What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-14 compared with 2026-01-14 · 98 added, 152 removed, 239 unchanged (51% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information and any forward-looking statements should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q, including those risks identified in the “Risk Factors” section of our 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 “2025 Annual Report”).

The following information and any forward-looking statements should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q, including those risks identified in the “ Risk Factors ” section of our Annual Report on Form 10-K for the fiscal year ended February 28, 2026, filed with the SEC on May 27, 2026 (the “ 2026 Annual Report ” ).

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

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

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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.

Loop plans to commercialize the Infinite Loop™ technology by developing facilities throughout the world which use its technology to produce rPET.

These facilities will be developed through a combination of direct investments with strategic partners and the licensing of its technology to companies with industry expertise.

As the initial phase of our plan for the commercialization of future Infinite Loop™ manufacturing facilities, we constructed and have successfully operated our Terrebonne, Québec depolymerization production facility (the “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 is also used for research and development activities.

The facility has also been used for research and development activities.

Loop is currently executing on its commercialization strategy through two key strategic partnerships.

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

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

In addition, the Company sold its first technology license to Reed Management SAS, ("Reed Societe Generale Group"), for one Infinite Loop™ manufacturing facility in Europe for an initial payment of $10.4 million (€10.0 million) with additional milestone payments to be received by Loop as the project advances.

Infinite Loop Europe SAS (“Infinite Loop Europe”), an entity owned 10% by Loop and 90% by Reed Circular Economy (“RCE”), an affiliate of Reed Societe Generale Group, was formed with the purpose of developing Infinite Loop™ manufacturing facilities in Europe.

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

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Agreements with Reed Societe Generale Group

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

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

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

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

To facilitate the closing of the transactions contemplated by the Amended Agreement and to develop Infinite Loop™ manufacturing facilities in Europe, Infinite Loop Europe was incorporated under French law.

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

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Convertible to Loop common stock at $4.75 per share or redeemable in cash

We believe the licensing and financing transactions mark a pivotal step in Loop's commercialization strategy, enabling the deployment of its patented recycling technology across Europe and supporting capital investment in cost-effective manufacturing regions, including its joint venture in India with strategic partner Ester.

Proceeds from these transactions are being used to fund the India JV project and Loop's operational cash flow needs.

We believe the licensing and financing transactions marked an important step in Loop's commercialization strategy, enabling the deployment of its patented recycling technology across Europe and supporting capital investment in cost-effective manufacturing regions, including its joint venture in India with strategic partner Ester.

Proceeds from these transactions have been used to fund the India JV project and Loop's operational cash flow needs.

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

On September 23, 2025, Loop entered into a formal agreement with Reed Circular Economy (“RCE”) to establish the framework for the governance, ownership, and operations of Infinite Loop Europe SAS (“Infinite Loop Europe”), a European entity formed 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.

On September 23, 2025, Loop entered into a formal agreement with RCE to establish the framework for the governance, ownership, and operations of Infinite Loop Europe, a European entity formed 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.

Under this agreement, RCE and Loop hold equity interests in Infinite Loop Europe on a 90/10 basis.

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Certain transactions that could risk the disclosure of Loop’s technology, as well as certain related-party transactions, require unanimous board approval.

RCE has provided Infinite Loop Europe with a €10 million shareholder loan to fund the first royalty tranche under the license agreement, which accrues payment-in-kind interest at 11.9% per annum and matures on December 27, 2027.

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

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

RCE has provided Infinite Loop Europe with a $10.4 million (€10.0 million) shareholder loan to fund the first royalty tranche under the license agreement, which accrues payment-in-kind interest at 11.9% per annum and matures on December 27, 2027.

On February 17, 2026, Loop announced that Infinite Loop Europe has selected BASF Industriepark Lausitz in Schwarzheide, Germany, as the site for its inaugural European manufacturing facility.

The project will be the first under Loop’s licensed technology model.

This selection marks a major step in Loop’s global commercialization strategy, with the site expected to be operational by 2030.

The facility is designed to utilize Loop’s proprietary depolymerization technology to produce 70,000 metric tons per year of virgin-quality Loop™ PET made from 100% recycled content.

By addressing a critical supply gap for food-grade and pharmaceutical applications in the European market, the project pairs technical reliability with a high-demand commercial opportunity.

