Loop Industries, a technology innovator in sustainable plastic resin and polyester, announced financial results for its fiscal 2019 third quarter ended November 30, 2018 during which it achieved major milestones.
“Since the second quarter we have made significant progress on the Company’s strategic business goals including client contracts, manufacturing and organizational development,” said Daniel Solomita, the Company’s Founder and CEO.
“We entered into a multi-year supply agreement with PepsiCo Inc. and a multi-year 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 continued, “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 turn-key Waste-to-Resin industrial solution for license to manufacturing companies seeking a commercially viable technology to produce sustainable PET and polyester plastic.
“Lastly, we continued the buildout of our experienced management team with the appointment of Nelson Gentiletti to Chief Operating and Chief Financial Officer; an experienced and well recognized public company CFO.”
Financial results for the third quarter ended November 30, 2018
Net loss for the three months ended November 30, 2018 decreased $3.8 million to $2.9 million compared to the same period last year, primarily due to decreased research and development expenses of $3.1 million.
General and administrative expenses decreased by $0.7 million and amounted to $2.0 million compared to $2.7 million for the three months ended November 30, 2018 and 2017, respectively. The decrease was primarily due to lower employee related costs including non-cash stock-based compensation of $0.6 million and professional fees of $0.1 million.
Research and development expenses for the three months ended November 30, 2018 decreased $3.1 million to $0.8 million as compared to the same period last year. The decrease was primarily due to lower employee related expenses of $2.7 million resulting from lower non-cash stock-based compensation expense, in addition to lower engineering fees of $0.4 million related to completion of initial process design and development.
During the three months ended November 30, 2018, the Company made capital investments of $0.4 million.
Financial results for the nine months ended November 30, 2018
Net loss for the nine months ended November 30, 2018 decreased $0.4 million to $10.0 million compared to the same period last year, primarily due to decreased research and development costs of $2.4 million as well as increased general and administrative expenses of $2.0 million.
Research and development expenses for the nine months ended November 30, 2018 decreased $2.4 million to $2.9 million compared to the same period last year. The decrease in research and development expenses was driven primarily by lower non-cash stock-based compensation expense of $2.2 million and lower engineering fees of $0.4 million resulting from process design and development efforts.
General and administrative expenses for the nine months ended November 30, 2018 increased $2.0 million to $6.7 million as compared to the same period last year. The increase was primarily due to higher employee related expenses of $0.7 million, comprised mainly of non-cash 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 the nine months ended November 30, 2018, the Company made capital investments of $1.5 million.
We are a pre-revenue company and our ongoing operations have been financed by successfully raising new equity capital. We are actively evaluating financing alternatives to continue to execute our growth strategy and commercialize our disruptive technology for sustainable plastic.
The company issued on November 13, 2018 convertible notes in the aggregate principal amount of $2.45 million and related warrants to acquire an additional 50% of the shares issued upon the exercise of the notes. The notes bear interest at a rate of 8% per annum and mature on May 13, 2019. On January 3, 2019, the Company issued additional convertible notes and related warrants under the same conditions for an aggregate purchase price of $0.2 million.
The financing provides additional short-term liquidity while the Company actively pursues options to finance its growth strategy and the startup of large scale commercial operations pursuant to its announced joint venture with Indorama Ventures.
Joint venture with Indorama Ventures Public Company Limited (IVL)
In September 2018, the Company announced a joint venture with a subsidiary of IVL to manufacture and commercialize the Company’s technology to meet the growing global demand from beverage and consumer packaged goods companies for 100% sustainable recycled PET and polyester fiber. IVL, listed in Thailand, is one of the world’s leading petrochemicals producers, with a global manufacturing footprint and consolidated revenues of $8.4 billion in 2017. This joint-venture brings together IVL’s world-class manufacturing footprint and our proprietary science and technology with a goal of becoming a reliable world leader in the circular economy for sustainable and recycled PET resin and polyester fiber. The 50:50 joint venture will have an exclusive world-wide license to retrofit existing facilities and use the Company’s technology to produce Loop™ PET resin and polyester fiber with plans to begin commercial production in the first quarter of 2020. We expect that production from the facility will be fully subscribed by leading global consumer brands.
PepsiCo secures multi-year supply agreement for Loop™ branded 100% sustainable PET plastic
In October 2018, the Company entered into a multi-year agreement with PepsiCo that will enable it to purchase production capacity from the Company’s joint venture facility with IVL in the United States and incorporate Loop™ PET resin, which is 100% recycled material, into its product packaging by early 2020. As one of the largest purchasers of recycled PET plastic in the consumer goods space, PepsiCo has identified Loop™ PET resin as a commercially viable technology to expand the amount of recycled content in its product packaging and help meet its sustainability ambitions and consumer needs. This agreement aligns with PepsiCo’s Performance with Purpose vision and highlights the company’s commitment to adopt different and creative approaches to the challenges of plastics and waste. The deal will also include a marketing and communications plan to raise awareness of the importance of recycling, sustainability and the circular economy.
Coca-Cola Cross Enterprise Procurement Group enters into multi-year supply framework for Loop branded 100% sustainable PET plastic
On November 29, 2018 the Company entered into a multi-year supply framework with certain members of the Coca-Cola Cross Enterprise Procurement Group to supply 100% recycled and sustainable Loop™ PET plastic from our joint venture facility with IVL in the United States to authorized Coca-Cola bottlers who enter into supply agreements with the company.
Strategic partnership with thyssenkrupp
On December 19, 2018 the Company announced an agreement with thyssenkrupp Industrial Solutions’ division, Uhde Inventa-Fischer GmbH, a leading global polyester technology provider and polyester plant engineering firm. This strategic alliance is expected to shape the future of PET and Polyester manufacturing. The Global Alliance Agreement advances the integration of our respective technologies intended to provide a turn-key WTR™ industrial solution for license to manufacturing companies seeking a commercially viable technology to produce sustainable PET and polyester plastic.
Appointment of Nelson Gentiletti as Chief Operating and Financial Officer
The Company continues to invest in developing our organizational strength and depth. On December 20, 2018 we announced the appointment of Nelson Gentiletti to the position of Chief Operating and Chief Financial Officer, an experienced and well recognized public company CFO, Mr. Gentiletti will be responsible for all of the Company’s corporate functions. He will also draw upon his strong background in operations management and business development to support the Company in the rollout of the recently announced joint venture with IVL and the development of WTR™ plants. His skillset will complement those of Nelson Switzer who joined the company earlier this year as Chief Growth Officer.
Source: Company Press Release