What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-15 compared with 2025-07-15 · 147 added, 76 removed, 225 unchanged (50% of the section changed)

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CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q of Loop Industries, Inc., a Nevada corporation (the “Company,” “Loop Industries,” “Loop,” “we,” or “our”), contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as defined in the United States Private Securities Litigation Reform Act of 1995.

This Quarterly Report on Form 10-Q of Loop Industries, Inc., a Nevada corporation (the “Company,” “Loop,” “we,” or “our”), contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as defined in the United States Private Securities Litigation Reform Act of 1995.

In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology.

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These risks and other factors include, but are not limited to, those listed under “Risk Factors.” Additional factors that could materially affect these forward-looking statements and/or projections include, among other things:

(i) our ability to commercialize our technology and products, (ii) the status of our relationships with our partners, (iii) development and protection of our intellectual property and products, (iv) industry competition, (v) our need for and ability to obtain additional funding relative to our current and future financial commitments, (vi) our ability to continue as a going concern, (vii) engineering, contracting, and building our manufacturing facilities, (viii) our ability to scale, manufacture, and sell our products and to license our technology in order to generate revenues, (ix) our proposed business model and our ability to execute it, (x) our ability to obtain the necessary approvals or satisfy any closing conditions in respect of any of our proposed partnerships, (xi) our joint venture projects and our ability to recover certain expenditures in connection to them, (xii) adverse effects on the Company’s business and operations as a result of increased regulatory, media, or financial reporting scrutiny, practices, rumors, or otherwise, (xiii) public health issues, such as disease epidemics, which may lead to reduced access to capital markets, supply chain disruptions, and government-imposed business closures, (xiv) war, regional tensions, and economic or other conflicts including trade disputes and increasing protectionist measures that could impact market stability and our business;

(i) our ability to commercialize our technology and products, (ii) the status of our relationships with our partners, (iii) development and protection of our intellectual property and products, (iv) industry competition, (v) our need for and ability to obtain additional funding relative to our current and future financial commitments, (vi) our ability to continue as a going concern, (vii) engineering, contracting, and building our manufacturing facilities, (viii) our ability to scale, manufacture, and sell our products and to license our technology in order to generate revenues, (ix) our proposed business model and our ability to execute it, (x) our ability to obtain the necessary approvals or satisfy any closing conditions in respect of any of our proposed partnerships, (xi) our joint venture projects and our ability to recover certain expenditures in connection them, (xii) adverse effects on the Company's business and operations as a result of increased regulatory, media, or financial reporting scrutiny, practices, rumors, or otherwise, (xiii) public health issues, such as disease epidemics, which may lead to reduced access to capital markets, supply chain disruptions, and government-imposed business closures, (xiv) war, regional tensions, and economic or other conflicts including trade disputes and increasing protectionist measures that could impact market stability and our business;

(xv) the effect of the continuing worldwide macroeconomic uncertainty and its impacts, including inflation, market volatility and fluctuations in foreign currency exchange and interest rates, (xvi) the outcome of any SEC investigations or class action litigation filed against us, (xvii) our ability to hire and/or retain qualified employees and consultants, (xviii) other events or circumstances over which we have little or no control, and (xix) other factors discussed in our subsequent filings with the Securities and Exchange Commission (the “SEC”).

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Polymerization refers to a process of reacting monomer molecules together in a chemical reaction to form polymer chains or three-dimensional networks.

PET is an acronym for polyethylene terephthalate, which is a thermoplastic polymer resin of the polyester family showing excellent tensile and impact strength, chemical resistance, clarity, and processability, and reasonable thermal stability.

It is typically produced through the reaction of terephthalic acid or DMT and MEG.

PET is the material which is most commonly used for the production of plastic packaging, including plastic bottles for water and carbonated soft drinks, containers for food and other consumer products;

PET is an acronym for polyethylene terephthalate, which is a resin and a type of polyester showing excellent tensile and impact strength, chemical resistance, clarity, and processability, and reasonable thermal stability.

PET is the material which is most commonly used for the production of polyester fiber and plastic packaging, including plastic bottles for water and carbonated soft drinks, containers for food and other consumer products;

it is commonly identified by the number “1”, often inside an image of a triangle, on the packaging.

PET is also the specific type of polyester most commonly used to produce polyester fiber for a variety of applications including textiles, clothing and apparel.

PET is also used as a polyester fiber for a variety of applications including textiles, clothing and apparel.

rPET, rDMT and rMEG are acronyms for recycled PET, DMT and MEG.

