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Item 1. Business

2023-05-18 compared with 2022-05-27 · 212 added, 192 removed, 72 unchanged (85% of the section changed)

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Loop owns patented and proprietary technology that depolymerizes no and low-value waste PET plastic and polyester fiber, including plastic bottles and packaging, carpets and textiles of any color, transparency or condition and even ocean plastics that have been degraded by the sun and salt, to its base building blocks (monomers).

The monomers are filtered, purified and polymerized to create virgin-quality Loop ™ branded PET resin and polyester fiber suitable for use in food-grade packaging, thus enabling our customers to meet their sustainability objectives.

Loop Industries is contributing to the global movement towards a circular economy by preventing plastic waste and recovering waste plastic for a more sustainable future for all.

The Company is in the planning stages of pursuing the construction of Infinite Loop™ commercial scale facilities in Québec, Canada, and with strategic partners in Europe and South Korea.

Additionally, the Company has a joint venture to pursue the retrofitting of existing fossil fuel PET polymerization facilities with its recycling technology.

Industry Background and Market Opportunity

The global annual market demand for PET plastic and polyester fiber is expected to exceed $160 billion by 2022 as projected in the 2018 IHS Polymer Market Report.

We believe plastic pollution and climate change continue to be the most persistently covered environmental issues by media and local and global environmental non-governmental organizations.

Some of the main concerns associated with PET are the greenhouse gas (“GHG”) emissions associated with its production from non-renewable hydrocarbons and the length of time it persists in landfills and the natural environment.

There is an increasing demand for action to address the global plastic crisis, as evidenced by the March 2022 endorsement by 175 nations of a historic resolution at the UN Environmental Assembly to end plastic pollution and forge an international legally binding agreement by the end of 2024.

In the last few years, governments in North America, Europe and Asia have been enacting and proposing laws and regulations mandating the use of minimum recycled content in packaging underlying the strength of this issue in the marketplace.

Consumer brands are seeking a solution to their plastic challenge, and they are taking action.

In recent years we have seen major brands make significant commitments to close the loop on their plastic packaging by transitioning their packaging to recyclable materials and by incorporating more recycled content into their packaging.

Global consumer packaged goods companies (“CPG companies”), apparel manufacturers, and retail brands have announced significant public commitments and targets to make the transition to a circular plastic economy, namely:

In January 2018, Danone’s evian® brand bottled spring water committed to a 100% recycled content package by 2025;

In 2018, Coca-Cola committed to an average recycled content of 50% across its packaging by 2030;

In September 2021, PepsiCo stated 11 European markets are moving key Pepsi-branded products to 100% rPET bottles by 2022, and in the U.S., all Pepsi-branded products will be converted to 100% rPET bottles by 2030.;

In 2020, L’OCCITANE en Provence committed to 100% recycled content plastic in their bottles by 2025;

In 2020, L’Oréal Group committed to using 100% recycled or biobased plastic in their packaging by 2030;

By 2025, Unilever targets increasing the use of post-consumer recycled plastic material in their packaging to at least 25%;

Colgate-Palmolive states a 2025 goal of using at least 25% post-consumer recycled plastic in packaging;

Nestlé aims to increase the amount of recycled PET used across their brands globally to 50% by 2025;

Adidas Group aims to replace all virgin polyester with recycled polyester in all adidas and Reebok products where a solution exists by 2024;

H&M is aiming to ensure that at least 25% of the plastic they use is from post-consumer recycled materials;

Walmart has an objective to use at least 17% post-consumer recycled content globally in their private brand plastic packaging and is taking action to eliminate problematic or unnecessary plastic packaging and move from single-use towards reuse models where relevant by 2025;

Ikea’s ambition is, that by 2030, all plastic used in their products will be based on renewable or recycled material;

Puma is aiming to increase the amount of recycled materials in their apparel and accessories products and by 2025, for 75% of the polyester used in Puma products will be from recycled sources;

By 2025, Lululemon aims to achieve at least 75% sustainable materials for their products, including fibres that are recycled, renewable, regenerative, sourced responsibly and are manufactured using low-resource processes;

Nike has set a 2025 target of diverting 100% of its waste from landfills with at least 80% recycled back into their products and goods.

There is a growing regulatory and policy environment to encourage a reduction in the production of virgin fossil fuel-based plastic and for minimum recycled content in packaging imposed by various governments:

In North America:

Canada has announced a zero-plastic waste by 2030 goal and is targeting for all plastic packaging to contain 50% recycled content by 2030.

A California law enacted on September 24, 2020 requires that plastic bottles contain at least 15% post-consumer resin by 2022, 25% by 2025 and 50% by 2030.

As of January 2021, the European Union introduced a new tax of €800/ton on non-recycled plastic packaging based on the amount of plastic packaging placed on each member state’s market.

Effective April 2022, a new £200/ton tax will apply in the UK to plastic packaging produced or imported into the UK that does not contain at least 30% recycled plastic.

Italy is introducing a tax of €450 per ton on virgin plastic used in manufacture or importation of single use plastic which is expected in January 2023.

Spain has also proposed a tax of €450 per ton on non-reusable plastic packaging with an anticipated start date of January 2023.

France has a stated goals of 100% plastics recycled by 2025 and 77% of beverage bottles to be collected.

South Korea targets reducing plastic waste by 20% and increase recycling rates from 54% to 70% by 2025 and 30% renewable plastic by 2030.

The growing regulatory environment combined with global consumer goods companies, apparel manufacturers, and retail brand commitments for 2025 and 2030 are expected to increase the demand for recycled PET (“rPET”) plastic further.

Mechanical recycled PET plastic is produced principally through the conversion of bales of PET bottles.

The materials have been collected and transported to a materials recovery facility (“MRF”), where they are sorted from other materials, baled, and sent to specific PET recycling facilities.

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, thus enabling our customers to meet their sustainability objectives.

Loop is contributing to the global movement towards a circular economy by reducing and recovering plastic waste for a sustainable future.

The Company is presently in the planning stages of pursuing the construction of Infinite Loop™ commercial scale facilities.

Loop is currently engaged in discussions to secure financing for its investments in the various planned manufacturing facilities and the sequencing of the manufacturing facilities will be determined in conjunction with the outcome of the Company’s financing discussions and discussions with our partners.

Industry Background

We believe Loop's depolymerization technology offers a superior solution to mechanical recycling by enabling the use of a wider variety of PET feedstock, including complex and degraded plastics as well as polyester fiber, to produce virgin quality rPET with no degradation through continued recycling.

Mechanically recycled PET plastic is produced principally through the conversion of bales of PET bottles.

