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Loop Industries Reports Fourth Quarter and Fiscal 2019 Consolidated Results

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Significant Milestones Achieved During Year; In Progress Towards Commercialization

MONTREAL, CA / ACCESSWIRE / May 7, 2019 / Loop Industries, Inc. (NASDAQ:LOOP) (the ''Company'' or ''Loop''), a leading sustainable plastics technology innovator, today announced financial results for its fourth quarter and fiscal year ended February 28, 2019.

''The 2019 fiscal year was a success for Loop and our commercialization journey,'' said Daniel Solomita, Loop's Founder & CEO. '' We announced our 50/50 joint venture with Indorama Ventures Limited (''IVL''), which will see the joint venture retrofit existing facilities to produce Loop PET, and our Global Alliance Agreement with thyssenkrupp (''tkIS'') that will see us develop new Waste-to-Resin facilities, our blue print for large scale greenfield manufacturing facilities to drive our licensing revenues. Having seen the progress we made in driving toward production, many of the world's leading consumer brands committed to supply agreements with us. I am very pleased with what our team has delivered, our progress and our trajectory.''

Mr. Solomita added, ''The detailed engineering work for our first facility in Spartanburg in partnership with IVL to commercialize Loop PET plastic resin is well underway. Due to the overwhelming demand from global consumer brands for Loop PET resin and IVL's confidence in our technology, the joint venture is exploring expanding the capacity of the first retrofit production facility planned for operation in 2020.''

Selected achievements from fiscal 2019:

  • Joint venture with IVL to manufacture and commercialize sustainable Loop branded PET plastic resin and polyester fiber to meet the growing global demand from beverage and consumer packaged goods companies. The 50/50 joint venture has an exclusive world-wide license to use our technology to retrofit existing IVL facilities, so each retrofitted facility can produce 100% sustainable Loop PET plastic resin and polyester fiber;
  • Entered into a Global Alliance Agreement with thyssenkrupp (''tkIS'') aimed at transforming the future of sustainable PET plastic resin manufacturing. We believe the Waste-to-Resin solution will result in a highly scalable recurring revenue licensing model to supply the global demand for 100% sustainable Loop PET plastic resin and polyester fiber, allowing us to rapidly penetrate and transform the plastic market and fully capitalize on our disruptive potential to be the leader in the circular economy for PET plastic resin and polyester fiber;
  • Multi-year supply agreement with Danone SA, one of the world's leading global food and beverage companies. Danone will purchase 100% sustainable and upcycled Loop branded PET from Loop's joint venture facility with IVL in the United States for use in brands across its portfolio including evian®, Danone's iconic natural spring water;
  • Multi-year supply agreement with PepsiCo, one of the largest purchasers of recycled PET plastic, enabling them to purchase production capacity from Loop's joint venture facility with IVL in the United States and incorporate Loop PET plastic resin into its product packaging;
  • Multi-year supply framework with the Coca-Cola system's Cross Enterprise Procurement Group to supply 100% recycled and sustainable Loop PET plastic resin from our joint venture facility with IVL in the United States to authorized Coca-Cola bottlers who enter into supply agreements with us;
  • Multi-year supply agreement with L'Occitane to supply 100% recycled and sustainable Loop PET plastic resin from our first European production facility;
  • Letters of Intent with L'Oréal Group, the global leader in the beauty industry and Nestle Waters North America setting forth the framework conditions for multi-year supply agreements for Loop PET.
  • Raised $12.6 M in financing;
  • We successfully completed our Generation II industrial pilot plant, which continues to see consistently high monomer yields and excellent purity. We are continuing to upgrade the Company's pilot plant to ensure the highest quality of sustainable Loop PET plastic resin and polyester fiber is produced at the facility;
  • We have continued to enhance our patent portfolio by investing to improve our existing technology and develop new technologies; and
  • We also strengthened our talent with the addition of several individuals in key positions.

The following table summarizes our operating results for the three-month periods ended February 28, 2019 and 2018.

