Financial Data and Key Metrics Changes - The company expects to realize revenue of $50 million to $70 million in 2026 and $150 million to $210 million in 2027, reflecting a delay in commercial scale PET cap revenue generation by one to three quarters [7][18] - The company reiterated guidance for achieving run rate positive adjusted EBITDA by the end of 2026 [18] - The company ended the quarter with $83 million in cash, cash equivalents, and marketable securities [19] Business Line Data and Key Metrics Changes - The company is commercializing its PET cap solution, which addresses a $65 billion cap closures market, with over 20 companies qualifying or preparing for qualification [5] - Customer product qualification is taking longer than expected, with a typical qualification journey for new caps now projected to take one to two years [6][9] - The company is confirming its first customer pilot launch remains on track for Q3 2025 [14] Market Data and Key Metrics Changes - The company is facing challenges due to global manufacturing supply chain disruptions caused by tariffs and protectionist trade policies [12] - The company is updating its Catformer deployment schedule in response to the current tariff environment [13] Company Strategy and Development Direction - The company is focused on diversifying its manufacturing footprint to minimize tariff exposure and is investing in supply chain preparedness [15] - The company is committed to bringing its PET caps to market and believes it can drive a meaningful transformation in packaging [12][21] - The company is exploring additional technology improvements to increase line throughput [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming qualification challenges and highlighted strong customer interest with over 65 new inquiries in the last six weeks [21] - The company remains focused on its mission to enable the transition to sustainable materials and is excited about future developments [22] Other Important Information - The company is making strategic adjustments to its deployment plan to factor in geographic diversification [15] - The company has sold 35 of the 80 acres of land in Geismar and remains optimistic about future transactions [37] Q&A Session Summary Question: Why is revenue declining further? - Management clarified that OriginOne is being operated intermittently to supply customers with samples and develop internal knowledge, leading to a reduced operating rate [27] Question: Are there any specific issues faced in product qualification? - Management noted variability in customer testing processes and the need for iterative design changes to meet customer performance standards [30][31] Question: Can you provide an update on EBITDA breakeven and higher CapEx due to tariffs? - Management indicated that current tariffs are factored into estimates and do not materially impact the return on invested capital [33] Question: What is the status of the $100 million MOU? - Management confirmed the MOU is still in place and will convert into a contract post-qualification [51] Question: When will revenue realization begin? - Management expects revenue ramp to begin in mid-2026 as customers complete their qualification processes [54] Question: How does the company plan to fund growth? - Management is engaged with multiple equipment lenders for financing and is confident in avoiding equity markets unless absolutely necessary [59] Question: What should investors be excited about in the future? - Management highlighted strong demand, ongoing customer engagement, and upcoming pilot launches as key positive indicators [62]

Financial Projections - Origin Materials projects revenue of $50 million to $70 million in 2026[8, 15] - The company anticipates revenue of $150 million to $210 million in 2027[8, 15] - Adjusted EBITDA is projected to be positive on a run-rate basis by the end of 2026[8, 15] Market and Technology - The total addressable market for Origin closures is greater than $65 billion[8, 31] - Origin Materials has developed proprietary technology for 100% PET caps and closures[6, 58] - The company has secured over 70 patents protecting its technology and products[9, 61] Manufacturing and Operations - Origin commenced production of its first CapFormer line in February 2025[17, 50] - The company is aiming to have 8 to 10 CapFormer lines operating in 2026[15, 17] - The payback period for the manufacturing lines is expected to be less than 18 months[8, 12]

