【twist about crossword】Loop Industries Reports Fourth Quarter Consolidated Financial Results of Fiscal 2020 and Provides Updates on Business Developments

MONTREAL,twist about crossword QC / ACCESSWIRE / May 4, 2020 /

Loop Industries, Inc. (

LOOP

) (the "Company" or "Loop Industries"), a leading sustainable plastics technology innovator, today announced its consolidated financial results for the fourth quarter and fiscal year ended February 29, 2020, 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 is required to shut down until April 13 and and the order provides exemptions that allow us to continue reduced operations at the pilot plant and we have been continuing work with our joint venture partner, Indorama Ventures Holdings LP ("Indorama"), and our engineering partner, to oversee the engineering for the Spartanburg joint venture facility and pursue our plans for the commercialization of our technology. We have made arrangements for certain employees to work remotely to support these engineering activities. The government has recently announced that we can re-start complete operations on May 11.

The Québec provincial government order has not significantly impacted our ability to work to advance this project to date and the commercialization plan for commissioning of the planned Spartanburg facility is currently unchanged. However, the planned timing may potentially be affected by the COVID-19 pandemic. We are monitoring the potential impact of the pandemic on the global economy and capital markets, as well as on the operations of our partners who are critical to achieving the anticipated commissioning date of the facility scheduled for the third quarter of the calendar year 2021. Both Loop Industries and our partners are fully committed to the joint venture and are working diligently on the commercialization plan.

Fourth Quarter Ended February 29, 2020

The following table summarizes our operating results for the three-month periods ended February 29, 2020 and February 28, 2019, in U.S. Dollars.

Three Months Ended

February 29,

2020

February 28,

2019

$ Change

Revenues

$

-

$

-

$

-

Expenses

Research and development

Stock-based compensation

311,253

250,251

61,002

Other research and development

1,159,676

273,815

885,861

Total research and development

1,470,929

524,066

946,863

General and administrative

Stock-based compensation

547,327

575,240

(27,913

)

Legal settlement

-

4,041,627

(4,041,627

)

Other general and administrative

1,221,037

1,514,203

(293,166

)

Total general and administrative

1,768,364

6,131,070

(4,362,706

)

Depreciation and amortization

245,065

136,285

108,780

Impairment of intangible assets

-

298,694

(298,694

)

Interest and other finance costs

406,215

425,964

(19,749

)

Interest income

(136,913)

-

(136,913

)

Foreign exchange loss (gain)

4,303

38,632

(34,329

)

Total expenses

3,757,963

7,554,711

(3,796,748

)

Net loss

$

(3,757,963)

$

(7,554,711

)

$

3,796,748

The net loss for the three-month period ended February 29, 2020 decreased $3.80 million to $3.76 million, as compared to the net loss for the three-month period ended February 28, 2019 which was $7.55 million. The decrease is primarily due to decreased general and administrative expenses of $4.36 million, a decrease in impairment of intangible assets of $0.30 million, an increase in interest income of $0.14 million, partially offset by higher research and development expenses of $0.95 million and by higher depreciation and amortization of $0.11 million.

Research and development expenses for the three-month period ended February 29, 2020 amounted to $1.47 million compared to $0.52 million for the three-month period ended February 28, 2019, representing an increase of $0.95 million, or $0.89 million excluding stock-based compensation. The increase of $0.89 million was primarily attributable to higher employee related expenses of $0.63 million, higher spending for purchases and consumables of $0.15 million and higher professional fees of $0.06 million. The increase in non-cash stock-based compensation expense of $0.06 million is mainly attributable to the timing of certain stock awards provided to employees.

General and administrative expenses for the three-month period ended February 29, 2020 amounted to $1.77 million compared to $6.13 million for the three-month period ended February 28, 2019, representing a decrease of $4.36 million, or $0.29 million excluding stock-based compensation and the legal settlement. The decrease of $4.36 million was primarily due to a legal settlement expense which amounted to $4.04 million for the three-month period ended February 28, 2019 compared to nil for the three-month period ended February 29, 2020. Other variances were attributable to lower employee related expenses of $0.23 million, lower legal, accounting and other professional fees of $0.41 million offset by higher Directors' and Officers' insurance expenses of $0.24 million. Stock-based compensation expense for the three-month period ended February 29, 2020 amounted to $0.55 million compared to $0.58 million for the three-month period ended February 28, 2019, representing a decrease of $0.03 million. The decrease was mainly attributable to lower stock awards provided to executives.

