Loop Industries, Inc. 10-K

ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is currently traded on the Nasdaq Global Market under the symbol “LOOP.” Holders As at May 26, 2026, there were 48,380,371 shares of com mon stock issued and outstanding (excluding shares of common stock issuable upon conversion of all of our currently outstanding Series A Preferred Stock or Series B CPS) held by approximately 42 stockholders of record. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. Dividends We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future. There are no restrictions in our Articles of Incorporation or By-laws that prevent us from declaring dividends, except that we are not permitted to declare or pay any dividend or other distribution without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock, voting as a separate class. The Nevada Revised Statutes, however, prohibit us from declaring dividends where, after giving effect to the distribution of the dividend: ● we would not be able to pay our debts as they become due in the usual course of business; or ● our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution, unless otherwise permitted under our Articles of Incorporation. Recent Sales of Unregistered Securities During the period covered by this Annual Report on Form 10-K, we have not sold any equity securities that were not registered under the Securities Act that were not previously reported in a quarterly report on Form 10-Q or in a current report on Form 8-K. Purchases of Equity Securities by the Registrant and Affiliated Purchasers We did not purchase any of our shares of common stock or other securities during the year ended February 28, 2026. ITEM 6. [Reserved] ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and any forward-looking statements should be read in conjunction with the “ Cautionary Statements Regarding Forward-Looking Statements ” in this Annual Report on Form 10-K and the Risk Factors section included in Part I, Item 1A of this Annual Report on Form 10K . 30 Table of Contents Overview Loop Industries is a technology company whose mission is to accelerate the world’s shift toward sustainable PET plastic and polyester fiber and away from our dependence on fossil fuels. Loop Industries owns patented and proprietary technology that depolymerizes no and low-value waste PET plastic and polyester fiber, including plastic bottles, packaging, and textiles such as carpets and clothing, into its base building block monomers, DMT and MEG. The monomers are separated, purified and polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber, thus enabling our customers to meet their sustainability objectives. Loop™ PET plastic and polyester fiber can be recycled infinitely without degradation of quality, helping to close the plastic loop. Loop Industries is committed to contributing to the global movement towards a circular economy by reducing plastic waste and recovering waste plastic for a sustainable future. Loop plans to commercialize the Infinite Loop™ technology through a combination of direct investments with strategic partners to own and operate commercial facilities and the licensing of its technology. As the initial phase of our plan for the commercialization of future Infinite Loop™ manufacturing facilities, we constructed and have successfully operated our Terrebonne Facility for the past five years, demonstrating the effectiveness of our technology and supplying Loop PET resin and polyester fiber to customers. The facility has also been used for research and development activities. Loop is currently executing on its commercialization strategy through two key strategic partnerships. The Company is advancing towards the construction of an Infinite Loop™ manufacturing facility in India through its 50/50 joint venture in India with Ester Industries Ltd. (“Ester”). The facility’s planned production capacity is 70,000 tons per year of Loop branded PET resin and polyester fiber. In addition, 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 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. These initiatives represent key steps in implementing the Company's plan to deploy its proprietary depolymerization technology in global markets. Commercialization Plan and Progress Our commercialization strategy to achieve global expansion of the Infinite Loop™ Technology is founded on a combination of direct investments with strategic partners to own and operate commercial facilities and the licensing of our technology. The global expansion plan for our technology will allow our target customers, mostly comprised of apparel companies and CPG companies, to integrate Loop™ PET resin and polyester fiber into their products and packaging. As countries around the globe continue to impose sustainability targets and recycled content mandates, we observe that companies are increasingly seeking to incorporate sustainably produced materials into their products. Our market strategy is to assist global consumer goods and apparel companies in meeting these requirements as well as their own stated sustainability commitments by offering co-branded packaging or polyester fibers that are made with Loop 100% recycled, virgin-quality PET. We believe that Loop™ recycled PET resin and polyester fiber could command premium pricing over virgin, petroleum-based PET resin and provide attractive economic returns. The Infinite