Integration within BASF’s Industriepark Lausitz provides access to world-class industrial infrastructure and operational expertise, while the partnership with Reed Societe Generale Group brings strong institutional capital support, reducing execution risk and accelerating commercialization.

The facility is positioned to benefit from the European Commission’s 2025 pilot actions aimed at modernizing and strengthening the EU plastics recycling sector.

Following site selection, the project moves into the engineering and permitting phase.

Joint Venture with Ester

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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.

The India facility will leverage the Infinite Loop™ Technology and existing engineering package which should accelerate the lead-time towards groundbreaking.

The India facility will leverage the Infinite Loop™ Technology and Loop’s existing engineering package.

The planned production capacity of the Infinite Loop™ India facility is 70,000 tons per year of Loop branded PET resin and polyester fiber.

We believe the India JV offers attractive projected economic returns without the need for substantial sustainability-linked premium pricing.

Loop and Ester made the decision to incorporate a continuous polymerization line at the Infinite Loop™ India facility.

By integrating polymerization assets within the Infinite Loop™ India facility, we expect improved efficiency and lower operating costs with a minimal impact on overall project cost.

Loop and Ester anticipate that the total funding required for the India JV for the purposes of construction, development and operationalization of the project, including the initial working capital requirements, will be financed by a combination of debt and equity capital.

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

As of November 30, 2025 , Loop and Ester had each made total equity contributions of $2.91 million in cash to the India JV.

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

Subject to the terms of the relevant governing documents, Ester will be the exclusive producer of specialty polymers for the India JV, and Loop will be the exclusive seller and marketing agent of the India JV's products.

Ester and Loop are working in collaboration on all financing activities for the India JV pursuant to the terms of the agreement.

The India JV will also enter into (i) a technology license agreement with Loop (the “Loop Technology License Agreement”), (ii) a service agreement with Ester, and (iii) a sales and marketing agreement with Loop, each on terms mutually agreed upon by the parties.

Ester and Loop are each contributing 50% of the equity capital of the I

As of May 31, 2026 Loop and Ester had each made total equity contributions of $2.9 million in cash to the India JV.

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

The India JV will enter into (i) a technology license agreement with Loop (the “Loop Technology License Agreement”), (ii) a service agreement with Ester, and (iii) a sales and marketing agreement with Loop, each on terms mutually agreed upon by the parties.

Pursuant to the Loop Technology License Agreement, the India JV will be granted an exclusive, subject to certain exceptions, license to exploit the Infinite Loop™ Technology in India at a royalty rate set forth in the Loop Technology License Agreement.

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

This has resulted in Loop generating engineering services revenue of $0.33 million in the nine -month period ended November 30, 2025 .

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

The Company commenced performance under this engineering services agreement in November 2025.

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

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

Loop has entered into two engineering services agreements with the India JV to provide engineering services, underscoring the role of engineering services in Loop's commercialization strategy as an important and growing source of revenue.

The first engineering services agreem ent with the India JV had a value of $0.5 million and was fulfilled over fourth quarter of the fiscal year ended February 28, 2025 and the first quarter of the fiscal year ended February 28, 2026.

It resulted in $0.2 million of revenue in the first quarter ended May 31, 2026.

On June 22, 2025, Loop entered into its second engineering services agreement with the India JV to support it through construction as it moves towards breaking ground on the Infinite Loop™ India facility.

This agreement has a value of $1.5 million, and the Company commenced performance under it in November 2025, resulting in Loop generating $0.4 million of engineering services revenue in the year ended February 28, 2026 and $0.2 million in the quarter ended May 31, 2026.

Engineering services revenue is currently recognized only to the extent of costs incurred, the associated revenue and cost of sales are recognized in equal amounts, yielding no gross profit margin during the period.

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

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

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

On August 13, 2025, the India JV executed an agreement with a group of sellers for the acquisition of approximately 93 acres in Gujarat, India, for total consideration of approximately US $0.1 million (9.1 million Indian rupees) per acre.

The sellers are obligated to consolidate the parcels, deliver marketable title with requisite governmental approvals, and construct access road infrastructure.

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

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

Loop has signed a multi-year offtake agreement with Nike, Inc., which will serve as an anchor customer for the facility.

Loop has also signed an offtake agreement with Taro Plats S.p.A.