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In addition, the Company sold its first technology license to Reed Management SAS, known as Reed Societe Generale Group, for one Infinite Loop™ manufacturing facility in Europe for an initial down payment of €10 million with additional milestone payments to be received by Loop as the project advances.

Infinite Loop Europe, an entity to be owned 10% by Loop and 90% by Reed Societe Generale Group, was formed with the purpose of developing Infinite Loop™ manufacturing facilities in Europe.

Infinite Loop Europe, an entity owned 10% by Loop and 90% by Reed Societe Generale Group, was formed with the purpose of developing Infinite Loop™ manufacturing facilities in Europe.

These initiatives represent key steps in implementing the Company's plan to deploy its proprietary depolymerization technology in global markets.

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Agreements with Reed Societe Generale Group

On December 12, 2024, the Company entered into an Amended and Restated Share Purchase Agreement (the “Amended Agreement”) with Reed Societe Generale Group, a European investment firm focused on high impact and technology-enabled infrastructure majority-owned by the bank Societe Generale.

On December 12, 2024, the Company entered into an Amended and Restated Share Purchase Agreement (the “Amended Agreement”) with Reed Management SAS (“Reed”), a European investment firm focused on high impact and technology-enabled infrastructure majority-owned by the bank Societe Generale.

The Amended Agreement amends the original Share Purchase Agreement dated May 30, 2024 previously reported by the Company in a current report on Form 8-K filed on June 4, 2024.

A joint entity, which under French Law is referred to as a simplified joint-stock company, was incorporated (“Infinite Loop Europe”), to be owned 90% by Reed Societe Generale Group and 10% by Loop, with the purpose of developing Infinite Loop™ manufacturing facilities in Europe.

Pursuant to the Amended Agreement, the Company will enter into a Securityholders Agreement with Reed Circular Economy (“RCE”), an affiliate of Reed Societe Generale Group, to establish the framework for the governance, ownership, and operations of Infinite Loop Europe.

On December 23, 2024, the Company received total cash proceeds of $20.8 million (€20.0 million) upon closing of the financing and licensing transactions contemplated by the Amended Agreement.

The Company entered into a license agreement with RCE, acting on behalf of Infinite Loop Europe, granting a license to use Loop’s proprietary depolymerization technology for one facility within Europe.

Pursuant to the terms of the license agreement, the Company received an initial upfront royalty payment of $10.4 million (€10.0 million), with additional milestone-based payments from Reed Societe Generale Group to follow.

Additionally, the Company issued and sold 1,044,430 shares of Series B Convertible Preferred Stock (“Series B CPS”) at $10.00 per share to RCE for cash proceeds of $10.4 million (€10.0 million).

Key terms of the Series B CPS include:

To facilitate the closing of the transactions contemplated by the Amended Agreement and to develop Infinite Loop™ manufacturing facilities in Europe, a simplified joint-stock company has been incorporated under French law (“Infinite Loop Europe”), owned 90% by Reed Circular Economy (“RCE”), an affiliate of Reed and 10% by Loop.

On December 23, 2024, the Company closed the financing and licensing transactions contemplated by the Amended Agreement.

The Company issued and sold 1,044,430 shares of Series B Convertible Preferred Stock at $10.00 per share to RCE.

Additionally, the Company entered into a License Agreement with RCE, acting on behalf of Infinite Loop Europe, granting a non-transferable, royalty-bearing license to use Loop's proprietary depolymerization technology for one facility within Europe.

The Company received total cash proceeds of $20,790 (€20,000) on December 23, 2024.

Key terms of the Series B Convertible Preferred Stock include:

13% PIK dividend rate

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We further believe the sale of our first license underscores the commercial readiness of Loop's technology, which has been validated by five years of operations at its Terrebonne facility.

Under the agreed terms of the partnership with Reed Societe Generale Group, Loop retains the right to increase its equity stake in the European manufacturing facility, as well as potential future facilities, to a maximum of 50% for each facility.

As the license is to build one Infinite Loop™ manufacturing facility in Europe, future facilities under this partnership would require the purchase of additional technology licenses from Loop.

Loop and Reed Societe Generale Group are actively assessing opportunities for the first Infinite Loop™ facility in Europe.

On September 23, 2025, Loop entered into a Securityholders Agreement with RCE to establish the framework for the governance, ownership, and operations of the European joint venture, Infinite Loop Europe SAS (the "Europe JV").

