Loop Industries, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS Loop Industries, Inc. Three and Six Months Ended August 31, 2025 Index to the Unaudited Interim Condensed Consolidated Financial Statements Contents Page(s) Condensed consolidated balance sheets as at August 31, 2025 (Unaudited) and February 28, 2025 F-2 Condensed consolidated statements of operations and comprehensive loss for the three and six months ended August 31, 2025 and 2024 (Unaudited) F-3 Condensed consolidated statements of changes in stockholders ' equity (deficit) for the three and six months ended August 31, 2025 and 2024 (Unaudited) F-4 Condensed consolidated statements of cash flows for the six months ended August 31, 2025 and 2024 (Unaudited) F-6 Notes to the condensed consolidated financial statements (Unaudited) F-7 F-1 Table of Contents Loop Industries, Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands of U.S. dollars, except per share data) As at August 31, February 28, 2025 2025 Assets Current assets Cash and cash equivalents $ 7,310 $ 12,973 Accounts receivable and other (Note 3) 902 639 Inventories 86 82 Prepaid expenses (Note 4) 502 158 Total current assets 8,800 13,852 Investments in joint ventures 936 1,281 Property, plant and equipment, net (Note 5) 1,754 1,737 Intangible assets, net (Note 6) 1,800 1,708 Total assets $ 13,290 $ 18,578 Liabilities and Stockholders’ Equity (Deficit) Current liabilities Accounts payable and accrued liabilities (Note 8) $ 3,335 $ 3,545 Unearned revenue 102 102 Current portion of long-term debt (Note 11) 464 312 Total current liabilities 3,901 3,959 Due to customer 865 832 Series B Convertible Preferred stock (Note 10) 11,328 10,647 Long-term debt (Note 11) 2,664 2,773 Total liabilities 18,758 18,211 Stockholders’ Equity (Deficit) Series A Preferred stock par value $ 0.0001 ; 25,000,000 shares authorized; one share issued and outstanding - - Common stock par value $ 0.0001 ; 250,000,000 shares authorized; 47,863,478 shares issued and outstanding (February 28, 2025 – 47,620,263 ) (Note 12) 5 5 Additional paid-in capital 194,370 193,529 Accumulated deficit ( 198,678 ) ( 192,027 ) Accumulated other comprehensive loss ( 1,165 ) ( 1,140 ) Total stockholders’ equity (deficit) ( 5,468 ) 367 Total liabilities and stockholders’ equity (deficit) $ 13,290 $ 18,578 See accompanying notes to the condensed consolidated financial statements . F-2 Table of Contents Loop Industries, Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (in thousands of U.S. dollars, except per share data) Three Months Ended Six Months Ended August 31, 2025 August 31, 2024 August 31, 2025 August 31, 2024 Revenues (Note 13) $ - $ 23 $ 252 $ 29 Expenses: Research and development (Note 14) 843 1,945 2,217 4,182 General and administrative (Note 15) 1,871 2,595 3,519 5,506 Depreciation and amortization (Notes 5 and 6) 96 129 197 266 Loss on equity accounted investments (Note 9) 43 - 345 - Total expenses 2,853 4,669 6,278 9,954 Other loss (income): Interest and other financial expenses 419 119 837 179 Interest income ( 70 ) ( 6 ) ( 170 ) ( 132 ) Foreign exchange loss (gain) 2 80 ( 42 ) 56 Total other loss 351 193 625 103 Net loss ( 3,204 ) ( 4,839 ) ( 6,651 ) ( 10,028 ) Other comprehensive loss: Foreign currency translation adjustment ( 6 ) 43 ( 25 ) ( 12 ) Comprehensive loss $ ( 3,210 ) $ ( 4,796 ) $ ( 6,676 ) $ ( 10,040 ) Net loss per share Basic and diluted $ ( 0.07 ) $ ( 0.10 ) $ ( 0.14 ) $ ( 0.21 ) Weighted average common shares outstanding Basic and diluted 47,769,800 47,573,302 47,716,964 47,554,357 See accompanying notes to the condensed consolidated financial statements. F-3 Table of Contents Loop Industries, Inc. Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) (Unaudited) (in thousands of U.S. dollars, except for share data) Three months ended August 31, 2025 Common stock Preferred stock Additional Accumulated par value $0.0001 par value $0.0001 Additional Paid-in Other Total Number of Number of Paid-in Capital– Accumulated Comprehensive Stockholders’ Shares Amount Shares Amount Capital Warrants Deficit Income (Loss) Equity (Deficit) Balance, May 31, 2025 47,718,350 $ 5 1 $ - $ 193,904 $ - $ ( 195,474 ) $ ( 1,159 ) $ ( 2,724 ) Issuance of shares upon the vesting of restricted stock units (Note 16) 28,770 - - - - - - - - Issuance of common stock under