Depreciation and amortization for the three-month period ended February 29, 2020 totaled $0.25 million compared to $0.14 million for the three-month period ended February 28, 2019, representing an increase of $0.11 million. The increase is mainly attributable to an increase in the amount of fixed assets held at the Company's pilot plant and corporate offices. Impairment of intangible assets for the three-month period ended February 29, 2020 was nil compared to $0.30 million for the three-month period ended February 28, 2019, representing a decrease of $0.30 million. The increase is entirely attributable to the write-off of the remaining intangible asset balance of the GEN I technology of $0.30 million in the three-month period ended February 28, 2019.

Interest and other finance costs for the three-month period ended February 29, 2020 totaled $0.41 million compared to $0.43 for the three-month period ended February 28, 2019, representing a decrease of $0.02 million. The decrease is mainly attributable to a decrease in interest expense relating to the convertible notes converted during the year in the amount of $0.06 million offset by an increase in accretion expense also relating to the convertible notes converted during the year in the amount of $0.04 million.

Fiscal year Ended February 29, 2020

The following table summarizes our operating results for the years ended February 29, 2020 and February 28, 2019, in U.S. Dollars.

Years Ended

February 29,

2020

February 28,

2019

$ Change

Revenues

$

-

$

-

Expenses

Research and development

Stock-based compensation

1,252,394

1,160,254

92,140

Other research and development

3,464,781

2,288,293

1,176,488

Total research and development

4,717,175

3,448,547

1,268,628

General and administrative

Stock-based compensation

2,216,997

2,824,902

(607,905

)

Legal settlement

-

4,041,627

(4,041,627

)

Other general and administrative

4,998,423

5,986,336

(987,913

)

Total general and administrative

7,215,420

12,852,865

(5,637,445

)

Depreciation and amortization

830,432

502,996

327,436

Impairment of intangible assets

-

298,694

(298,694

)

Interest and other finance costs

2,223,304

467,082

1,756,222

Interest income

(500,478)

-

(500,478

)

Foreign exchange loss (gain)

19,602

(33,773

)

53,375

Total expenses

14,505,455

17,536,411

(3,030,956

)

Net loss

$

(14,505,455)

$

(17,536,411

)

$

3,030,956

The net loss for the year ended February 29, 2020 decreased by $3.03 million, to $14.51 million, as compared to the net loss for the year ended February 28, 2019 which was $17.54 million. The decrease is primarily explained by lower general and administrative expenses of $5.64 million, an increase in interest income of $0.50 million and a decrease of impairment of intangible assets of $0.30 million offset by an increase in research and development expenses of $1.27 million, an increase in interest and other finance costs of $1.76 million, an increase in depreciation and amortization of $0.33 million and an increase in foreign exchange of $0.05 million.

Research and development expenses for year ended February 29, 2020 amounted to $4.72 million compared to $3.45 million for the year ended February 28, 2019, representing an increase of $1.27 million, or $1.18 million excluding stock-based compensation. The increase of $1.18 million was primarily attributable to higher employee related expenses of $1.01 million, increased purchases and consumables of $0.21 million, higher travel costs of $0.06 and higher facilities costs of $0.05 offset by lower professional fees of $0.30 million. The increase in non-cash stock-based compensation expense of $0.09 million was attributable to the timing of certain stock awards provided to employees.

General and administrative expenses for the year ended February 29, 2020 totaled $7.22 million compared to $12.85 million for the year ended February 28, 2019, representing a decrease of $5.64 million, or $0.99 million excluding stock-based compensation and the legal settlement. The decrease of $5.64 million was primarily attributable to a legal settlement expense which amounted to nil for the year ended February 29, 2020 compared to $4.04 million for the year ended February 28, 2019. Other variances were attributable to lower legal fees of $2.04 million offset by higher Directors' and Officers' insurance expenses of $0.4 million, higher employee related expenses of $0.27 million as well as higher accounting and other professional fees of $0.27 million. Stock-based compensation expense for the year ended February 29, 2020 amounted to $2.22 million compared to $2.82 million for the year ended February 28, 2019, representing a decrease of $0.61 million. The decrease was mainly attributable to lower stock awards provided to executives.

Depreciation and amortization for the year ended February 29, 2020 totaled $0.83 million compared to $0.50 million for the year ended February 28, 2019, representing an increase of $0.33 million. The increase is mainly attributable to an increase in the amount of fixed assets held at the Company's pilot plant and corporate offices. Impairment of intangible assets for the year ended February 29, 2020 was nil compared to $0.30 million for the year ended February 28, 2019, representing a decrease of $0.3 million. The decrease is mainly attributable to the write-off of the remaining intangible asset balance of the GEN I technology of $0.3 in the year ended February 28, 2019.

Interest and other finance costs for the year ended February 29, 2020 totaled $2.22 million compared to $0.47 million for the year ended February 28, 2019, representing an increase of $1.76 million. The increase is mainly attributable to an increase in accretion expense related to convertible notes of $1.76 million and increased interest expense also relating to the convertible notes issued during the year of $0.26 million offset by a gain on conversion related to the convertible notes of $0.23 million and a decreased expense for revaluation of financial instruments of $0.03 million.