Loop has signed a multi-year offtake agreement with Nike, Inc.

("Nike") which will serve as an anchor customer for the facility.

Loop has also signed an offtake agreement with Taro Plast S.p.A.

to supply 100% recycled, virgin-quality Loop™ DMT.

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

The debt financing process is progressing, and term sheets have been received from international lenders.

The debt financing process is progressing, with term sheets having been received from international lenders who are moving into the technical due diligence stage of the process.

The front-end engineering design for the Infinite Loop™ India facility was completed by Tata Consulting Engineers.

Subsequent to November 30, 2025, the India JV awarded the detailed engineering contract for the Infinite Loop™ India facility to Toyo Engineering India Private Limited, covering the full scope of detailed design, procurement engineering, and technical documentation.

This represents the final engineering phase prior to construction.

The net total investment cost for the facility, including continuous polymerization, financing costs during construction and initial working capital requirements, is budgeted to be $176 million.

The project is anticipated for completion by the end of calendar 2027.

In December 2025, the India JV awarded the detailed engineering contract for the Infinite Loop™ India facility to Toyo Engineering India Private Limited, covering the full scope of detailed design, procurement engineering, and technical documentation.

The net total investment cost for the facility, including continuous polymerization, financing costs during construction and initial working capital requirements, is budgeted to be approximately $165 to $170 million, including approximately $13 million of a GST tax which will be refunded to the India JV as it generates international sales.

In May 2026, the India JV has signed a memorandum of understanding with the government of Gujarat providing formal alignment to support the development of Loop's first large-scale commercial manufacturing platform.

The agreement is expected to streamline permitting, infrastructure coordination, and administrative processes, reinforcing a clear path forward and enabling a phased expansion strategy at the site which is capable of supporting multiple facilities.

The Company expects the Infinite Loop™ India facility to be operational in calendar 2028.

Commercialization Strategy

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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.

(i) profits from the operation of commercial facilities, and (ii) royalties paid to Loop for licensing its technology and exclusive responsibility for sales and marketing.

We believe these income sources will support long-term financial sustainability and growth.

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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 €10.0 million with additional milestone payments to be received by Loop as the project advances.

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 RCE.

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

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

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

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

This has resulted in Loop generating engineering services revenue of $0.33 million in the nine -month period ended November 30, 2025 .

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

This strategy envisages that we would manufacture 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.

This has resulted in Loop generating engineering services revenue of $0.2 million in the three month period ended May 31, 2026 .

This strategy consists of the manufacture of plant modules in a low-cost country which can then be transported and assembled on site at global locations.

This would provide a more economical scalable approach for global expansion and would potentially provide an additional income stream for Loop as it coordinates the process.

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

Recent Developments

Market Development and Strategic Relationships

Letter of Intend with global apparel company

In June 2026, Loop executed a letter of intent for an initial multi-year offtake agreement with a major global apparel company.

This letter of intend forms the framework for an ongoing collaboration targeting up to 15,000 metric tons annually of Loop’s proprietary PET fiber-grade resin.

Offtake Agreement with Nike

In September 2025, we entered into a multi-year offtake agreement NIKE, Inc.

("Nike"), a global leader in athletic footwear and apparel.

Under the terms of this agreement, we will supply agreed minimum volumes of Tw ist™, our virgin-quality circular polyester resin made exclusively from textile waste.

In September 2025, we entered into a multi-year offtake agreement with Nike, a global leader in athletic footwear and apparel.

Under this agreement and subject to its terms, we will supply agreed minimum volumes of Twist™, our virgin-quality circular polyester resin made exclusively from textile waste, once the Company's planned Infinite Loop™ India Facility becomes operational.

Offtake Agreement with Taro Plast

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

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

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

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

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

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

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

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

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

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

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

At-The-Market Offering

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

As of November 30, 2025 , the Company had sold 510,435 shares of common stock under the Sales Agreement for aggregate gross proceeds of approximately $917,048 and net proceeds of approximately $888,923 , after deducting sales agent commissions and other offering expenses.

As of November 30, 2025 , the Company had approximately $14.1 million of capacity remaining under the ATM Equity Offering.

Human Capital

As of November 30, 2025 , we had 40 employees of which 16 work in research and development, 16 in engineering and operations, and 8 in administrative functions.