ATM Equity Offering (Note 12) 116,358 - - - 193 - - - 193 Stock options issued for services (Note 16) - - - - 165 - - - 165 Restricted stock units issued for services (Note 16) - - - - 115 - - - 115 Share issuance costs - - - - ( 7 ) - - - ( 7 ) Foreign currency translation - - - - - - - ( 6 ) ( 6 ) Net loss - - - - - - ( 3,204 ) - ( 3,204 ) Balance, August 31, 2025 47,863,478 $ 5 1 $ - $ 194,370 $ - $ ( 198,678 ) $ ( 1,165 ) $ ( 5,468 ) (in thousands of U.S. dollars, except for share data) Three months ended August 31, 2024 Common stock Preferred stock Additional Accumulated par value $0.0001 par value $0.0001 Additional Paid-in Other Total Number of Number of Paid-in Capital– Accumulated Comprehensive Stockholders’ Shares Amount Shares Amount Capital Warrants Deficit Income (Loss) Equity Balance, May 31, 2024 47,538,745 $ 5 1 $ - $ 172,162 $ 20,385 $ ( 182,159 ) $ ( 1,125 ) $ 9,268 Issuance of shares upon the vesting of restricted stock units (Note 16) 81,518 - - - - - - - - Expiration of warrants - - - - 13,344 ( 13,344 ) - - - Stock options issued for services (Note 16) - - - - 148 - - - 148 Restricted stock units issued for services (Note 16) - - - - 214 - - - 214 Foreign currency translation - - - - - - - 43 43 Net loss - - - - - - ( 4,839 ) - ( 4,839 ) Balance, August 31, 2024 47,620,263 $ 5 1 $ - $ 185,868 $ 7,041 $ ( 186,998 ) $ ( 1,082 ) $ 4,834 See accompanying notes to the condensed consolidated financial statements. F-4 Table of Contents Loop Industries, Inc. Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) (Unaudited) (in thousands of U.S. dollars, except for share data) Six months ended August 31, 2025 Common stock Preferred stock Additional Accumulated par value $0.0001 par value $0.0001 Additional Paid-in Other Total Number of Number of Paid-in Capital– Accumulated Comprehensive Stockholders’ Shares Amount Shares Amount Capital Warrants Deficit Income (Loss) Equity (Deficit) Balance, February 28, 2025 47,620,263 $ 5 1 $ - $ 193,529 $ - $ ( 192,027 ) $ ( 1,140 ) $ 367 Issuance of shares upon the vesting of restricted stock units (Note 16) 126,857 - - - - - - - - Issuance of common stock under ATM Equity Offering (Note 12) 116,358 - - - 193 - - - 193 Stock options issued for services (Note 16) - - - - 651 - - - 651 Restricted stock units issued for services (Note 16) - - - - 4 - - - 4 Share issuance costs - - - - ( 7 ) - - - ( 7 ) Foreign currency translation - - - - - - - ( 25 ) ( 25 ) Net loss - - - - - - ( 6,651 ) - ( 6,651 ) Balance, August 31, 2025 47,863,478 $ 5 1 $ - $ 194,370 $ - $ ( 198,678 ) $ ( 1,165 ) $ ( 5,468 ) (in thousands of U.S. dollars, except for share data) Six months ended August 31, 2024 Common stock Series A Preferred stock Additional Accumulated par value $0.0001 par value $0.0001 Additional Paid-in Other Total Number of Number of Paid-in Capital– Accumulated Comprehensive Stockholders’ Shares Amount Shares Amount Capital Warrants Deficit Income (Loss) Equity Balance, February 29, 2024 47,528,908 $ 5 1 $ - $ 171,792 $ 20,385 $ ( 176,970 ) $ ( 1,070 ) $ 14,142 Issuance of shares upon the vesting of restricted stock units (Note 16) 91,355 - - - - - - - - Expiration of warrants - - - - 13,344 ( 13,344 ) - - - Stock options issued for services (Note 16) - - - - 295 - - - 295 Restricted stock units issued for services (Note 16) - - - - 437 - - - 437 Foreign currency translation - - - - - - - ( 12 ) ( 12 ) Net loss - - - - - - ( 10,028 ) - ( 10,028 ) Balance, August 31, 2024 47,620,263 $ 5 1 $ - $ 185,868 $ 7,041 $ ( 186,998 ) $ ( 1,082 ) $ 4,834 See accompanying notes to the condensed consolidated financial statements. F-5 Table of Contents Loop Industries, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands of U.S. dollars) Six Months Ended August 31, 2025 2024 Cash Flows from Operating Activities Net loss ( 6,651 ) $ ( 10,028 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization (Notes 5 and 6) 197 266 Stock-based compensation expense (Note 16) 655 732 Accrued interest and other financing costs (Note 11) 737 57 Loss on equity accounted investments (Note 9) 345 - Changes in operating assets and liabilities: Accounts receivable and other (Note 3) ( 228 ) ( 39 ) Inventories - 21 Prepaid expenses (Note 4) ( 338 ) 84 Accounts payable and accrued liabilities (Note 8) ( 321 ) 2,132 Net cash used in operating activities ( 5,604 ) ( 6,775 ) Cash Flows from Investing Activities Additions to intangible assets (Note 6) ( 133 ) ( 325 ) Net cash used in investing activities ( 133 ) ( 325 ) Cash Flows from Financing Activities Proceeds from ATM equity offering, net of issuance costs (Note 12) 187 - Borrowings under credit facility (Note 11) - 1,587 Repayment of long-term debt (Note 11) ( 136 ) ( 50 ) Net cash provided by financing activities 51 1,537 Effect of exchange rate changes 23 - Net decrease in cash ( 5,663 ) ( 5,563 ) Cash and cash equivalents, beginning of period 12,973 6,958 Cash and cash equivalents, end of period $ 7,310 $ 1,395 Supplemental Disclosure of Cash Flow Information: Income tax paid $ - $ - Interest paid $ 100 $ 132 Interest received $ 170 $ 201 See accompanying notes to the condensed consolidated financial statements. F-6 Table of Contents Loop Industries, Inc. Three and Six Months Ended August 31, 2025 and 2024 Notes to the Condensed Consolidated Financial Statements (Unaudited) 1. The Company, Basis of Presentation and Liquidity Risk Assessment The Company Loop Industries, Inc. (the “Company,” “Loop,” “we,” or “our”) is a technology company that owns patented and proprietary technology that depolymerizes no and low-value waste polyethylene terephthalate (“PET”) plastic and polyester fiber to its base building blocks (monomers). The monomers are filtered, purified and polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber. The Company is currently in the pre-commercialization stage with limited revenues. Basis of Presentation These unaudited interim condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures included in these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10 -K for the fiscal year ended February 28, 2025 , filed with the SEC on May 29, 2025, as amended by the Amendment No. 1 on Form 10 -K/A filed with the SEC on May 30, 2025. The unaudited interim condensed consolidated financial statements comprise the consolidated financial position and results of operations of Loop Industries, Inc. and its subsidiaries, Loop Innovations, LLC and Loop Canada Inc. All subsidiaries are, either directly or indirectly, wholly owned subsidiaries of Loop Industries, Inc. (collectively, the “Company”). The Company owns, through Loop Innovations, LLC, a 50 % interest in a joint venture, Indorama Loop Technologies, LLC, which is accounted for under the equity method. The Company also owns a 50 % interest in a joint venture, Ester Loop Infinite Technologies Private Limited ("India JV"), which is accounted for under the equity method. Intercompany balances and transactions are eliminated on consolidation. The condensed consolidated balance sheet as of February 28, 2025 , included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by US GAAP on an annual reporting basis. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods. The results for the three - and six -month periods ended August 31, 2025 are not necessarily indicative of the results to be expected for any subsequent quarter, for the fiscal year ending February 28, 2026 , or for any other period. All monetary amounts in these notes to the condensed consolidated financial statements are in thousands of U.S. dollars unless otherwise specified, except for per share data. Liquidity Risk Assessment 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. As at 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 $2,547 . 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. 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. F- 7 Table of Contents 2. Summary of Significant Accounting Policies Use of estimates The preparation of financial statements in conformity with US GAAP requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include the going concern assessment, estimates for depreciable lives of property, plant and equipment and intangible assets, recoverability of property, plant and equipment, recoverability of tax credits receivable, assumptions made in calculating the fair value of stock-based compensation and other equity instruments, and the assessment of performance conditions for stock-based compensation awards. Net loss per share The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share . Basic loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the year. The Company includes common stock issuable in its calculation. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive. For the three - and six -month periods ended August 31, 2025 and 2024 , the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at August 31, 2025 , the potentially dilutive securities consisted of 5,493,138 outstanding stock options ( 2024 – 2,771,216 ), 4,256,532 outstanding restricted stock units ( 2024 – 4,461,818 ), and nil outstanding warrants ( 2024 – 2,357,407 ) F- 8 Table of Contents Recently adopted accounting pronouncements In August 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023 - 05, Joint Venture Formations, which requires joint ventures to apply a new basis of accounting by measuring assets and liabilities at fair value upon formation. The amendments address diversity in practice by establishing requirements for recognition and measurement of net assets and liabilities on the formation date. The updated standard is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. The adoption of this accounting guidance for the six -month period ended August 31, 2025 did not impact the disclosures in our interim condensed consolidated financial statements. Recently issued accounting pronouncements not yet adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023 - 09—Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The amendments in this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU is effective for our annual period beginning after December 15, 2024 and all joint ventures formed on or after January 1, 2025, which for the Company is the annual period ending February 28, 2026. Early adoption is permitted. Management is currently evaluating the impact that the updated standard will have on our consolidated financial statements and related disclosures. In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2024 - 03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses, which requires public business entities to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements. The updated standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. Management is currently evaluating the impact that the updated standard will have on our consolidated financial statements and related disclosures. In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2024 - 04, Debt—Debt with Conversion and Other Options (Subtopic 470 - 20 ): Induced Conversions of Convertible Debt Instruments, which clarifies the accounting for settlements of convertible debt instruments that occur on terms different from the original contractual conversion terms. The amendments introduce a "preexisting contract approach," requiring that, to qualify for induced conversion accounting, the inducement offer must preserve the form of consideration and provide an amount of consideration that is no less than what was issuable under the original conversion privileges. This guidance applies to convertible debt instruments with cash conversion features and to instruments that are not currently convertible but had substantive conversion features at issuance and at the time the inducement offer is accepted. The updated standard is effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted for entities that have adopted the amendments in ASU 2020 - 06. Management is currently evaluating the impact that the updated standard will have on our consolidated financial statements and related disclosures. In January 2025, the Financial Accounting Standards Board (FASB) issued ASU 2025 - 01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Clarifying the Effective Date. This update clarifies the effective date of ASU 2024 - 03, which requires public business entities to provide disaggregated disclosures of certain income statement expenses. Specifically, ASU 2025 - 01 confirms that the guidance in ASU 2024 - 03 is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. Management is currently evaluating the impact that the updated standard will have on our consolidated financial statements and related disclosures. In July 2025, the FASB issued ASU 2025 - 05, Financial Instruments—Credit Losses (Topic 326 ): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, including those assets acquired in a business combination. The practical expedient permits an entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the current accounts receivable and current contract assets. This guidance is effective for the Company for its fiscal year and all interim periods beginning February 1, 2026 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance on its condensed consolidated financial statements. 