Loop Industries Reports Second Quarter Fiscal 2021 Consolidated Financial Results and Provides Corporate Update
Loop Industries, Inc. (NASDAQ: LOOP) announced its financial results for Q2 FY21, highlighting key milestones in its Infinite Loop™ commercialization strategy. The company has partnered with Suez Groupe to build its first facility in Europe and completed agreements with INVISTA/Chemtex to finalize its technology package. Despite not generating revenue, Loop raised $25.1 million through a public offering, but reported a net loss of $5.13 million, an increase from the previous year's loss of $3.34 million. R&D expenses surged significantly, and the company aims to scale its operations amid ongoing pandemic challenges.
- Partnership with Suez Groupe for the first Infinite Loop™ facility in Europe.
- Secured $25.1 million from an underwritten public offering.
- Completed technology package with INVISTA/Chemtex for Infinite Loop™.
- Net loss increased to $5.13 million from $3.34 million year-over-year.
- Research and development expenses rose sharply, totaling $4.23 million for the six months ended August 31, 2020.
Company Achieves Key Milestones Towards Infinite Loop™ Commercialization Strategy
MONTREAL, QC / ACCESSWIRE / October 7, 2020 / Loop Industries, Inc. (NASDAQ:LOOP) (the "Company" or "Loop Industries"), a leading sustainable plastics technology innovator, today announced its consolidated financial results for the second quarter of the fiscal year ending February 28, 2021, and provided an update on its continuing progress in implementing its business plan.
Highlights
- Entered into strategic partnership with Suez Groupe to build first Infinite LoopTM facility in Europe
- Signed know-how and engineering agreement with INVISTA/Chemtex, completing the technology package for the first Infinite LoopTM facilities
- Strengthened balance sheet through underwritten public offering for net proceeds of
$25.1 million - Sheila Morin joins Loop Industries' executive leadership team as Chief Marketing Officer
Commercialization Progress
The Infinite LoopTM manufacturing technology is the key pillar of our commercialization blueprint. We believe our technology is at the forefront of the global transition away from fossil fuels and petrochemicals and into the circular economy, where PET plastic and polyester fiber are produced from
Our objective is to achieve global expansion of the technology through a mix of fully owned facilities, partnerships, and licensing agreements. We believe that industrial companies, which today are not in the business of manufacturing PET and polyester fiber, will view our Infinite Loop™ manufacturing technology as a growth opportunity for the future, which offers attractive economic returns either as Loop manufacturing partners or as licensees of Loop technology.
In September 2020, we made two key announcements regarding significant advancements for the Infinite LoopTM manufacturing technology. First, we completed a partnership with Chemtex Global Corporation ("Chemtex") to license the PET plastic and polyester polymer for fiber manufacturing know-how of INVISTA's technology and licensing group, INVISTA Performance Technologies (IPT) ("INVISTA"). Coupled with Loop Industries' depolymerization technology, INVISTA's leading depolymerization know-how make Infinite Loop™ manufacturing facilities an end-to-end solution to meet the global demand for Loop™ branded PET resin and polyester fiber made from
Second, we announced a strategic partnership with SUEZ GROUPE ("SUEZ"), a world leader in environmental services, with plans to build the first Infinite Loop™ manufacturing facility in Europe. With the combination of the Infinite LoopTM technology package and the resource management expertise of SUEZ, this partnership seeks to respond to growth in demand in Europe from global beverage and consumer goods brand companies who we believe are committed to aggressive targets for a high level of recycled content in their products.
During this quarter, we also accelerated the completion of our engineering design together with Worley which is a key partner in the deployment of Loop's PET manufacturing facilities and plays a key role in the integration of our depolymerization process with INVISTA's polymerization technology.
As disclosed in our 10-Q for the period ended August 31, 2019, the joint venture decided to double the capacity of the planned Spartanburg plant due to customer demand to 40,000 metric tons per year. Following that decision, we identified a number of enhancements to the plant design to improve the operability and optimize the total construction cost of the plant and expected the commissioning of the plant to occur in the third quarter of calendar 2021.
We have currently contracted for the sale of the initial 20,700 metric tons expected output of the Spartanburg facility and we continue discussions to contract the additional volume up to its planned increased capacity of 40,000 metric tons. As part of the Joint Venture Agreement to establish the facility to produce 40,000 metric tons, we are committed to contribute our equity share for the costs under the joint venture agreement to construct the facility. During the six-month period ended August 31, 2020 we made a contribution of
On March 25, 2020, due to the COVID-19 pandemic, the Québec provincial government issued an order that all non-essential business and commercial activity in the province shut down. The order provided exemptions that allowed us to continue reduced operations at our pilot plant and we continued working remotely to support the engineering activities with our joint venture partner, Indorama, and our engineering partner, for the Spartanburg joint venture facility and pursue our plans for the commercialization of our technology. On May 11, the government announced that we could re-start complete operations. We have implemented all the necessary measures required by the Québec provincial government to ensure a safe work environment for our employees and we are operating at full capacity.