The materials have been collected and transported to a materials recovery facility, where they are sorted from other materials, baled, and sent to specific PET recycling facilities.

The bales are broken and sorted to remove any non-PET materials.

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Clean PET flake is then further processed depending on its intended end market.

It may become more highly refined PET pellet for new bottles or extruded into PET sheet for clamshells, trays, and cups.

It may become more highly refined PET pellets for new bottles or extruded into PET sheet for clamshells, trays, and cups.

Recycled PET is also spun into fiber for carpet, clothing, fiber fill, or other materials.

We believe mechanically recycled PET has a number of challenges in meeting the quality specifications and growing volume requirements implied by commitments from major brands, mainly due to the cost and variety of acceptable PET feedstock.

We believe mechanically recycled PET faces a number of challenges in meeting the quality specifications and growing volume requirements implied by commitments from major brands, mainly due to the cost and variety of acceptable PET feedstock.

Some mechanical recycling processes involve remelting the PET flake which reduces the quality of the rPET output each time it is recycled relative to the specifications of virgin PET produced from fossil fuels.

Each time the PET plastic is mechanically recycled, its quality and clarity are reduced.

Each time PET plastic is mechanically recycled, its quality and clarity are reduced.

Therefore, mechanically recycled PET may need to be mixed with virgin PET from fossil fuels to maintain quality.

Lower quality mechanically recycled PET is often downcycled to alternate uses such as polyester fibers which may be dyed and used in carpets or clothing.

Additionally, mechanically recycled PET manufactured for use in clear bottles or food containers requires predominantly clear and clean PET flakes separated from waste bales, and cannot accommodate darkly colored PET flakes, lower quality fiber feedstock, or materially contaminated feedstock, which may be cheaper.

Additionally, mechanically recycled PET manufactured for use in clear bottles or food containers requires predominantly clear and clean PET flakes separated from waste bales, and cannot accommodate colored or opaque PET flakes, lower quality fiber feedstock, or materially contaminated feedstock, which may be cheaper.

Chemical recycling is a process in which plastics are broken down into their constituent molecules through chemical reactions, rather than being physically melted down and reprocessed as in mechanical recycling.

This approach, which we utilize, has several advantages over mechanical recycling, which can have limitations due to the complexity and diversity of plastics.

One of the main limitations of mechanical recycling is that it is difficult to recycle plastics that have been contaminated or degraded.

For example, if a plastic container has been exposed to heat or sunlight, it may become brittle and prone to breaking during the recycling process.

Another limitation of mechanical recycling is that it is difficult to recycle certain types of plastics, such as multi-layered or composite plastics.

These plastics are often used in food packaging or other products that require specialized properties like barrier protection or insulation.

Chemical recycling, however, can break down these degraded or complex plastics into their constituent molecules, which can then be purified and used to create new products.

Chemical recycling has the potential to create a closed-loop system for plastic waste, whereby plastics can be recycled an infinite number of times without degrading the quality of the material.

This is because the constituent molecules can be broken down and reassembled without losing their original properties, which can reduce the need for new plastics to be produced.

We believe chemical recycling offers a promising solution to the limitations of mechanical recycling by enabling the recirculation of more diverse and complex plastics, reducing waste and pollution, and creating a closed-loop system for plastic waste.

Our chemical recycling technology breaks down waste PET into DMT and MEG through depolymerization.

The monomers are purified and then recombined into virgin quality PET plastic and polyester fiber.

We use low value PET plastic and polyester fiber waste as feedstock.

Our technology can process PET plastic bottles and packaging of any color, transparency or condition, carpet, clothing and other polyester textiles that may contain colors, dyes or additives, and even PET plastics that have been recovered from the ocean and degraded by exposure to sun and salt.

We believe that our ability to use many materials that mechanical recyclers cannot process is an important advantage of Loop ™ PET resin and further expands the range of PET waste streams that may be recycled.

This also means we are creating a new market for materials that have persistently been leaking out of the waste management system and into shared rivers, oceans and natural areas.

Supply Agreements with Global Consumer Brands

In the past years, we have seen major consumer brands make significant commitments to close the loop on their plastic use by transitioning their packaging to recyclable materials like PET, and by incorporating more recycled content into their packaging.

We believe Loop ™ PET resin provides the ideal solution for these brands because it is recyclable and is made from 100% recycled PET waste and polyester fiber, while being virgin-quality and suitable for use in food-grade packaging and polyester fiber.

Due to the commitments by large global consumer brands to incorporate more recycled content into their product packaging, the regulatory requirements for minimum recycled content in packaging imposed by governments, the virgin-quality of Loop ™ branded PET resin and its marketability to extol the sustainability credentials of consumer brands that incorporate it, we believe we will be able to sell Loop ™ branded PET resin at a premium price relative to virgin and mechanically recycled PET resin.

We currently have agreements with some of the world’s leading brands to be supplied from our planned commercial facilities, including:

Multi-year supply agreement with Danone SA (“Danone”), one of the world’s leading global food and beverage companies, enabling Danone to purchase 100% sustainable and upcycled Loop ™ branded PET for use in brands across its portfolio including evian®, Danone’s iconic natural spring water;

Multi-year supply agreement with L’OCCITANE en Provence (“L’OCCITANE”) to supply 100% recycled and sustainable Loop ™ PET resin and incorporate Loop ™ PET resin into its product packaging;

Multi-year supply agreement with L’Oréal Group, the global leader in the beauty industry, enabling L’Oréal Group to purchase production capacity and incorporate Loop ™ PET resin into its product packaging.

We are pursuing amended supply agreements with existing customers and new agreements with additional customers that are located in North America, Europe, and Asia to sell the production volumes of our planned Infinite Loop ™ commercial facilities.

We also have a signed letter of intent with On AG, a sportswear brand and subsidiary of On Holding AG, to secure volumes of Loop™ PET resin from the Asian Infinite Loop™ manufacturing facility in Ulsan, South Korea, which Loop is planning with its strategic partner SK Geo Centric.

Strategic Partnership with SK Geo Centric

In June 2021, Loop and SK Geo Centric (“SKGC”) concluded a definitive agreement for SKGC to become a strategic investor in Loop, with SKGC acquiring a 10% stake in Loop at $12.00 per share for a total of $56.5 million.

The transaction, which closed in July 2021, also included warrants for SKGC to purchase Loop common stock at $15.00 and $20.00 per share.

Concurrent with the strategic investment, Loop and SKGC entered into a memorandum of understanding (“MOU”) to form a joint venture with exclusivity to build sustainable PET plastic and polyester fiber manufacturing facilities throughout Asia.

SKGC is a global chemical company and member of the SK Group, one of South Korea’s largest conglomerates.

