Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
Loop Industries, Inc.
Three Months Ended
Index to the Unaudited Interim Condensed Consolidated Financial Statements
Contents
Page(s)
Condensed consolidated balance sheets as at May 31, 2026 (Unaudited) and February 28, 2026
F-2
Condensed consolidated statements of operations and comprehensive loss for the three months ended May 31, 2026 and 2025 (Unaudited)
F-3
Condensed consolidated statements of changes in stockholders ' deficit for the three months ended May 31, 2026 and 2025 (Unaudited)
F-4
Condensed consolidated statements of cash flows for the three months ended May 31, 2026 and 2025 (Unaudited)
F-5
Notes to the condensed consolidated financial statements (Unaudited)
F-6
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Table of Contents
Loop Industries, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands of U.S. dollars, except per share data)
As at
May 31,
February 28,
2026
2026
Assets
Current assets
Cash and cash equivalents
$ 1,063 $ 2,356
Accounts receivable and other (Note 3)
699 755
Prepaid expenses (Note 4)
395 495
Total current assets
2,157 3,606
Equity method investments (Note 9)
1,159 1,478
Property, plant and equipment, net (Note 5)
1,657 1,699
Intangible assets, net (Note 6)
1,730 1,776
Total assets
$ 6,703 $ 8,559
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable and accrued liabilities (Note 8)
$ 2,038 $ 1,916
Unearned revenue
323 234
Current portion of long-term debt (Note 11)
807 605
Total current liabilities
3,168 2,755
Due to customer
918 900
Series B Convertible Preferred stock (Note 10)
12,429 12,054
Long-term debt (Note 11)
2,206 2,430
Total liabilities
18,721 18,139
Stockholders’ Deficit
Common stock par value $ 0.0001 ; 250,000,000 shares authorized; 48,380,371 shares issued and outstanding (February 28, 2026 – 48,337,555 ) (Note 12)
5 5
Additional paid-in capital
196,874 195,934
Accumulated deficit
( 207,710 ) ( 204,326 )
Accumulated other comprehensive loss
( 1,187 ) ( 1,193 )
Total stockholders’ deficit
( 12,018 ) ( 9,580 )
Total liabilities and stockholders’ deficit
$ 6,703 $ 8,559
Going Concern (Note 1)
See accompanying notes to the condensed consolidated financial statements .
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Loop Industries, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(in thousands of U.S. dollars, except per share data)
Three Months Ended
May 31, 2026
May 31, 2025
Revenues
Products
$
-
$
8
Services
179
244
Total revenues
179
252
Cost of services
Cost of services
179
114
Expenses
Research and development (Note 13)
962
1,259
General and administrative (Note 14)
1,574
1,649
Depreciation and amortization (Notes 5 and 6)
84
100
Total expenses
2,620
3,008
Other loss
Loss on equity accounted investments (Note 9)
319
302
Interest and other financial expenses
436
419
Interest income
( 5
)
( 100
)
Foreign exchange loss (gain)
15
( 45
)
Total other loss
765
576
Net loss
( 3,385
)
( 3,446
)
Other comprehensive loss
Foreign currency translation adjustment
6
( 19
)
Comprehensive loss
$
( 3,379
)
$
( 3,465
)
Net loss per share
Basic and diluted
$
( 0.07
)
$
( 0.07
)
Weighted average common shares outstanding
Basic and diluted
48,363,463
47,664,134
Going Concern (Note 1)
See accompanying notes to the condensed consolidated financial statements.
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Loop Industries, Inc.