Loop™ Technology is the key pillar of our commercialization strategy. We believe our technology is well positioned to respond to the global transition away from fossil fuels and petrochemicals and into the circular economy, where PET plastic and polyester fiber are produced by recycling waste polyester that would otherwise typically be destined for landfill or incineration, rather than relying on fossil-based resources. We have completed our process design package for the Infinite Loop™ full-scale manufacturing facilities to be used as the base engineering platform for all future facilities. We believe this approach allows for quick execution, speed to market, and lends itself well to modular construction. The basic design package has a capacity of up to 70,000 tons of rDMT and 23,000 tons of rMEG, or 70,000 tons of Loop PET and polyester fiber output per year, subject to applicable site-specific permitting, site and regulatory considerations. We are focused on direct investments in Infinite Loop™ commercial facilities located in low-cost manufacturing regions. By strategically selecting cost-efficient locations, we aim to optimize production costs and improve overall financial performance, while limiting our capital contributions. This direct investment approach also includes leveraging partnerships to integrate Loop’s proprietary technology and sales and marketing expertise with the operational and construction capabilities of experienced partners. We believe this combination of complementary skill sets allows for more efficient project execution, accelerated market adoption, and scalable growth. 31 Table of Contents We expect that revenue generation from direct investments in commercial facilities will be driven by two key streams: (i) profits from the operation of commercial facilities, and (ii) royalties paid to Loop for licensing its technology and exclusive responsibility of sales and marketing. We believe these income sources will support long-term financial sustainability and growth. This approach is currently being deployed through the Company’s 50/50 joint venture in India with Ester, which is advancing towards the construction of an Infinite Loop™ manufacturing facility. The facility’s planned production capacity is 70,000 tons per year of Loop branded PET resin and polyester fiber. The India JV intends to leverage the complementary skill sets of each partner by combining Loop’s innovative technology and global customer relationships with Ester’s nearly 40 years of specialized polymer production, operational proficiency, and local expertise, including sourcing of PET plastic and polyester fiber waste feedstocks. Loop will grant a royalty-bearing license to the India JV and will be the exclusive seller and marketing agent of the India JV’s products. We also aim to accelerate the roll-out of the Infinite Loop™ technology through the sale of technology licenses for commercial facilities in which Loop may take limited or no ownership. We expect licensee-owned facilities to allow us to scale our technology efficiently, without requiring significant capital investment from Loop. Revenue generation through technology licensing is expected to come from a combination of up-front and recurring royalties. This approach focused on licensing is currently being deployed in our European partnership with Reed Societe Generale Group. 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 $10.4 million (€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. 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 revenue stream prior to the startup of the facility. Loop has entered into engineering services agreements 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 re venue of $0.5 million in the year ended February 28, 2026. 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. This strategy envisages the manufacture of plant modules in a low-cost country to be transported and assembled on site at global locations, and would potentially provide an additional income stream alongside returns from owned facilities and royalties. 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. Additionally, for a detailed description of our joint venture with Ester and our agreements with Reed Societe Generale Group, see the sections “Overview – Joint Venture with Ester” and “ – Agreements with Reed Societe Generale Group” above under Item 1. Business. 32 Table of Contents 33 Table of Contents RESULTS OF OPERATIONS All monetary amounts are in thousands of U.S. dollars unless otherwise specified. Fourth Quarter Ended February 28, 2026 The following table summarizes our operating results for the three-month periods ended February 28, 2026 and February 28, 2025, in thousands of U.S. Dollars. Three months ended February 28, February 28, Change 2026 2025 (1) favorable / (unfavorable) Revenues Technology licensing $ - $ 10,395 $ (10,395 ) Products - 46 (46 ) Services 176 368 (192 ) Total revenues 176 10,809 (10,633 ) Cost of services Cost of services 191 218 27 Total cost of services 191 218 27 Expenses Research and development Employee compensation 103 468 365 Stock-based compensation 64 104 40 Plant and laboratory operating expenses 274 193 (81 ) External engineering 24 113 89 Machinery and equipment expenditures - 20 20 Other 15 190 175 Total research and development 480 1,088 608 General and administrative Professional fees 382 570 188 Employee compensation 