Loop Industries(LOOP) - 2020 Q3 - Quarterly Report

Technology and Innovation - Loop Industries' Generation II technology has improved monomer yields and reduced purification steps from 12 to 4, resulting in lower production costs[107] - Loop Industries' technology can utilize a wide range of waste materials, including ocean plastics, which are typically not accepted by other recyclers[127] - The Infinite Loop™ business model aims to supply global demand for 100% sustainable Loop™ PET plastic resin and polyester fiber, reducing logistics costs by locating facilities near feedstock sources[122] Production Capacity and Agreements - The joint venture with Indorama Ventures has increased the Spartanburg plant's capacity to 40,000 metric tons per year due to customer demand[118] - Loop Industries has contracted for the sale of the initial 20,700 metric tons expected output from the Spartanburg facility and is in discussions to contract the additional volume[119] - The expanded supply agreement with L'OCCITANE en Provence aims to transition to 100% sustainable PET plastic in all its bottles, utilizing Loop's sustainable PET resin[120] Financial Performance - For the three-month period ended November 30, 2019, the net loss increased by $0.94 million to $3.85 million compared to a net loss of $2.91 million for the same period in 2018[132] - Research and development expenses for the three-month period ended November 30, 2019 amounted to $1.28 million, an increase of $0.49 million from $0.79 million in the same period in 2018[133] - General and administrative expenses for the three-month period ended November 30, 2019 decreased by $0.14 million to $1.83 million compared to $1.97 million for the same period in 2018[134] - Total operating expenses for the nine-month period ended November 30, 2019 were $10.75 million, an increase of $0.77 million from $9.98 million in the same period in 2018[138] Cash Flow and Investments - As of November 30, 2019, the company had cash on hand of $35.5 million, following a capital raise of approximately $34.6 million from a registered direct offering[144] - The company reported net cash used in operating activities of $6.82 million for the nine months ended November 30, 2019, compared to $5.46 million for the same period in 2018[149] - The Company made investments of $1.7 million in property, plant, and equipment during the nine months ended November 30, 2019, compared to $1.4 million in the same period of 2018, primarily for upgrading its GEN II industrial pilot plant[151] - The Company raised net proceeds of $39.2 million through the sale of common stock during the nine months ended November 30, 2019[153] Financial Risks and Compliance - The Company is currently in a development stage with no revenues, relying on raising new equity and debt capital to finance ongoing operations[143] - As of November 30, 2019, the Company was in compliance with its financial covenants[154] - The Company had no off-balance sheet arrangements as of November 30, 2019[155] - The Company is exposed to foreign currency exchange risk due to operations in Canada, with significant operational costs in Canadian dollars[160] - Fluctuations in the U.S. dollar to Canadian dollar exchange rates could materially affect the Company's results of operations and cash position[161] Market Conditions - The plastics manufacturing industry is highly competitive, with the cost of manufacturing recycled PET potentially higher than virgin PET if crude oil prices decline[163] - The profitability of the Company depends on the availability and price fluctuations of raw materials, which could adversely affect financial results[164]