As of May 31, 2026 , we had 38 employees of which 17 work in research and development, 13 in engineering and operations, and 8 in administrative functions.

Results of Operations

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dollars unless otherwise specified.

The following table summarizes our operating results for the three-month periods ended November 30, 2025 and 2024, in thousands of U.S.

Three months ended November 30,

The following table summarizes our operating results for the three-month periods ended May 31, 2026 and 2025, in thousands of U.S.

Three months ended May 31,

favorable / (unfavorable)

Total revenues

Cost of services

Research and development

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Stock-based compensation

Machinery and equipment expenditures

Plant and laboratory operating expenses

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Total general and administrative

Impairment of assets

Loss on equity accounted investment

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Total expenses

Third Quarter Ended November 30, 2025

Revenues for the three-month period ended November 30, 2025 , increased $34 to $86 , as compared to $52 for the same period in 2024 .

The revenues of $86 for the three-month period ended November 30, 2025 resulted from engineering services provided to the India JV.

The revenues of $52 for the three-month period ended November 30, 2024 resulted from sales of Loop™ PET resin.

Research and Development

Research and development expense for the three-month period ended November 30, 2025 , decreased $410 to $967 , as compared to $1,377 for the same period in 2024 .

The decrease was primarily attributable to a $ 68 decrease in external engineering expenses for design work for our Infinite Loop™ manufacturing process, and a $ 117 decrease in employee compensation expenses.

General and administrative expenses

General and administrative expenses for the three-month period ended November 30, 2025 , decreased $648 to $1,500 , as compared to $2,148 for the same period in 2024 .

The decrease was primarily attributable to a $438 decrease in professional fees, which was mainly attributable to legal costs related to our partnerships with Reed Societe Generale Group and Ester incurred in the three-month period ended November 30, 2024 , and a $158 decrease in employee compensation.

Interest and other financial expenses

Interest and other financial expenses increased by $326 for the three-month period ended November 30, 2025 .

This increase is mainly attributable to the accrued PIK dividend on the Series B Convertible Preferred Stock issued to RCE recorded as an interest expense for $360 in the three-month period ended November 30, 2025 (2024 – nil).

The net loss for the three-month period ended November 30, 2025 , decreased $8,968 to $2,944 , as compared to $11,912 for the same period in 2024 .

This decrease was primarily due to the decrease of $410 in research and development expenses, a decrease of $648 in general and administrative expenses, and a decrease of $ 8,460 in the prior year quarter due to an impairment charge for machinery and equipment.

These decreases were partially offset by the $326 increase in interest and other financial expenses.

Nine Months Ended November 30, 2025

The following table summarizes our operating results for the nine -month periods ended November 30, 2025 and 2024 , in thousands of U.S.

Nine months ended November 30,

Total revenues

Research and development

Employee compensation

Machinery and equipment expenditures

Stock-based compensation

Plant and laboratory operating expenses

External engineering

Total research and development

General and administrative

Professional fees

Employee compensation

Stock-based compensation

Total general and administrative

Impairment of assets

Loss on equity accounted investment

Depreciation and amortization

Interest and other financial expenses

Interest income

Foreign exchange loss (gain)

Total expenses

Revenues for the nine -month period ended November 30, 2025 , increased $257 to $338 , as compared to $81 for the same period in 2024 .

The revenues for the nine -month period ended November 30, 2025 resulted from $330 in engineering fees and $8 from sales of Loop™ PET resin produced using monomers manufactured at the Terrebonne Facility.

The revenues of $81 for the nine -month period ended November 30, 2024 resulted from sales of Loop™ PET resin.

First Quarter Ended May 31, 2026

Revenues for the three month period ended May 31, 2026 , decreased $73 to $179 , as compared to $252 for the same period in 2025 .

The revenues of $179 for the three month period ended May 31, 2026 resulted from engineering services provided to the India JV.

The revenues of $8 for the three month period ended May 31, 2025 resulted from engineering services provided to the India JV for $244 and sales of Loop™ PET resin for $8.

Cost of Services

Cost of Services for the three month period ended May 31, 2026 increased $65 to $179 compared to $114 for the same period in 2026.

Research and Development

Research and development expense for the nine -month period ended November 30, 2025 , decreased $2,377 to $3,182 , as compared to $5,559 for the same period in 2024 .

