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8-K/A - CURRENT REPORT AMENDMENT - Loop Industries, Inc. | loop_8k.htm |
Exhibit 99.1
CORRECTION: Loop Industries Reports First Quarter Consolidated
Financial Results of Fiscal 2021 and Provides Updates on Business
Developments
CORRECTION: Loop Industries, Inc. (the “Company,”
“Loop,” “we” or “us”) is filing
this corrected press release to correct a scrivener’s error
in the heading of the
previous press release published on July 14, 2020 at 4:35pm ET to
announce its first quarter consolidated financial results of fiscal
2021. The error incorrectly referenced the Company’s fourth
quarter consolidated financial results of fiscal 2020 rather than
the first quarter of fiscal 2021.
Company Expresses Interest to Increase its Participation in Joint
Venture
MONTREAL, QC / ACCESSWIRE / July 14, 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 first quarter of the fiscal
year ending February 28, 2021, and provided an update on its
continuing progress in implementing its business plan.
Commercialization Progress
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 Ventures Holdings LP ("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.
Over
the period, our team in Canada continued to optimize our technology
and make engineering design improvements which have reduced both
capital and operating costs and further enhanced the projected
return on investment for the project. These improvements were
achieved together with Worley, a leading global engineering,
procurement and construction company which we are engaging to
provide a fixed-price construction contract for Spartanburg and
work on Loop Industries engineering and construction
plans.
In
order to move forward 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 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 we
indicated that we were monitoring the COVID-19 pandemic and the
possible impacts it could have on the expected commissioning date.
Unfortunately, despite the continued progress in Canada, the
situation in the United States and the continued border closures
and quarantine requirements between Canada and the US have caused
some disruptions in our timetable. As a result, we now expect a
delay in the anticipated commissioning date of the facility of
approximately three to six months but that assumes no further
delays, which we cannot ensure will be the case in light of the
COVID-19 pandemic. The discussions regarding the structure and
financing of the joint venture are not expected to further delay
this timetable.
We
continue to develop the engineering of the Infinite
LoopTM
technology, and we are actively engaged in planning our first
Infinite LoopTM manufacturing
complex in Europe with a strategic partner.
First Quarter Ended May 31, 2020
The
following table summarizes our operating results for the
three-month periods ended May 31, 2020 and 2019, in U.S.
Dollars.
|
Three Months
Ended May 31,
|
||
|
2020
|
2019
|
$
Change
|
Revenues
|
$-
|
$-
|
$-
|
|
|
|
|
Operating
expenses
|
|
|
|
Research and
development
|
|
|
|
Stock-based
compensation
|
352,007
|
312,435
|
39,572
|
Other research and
development
|
1,128,581
|
685,426
|
443,155
|
Total research and
development
|
1,480,588
|
997,861
|
482,727
|
|
|
|
|
General and
administrative
|
|
|
|
Stock-based
compensation
|
659,817
|
618,255
|
41,562
|
Other general and
administrative
|
1,293,264
|
1,284,375
|
8,889
|
Total general and
administrative
|
1,953,081
|
1,902,630
|
50,451
|
|
|
|
|
Depreciation and
amortization
|
255,974
|
164,336
|
91,638
|
Interest and other
financial expenses
|
126,776
|
501,849
|
(375,073)
|
Interest
income
|
(40,346)
|
-
|
(40,346)
|
Foreign exchange
(gain) loss
|
76,641
|
(12,126)
|
88,767
|
Total
operating expenses
|
3,852,714
|
3,554,550
|
298,164
|
Net
loss
|
$(3,852,714)
|
$(3,554,550)
|
$(298,164)
|
|
|
|
|
The net
loss for the three-month period ended May 31, 2020 increased $0.30
million to $3.85 million, as compared to the net loss for the
three-month period ended May 31, 2019 which was $3.55 million. The
increase is primarily due to increased research and development
expenses of $0.48 million, an increase in depreciation and
amortization of $0.09 million, an increase in foreign exchange loss
of $0.09 million and an increase in general and administration
expenses of $0.05 million, offset by lower interest and other
financial expenses of $0.38 million and by higher interest income
of $0.04 million.