3. Accounts Receivable and Other Accounts Receivable and Other as at August 31, 2025 and February 28, 2025 are comprised of the following: August 31, 2025 February 28, 2025 Accounts receivable from customers $ 616 $ 420 Research and development tax credits 206 121 Sales tax 48 89 Other receivables 32 9 $ 902 $ 639 F- 9 Table of Contents 4. Prepaid Expenses Prepaid expenses as at August 31, 2025 and February 28, 2025 were as follows: August 31, 2025 February 28, 2025 Insurance $ 336 $ 69 Utilities 32 29 Software 44 28 Other 90 32 $ 502 $ 158 5. Property, Plant and Equipment, Net As at August 31, 2025 Accumulated depreciation, write-down Cost and impairment Net book value Machinery and equipment $ 8,460 $ ( 8,460 ) $ - Building 1,804 ( 457 ) 1,347 Land 223 - 223 Building and Land Improvements 1,830 ( 1,735 ) 95 Office equipment and furniture 272 ( 183 ) 89 $ 12,589 $ ( 10,835 ) $ 1,754 As at February 28, 2025 Accumulated depreciation, write-down Cost and impairment Net book value Machinery and equipment $ 8,460 $ ( 8,460 ) $ - Building 1,717 ( 406 ) 1,311 Land 212 - 212 Building and Land Improvements 1,741 ( 1,616 ) 125 Office equipment and furniture 259 ( 170 ) 89 $ 12,389 $ ( 10,652 ) $ 1,737 Depreciation expense for the three - and six -month periods ended August 31, 2025 amounted to $ 36 and $ 70 , respectively ( 2024 – $ 79 and $ 170 ). F- 10 Table of Contents 6. Intangible Assets, Net Intangible assets as at August 31, 2025 and February 28, 2025 were $ 1,800 and $ 1,708 , respectively. During the six -month periods ended August 31, 2025 and 2024 , we made additions relating to patent application costs to intangible assets of $ 133 and $ 325 , respectively. Amortization expense for the three - and six -month periods ended August 31, 2025 amo unted to $ 61 and $ 126 , respectively ( 2024 – $ 50 and $ 96 ). 7. Fair Value of Financial Instruments The following tables presents the fair value of the Company's financial liabilities as at August 31, 2025 and February 28, 2025 : Fair Value at August 31, 2025 Carrying Level in the Amount Fair Value hierarchy Financial liabilities measured at amortized cost: Series B Convertible Preferred stock (Note 10) $ 11,328 $ 11,328 Level 2 Long-term debt (Note 11) $ 3,128 $ 3,128 Level 2 Due to customer $ 865 $ 865 Level 2 Fair Value at February 28, 2025 Carrying Level in the Amount Fair Value hierarchy Financial liabilities measured at amortized cost: Series B Convertible Preferred stock (Note 10) $ 10,647 $ 10,647 Level 2 Long-term debt (Note 11) $ 3,085 $ 3,085 Level 2 Due to customer $ 832 $ 832 Level 2 The fair value of cash, restricted cash, accounts receivable and other, and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturity. 8. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities as at August 31, 2025 and February 28, 2025 were as follows: August 31, 2025 February 28, 2025 Trade accounts payable $ 1,601 $ 2,010 Accrued employee compensation 602 554 Accrued engineering fees 455 431 Accrued professional fees 338 276 Other accrued liabilities 339 274 $ 3,335 $ 3,545 F- 11 Table of Contents 9. Investments in Joint Ventures Joint Venture with Ester On May 1, 2024, the Company entered into an agreement with Ester Industries Ltd. (“Ester”), a manufacturer of polyester films and specialty polymers in India, to form a 50/50 joint venture based in India (“India JV”). The purpose of the India JV is to build and operate an Infinite Loop™ manufacturing facility in India which will produce lower carbon footprint rDMT, rMEG and specialty polymers, using the Infinite Loop™ Technology. During the year ended February 28, 2025, Ester Loop Infinite Technologies Private Limited (“ELITe”) was incorporated as the India JV. ELITe meets the accounting definition of a joint venture where neither party has control of the joint venture entity and both parties have joint control over the decision-making process. As such, the Company uses the equity method of accounting to account for its share of the investment in ELITe. During the six -month period ended August 31, 2025 , Loop and Ester made no contributions ( 2024 – nil ) to ELITe. During the three - and six -month periods ended August 31, 2025 , ELITe incurred losses of $ 86 and $ 689 , respectively ( 2024 – nil ), resulting in the Company recording its share of the loss on equity accounted investment of $ 43 and $ 345 ( 2024 – nil ) for the respective periods. As at August 31, 2025 , and February 28, 2025 the carrying value of the Company's investment in ELITe was $ 923 and $ 1,267 , respectively. 