Financial Performance - Total revenues for Q1 2025 were $5,430,000, a decrease of 20.5% compared to $6,825,000 in Q1 2024[16]. - Net loss for Q1 2025 was $26,441,000, compared to a net loss of $13,913,000 in Q1 2024, representing an increase in loss of 90.5%[16]. - Operating expenses in Q1 2025 totaled $32,736,000, up 80.6% from $18,135,000 in Q1 2024, primarily due to increased research and development costs[16]. - Loss from operations for the three months ended March 31, 2025, was $32.62 million, compared to a loss of $17.99 million in the prior year[94]. - The company reported a net loss of $26.4 million for the three months ended March 31, 2025, compared to a net loss of $13.9 million for the same period in 2024, resulting in a basic and diluted net loss per share of $0.18[108]. Cash and Assets - Cash and cash equivalents decreased to $43,835,000 as of March 31, 2025, down from $56,307,000 at the end of 2024, a decline of 22.2%[13]. - Total assets decreased to $348,977,000 as of March 31, 2025, down from $378,027,000 at the end of 2024, a reduction of 7.7%[13]. - Total current assets decreased to $119,509,000 as of March 31, 2025, down from $139,174,000 as of December 31, 2024, a decline of 14.1%[14]. - The company’s total liabilities decreased to $34,369,000 as of March 31, 2025, down from $39,662,000 at the end of 2024, a decline of 13.0%[13]. - The total stockholders' equity as of March 31, 2025, was $314,608,000, down from $338,365,000 at the end of 2024, a decrease of 7.0%[14]. Research and Development - Research and development expenses for Q1 2025 were $3,301,000, a decrease of 43.3% from $5,819,000 in Q1 2024[16]. - The company recorded an impairment charge of $16,610 thousand during the three months ended March 31, 2025, related to long-lived assets[41]. - The company received zero funding under the Canadian government R&D program for the three months ended March 31, 2025, compared to $8.1 million received in the same period in 2024, marking a decrease of 100%[77]. Revenue Recognition - Revenue is recognized upon shipment for product sales, while service agreements generate revenue over the period services are performed[58]. - The Company’s revenue recognition follows ASC 606, ensuring that revenue reflects the consideration expected in exchange for goods or services[45]. - The Company has zero deferred revenue for the three months ended March 31, 2025, as it did not receive payment before the provision of services[59]. Marketable Securities - The Company recorded a total fair value of $69,564,000 for its financial assets as of March 31, 2025, which includes $30,351,000 in cash equivalents and $39,213,000 in marketable securities[60]. - The company sold marketable securities for proceeds of $282.4 million during the three months ended March 31, 2025, realizing a loss of $0.1 million, consistent with the loss reported for the same period in 2024[66]. - The aggregate fair value of marketable securities in an unrealized loss position was $23.0 million as of March 31, 2025, down from $26.6 million as of December 31, 2024, indicating a reduction of approximately 13.5%[66]. Stock and Equity - The weighted-average common shares outstanding for Q1 2025 were 146,852,340, an increase from 141,828,895 in Q1 2024[16]. - The total remaining compensation expense for RSU awards to be recognized under the 2021 Equity Incentive Plan is $12.6 million, expected to be recognized over an estimated weighted average period of 1.4 years[90]. - The company has 1,058,231 options to purchase common stock and 2,124,255 performance-based stock awards outstanding as of March 31, 2025, which are excluded from diluted net loss per share calculations[109]. Legal and Compliance - The company is currently facing litigation related to a securities class action and derivative complaints, which may have uncertain financial impacts[106][107]. - The Company is involved in derivative complaints filed by shareholders against current and former directors, which may lead to unspecified damages and governance changes[107]. Business Developments - The company completed the mechanical construction of its first furanics manufacturing plant in Ontario, Canada, which is currently operating on demand[25]. - Origin announced its PET closures business in August 2023, with mass production partnerships established in Europe and North America[24]. - The first PET closure manufacturing system, "CapFormer," successfully completed its Factory Acceptance Test in September 2024[24].