The decrease was primarily attributable to a $1,283 decrease in external engineering expenses for design work for our Infinite Loop™ manufacturing process, and a $696 decrease in employee compensation expenses, partially offset by a $59 increase in stock-based compensation expenses.

Research and development expense for the three month period ended May 31, 2026 , decreased $297 to $962 , as compared to $1,259 for the same period in 2025 .

The decrease was primarily attributable to a $341 decrease in employee compensation expenses, a $63 decrease in other, mainly legal fees, a $49 decrease in plant and laboratory expenses, partially offset by a $146 increase in stock compensation.

General and administrative expenses

General and administrative expenses for the nine -month period ended November 30, 2025 , decreased $2,636 to $5,018 , as compared to $7,654 for the same period in 2024 .

The decrease was primarily attributable to a $1,728 decrease in professional fees, which was mainly due to legal costs related to our partnerships with Reed Societe Generale Group and Ester incurred in the nine -month period ended November 30, 2024 , a decrease of $385 in employee compensation expenses and a $150 decrease in stock-based compensation expense.

Loss on equity accounted investment

Loss on equity accounted investment increased by $410 for the nine -month period ended November 30, 2025 .

This loss relates to the Compa ny's 50% portion of the loss incurred by the India JV for the nine -month period ended November 30, 2025 , during which the India JV incurred preliminary project costs for the planned Infinite Loop™ facility in India, which are mainly engineering fees.

General and administrative expenses for the three month period ended May 31, 2026 , decreased $75 to $1,574 , as compared to $1,649 for the same period in 2025 .

The decrease was primarily attributable to a $298 decrease in insurance expenses, a $181 decrease in employee compensation, a $117 decrease in professional fees, partially offset by a $458 in crease in employee compensation and $63 increase in other.

Interest and other financial expenses

Interest and other financial expenses increased by $984 for the nine -month period ended November 30, 2025 .

This increase is mainly attributable to the accrued PIK dividend on the Series B Convertible Preferred Stock issued to RCE recorded as an interest expense for $1,041 in the nine -month period ended November 30, 2025 (2024 – nil).

The net loss for the nine -month period ended November 30, 2025 , decreased $12,345 to $9,595 , as compared to $21,940 for the same period in 2024 .

This decrease was primarily due to the decrease of $2,636 in general and administrative expenses, a decrease of $2,377 in research and development expenses, and a decrease of $ 8,460 in the prior year due to an impairment charge for machinery and equipment.

These decreases were partially offset by a $984 increase in interest and other financial expenses and the increase of $410 in loss on equity accounted investment.

GOING CONCERN AND CAPITAL RESOURCES

Interest and other financial expenses increased by $17 for the three-month period ended May 31, 2026 .

The net loss for the three month period ended May 31, 2026 , decreased $61 to $3,385 , as compared to $3,446 for the same period in 2025 .

This decrease was primarily due to the decrease of $297 in research and development expenses, a decrease of $75 in general and administrative expenses .

These decreases were partially offset by the decrease of $95 in interest income, increase of $65 in cost of services, $17 increase in interest and other financial expenses.

LIQUIDITY AND CAPITAL RESOURCES

All monetary amounts are in thousands of U.S.

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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 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.

Management has determined that current cash and cash equivalents on hand of $5,204, together with the $2,504 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 the date of issuance of these unaudited interim condensed consolidated financial statements.

Management has determined that current cash and cash equivalents o n hand as of May 31, 2026 of $1,063 , together with the $2,537 a vailable 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 the issuance date of these unaudited interim condensed consolidated financial statements.

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.

These unaudited interim condensed 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.

Sale and issuance of Series B CPS

On December 23, 2024 (the “Issuance Date”), the Company issued and sold 1,044,430 shares of Series B CPS at $10.00 per share to Reed Circular Economy (the “Holder”), an affiliate of Reed Societe Generale Group, for cash proceeds of $10,395 (€10,000).