Condensed Consolidated Statement of Changes in Stockholders' Deficit
(Unaudited)
(in thousands of U.S. dollars, except for share data)
Three months ended May 31, 2026
Common stock
Preferred stock
Additional
Accumulated
par value $0.0001
par value $0.0001
Additional
Paid-in
Other
Total
Number of
Number of
Paid-in
Capital–
Accumulated
Comprehensive
Stockholders’
Shares
Amount
Shares
Amount
Capital
Warrants
Deficit
Loss
Deficit
Balance, February 28, 2026
48,337,555
$
5
1
$
-
$
195,934
$
-
$
( 204,326
)
$
( 1,193
)
$
( 9,580
)
Issuance of shares upon the vesting of restricted stock units (Note 15)
42,816
-
-
-
-
-
-
-
-
Issuance of shares upon the exercise of stock options (Note 15)
-
-
-
-
-
-
-
Stock options issued for services (Note 15)
-
-
-
-
813
-
-
-
813
Restricted stock units issued for services (Note 15)
-
-
-
-
127
-
-
-
127
Share issuance costs
-
-
-
-
-
-
-
-
-
Foreign currency translation
-
-
-
-
-
-
-
6
6
Net loss
-
-
-
-
-
-
( 3,385
)
-
( 3,385
)
Balance, May 31, 2026
48,380,371
$
5
1
$
-
$
196,874
$
-
$
( 207,710
)
$
( 1,187
)
$
( 12,018
)
(in thousands of U.S. dollars, except for share data)
Three months ended May 31, 2025
Common stock
Preferred stock
Additional
Accumulated
par value $0.0001
par value $0.0001
Additional
Paid-in
Other
Total
Number of
Number of
Paid-in
Capital–
Accumulated
Comprehensive
Stockholders’
Shares
Amount
Shares
Amount
Capital
Warrants
Deficit
Loss
Deficit
Balance, February 28, 2025
47,620,263
$
5
1
$
-
$
193,529
$
-
$
( 192,027
)
$
( 1,140
)
$
367
Issuance of shares upon the vesting of restricted stock units (Note 15)
98,087
-
-
-
-
-
-
-
-
Stock options issued for services (Note 15)
-
-
-
-
486
-
-
-
486
Restricted stock units issued for services (Note 15)
-
-
-
-
( 111
)
-
-
-
( 111
)
Foreign currency translation
-
-
-
-
-
-
-
( 19
)
( 19
)
Net loss
-
-
-
-
-
-
( 3,446
)
-
( 3,446
)
Balance, May 31, 2025
47,718,350
$
5
1
$
-
$
193,904
$
-
$
( 195,473
)
$
( 1,159
)
$
( 2,723
)
Going Concern (Note 1)
See accompanying notes to the condensed consolidated financial statements.
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Loop Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands of U.S. dollars)
Three Months Ended May 31,
2026
2025
Cash Flows from Operating Activities
Net loss
$
( 3,385
)
$
( 3,446
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization (Notes 5 and 6)
84
100
Stock-based compensation (Note 15)
979
375
Accrued interest and other financing costs (Note 11)
404
369
Loss on equity method investments (Note 9)
319
302
Changes in operating assets and liabilities:
Accounts receivable and other (Note 3)
56
( 297
)
Prepaid expenses (Note 4)
100
( 343
)
Accounts payable and accrued liabilities (Note 8)
123
( 141
)
Unearned revenue
90
-
Net cash used in operating activities
( 1,229
)
( 3,082
)
Cash Flows from Investing Activities
Additions to intangible assets (Note 6)
( 35
)
( 115
)
Net cash used in investing activities
( 35
)
( 115
)
Cash Flows from Financing Activities
Repayment of long-term debt (Note 11)
-
( 55
)
Net cash provided by financing activities
-
( 55
)
Effect of exchange rate changes
( 29
)
27
Net decrease in cash and cash equivalents
( 1,293
)
( 3,225
)
Cash and cash equivalents, beginning of period
2,356
12,973
Cash and cash equivalents, end of period
$
1,063
$
9,748
Supplemental Disclosure of Cash Flow Information:
Income tax paid
$
-
$
-
Interest paid
$
35
$
50
Interest received
$
5
$
100
Going Concern (Note 1)
See accompanying notes to the condensed consolidated financial statements.
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Loop Industries, Inc.
Three Months Ended May 31, 2026 and 2025
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. The Company, Basis of Presentation and Going Concern
The Company
Loop Industries, Inc. (the “Company,” “Loop,” “we,” or “our”) is a technology company that owns patented and proprietary technology that depolymerizes no and low-value waste polyethylene terephthalate (“PET”) plastic and polyester fiber to its base building blocks (monomers). The monomers are filtered, purified and polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber. The Company is currently in the pre-commercialization stage with limited revenues.