In order to move forward more expeditiously with the Spartanburg facility and its overall commercialization plans, and in light of the continuing improvements which have been achieved, we have expressed our desire to and are exploring joint venture structures and financing alternatives with Indorama to increase our equity participation in the project. Indorama has reiterated to the joint venture its commitment to maintaining an investment in the Spartanburg project, which is strategically important to support the sustainability objectives of its customers. Discussions on the joint venture structure and financing are on-going.
In our 10-K which was filed on May 5, 2020 and amended on May 6, 2020 and September 21, 2020 we indicated that we were monitoring the COVID-19 pandemic and the possible impacts it could have on the expected commissioning date. The continued border closures and quarantine requirements between Canada and the US continued to cause disruptions in our timetable. As a result, we continue to expect a delay in the anticipated commissioning date of the facility. The revised commissioning date will be established once the COVID- 19 situation subsides and the border re-opens.
We are investing in building a strong management team to integrate best in class processes and practices while maintaining our entrepreneurial culture. On March 9, 2020, we hired Mr. Stephen Champagne as Chief Technology Officer. Mr. Champagne has over 25 years of industrial experience having participated in all project phases from laboratory development through engineering, procurement, and construction, all the way to plant commissioning. On September 21, 2020, we hired Ms. Sheila Morin as Chief Marketing Officer. Ms. Morin has more than 20 years of experience in sales and marketing and has worked for large global consumer packaged goods companies such as L'Oréal, Danone and Proctor & Gamble. Immediately prior to joining Loop Industries, she held the position of Executive Vice-President & CMO, Brands and Consumer Experience at Cirque du Soleil Group.
Results of Operations
The following table summarizes our operating results for the three-month periods ended August 31, 2020 and 2019, in U.S. Dollars.
| Three Months Ended August 31 | ||||||||||||
| 2020 | 2019 | $ Change | ||||||||||
Revenues | $ | - | $ | - | $ | - | ||||||
Operating expenses | ||||||||||||
Research and development | ||||||||||||
Stock-based compensation | 352,282 | 317,353 | 34,929 | |||||||||
Other research and development | 2,396,940 | 652,860 | 1,744,080 | |||||||||
Total research and development | 2,749,222 | 970,213 | 1,779,009 | |||||||||
General and administrative | ||||||||||||
Stock-based compensation | 513,648 | 485,975 | 27,673 | |||||||||
Other general and administrative | 1,535,593 | 1,232,638 | 302,955 | |||||||||
Total general and administrative | 2,049,241 | 1,718,613 | 330,628 | |||||||||
Depreciation and amortization | 302,587 | 201,403 | 101,184 | |||||||||
Interest and other financial | (58,905) | 622,183 | (681,088 | ) | ||||||||
Interest income | (18,039) | (192,259 | ) | 174,220 | ||||||||
Foreign exchange loss | 103,618 | 21,890 | 81,728 | |||||||||
Total operating expenses | 5,127,724 | 3,342,043 | 1,785,681 | |||||||||
Net loss | $ | (5,127,724) | $ | (3,342,043 | ) | $ | (1,785,681 | ) | ||||
Second Quarter Ended August 31, 2020
The net loss for the three-month period ended August 31, 2020 increased
Research and development expenses for the three-month period ended August 31, 2020 amounted to
General and administrative expenses for the three-month period ended August 31, 2020 amounted to
Depreciation and amortization expenses for the three-month period ended August 31, 2020 totaled
Interest and other financial expenses for the three-month period ended August 31, 2020 totaled
Six Months Ended August 31, 2020
The following table summarizes our operating results for the six-month periods ended August 31, 2020 and 2019, in U.S. Dollars.