SKGC is a general energy and chemical leader in the global market and is growing into a technology-based global chemical company through continuous R&D efforts.

SKGC aims to achieve its “Green for Better Life” vision by establishing a plastics based circular economy through collaboration with various partners and stakeholders, such as Loop.

Asia represents approximately 60% of the world’s population and 70% of global PET consumption and is the main hub for the polyester fiber supply chain for textiles.

The Asian market represents a prime opportunity for Loop’s growth and commercialization of its technology.

SKGC is well established with a deep understanding of the Asian market, and vast expertise in building and operating large-scale petrochemical facilities, making them a uniquely well-suited partner for Loop in helping to ensure the successful commercialization of Loop’s technology in this market.

On April 27, 2023, Loop and SKGC entered into a joint venture agreement (the “JV Agreement”) to deploy Loop’s depolymerization technology in the Asian market through multiple commercial manufacturing facilities.

Pursuant to the JV Agreement, Loop and SKGC agreed to form a new company (the “JV Company”), which will be headquartered in Singapore.

SKGC will contribute 51% and Loop will contribute 49% of the initial equity capital of the JV Company.

The JV Agreement outlines that the JV Company will have exclusive rights to commercialize Loop’s technology in the Asian market and Loop will receive an annual royalty fee for each of the commercial plants.

The first planned commercial manufacturing facility with Infinite Loop™ technology, located in Ulsan, South Korea, will have an annual capacity to supply 70,000 metric tons per year of Loop™ PET resin for packaging and polyester fiber applications, and is anticipated to break ground in 2023 and to have construction completed by the end of 2025.

In addition to Infinite Loop™ Ulsan, the two partners have outlined plans which target a minimum of three additional commercial manufacturing facilities to be constructed throughout Asia by 2030.

Loop and SKGC have partnered with SK ecoengineering, a subsidiary of the SK Group who brings considerable experience and proficiency as an EPC contractor, for the engineering and construction of the commercial manufacturing facilities.

Infinite Loop ™ Europe

We announced on September 10, 2020 a strategic partnership with SUEZ Group (“Suez”), with the objective to build the first Infinite Loop ™ manufacturing facility in Europe.

On June 16, 2022, Loop, together with Suez and SKGC, announced that the three companies will become equal participants in the strategic partnership.

The expanded partnership intends to combine SKGC's petrochemical manufacturing experience with Suez's resource management expertise and Loop’s breakthrough proprietary technology to supply up to 70,000 M/T of virgin quality, 100% recycled PET plastic and polyester fiber to the European market.

The planned Infinite Loop™ facility will offer a solution to consumer goods companies which have committed to goals for significantly increased use of recycled content in their products and/or packaging and help to meet the growing demand for recycled PET resin and polyester fiber.

On February 16, 2023, the three companies announced that the Chemesis industrial platform in Saint-Avold, located in the Grand Est region of France, has been selected as the site for their planned manufacturing facility in Europe.

We are working with our partners Suez and SKGC on acquiring the project site, alignment of various levels of government support and additional steps for the project which include advancing permitting, site specific engineering, customer offtake contracts, feedstock and financing.

Product activations with evian, L’Occitane, L’Oréal, On AG, and Garnier

Loop has collaborated with multiple customers in recent and upcoming launches for products and product packaging incorporating Loop™ PET manufactured from monomers produced at the Terrebonne Facility.

In 2021, Loop, in partnership with iconic global beverage brand evian, unveiled a new “evian Loop” prototype virgin-quality water bottle made from 100% recycled content.

The monomers used to produce the evian Loop bottles were made at the Terrebonne Facility.

Evian began selling water bottles made from Loop ™ PET in South Korea in October 2022.

The waste plastic used to produce these bottles includes polyester fibers from carpets and clothing which are considered unrecyclable and destined for landfill and other natural environments.

This initiative reflects evian’s commitment to its stated goal for circularity and 100% recycled content by 2025.

On October 11, 2022, Loop and L’OCCITANE, a global manufacturer and retailer of sustainable beauty and wellness products, unveiled a new bottle for the brand’s Almond Shower Oil that was manufactured with 100% recycled Loop™ PET resin produced using monomers from Loop’s Terrebonne Facility.

Loop has partnered with L’OCCITANE to help meet the brand’s sustainability goal of using 100% recycled PET in its bottles by 2025.

In partnership with the brand, a pilot project was executed where the bottle (excluding cap and label) was produced using 100% recycled Loop™ PET resin and was successfully carried out on L’OCCITANE production lines.

This initiative marks a significant step forward in the partnership between the two companies and sets the pathway to implement Loop’s technology across other products in the brand’s assortment.

As part of this partnership with L’OCCITANE, Loop’s branding is featured prominently on the front of the packaging, with additional details speaking to Loop’s technology on the back label.

We also entered into an agreement in May 2022 with On AG to supply Loop ™ PET to be utilized in polyester fiber by the brand, pursuant to which Loop ™ PET resin was delivered in the year ended February 28, 2023.

On April 19, 2023, Loop and Garnier, one of the world’s largest mass market beauty brands, launched the brand’s first Micellar Cleansing Water All-In-1 bottle made of Loop™ PET produced using monomers from Loop’s Terrebonne Facility (excluding cap and label).

The Loop logo, featured on the front of this packaging innovation, serves as an anchor to highlight Loop’s technology, the quality of materials and the bottle’s recyclability.

The inclusion of Loop branding on the packaging strongly supports Garnier’s sustainability goals by promoting the infinitely recyclable potential of the product and brings awareness to PET plastic circularity.

This packaging innovation will first be distributed in Garnier’s largest market, the US and the brand’s home market of France.

Loop continues to work towards new brand and further marketing campaigns with additional consumer goods brand companies.

Terrebonne Facility

As part of our plan for the commercialization of future Infinite Loop ™ manufacturing facilities, we enhanced our Terrebonne, Québec pilot plant to become a small-scale PET depolymerization production facility, incorporating all key pieces of depolymerization equipment that will be used in the full-scale commercial facilities.

In addition to our research and development activities, this facility is used to deliver initial production volumes to support co-branded market launch campaigns with partners and customers and will also be used to showcase the Infinite Loop ™ end-to-end technology and train operational teams in advance of the commissioning of the Infinite Loop ™ full-scale commercial facilities.

On December 22, 2022, we announced that we have reduced hours of operation at the Terrebonne Facility in order to reduce operating costs and preserve liquidity.

The primary purpose of the Terrebonne Facility was to demonstrate that Loop’s breakthrough depolymerization technology was scalable and to produce commercial quantities of virgin quality PET resin and polyester fiber for global brands.