Under this agreement, RCE and Loop hold their interests in the Europe JV on a 90/10 basis to pursue the non-exclusive development, financing, construction, ownership, operation, and commercialization of chemical upcycling plants and related products using Loop's technology within Europe.

The Securityholders Agreement provides the Europe JV with priority rights to evaluate European project opportunities, establishes financing arrangements between the shareholders, grants Loop options to participate in project equity, and confirms that Loop retains ownership of its intellectual property while granting the Europe JV limited use rights.

The Europe JV is managed by a CEO proposed by RCE, with governance provided by a four-member Board of Directors where Loop is entitled to nominate one director and RCE nominates the remainder.

Certain transactions that could risk disclosure of Loop's technology and certain related party transactions require unanimous Board approval.

RCE has provided the Europe JV with a €10 million shareholder loan to fund the first royalty tranche under the License Agreement, with the loan accruing payment-in-kind interest at 11.9% per annum and maturing on December 27, 2027.

Loop and RCE are actively assessing opportunities for the first Infinite Loop™ facility in Europe.

Current activities include evaluating potential project locations, engaging with local and national governments to assess the availability of subsidies and incentives, and identifying potential strategic partners to support the execution of the project.

In parallel, Loop is in the process of implementing a modular construction strategy, including the development of a standardized facility design and pre-fabrication approach aimed at reducing construction costs and timelines, with the objective of improving scalability for future projects across Europe and other regions with high construction costs.

Joint Venture with Ester

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Ester and Loop are each contributing 50% of the equity capital of the India JV.

As of May 31, 2025, Loop and Ester had each made total equity contributions of $1.9 million in cash to the India JV.

As of August 31, 2025, Loop and Ester had each made total equity contributions of $1.9 mil lion in cash to the India JV.

The funds injected in the India JV are being used for preliminary project costs, which are mainly engineering fees.

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Loop has entered into an engineering services agreement with the India JV to provide engineering services and support the local engineering firm.

This has resulted in Loop generating engineering services revenue of $0.2 million in the quarter ended May 31, 2025.

This has resulted in Loop generating engineering services revenue of $0.2 million in the six-month period ended August 31, 2025.

On June 22, 2025, Loop executed a $1.5 million engineering services agreement with the India JV to support it through construction as it moves towards breaking ground on the Infinite Loop™ India facility.

This new engineering services agreement builds on the initial engineering services agreement with the India JV which was fulfilled over Q4 of fiscal 2025 and Q1 of fiscal 2026, underscoring the role of engineering services in Loop's commercialization strategy as an important and growing source of revenue.

The development of the Infinite Loop™ India facility continues to progress towards groundbreaking.

Following the completion of a detailed land study by an external engineering firm, the India JV partners have identified the Gujarat province of India as the optimal location for the facility based on several key requirements such as infrastructure, proximity to a seaport for exports, renewable energy for a reduction in CO2 emissions and proximity to waste PET and polyester feedstocks.

Additionally, feedstock sourcing for the facility, of which there is abundant supply from textile waste in India, is well advanced.

Furthermore, ELITe has engaged a leading global advisory firm which has been retained to manage the debt syndication process to finance the construction of the Infinite Loop™ India facility.

Based on an engineering study completed by a globally renowned engineering firm in May 2025, the estimated total investment cost for the facility, including continuous polymerization, financing costs during construction and initial working capital requirements, is expected to be approximately $176 million.

Groundbreaking for the Infinite Loop™ India facility is now expected to occur in the second half of calendar 2025, with commercial operations projected to commence in calendar 2027.

Following the completion of a detailed land study by an external engineering firm, the India JV partners have identified the state of Gujarat, India's synthetic textile capital as the optimal location for the facility based on several key requirements such as infrastructure, proximity to a seaport for exports, renewable energy for a reduction in CO ₂ emissions and proximity to waste PET and polyester feedstocks.

On August 13, 2025, the India JV executed an agreement with a group of sellers for the acquisition of approximately 93 acres in Gujarat, India, for total consideration of 9,072,000 Indian rupees (approximately US $103,720) per acre.

The sellers are obligated to consolidate the parcels, deliver marketable title with requisite governmental approvals, and construct bituminous access road infrastructure, with completion required within five months of execution, subject to extension at India JV's sole discretion.

The purchase price is payable through advance payments secured by equitable mortgages over designated parcels, with remaining consideration due upon title transfer.

The agreement incorporates customary representations, warranties, and covenants, together with termination provisions permitting India JV to reject non-compliant parcels or terminate for material breach, including failure to deliver contiguous parcels, with full restitution of payments made.