First Quarter 2025 Operating and Financial Results [Overview and Key Highlights](index=1&type=section&id=Overview%20and%20Key%20Highlights) Origin Materials announced a strategic customer agreement for PET closures, but customer qualification delays and supply chain uncertainties defer commercial-scale revenue, leading to updated 2026 and 2027 guidance while reiterating run-rate Adjusted EBITDA positive by late 2026 - Announced a signed strategic customer agreement with a major packaging company for the development of large format PET closures for the ready to drink, wine, and spirits market[1](index=1&type=chunk)[2](index=2&type=chunk)[5](index=5&type=chunk) - Customer product qualification is taking longer than projected, leading to a deferral of commercial-scale PET cap revenue generation by **one to three quarters**[2](index=2&type=chunk) Updated Revenue and Profitability Guidance | Guidance Metric | Updated Forecast | | :--- | :--- | | 2026 Revenue | $50 million to $70 million | | 2027 Revenue | $150 million to $210 million | | Run-Rate Adjusted EBITDA Positive | By the back end of 2026 | [Business and Operational Updates](index=2&type=section&id=Business%20and%20Operational%20Updates) The company reports robust customer interest and pilot launch progress for PET caps, with CapFormer lines 5-8 production now expected in 1H 2026, alongside strategic efforts to diversify manufacturing and secure financing - Over twenty companies are qualifying or preparing to qualify Origin PET caps, including **six Fortune 500 companies**; customer interest remains strong with over **sixty-five new inquiries** in the last six weeks[2](index=2&type=chunk)[3](index=3&type=chunk)[4](index=4&type=chunk) - The first customer pilot launch of beverages with PET closures is confirmed to be on track for **Q3 2025** in the United States[5](index=5&type=chunk)[6](index=6&type=chunk) - CapFormer lines five through eight are now estimated to begin PET cap production in the **first half of 2026**, with factory acceptance testing expected in **Q4 2025** and **Q1 2026**[1](index=1&type=chunk)[5](index=5&type=chunk) - The company is pursuing both equipment financing for CapFormer lines and corporate debt in the **second half of 2025** to maintain a healthy cash balance[8](index=8&type=chunk) - Strategic adjustments include diversifying the manufacturing footprint to minimize tariff exposure and investing in owned PET extruders to improve line margins[8](index=8&type=chunk) [Financial Performance](index=3&type=section&id=Financial%20Performance) For Q1 2025, revenue decreased to $5.4 million from $6.8 million year-over-year due to a planned supply chain reduction, resulting in a wider net loss of $26.4 million primarily from a $16.6 million non-cash asset impairment, though Adjusted EBITDA loss improved to $11.0 million, with cash and equivalents at $83.0 million Q1 2025 Financial Highlights (vs. Q1 2024, in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $5.4 | $6.8 | | Operating Expenses | $32.7 | $18.1 | | Net Loss | $(26.4) | $(13.9) | | Adjusted EBITDA Loss | $(11.0) | $(12.9) | | Net Loss Per Share | $(0.18) | $(0.10) | - Cash, cash equivalents and marketable securities were **$83.0 million** as of March 31, 2025[7](index=7&type=chunk) - The increase in operating expenses was primarily driven by a **$16.6 million** non-cash impairment charge related to a biomass conversion technology contracting manufacturing agreement[9](index=9&type=chunk) Financial Statements [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to $349.0 million from $378.0 million at year-end 2024, primarily due to reduced cash, cash equivalents, and marketable securities, while total liabilities also decreased to $34.4 million from $39.7 million Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $43,835 | $56,307 | | Total current assets | $119,509 | $139,174 | | Total assets | $348,977 | $378,027 | | Total current liabilities | $12,572 | $12,549 | | Total liabilities | $34,369 | $39,662 | | Total stockholders' equity | $314,608 | $338,365 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q1 2025, total revenues were $5.4 million, down from $6.8 million year-over-year, with a significant $16.6 million asset impairment charge leading to a $32.6 million loss from operations and a $26.4 million net loss, compared to a $13.9 million net loss in Q1 2024 Statement of Operations Summary (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Total revenues | $5,430 | $6,825 | | Loss from operations | $(32,623) | $(17,997) | | Net loss | $(26,441) | $(13,913) | | Net loss per share, basic & diluted | $(0.18) | $(0.10) | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash used in operating activities significantly improved