We believe the Terrebonne Facility has achieved this objective.

We will continue to fulfill existing commitments related to ongoing sales contracts.

In the year ended February 28, 2023, Loop reported initial revenues of $0.17 million from the sale of Loop™ PET resin produced from monomers manufactured at the Terrebonne Facility to several global consumer brands, including those with whom Loop is collaborating on product launches.

In addition to supplying customers with initial volumes of Loop ™ PET, the Terrebonne Facility continues to support our customers and partners with R&D and analytical capabilities.

Infinite Loop ™ Bécancour, Québec

We acquired a project site in Bécancour, Québec in May of 2021 for $4.3 million (CDN $5.9 million), a portion of which was sold on September 15, 2022 for net proceeds of $8.56 million (CDN $11.4 million).

On December 22, 2022, we announced that our commercialization strategy will now focus on our planned projects with SKGC in Asia and Europe and that we had entered into an agreement to sell all of our remaining property in Bécancour, Quebec for $13.75 million (CDN $18.5 million).

The sale transaction closed on February 22, 2023.

Although the company is currently focusing on developing the planned joint venture facilities in Asia and Europe, a future facility in Quebec remains an option at the appropriate time, and possible alternative locations for such a facility are available.

We are continuing to explore financing options to fully fund the project.

Alternatives under exploration include incentive and financing programs supported by, or in partnership with, various levels of government.

A future facility in Quebec would be aligned with the Government of Canada’s announced zero plastic waste goal by 2030.

Market Opportunity

The estimated global annual market demand for PET plastic and polyester fiber is approximately $180 billion in 2022.

We believe plastic pollution and climate change continue to be the most persistently covered environmental issues by media and local and global environmental non-governmental organizations.

In the last few years, governments in North America, Europe and Asia have been enacting and proposing laws and regulations mandating the use of minimum recycled content in packaging, which underlies the strength of this issue in the marketplace.

Consumer brands are seeking a solution to their plastic challenge, and they are taking action.

Adidas Group aims to replace all virgin polyester with recycled polyester in all of its Adidas products by 2024;

Danone, the provider of evian® brand bottled water, committed to a goal of using 100% recycled content packaging by 2025;

Coca-Cola committed to an average recycled content of 50% across its packaging by 2030;

PepsiCo stated 10 European markets are moving key Pepsi-branded products to 100% rPET bottles by 2022, and in the U.S., all Pepsi-branded products will be converted to 100% rPET bottles by 2030;

In 2020, L’OCCITANE committed to implementing 100% recycled content plastic in their bottles by 2025;

Nike has announced a 2025 target of diverting 100% of its waste from landfills, with at least 80% recycled back into its products and goods;

L’Oréal Group committed to using 100% recycled or biobased plastic in their packaging by 2030;

Ikea maintains its goal that, by 2030, all plastic used in its products will be based on renewable or recycled material;

By 2025, Lululemon aims to achieve at least 75% sustainable materials for their products, including fibers that are recycled, renewable, regenerative, sourced responsibly and are manufactured using low-resource processes.

North America:

Canada has announced a goal of zero-plastic waste by 2030 and is targeting for all plastic packaging to contain 50% recycled content by 2030.

California law requires that plastic bottles contain at least 25% post-consumer resin by 2025, and at least 50% by 2030.

As of January 2021, the European Union introduced a new tax of €800/ton on non-recycled plastic packaging based on the amount of plastic packaging placed on each member state’s market.

Spain imposed a tax of €450 per ton on non-reusable plastic packaging, effective January 1, 2023.

Italy introduced a tax in January 2023 of €450 per ton on virgin plastic used in manufacture or importation of single use plastic.

Effective April 2022, a new £200/ton tax applies in the UK to plastic packaging produced or imported into the UK that does not contain at least 30% recycled plastic.

France maintains its goal of having 100% plastics recycled by 2025 and 77% of beverage bottles to be collected.

South Korea continues to target reduction of plastic waste by 20%, an increase in recycling rates from 54% to 70% by 2025, and utilization of 30% renewable plastic by 2030.

The growing regulatory environment combined with global consumer goods companies, apparel manufacturers, and retail brand commitments for 2025 and 2030 are expected to further increase the demand for rPET.

Closed-loop circularity and keeping materials within their own cycle (bottle-to-bottle and fiber-to-fiber) is gaining increasing attention as the focus on sustainability intensifies.

Governments and regulators have considered or enacted heightened standards for recycled materials that discourage downcycling of bottles into polyester fiber.

Additionally, it is becoming increasingly difficult to secure inventory of post-consumer bottles due to the increased demand from the bottle industry as they strive to achieve their own sustainability goals.

A fiber-to-fiber recycling strategy addresses these problems and allows fashion brands and companies to secure volume and support the increasing demand of recycled polyester fiber in the textile industry.

We believe the commercialization plans of Loop ™ PET resin and polyester fiber may provide the ideal solution for global brands because Loop ™ PET resin and polyester fiber contains 100% recycled PET and polyester fiber content.

The Loop ™ PET resin and polyester fiber is virgin-quality suitable for use in food-grade packaging.

That means consumer packaged goods companies will be able to choose to market packaging made from a 100% recycled Loop ™ branded PET resin and polyester fiber.

That means CPG companies will be able to market packaging made from a 100% recycled Loop ™ branded PET resin and polyester fiber.

Commercialization Strategy

Our objective is to achieve global expansion of Loop’s technology through a mix of fully owned manufacturing facilities, strategic partnerships, and licensing agreements.

We believe that industrial companies, some of which today may not be in the business of manufacturing PET resin or polyester fiber, will view involvement in Infinite Loop ™ projects as a significant growth opportunity, which may offer attractive economic returns either as Loop manufacturing partners or as licensees of the technology.

On December 22, 2022, we announced a shift in our commercialization strategy and will now focus on our planned joint venture projects with SKGC in Asia and Europe.

These projects have a lower requirement for Loop equity investment and higher expected return on capital, and leverage SKGC’s engineering and operational infrastructure.

In addition, the joint venture projects will provide Loop with an annual technology licensing fee.

SKGC is committed to commercializing Loop’s technology as the underpinning of its sustainable plastics strategy.

Loop is working collaboratively with SKGC to put in place a financing plan for the rollout of large-scale manufacturing in Asia and Europe, including the first Asian manufacturing facility in Ulsan, South Korea, which is anticipated to break ground in 2023 and to have construction completed by the end of 2025.

The global expansion plan for our technology will allow our customers, mostly comprised of CPG brand companies and apparel companies, to expand the use of Loop ™ PET resin and polyester fiber into their packaging and clothing.