Strategically located within the Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR), the site offers direct access to abundant polyester textile waste feedstock, a skilled petrochemical workforce, and a streamlined permitting process.

Its proximity to a deep-water seaport will further support cost-efficient exports of the India JV’s products.

Feedstock sourcing for the facility, of which there is abundant supply from textile waste in India, is well advanced.

Furthermore, the India JV has engaged a leading global advisory firm to manage the debt syndication process for financing the construction of the Infinite Loop™ India facility.

Based on an engineering study completed by an engineering firm in May 2025, the estimated total investment cost for the facility, including continuous polymerization, financing costs during construction and initial working capital requirements, is expected to be approximately $176 million.

Groundbreaking for the Infinite Loop™ India facility is now expected to occur by end of fiscal year 2026, with commercial operations projected to commence in calendar 2027.

Commercialization Strategy

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The Company sold its first technology license to Reed Societe Generale Group for one Infinite Loop™ manufacturing facility in Europe for an initial down payment of €10.0 million with additional milestone payments to be received by Loop as the project advances.

Infinite Loop Europe was formed with the purpose of developing Infinite Loop™ manufacturing facilities in Europe to be owned 10% by Loop and 90% by Reed Societe Generale Group.

Infinite Loop Europe was formed with the purpose of developing Infinite Loop™ manufacturing facilities in Europe to be owned 10% by Loop and 90% by RCE.

Loop has the right to increase its ownership in each project developed through Infinite Loop Europe up to 50% subject to a binding commitment.

Additionally, we aim to generate income by providing engineering services throughout all phases of project development, construction, and startup for all Infinite Loop™ commercial facilities, supporting efficient project execution and creating a steady revenue stream prior to the startup of the facility.

Loop has entered into an engineering services agreement with the India JV to provide engineering services and support the completion of the engineering for the planned Infinite Loop™ manufacturing facility in India.

This has resulted in Loop generating engineering services revenue of $0.2 million in the quarter ended May 31, 2025.

This has resulted in Loop generating engineering services revenue of $0.2 million in the six-month period ended August 31, 2025.

We are also in the process of implementing a modular construction strategy, in order to reduce overall capital expenditures and operating expenses, while improving project timelines and ensuring standardized design and quality, and providing a scalable solution for global expansion.

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The Company's ability to move to the next stage of its strategic development, including the construction of manufacturing plants and the commercialization of its technology and products at scale, is dependent on, among other factors, its ability to obtain the necessary financing through a combination of the issuance of equity, project debt, and/or government incentive programs.

Recent Development – ATM Offering

On July 3, 2025, we entered into an At the Market Offering Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Sales Agent”), under which we may offer and sell shares of our common stock having an aggregate offering price of up to $15 million from time to time through or to the Sales Agent, acting as our sales agent or principal (the “ATM”).

We are not obligated to make any sales of shares under the Sales Agreement and we may not sell any shares under the Sales Agreement, or if we do, as to the price or amount of shares that we will sell, or the date on which any such sales will take place.

Recent Developments

Offtake Agreement with Leading Sports Apparel Company

In September 2025, we entered into a multi-year offtake agreement with a subsidiary of a leading branded sports apparel company responsible for its global sourcing.

Under the terms of this agreement, we will supply agreed minimum volumes of "Twist," our circular polyester resin made entirely from textile waste, at an agreed upon price once our planned Infinite Loop™ India facility becomes operational.

This agreement represents a significant commitment from a major global brand to incorporate our textile-to-textile recycled materials into their supply chain.

Offtake Agreement with Taro Plast

In September 2025, we entered into an offtake agreement with Taro Plast S.p.A.

("Taro Plast"), an Italy-based manufacturer of engineering plastics and compounds.

Under this agreement, we will supply Taro Plast with agreed volumes of our 100% recycled, virgin-quality Loop™ DMT produced using our proprietary depolymerization technology at our planned Infinite Loop™ facility in India, once the facility becomes operational.

This agreement expands our product offering beyond bottle-grade and fiber-grade PET resin into the specialty polymers market, where Loop™ DMT can be used for automotive and specialty polymer applications.

Taro Plast has conducted independent testing confirming the high purity and performance of Loop™ DMT, and is expected to be the first company to integrate Loop™ DMT into their product portfolio.

Strategic Alliance with Shinkong

In August 2025, we announced a strategic alliance with Shinkong Synthetic Fibers Corporation ("Shinkong"), a leader in Taiwan's polyester industry and global leader in sustainable polyester yarn solutions.