Three Months Ended February 28,
2019
2018
$ Change
Revenues
$ - $ - $ -
Operating expenses
Research and development
Stock-based compensation
250,251 479,816 (229,565 )
Other research and development
273,815 873,199 (599,384 )
Total research and development
524,066 1,353,015 (828,949 )
General and administrative
Stock-based compensation
575,240 743,580 (168,340 )
Legal settlement
4,041,627 - 4,041,627
Other general and administrative
1,514,203 1,425,749 88,454
Total general and administrative
6,131,070 2,169,329 3,961,741
Depreciation and amortization
136,285 86,160 50,125
Impairment of intangible assets
298,694 - 298,694
Interest and other finance costs
425,964 5,125 420,839
Foreign exchange loss (gain)
38,632 21,042 17,590
Total operating expenses
7,554,711 3,634,671 3,920,040
Net loss
$ (7,554,711 ) $ (3,634,671 ) $ (3,920,040 )

Fourth Quarter Ended February 28, 2019

The net loss for the three-month period ended February 28, 2019 increased $3.9 million to $7.5 million, as compared to the net loss for the three-month period ended February 28, 2018 which was $3.6 million. The increase is primarily due to increased general and administrative expenses of $4.0 million, an increase in depreciation and amortization and impairment of intangible assets of $0.3 million, an increase in interest and other finance costs of $0.4 million, offset by lower research and development expenses of $0.8 million.

Research and development expenses for the three-month period ended February 28, 2019 amounted to $0.5 million compared to $1.4 million for the three-month period ended February 28, 2018, representing a decrease of $0.8 million, or $0.6 million excluding stock-based compensation. The decrease of $0.6 million was primarily attributable to lower employee related expenses of $0.1 million, lower professional fees of $0.2 million and by lower spending for purchases and consumables of $0.3 million. The decrease in non-cash stock-based compensation expense of $0.2 million is mainly attributable to the termination of an individual whose vesting of stock options ceased upon termination.

General and administrative expenses for the three-month period ended February 28, 2019 amounted to $6.1 million compared to $2.2 million for the three-month period ended February 28, 2018, representing an increase of $4.0 million, or $0.1 million excluding stock-based compensation and the legal settlement. The increase of $4.0 million was primarily due to the legal settlement expense which amounted to $4.0 million compared to nil for the three-month period ended February 28, 2018. Other variances were attributable to higher employee related expenses of $0.4 million associated with an increased number of employees, offset by lower legal, accounting and other professional fees of $0.1 million and by lower other general operating expenses of $0.2 million. Stock-based compensation expense for the three-month period ended February 28, 2019 amounted to $0.6 million compared to $0.8 million for the three-month period ended February 28, 2018, representing an increase of $0.2 million. The decrease was mainly attributable the timing of certain stock awards provided to executives.

Depreciation and amortization for the three-month period ended February 28, 2019 totaled $0.14 million compared to $0.09 million for the three-month period ended February 28, 2018, representing an increase of $0.05 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 28, 2019 totaled $0.3 million compared to nil for the three-month period ended February 28, 2018, representing an increase of $0.3 million. The increase is entirely attributable to the write-off of the remaining intangible asset balance of the GEN I technology of $0.3 million.

Interest and other finance costs for the year three-month period ended February 28, 2019 totaled $0.4 million compared to a negligible amount for the three-month period ended February 28, 2018, representing an increase of $0.4 million. The increase is mainly attributable to an increase in interest expense relating to the convertible notes issued during the year in the amount of $0.1 million, an increase in accretion expense also relating to the convertible notes issued during the year in the amount of $0.2 million, an increase in the amortization of deferred financing costs also related to the convertible notes issued during the year in the amount of $0.05 million and an increase in the revaluation expense of the November 2018 Warrants in the amount of $0.07 million.The following table summarizes our operating results for the years ended February 28, 2019 and 2018.

Years Ended February 28,
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