The main features of the Series B CPS are as follows:

Automatic conversion of the stated value ($10,395 on the Issuance Date) on the fifth anniversary of the Issuance Date into shares of the Company's common stock at a conversion price of $4.75 per share;

Accrues a cumulative fixed annual PIK dividend at a rate of 13% of the stated value, which is added to the stated value of the Series B CPS on September 30 of each year;

Redeemable in cash at any time, starting after the third anniversary of the Issuance Date by the Company (issuer call option);

Redeemable in cash on the fifth anniversary of the Issuance Date at the option of the Holder (put feature);

Voting rights equal to the number of whole shares of the Company's common stock (rounded to the nearest whole share) into which the stated value of Series B CPS would be convertible on a given date;

and separate class voting rights on certain matters such as amendments to the Certificate of Designation or Articles of Incorporation that adversely affect the rights of the Series B CPS, as long as at least 50,000 shares of Series B CPS are outstanding.

The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the full text of the Certificate of Designation, which was filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on December 26, 2025.

Investissement Qu é bec financing facility

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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 under the Financing Facility after the second disbursement.

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 $36 of the principal amount was repayable in monthly installments in the fiscal year ended February 29, 2024, with the remainder of the principal amount being repayable in 72 monthly installments.

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 $72 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 60 monthly installments.

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%.

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 $301 for the fiscal year ending February 28, 2026 and $519 for the fiscal year ending February 28, 2027, with the remainder of the principal amount being repayable in 36 monthly installments.

As per the Third Financing Facility Amendment, total annual principal repayments in monthly installment s are of $599 for the fiscal year ending February 28, 2027 and $834 for the fiscal year ending February 28, 2028, 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%.

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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 $2,504 in aggregate principal amount.

The Credit Facility is secured by the Company's Terrebonne, Québec property and was initially subject to a minimum equity covenant, tested quarterly .

The Credit Facility allows for borrowings of up to $2,537 (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 November 30, 2025 , the $2,504 Credit Facility was available and undrawn.

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

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

At-the-Market Offering

During the three months ended November 30, 2025 , the Company issued and sold an aggregate of 394,077 shares of its common stock pursuant to its ATM Equity Offering program for aggregate gross proceeds of approximately $724 .

After deducting sales agent commissions and other offering expenses totaling approximately $22 , the Company received net proceeds of approximately $702 from such sales.

The shares were sold at prevailing market prices at the time of sale, with an average selling price of $1.84 per share.

The net proceeds from these equity transactions were used for general corporate purposes.

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

As at May 31, 2026 , the $2,537 Credit Facility was available and undrawn.

Flow of Funds

Summary of Cash Flows

A summary of cash flows for the nine months ended November 30, 2025 and 2024 was as follows, in thousands of U.S.

Nine Months Ended November 30,

A summary of cash flows for the three months ended May 31, 2026 and 2025 was as follows, in thousands of U.S.

Three Months Ended May 31,

Net cash used in operating activities

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Net Cash Used in Operating Activities

During the nine -month period ended November 30, 2025 , we used $7,372 in operations compared to $8,635 during the nine -month period ended November 30, 2024 .

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

During the three -month period ended May 31, 2026 , we used $1,229 in operations compared to $3,082 during the three month period ended May 31, 2025 .

As discussed above in the Results of Operations, the decrease was mainly due to a decrease in operating expenses in addition to decreased general and administrative expenses and revenues.

Net Cash Used in Investing Activities

During the nine months ended November 30, 2025 , we used $1,159 in investing activities compared to $86 during the nine -month period ended November 30, 2024 .

During the nine -month period ended November 30, 2025 , we made investments in intangible assets of $199 , as compared to $454 for the same period in 2024 , particularly to file patents for the Infinite Loop™ technology in the United States and around the world.

Additionally, we made investments of $960 in our joint venture with Ester during the nine -month period ended November 30, 2025 , as compared to $nil for the same period in 2024.

During the three months ended May 31, 2026 , we used $35 in investing activities compared to $115 during the three month period ended May 31, 2025 .

During the three -month period ended May 31, 2026 , we made investments in intangible assets of $35 , as compared to $115 for the same period in 2025 , particularly to file patents for the Infinite Loop™ technology in the United States and around the world.

Net Cash Provided by (Used in) Financing Activities

During the nine months ended November 30, 2025 , we repaid $215 of long-term debt and received net proceeds from our ATM Equity Offering of $889 .

During the nine months ended November 30, 2024 , we borrowed $2,372 under the Credit Facility and we repaid $60 of long-term debt.

During the three months ended May 31, 2026 , we repaid $0 of long-term debt.

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-Q

Item 2. Management’s Discussion and Analysis