Loop Industries(LOOP) - 2020 Q1 - Quarterly Report

Financial Performance - The net loss for the three-month period ended May 31, 2019, was $3.56 million, an increase of $0.03 million compared to the same period in 2018[136]. - Research and development expenses for the three-month period ended May 31, 2019, were $1.0 million, a decrease of $0.07 million from $1.07 million in the same period in 2018[137]. - General and administrative expenses for the three-month period ended May 31, 2019, amounted to $1.90 million, down from $2.36 million in the same period in 2018, representing a decrease of $0.46 million[138]. - Net cash used in operating activities was $2.1 million for the three months ended May 31, 2019, compared to $2.2 million for the same period in 2018, reflecting a decrease of approximately 5.0%[146]. - The company had cash on hand of $7.0 million and raised approximately $34.6 million from a registered direct offering as of May 31, 2019[143]. - The company has a long-term debt obligation of CDN$1,400,000 related to the purchase of land and building for its pilot plant and corporate offices[144]. Investment and Joint Ventures - Loop Industries reported a capital asset investment of $943,891 during the three months ended May 31, 2019[110]. - The joint venture with Indorama Ventures Limited (IVL) aims to establish a facility with a production capacity of 20,700 metric tonnes of sustainable Loop™ PET plastic resin, fully subscribed by customers including Danone, PepsiCo, and Coca-Cola[115]. - The joint venture is evaluating increasing the facility's capacity to 40,000 metric tonnes, which may require an additional equity contribution of $15 million to $20 million from Loop Industries[119]. - The company made an initial contribution of $500,000 to Indorama Loop Technologies, LLC, a joint venture with Indorama Ventures Holdings LP, USA[148]. - The company entered into a Global Alliance Agreement with Thyssenkrupp Industrial Solutions in December 2018 to develop a fully integrated manufacturing facility for sustainable Loop™ PET plastic resin and polyester fiber[121]. Technology and Innovation - The Generation II technology is expected to be more cost-effective and environmentally sustainable, requiring less energy and fewer resources compared to conventional PET production processes[108]. - The Generation I technology portfolio includes two issued U.S. patents and a pending application expected to expire around July 2035, while the Generation II technology has an issued U.S. patent expected to expire around September 2037[116]. - The company aims to create a highly scalable recurring revenue licensing model for 100% sustainable Loop™ PET plastic resin and polyester fiber, transforming the plastic market[122]. - Loop Industries' technology diverts plastic waste from landfills and oceans, creating sustainable Loop™ PET plastic resin suitable for food-grade packaging[104]. Market and Demand - The global annual market demand for PET plastic and polyester fiber is nearly $130 billion, projected to exceed $160 billion by 2022[102]. - During the fiscal year 2019, the company announced multi-year supply agreements with major brands including Danone, PepsiCo, and Coca-Cola for sustainable Loop™ PET plastic resin[125][126]. Operational Challenges - The company is in the process of obtaining necessary permits and approvals for its operations, which may affect operational costs[112]. - The company is focused on securing long-term feedstock supply agreements to ensure continuous operation of its planned facilities[129]. - The company is exposed to foreign exchange risk due to operations in Canada, with significant operational costs denominated in Canadian dollars while financing is primarily in U.S. dollars[155]. - Significant fluctuations in the U.S. dollar to Canadian dollar exchange rates could materially affect the company's results of operations and cash position[156]. - The company faces commodity price risk as the demand for recycled PET is correlated with crude oil prices, which can impact manufacturing costs[158]. - Raw material prices are subject to fluctuations, which could adversely affect the company's profitability and operational results[159]. Strategic Partnerships - The company has secured key partners such as Thyssenkrupp Industrial Solutions to support its growth strategy[116]. - The company plans to continue investing in R&D and enhancing its Loop brand value through strategic relationships and innovation[133].