Loop Industries, Inc. current report, 29 June 2015

Business Context and Reporting Period

Company: First American Group Inc. (operating as Loop Industries, Inc. following reverse acquisition)

Filing Date: June 29, 2015

Event: The Company completed a reverse acquisition of Loop Holdings, Inc., a Nevada corporation focused on depolymerizing waste plastics (specifically PET) into purified terephthalic acid (PTA) and ethylene glycol (EG). Prior to this transaction, First American Group was a shell company with no active operations. Following the transaction, Loop Holdings is a wholly-owned subsidiary, and the Company is no longer considered a shell company.

Key Financial Metrics

Revenue: $0. The Company is a development-stage entity and has never generated revenue.

Net Loss: $789,600 for the period from inception (October 23, 2014) through February 28, 2015.

Operating Expenses: $831,012 for the period from inception through February 28, 2015 (primarily consulting fees of $762,000).

Cash and Deposits: $182,492 as of February 28, 2015. As of June 15, 2015, cash balance was approximately $1,950,000.

Total Assets: $188,442 as of February 28, 2015.

Total Liabilities: $214,010 as of February 28, 2015.

Stockholders' Equity: $409,590 as of February 28, 2015.

Capital Structure: 119,093,200 shares of common stock issued and outstanding as of June 29, 2015. Daniel Solomita beneficially owns 68,000,000 shares (57.1%).

Material Changes

  • Reverse Acquisition: Issued 93,030,000 shares of common stock to acquire 100% of Loop Holdings. Former Loop Holdings shareholders now hold approximately 78.1% of the Company.
  • Management Change: Daniel Solomita appointed as President, CEO, Secretary, Treasurer, and Chairman. Former officers Mazen Kouta and Zeeshan Sajid resigned and redeemed their shares for nominal amounts ($9,000 and $7,000 respectively).
  • Fiscal Year Change: Fiscal year-end changed from September 30 to the last day of February.
  • Business Pivot: Shifted from a shell company/VoIP services history to a plastic recycling technology business.

Guidance, Outlook, and Risks

Outlook and Plan of Operation:

  • Short-term: Building a pilot plant facility estimated to cost $700,000 to validate technology.
  • Medium-term: Construction of a full-scale commercial facility with an estimated cost of $15 million, capable of processing 10 metric tons of PET per hour.
  • Long-term: Expansion to depolymerize other plastics (Nylon, HIPS, PE).

Capital Requirements: The Company requires approximately $2,000,000 to fund operations for one year. No financing arrangements are currently secured. Additional funding will likely come from equity financing, resulting in dilution.

Risks and Contingencies:

  • Going Concern: Auditors have expressed substantial doubt about the Company's ability to continue as a going concern due to lack of revenue and history of losses.
  • Technology Risk: Commercialization is in incipient stages; scaling up the depolymerization technology is unproven and carries significant technical risk.
  • Liquidity: Current cash is insufficient to commence the 12-month plan of operation without additional financing.
  • Management Concentration: Operations are heavily dependent on Daniel Solomita, who is the sole employee and holds a controlling interest.
  • Intellectual Property: No patents currently owned; plans to file within 8 months.

Investor Verification Checklist

  • Verify the status of the $1,950,000 cash balance reported as of June 15, 2015, and the source of these funds.
  • Confirm the technical validation results of the pilot plant and the timeline for the $15 million commercial facility.
  • Review the Intellectual Property Assignment Agreement regarding the $1.3 million purchase price for the depolymerization technology.
  • Assess the Company's ability to secure the required $2 million in funding to avoid insolvency.
  • Verify the "penny stock" status and liquidity constraints for trading on the OTCQB market.