10. Series B Convertible Preferred Stock The balance of Series B Convertible Preferred Stock as at August 31, 2025 and February 28, 2025 was as follows: August 31, 2025 February 28, 2025 Stated value at issuance $ 10,395 $ 10,395 Accrued PIK dividends 933 252 Series B Convertible Preferred Stock $ 11,328 $ 10,647 During the three - and six -month periods ended August 31, 2025 , the Company recorded PIK dividends of $ 341 and $ 681 respectively, ( 2024 – nil ), which were recorded in “Interest and other financial expenses” in our Consolidated Statements of Operations and Comprehensive Loss. 11. Long ‑ Term Debt Long-term debt as of August 31, 2025 and February 28, 2025 , was comprised of the following: August 31, 2025 February 28, 2025 Investissement Québec financing facility: Principal amount $ 3,131 $ 3,099 Unamortized discount ( 122 ) ( 138 ) Accrued interest 119 124 Total Investissement Québec financing facility 3,128 3,085 Less: current portion of long-term debt ( 464 ) ( 312 ) Long-term debt, net of current portion $ 2,664 $ 2,773 Investissement Qu é bec financing facility The Company recorded interest expense on the Investissement Québec loan for the three - and six -month periods ended August 31, 2025 in the amount of $ 36 and $ 72 , respectively ( 2024 – $ 29 and $ 59 ) and an accretion expense of $ 11 and $ 23 , respectively ( 2024 – $ 14 and $ 27 ). During the six -month period ended August 31, 2025 , the Company made repayments of $ 136 ( 2024 – $ 50 ) on the Investissement Québec loan. Total repayments due on the Company's indebtedness over the next five years are as follows: Years ending Amount February 28, 2026 191 February 28, 2027 546 February 29, 2028 838 February 28, 2029 838 February 28, 2030 837 Thereafter - Total $ 3,250 Credit facility from a Canadian bank On July 26, 2022, Loop Canada, Inc., a wholly-owned subsidiary of the Company (the "Borrower"), entered into an Operating Credit Facility (the “Credit Facility”) with a Canadian bank. 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 in compliance as at August 31, 2025 . All borrowings under the Credit Facility bear interest at an annual rate equal to the bank's Canadian prime rate plus 1.0 %. As at August 31, 2025 , the $ 2,547 Credit Facility was available and undrawn. As at August 31, 2024 , the Company had borrowings of $ 1,587 under the Credit Facility. 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. F- 12 Table of Contents 12. Stockholders' Equity (Deficit) Common Stock For the period ended August 31, 2025 Number of shares Amount Balance, February 28, 2025 47,620,263 $ 5 Issuance of shares upon settlement of restricted stock units 126,857 - Issuance of shares for cash 116,358 - Balance, August 31, 2025 47,863,478 $ 5 For the period ended August 31, 2024 Number of shares Amount Balance, February 29, 2024 47,528,908 $ 5 Issuance of shares upon settlement of restricted stock units 91,355 - Balance, August 31, 2024 47,620,263 $ 5 During the six months ended August 31, 2025 , the Company recorded the following common stock transactions: (i) The Company issued 126,857 shares of the common stock to settle restricted stock units that vested in the period. (ii) The Company issued 116,358 shares of common stock through its ATM Equity Offering program at an average offering price of $ 1.66 for gross proceed of $ 193 . During the six months ended August 31, 2024 , the Company recorded the following common stock transaction: (i) The Company issued 91,355 shares of the common stock to settle restricted stock units that vested in the period. 