105 148 43 Stock-based compensation 418 185 (233 ) Insurance 302 450 148 Other 179 221 42 Total general and administrative 1,386 1,574 188 Depreciation and amortization 94 126 32 Total expenses 1,960 2,788 828 Loss on equity method investment 353 687 334 Interest and other financial expenses 430 329 (101 ) Interest income (24 ) (83 ) (59 ) Foreign exchange gain (31 ) (12 ) 19 Total other loss 728 921 193 Net (loss) income $ (2,703 ) $ 6,882 $ (9,585 ) (1) Certain comparative figures have been reclassified to conform to the current year presentation, including the introduction of a cost of services line item causing reclassifications out of research and development employee compensation and external engineering expenses. These reclassifications had no impact on the previously reported net loss and comprehensive loss. Revenues Revenues for the three-month period ended February 28, 2026 decreased $10,633 to $176 as compared to $10,809 for the same period in 2025 . The revenues for the three-month period ended February 28, 2026 resulted from $176 in engineering fees. The revenues of $10,809 for the three-month period ended February 28, 2025 resulted from royalty from Reed Societe Generale Group, engineering fees and sales of Loop™ PET resin. Cost of Services Cost of Services for the three-month period ended February 28, 2026 decreased $27 to $191 compared to $218 for the same period in 2025. Research and Development Research and development expenses for the three-month period ended February 28, 2026 decreased $608 to $480, as compared to $1,088 for the same period in 2025 . The decrease was primarily attributable to a $365 decrease in employee compensation expenses, a $175 decrease in other, mainly legal fees, and an $89 decrease in external engineering. 34 Table of Contents General and administrative expenses General and administrative expenses for the three-month period ended February 28, 2026 decreased $188 to $1,386, as compared to $1,574 for the same period in 2025 . The decrease was primarily attributable to a decrease of $188 in professional fees, mainly legal fees, a decrease of $148 in insurance expenses, offset by an increase of $233 in stock-based compensation. Loss on equity accounted investment Loss on equity accounted investment decreased by $334 for the three-month period ended February 28, 2026 . This loss relates to the Company’s 50% portion of the loss incurred by the India JV for the three-month period ended February 28, 2026 , during which the India JV incurred preliminary project costs for the planned Infinite Loop™ facility in India, which are mainly engineering fees. Net Loss Net income for the three-month period ended February 28, 2026 decreased $9,585 to a loss of $2,703 in the period, as compared to a net income of $6,882 for the same period in 2025 . The decrease was primarily due to the decrease of $10,633 in revenues, which was partially offset by the decrease of $608 in research and development expenses, the decrease of $188 in general and administrative expenses and the decrease of $334 in loss on equity accounted investment. Fiscal Year Ended February 28, 2026 The following table summarizes our operating results for the years ended February 28, 2026 and February 28, 2025, in thousands of U.S. Dollars. Years ended February 28, February 28, Change 2026 2025 (1) favorable / (unfavorable) Revenues Technology licensing $ - $ 10,395 $ (10,395 ) Products 8 126 $ (118 ) Services 506 368 138 Total revenues 514 10,889 (10,375 ) Cost of services Cost of services 381 218 (163 ) Total cost of services 381 218 (163 ) Expenses Research and development Employee compensation 1,877 3,115 1,238 Stock-based compensation 490 471 (19 ) Plant and laboratory operating expenses 836 870 34 External engineering 96 1,477 1,381 Machinery and equipment expenditures 2 64 62 Other 171 649 478 Total research and development 3,472 6,646 3,174 General and administrative Professional fees 1,512 3,428 1,916 Employee compensation 1,516 1,942 426 Stock-based compensation 963 881 (82 ) Insurance 1,604 1,871 267 Other 810 1,106 296 Total general and administrative 6,405 9,228 2,823 Impairment of equipment - 8,460 8,460 Depreciation and amortization 384 524 140 Total expenses 10,261 24,858 14,597 Loss on equity method investment 763 687 (76 ) Interest and other financial expenses 1,703 618 (1,085 ) Interest income (236 ) (238 ) (2 ) Foreign exchange gain (59 ) (197 ) (138 ) Total other loss 2,171 870 (1,301 ) Net loss $ (12,299 ) $ (15,057 ) $ 2,758 (1) Certain comparative figures have been reclassified to conform to the current year presentation, including the introduction of a cost of services line item causing reclassifications out of research and development employee compensation and external engineering expenses. These reclassifications had no impact on the previously reported net loss and comprehensive loss. 35 Table of Contents Revenues Revenues for the year ended February 28, 2026 decreased $10,375 to $514, as compared to $10,889 for the same period in 2025 . The revenues for the year ended February 28, 2026 resulted from $506 in engineering fees and $8 from sales of Loop™ PET resin produced using monomers manufactured at the Terrebonne Facility. The revenues of $10,889 for the year ended February 28, 2025 resulted from $10,395 in licensing revenue from the up-front royalty received from Reed Societe Generale Group, $368 in engineering fees and $126 from sales of Loop™ PET resin produced using monomers manufactured at the Terrebonne Facility . Cost of Services Cost of Services for the year ended February 28, 2026 increased by $163 to $381 compared to $218 for the same period in 2025. Research and Development Research and development expenses for the year ended February 28, 2026 decreased by $3,174 to $3,472, as compared to $6,646 for the same period in 2025 . The decrease was primarily attributable to a $1,381 decrease in external engineering expenses, a $1,238 decrease in employee compensation expenses and a $478 decrease in other, mainly legal fees. General and administrative expenses General and administrative expenses for the year ended February 28, 2026 decreased $2,823 to $6,405, as compared to $9,228 for the same period in 2025 . The decrease was primarily attributable to a $1,916 decrease in legal fees, a decrease of $426 in employee compensation expenses, a decrease of $296 in other expenses and a decrease of $267 in insurance expenses. Impairment of equipment Impairment of equipment expense decreased by $8,460 for the year ended February 28, 2026 . The impairment was fully recognized in the year ended February 28, 2025 and the agreement with the joint venture between the Company and SKGC was terminated. There are no future plans to construct and operate an Infinite Loop™ manufacturing facility in Ulsan, South Korea. As a result, there is no impairment to be recognized in the year ending February 28, 2026. Loss on equity accounted investment Loss on equity accounted investment increased by $76 for the year ended February 28, 2026 . This loss relates to the Company’s 50% portion of the loss incurred by the India JV for the year ended February 28, 2026 , during which the India JV incurred preliminary project costs for the planned Infinite Loop™ facility in India, which are mainly engineering fees. Net Loss The net loss for the year ended February 28, 2026 decreased $2,758 to $12,299, as compared to $15,057 for the same period in 2025 . The decrease was primarily due to $8,460 decrease in impairment of equipment, the $3,174 decrease in research and development expenses, the $2,823 decrease in general and administrative expenses, which were offset by a $10,375 decrease in revenue and by $1,085 increase in interest and other financial expenses. LIQUIDITY AND CAPITAL RESOURCES All monetary amounts are in thousands of U.S. dollars unless otherwise specified. Going Concern The consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and settlement of liabilities in the normal course of business as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to, twelve months from the date of issuance of the consolidated financial statements. 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 a net capital deficiency. 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 consolidated financial statement issuance date. In preparing this going concern assessment in accordance with US GAAP, the Company included cash flows that meet the 'probable' threshold under ASC 205-40 in its going concern evaluation and has excluded forecasted cash flows that lack substantive support or binding commitments. 36 Table of Contents Management has determined that cash and cash equivalents on hand as of February 28, 2026 of $2,356, together with the $2,566 available under its undrawn credit facility, will not be sufficient to fund the Company's ongoing operations, obligations and commitments for the next twelve months from consolidated financial statements issuance date. These events and conditions are material uncertainties that raise substantial doubt upon the Company's ability to continue as a going concern and, accordingly, the appropriateness of the use of accounting principles applicable to a going concern. The Company’s ability to continue as a going concern and execute upon management's plans to move to the next stage of its strategic development is dependent on, among other factors, whether the Company can obtain the necessary financing through a combination of the issuance of debt and/or equity, technology licensing and engineering services arrangements, and/or financing from government incentive programs. 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 until Loop begins receiving returns from the India JV. While the Company is actively engaged in financing discussions, there is no assurance that the Company will be successful in attracting additional funding on terms acceptable to the Company. Failure to secure additional financing on acceptable 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. The consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material. 