# Loop Industries, Inc.: Form 10-Q for the period ended May 31, 2017 - Company: [Loop Industries, Inc.](/companies/loop.md) (CIK 1504678) - Form: 10-Q - Filed: 2017-07-14 - Accepted by EDGAR: Jul 14, 2017, 20:16 ET - Period: 2017-05-31 - Accession: 0001477932-17-003308 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1504678/000147793217003308/llpp_10q.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1504678/000147793217003308/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2017-05-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Research and development | 3 months, 2017-03-01 to 2017-05-31 | $496.5k | us-gaap:ResearchAndDevelopmentExpense | | Operating income | 3 months, 2017-03-01 to 2017-05-31 | $1.5m | us-gaap:OperatingIncomeLoss | | Net income | 3 months, 2017-03-01 to 2017-05-31 | −$1.5m | us-gaap:NetIncomeLoss | | Diluted EPS | 3 months, 2017-03-01 to 2017-05-31 | −$0.05 | us-gaap:EarningsPerShareBasicAndDiluted | | Operating cash flow | 3 months, 2017-03-01 to 2017-05-31 | −$983.8k | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 3 months, 2017-03-01 to 2017-05-31 | $55.5k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Cash and equivalents | at 2017-05-31 | $5.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2017-05-31 | $5.6m | us-gaap:AssetsCurrent | | Total assets | at 2017-05-31 | $7.4m | us-gaap:Assets | | Current liabilities | at 2017-05-31 | $665.0k | us-gaap:LiabilitiesCurrent | | Shareholders' equity | at 2017-05-31 | $6.7m | us-gaap:StockholdersEquity | ## Management's discussion and analysis As filed, 6,397 characters. *The following information should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our most recent Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or the SEC, on May 30, 2017.* *The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this Quarterly Report on Form 10-Q, including those risks identified in the “Risk Factors” section of our most recent Annual Report on Form 10-K.* ### Overview Our business develops technology and processes to promote the regeneration and reuse of materials to sustain a circular economy. Currently, the focus of our business is on the depolymerizing waste PET plastics and converting them into valuable chemicals, ready to be reintroduced into the manufacturing of virgin PET plastic. Our proprietary technology breaks down PET into its base chemicals, PTA and MEG, at a recovery rate of over 90% and under normal atmospheric pressure and at room temperature. Depolymerization presents two unique advantages in recycling resin-based products: (i) the ability to return a recovered resin to virgin-resin-like quality, and (ii) the potential to recover a valuable feedstock from products that are economically challenging to recycle. When plastic is mechanically recycled, even small levels of contamination can compromise the performance of the resin. However, because depolymerization breaks down plastics into monomer form, all contamination is removed. Our unique depolymerization process can be applied to all sorts of post-consumer PET, including degraded, colored or heavily contaminated PET that is not currently recyclable. We are a development-stage company and have never generated any revenues. Our depolymerization technology must be scaled-up before we can commercialize the technology and generate any revenues. We intend to sell depolymerized LOOP™-branded PET resin to sustainably focused customers. During January 2016, we announced the successful completion of a pilot plant facility in Montreal, Canada with a production capacity of 2.5 metric tons per day of high purity PTA and MEG. ### Plan of Operation We are planning to and have begun taking steps to build a commercial scale facility with an installed capacity of a minimum of 10,000 metric tons (MT) per annum to supply our potential customers with LOOP™ branded PET resin of up to 50% recycled content. We are planning to finance any new facilities through additional sales of our common stock, government assistance, including grants and low-interest loans and traditional bank financing. We are conducting qualification testing of our LOOP™ branded PET resin and negotiating long term supply contracts with potential customers. In addition, we are optimizing our manufacturing process to ensure a smooth transition from pilot scale to full scale commercial manufacturing facility. Our plan of operation also includes the development of the LOOP™ branded PET resin, by establishing co-marketing and co-branding initiatives with potential customers. LOOP™ branded PET resin will primarily focus on educating consumers on the importance of the circular economy and the Loop technology that can play a pivotal role in this new economy. ### Results of Operations ### For the three months ended May 31, 2017 and May 31, 2016 We recorded no revenues for the three months ended May 31, 2017 and May 31, 2016. We realized a net loss from operations of $1.5 million for the three months ended May 31, 2017 compared to a net loss of $1.0 million for the three months ended May 31, 2016. This net loss from operations is mainly due to an increase in general and administrative expenses of $0.9 million for the period ended May 31, 2017 compared to $0.4 million for the period ended May 31, 2016. In addition, we incurred $0.5 million in research and development expenses for the period ended May 31, 2017 compared to $0.4 million for the period ended May 31, 2016 as we continue to scale our technology. 4 #### Table of Contents Activity in the three months ended May 31, 2017 continues to focus on the development of plans for a commercial facility, continued testing and improvement of our depolymerization process as well as testing of various feedstocks used in the depolymerization process. On the commercial side, we have undertaken various marketing initiatives to raise awareness of the Loop depolymerization process. In addition, we have been working with future customers and other key stakeholders to ensure that the Loop™ branded PET resin meets customers’ needs and specifications once commercial production begins. ### Liquidity and Capital Resources As reflected in the accompanying consolidated financial statements, we have no recurring source of revenue and during the three months ended May 31, 2017, we incurred a net loss of $1.5 million and used cash in operations of $1.0 million. As of May 31, 2017, we had cash on hand of $5.5 million and stockholders’ equity of $6.7 million as a result of the sale of 1,123,266 shares of our common stock on May 4, 2017 for net proceeds of $5.9 million. We estimate that the current funds on hand will be sufficient to continue operations through the next twelve months. However, we will need additional financing through either debt or equity to finalize the transition from pilot scale to a full scale commercial manufacturing facility. We are currently seeking additional funds, primarily through the issuance of debt and equity securities for cash and estimates that a significant amount of capital will be necessary to advance the development of our projects to the point at which they will become commercially viable. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we could obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case of equity financing. ### Off-Balance Sheet Arrangements As of May 31, 2017, we did not have any off-balance sheet arrangements as defined in the rules and regulations of the SEC. 5 #### Table of Contents ## Market risk As filed, 151 characters. As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item. ## Controls and procedures As filed, 1,539 characters. ### Management’s Evaluation of our Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and the Chief Financial Officer, we are responsible for conducting an evaluation of the effectiveness of the design and operation of our internal controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the fiscal quarter covered by this report. Disclosure controls and procedures means that the material information required to be included in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective as of May 31, 2017. ### Changes in Internal Control over Financial Reporting As described under “*Material Weakness Discussion and Remediation”* in our most recent Annual Report on Form 10-K, filed on May 30, 2017, we have undertaken a broad range of remedial procedures to address the weaknesses in our internal control over financial reporting. Testing of the effectiveness of these remediation efforts will be undertaken in future quarters. 6 #### Table of Contents ## Risk factors As filed, 300 characters. We are subject to various risks and uncertainties in the course of our business. Risk factors relating to us are set forth under “Risk Factors” in our Annual Report on Form 10-K, filed on May 30, 2017. No material changes to such risk factors have occurred during the three months ended May 31, 2017. Filed Jul 14, 2017. Source: SEC EDGAR, the filing index for accession 0001477932-17-003308. Last ingested by Listed: Oct 24, 2026, 15:12 ET. No prices; not investment advice.