As countries around the globe continue to increase sustainability targets and recycled content mandates, our customers are increasing the use of sustainably produced materials into their products.

The Infinite Loop ™ manufacturing technology is the key pillar of our commercialization blueprint.

We believe our technology is at the forefront of 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 plastic rather than depleting finite resources.

The Infinite Loop ™ manufacturing technology allows for waste PET plastic and polyester fiber to be broken down into its base building blocks, monomers DMT and MEG, using Loop’s patented technology.

Once the monomers are purified, they are then repolymerized into PET plastic or polyester fiber using INVISTA know how, which Loop licenses, and Chemtex Global Corporation’s engineering.

The INVISTA polymerization process and the associated designs are historically proven in the commercial production of PET resin and polyester fiber.

We have completed our basic design package for the Infinite Loop ™ full-scale manufacturing facilities.

The engineering philosophy we have adopted is “design one, build many.” This approach allows for the basic design package to be used as the base engineering platform for all future geographical expansion.

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 M/T of PET resin output per year.

Permitting, site and regulatory considerations may impact plant capacity.

Our market strategy is to assist global consumer goods brands in meeting their public sustainability commitments by offering co-branded packaging or polyester fibers that are made with Loop, 100% recycled, virgin-quality PET or polyester fibers.

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.

We are targeting multi-year take or pay offtake agreements for planned Infinite Loop ™ production.

Factors under consideration in determining project economics include the feasibility design engineering and cost estimate work, timing and permitting of a facility, customer offtake demand, commitment terms, and feedstock sources, quality, availability, PET bale index pricing, logistics, and ramp up, among others.

Recent developments

Signature of Venture Agreement with SKGC

Pursuant to the JV Agreement, Loop and SKGC agreed to form a new company (the “JV Company”), which will be headquartered in Singapore.

SKGC will contribute 51% and Loop will contribute 49% of the initial equity capital of the JV Company.

In addition to Infinite Loop™ Ulsan, the two partners have outlined plans which target a minimum of three additional commercial manufacturing facilities to be constructed throughout Asia by 2030.

Successful completion of SKGC technical due diligence

On March 28, 2023, Loop and SKGC announced the successful completion of a technical due diligence conducted by SKGC and the validation of Loop’s technology.

The technical due diligence marks the next phase in Loop and SKGC's long-standing partnership to commercialize Loop’s technology through Infinite Loop™ manufacturing facilities in the Asian market.

SKGC executed a comprehensive due diligence to validate Loop’s technology and its production facility in Terrebonne, Quebec.

The scope of the technical due diligence included the depolymerization of low value PET waste into its base monomers of DMT and MEG, the purification of the monomers, as well as the polymerization into virgin-quality Loop™ PET resin and polyester fiber.

Key parameters of Loop’s technology that were validated were the production yields, operational stability, quality of the output monomers and overall performance of the production facility.

The technical due diligence validated that the PET resin and polyester fiber produced using Loop’s technology is of virgin quality.

The technical due diligence report, signed by both parties, confirms Loop’s innovative technology.

Site selection for European commercial project

On February 16, 2023, Loop, SKGC and Suez together announced that the Chemesis industrial platform in Saint-Avold, located in the Grand Est region of France, has been selected as the site for their planned manufacturing facility in Europe.

The Saint-Avold Chemesis industrial platform is strategically situated in the heart of Europe and provides an efficient industrial and infrastructure network (access to energy notably via existing heat networks, road and rail logistics, suppliers, etc.) making it the optimum environment for the manufacturing facility.

Customer product activations

On April 19, 2023, Loop and Garnier, launched the brand’s first Micellar Cleansing Water All-In-1 bottle made of Loop™ PET produced using monomers from Loop’s Terrebonne Facility (excluding cap and label).

The Loop logo, featured on the front of this packaging innovation, serves as an anchor to highlight Loop’s technology, the quality of materials and the bottle’s recyclability.

On October 11, 2022, Loop and L’OCCITANE unveiled a new bottle for the brand’s Almond Shower Oil that was manufactured with 100% recycled Loop™ PET resin produced using monomers from Loop’s Terrebonne Facility.

This initiative marks a significant step forward in the partnership between the two companies and sets the pathway to implement Loop’s technology across other products in the brand’s assortment.

As part of this partnership with L’OCCITANE, Loop’s branding is featured prominently on the front of the packaging, with additional details speaking to Loop’s technology on the back label.

Sale of land in Bécancour, Québec

On February 22, 2023, Loop sold the land in Bécancour, Québec which was purchased in May 2021 for net proceeds of $22.31 million.

The sale follows the Company’s announcement that our commercialization strategy will now focus on our planned projects with SKGC in Asia and Europe.

The land sale provides Loop with the liquidity to cover its ongoing operations and support its commercialization efforts.

Initial revenues generated from Terrebonne Facility

In addition to supplying customers with initial volumes of Loop ™ PET, the Terrebonne Facility continues to support our customers and partners with R&D and analytical capabilities.

Proprietary Technology and Intellectual Property

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We believe our technology can deliver high-purity profitable virgin-quality, 100% recycled PET resin suitable for use in food-grade packaging and polyester fiber.

Our Generation I technology (“GEN I”) is a hydrolysis-based depolymerization technology which yielded purified terephthalic acid (“PTA”) and monoethylene glycol (“MEG”), two common monomers of PET.

As the Company evaluated the transition from the GEN I technology from pilot scale to commercial scale, several challenges involving PTA and MEG purification were identified.

To overcome the GEN I technology challenges, we embarked on the development of a second generation of our technology.

Our Generation II technology (“GEN II”) is a methanolysis-based depolymerization technology that uses temperatures below 90 °C to depolymerize waste PET and polyester fiber.

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The GEN II technology uses only trace amounts of water, eliminates the need for a halogenated solvent and uses a catalyst at low concentration.

This shift, from producing the monomer PTA to the monomer DMT, was a pivotal moment for Loop.

We believe that GEN II requires less energy and fewer resource inputs than conventional PET production processes.

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The complete Kemitek report was filed with the SEC by the Company on December 14, 2020.

To protect our technology, we rely on a combination of patents, trademarks, trade secrets, confidentiality agreements and provisions as well as other contractual provisions to protect our proprietary rights, which are primarily our patents, brand names, product designs and marks.

We have two technology areas, referred to as GEN I technology and the GEN II technology, with patent claims relating to our technology for depolymerizing PET.

The GEN I technology portfolio has three issued U.S.

patents, all expected to expire on or around July 2035.

