Loop Industries Provides Business Update and Reports First Quarter Financial Results of Fiscal Year 2022
Loop Industries, a clean technology company, has announced a strategic partnership with SK global chemical to accelerate commercialization of its sustainable PET production in Asia. Loop will own 49% of the joint venture, with SKGC owning 51%. SKGC is investing $56.5 million in Loop by purchasing new common shares. In Q1 2022, Loop reported a net loss of $12.16 million, up from $3.85 million the previous year, driven by increased R&D and administrative expenses. Cash reserves decreased to $18 million, down from $35 million, reflecting ongoing investments for future growth.
- $56.5 million strategic investment from SKGC.
- Formation of a joint venture with SKGC for sustainable PET production.
- Net loss increased to $12.16 million from $3.85 million.
- Cash reserves decreased significantly from $35 million to $18 million.
MONTREAL, QC / ACCESSWIRE / July 15, 2021 / Loop Industries, Inc. (NASDAQ:LOOP) (the "Company" or "Loop"), a clean technology company focused on accelerating a circular plastics economy by manufacturing
SK global chemical Strategic Partnership and Equity Investment
On June 23, 2021, Loop announced announced that it intends to form a strategic partnership with SK global chemical Co. Ltd. ("SKGC"), a subsidiary of South Korea's SK Group, one of Asia's largest conglomerates, to accelerate the commercialization of Loop's sustainable PET plastic and polyester fiber manufacturing technology throughout Asia. Loop and SKGC intend to form a joint venture with exclusivity to build sustainable food-grade PET resin and polyester fiber manufacturing facilities throughout Asia to support global brand companies. Under the terms of the Memorandum of Understanding ("MOU") for the proposed joint venture, SKGC will own 51 percent of the joint venture and Loop will own 49 percent. Loop will also receive a recurring annual royalty fee as a percentage of revenue from each facility for the use of its technology.
In addition, Loop and SKGC have entered into a definitive agreement for SKGC to become a strategic investor in Loop. SKGC will purchase 4,714,813 new treasury common shares of Loop at a price of
Infinite Loop™ Quebec Project
On May 27, 2021, Loop acquired a 19 million square foot parcel of land in Bécancour, Québec for approximately
Management Commentary
Daniel Solomita, Founder and CEO of Loop Industries, said: "As we begin collaboration with our valued partners at SK global chemical, we look forward to accelerating the global commercialization of our sustainable PET plastic manufacturing technology. With an initial investment in four projected facilities in North America, Europe and Asia, including Joint Ventures with Indorama and SUEZ, Loop is well positioned to meet the growing global demand for
First Quarter Ended May 31, 2021
The following table summarizes our operating results for the three-month periods ended May 31, 2021 and 2020, in U.S. Dollars.
| Three months ended May 31, | ||||||||||||
| 2021 | 2020 | Change | ||||||||||
Revenues | $ | - | $ | - | $ | - | ||||||
Expenses | ||||||||||||
Research and development | ||||||||||||
Stock-based compensation | 395,545 | 352,007 | 43,538 | |||||||||
External engineering | 2,903,448 | 74,932 | 2,828,516 | |||||||||
Employee compensation | 1,690,583 | 467,041 | 1,223,542 | |||||||||
Machinery and equipment expenditures | 2,622,892 | - | 2,622,892 | |||||||||
Demonstration plant operating expenses | 691,537 | 286,103 | 405,434 | |||||||||
Other | 333,900 | 300,505 | 33,395 | |||||||||
Total research and development | 8,637,905 | 1,480,588 | 7,157,317 | |||||||||
General and administrative | ||||||||||||
Stock-based compensation | (383,630 | ) | 659,817 | (1,043,447 | ) | |||||||
Professional fees | 1,631,451 | 221,697 | 1,409,754 | |||||||||
Employee compensation | 845,035 | 483,034 | 362,001 | |||||||||
Directors and officers insurance | 868,647 | 473,574 | 395,073 | |||||||||
Other | 199,068 | 114,959 | 84,109 | |||||||||
Total general and administrative | 3,160,571 | 1,953,081 | 1,207,490 | |||||||||
Depreciation and amortization | 132,001 | 255,974 | (123,973 | ) | ||||||||
Interest and other financial expenses | 30,588 | 126,776 | (96,188 | ) | ||||||||
Interest income | (9,761 | ) | (40,346 | ) | 30,585 | |||||||
Foreign exchange loss | 206,060 | 76,641 | 129,419 | |||||||||
Total expenses | 12,157,364 | 3,852,714 | 8,304,650 | |||||||||
Net loss | $ | (12,157,364 | ) | $ | (3,852,714 | ) | $ | (8,304,650 | ) | |||
First Quarter Ended May 31, 2021
The net loss for the three-month period ended May 31, 2021 increased
The
$2.83 million increase in external engineering expenses for ongoing design work for our Infinite Loop TM manufacturing process;$2.62 million increase in purchases of research and development machinery and equipment. Starting in Q3 of fiscal 2021, we expense research and development machinery and equipment in accordance with ASC 730, Research and Development Costs, and no longer capitalize these costs. The timing of this accounting treatment is related to management's decision to convert our pilot plant to exclusively a demonstration and training facility for our future Infinite Loop™ manufacturing facilities, therefore foregoing any alternative future use of its machinery and equipment assets in other applications;$1.2 million increase in employee compensation expenses due to an increase in hiring; and$0.41 million increase in demonstration plant and laboratory operating expenses due to increased activity at our demonstration plant.