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 $15.0 million through the Sales Agent, acting as its agent, or directly to the Sales Agent, acting as principal (the “ATM Equity Offering”). As of February 28, 2026, the Company had sold 510,435 shares of common stock under the Sales Agreement for aggregate gross proceeds of appro ximately $917 and net proceeds of approximately $889, afte r deducting sales agent commissions and other offering expenses. As of February 28, 2026, the Company had approximately $14.1 million of capacity remaining under the ATM Equity Offering. Investissement Qu é bec financing facility We have a long-term debt obligation to Investissement Québec in connection with a financing facility (the “Financing Facility”) for the expansion of the Terrebonne Facility up to a maximum of $3,390. We received the first disbursement in the amount of $1,628 on February 21, 2020 and the second disbursement in the amount of $1,762 on August 26, 2021. The loan can be repaid at any time by us without penalty. The loan’s interest rate was initially set at 2.36% and there was a 36-month moratorium on both capital and interest repayments as of the first disbursement date. Under the original terms of the Financing Facility, at the end of the 36-month moratorium, capital and interest was repayable in 84 monthly installments. There is no remaining amount available for disbursement under the Financing Facility. On November 21, 2022, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “Financing Facility Amendment”). As per the Financing Facility Amendment, a total of $37 (CDN $50) of the principal amount was repayable in monthly installments in the fiscal year ended February 28, 2025, with the remainder of the principal amount being repayable in 72 monthly installments. On February 28, 2024, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “Second Financing Facility Amendment”). As per the Second Financing Facility Amendment, a total of $74 (CDN $100) of the principal amount was repayable in monthly installments in the fiscal year ended February 28, 2026, with the remainder of the principal amount being repayable in 60 monthly installments. Pursuant to the Second Financing Facility Amendment the interest rate of the Financing Facility was increased from 2.36% to 3.36%. 37 Table of Contents On February 5, 2025, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “Third Financing Facility Amendment”). As per the Third Financing Facility Amendment, total annual principal repayments in monthly installments are of $275 for the fiscal year ending February 28, 2026 and $605 for the fiscal year ending February 28, 2027, with the remainder of the principal amount being repayable in 24 monthly installments. Pursuant to the Third Financing Facility Amendment the interest rate of the Financing Facility was increased from 3.36% to 4.36%. Under the original terms of the Financing Facility, the principal amount was repayable in 84 monthly installments beginning in March of 2023. The amendments do not modify the repayment terms of accrued interest or any of the other terms of the Financing Facility that are not mentioned above. The amendments did not meet the criteria of ASC 470, Debt for an extinguishment of debt as the amendments did not substantially modify the terms of the Financing Facility. The Company therefore applied modification accounting and no immediate gain or loss was recognized related to the amendments. Credit facility from a Canadian bank On July 26, 2022, Loop Canada, Inc., a wholly-owned subsidiary of the Company, entered into an Operating Credit Facility (the “Credit Facility”) with a Canadian bank. The Credit Facility allows for borrowings of up to $2,566 (CDN $3,500) in aggregate principal amount. The Credit Facility is secured by the Company’s Terrebonne, Québec property. 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 February 28, 2026 , the $2,566 Credit Facility was available and undrawn. Due to customer In October 2022, the Company received a cash deposit from a customer of $1,000 in relation to an executed capacity reservation agreement. The deposit was intended to be credited against any future sales of Loop™ PET resin over a five-year period, commencing two years after the first delivery of Loop™ PET resin to the customer. Upon mutual agreement, the capacity reservation agreement with the customer was terminated on January 18, 2024. The customer and the Company agreed for the deposit to be refunded in full on July 1, 2027, with no restriction on the Company’s use of the funds. The amount bears no interest. The cause of the termination is related to the customer’s decision to abandon its plans to incorporate recycled PET in its products for technical reasons. Exchange rate hedging From time to time, we may engage in exchange rate hedging activities in an effort to mitigate the impact of exchange rate fluctuations. As part of our risk management program, we may enter into foreign exchange forward contracts to lock in the exchange rates for future foreign currency transactions, which is intended to reduce the variability of our operating costs and future cash flows denominated in currencies that differs from our functional currencies. We do not enter into these contracts for trading purposes or speculation, and our management believes all such contracts are entered into as hedges of underlying transactions. The following table summarizes the exchange rates used: February 28, February 28, 2026 2025 Period end Canadian $: US Dollar exchange rate $ 0.73 $ 0.69 Average period Canadian $: US Dollar exchange rate $ 0.72 $ 0.72 Expenditures are translated at the average exchange rate for the period presented. 