Research
and development expenses for the three-month period ended May 31,
2020 amounted to $1.48 million compared to $1.00 million for the
three-month period ended May 31, 2019, representing an increase of
$0.48 million, or representing an increase of $0.44 million
excluding stock-based compensation. The increase of $0.44 million
was primarily attributable to higher employee-related expenses of
$0.19 million and lower research and development tax credits of
$0.36 million. During the three-month period ended May 31, 2020,
the Company recorded a decrease in refundable research and
development tax credits receivable, increasing research and
development expenses by $0.24 million which was partially offset by
a COVID-19 related government wage subsidy of $0.10 million. The
increase in non-cash stock-based compensation expense of $0.04
million is mainly attributable to the timing of stock awards
provided to certain employees.
General
and administrative expenses for the three-month period ended May
31, 2020 amounted to $1.95 million compared to $1.90 million for
the three-month period ended May 31, 2019, representing an increase
of $0.05 million, or $0.01 million excluding stock-based
compensation. The increase of $0.01 million was mainly attributable
to higher insurance expenses of $0.36 million, offset by lower
professional fees of $0.21 million and lower employee-related
expenses of $0.08 million. During the three-month period ended May
31, 2020, the Company recorded a COVID-19 related government wage
subsidy of $0.04 million in general and administrative expenses.
Stock-based compensation expense for the three-month period ended
May 31, 2020 amounted to $0.66 million compared to $0.62 million
for the three-month period ended May 31, 2019, representing an
increase of $0.04 million, which was mainly attributable higher
stock awards provided to executives.
Depreciation
and amortization for the three-month period ended May 31, 2020
totaled $0.26 million compared to $0.16 million for the three-month
period ended May 31, 2019, 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 financial expenses for the three-month period ended May
31, 2020 totaled $0.13 million compared to $0.50 million the
three-month period ended May 31, 2019, representing an increase of
$0.38 million. This decrease is attributable to the non-cash
accretion expense relating to the convertible notes issued during
the 2019 Fiscal year in the amount of $0.51 million, the interest
expense relating to the convertible notes issued during the 2019
Fiscal year in the amount of $0.12 million, offset by the gain on
conversion of the November 2018 Notes in the amount of $0.27
million in the three-months ended May 31, 2019 and a loss on
foreign exchange contracts of $0.10 million during the three-months
ended May 31, 2020. During the three months ended May 31, 2020,
there were no convertible notes outstanding.
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
February 29, 2020, we had cash and cash equivalents on hand of
$27.51 million.
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 $27.51 million, in light of the current
global COVID-19 pandemic and its impacts on the global capital
markets, our liquidity position may change, including the inability
to raise new equity and debt, disruption in completing repayments
or disbursements to our creditors.
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 May 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
May 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 $1,015,449 (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 $4,231 (CDN$5,833) plus interest,
until January 2021, at which time it will be subject to renewal. It
includes an option allowing for the prepayment of the Loan without
penalty.
We also
have a long-term debt obligation to Investissement Québec in
connection with a financing facility equal to 63.45% of all
eligible expenses incurred for the expansion of its Pilot Plant up
to a maximum of $3,336,476 (CDN$4,600,000). We received the first
disbursement in the amount of $1,602,404 (CDN$2,209,234) on
February 21, 2020. There is a 36-month moratorium on both capital
and interest repayments 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 bears interest at
2.36%. We have also agreed to issue to Investissement Québec
warrants to purchase shares of our common stock in an amount equal
to 10% of each disbursement up to a maximum aggregate amount of
$333,647 (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 us without
penalty. On February 21, 2020, upon the receipt of the first
disbursement under this facility, we issued a warrant to purchase
15,153 shares of common stock at a price of $11.00 to
Investissement Québec.