| Six Months Ended August 31 | |||||||||||||||
| 2020 | 2019 | $ Change | |||||||||||||
Revenues | $ | - | $ | - | $ | - | |||||||||
Operating expenses | |||||||||||||||
Research and development | |||||||||||||||
Stock-based compensation | 704,289 | 629,788 | 74,501 | ||||||||||||
Other research and development | 3,525,521 | 1,338,286 | 2,187,235 | ||||||||||||
Total research and development | 4,229,810 | 1,968,074 | 2,261,736 | ||||||||||||
General and administrative | |||||||||||||||
Stock-based compensation | 1,173,465 | 1,104,230 | 69,235 | ||||||||||||
Other general and administrative | 2,828,858 | 2,517,013 | 311,845 | ||||||||||||
Total general and administrative | 4,002,323 | 3,621,243 | 381,080 | ||||||||||||
Depreciation and amortization | 558,561 | 365,739 | 192,822 | ||||||||||||
Interest and other financial | 67,871 | 1,124,064 | (1,056,193 | ) | |||||||||||
Interest income | (58,386) | (192,291 | ) | 133,905 | |||||||||||
Foreign exchange (gain) loss | 180,259 | 9,764 | 170,495 | ||||||||||||
Total operating expenses | 8,980,438 | 6,896,593 | 2,083,845 | ||||||||||||
Net loss | $ | (8,980,438) | $ | (6,896,593 | ) | $ | (2,083,845 | ) | |||||||
The net loss for the six-month period ended August 31, 2020 increased by
Research and development expenses for the six-month period ended August 31, 2020 amounted to
General and administrative expenses for the six-month period ended August 31, 2020 amounted to
Depreciation and amortization expenses for the six-month period ended August 31, 2020 totaled
Interest and other finance costs for the six-month period ended August 31, 2020 totaled
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
We are a development stage company with no revenues, and our ongoing operations and commercialization plans 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, 2020, we had cash and cash equivalents on hand of
Management continues to be positive about our growth strategy and is evaluating our financing plans to continue to raise capital to finance the start-up of commercial operations and continue to fund the further development of our ongoing operations. Although we continue to be in a good liquidity position with cash and cash equivalents on hand of
On September 21, 2020, we entered into an underwriting agreement (the "Underwriting Agreement") with Roth Capital Partners, LLC, as underwriter (the "Underwriter"), relating to the sale and issuance of an aggregate of 1,880,000 shares (the "Shares") of the Company's common stock. The offering price to the public of the Shares was
As reflected in the accompanying interim unaudited condensed consolidated financial statements, we are a development stage company, we have not yet begun commercial operations and we do not have any sources of revenue. Management believes that the Company has sufficient financial resources to fund planned operating and capital expenditures and other working capital needs for at least, but not limited to, the 12-month period from the date of issuance of the August 31, 2020 interim condensed consolidated financial statements. There can be no assurance that any future financing will be available or, if available, that it will be on terms that are satisfactory to us.
As at August 31, 2020, we have a long-term debt obligation to a Canadian bank in connection with the purchase, in the year ended February 28, 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
We also have a long-term debt obligation to Investissement Québec in connection with a financing facility equal to
Flow of Funds
Summary of Cash Flows
A summary of cash flows for the six-month period ended August 31, 2020 and 2019 was as follows:
| Six Months Ended August 31 | ||||||||
| 2020 | 2019 | |||||||
Net cash used in operating activities | $ | (7,455,787) | $ | (5,235,429 | ) | |||
Net cash used in investing activities | (3,232,238) | (1,785,198 | ) | |||||
Net cash provided (used) by financing activities | (26,836) | 39,141,055 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 125,433 | (22,778 | ) | |||||
Net increase (decrease) in cash and cash equivalents | $ | (10,589,428) | $ | 32,097,650 | ||||
Net Cash Used in Operating Activities
During the six months ended August 31, 2020, we used
Net Cash Used in Investing Activities
During the six months ended August 31, 2020, the Company made investments of
During the six months ended August 31, 2020, the Company made investments in intangible assets of
During the six months ended August 31, 2020, the Company also made a contribution of
Net Cash Provided from (Used in) Financing Activities
During the six months ended August 31, 2020, we repaid
Loop Industries, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| Three Months Ended August 31 | Six Months Ended August 31 | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
Expenses | ||||||||||||||||
Research and development | 2,749,222 | 970,213 | 4,229,810 | 1,968,074 | ||||||||||||
General and administrative | 2,049,241 | 1,718,613 | 4,002,323 | 3,621,243 | ||||||||||||
Depreciation and amortization | 302,587 | 201,403 | 558,561 | 365,739 | ||||||||||||
Interest and other financial | (58,905 | ) | 622,183 | 67,871 | 1,124,064 | |||||||||||
Interest income | (18,039 | ) | (192,259 | ) | (58,386 | ) | (192,291 | ) | ||||||||