This partnership combines our textile-to-textile manufacturing technology with Shinkong's polyester fiber spinning capabilities and distribution network.

Under this alliance, Shinkong will convert our Twist™ polyester resin into high-performance yarns for their network of over 100 customers worldwide, while we can now offer high-quality circular polyester yarns to customers.

This collaboration supports our planned Infinite Loop™ India project by providing additional distribution channels and supply chain options for apparel and textile brands across Asian, European, and North American markets.

Strategic Alliance with Hyosung TNC

In September 2025, we announced a strategic alliance with Hyosung TNC, a complete sustainable textile solutions provider and the world's largest manufacturer of spandex by market share.

This alliance combines our Infinite Loop™ depolymerization technology with Hyosung TNC's expertise in advanced textile materials to expand access to circular polyester through textile-to-textile supply chains.

Hyosung TNC will convert our Twist™ polyester resin into performance yarns under its regen™ brand portfolio, trusted by leading brands across fashion, activewear, and other textile markets.

The relationship has been established for products from our Terrebonne facility and will be significantly expanded once our planned India Infinite Loop™ facility is operational.

Launch of Twist™

During the quarter ended August 31, 2025, the Company announced the launch of Twist™, a new branded circular polyester resin made entirely from textile waste.

This product represents a strategic evolution of the Company's fiber-grade PET resin offering, now repositioned to serve the growing textile-to-textile recycling market.

Twist™ utilizes the Company's patented depolymerization technology to break down polyester textile waste into base monomers, which are then purified and polymerized into virgin-quality resin that is chemically identical to traditional polyester while providing complete traceability from feedstock to final product.

The Company is advancing discussions with apparel brands for offtake agreements from its planned India joint venture facility, where Twist™ will be produced alongside the Company's existing Loop™ branded products.

At-The-Market Offering

On July 3, 2025, the Company entered into an At the Market Offering Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Sales Agent”), pursuant to which the Company may offer and sell, from time to time, shares of its common stock, par value $0.0001 per share having an aggregate offering price of up to $15 million through the Sales Agent, acting as its agent, or directly to the Sales Agent, acting as principal (the “ATM Equity Offering”).

As of August 31, 2025, the Company had sold 116,358 shares of common stock under the Sales Agreement for aggregate gross proceeds of approximately $192,882 and net proceeds of approximately $186,557, after deducting sales agent commissions and other offering expenses.

As of August 31, 2025, the Company had approximately $14.8 million of capacity remaining under the ATM Equity Offering.

Human Capital

As of May 31, 2025, we had 44 employees of which 18 work in research and development, 17 in engineering and operations, and 9 in administrative functions.

As of August 31, 2025, we had 42 employees of which 18 work in research and development, 15 in engineering and operations, and 9 in administrative functions.

Results of Operations

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dollars unless otherwise specified.

The following table summarizes our operating results for the three-month periods ended May 31, 2025 and 2024, in thousands of U.S.

Three months ended May 31,

The following table summarizes our operating results for the three-month periods ended August 31, 2025 and 2024, in thousands of U.S.

Three months ended August 31,

favorable / (unfavorable)

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Stock-based compensation

External engineering

Plant and laboratory operating expenses

External engineering

Total research and development

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Depreciation and amortization

Interest and other financial expenses (income)

Interest and other financial expenses

Interest income

Foreign exchange gain

Foreign exchange loss (gain)

Total expenses

First Quarter Ended May 31, 2025

Revenues for the three-month period ended May 31, 2025 increased $246 to $252, as compared to $6 for the same period in 2024.

The revenues for the three-month period ended May 31, 2025 resulted from $244 in engineering fees and $8 from sales of Loop ™ PET resin produced using monomers manufactured at the Terrebonne Facility.

The revenues of $6 for the three-month period ended May 31, 2024 resulted from sales of Loop ™ PET resin.

Second Quarter Ended August 31, 2025

Revenues for the three-month period ended August 31, 2025 , decreased $23 to $0 , as compared to $23 for the same period in 2024 .

The revenues of $23 for the three-month period ended August 31, 2024 resulted from sales of Loop™ PET resin.

Research and Development

Research and development expense for the three-month period ended May 31, 2025 decreased $863 to $1,374, as compared to $2,237 for the same period in 2024.

Research and development expense for the three-month period ended August 31, 2025, decreased $1,102 to $843, as compared to $1,945 for the same period in 2024.

The decrease was primarily attributable to a $642 decrease in external engineering expenses for design work for our Infinite Loop™ manufacturing process, and a $265 decrease in employee compensation expenses.

