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8-K - CURRENT REPORT - Loop Industries, Inc. | lp_8k.htm |
Exhibit 99.1
LOOP
INDUSTRIES PROVIDES BUSINESS UPDATE AND REPORTS FIRST QUARTER
FINANCIAL RESULTS OF FISCAL YEAR 2022
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 100%
recycled polyethylene terephthalate (“PET”) plastic and
polyester fiber, today provided an update on its activities, and
reported its consolidated financial results for the first quarter
of fiscal year 2022.
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 $12 per
share, for total consideration of $56.5 million. SKGC was also
granted options to acquire additional shares at successively higher
prices, as well as representation on Loop’s Board of
Directors. Closing of the strategic equity investment will be as
soon as practical and no later than 90 days from the June 23, 2021
announcement.
Infinite Loop™ Quebec Project
On May
27, 2021, Loop acquired a 19 million square foot parcel of land in
Bécancour, Québec for approximately $4.9 million. The
site is located near existing industrial infrastructure, which
reduces project costs, permitting time and does not result in the
destruction of wetlands or forest. Loop intends to use the proceeds
from SKGC’s strategic investment toward the funding of its
planned Infinite Loop™ manufacturing facility at this
recently acquired site.
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 100% recycled
PET plastic and polyester fiber.”
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 $8.30
million to $12.16 million, as compared to the net loss for the
three-month period ended May 31, 2020 which was $3.85
million. The increase is primarily due to increased research
and development expenses of $7.16 million, increased general and
administrative expenses of $1.21 million, an increase in foreign
exchange loss of $0.13 million and a decrease in interest income of
$0.03 million, partially offset by lower depreciation and
amortization expenses of $0.12 million and lower interest and other
financial expenses of $0.1 million.
The
$7.16 million increase in research and development for the
three-month period ended May 31, 2021 was primarily attributable to
the following:
●
$2.83 million
increase in external engineering expenses for ongoing design work
for our Infinite LoopTM
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
$1.21 million increase in general and administrative expenses for
the three-month period ended May 31, 2021 was primarily
attributable to the following:
●
$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
$1.04 million which are mainly due to forfeitures of RSUs recorded
in the three-month period ended May 31, 2021 for a total of $0.94
million.
The
$0.12 million decrease in depreciation and amortization expenses
for the three-month period ended May 31, 2021 is mainly
attributable to the write-down of machinery and equipment assets
related to the decision in the
third quarter of fiscal 2021 to
dedicate the demonstration and training facility to research and
development activities. Although the machinery and equipment
will continue to be utilized at our demonstration and training
facility as it is an integral part of supporting the
commercialization of our technology, application of ASC 730, Research and Development Costs
requires machinery and
equipment assets to be written off and
all future costs associated with the demonstration and training
facility to be recognized as a research and development
expense in the consolidated statements of operations and
comprehensive loss.
The
$0.12 million increase in foreign exchange loss for the three-month
period ended May 31, 2021 is mainly due to the fluctuation in
USD/CAD exchange rates. The $0.10 million decrease in interest and
other financial expenses for the three-month period ended May 31,
2021 is mainly due to the loss on revaluation of foreign exchange
contracts in the three-month period ended May 31, 2020 which was
nil in the three-month period ended May 31, 2021. The $0.03 million
decrease in interest income for the three-month period ended May
31, 2021 is mainly due to lower interest rates as well as lower
cash balances on which we receive interest.
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