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures included in these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10 -K for the fiscal year ended February 28, 2026, filed with the SEC on May 27, 2026. The unaudited interim condensed consolidated financial statements comprise the consolidated financial position and results of operations of Loop Industries, Inc. and its subsidiaries, Loop Innovations, LLC and Loop Canada Inc. All subsidiaries are, either directly or indirectly, wholly owned subsidiaries of Loop Industries, Inc. (collectively, the “Company”). The Company owns, through Loop Innovations, LLC, a 50 % interest in a joint venture, Indorama Loop Technologies, LLC, which is accounted for under the equity method. The Company also owns a 50 % interest in a joint venture, Ester Loop Infinite Technologies Private Limited ("India JV"), which is accounted for under the equity method. The Company owns a 10 % equity interest in Infinite Loop Europe SAS ("Infinite Loop Europe"), accounted for under the equity method, over which it has significant influence but not joint control; the remaining 90 % is owned by Reed Circular Economy ("RCE").
Intercompany balances and transactions are eliminated on consolidation. The condensed consolidated balance sheet as of February 28, 2026, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by US GAAP on an annual reporting basis. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods. The results for the three month period ended May 31, 2026 are not necessarily indicative of the results to be expected for any subsequent quarter, for the fiscal year ending February 28, 2027, or for any other period.
All monetary amounts in these notes to the condensed consolidated financial statements are in thousands of U.S. dollars unless otherwise specified, except for per share data.
Going Concern
These unaudited interim condensed 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 unaudited interim condensed 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 unaudited interim condensed 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.
Management has determined that current cash and cash equivalents on hand as of May 31, 2026 of $ 1,063 , together with the $ 2,537 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. 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.
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2. Summary of Significant Accounting Policies
Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include the going concern assessment, estimates for depreciable lives of property, plant and equipment and intangible assets, recoverability of property, plant and equipment, recoverability of equity accounted investments, assumptions made in calculating the fair value of stock-based compensation and other equity instruments, and the assessment of performance conditions for stock-based compensation awards.
Net loss per share
The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share . Basic loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the year. The Company includes common stock issuable in its calculation. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive.
For the three months ended May 31, 2026 and 2025 , the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at May 31, 2026 , the potentially dilutive securities consisted of 7 ,325,317 outstanding stock options ( 2025 – 5 ,573,138 ), 4,218,696 outstanding restricted stock units ( 2025 – 3 ,981,121 ).
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Recently adopted accounting pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2024 - 04, Debt—Debt with Conversion and Other Options (Subtopic 470 - 20 ): Induced Conversions of Convertible Debt Instruments, which clarifies the accounting for settlements of convertible debt instruments that occur on terms different from the original contractual conversion terms. The amendments introduce a "preexisting contract approach," requiring that, to qualify for induced conversion accounting, the inducement offer must preserve the form of consideration and provide an amount of consideration that is no less than what was issuable under the original conversion privileges. This guidance applies to convertible debt instruments with cash conversion features and to instruments that are not currently convertible but had substantive conversion features at issuance and at the time the inducement offer is accepted. The updated standard is effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted for entities that have adopted the amendments in ASU 2020 - 06. The updated standard will be effective for the first quarter ending May 31, 2026. The updated standard is potentially applicable to the future settlement or conversion of its Series B Convertible Preferred Stock (“Series B CPS”), which is classified as a liability and contains a substantive conversion feature (note 10 ). There has been no impact of adopting the standard in the condensed consolidated financial statements.
Recently issued accounting pronouncements not yet adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2024 - 03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses, which requires public business entities to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements. The updated standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. Management is currently evaluating the impact that the updated standard will have on our financial statement disclosures.
In January 2025, the Financial Accou nting Standards Board (FASB) issued ASU 2025 - 01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Clarifying the Effective Date. This update clarifies the effective date of ASU 2024 - 03, which requires public business entities to provide disaggregated disclosures of certain income statement expenses. Specifically, ASU 2025 - 01 confirms that the guidance in ASU 2024 - 03 is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027. E arly adoption is permitted. Management is currently evaluating the impact that the updated standard will have on our consolidated financial statement disclosures.