LIQUIDITY AND CAPITAL RESOURCES

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 $33.72 million.

Although we continue to be in a good liquidity position with cash and cash equivalents on hand of $33.72 million, in light of the current global COVID-19 pandemic, our liquidity position may change, including the inability to raise new equity and debt, disruption in completing repayments or disbursements to our creditors. 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.

As reflected in our consolidated financial statements for the year ended February 29, 2020, we are a development stage company, we have not yet begun commercial operations and we do not have any sources of revenue. During the year ended February 29, 2020, we incurred a net loss of $14.51 million, used cash in operations of $9.10 million and had an accumulated deficit as at February 29, 2020 of $53.32 million, all of these factors raise substantial doubt about our ability to continue as a going concern. 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 February 29, 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 $1,042,520 (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 $4,344 (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 $3,425,423 (CDN$4,600,000). We received the first disbursement in the amount of $ 1,645,122 (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 $342,542 (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 years ended February 29, 2020 and February 28, 2019 was as follows:

Years Ended

February

29,

2020

February 28,

2019

Net cash used in operating activities

$

(9,092,549

)

$

(7,562,487

)

Net cash used in investing activities

(3,388,985

)

(2,046,119

)

Net cash provided by financing activities

40,463,141

7,328,024

Effect of exchange rate changes on cash and cash equivalents

(97,326

)

(35,741

)

Net change in cash and cash equivalents

$

27,884,281

$

(2,316,323

)

Net Cash Used in Operating Activities

During the year ended February 29, 2020, we used $9.10 million in operations compared to $7.56 million during the year ended February 28, 2019 and $6.39 million during the year ended February 28, 2018. The increase over each year is mainly due to increased operating expenses as we move to the next phase of commercialization.

Net Cash Used in Investing Activities

During the year ended February 29, 2020, we used $3.39 million in investing activities. We made capital asset investments of $2.54 million of which $2.44 million was mainly attributable to the expansion and additions to our pilot plant and executive offices in Terrebonne, Canada. We also invested $0.1 million in our intellectual property as we developed, during the year ended February 29, 2020, our next generation GEN II technology and filed various patents in various jurisdictions around the world which await approval. During the year ended February 29, 2020 we made capital contributions to our joint venture with Indorama for a total of $0.85 million.

Net Cash Provided by Financing Activities

During the year ended February 29, 2020, we raised $40.46 million mainly through two separate registered direct offerings of common stock, in the net amounts of $34.60 million and $4.20 million, respectively, and through debt from a financing facility from Investissement Québec in the amount of $1.61 million. We also made payments totaling $0.05 million against our long-term debt, representing the loan agreement we entered into during the year ended February 28, 2018 to purchase the land and building of our pilot plant and executive offices. During the year ended February 28, 2019, we raised $7.38 million through the issuance of convertible debt and $15.69 million through the sale of additional common stock and the exercise of warrants in the year ended February 28, 2018.

During the year ended February 29, 2020, we paid a total of $312,000 in interest in connection with convertible notes (2019 - nil; 2018 - nil) that were converted during the year.

On February 21, 2020, we received $1,645,122 (CDN$2,209,234) in connection with the credit facility from Investissement Québec to finance capital expenses incurred for the expansion of our pilot plant. There is a 36-month moratorium on both capital and interest repayments beginning on the date of receipt of the funds.

As at February 29, 2020, we were in compliance with its financial covenants.

Loop Industries, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(in United States dollars)

Years Ended

February 29,

2020

February 28,

2019

February 28,

2018

Revenue

$

-

$

-

$

-

Expenses -

Research and development

4,717,175

3,448,547

6,694,778

General and administrative

7,215,420

8,811,237

6,860,623

Legal settlement

-

4,041,627

-

Depreciation and amortization

830,432

502,997

367,176

Impairment of intangible assets

-

298,694

-

Interest and other finance costs

2,223,304

467,082

5,125

Interest income

(500,478

)

-

-

Foreign exchange loss (gain)

19,602

(33,773

)

109,676

Total expenses

14,505,455

17,536,411

14,037,378

Net loss

(14,505,455

)

(17,536,411

)

(14,037,378

)

Other comprehensive loss -

Foreign currency translation adjustment

(98,225

)

(121,124

)

(17,889

)

Comprehensive loss

$

(14,603,680

)

$

(17,657,535

)

$

(14,055,267

)

Loss per share

Basic and diluted

$

(0.38

)

$

(0.52

)

$

(0.43

)

Weighted average common shares outstanding

Basic and diluted

37,936,094

33,795,600

32,642,741

Loop Industries, Inc.