Flow of Funds
Summary of Cash Flows
A
summary of cash flows for the three months ended May 31, 2020 and
2019 was as follows:
|
Three Months
Ended
May
31,
|
|
|
2020
|
2019
|
Net cash used in
operating activities
|
$(4,977,900)
|
$(2,087,353)
|
Net cash used in
investing activities
|
(1,188,789)
|
(995,356)
|
Net cash (used)
provided by financing activities
|
(12,693)
|
4,253,727
|
Effect of exchange
rate changes on cash
|
(29,534)
|
(32,796)
|
Net (decrease)
increase in cash
|
$(6,208,916)
|
$1,138,222
|
|
|
|
Net Cash Used in Operating Activities
During
the three months ended May 31, 2020, we used $4.98 million in
operations compared to $2.01 million during the three months ended
May 31, 2019. The increase in cash used in operations is mainly
attributable to the prepayment of annual directors and officers
insurance premium and other prepayments of $1.87 million as well as
the variation in accounts payable and accrued liabilities of $0.72
million. The variation in the amount of prepaid directors and
officers insurance is due to an increase of $1.30 million of the
annual premium as well as a change in the payment structure wherein
a full up-front payment was made in the current year compared to
monthly payments being made in the prior year. The variation in
accounts payable accrued liabilities since year-end is due to the
decrease in accrued professional fees and payroll taxes which were
paid during the three-month period ended May 31, 2020. The Company
continued to invest in research and development on its existing
technologies and new technologies, particularly on the
implementation of its GEN II technology as the Company moves to the
next phase of commercialization.
Net Cash Used in Investing Activities
During
the three months ended May 31, 2020, the Company made investments
of $0.39 million in property, plant and equipment as compared to
$0.50 million for the three months ended May 31, 2019, primarily in
connection with the upgrade of its GEN II industrial pilot plant.
During the three months ended May 31, 2020, the Company made
investments in intangible assets particularly in its GEN II patent
technology in the United States and around the world.
During
the three months ended May 31, 2020, the Company also made an
additional contribution of $0.65 million to Indorama Loop
Technologies, LLC, the joint venture with Indorama Ventures
Holdings LP, USA.
Net Cash (Used) Provided by Financing Activities
During
the three months ended May 31, 2020, we repaid $0.01 million of
long-term debt.
As at
May 31, 2020, we did not have any significant lease obligations to
third parties.
Loop Industries, Inc.
Condensed Consolidated Statements of Operations and Comprehensive
Loss
(Unaudited)
|
Three Months
Ended
May
31,
|
|
|
2020
|
2019
|
Revenue
|
$-
|
$-
|
|
|
|
Expenses
|
|
|
Research and
development
|
1,480,588
|
997,861
|
General and
administrative
|
1,953,081
|
1,902,630
|
Depreciation and
amortization
|
255,974
|
164,336
|
Interest and other
financial expenses
|
126,776
|
501,849
|
Interest
income
|
(40,346)
|
-
|
Foreign exchange
loss (gain)
|
76,641
|
(12,126)
|
Total
expenses
|
3,852,714
|
3,554,550
|
|
|
|
Net
loss
|
(3,852,714)
|
(3,554,550)
|
|
|
|
Other comprehensive
loss
|
|
|
Foreign currency
translation adjustment
|
(170,412)
|
(140,142)
|
Comprehensive
loss
|
$(4,023,126)
|
$(3,694,692)
|
Loss per
share
|
|
|
Basic and
diluted
|
$(0.10)
|
$(0.11)
|
Weighted average
common shares outstanding
|
|
|
Basic and
diluted
|
39,916,838
|
34,714,510
|
|
|
|
Loop Industries, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
|
May
31,
2020
|
February
29,
2020
|
|
|
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$27,508,755
|
$33,717,671
|
Sales tax, tax
credits and other receivables
|
570,214
|
664,544
|
Prepaid
expenses
|
1,937,039
|
141,226
|
Total current
assets
|
30,016,008
|
34,523,441
|