38 Table of Contents Flow of Funds Summary of Cash Flows A summary of cash flows for the years ended February 28, 2026, and February 28, 2025 in U.S. dollars was as follows: February 28, February 28, 2026 2025 Net cash used in operating activities $ (10,110 ) $ (2,121 ) Net cash used in investing activities (1,171 ) (2,036 ) Net cash provided by used in financing activities 678 10,318 Effect of exchange rate changes on cash (14 ) (146 ) Net change in cash $ (10,617 ) $ 6,015 Net Cash Used in Operating Activities During the year ended February 28, 2026 , we used $10,110 in operations compared to $2,121 during the year ended February 28, 2026 . As discussed above in the Results of Operations, the increase was mainly due to decreased revenues, offset by a decrease in operating expenses in addition to decreased general and administrative expenses. Net Cash Used in Investing Activities During the year ended February 28, 2026 , we used $1,171 in investing activities compared to $2,036 during the year ended February 28, 2025 . During the year ended February 28, 2026 , we invested $960 in our joint venture in India. During the year ended February 28, 2025 , cash was used for our joint venture in India was $1,954 and we received a distribution of $368 from the joint venture with Indorama. During the year ended February 28, 2026 , we made investments in intangible assets of $211, as compared to $450 during the year ended February 28, 2025 , particularly to file patents for the Infinite Loop™ technology in the United States and around the world. Net Cash Used in Financing Activities During the year ended February 28, 2026 , we received cash proceeds of $889 for the sale of shares under the ATM Equity Offering as compared to $10,395 for the sale and issuance of Series B CPS which we received in the year ended February 28, 2025. In the year ended February 28, 2026 , we made repayments of long-term debt of $275 as compared to $77 in the year ended February 28, 2025 . OUTLOOK In connection with the upcoming fiscal year ending February 28, 2027, we intend to continue to execute our corporate strategy. We believe we must execute on several areas of our operational strategic plan, namely: ● Continuing to drive the commercialization of our Infinite Loop™ Technology. This entails the continuation of executing partnerships and/or commercial agreements with customers, including multi-year offtake agreements for the planned commercial facilities; ● Continuing to identify and secure feedstock to ensure planned commercial facilities can operate continuously and efficiently; ● Executing on the project plan for the planned Infinite Loop™ manufacturing facility in India; ● Securing financing to fund our operations, including our planned commercial projects and continued growth; ● Identifying and pursuing additional strategic partners and regions for Infinite Loop™ projects; ● Protecting our intellectual property; and ● Limiting expenses for our current operations at our head office and facilities in Terrebonne, Québec to optimize our liquidity position. 39 Table of Contents Risks that may affect our ability to execute on this strategy include, but are not limited to, those listed under “Risk Factors” elsewhere in this Annual Report on Form 10-K. CRITICAL ACCOUNTING 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. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. Going Concern Assessment 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 February 28, 2026, the Company had cash and cash equivalents of $2,356, together with the $2,566 available under its undrawn credit facility. 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 consolidated 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 going concern 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 not be sufficient to meet the Company’s obligations, commitments and budgeted expenditures for at least twelve months from the issuance date of the consolidated financial statements. Failure to secure additional financing on acceptable 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. The Company’s ability to continue as a going concern and execute upon management's plans to move to the next stage of its strategic development is dependent on, among other factors, whether the Company can obtain the necessary financing through a combination of the issuance of debt and/or equity, technology licensing and engineering services arrangements, and/or financing from government incentive programs. 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 until Loop begins receiving returns from the India JV. While the Company is actively engaged in financing discussions, there is no assurance that the Company will be successful in attracting additional funding on terms acceptable to the Company. The consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material. Revenue recognition The Company recognizes revenue with customers in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). This standard applies to all contracts with customers, except for contracts with customers that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company enters into contracts with customers to sell Loop™ PET resin. These contracts include a single performance obligation, which is the delivery of Loop™ PET resin, and the transaction price is a fixed rate per delivered volume. Revenue is recognized when control of the product transfers to the customer, which is when product is delivered to the customer location. Shipping and handling costs are accounted for as a fulfillment cost. The Company enters into licensing agreements with customers, or licensees, for the use of the Company’s proprietary technology. Licensing agreements may include various types of payments, including upfront fees, milestone payments, and royalties. Upfront licensing fees are generally