Sun, 17 Nov 2019

Financing In Place To Support Commercialization

MONTREAL, QC / ACCESSWIRE / July 8, 2019 / Loop™ Industries, Inc. (NASDAQ: LOOP) (the "Company" or "Loop"), a leading sustainable plastics technology innovator, today announced its first quarter ended May 31, 2019 consolidated financial results of fiscal year 2020.

The Company announced, on June 14, 2019, that it had closed its previously announced registered direct offering for aggregate net proceeds of $34.6 million from Northern Private Capital, which will be used to finance the start-up of its joint venture commercial operations and further fund the development of Loop's existing technologies and new technologies and its ongoing pre-revenue operations.

"The engineering work for our first facility in Spartanburg, South Carolina with our joint venture partner, Indorama Ventures to produce Loop™ PET resin is progressing well, the work to upgrade our pilot plant to increase production is almost complete and the progress with converting certain Letters of Intent into contracts is also on track." said Daniel Solomita, Loop's Founder & Chief Executive Officer.

The following table summarizes our operating results for the three-month periods ended May 31, 2019 and 2018.

Three Months Ended May 31,
2019 2018 $ Change
Revenues
$ - $ - $ -
Operating expenses
Research and development
Stock-based compensation
312,435 410,213 (97,778)
Other research and development
685,426 655,866 29,560
Total research and development
997,861 1,066,079 (68,218)
General and administrative
Stock-based compensation
618,255 775,456 (157,201)
Other general and administrative
1,284,375 1,580,094 (295,719)
Total general and administrative
1,902,630 2,355,550 (452,920)
Depreciation and amortization
164,336 101,069 63,267
Interest and other finance costs
501,849 12,913 488,936
Foreign exchange (gain) loss
(12,126) (6,081) (6,045)
Total operating expenses
3,554,550 3,529,530 25,020
Net loss
$ (3,554,550) $ (3,529,530) $ (25,020)

First Quarter Ended May 31, 2019

The net loss for the three-month period ended May 31, 2019 increased $0.03 million to $3.56 million, as compared to the net loss for the three-month period ended May 31, 2018 which was $3.53 million. The increase is primarily due to increased interest and other finance costs of $0.49 million, an increase in depreciation and amortization of $0.06 million, offset by lower research and development expenses of $0.07 million and by lower general and administrative expenses of $0.45 million.

Research and development expenses for the three-month period ended May 31, 2019 amounted to $1.0 million compared to $1.07 million for the three-month period ended May 31, 2018, representing a decrease of $0.07 million, or representing an increase of $0.03 million excluding stock-based compensation. The increase of $0.03 million was primarily attributable to higher professional fees offset by higher research and development tax credits. The decrease in non-cash stock-based compensation expense of $0.10 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, 2019 amounted to $1.90 million compared to $2.36 million for the three-month period ended May 31, 2018, representing a decrease of $0.46 million, or $0.30 million excluding stock-based compensation. The decrease of $0.30 million was mainly attributable to higher employee related expenses, higher marketing and commercial insurance expenses totaling $0.28 million, offset by professional fees of $0.58 million. Stock-based compensation expense for the three-month period ended May 31, 2019 amounted to $0.62 million compared to $0.78 million for the three-month period ended May 31, 2018, representing a decrease of $0.16 million, which was mainly attributable lower stock awards provided to executives.

Depreciation and amortization for the three-month period ended May 31, 2019 totaled $0.16 million compared to $0.10 million for the three-month period ended May 31, 2018, representing an increase of $0.06 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 May 31, 2019 totaled $0.50 million compared to $0.01 million the three-month period ended May 31, 2018, representing an increase of $0.49 million. This increase is attributable to the non-cash accretion expense also relating to the convertible notes issued during the 2019 Fiscal year in the amount of $0.59 million, the interest expense relating to the convertible notes issued during the 2019 Fiscal year in the amount of $0.12 million, the amortization of deferred financing costs also related to the convertible notes issued during the 2019 Fiscal year in the amount of $0.04 million, the revaluation expense of the November 2018 Warrants in the amount of $0.01 million offset by the gain on conversion of the November 2018 Notes in the amount of $0.27 million. During the three months ended May 31, 2018, there were no convertible notes outstanding.

LIQUIDITY AND CAPITAL RESOURCES

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 May 31, 2019, the Company had cash on hand of $7.0 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 has agreed to issue and sell 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 estimated offering expenses payable by the Company of approximately $400,000. Concurrently with the Offering and pursuant to the Purchase Agreement, the Company has agreed to issue 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. 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.

Flow of Funds

Summary of Cash Flows

A summary of cash flows for the three months ended May 31, 2019 and 2018 was as follows:

Three Months Ended May 31,
2019 2018
Net cash used in operating activities
$ (2,087,353) $ (2,171,061)
Net cash used in investing activities
(995,356) (592,316)
Net cash (used) provided by financing activities
4,253,727 (13,514)
Effect of exchange rate changes on cash
(32,796) (17,807)
Net (decrease) increase in cash
$ 1,138,222 $ (2,794,698)

During the three months ended May 31, 2019, we used $2.1 million in operations compared to $2.2 million during the three months ended May 31, 2018. 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 Operating Activities

Net Cash Used in Investing Activities

During the three months ended May 31, 2019, the Company made investments of $0.5 million in property, plant and equipment as compared to $0.6 million for the three months ended May 31, 2018, primarily in connection with the upgrade of its GEN II industrial pilot plant. During the three months ended May 31, 2019, 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, 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 (Used) Provided by Financing Activities

During the three months ended May 31, 2019, we raised net proceeds of $4.3 million through the sale of common stock.

As at May 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 May 31,
2019 2018
Revenue
$ - $ -
Operating Expenses -
Research and development, net (Note 13)
997,861 1,066,079
General and administrative (Note 13)
1,902,630 2,355,550
Depreciation and amortization (Notes 4 and 5)
164,336 101,069
Interest and other finance costs (Note 16)
501,849 12,913
Foreign exchange (gain)
(12,126) (6,081)
Total operating expenses
3,554,550 3,529,530)
Net loss
(3,554,550) (3,529,530)
Other comprehensive loss -
Foreign currency translation adjustment
(140,142) (52,268)
Comprehensive loss
$ (3,694,692) $ (3,581,798)
Loss per share
Basic and diluted
$ (0.11) $ (0.11)
Weighted average common shares outstanding
Basic and diluted
34,714,510 33,140,148

Loop Industries, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(in United States dollars)

May 31, 2019 February 28, 2019
Assets
Current assets
Cash (Note 18)
$6,971,613 $5,833,390
Sales tax, tax credits and other receivables (Note 3)
741,993 599,000
Prepaid expenses
176,309 226,521
Total current assets

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