Investment in joint
venture
|
1,500,000
|
850,000
|
Property, plant and
equipment, net
|
7,250,045
|
7,260,254
|
Intangible assets,
net
|
334,046
|
202,863
|
Total
assets
|
$39,100,099
|
$42,836,558
|
|
|
|
Liabilities
and Stockholders' Equity
|
|
|
Current
liabilities
|
|
|
Accounts payable
and accrued liabilities
|
$1,411,472
|
$2,082,698
|
Current portion of
long-term debt
|
50,772
|
52,126
|
Total current
liabilities
|
1,462,244
|
2,134,824
|
Long-term
debt
|
2,185,449
|
2,238,026
|
Total
liabilities
|
3,647,693
|
4,372,850
|
|
|
|
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; 39,916,905 shares
issued and outstanding (February 28, 2019 -
39,910,774)
|
3,993
|
3,992
|
Additional paid-in
capital
|
83,306,794
|
82,379,413
|
Additional paid-in
capital - Warrants
|
9,870,241
|
9,785,799
|
Accumulated
deficit
|
(57,169,761)
|
(53,317,047)
|
Accumulated other
comprehensive loss
|
(558,861)
|
(388,449)
|
Total stockholders'
equity
|
35,452,406
|
38,463,708
|
Total liabilities
and stockholders' equity
|
$39,100,099
|
$42,836,558
|
|
|
|
Loop Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
Three Months
Ended
May
31,
|
|
|
2020
|
2019
|
Cash
Flows from Operating Activities
|
|
|
Net
loss
|
$(3,852,714)
|
$(3,554,550)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation and
amortization
|
256,090
|
164,336
|
Stock-based
compensation expense
|
1,011,824
|
930,690
|
Accrued interest
expenses
|
9,416
|
117,433
|
Loss on revaluation
of warrants
|
-
|
8,483
|
Debt
accretion
|
8,547
|
583,727
|
Deferred financing
expenses
|
-
|
46,442
|
Gain on conversion
of convertible notes
|
-
|
(268,730)
|
Loss on revaluation
of foreign exchange contracts
|
98,502
|
-
|
Changes in
operating assets and liabilities:
|
|
|
Sales tax and tax
credits receivable
|
76,410
|
(158,954)
|
Prepaid
expenses
|
(1,865,216)
|
49,136
|
Accounts payable
and accrued liabilities
|
(720,759)
|
(5,366)
|
Net cash used in
operating activities
|
(4,977,900)
|
(2,087,353)
|
|
|
|
Cash
Flows from Investing Activities
|
|
|
Investment in joint
ventur
|
(650,000)
|
(500,000)
|
Additions to
property, plant and equipment
|
(394,403)
|
(470,545)
|
Additions to
intangible assets
|
(144,386)
|
(24,811)
|
Net cash used in
investing activities
|
(1,188,789)
|
(955,356)
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
Proceeds from sale
of common shares
|
-
|
5,130,000
|
Share issuance
costs
|
-
|
(863,216)
|
Repayment of
long-term debt
|
(12,693)
|
(13,057)
|
Net cash (used)
provided by financing activities
|
(12,693)
|
4,253,727
|
|
|
|
Effect of exchange
rate changes
|
(29,534)
|
(32,796)
|
Net decrease in
cash
|
(6,208,916)
|
1,138,222
|
Cash, beginning of
period
|
33,717,671
|
5,833,390
|
Cash, end of
period
|
$27,508,755
|
$6,971,612
|
|
|
|
Supplemental
Disclosure of Cash Flow Information:
|
|
|
Income tax
paid
|
$-
|
$-
|
Interest
paid
|
$10,311
|
$14,488
|
Interest
received
|
$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 bottles,
packaging, carpets, and other textiles of any color, transparency
or condition, including waste PET plastic recovered from the ocean
that has 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 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." 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 Industries' 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, (x) disease epidemics and health related
concerns, such as the current outbreak of 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,
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. 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 Industries 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:
Greg
Falesnik
MZ
Group - MZ North America
+1
949-259-4987
LOOP@mzgroup.us
www.mzgroup.us
Media Inquiries:
Stephanie
Corrente
Loop
Industries, Inc.
+1
(450) 951-8555 ext. 226
scorrente@loopindustries.com
SOURCE: Loop Industries, Inc.