General and administrative expenses

General and administrative expenses for the three-month period ended August 31, 2025, decreased $724 to $1,871, as compared to $2,595 for the same period in 2024.

The decrease was primarily attributable to a $395 decrease in professional fees, which was mainly attributable to legal costs related to our partnerships with Reed Societe Generale Group and Ester incurred in the three-month period ended August 31, 2024, and a $162 decrease in employee compensation.

Interest and other financial expenses

Interest and other financial expenses increased by $300 for the three-month period ended August 31, 2025.

This increase is mainly attributable to the accrued PIK dividend on the Series B Convertible Preferred Stock issued to RCE recorded as an interest expense for $341 in the three-month period ended August 31, 2025 (2024 – nil).

The net loss for the three-month period ended August 31, 2025 , decreased $1,635 to $3,204 , as compared to $4,839 for the same period in 2024 .

This decrease was primarily due to the decrease of $1,102 in research and development expenses and the decrease of $724 in general and administrative expenses, which were partially offset by the $300 increase in interest and other financial expenses.

Six Months Ended August 31, 2025

The following table summarizes our operating results for the six-month periods ended August 31, 2025 and 2024, in thousands of U.S.

Six months ended August 31,

Research and development

Employee compensation

Stock-based compensation

Plant and laboratory operating expenses

External engineering

Total research and development

General and administrative

Professional fees

Employee compensation

Stock-based compensation

Total general and administrative

Loss on equity accounted investment

Depreciation and amortization

Interest and other financial expenses

Interest income

Foreign exchange loss (gain)

Total expenses

Revenues for the six-month period ended August 31, 2025, increased $223 to $252, as compared to $29 for the same period in 2024.

The revenues for the six-month period ended August 31, 2025 resulted from $244 in engineering fees and $8 from sales of Loop™ PET resin produced using monomers manufactured at the Terrebonne Facility.

The revenues of $29 for the six-month period ended August 31, 2024 resulted from sales of Loop™ PET resin.

Research and Development

Research and development expense for the six-month period ended August 31, 2025, decreased $1,965 to $2,217, as compared to $4,182 for the same period in 2024.

The decrease was primarily attributable to a $1,265 decrease in external engineering expenses for design work for our Infinite Loop™ manufacturing process, and a $578 decrease in employee compensation expenses, partially offset by a $83 increase in stock-based compensation expenses.

General and administrative expenses

General and administrative expenses for the three-month period ended May 31, 2025 decreased $1,262 to $1,649, as compared to $2,911 for the same period in 2024.

The decrease was primarily attributable to a $894 decrease in professional fees, which was mainly attributable to legal costs related to our partnerships with Reed Societe Generale Group and Ester incurred in the three-month period ended May 31, 2024, a $178 decrease in stock-based compensation expense mainly due to $(268) of forfeitures recorded in the three-month period ended May 31, 2025, and a decrease of $66 in employee compensation expenses.

General and administrative expenses for the six -month period ended August 31, 2025 , decreased $1,987 to $3,519 , as compared to $5,506 for the same period in 2024 .

The decrease was primarily attributable to a $1,289 decrease in professional fees, which was mainly due to legal costs related to our partnerships with Reed Societe Generale Group and Ester incurred in the six-month period ended August 31, 2024, a decrease of $229 in employee compensation expenses and a $160 decrease in stock-based compensation expense.

Loss on equity accounted investment

Loss on equity accounted investment increased by $302 for the three-month period ended May 31, 2025.

This loss relates to the Company’s 50% portion of the loss incurred by the India JV for the three-month period ended May 31, 2025, during which the India JV incurred preliminary project costs for the planned Infinite Loop™ facility in India, which are mainly engineering fees.

Loss on equity accounted investment increased by $345 for the six-month period ended August 31, 2025.

This loss relates to the Compa ny's 50% portion of the loss incurred by the India JV for the six-month period ended August 31, 2025, during which the India JV incurred preliminary project costs for the planned Infinite Loop™ facility in India, which are mainly engineering fees.

Interest and other financial expenses

Interest and other financial expenses increased by $359 for the three-month period ended May 31, 2025.

This increase is mainly attributable to the accrued PIK dividend on the Series B Convertible Preferred Stock issued to RCE recorded as an interest expense for $340 in the three-month period ended May 31, 2025 (2024 – nil).

The net loss for the three-month period ended May 31, 2025 decreased $1,742 to $3,447, as compared to $5,189 for the same period in 2024.