3. Accounts Receivable and Other
Accounts Receivable and Other as at May 31, 2026 and February 28, 2026 are comprised of the following:
May 31, 2026
February 28, 2026
Accounts receivable from services to the India JV
$ 359 $ 401
Research and development tax credits
109 88
Sales tax
63 66
Other receivables
168 200
$ 699 $ 755
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4. Prepaid Expenses
Prepaid expenses as at May 31, 2026 and February 28, 2026 were as follows:
May 31, 2026
February 28, 2026
Insurance
$ 213 $ 286
Utilities
32 32
Software
35 55
Other
115 122
$ 395 $ 495
5. Property, Plant and Equipment, Net
As at May 31, 2026
Accumulated
depreciation,
write-down
Cost
and impairment
Net book value
Machinery and equipment
$ 8,460 $ ( 8,460 ) $ -
Building
1,797 ( 500 ) 1,297
Land
222 - 222
Building and Land Improvements
1,822 ( 1,766 ) 56
Office equipment and furniture
271 ( 189 ) 82
$ 12,572 $ ( 10,915 ) $ 1,657
As at February 28, 2026
Accumulated
depreciation,
write-down
Cost
and impairment
Net book value
Machinery and equipment
$ 8,460 $ ( 8,460 ) $ -
Building
1,817 ( 490 ) 1,327
Land
225 - 225
Building and Land Improvements
1,843 ( 1,780 ) 63
Office equipment and furniture
274 ( 190 ) 84
$ 12,619 $ ( 10,920 ) $ 1,699
Depreciation expense for the three months ended May 31, 2026 amounted to $ 23 , ( 2025 – $ 35 ).
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6. Intangible Assets, Net
Intangible assets as at May 31, 2026 and February 28, 2026 were $ 1,730 and $ 1,776 , respectively.
During the three month periods ended May 31, 2026 and 2025 , we made additions relating to patent application costs to intangible assets of $ 35 and $ 115 , respectively.
Amortization expense for the three months ended May 31, 2026 amo unted to $ 61 , ( 2025 – $ 66 ).
7. Fair Value of Financial Instruments
The following tables disclose the estimated fair value of the Company's financial liabilities as at May 31, 2026 and February 28, 2026 :
Fair Value at May 31, 2026
Carrying
Level in the
Amount
Fair Value
hierarchy
Financial liabilities accounted for at amortized cost:
Series B Convertible Preferred stock (Note 10)
$ 12,429 $ 12,455 Level 2
Long-term debt (Note 11)
$ 3,012 $ 2,725 Level 2
Due to customer
$ 918 $ 915 Level 2
Fair Value at February 28, 2026
Carrying
Level in the
Amount
Fair Value
hierarchy
Financial liabilities accounted for at amortized cost:
Series B Convertible Preferred stock (Note 10)
$ 12,054 $ 11,770 Level 2
Long-term debt (Note 11)
$ 3,035 $ 2,873 Level 2
Due to customer
$ 900 $ 897 Level 2
The fair value of cash, accounts receivable and other, and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturity.
8. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities as at May 31, 2026 and February 28, 2026 were as follows:
May 31, 2026
February 28, 2026
Trade accounts payable
$ 949 $ 729
Accrued employee compensation
302 362
Accrued engineering fees
527 460
Accrued professional fees
133 250
Other accrued liabilities
127 115
$ 2,038 $ 1,916
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9. Equity Method Investments
Joint Venture with Ester
On May 1, 2024, the Company entered into an agreement with Ester Industries Ltd. (“Ester”), a manufacturer of polyester films and specialty polymers in India, to form a 50/50 joint venture based in India (“India JV”). The purpose of the India JV is to build and operate an Infinite Loop™ manufacturing facility in India which will produce lower carbon footprint rDMT, rMEG and specialty polymers, using the Infinite Loop™ Technology. During the year ended February 28, 2025, Ester Loop Infinite Technologies Private Limited (“ELITe”) was incorporated as the India JV.
ELITe meets the accounting definition of a joint venture where neither party has control of the joint venture entity and both parties have joint control over the decision-making process. As such, the Company uses the equity method of accounting to account for its share of the investment in ELITe.
During the three -month period ended May 31, 2026, Loop and Ester made no contribution ( 2025 – nil ) to ELITe. During the three -months ended May 31, 2026, ELITe incurred losses of $ 639 ( 2025 – $ 604 ), resulting in the Company recording its share of the loss on equity accounted investment of $ 319 ( 2025 – $ 302 ). As at May 31, 2026, and February 28, 2026 the carrying value of the Company's investment in ELITe was $ 1,145 and $ 1,465 , respectively.
The summarized financial information for ELITe is presented below, on a quarterly lag (in thousands).