recognized at a point in time, when the license is made available for the customer’s benefit and the customer can benefit from the technology independently. Milestone payments are recognized when the milestone is achieved and the payment is no longer subject to reversal. Royalties are recognized when the underlying transactions occur. The Company also enters into agreements to provide engineering services for Infinite Loop™ facilities. Engineering fees are recognized over time, as services are performed. When a reasonable estimate can be made, the Company measures progress toward complete satisfaction of the performance obligation using an input method based on the ratio of costs incurred to date to the total estimated costs to complete the engineering scope (a "cost-to-cost" measure of progress). Costs incurred consist primarily of internal engineering labor (including related employee compensation), subcontracted external engineering costs where applicable, and directly attributable expenses. Management believes that costs incurred faithfully depict the Company's performance in transferring control of the services to the customer. If circumstances exist whereby the Company cannot reasonably determine its progress towards satisfaction of the performance obligation, revenue is recognized over time as the work is performed, but only to the extent of costs incurred if the Company expects to at least recover those costs. The application of this policy requires significant management judgment, principally in estimating total costs to complete the engineering scope. Key assumptions include the scope, schedule and hours of internal engineering effort required to complete the work and the cost of subcontracted external engineering services where applicable. Estimates are reviewed at each reporting date; changes in estimates are accounted for on a cumulative catch-up basis in the period identified, with the effect on current-period revenue and contract balances disclosed if material. Amounts invoiced or received in advance of performance are recorded as contract liabilities (presented as "Unearned revenue" on the Consolidated Balance Sheet), and amounts earned in advance of the right to invoice are recorded as contract assets. As at February 28, 2026, the only open contract was the second engineering services agreement with the India JV. The India JV is in a pre-commercial development phase, the estimation of total costs to complete is inherently subject to heightened uncertainty, including uncertainty regarding the timing and cost of the engineering scope, potential changes in project scope, and the possibility of contract modifications as the India JV advances its financing and development plans. As such, the Company has only recognized revenue to the extent of costs incurred, as it believes these costs to be recoverable. Changes in these estimates in future periods could result in material adjustments to the consolidated financial statements. 40 Table of Contents Stock-Based Compensation The Company periodically issues stock options, warrants and restricted stock units to employees and non-employees in non-capital raising transactions for services and financing expenses. The Company accounts for stock options granted to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (the “FASB”) wherein the fair value of the award is measured on the grant date and recognized as compensation expense on the straight-line basis over the vesting period. When performance conditions exist, the Company recognizes compensation expense when it becomes probable that the performance condition will be met. Forfeitures on share-based payments are recognized as they occur. The Company accounts for stock options and warrants granted to non-employees in accordance with the authoritative guidance of the FASB wherein the fair value of the stock compensation is based upon the measurement date determined as the earlier of the date at which either a) a commitment is reached with the counterparty for performance or b) the counterparty completes its performance. The Company estimates the fair value of restricted stock unit awards to employees and directors based on the closing market price of its common stock on the date of grant. The fair value of the stock options granted is estimated using the Black-Scholes model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options, and future dividends. Stock-based compensation expense is recorded based on the value derived from the Black-Scholes model and on actual experience. The assumptions used in the Black-Scholes model could materially affect stock-based compensation expenses recorded in the current and future periods. Convertible Preferred Stock The accounting for convertible preferred stock involves significant management judgment and estimation, particularly when determining the appropriate classification and measurement under applicable U.S. GAAP, including ASC 480, Distinguishing Liabilities from Equity, ASC 470, Debt, and ASC 815, Derivatives and Hedging. These instruments may exhibit characteristics of both debt and equity, and the assessment of classification and subsequent measurement depends on contractual terms such as redemption rights, dividend features, and conversion mechanisms. Convertible preferred stock is classified as a liability when it contains features such as mandatory redemption provisions or