Interest and other financial expenses increased by $658 for the six-month period ended August 31, 2025.

This increase is mainly attributable to the accrued PIK dividend on the Series B Convertible Preferred Stock issued to RCE recorded as an interest expense for $681 in the six-month period ended August 31, 2025 (2024 – nil).

The net loss for the six-month period ended August 31, 2025, decreased $3,377 to $6,651, as compared to $10,028 for the same period in 2024.

This decrease was primarily due to the decrease of $1,987 in general and administrative expenses and the decrease of $1,965 in research and development expenses, which were partially offset by the $658 increase in interest and other financial expenses and the increase of $345 in loss on equity accounted investment.

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dollars unless otherwise specified.

Since its inception, the Company has been in the pre-commercialization stage with its ongoing operations and commercialization plans financed primarily by raising equity.

The Company has incurred net losses and negative cash flow from operating and investing activities since its inception and expects to incur additional net losses while it continues to advance its commercialization efforts.

As at May 31, 2025, the Company had cash and cash equivalents of $9,748.

Our liquidity position is subject to risks and uncertainties, including those discussed under “Cautionary Statements Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and the Risk Factors section included in Part I, Item 1A of our 2025 Annual Report.

Management continuously monitors the Company’s cash resources against its short-term cash commitments to ensure there is sufficient liquidity to fund its costs for at least twelve months from the financial statements issuance date.

It evaluates the Company’s liquidity to determine if there is substantial doubt about its ability to continue as a going concern.

In preparing this liquidity assessment, management applies significant judgment in estimating future cash flow requirements of the Company based on budgets and forecasts, which includes developing assumptions related to:

(i) the estimation of amount and timing of future cash outflows and inflows, and (ii) determining what future expenditures are committed and what could be considered discretionary.

Based on this assessment, management believes that current available liquidity will be sufficient to meet the Company’s obligations, commitments and budgeted expenditures for at least twelve months from the issuance date of the unaudited interim condensed consolidated financial statements.

The Company’s ability to move to the next stage of its strategic development and construct manufacturing facilities is dependent on, among other factors, whether the Company can obtain the necessary financing through a combination of further technology licensing arrangements, government incentive programs, and/or the issuance of debt and/or equity.

In particular, the Company will require capital sufficient to fund its equity contributions to the India JV for the construction of the planned Infinite Loop™ facility in India, as well as its ongoing cash requirements.

The Company’s financing requirements may potentially be reduced depending on the timing of anticipated revenues from engineering services for the European partnership with Reed Societe Generale Group.

Since its inception, the Company has been in the pre-commercialization stage with no recurring revenues, and its ongoing operations and commercialization plans have been financed primarily by raising equity and debt.

The Company has recurring net losses, negative cash flow from operating activities since its inception, and has a net capital deficiency.

August 31, 2025, the Company’s available liquidity was

$9,857, consisting of cash and cash equivalents of

$7,310 and an undrawn amount on a senior loan facility from a Canadian bank of

Management continuously monitors the Company's cash resources against its cash commitments to determine whether there is sufficient liquidity to fund its costs for at least twelve months from the financial statement issuance date.

In preparing its going concern assessment in accordance with US GAAP, the Company included cash flows that meet the "probable" threshold under ASC 205-40 in its liquidity assessment and has excluded forecasted cash flows that lack substantive support or binding commitments.

Based on this assessment, management has determined that current available liquidity will be sufficient to meet the Company’s obligations, commitments and budgeted operating expenditures for at least twelve months from the issuance date of these unaudited interim condensed consolidated financial statements.

The Company's ability to move to the next stage of its strategic development and participate in the construction of manufacturing facilities through joint ventures is dependent on, among other factors, whether the Company can obtain the necessary funding through a combination of further technology licensing and engineering services arrangements, government incentive programs, and/or the issuance of debt and/or equity.

Management is pursuing options to secure financing for Loop's equity contribution for the India JV and to cover ongoing cash requirements through to the start of commercial operations in India.

There is no assurance that the Company will be successful in attracting additional funding.

Even if additional financing is available, it may not be available on terms favorable to the Company.

Failure to secure additional financing on favorable terms when it becomes required would have an adverse effect on the Company’s financial position and on its ability to execute its business plan.

Inability to secure additional financing on favorable terms, or to obtain such financing at all when required, would have an adverse effect on the Company’s financial position and on its ability to execute its business plan.

Sale and issuance of Series B CPS

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The Credit Facility allows for borrowings of up to $2,547 in aggregate principal amount.