Balance sheet
March 31, 2026
Asset
$ 3,475
Liabilities
887
Equity
$ 2,588
Results of Operations
Three months ended March 31, 2026
Revenues
$ -
Pre-tax loss
( 686 )
Net loss
( 686 )
10. Series B Convertible Preferred Stock
The balance of Series B Convertible Preferred Stock as at May 31, 2026 and February 28, 2026 was as follows:
May 31, 2026
February 28, 2026
Stated value
$ 11,439 $ 11,439
Accrued PIK dividends
990 615
Series B Convertible Preferred Stock
$ 12,429 $ 12,054
During the three months ended May 31, 2026 , the Company recorded PIK dividends of $ 375 , ( 2025 – $ 340 ), which were recorded in “Interest and other financial expenses” in our Consolidated Statements of Operations and Comprehensive Loss.
11. Long ‑ Term Debt
Long-term debt as of May 31, 2026 and February 28, 2026 , was comprised of the following:
May 31, 2026
February 28, 2026
Investissement Québec financing facility:
Principal amount
$ 2,994 $ 3,027
Unamortized discount
( 89 ) ( 101 )
Accrued interest
108 109
Total Investissement Québec financing facility
3,013 3,035
Less: current portion of long-term debt
( 807 ) ( 605 )
Long-term debt, net of current portion
$ 2,206 $ 2,430
Investissement Qu é bec financing facility
The Company recorded interest expense on the Investissement Québec loan for the three months ended May 31, 2026 in the amount of $ 33 , respectively ( 2025 – $ 36 ) and an accretion expense of $ 11 , respectively ( 2025 – $ 11 ). During the three month period ended May 31, 2026 , the Company made repayments of nil ( 2025 – $ 55 ) on the Investissement Québec loan.
Total repayments due on the Company's indebtedness over the next five years are as follows:
Years ending
Amount
February 28, 2027
599
February 29, 2028
834
February 28, 2029
834
February 28, 2030
834
Total
$ 3,101
Credit facility from a Canadian bank
On July 26, 2022, Loop Canada, Inc., a wholly-owned subsidiary of the Company (the "Borrower"), entered into an Operating Credit Facility (the “Credit Facility”) with a Canadian bank. The Credit Facility allows for borrowings of up to CDN $ 3,500 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.
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, 2026 of $ 12,054 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.
All borrowings under the Credit Facility bear interest at an annual rate equal to the bank's Canadian prime rate plus 1.0 %. As at May 31, 2026 , the $ 2,537 (CDN $ 3,500 ) Credit Facility was available and undrawn.
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12. Stockholders' Deficit
Common Stock
For the period ended May 31, 2026
Number of shares
Amount
Balance, February 28, 2026
48,337,555 $ 5
Issuance of shares upon settlement of restricted stock units
42,816 -
Issuance of shares upon exercise of stock options
- -
Issuance of shares for cash
- -
Balance, May 31, 2026
48,380,371 $ 5
For the period ended May 31, 2025
Number of shares
Amount
Balance, February 28, 2025
47,620,263 $ 5
Issuance of shares upon settlement of restricted stock units
98,087 -
Balance, May 31, 2025
47,718,350 $ 5
During the three months ended May 31, 2026 , the Company recorded the following common stock transactions:
(i) The Company issued 42,816 shares of common stock to settle restricted stock units that vested in the period.
During the three months ended May 31, 2025 , the Company recorded the following common stock transaction:
(i)
The Company issued 98,087 shares of common stock to settle restricted stock units that vested in the period.
