Loop Industries Inc., Terrebonne, Quebec, a technology innovator in sustainable plastic resin and polyester, has announced financial results for its fiscal 2019 third quarter ended Nov. 30, 2018.
“Since the second quarter, we have made significant progress on the company’s strategic business goals, including client contracts, manufacturing and organizational development,” says Daniel Solomita, founder and CEO. “We entered into a multiyear supply agreement with PepsiCo Inc. and a multiyear supply framework with Coca-Cola system’s Cross Enterprise Procurement Group to supply Loop branded PET plastic resin from our joint venture facility with Indorama Ventures PCL. We have also made significant progress securing additional commitments from leading global consumer goods companies for what we expect to be the balance of the production capacity from our first facility.”
Solomita continues, “Moreover, we announced a joint venture with Indorama Ventures for the manufacturing of our Loop branded PET plastic resin, followed by an agreement with Thyssenkrupp Industrial Solutions’ division Uhde Inventa-Fischer GmbH, a leading global polyester technology provider and polyester plant engineering firm, for the integration of our respective technologies. The agreement is intended to provide a turnkey waste-to-resin industrial solution for license to manufacturing companies seeking a commercially viable technology to produce sustainable PET and polyester plastic.”
The company also appointed Nelson Gentiletti to chief operating and chief financial officer (CFO). Solomita describes him as “an experienced and well-recognized public company CFO.”
Gentiletti most recently served as CFO and development officer of Transcontinental Inc., Montreal, where he played a leading role in the company's transformation into flexible packaging.
Net loss for the quarter decreased $3.8 million to $2.9 million compared with the same period last year, primarily because of decreased research and development expenses of $3.1 million, Loop reports.
General and administrative expenses decreased by $700,000 and amounted to $2 million compared with $2.7 million for the three months ended Nov. 30, 2017. The decrease was primarily attributable to lower employee related costs, including noncash stock-based compensation of $600,000 and professional fees of $100,000.
Research and development expenses for the quarter $3.1 million to $800,000 as compared with the same period of the previous year. The decrease was primarily because of lower employee-related expenses of $2.7 million resulting from lower noncash stock-based compensation expense, in addition to lower engineering fees of $400,000 related to completion of initial process design and development, according to Loop.
The company made capital investments of $400,000 in the first quarter.
Net loss for the nine months ended Nov. 30, 2018, decreased $400,000 to $10 million compared with the same period last year largely because of decreased research and development costs of $2.4 million as well as increased general and administrative expenses of $2 million, the company says.
Research and development expenses for the nine-month period decreased $2.4 million to $2.9 million compared with the same period last year. This decrease was driven by lower noncash stock-based compensation expense of $2.2 million and lower engineering fees of $400,000 resulting from process design and development efforts.
General and administrative expenses for nine-month period increased from $2 million to $6.7 million as compared with the same period last year because of higher employee-related expenses of $700,000, comprised mainly of noncash stock-based compensation expense as well as higher compensation expense related to the increased number of employees and a retroactive compensation adjustment associated with the amended employment agreement of the company’s CEO. Other elements explaining the increase include higher legal fees related to legal proceedings and commercialization efforts and consulting, accounting and public company related fees totaling $1.1 million.
During its first three fiscal year quarters, Loop says it made capital investments of $1.5 million.
“We are a prerevenue company and our ongoing operations have been financed by successfully raising new equity capital,” the company says in the news release announcing its quarterly financials. “We are actively evaluating financing alternatives to continue to execute our growth strategy and commercialize our disruptive technology for sustainable plastic.”
Loop says it issued convertible notes Nov. 13, 2018, in the aggregate principal amount of $2.45 million and related warrants to acquire an additional 50 percent of the shares issued upon the exercise of the notes. The notes bear interest at a rate of 8 percent per annum and mature May 13. Jan. 3, the company issued additional convertible notes and related warrants under the same conditions for an aggregate purchase price of $200,000.
The financing provides additional short-term liquidity while Loop pursues options to finance its growth strategy and the startup of large commercial operations pursuant to its announced joint venture with Indorama Ventures, according to the company.