to $8.4 million from $16.7 million in Q1 2024, with net cash provided by investing activities at $0.5 million and financing activities using $4.5 million, resulting in a $12.5 million net decrease in cash and cash equivalents for the quarter Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,439) | $(16,735) | | Net cash provided by investing activities | $540 | $9,335 | | Net cash (used in) provided by financing activities | $(4,542) | $6,648 | | Net (decrease) increase in cash | $(12,472) | $271 | | Cash and cash equivalents, end of period | $43,835 | $75,773 | Other Information [Reconciliation of GAAP and Non-GAAP Results](index=12&type=section&id=Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Results) The company reconciled its GAAP net loss of $26.4 million to a non-GAAP Adjusted EBITDA loss of $11.0 million for Q1 2025, an improvement from Q1 2024's $12.9 million loss, with major adjustments including a $16.6 million asset impairment, stock-based compensation, and depreciation & amortization Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net loss (GAAP)** | **$ (26,441)** | **$ (13,913)** | | Impairment of assets | 16,610 | — | | Stock-based compensation | 2,289 | 2,781 | | Depreciation and amortization | 2,714 | 2,311 | | Other adjustments (net) | (1,182) | (4,084) | | **Adjusted EBITDA (Non-GAAP)** | **$ (11,010)** | **$ (12,905)** | [Cautionary Note on Forward-Looking Statements](index=6&type=section&id=Cautionary%20Note%20on%20Forward-Looking%20Statements) This section warns investors that the press release contains forward-looking statements regarding business strategy, financial projections, and operational timelines, which are subject to significant risks and uncertainties, including commercialization challenges, competition, and tariffs, that could cause actual results to differ materially - Forward-looking statements include projections on business strategy, revenue potential, achieving positive run-rate Adjusted EBITDA by the **end of 2026**, and CapFormer deployment timelines[21](index=21&type=chunk) - These statements are subject to risks and uncertainties such as the inability to successfully commercialize products, effects of competition and tariffs, and the uncertainty of financial projections[22](index=22&type=chunk)

Core Viewpoint - Schubert Jonckheer & Kolbe LLP is investigating potential legal claims against Origin Materials, Inc. regarding alleged false statements about the development of a manufacturing plant, which was initially set to be completed by mid-2025 [1] Group 1: Legal Proceedings - A U.S. District Court judge has allowed a securities class action complaint against Origin to proceed, alleging that the company misled investors about the production focus and timeline of its new manufacturing plant, Origin 2, between February 2023 and August 2023 [2] - The lawsuit claims that these misleading statements inflated Origin's stock price, which subsequently fell by 67% when the delay and change in production plans were revealed in August 2023 [2] Group 2: Company Actions - The investigation by Schubert Jonckheer & Kolbe LLP is focused on potential wrongdoing by Origin's directors and officers in relation to the allegations of misleading investors [3]

Core Viewpoint - A shareholder class action lawsuit has been filed against Origin Materials, Inc. for allegedly misleading investors regarding the construction and operational timeline of its Origin 2 plant, which is critical for the company's future production capabilities [1][3]. Group 1: Allegations and Misconduct - The lawsuit claims that Origin failed to disclose significant issues, including the inability to meet the construction timeline for the Origin 2 plant, a drop in demand for paraxylene (PX), and an increase in projected costs [3]. - The complaint highlights that the defendants' positive statements about the company's business and prospects were materially misleading and lacked a reasonable basis [3]. Group 2: Financial Impact - On August 9, 2023, Origin reported disappointing financial results, revealing that the Origin 2 plant would not be operational by mid-2025 as previously stated, and would be smaller and more expensive than initially projected [4]. - Following this announcement, Origin's stock price plummeted by $2.88, representing a decline of over 66%, closing at $1.45 per share on August 10, 2023 [4]. Group 3: Legal Proceedings - The investigation aims to determine whether members of Origin's board of directors violated securities laws or breached their fiduciary duties in relation to the alleged misconduct [5]. - Current shareholders who purchased shares before February 23, 2023, are encouraged to seek legal advice regarding their rights and options [6].