13. Research and Development Expenses
Research and development expenses for the three month periods ended May 31, 2026 and 2025 were as follows:
May 31, 2026
May 31, 2025
Employee compensation
$ 706 $ 901
External engineering
$ 9 3
Plant and laboratory operating expenses
$ 182 231
Other
65 124
$ 962 $ 1,259
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14. General and Administrative Expenses
General and administrative expenses for the three month periods ended May 31, 2026 and 2025 were as follows:
May 31, 2026
May 31, 2025
Employee compensation
$ 909 $ 632
Insurance
155 453
Professional fees
244 361
Other
266 203
$ 1,574 $ 1,649
15. Share-based Payments
Stock Options
The following table summarizes the continuity of the Company's stock options during the three month periods ended May 31, 2026 and 2025 :
2026
2025
Number of
Weighted average
Number of
Weighted average
stock options
exercise price
stock options
exercise price
Outstanding, beginning of period
6,243,138 $ 2.96 2,771,216 $ 5.25
Granted
1,082,179 1.44 2,801,922 1.16
Exercised
- - - -
Forfeited
- - - -
Expired
- - - -
Outstanding, end of period
7,325,317 $ 5.59 5,573,138 $ 3.19
Exercisable, end of period
4,247,043 $ 3.74 2,711,727 $ 4.98
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The Company applies the fair value method of accounting for stock-based compensation awards granted. Fair value is calculated based on a Black-Scholes option pricing model. The principal components of the pricing model for the stock options granted in the three month period ended May 31, 2026 and 2025 were as follows:
2026
2025
Exercise price
$ 1.44 $ 1.16
Risk-free interest rate
3.82% - 3.89% 3.68% - 3.72%
Expected dividend yield
0 % 0 %
Expected volatility
82.12% - 84.31% 81% - 82%
Expected life (years)
3.5 - 5.0 years 3.5 - 5.0 years
The weighted-average grant-date fair value of options granted during the three month periods ended May 31, 2026 and 2025 was $ 0.94 and $ 0.63 respectively.
A summary of the Company’s nonvested shares as of May 31, 2026 , and changes during the three month period ended May 31, 2026 were as follows:
2026
Number of
Weighted average
stock options
exercise price
Nonvested, beginning of period
3,461,411 $ 0.63
Granted
400,000 0.94
Exercised
- -
Forfeited
- -
Vested
( 783,137 ) 0.75
Nonvested, end of period
3,078,274 $ 0.83
During the three month periods ended May 31, 2026 and 2025 , stock-based compensation expense attributable to stock options amounted to $ 852 and $ 486 , respectively.
Restricted Stock Units
The following table summarizes the continuity of the restricted stock units during the three month periods ended May 31, 2026 and 2025 :
2026
2025
Weighted average
Weighted average
Number of units
fair value price
Number of units
fair value price
Outstanding, beginning of period
4,261,512 $ 6.35 4,466,958 $ 6.32
Granted
- - - -
Settled
( 42,816 ) 8.06 ( 98,087 ) 3.41
Forfeited
- - ( 387,750 ) 2.87
Outstanding, end of period
4,218,696 $ 6.35 3,981,121 $ 6.73
Outstanding vested, end of period
1,833,531 $ 5.71 1,689,255 $ 6.02
The Company applies the fair value method of accounting for awards granted through the issuance of restricted stock units. Fair value is calculated based on the intrinsic value at grant date multiplied by the number of restricted stock unit awards granted.
During the three month periods ended May 31, 2026 and 2025 , stock-based compensation attributable to RSUs amounted to $ 127 and $( 111 ), respectively.
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Stock-Based Compensation Expense
During the three month periods ended May 31, 2026 and 2025 , stock-based compensation included in research and development expenses amounted to $ 458 and $ 312 , respectively, and in general and administrative expenses amounted to $ 521 and $ 63 , respectively.
16. Equity Incentive Plan
On July 6, 2017, the Company adopted the 2017 Equity Incentive Plan (the “Plan”). The Plan permits the granting of warrants, stock options, stock appreciation rights and restricted stock units to employees, directors and consultants of the Company. A total of 3,000,000 shares of common stock were initially reserved for issuance under the Plan at July 6, 2017, with annual automatic share reserve increases, as defined in the Plan, amounting to the lesser of (i) 1,500,000 shares, (ii) 5 % of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the Administrator of the Plan, effective March 1, 2018. On March 1, 2026, the share reserve was increased by 1,500,000 shares ( 2025 – 1,500,000 ). The Plan is administered by the Board of Directors who designates eligible participants to be included under the Plan, the number of awards g ranted, the share price pursuant to the awards and the vesting conditions and period. The awards, when granted, will have an exercise price of no less than the estimated fair value of shares at the date of grant and a life not exceeding 10 years from the grant date.
The following table summarizes the continuity of the units that were authorized for issuance under the Plan as at and during the three month periods ended May 31, 2026 and 2025 :
2026
2025
Number of units*
Number of units*
Authorized, beginning of period
186,279 2,159,612
Automatic share reserve increase
1,500,000 1,500,000
Units granted
( 1,082,179 ) ( 2,801,922 )
Units forfeited
- 387,750
Units expired
- -
Authorized, end of period
604,100 1,245,440
*The use of the term “units” in the table above describes a combination of stock options and RSUs.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.