Internationally, we also have issued patents in China, the Eurasian Patent Organization, Europe, Japan, India, the Gulf Cooperation Council, and various other countries, and pending patent applications in Canada, Mexico, South Korea, and various other countries all expected to expire, if granted, on or around July 2036, not including any patent term extension.

Additionally, Loop’s strategic partners, Suez and Danone, among others, collectively engaged an independent, globally recognized third-party engineering firm to execute a thorough due diligence and technology validation report.

We believe the final report, which was communicated in May 2022, validated and reinforced the quality, effectiveness, and scalability of our technology.

Our technology was further validated in March 2023, when Loop and SKGC announced the successful completion of a technical due diligence conducted by SKGC.

Key parameters of Loop’s technology that were validated through SKGC’s comprehensive due diligence include the production yields, operational stability, quality of the output monomers and overall performance of Loop’s Terrebonne Facility.

The technical due diligence validated that the PET resin and polyester fiber produced using Loop’s technology is of virgin quality.

To protect our technology and intellectual property rights, we rely on a combination of patents, trademarks, trade secrets, confidentiality agreements and provisions as well as other contractual provisions to protect our proprietary rights, which are primarily our patents, brand names, product designs and marks.

The GEN II technology portfolio currently consists of four patent families:

The first family has two issued U.S.

One family has two issued U.S.

patents and a pending U.S.

application, all expected to expire on or around September 2037.

Internationally, we also have an issued patent in Bangladesh, and pending applications in Canada, China, the Eurasian Patent Organization, Europe, the Gulf Cooperation Council, India, Japan, Mexico, South Korea, and various other countries, all expected to expire on or around September 2038, if granted, and not including any patent term extension.

An additional aspect of the GEN II technology is claimed in an issued U.S.

patent and an allowed U.S.

Internationally, this patent family has four issued or allowed patents in foreign jurisdictions, Bangladesh, Argentina, Taiwan and Brazil, and pending applications in Canada, China, the Eurasian Patent Organization, Europe, the Gulf Cooperation Council, India, Japan, Mexico, South Korea, and various other countries, all expected to expire on or around September 2038, if granted, not including any patent term extensions.

An additional aspect of the GEN II technology, as claimed in two issued U.S.

patents and a pending U.S.

application, all expected to expire on or around June 2039.

Internationally, we also have issued patents in Algeria and Bangladesh, and pending applications in Canada, China, the Eurasian Patent Organization, Europe, the Gulf Cooperation Council, India, Japan, Mexico, South Korea, and various other countries, all expected to expire on or around June 2039, if granted, and not including any patent term extension.

Another aspect of the GEN II technology is the subject of a pending U.S.

Internationally, we also have pending applications in Canada, Europe, India, Singapore, Papua New Guinea, Brazil, and South Africa.

Any patents that would ultimately grant from this application would be expected to expire on or around March 2040, not including any patent term extension.

Another aspect of the GEN II technology is the subject of an issued U.S.

Internationally, this patent family includes five issued or allowed patents in foreign jurisdictions, including Morocco, Algeria, Indonesia and Bangladesh, and pending applications in Canada, China, the Eurasian Patent Organization, Europe, the Gulf Cooperation Council, India, Japan, Mexico, South Korea, and various other countries, all expected to expire on or around June 2039, if granted, not including any patent term extensions.

Another aspect of the GEN II technology, which is the subject of an issued U.S.

patent and a pending U.S.

application, all expected to expire on or around March 2040.

Internationally, we also have an allowed application in Bangladesh and pending applications in Canada, China, Korea, the Eurasian Patent Organization, Europe, the Gulf Cooperation Council, India, Japan, Mexico, and various other countries, all expected to expire on or around March 2040, if granted, and not including any patent term extension.

Loop owns registrations for its trademarks in Canada, the European Union, the United Kingdom, and the U.S.

Loop also has pending applications in Cambodia, Canada, Indonesia, Taiwan, the U.S., and Vietnam.

Internationally, this patent family includes pending applications in Canada, Europe, India, Singapore, Papua New Guinea, Brazil, and South Africa.

Any patents that would ultimately be granted from this application would be expected to expire on or around March 2040, not including any patent term extensions.

Another aspect of the GEN II technology, which is the subject of an issued U.S.

patent and a pending U.S.

application, both expected to expire on or around March 2040.

Internationally, this patent family includes two issued patents in foreign jurisdictions, Bangladesh and South Africa, and pending applications in Canada, China, Korea, the Eurasian Patent Organization, Europe, the Gulf Cooperation Council, India, Japan, Mexico, and various other countries, all expected to expire on or around March 2040, if granted, not including any patent term extensions.

Loop owns registrations for its trademarks in Cambodia, Canada, the European Union, Taiwan, the United Kingdom, and the U.S.

Loop also has pending applications in Canada, Japan, South Korea, the U.S., and Vietnam.

Government Regulation and Approvals

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however, any of these permits or approvals may be subject to denial, revocation or modification under various circumstances.

Additionally, due to the impact of the COVID-19 pandemic, we may experience delays in obtaining such permits or approvals.

Failure to obtain or comply with the conditions of permits and approvals or to have the necessary approvals in place may adversely affect our operations and may subject us to penalties.

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On August 31, 2021, Loop also received a NOL from Health Canada, which states that the PET produced by Loop’s recycling process is suitable for use in the manufacture of water bottles and articles for contact with all food types under all conditions of use.

Supply Agreements with Global Consumer Brands

Consumer brands are seeking a solution to their plastic challenge and they are taking bold action.

In the past years, we have seen major brands make significant commitments to close the loop on their plastic use in two ways;

by transitioning their packaging to recyclable materials, like PET, and by incorporating more recycled content into their packaging.

Due to the commitments by large global consumer brands to incorporate more recycled content into their product packaging, the regulatory requirements for minimum recycled content in packaging imposed by governments, the virgin-quality of Loop ™ branded PET resin and its marketability to extoll the sustainability credentials of consumer brands that incorporate it, we believe we will be able to sell Loop ™ branded PET resin at a premium price relative to virgin and mechanically recycled PET resin.

We currently have agreements with some of the world’s leading brands to be supplied from our planned commercial facilities, including:

A new multi-year supply agreement with Danone SA (“Danone”), one of the world’s leading global food and beverage companies announced on May 16, 2022.

Danone will purchase 100% sustainable and upcycled Loop ™ branded PET to be supplied from our planned Infinite Loop ™ manufacturing facility in Bécancour, Québec for use in brands across its portfolio including evian®, Danone’s iconic natural spring water;

Multi-year supply agreement with PepsiCo, one of the largest purchasers of recycled PET plastic, enabling PepsiCo to purchase production capacity and incorporate Loop ™ PET resin into its product packaging;

Multi-year supply agreement with L’OCCITANE en Provence to supply 100% recycled and sustainable Loop ™ PET resin and incorporate Loop ™ PET resin into its product packaging;

Turning PET Waste into Feedstock

We use waste PET plastic and polyester fiber as feedstock.