Condensed Consolidated Balance Sheets

(in United States dollars)

As at

February 29,

2020

February 28,

2019

Assets

Current assets

Cash and cash equivalents

$

33,717,671

$

5,833,390

Sales tax, tax credits and other receivables

664,544

599,000

Prepaid expenses

141,226

226,521

Total current assets

34,523,441

6,658,911

Investment in joint venture

850,000

-

Property, plant and equipment, net

7,260,254

5,371,263

Intangible assets, net

202,863

127,672

Total assets

$

42,836,558

$

12,157,846

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable and accrued liabilities

$

2,082,698

$

2,670,233

Convertible notes

-

5,636,172

Warrants

-

219,531

Current portion of long-term debt

52,126

53,155

Total current liabilities

2,134,824

8,579,091

Long-term debt

2,238,026

952,363

Total liabilities

4,372,850

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; 39,910,774 shares issued and outstanding (2019 - 33,805,706)

3,992

3,381

Additional paid-in capital

82,379,413

38,966,208

Additional paid-in capital - Warrants

9,785,799

757,704

Additional paid-in capital - Beneficial conversion feature

-

1.200,915

Common stock issuable, 1,000,000 shares

-

800,000

Accumulated deficit

(53,317,047

)

(38,811,592

)

Accumulated other comprehensive loss

(388,449

)

(290,224

)

Total stockholders' equity

38,463,708

2,626,392

Total liabilities and stockholders' equity

$

42,836,558

$

12,157,846

Loop Industries, Inc.

Condensed Consolidated Statements of Cash Flows

(in United States dollars)

Years Ended

February 29,

2020

February 28,

2019

February 28,

2018

Cash Flows from Operating Activities

Net loss

$

(14,505,455

)

$

(17,536,411

)

$

(14,037,378

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

830,432

502,997

367,176

Impairment of intangible assets

-

298,694

-

Warrants issued for legal settlement

-

2,271,627

-

Shares issued for legal settlement

-

1,770,000

-

Stock-based compensation

3,469,390

3,985,160

6,547,313

Accrued interest

363,390

109,804

-

Loss on revaluation of warrants

8,483

65,167

-

Convertible notes debt discount amortization

1,892,185

185,505

-

Deferred financing costs

96,155

47,123

-

Gain on conversion of convertible notes

(232,565

)

-

-

Fair value of warrants issued

7,744

-

-

Loss on revaluation of foreign exchange contracts

27,129

-

-

Changes in operating assets and liabilities:

Valued added tax and tax credits receivable

(77,294

)

(234,366

)

(218,560

)

Prepaid expenses

83,876

285,052

(511,573

)

Accounts payable and accrued liabilities

(1,056,019

)

687,161

1,821,536

Advances from controlling stockholder

-

(360,000

)

Net cash used in operating activities

(9,092,549

)

(7,562,487

)

(6,391,486

)

Cash Flows from Investing Activities

Investment in joint venture

(850,000

)

-

-

Additions to property, plant and equipment

(2,439,013

)

(1,892,654

)

(2,710,053

)

Additions to intangible assets

(99,972

)

(153,465

)

(88,319

)

Net cash used in investing activities

(3,388,985

)

(2,046,119

)

(2,798,372

)

Cash Flows from Financing Activities

Proceeds from sales of common shares and exercise of warrants, net of share issuance costs

39,216,399

(25,544

)

15,694,497

Repayment of advances from controlling stockholder

-

-

(278,472

)

Proceeds from issuance of long-term debt

1,645,122

-

-

Proceeds from issuance of convertible notes

-

7,550,000

1,092,980

Deferred financing costs

(34,254

)

(143,277

)

-

Payment of accrued interest on convertible notes

(312,000

)

Repayment of long-term debt

(52,126

)

(53,155

)

(4,554

)

Net cash provided by financing activities

40,463,141

7,328,024

16,504,451

Effect of exchange rate changes

(97,326

)

(35,741

)

(81,367

)

Net change in cash

27,884,281

(2,316,323

)

7,233,226

Cash and cash equivalents, beginning of year

5,833,390

8,149,713

916,487

Cash and cash equivalents, end of year

$

33,717,671

$

5,833,390

$

8,149,713

Supplemental Disclosure of Cash Flow Information:

Income tax paid

$

-

$

-

$

-

Interest paid

$

368,482

$

54,040

$

5,125

Interest received

$

500,478

$

-

$

-

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 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 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 and Media Inquiries:

Nelson Gentiletti

Loop Industries, Inc.

+1 (450) 951 8555 ext. 223

[email protected]

SOURCE:

Loop Industries, Inc.

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