The
$1.41 million increase in expenses for legal and professional fees due to costs principally associated with the ongoing SEC investigation and class action suits described in "Part II, Item 1. Legal Proceedings";$0.40 million increase in insurance expenses mainly due to directors and officers ("D&O") insurance renewal costs; and$0.36 million increase in employee compensation expenses due to an increase in hiring.
The listed increases in general and administrative expenses were partially offset by lower stock-based compensation expenses of
The
The
Loop Industries, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| Three Months Ended | ||||||||
| May 31, 2021 | May 31, 2020 | |||||||
Revenue | $ | - | $ | - | ||||
Expenses : | ||||||||
Research and development | 8,637,905 | 1,480,588 | ||||||
General and administrative | 3,160,571 | 1,953,081 | ||||||
Depreciation and amortization | 132,001 | 255,974 | ||||||
Interest and other financial expenses | 30,588 | 126,776 | ||||||
Interest income | (9,761 | ) | (40,346 | ) | ||||
Foreign exchange loss (gain) | 206,060 | 76,641 | ||||||
Total expenses | 12,157,364 | 3,852,714 | ||||||
Net loss | (12,157,364 | ) | (3,852,714 | ) | ||||
Other comprehensive loss - | ||||||||
Foreign currency translation adjustment | 206,815 | (170,412 | ) | |||||
Comprehensive loss | $ | (11,950,549 | ) | $ | (4,023,126 | ) | ||
Loss per share | ||||||||
Basic and diluted | $ | (0.29 | ) | $ | (0.10 | ) | ||
Weighted average common shares outstanding | ||||||||
Basic and diluted | 42,433,107 | 39,916,838 | ||||||
Loop Industries, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
As at | ||||||||
May 31, 2021 | February 28, 2021 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 18,037,062 | $ | 35,221,951 | ||||
| Sales tax, tax credits and other receivables | 1,551,702 | 1,763,835 | ||||||
| Prepaid expenses | 1,978,390 | 609,782 | ||||||
Total current assets | 21,567,154 | 37,595,568 | ||||||
Investment in joint venture | 1,500,000 | 1,500,000 | ||||||
| Property, plant and equipment, net | 8,569,606 | 3,513,051 | ||||||
| Intangible assets, net | 881,223 | 794,894 | ||||||
Total assets | $ | 32,517,983 | $ | 43,403,513 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 9,057,423 | $ | 8,124,865 | ||||
| Current portion of long-term debt | 971,257 | 938,116 | ||||||
Total current liabilities | 10,028,680 | 9,062,981 | ||||||
| Long-term debt | 1,614,971 | 1,516,008 | ||||||
Total liabilities | 11,643,651 | 10,578,989 | ||||||
| Stockholders' Equity | ||||||||
| Series A Preferred stock | - | - | ||||||
| Common stock | 4,244 | 4,242 | ||||||
| Additional paid-in capital | 113,663,032 | 113,662,677 | ||||||
| Additional paid-in capital - Warrants | 8,826,165 | 8,826,165 | ||||||
| Accumulated deficit | (101,819,334) | (89,661,970) | ||||||
| Accumulated other comprehensive loss | 200,225 | (6,590) | ||||||
Total stockholders' equity | 20,874,332 | 32,824,524 | ||||||
Total liabilities and stockholders' equity | $ | 32,517,983 | $ | 43,403,513 | ||||
Loop Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended May 31, | ||||||||
| 2021 | 2020 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (12,157,364 | ) | $ | (3,852,714 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 132,001 | 256,090 | ||||||
Stock-based compensation expense | 15,357 | 1,011,824 | ||||||
Accretion and accrued interest expenses | 21,408 | 17,963 | ||||||
Loss on revaluation of foreign exchange contracts | - | 98,502 | ||||||
Changes in operating assets and liabilities: | ||||||||
Sales tax and tax credits receivable | 287,116 | 76,410 | ||||||
Prepaid expenses | (1,326,519 | ) | (1,865,216 | ) | ||||
Accounts payable and accrued liabilities | 622,443 | (720,759 | ) | |||||
Net cash used in operating activities | (12,405,558 | ) | (4,977,900 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Investment in joint venture | - | (650,000 | ) | |||||
Additions to property, plant and equipment | (4,867,007 | ) | (394,403 | ) | ||||
Additions to intangible assets | (52,319 | ) | (144,386 | ) | ||||