Our technology can use PET plastic bottles and packaging of any color, transparency or condition, carpet, clothing and other polyester textiles that may contain colors, dyes or additives, and even PET plastics that have been recovered from the ocean and degraded by exposure to sun and salt.

We believe that our ability to use many materials that mechanical recyclers cannot use is both an important advantage of Loop ™ PET resin over mechanically recycled PET resin and is additive to the number of PET waste streams that may be recycled.

This also means we are creating a new market for materials that have persistently been leaking out of the waste management system and into our shared rivers, oceans and natural areas.

Commercialization Strategy

Our objective is to achieve global expansion of Loop’s technology through a mix of fully owned manufacturing facilities, strategic partnerships, and licensing agreements.

We are currently pursuing projects for future commercial production facilities in three regions:

North America, Europe and Asia.

As countries around the globe continue to increase sustainability targets and recycled content mandates, our customers are increasing the use of sustainably produced materials into their products.

The Infinite Loop ™ manufacturing technology is the key pillar of our commercialization blueprint.

Once the monomers are purified, they are then repolymerized into PET plastic or polyester fiber using INVISTA know how, which Loop licenses, and Chemtex Global Corporation’s engineering.

The INVISTA polymerization process and the associated designs are historically proven in the commercial production of PET resin and polyester fiber.

We have completed our basic design package for the Infinite Loop ™ full-scale manufacturing facilities with our engineering partners Worley, BBA and Chemtex, all leading global engineering and construction companies.

The engineering philosophy we have adopted is “design one, build many.” This approach allows for the basic design package, to be used as the base engineering platform for all future geographical expansion.

We believe this approach allows for a quick execution, speed to market and lends itself well to modular construction.

The basic design package has a capacity of up to 70,000 M/T of PET resin output per year.

Permitting, site and regulatory considerations may impact plant capacity.

Our engineering partners may also play a role in the future design of larger capacity facilities.

Our market strategy is to assist global consumer goods brands in meeting their public sustainability commitments by offering packaging or polyester fibers that are made with Loop co-branded, 100% recycled, virgin-quality PET or polyester fibers.

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.

We are targeting multi-year take or pay offtake agreements for planned Infinite Loop ™ production.

Strategic Partnership with SK geo centric

Loop and SK geo centric Co., Ltd.

(formerly known as SK global chemical Co.

Ltd.) (“SKGC”) intend to form a joint venture with exclusivity to build sustainable PET plastic and polyester fiber manufacturing facilities throughout Asia, which accounts for approximately 60% of the world’s population and an estimated 70% of global PET consumption making it the largest market in terms of plastic manufacturing, consumption and waste.

Under the terms of the Memorandum of Understanding (“MOU”) for the proposed joint venture, which was entered into in July, 2021, SKGC will own 51 percent of the joint venture and Loop will own 49 percent.

Loop will also receive a recurring annual royalty fee as a percentage of revenue from each facility for the use of its technology.

As of the date of the filing on this Annual Report on Form 10-K, final joint venture agreements have not been entered into.

In addition, on June 22, 2022, Loop and SKGC concluded a definitive agreement for SKGC to become a strategic investor in Loop.

Under this agreement, SKGC purchased 4,714,813 new treasury common shares of Loop at a price of $12 per share, for total consideration of $56.5 million.

The equity investment transaction closed on July 29, 2021.

SKGC was also granted warrants to acquire an additional 461,298 common shares at $11 per share with an expiration date of June 14, 2022, 4,714,813 common shares at a price of $15 per share with an expiration date of July 29, 2024, and a further 2,357,407 shares at $20 per share, conditional upon the timing of construction of the first Asian manufacturing facility.

SKGC currently owns approximately 10% of Loop’s common shares.

In conjunction with the equity investment, Mr.

Jonghyuk Lee, Vice President of SKGC’s Green Business Division, was appointed to Loop’s Board of Directors.

This appointment reflects SKGC’s strategic view of the importance of its investment in Loop, as part of its “Green for Better Life” global strategic vision.

As reported on July 8, 2021 SKGC signed a memorandum of understanding (“MOU”) with the city of Ulsan, South Korea to develop an industrial complex which is planned to include the first Infinite Loop ™ manufacturing facility in Asia.

SKGC unveiled on August 31, 2021 its rebrand as SK geo centric, aligning with the company’s goal of transforming into a green company and focusing on eco-friendly products such as recyclable plastics.

These announcements further reinforce Loop’s alignment as an important strategic partner for SK geo centric, as we move to commercialize our technology in Asia.

Unveiling of New evian Loop Bottle

On September 20, 2021, Loop, in partnership with iconic global beverage brand evian, unveiled a new “evian Loop” prototype virgin-quality water bottle made from 100% recycled content.

The monomers used to produce the evian Loop bottles were made at the Terrebonne Facility.

We expect evian to begin selling water bottles made from Loop ™ PET initially in South Korea during the second half of 2022, and subsequently in other global markets.

The waste plastic used to produce these bottles include polyester fibers from carpets and clothing which are considered unrecyclable and destined for landfill and other natural environments.

This initiative reflects evian’s commitment to its stated 2025 goals for circularity and 100% recycled content.

Loop continues to work toward new brand and market introductions with additional consumer goods brand companies.

Technology Due Diligence Report

Loop's strategic partners, Suez and Danone, among others, collectively engaged an independent, globally recognized third-party engineering firm to execute a thorough due diligence and technology validation report.

We believe the final report, which was communicated in May 2022, validated and reinforced the quality, effectiveness, and scalability of Loop Industries’ technology.

Infinite Loop ™ Bécancour, Québec

Our Infinite Loop ™ Québec project (the “Quebec Project”) is aligned with the Government of Canada’s announced zero plastic waste goal by 2030.

We believe the project could be critical infrastructure for customers to meet their 2025 and 2030 sustainability commitments and will assist the Government of Canada with achieving its Canada-wide zero plastic waste target and any proposed additional requirements, such as the requirement that all plastic packaging in Canada contain at least 50% recycled content by 2030.

The Québec Project is currently contemplated as wholly-owned and operated by Loop which allows us to commercialize near our innovation and engineering teams located in Terrebonne, Québec.

We acquired the project site in Bécancour, Québec in May of 2021.