The Credit Facility is secured by the Company’s Terrebonne, Québec property and is subject to a minimum equity covenant, tested quarterly with which the Company was not in compliance as at May 31, 2025.

The Credit Facility is secured by the Company's Terrebonne, Québec property and is subject to a minimum equity covenant, tested quarterly with which the Company was in compliance as at August 31, 2025 .

All borrowings under the Credit Facility will bear interest at an annual rate equal to the bank's Canadian prime rate plus 1.0%.

As at May 31, 2025, the $2,544 Credit Facility was available and undrawn.

On July 4, 2025, the Company and the Canadian Bank executed an amendment to the Credit Facility, modifying the minimum equity covenant to include the balance of Series B Convertible Preferred Stock as at February 28, 2025 of $10,647 in the calculation of stockholders’ equity.

The Company was in compliance with the minimum equity covenant following this amendment.

As at August 31, 2025 , the $2,547 Credit Facility was available and undrawn.

On July 4, 2025, the Borrower, the Company and the Canadian bank executed an amendment to the Credit Facility, modifying the minimum equity covenant to include the balance of Series B Convertible Preferred Stock as at February 28, 2025 of $10,647 in the calculation of stockholders' equity.

On October 10, 2025, the Borrower, the Company and the Canadian bank executed an amendment to the Credit Facility, which removed the minimum equity covenant tested quarterly for the duration of the term of the Credit Facility.

At-the-Market Offering

During the three months ended August 31, 2025, the Company issued and sold an aggregate of 116,358 shares of its common stock pursuant to its ATM Equity Offering program for aggregate gross proceeds of approximately $193.

After deducting sales agent commissions and other offering expenses totaling approximately $6, the Company received net proceeds of approximately $187 from such sales.

The shares were sold at prevailing market prices at the time of sale, with an average selling price of $1.66 per share.

The net proceeds from these equity transactions were used for general corporate purposes and to strengthen the Company's working capital position.

The Company may, from time to time, continue to utilize its ATM Equity Offering program to raise additional capital, subject to market conditions and the Company's capital needs, though there can be no assurance as to if or when any additional sales may occur under the program.

Flow of Funds

All monetary amounts are in thousands of U.S.

dollars unless otherwise specified.

Summary of Cash Flows

A summary of cash flows for the three months ended May 31, 2025 and 2024 was as follows, in thousands of U.S.

Three Months Ended May 31,

A summary of cash flows for the six months ended August 31, 2025 and 2024 was as follows, in thousands of U.S.

Six Months Ended August 31,

Net cash used in operating activities

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Net Cash Used in Operating Activities

During the three-month period ended May 31, 2025, we used $3,082 in operations compared to $3,915 during the three-month period ended May 31, 2024.

During the six-month period ended August 31, 2025, we used $5,604 in operations compared to $6,775 during the six-month period ended August 31, 2024.

As discussed above in the Results of Operations, the year-over-year decrease is mainly due to decreased operating expenses as we have completed the upgrade of the Terrebonne Facility and our basic design package for the Infinite Loop™ full-scale manufacturing facilities, and lower legal costs related to forming our partnerships with Reed Societe Generale Group and Ester.

Net Cash Used in Investing Activities

During the three months ended May 31, 2025, we used $115 in investing activities compared to $176 during the three-month period ended May 31, 2024.

During the three months ended May 31, 2025, we made investments in intangible assets of $115, particularly to file patents for the Infinite Loop™ technology in the United States and around the world.

During the three months ended May 31, 2024, we made investments in intangible assets of $176.

During the six months ended August 31, 2025 , we used $133 in investing activities compared to $325 during the six -month period ended August 31, 2024 .

During the six -month period ended August 31, 2024 During the six -month period ended August 31, 2025 , we made investments in intangible assets of $133, as compared to $325 for the same period in 2024 , particularly to file patents for the Infinite Loop™ technology in the United States and around the world.

Net Cash Provided by (Used in) Financing Activities

During the three months ended May 31, 2025, we repaid $55 of long-term debt.

During the three months ended May 31, 2024, we borrowed $2,517 under the Credit Facility and we repaid $25 of long-term debt.

During the six months ended August 31, 2025 , we repaid $136 of long-term debt and received net proceeds from our ATM Equity Offering of $187.

During the six months ended August 31, 2024 , we borrowed $1,587 under the Credit Facility and we repaid $50 of long-term debt.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-Q

Item 2. Management’s Discussion and Analysis