Financial Data and Key Metrics Changes - The company ended 2024 with $103 million in cash, cash equivalents, and securities, down from $158 million at the end of 2023, indicating a cash burn of $55 million, which is at the low end of the guidance range for 2024 of $55 million to $65 million [38][39] - Fourth-quarter revenue was $9.2 million compared to $13.1 million in the prior year quarter, while annual revenue for 2024 was $31.3 million, within the guidance of $25 million to $35 million [38][39] - Operating expenses for the fourth quarter were $16.2 million, down from $19.8 million in the prior year, while full-year operating expenses increased to $85.3 million from $60.1 million, largely due to a non-cash impairment charge and higher depreciation [39][40] Business Line Data and Key Metrics Changes - The company has begun commercial production from its first Catformer line, which is expected to produce tens of millions of caps monthly, with plans to have eight Catformer lines operational by the end of 2025 [10][12][14] - The expected gross margins for the cap business are projected to fall in the mid-double digits range, with a payback period for the average line expected to be less than eighteen months [32][34] Market Data and Key Metrics Changes - Demand for the company's caps is described as incredibly strong, with multiple customers signing MOUs, and indicative demand significantly exceeding fulfillment capabilities for several years [21][22] - The caps market is dynamic, with variable pricing based on customer types and volume commitments, allowing the company to price its products based on their unique value [24][25] Company Strategy and Development Direction - The company aims to build a scalable platform capable of accommodating hundreds of Catformer lines over time, targeting a significant share of the $65 billion caps and closures market [46][47] - The strategy includes forming partnerships and licensing technology to expand overall PET cap supply, with a focus on maintaining a balanced portfolio of customers [27][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the macroeconomic environment as unforeseen but believes the fundamentals of the business remain unchanged, expressing confidence in the technology's value [105][107] - The company expects to achieve EBITDA positive results on a run rate basis by the end of 2026, updated from the previous guidance of the first half of 2026 [36][37] Other Important Information - The company has over seventy issued patents and numerous pending applications, creating a defensible moat around its technology [42][43] - The first beverage products with Origin caps are expected to be on shelves by Q3 2025, with continuous improvements planned for future Catformers [13][29] Q&A Session Summary Question: Timeline for qualification process and customer sourcing - Management confirmed that qualification involves extensive testing on capping and filling systems, requiring large sample sizes for evaluation [51][55] - The qualification process duration varies by customer size, with larger customers typically requiring more time [58][60] Question: Status of a significant MOU and its impact on revenue - Management acknowledged a delay in the initiation of purchases under a $100 million MOU but expects it to be backloaded into the second year of the contract [66][70] Question: Cash burn and minimum cash level - Management indicated a prudent approach to maintaining a minimum cash balance equivalent to one to eighteen months of operating expenses, estimating around $48 million for 2024 [73][75] Question: Revenue and EBITDA guidance for 2025 - Management refrained from providing specific revenue guidance for 2025, citing variability in customer orders and qualification timelines, but expressed confidence in a strong exit rate for 2026 [81][82] Question: Issues with Catformer line one and its impact on EBITDA timeline - Management explained that customer feedback led to the addition of knurling features on line one, causing delays in production and qualification processes, impacting the timeline for achieving EBITDA positivity [89][92] Question: Manufacturing process and margin economics - Management clarified that while they currently rely on external suppliers for extrusion, they plan to vertically integrate over time, maintaining margins without immediate reliance on extruders [96][98]

Financial Outlook - Origin Materials expects revenue of $110 million to $140 million in 2026[8, 13] - The company anticipates achieving positive EBITDA on a run-rate basis in 2026[2, 8] Manufacturing and Production - Commercial production of the first CapFormer Line commenced in February 2025[12, 13, 15] - Origin Materials is on track for eight CapFormer Lines in 2025[8, 13] - The capital cost per CapFormer Line is in the single-digit millions[8] Market and Product - The company is targeting a greater than $65 billion market with its PET caps[10] - Origin's PET caps offer approximately 40x the carbon dioxide barrier compared to HDPE and approximately 30x the oxygen barrier[12] - The company's initial focus is on the 1881 format cap[8, 11] Customer Engagement - Multiple customer MOUs have been signed, with beverage products using Origin caps expected to be on shelves potentially as early as late Q2 2025 or in Q3 2025[14]