During the year ended February 28, 2022, we completed initial site preparation work on the Bécancour, Québec project land for the planned Infinite Loop ™ manufacturing facility.

During the third and fourth quarters, the Company invested $1.14 million in civil construction costs which included building access roads, landscaping and drainage to ready the site for full construction.

We are currently in the process of negotiating and entering into commercial contracts for the acquisition and fabrication of long lead item equipment to develop the project.

In December 2021, the Company entered into an agreement for the purchase of long lead machinery and equipment in connection with the construction of our Infinite Loop™ manufacturing facility in Bécancour, Québec for up to $8.55 million over the next 9 months, based on certain milestones subject to various terms and conditions, including securing financing for the Quebec Project.

We may enter into additional commitments to move the project ahead within our targeted final investment decision and construction timeframes.

On May 16, 2022, we announced a new multi-year agreement to supply Danone brands, including evian water, with Loop ™ branded PET resin made from 100% recycled content.

The resin is to be supplied from the planned Infinite Loop ™ Bécancour manufacturing facility.

We continue to work with existing and additional customers to sign definitive multi-year contracts for the Québec Project’s commercial output.

We are exploring financing options to fully fund the project.

Alternatives under exploration include incentive and financing programs supported by, or in partnership with, various levels of government.

The site offers attractive logistics being located on the St-Lawrence river and access to rail.

The site size exceeds our project needs and we plan to sell a portion of the land to offset part of our project commitment.

Infinite Loop ™ Europe

We announced on September 10, 2020 a strategic partnership with SUEZ GROUP (“Suez”), with the objective to build the first Infinite Loop ™ manufacturing facility in Europe.

With the combination of the Infinite Loop ™ technology and the resource management expertise of Suez, this partnership seeks to respond to growth in demand in Europe from global beverage and consumer goods brand companies for virgin quality PET resin made from 100 percent recycled content.

We are working with our partner Suez on acquiring the preferred project site, alignment of various levels of government support and additional steps for the project which include advancing permitting, site specific engineering, customer offtake contracts, feedstock and financing.

Joint Venture with Indorama for Retrofit

In September 2018 we announced a joint venture with Indorama to retrofit certain PET manufacturing facilities.

We entered into a Limited Liability Company Agreement (the “LLC Agreement”), a Marketing Agreement (the “Marketing Agreement”) and a License Agreement (the “License Agreement”), with Indorama through our wholly-owned subsidiary Loop Innovations, LLC (“Loop Innovations”).

Each company has 50/50 equity interest in the joint venture.

We are contributing to the 50/50 joint venture an exclusive worldwide royalty-free license to use our proprietary technology to produce 100% sustainably produced PET resin in addition to our equity cash contribution.

In 2019, the joint venture decided to increase the capacity of the planned Spartanburg, South Carolina plant due to customer demand to 40,000 metric tons per year from the initially planned 20,700 metric tons per year.

The joint venture made a decision over the summer of 2020 that due to the COVID-19 pandemic it would temporarily delay work on the project.

Since then, no expenditures have been incurred by the joint venture.

Both joint venture partners currently remain committed to the project and we continue to discuss the project timetable.

To conform with the terms of the SK strategic partnership mentioned above, on June 18, 2021, the Company, Loop Innovations, Indorama and Indorama Loop Technologies, LLC (the “Indorama Joint Venture Company”) amended (i) the LLC Agreement, (ii) the Marketing Agreement and (iii) the License Agreement (collectively such amendments, the “Indorama Joint Venture Amendments”).

Under the Indorama Joint Venture Amendments, the Company, Indorama and the Indorama Joint Venture Company agreed to:

terminate Indorama’s right of first refusal under the LLC Agreement over any facility to produce products utilizing any waste-to-resin technology applying the PET depolymerization process of the Company;

amend the non-compete obligations under the LLC Agreement to solely apply to the Company;

limit the scope of the Company’s grant of intellectual property rights and the scope of the exclusivity rights of the Indorama Joint Venture Company for the retrofit of existing facilities under the License Agreement to North America and Europe;

limit the scope of the Indorama Joint Venture Company’s permitted marketing rights under the Marketing Agreement to North America and Europe.

Terrebonne Facility

We made purchases of $9.55 million in machinery and equipment for the facility in the year ended February 28, 2022.

We have completed the planned upgrades at the Terrebonne Facility which have increased its production capacity, giving us the opportunity to further support product campaigns with customers.

In particular, we installed and began operation of new distillation columns in this period.

We also advanced testing and production with the two installed depolymerization reactors which substantially increase the Terrebonne Facility’s depolymerization capacity and confirm the design and scale-up factors for the engineering of the planned commercial-scale facilities.

In completing the upgrade of the Terrebonne facility to incorporate all key pieces of depolymerization equipment that will be used in the full-scale commercial facilities, we have achieved a key milestone in proving the effectiveness of our process.

Materials for the marketing launch of the prototype evian Loop bottle to be introduced in the South Korean market in calendar 2022 were produced at the Terrebonne Facility.

Also, we have entered into an agreement with On AG to supply Loop ™ PET to be utilized in polyester fiber by the brand.

This initial volume is planned to be supplied in 2022 and manufactured using MEG and DMT monomers produced at the Terrebonne Facility.

The Terrebonne Facility continues to support our customers and partners with R&D and analytical capabilities.

We have also previously entered into an agreement to acquire PET polymerization equipment from Chemtex to manufacture Loop ™ branded PET resin from the recycled monomers produced at the Terrebonne Facility and deliver initial production volume of Loop ™ branded PET resin to customers.

In addition to the capital requirements for our commercialization, we continue to invest in strengthening our intellectual property portfolio, building a core competency in managing strategic relationships and continue enhancing our brand value with activities such as the co-branded marketing launch of an evian Loop bottle.

Our research and development innovation center in Terrebonne, Québec will continue to push forward the continuous improvement of our technology.

Additional Information

Human Capital

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We also offer equity awards with multi-year vesting provisions to incentivize and reward our employees for long-term corporate performance and promote retention throughout the vesting period.

To support our employees this fiscal year and to promote their health and safety, we encouraged administrative and engineering employees to work remotely during certain periods.

We also provided emergency leave for employees to take care of a child or parent due to COVID-19 disruptions.

As of February 28, 2022, we had 89 employees of which 32 work in research and development and 42 in engineering and operations.

As of February 28, 2023, we had 75 employees of which 26 work in research and development, 35 in engineering and operations, and 14 in administrative functions.

Corporate History

We were originally incorporated in Nevada in March 2010 under the name Radikal Phones Inc.

We were originally incorporated under the name Radikal Phones Inc.

in Nevada in March 2010.

Loop Holdings, Inc.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business