income of $0.17 million.

Research and development expenses for the three-month period ended November 30, 2019 amounted to $1.28 million compared to $0.79 million for the three-month period ended November 30, 2018, representing an increase of $0.49 million, or representing an increase of $0.42 million excluding stock-based compensation. The increase of $0.42 million was primarily attributable to by higher employee compensation costs of $0.38, by higher purchases and freight costs of $0.08 million, by higher facilities costs of $0.02, by higher equipment rental costs of $0.02 and by higher license fees of $0.03 million, offset by lower legal and professional fees of $0.07 million and by higher research and development tax credits of $0.06 million. The increase in non-cash stock-based compensation expense of $0.06 million is mainly attributable to the timing of stock awards provided to certain employees.

General and administrative expenses for the three-month period ended November 30, 2019 amounted to $1.83 million compared to $1.97 million for the three-month period ended November 30, 2018, representing a decrease of $0.14 million, or an increase of $0.01 million excluding stock-based compensation. The increase of $0.01 million was mainly attributable to higher employee compensation costs of $0.15 million and by higher commercial insurance expenses of $0.08 million, offset by lower legal and professional fees of $0.20 million. Stock-based compensation expense for the three-month period ended November 30, 2019 amounted to $0.57 million compared to $0.72 million for the three-month period ended November 30, 2018, representing a decrease of $0.15 million, which was mainly attributable to lower stock awards provided to executives.

Depreciation and amortization for the three-month period ended November 30, 2019 totaled $0.22 million compared to $0.16 million for the three-month period ended November 30, 2018, representing an increase of $0.06 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 November 30, 2019 totaled $0.69 million compared to $0.01 million the three-month period ended November 30, 2018, representing an increase of $0.68 million. The increase is mainly attributable to an increase in accretion expense of $0.55 million, an increase in interest expense of $0.10 million and by an increase in amortization of deferred financing costs of $0.02 million.

Nine Months Ended November 30, 2019

The following table summarizes our operating results for the nine-month periods ended November 30, 2019 and 2018, in U.S. Dollars.

Nine Months Ended November 30
2019 2018 $ Change
Revenues
$ - $ - $ -
Operating expenses
Research and development
Stock-based compensation
941,142 910,004 31,138
Other research and development
2,305,104 2,014,479 290,625
Total research and development
3,246,246 2,924,483 321,763
General and administrative
Stock-based compensation
1,669,669 2,252,041 (582,372)
Other general and administrative
3,777,387 4,469,755 (692,368)
Total general and administrative
5,447,056 6,721,796 (1,274,740)
Depreciation and amortization
585,367 366,710 218,657
Interest and other finance costs
1,817,091 41,117 1,775,974
Interest income
(363,565) - (363,565)
Foreign exchange (gain) loss
15,297 (72,404) 87,701
Total operating expenses
10,747,492 9,981,702 765,790
Net loss
$ (10,747,492) $ (9,981,702) $ (765,790)

The net loss for the nine-month period ended November 30, 2019 increased by $0.77 million to $10.75 million, as compared to the net loss for the nine-month period ended November 30, 2018 which was $9.98 million. The increase of $0.77 million is primarily due to an increase in interest and other finance costs of $1.77 million, an increase in research and development expenses of $0.32 million, an increase in depreciation and amortization of $0.22 million and an increase in the foreign exchange loss of $0.09 million, partially offset by lower general and administrative expenses of $1.27 million and an increase in interest income of $0.36 million.

Research and development expenses for the nine-month period ended November 30, 2019 amounted to $3.24 million compared to $2.92 million for the nine-month period ended November 30, 2018, representing an increase of $0.32 million, or representing an increase of $0.29 million excluding stock-based compensation. The increase of $0.29 million was primarily attributable to higher employee compensation costs of $0.55 million, by higher facilities costs of $0.04 million, by higher purchases and freight costs of $0.07, by higher license fees of $0.03 million, by higher repairs and maintenance costs of $0.02 million, and by higher meals, travel and entertainment expenses of $0.04 million, offset by lower legal and professional fees of $0.36 million and by higher research and development tax credits of $0.16 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 nine-month period ended November 30, 2019 amounted to $5.45 million compared to $6.72 million for the nine-month period ended November 30, 2018, representing a decrease of $1.27 million, or a decrease of $0.69 million excluding stock-based compensation. The decrease of $0.69 million was mainly attributable to lower legal and professional fees of $1.36 million, offset by higher employee compensation costs of $0.50 million and by higher commercial insurance expenses totaling $0.17 million. Stock-based compensation expense for the nine-month period ended November 30, 2019 amounted to $1.67 million compared to $2.25 million for the nine-month period ended November 30, 2018, representing a decrease of $0.58 million, which was mainly attributable lower stock awards provided to executives.

Depreciation and amortization for the nine-month period ended November 30, 2019 totaled $0.59 million compared to $0.37 million for the nine-month period ended November 30, 2018, representing an increase of $0.22 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 nine-month period ended November 30, 2019 totaled $1.82 million compared to $0.04 million the nine-month period ended November 30, 2018, representing an increase of $1.78 million. The increase is mainly attributable to an increase in accretion expense of $1.58 million, an increase in interest expense of $0.31 million and by an increase in amortization of deferred financing costs of $0.09 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 November 30, 2019, the Company had cash on hand of $35.5 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 has 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 vested 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 and $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 Industries, Inc. 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 estimated 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 November 30, 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.

On July 24, 2019, the Company executed an agreement with Investissement Quebec providing it with a financing from which we can draw a total equal to 63.45% of all eligible expenses incurred for the expansion of our Pilot Plant up to a maximum CDN$4,600,000. There is a 36-month moratorium on both capital and interest repayments beginning as of the first disbursement date. At the end of the 36-month moratorium, capital and interest will be repayable in 84 monthly installments. The loan will bear interest at 2.36%. The Company has also agreed to issue to Investissement Quebec warrants convertible into common shares in an amount equal to 10% of each disbursement up to a maximum aggregate amount of CDN$460,000. The warrants will be issued at a price per share equal to the higher of (i) $11.00 per share and (ii) the ten-day weighted average closing price of Loop Industries' shares of Common Stock on the Nasdaq stock market for the 10 days prior to the issue of the warrants. The warrants can be exercised immediately upon grant and will have a term of three years from the date of issuance. The loan can be repaid at any time by the Company without penalty. No disbursements have yet been made under the agreement.

Flow of Funds

Summary of Cash Flows

A summary of cash flows for the nine-month period ended November 30, 2019 and 2018 was as follows:

Nine Months Ended November 30
2019 2018
Net cash used in operating activities

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