Financial Data and Key Metrics Changes - The company ended the year with $103 million in cash, cash equivalents, and securities, down from $158 million at the end of 2023, indicating a cash burn of $55 million, which is at the low end of the guidance range for 2024 of $55 million to $65 million [27][49]. - Fourth quarter revenue was $9.2 million compared to $13.1 million in the prior year quarter, while annual revenue for 2024 was $31.3 million, within the guidance of $25 million to $35 million [27][28]. - Operating expenses for the fourth quarter were $16.2 million, down from $19.8 million in the prior year, while full-year operating expenses increased to $85.3 million from $60.1 million, largely due to a non-cash impairment charge and higher depreciation [27][28]. Business Line Data and Key Metrics Changes - The company has begun commercial production from its first CAPFORMer line, which is expected to produce tens of millions of caps monthly, with plans to have eight CAPFORMer lines operational by the end of 2025 [10][21]. - The CAP business is expected to have aggregate gross margins in the mid-double digits range, with a payback period for the average line expected to be less than 18 months [22][23]. Market Data and Key Metrics Changes - The caps market is valued at $65 billion, with strong demand anticipated to grow, as multiple customers have signed MOUs to purchase caps [7][16]. - The company is currently the only commercial producer of PET caps in the market, allowing it to price its products based on the unique value they offer [18]. Company Strategy and Development Direction - The company aims to build a scalable platform capable of accommodating hundreds of cap lines over time, targeting a significant share of the $65 billion caps and closures market [31]. - The strategy includes expanding manufacturing relationships to ensure redundancy and additional capacity, as well as exploring licensing partnerships to scale up PET cap supply [20]. Management's Comments on Operating Environment and Future Outlook - Management acknowledges the macroeconomic environment has changed but believes the fundamentals of the business remain strong, with significant undervaluation of the stock [79]. - The company expects to achieve EBITDA positive results on a run rate basis by the end of 2026, updated from earlier guidance of the first half of 2026 [26]. Other Important Information - The company has over 70 issued patents and numerous pending applications, enhancing its technology advantage and creating a defensible market position [29]. - The CAPFORMer technology allows for flexibility and rapid retrofitting, enabling the company to respond quickly to customer demand and introduce new product formats [15]. Q&A Session All Questions and Answers Question: Can you confirm the qualification process timeline for customers? - Qualification involves sending caps to customers for testing on their capping and filling systems, which requires large sample sizes for evaluation. The process duration varies based on customer size and volume expectations [40][41]. Question: What is the status of the $100 million MOU? - The initiation date for purchases under the MOU is expected to be delayed due to slower ramp-up of Line One, but the two-year term remains intact, with production rates expected to increase significantly in the second year [46][47]. Question: What is the minimum cash level and cash burn forecast for 2025? - While the minimum cash balance has not been disclosed, the company aims to maintain at least a year to eighteen months of run rate on the balance sheet, with a cash burn of approximately $48 million expected for 2025 [49][50]. Question: What issues were encountered with Line One? - The delay in Line One was due to customer feedback necessitating the addition of knurling features, which impacted the qualification timeline for subsequent lines [64][66]. Question: How does the company achieve strong margins without operating its own extruders? - The decision to initially source extruders externally was made to expedite revenue generation. The company plans to vertically integrate over time while still achieving margins without immediate extruder operation [70][71].

Financial Performance and Risks - The company has a history of net losses primarily due to research and development, plant construction, and early-stage commercial activities, with expectations of continued losses for the foreseeable future [63]. - The company anticipates significant future losses as it develops its PET closure business, increases spending on strategic partnerships, and expands production capabilities [65]. - The company is exposed to credit risk due to potential nonperformance by customers, which could adversely affect its financial condition [71]. - The company faces significant costs in developing products that may not achieve market success, which could adversely affect its financial condition and operational results [82]. - The anticipated costs of constructing new manufacturing facilities have exceeded initial estimates, leading to potential delays and increased financial strain [99]. - Unfavorable global economic conditions, including inflation and supply disruptions, could adversely affect business operations and financial performance [112]. - The company’s operating results may fluctuate significantly due to various external factors, making revenue forecasting challenging [113]. - Changes in tax laws and regulations could materially affect the company's financial position and results of operations [115]. - The company’s ability to utilize net operating loss carryforwards may be limited due to ownership changes, impacting future tax liabilities [122]. Customer Dependency and Market Risks - The top two customers accounted for approximately 96% and 77% of total revenues for the years ended December 31, 2024 and 2023, respectively, indicating a high dependency on a few customers [81]. - The market for the company's PET closures and decarbonized materials is still nascent, with significant risks and uncertainties regarding