holder-initiated redemption rights that are outside the Company’s control. These features create an obligation that may require settlement in cash or other financial assets, regardless of whether the instrument ultimately converts into equity securities. Instruments classified as liabilities are initially recorded at fair value, net of issuance costs, and subsequently measured at amortized cost using the effective interest method. Periodic accretion of the carrying value, including the impact of any fixed PIK dividends, is recognized as interest expense in the consolidated statements of operations. In addition, the Company evaluates all convertible instruments to determine whether they contain embedded features requiring separate accounting as derivatives under ASC 815. This evaluation involves assessing the economic characteristics and risks of the embedded terms relative to the host instrument. If bifurcation is required, the embedded derivative is measured at fair value with subsequent changes in value recognized through earnings. The determination of whether bifurcation is required and the valuation of embedded derivatives, if present, require the use of complex valuation models and significant judgment regarding assumptions such as volatility, discount rates, and the probability of various settlement outcomes. Because of the complexity and subjectivity involved in evaluating classification, estimating fair value, and determining accretion and derivative valuation, accounting for convertible preferred stock is considered a critical accounting estimate. Changes in assumptions or interpretations could have a material impact on the Company’s financial statements. Recoverability of equity method investments The Company holds an equity method investment in its 50/50 joint venture with Ester Industries Ltd. (the "India JV"), which is developing an Infinite Loop™ manufacturing facility in Gujarat, India. As at February 28, 2026, the carrying amount of the Company's equity method investment was $1,465 (February 28, 2025 – $1,281). In accordance with ASC 323, the Company assesses its equity method investment for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable and that a decline in value below carrying amount may be other-than-temporary. The unit of account is the carrying value of the investment as a whole. At each reporting date, management performs a qualitative assessment of whether one or more triggering events have occurred. Indicators of potential impairment may include, but are not limited to, a significant adverse change in the economic, industry, regulatory, or technological environment in which the investee operates, including changes that may impair the investee's future earnings potential. Based on the assessment performed, management concluded that no triggering events had occurred during the year and, accordingly, no impairment charge was recorded during the year ended February 28, 2026. The assumptions underlying this assessment are inherently subjective and are specific to the development status of the India JV. Key sources of uncertainty include the India JV's ability to obtain equity and project debt financing on acceptable terms in support of the approximately $165 to $170 million estimated investment cost for the facility, the continued support and financial condition of the JV partners. Adverse developments in any of these areas, or a change in the Company's intent or ability to hold the investment through to its start-up, could result in the recognition of an impairment loss in future periods that could be material to the Company's results of operations and financial position. Impairment of Property, Plant and Equipment The Company reviews its property, plant and equipment (“PP&E”) for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. This analysis requires significant management judgment and is therefore considered a critical accounting estimate. Indicators of potential impairment may include, but are not limited to, significant adverse changes in the business climate, legal or regulatory environment, technological developments, business strategy or operating performance compared to expectations. If such indicators are identified, the Company performs a recoverability test by comparing the carrying value of the asset group to the estimated undiscounted future cash flows expected to be generated over the asset group’s remaining useful life. If the carrying amount of the asset group exceeds the estimated undiscounted future cash flows, an impairment loss is recognized equal to the amount by which the carrying value exceeds the fair value. Fair value is typically determined using either a discounted cash flow analysis or market-based approaches, both of which require management to make estimates and assumptions regarding future revenue, operating costs, useful lives, discount rates, and residual values. These estimates are inherently uncertain and may change over time based on evolving market conditions, operational results, and technological developments. Due to the significance of the assumptions involved and the potential material impact on the financial statements, the assessment of impairment for PP&E is considered a critical accounting estimate. Actual results may differ materially from those assumed in the Company’s impairment analysis, which could result in future impairments or changes in depreciation expense.