Foreign exchange loss | 103,618 | 21,890 | 180,259 | 9,764 | ||||||||||||
Total expenses | 5,127,724 | 3,342,043 | 8,980,438 | 6,896,593 | ||||||||||||
Net Loss | (5,127,724 | ) | (3,342,043 | ) | (8,980,438 | ) | (6,896,593 | ) | ||||||||
Other comprehensive income (loss) | ||||||||||||||||
Foreign currency translation adjustment | 402,812 | 102,457 | 232,400 | (37,685 | ) | |||||||||||
Comprehensive income (loss) | $ | (4,724,912 | ) | $ | (3,239,586 | ) | $ | (8,748,038 | ) | $ | (6,934,278 | ) | ||||
Loss per share | ||||||||||||||||
Basic and Diluted | $ | (0.13 | ) | $ | (0.09 | ) | $ | (0.22 | ) | $ | (0.19 | ) | ||||
Weighted average common shares outstanding | ||||||||||||||||
Basic and Diluted | 39,928,047 | 38,383,156 | 39,922,443 | 36,548,832 | ||||||||||||
Loop Industries, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| August 31, 2020 | February 29, 2020 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 23,128,243 | $ | 33,717,671 | ||||
Sales tax, tax credits and other receivables | 511,156 | 664,544 | ||||||
Prepaid expenses and deposits | 2,293,283 | 141,226 | ||||||
Total current assets | 25,932,682 | 34,523,441 | ||||||
Investment in joint venture | 1,500,000 | 850,000 | ||||||
Property, plant and equipment, net | 8,287,408 | 7,260,254 | ||||||
Intangible assets, net | 342,930 | 202,863 | ||||||
Total assets | $ | 36,063,020 | $ | 42,836,558 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 2,099,515 | $ | 2,082,698 | ||||
Current portion of long-term debt | 53,673 | 52,126 | ||||||
Total current liabilities | 2,153,188 | 2,134,824 | ||||||
Long-term debt | 2,316,408 | 2,238,026 | ||||||
Total liabilities | 4,469,596 | 4,372,850 | ||||||
Stockholders' Equity | ||||||||
Series A Preferred stock par value | - | - | ||||||
Common stock par value | 3,994 | 3,992 | ||||||
Additional paid-in capital | 84,172,723 | 82,379,413 | ||||||
Additional paid-in capital - Warrants | 9,870,241 | 9,785,799 | ||||||
Accumulated deficit | (62,297,485 | ) | (53,317,047 | ) | ||||
Accumulated other comprehensive loss | (156,049 | ) | (388,449 | ) | ||||
Total stockholders' equity | 31,593,424 | 38,463,708 | ||||||
Total liabilities and stockholders' equity | $ | 36,063,020 | $ | 42,836,558 | ||||
Loop Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Six Months Ended August 31 | ||||||||
| 2020 | 2019 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (8,980,438 | ) | $ | (6,896,593 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 558,561 | 365,739 | ||||||
Stock-based compensation expense | 1,877,754 | 1,734,018 | ||||||
Accrued interest | 19,291 | 215,433 | ||||||
Loss on revaluation of warrant | - | 8,483 | ||||||
Debt accretion | 17,658 | 1,035,888 | ||||||
Deferred financing costs | - | 66,327 | ||||||
Loss (gain) on conversion of convertible notes | - | (232,565 | ) | |||||
Loss on revaluation of foreign exchange contracts | 11,482 | - | ||||||
Changes in operating assets and liabilities: | ||||||||
Sales tax, tax credits and other receivable | 169,018 | (123,194 | ) | |||||
Prepaid expense | (824,675 | ) | (22,987 | ) | ||||
Accounts payable and accrued liabilities | (304,438 | ) | (1,385,978 | ) | ||||
Net cash used in operating activities | (7,455,787 | ) | (5,235,429 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Investment in joint venture | (650,000 | ) | (500,000 | ) | ||||
Deposits on machinery and equipment | (1,305,010 | ) | - | |||||
Additions to property, plant and equipment | (1,116,744 | ) | (1,202,766 | ) | ||||
Additions to intangible assets | (160,484 | ) | (82,432 | ) | ||||
Net cash used in investing activities | (3,232,238 | ) | (1,785,198 | ) | ||||
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 | (26,836 | ) | (26,326 | ) | ||||
Net cash provided from (used in) financing activities | (26,836 | ) | 39,141,055 | |||||
Effect of exchange rate changes | 125,433 | (22,778 | ) | |||||
Net change in cash and cash equivalents | (10,589,428 | ) | 32,097,650 | |||||
Cash and cash equivalents, beginning of period | 33,717,671 | 5,833,390 | ||||||
Cash and cash equivalents, end of period | $ | 23,128,243 | $ | 37,931,040 | ||||
Supplemental Disclosure of Cash Flow Information: | ||||||||
Income tax paid | $ | - | $ | - | ||||
Interest paid | $ | 19,441 | $ | 30,497 | ||||
Interest received | $ | 30,497 | $ | 192,291 | ||||
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 owns patented and proprietary low-energy 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 saltwater, into 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 Industries is contributing to the global movement toward a circular economy by preventing plastic waste and recovering waste plastic 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: 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 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 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 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, (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, 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, and (xi) 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 ext. 226
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.
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