market acceptance [82]. - The commercial success of the company's products is influenced by the relative pricing of HDPE, polypropylene, and PET, which can affect customer purchasing decisions [86]. - Fluctuations in raw material costs, influenced by external factors such as geopolitical events and natural disasters, may adversely impact the company's cost structure and profitability [87]. - The company competes with established producers of fossil-based materials and must ensure its products offer comparable or superior functionality to maintain market share [83]. Operational and Production Challenges - The company relies on a limited number of manufacturing facilities to meet near-term customer demand, which poses risks if any facility experiences shutdowns or reduced production [78]. - The company has not yet produced its products in large commercial quantities, facing technological and logistical challenges in scaling production [75]. - The construction of manufacturing lines for PET closures may not be completed in a timely or cost-effective manner, impacting commercialization efforts [76]. - The company may face significant delays in procuring necessary capital equipment, which could adversely affect its ability to produce products [79]. - The company may face production delays and increased costs if it cannot secure sufficient raw materials or if suppliers do not accurately forecast demand [93]. Strategic Partnerships and Collaborations - The company seeks to establish strategic partnerships for the development of manufacturing facilities and feedstock supply, but may face challenges in securing these partnerships [101]. - The company may face challenges in establishing timely and satisfactory collaborations, which could adversely affect product development and commercialization efforts [102]. - Future collaborations may be terminated by strategic partners, potentially delaying product development and adversely affecting financial results [109]. - The company has entered into collaborations and licensing arrangements, which expose it to competitive risks and may not yield anticipated benefits [105]. Regulatory and Compliance Risks - The company is subject to extensive environmental, health, and safety laws, which may increase compliance costs and operational changes [124]. - Compliance with environmental regulations could lead to substantial costs, including fines and remediation expenses, impacting overall financial performance [125]. - The market for bioplastics is heavily influenced by government regulations, such as the EU's Single-Use Plastic Directive, which could affect product demand and investment in R&D [125]. - Climate change may disrupt operations and increase costs due to regulatory compliance, impacting financial results [111]. - The company faces risks from international trade disputes and potential tariffs, which could increase product costs and adversely impact gross margins [129]. - Proposed tariffs of 25% on imports from Canada and Mexico, and 60% on goods from China, could materially affect operating results if implemented [130]. Intellectual Property and Legal Risks - The company relies on proprietary information and intellectual property, and failure to protect these rights could harm competitive advantages and financial condition [136]. - The company may face costly patent infringement claims that could limit its ability to use key technologies and incur significant unexpected costs [143]. - Legal proceedings related to intellectual property rights could divert management's attention and lead to expensive litigation [145]. - The company relies on trade secrets for technology protection, and any compromise could reduce competitive advantages [147]. - Compliance with Canadian federal regulations on intellectual property could limit the company's ability to commercialize products outside Canada [142]. Management and Operational Structure - The management team has limited experience in operating a public company, which may increase operational costs [149]. - Retaining key personnel is crucial for success, as the loss of management could adversely affect business operations [150]. - A material weakness in internal control over financial reporting was identified and remediated, but future weaknesses may arise [154]. - The company implemented a workforce reduction in September 2024, which may not yield expected benefits and could disrupt operations [153]. Stock and Market Risks - The company has never declared or paid any cash dividends and does not intend to do so in the foreseeable future [181]. - The market price of the company's Common Stock has experienced significant volatility, including a decline in August 2023 [183]. - The company may face substantial costs and management distractions from potential securities class-action litigation following periods of market volatility [184]. - Future issuances of debt or equity securities may adversely affect the market price of the common stock and could be dilutive to existing stockholders [190]. - The company’s charter documents could prevent favorable takeovers and reduce the market price of its stock [178]. - A failure to meet Nasdaq's listing standards could result in decreased liquidity and increased volatility for the common stock, adversely impacting capital raising efforts [192]. - The company's common stock is currently listed on Nasdaq, but it faced a deficiency letter in January 2024 due to the closing bid price falling below the minimum $1.00 requirement for continued listing [191]. - In June 2024, the stock price resumed trading above $1.00 for at least ten days, regaining compliance with Nasdaq's minimum bid price requirement [191].