Net cash used in investing activities | (4,919,326 | ) | (1,188,789 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Repayment of long-term debt | (14,496 | ) | (12,693 | ) | ||||
Net cash (used) provided by financing activities | (14,496 | ) | (12,693 | ) | ||||
Effect of exchange rate changes | 154,491 | (29,534 | ) | |||||
Net decrease in cash | (17,184,889 | ) | (6,208,916 | ) | ||||
Cash, beginning of period | 35,221,951 | 33,717,671 | ||||||
Cash, end of period | $ | 18,037,062 | $ | 27,508,755 | ||||
Supplemental Disclosure of Cash Flow Information: | ||||||||
Income tax paid | $ | - | $ | - | ||||
Interest paid | $ | 9,178 | $ | 10,311 | ||||
Interest received | $ | 9,761 | $ | 40,346 | ||||
About Loop Industries
Loop Industries 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 Industries 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 suitable for use in food-grade packaging and polyester fiber, thus enabling our customers to meet their sustainability objectives. Loop Industries is contributing to the global movement towards a circular economy by reducing plastic waste and recovering waste plastic for a sustainable future.
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 Loop on Twitter: @loopindustries , Instagram: loopindustries , Facebook: Loop Industries and LinkedIn: Loop Industries
Forward-Looking Statements
This news release contains "forward-looking statements" as defined in the U.S. Private Securities Litigation Reform Act of 1995. Such statements may be preceded by the words "intends", "may", "will", "plans", "expects", "anticipates", "should", "could", "projects", "predicts", "estimates", "aims", "believes", "hopes", "potential" or "continute" the negative of such terms or similar words. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, ability to improve and expand our capabilities, competition, expected activities and expenditures as we pursue our business plan, the adequacy of our available cash resources, regulatory compliance, plans for future growth and future operations, the size of our addressable market, market trends, and the effectiveness of the Company's internal control over financial reporting. 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 among other things: (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 scale, manufacture and 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 scrutiny and practices, rumors or otherwise, (x) disease epidemics and health related concerns, such as the current outbreak of a novel strain of coronavirus (COVID-19), which could result in (and, in the case of the COVID-19 outbreak, has resulted in some of the following) reduced access to capital markets, supply chain disruptions and scrutiny or embargoing of goods produced in affected areas, government-imposed mandatory business closures and resulting furloughs of our employees, government employment subsidy programs, travel restrictions or the like to prevent the spread of disease, and market or other changes that could result in noncash impairments of our intangible assets, and property, plant and equipment, (xi) the outcome of the current SEC investigation or recent class action litigation filed against us, (xii) our ability to hire and/or retain qualified employees and consultants and (xiii) 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:
Media Inquiries:
Stephanie Corrente
Loop Industries, Inc.
+1 (450) 951-8555
scorrente@loopindustries.com
Investor Inquiries:
Greg Falesnik
MZ Group-MZ North America
+1 949-259-4987
LOOP@mzgroup.us
www.mzgroup.us
SOURCE: Loop Industries, Inc.
View source version on accesswire.com:
https://www.accesswire.com/655686/Loop-Industries-Provides-Business-Update-and-Reports-First-Quarter-Financial-Results-of-Fiscal-Year-2022
FAQ
What was Loop Industries' net loss for Q1 2022?
How much is SK global chemical investing in Loop Industries?
What is the ownership structure of the joint venture with SKGC?
How did Loop Industries' cash reserves change in Q1 2022?
What were the primary reasons for the increase in net loss for Loop Industries?
