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Loop Industries, Inc. (LOOP) SEC Filing 8-K Material Event for the period ending Tuesday, October 8, 2019

Loop Industries, Inc.

CIK: 1504678 Ticker: LOOP
  Exhibit 99.1
 
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
 
 
 
2019
 
 
2018
 
 
$ Change
 
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
 
 
 
2019
 
 
2018
 
 
$ Change
 
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 banks 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
 
 
 
2019
 
 
2018
 
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
 
 
 
 2019
 
 
 2018
 
 
 2019
 
 
 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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)
 
 
 
August 31, 2019
 
 
February 28, 2019
 
 
 
 
 
 
 
 
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
 
 
 
2019
 
 
2018
 
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 
 
 

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Ticker: LOOP
CIK: 1504678
Form Type: 8-K Corporate News
Accession Number: 0001654954-19-011526
Submitted to the SEC: Tue Oct 08 2019 8:40:45 AM EST
Accepted by the SEC: Tue Oct 08 2019
Period: Tuesday, October 8, 2019
Industry: Chemicals And Allied Products
Events:
  1. Earnings Release
  2. Financial Exhibit

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