13. Revenues Revenue for the three -month periods ended August 31, 2025 and 2024 were as follows: August 31, 2025 August 31, 2024 Engineering services $ - $ - Sales of PET - 23 $ - $ 23 Revenue for the six -month periods ended August 31, 2025 and 2024 were as follows: August 31, 2025 August 31, 2024 Engineering services $ 244 $ - Sales of PET 8 29 $ 252 $ 29 14. Research and Development Expenses Research and development expenses for the three -month periods ended August 31, 2025 and 2024 were as follows: August 31, 2025 August 31, 2024 Employee compensation $ 629 $ 993 External engineering 9 651 Plant and laboratory operating expenses 148 197 Other 57 104 $ 843 $ 1,945 Research and development expenses for the six -month periods ended August 31, 2025 and 2024 were as follows: August 31, 2025 August 31, 2024 Employee compensation $ 1,643 $ 2,138 External engineering 14 1,279 Plant and laboratory operating expenses 379 467 Other 181 298 $ 2,217 $ 4,182 F- 13 Table of Contents 15. General and Administrative Expenses General and administrative expenses for the three -month periods ended August 31, 2025 and 2024 were as follows: August 31, 2025 August 31, 2024 Employee compensation $ 671 $ 816 Insurance 423 476 Professional fees 612 1,007 Other 165 296 $ 1,871 $ 2,595 General and administrative expenses for the six -month periods ended August 31, 2025 and 2024 were as follows: August 31, 2025 August 31, 2024 Employee compensation $ 1,303 $ 1,692 Insurance 876 968 Professional fees 973 2,262 Other 367 584 $ 3,519 $ 5,506 16. Share-based Payments Stock Options The following table summarizes the continuity of the Company's stock options during the three -month periods ended August 31, 2025 and 2024 : 2025 2024 Number of Weighted average Number of Weighted average stock options exercise price stock options exercise price Outstanding, beginning of period 5,573,138 $ 3.19 2,971,216 $ 4.95 Granted - - - - Exercised - - - - Forfeited ( 80,000 ) 3.11 ( 200,000 ) 0.80 Expired - - - - Outstanding, end of period 5,493,138 $ 3.19 2,771,216 $ 5.25 Exercisable, end of period 2,711,727 $ 4.98 1,890,000 $ 6.39 The following table summarizes the continuity of the Company's stock options during the six -month periods ended August 31, 2025 and 2024 : 2025 2024 Number of Weighted average Number of Weighted average stock options exercise price stock options exercise price Outstanding, beginning of period 2,771,216 $ 5.25 2,772,000 $ 5.10 Granted 2,801,922 1.16 199,216 2.89 Exercised - - - - Forfeited ( 80,000 ) 3.11 ( 200,000 ) 0.80 Expired - - - - Outstanding, end of period 5,493,138 $ 3.19 2,771,216 $ 5.25 Exercisable, end of period 2,711,727 $ 4.98 1,890,000 $ 6.39 F- 14 Table of Contents The Company applies the fair value method of accounting for stock-based compensation awards granted. Fair value is calculated based on a Black-Scholes option pricing model. The principal components of the pricing model for the stock options granted in the six -month period ended August 31, 2025 and 2024 were as follows: 2025 2024 Exercise price $ 1.16 $ 2.89 Risk-free interest rate 3.68% - 3.72% 4.09 % Expected dividend yield 0 % 0 % Expected volatility 81%-82% 73 % Expected life (years) 3.5 - 5.0 years 7 The weighted-average grant-date fair value of options granted during the six -month periods ended August 31, 2025 and 2024 was $ 0.62 and $ 2.03 , respectively. A summary of the Company’s nonvested shares as of August 31, 2025 , and changes during the period ended August 31, 2025 were as follows: 2025 Number of Weighted average stock options exercise price Nonvested, beginning of period 731,216 $ 1.88 Granted 2,270,000 0.64 Exercised - - Forfeited ( 80,000 ) 2.15 Vested ( 139,805 ) 2.09 Nonvested, end of period 2,781,411 $ 0.85 During the three -month periods ended August 31, 2025 and 2024 , stock-based compensation expense attributable to stock options amounted to $ 165 and $ 148 , respectively. During the six -month periods ended August 31, 2025 and 2024 , stock-based compensation expense attributable to stock options amounted to $ 651 and $ 295 , respectively Restricted Stock Units The following table summarizes the continuity of the restricted stock units during the three -month periods ended August 31, 2025 and 2024 : 2025 2024 Weighted average Weighted average Number of units fair value price Number of units fair value price Outstanding, beginning of period 3,981,121 $ 6.73 4,399,060 $ 6.49 Granted 310,770 1.31 144,276 2.09 Settled ( 28,770 ) 1.13 ( 81,518 ) 6.55 Forfeited ( 6,589 ) 5.32 - - Outstanding, end of period 4,256,532 $ 6.38 4,461,818 $ 6.35 Outstanding vested, end of period 1,833,531 $ 5.71 1,761,421 $ 5.86 The following table summarizes the continuity of the restricted stock units during the six -month periods ended August 31, 2025 and 2024 : 2025 2024 Weighted average Weighted average Number of units fair value price Number of units fair value price Outstanding, beginning of period 4,466,958 $ 6.32 4,368,897 $ 6.53 Granted 310,770 1.31 184,276 2.25 Settled ( 126,857 ) 2.90 ( 91,355 ) 6.74 Forfeited ( 394,339 ) 2.91 - - Outstanding, end of period 4,256,532 $ 6.38 4,461,818 $ 6.35 Outstanding vested, end of period 1,833,531 $ 5.71 1,761,421 $ 5.86 The Company applies the fair value method of accounting for awards granted through the issuance of restricted stock units. Fair value is calculated based on the intrinsic value at grant date multiplied by the number of restricted stock unit awards granted. During the three -month periods ended August 31, 2025 and 2024 , stock-based compensation attributable to RSUs amounted to $ 115 and $ 214 , respectively. During the six -month periods ended August 31, 2025 and 2024 , stock-based compensation expense attributable to RSUs amounted to $ 4 , which includes $( 291 ) for forfeitures recorded in the period, and $ 437 , respectively. F- 15 Table of Contents Stock-Based Compensation Expense During the three -month periods ended August 31, 2025 and 2024 , stock-based compensation included in research and development expenses amounted to $ 32 and $ 131 , respectively, and in general and administrative expenses amounted to $ 248 and $ 231 , respectively. During the six -month periods ended August 31, 2025 and 2024 , stock-based compensation included in research and development expenses amounted to $ 344 and $ 261 , respectively, and in general and administrative expenses amounted to $ 311 and $ 471 , respectively. 17. Equity Incentive Plan On July 6, 2017, the Company adopted the 2017 Equity Incentive Plan (the “Plan”). The Plan permits the granting of warrants, stock options, stock appreciation rights and restricted stock units to employees, directors and consultants of the Company. A total of 3,000,000 shares of common stock were initially reserved for issuance under the Plan at July 6, 2017, with annual automatic share reserve increases, as defined in the Plan, amounting to the lessor of (i) 1,500,000 shares, (ii) 5 % of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the Administrator of the Plan, effective March 1, 2018. On March 1, 2025, the share reserve was increased by 1,500,000 shares ( 2024 – 1,500,000 ). The Plan is administered by the Board of Directors who designates eligible participants to be included under the Plan, the number of awards granted, the share price pursuant to the awards and the vesting conditions and period. The awards, when granted, will have an exercise price of no less than the estimated fair value of shares at the date of grant and a life not exceeding 10 years from the grant date. However, where a participant, at the time of the grant, owns stock representing more than 10% of the voting power of the Company, the life of the options shall not exceed 5 years. The following table summarizes the continuity of the units that were authorized for issuance under the Plan as at and during the six -month periods ended August 31, 2025 and 2024 : 2025 2024 Number of units* Number of units* Authorized, beginning of period 2,159,612 848,244 Automatic share reserve increase 1,500,000 1,500,000 Units granted ( 3,112,692 ) ( 383,492 ) Units forfeited 474,339 200,000 Units expired - - Authorized, end of period 1,021,259 2,164,752 *The use of the term “units” in the table above describes a combination of stock options and RSUs. F- 16 Table of Contents 18. Subsequent Event On September 23, 2025, Loop entered into a Securityholders Agreement with Reed Circular Economy ("RCE"), an affiliate of Reed Management SAS, to establish the framework for the governance, ownership, and operations of Infinite Loop Europe SAS ("Infinite Loop Europe"). Under this agreement, RCE and Loop hold their interests in Infinite Loop Europe 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 Infinite Loop Europe 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 Infinite Loop Europe limited use rights. F- 17 Table of Contents