Loop Industries, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS Loop Industries, Inc. Three and Nine months ended November 30, 2024 Index to the Unaudited Interim Condensed Consolidated Financial Statements Contents Page(s) Condensed consolidated balance sheets as at November 30, 2024 (Unaudited) and February 29, 2024 F‑2 Condensed consolidated statements of operations and comprehensive loss for the three and nine months ended November 30, 2024 and 2023 (Unaudited) F‑3 Condensed consolidated statements of changes in stockholders’ equity for the three and nine months ended November 30, 2024 and 2023 (Unaudited) F‑4 Condensed consolidated statements of cash flows for the nine months ended November 30, 2024 and 2023 (Unaudited) F‑6 Notes to the condensed consolidated financial statements (Unaudited) F‑7 F-1 Table of Contents Loop Industries, Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands of U.S. dollars, except per share data) As at November 30, 2024 February 29, 2024 Assets Current assets Cash and cash equivalents $ 323 $ 6,958 Sales tax, tax credits and other receivables (Note 3) 200 351 Inventories (Note 4) 78 102 Prepaid expenses (Note 5) 393 577 Total current assets 994 7,988 Investment in joint venture 13 381 Property, plant and equipment, net (Note 6) 1,864 10,636 Intangible assets, net (Note 7) 1,808 1,548 Total assets $ 4,679 $ 20,553 Liabilities and Stockholders’ Equity Current liabilities Accounts payable and accrued liabilities (Note 9) $ 5,086 $ 2,321 Credit facility (Note 10) 2,372 - Unearned revenue (Note 11) 102 - Current portion of long-term debt (Note 12) 519 100 Total current liabilities 8,079 2,421 Due to customer 816 770 Long-term debt (Note 12) 2,667 3,220 Total liabilities 11,562 6,411 Stockholders’ Equity Series A Preferred stock par value $ 0.0001 ; 25,000,000 shares authorized; one share issued and outstanding - - Common stock par value $ 0.0001 ; 250,000,000 shares authorized; 47,620,263 shares issued and outstanding (February 29, 2024 – 47,528,908 ) (Note 13) 5 5 Additional paid-in capital 186,198 171,792 Additional paid-in capital – Warrants 7,041 20,385 Accumulated deficit ( 198,910 ) ( 176,970 ) Accumulated other comprehensive loss ( 1,217 ) ( 1,070 ) Total stockholders’ equity ( 6,883 ) 14,142 Total liabilities and stockholders’ equity $ 4,679 $ 20,553 See accompanying notes to the condensed consolidated financial statements . F-2 Table of Contents Loop Industries, Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (in thousands of U.S. dollars, except per share data) Three Months Ended Nine Months Ended November 30, 2024 November 30, 2023 November 30, 2024 November 30, 2023 Revenue from contracts with customers $ 52 $ 26 $ 81 $ 108 Expenses : Research and development (Note 14) 1,377 1,833 5,559 8,361 General and administrative (Note 15) 2,148 2,458 7,654 7,767 Impairment of machinery & equipment (Note 6) 8,460 - 8,460 - Depreciation and amortization (Notes 6 and 7) 132 131 398 400 Total expenses 12,117 4,422 22,071 16,528 Other loss (income) : Interest and other financial expenses 110 42 289 140 Interest income ( 23 ) ( 166 ) ( 155 ) ( 484 ) Foreign exchange loss (gain) ( 240 ) ( 28 ) ( 184 ) ( 81 ) Total other loss (income) ( 153 ) ( 152 ) ( 50 ) ( 425 ) Net loss ( 11,912 ) ( 4,244 ) ( 21,940 ) ( 15,995 ) Other comprehensive loss - Foreign currency translation adjustment ( 135 ) ( 83 ) ( 147 ) 21 Comprehensive loss $ ( 12,047 ) $ ( 4,327 ) $ ( 22,087 ) $ ( 15,974 ) Net loss per share Basic and diluted $ ( 0.25 ) $ ( 0.09 ) $ ( 0.46 ) $ ( 0.34 ) Weighted average common shares outstanding Basic and diluted 47,620,263 47,523,817 47,576,166 47,520,356 See accompanying notes to the condensed consolidated financial statements. F-3 Table of Contents Loop Industries, Inc. Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) (in thousands of U.S. dollars, except for share data) Three months ended November 30, 2024 Common stock Preferred stock Additional Accumulated par value $0.0001 par value $0.0001 Additional Paid-in Other Total Number of Shares Amount Number of Shares Amount Paid-in Capital Capital– Warrants Accumulated Deficit Comprehensive Income (Loss) Stockholders’ Equity Balance, August 31, 2024 47,620,263 $ 5 1 $ - $ 185,868 $ 7,041 $ ( 186,998 ) $ ( 1,082 ) $ 4,834 Stock options issued for services (Note 16) - - - - 146 - - - 146 Restricted stock units issued for services (Note 16) - - - - 184 - - - 184 Foreign currency translation - - - - - - - ( 135 ) ( 135 ) Net loss - - - - - - ( 11,912 ) - ( 11,912 ) Balance, November 30, 2024 47,620,263 $ 5 1 $ - $ 186,198 $ 7,041 $ ( 198,910 ) $ ( 1,217 ) $ ( 6,883 ) (in thousands of U.S. dollars, except for share data) Three months ended November 30, 2023 Common stock Preferred stock Additional Accumulated par value $0.0001 par value $0.0001 Additional Paid-in Other Total Number of Shares Amount Number of Shares Amount Paid-in Capital Capital – Warrants Accumulated Deficit Comprehensive Income (Loss) Stockholders’ Equity Balance, August 31, 2023 47,521,187 $ 5 1 $ - $ 171,113 $ 20,385 $ ( 167,634 ) $ ( 1,037 ) $ 22,832 Issuance of shares upon the exercise of stock options (Note 16) 7,721 - - - - - - - - Stock options issued for services (Note 16) - - - - 168 - - - 168 Restricted stock units issued for services (Note 16) - - - - 229 - - - 229 Foreign currency translation - - - - - - - ( 83 ) ( 83 ) Net loss - - - - - - ( 4,244 ) - ( 4,244 ) Balance, November 30, 2023 47,528,908 $ 5 1 $ - $ 171,510 $ 20,385 $ ( 171,878 ) $ ( 1,120 ) $ 18,902 See accompanying notes to the condensed consolidated financial statements. F-4 Table of Contents Loop Industries, Inc. Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) (in thousands of U.S. dollars, except for share data) Nine months ended November 30, 2024 Common stock Preferred stock Additional Accumulated par value $0.0001 par value $0.0001 Additional Paid-in Other Total Number of Shares Amount Number of Shares Amount Paid-in Capital Capital – Warrants Accumulated Deficit Comprehensive Income (Loss) Stockholders’ Equity Balance, February 29, 2024 47,528,908 $ 5 1 $ - $ 171,792 $ 20,385 $ ( 176,970 ) $ ( 1,070 ) $ 14,142 Issuance of shares upon the vesting of restricted stock units (Note 16) 91,355 - - - - - - - - Expiration of warrants (Note 18) - - - - 13,344 ( 13,344 ) - - - Stock options issued for services (Note 16) - - - - 441 - - - 441 Restricted stock units issued for services (Note 16) - - - - 621 - - - 621 Foreign currency translation - - - - - - - ( 147 ) ( 147 ) Net loss - - - - - - ( 21,940 ) - ( 21,940 ) Balance, November 30, 2024 47,620,263 $ 5 1 $ - $ 186,198 $ 7,041 $ ( 198,910 ) $ ( 1,217 ) $ ( 6,883 ) Nine Months Ended November 30, 2023 Common stock Series A preferred stock Additional Accumulated par value $0.0001 par value $0.0001 Additional Paid-in Other Total Number of Shares Amount Number of Shares Amount Paid-in Capital Capital - Warrants Accumulated Deficit Comprehensive (Loss) Stockholders’ Equity Balance, February 28, 2023 47,469,224 $ 5 1 $ - $ 170,370 $ 20,385 $ ( 155,883 ) $ ( 1,141 ) $ 33,736 Issuance of shares upon the vesting of restricted stock units (Note 16) 51,963 - - - - - - - - Issuance of shares upon the exercise of stock options (Note 16) 7,721 - - - - - - - - Stock options issued for services (Note 16) - - - - 501 - - - 501 Restricted stock units issued for services (Note 16) - - - - 639 - - - 639 Foreign currency translation - - - - - - - 21 21 Net loss - - - - - - ( 15,995 ) - ( 15,995 ) Balance, November 30, 2023 47,528,908 $ 5 1 $ - $ 171,510 $ 20,385 $ ( 171,878 ) $ ( 1,120 ) $ 18,902 See accompanying notes to the condensed consolidated financial statements. F-5 Table of Contents Loop Industries, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands of U.S. dollars) Nine Months Ended November 30, 2024 2023 Cash Flows from Operating Activities Net loss $ ( 21,940 ) $ ( 15,995 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization (Notes 6 and 7) 398 400 Stock-based compensation expense (Note 16) 1,062 1,140 Impairment of machinery & equipment (Note 6) 8,460 - Accretion expense (Note 12) 87 53 Changes in operating assets and liabilities: Sales tax and tax credits receivable (Note 3) 144 670 Inventories (Note 4) 21 ( 210 ) Prepaid expenses (Note 5) 180 147 Accounts payable and accrued liabilities (Note 9) 2,851 ( 955 ) Customer deposits - ( 12 ) Unearned revenue (Note 11) 102 - Net cash used in operating activities ( 8,635 ) ( 14,762 ) Cash Flows from Investing Activities Deposits on equipment - ( 5,065 ) Distribution from equity investment 368 - Additions to property, plant and equipment (Note 6) - ( 10 ) Additions to intangible assets (Note 7) ( 454 ) ( 378 ) Net cash used in investing activities ( 86 ) ( 5,453 ) Cash Flows from Financing Activities Borrowings under credit facility (Note 10) 2,372 - Repayment of long-term debt (Note 12) ( 60 ) ( 47 ) Net cash (used) provided by financing activities 2,312 ( 47 ) Effect of exchange rate changes ( 226 ) 37 Net decrease in cash ( 6,635 ) ( 20,225 ) Cash, cash equivalents and restricted cash, beginning of period 6,958 30,591 Cash, cash equivalents and restricted cash, end of period $ 323 $ 10,366 Supplemental Disclosure of Cash Flow Information: Income tax paid $ - $ - Interest paid $ 214 $ 63 Interest received $ 224 $ 347 See accompanying notes to the condensed consolidated financial statements. F-6 Table of Contents Loop Industries, Inc. Three and Nine Months Ended November 30, 2024 and 2023 Notes to the Condensed Consolidated Financial Statements (Unaudited) 1. The Company and Basis of Presentation The Company Loop Industries, Inc. (the “Company,” “Loop,” “we,” or “our”) is a technology company that owns patented and proprietary technology that depolymerizes no and low-value waste polyethylene terephthalate (“PET”) plastic and polyester fiber to its base building blocks (monomers). The monomers are filtered, purified and polymerized to create virgin-quality Loop ™ branded PET resin suitable for use in food-grade packaging and polyester fiber. The Company is currently in the pre-commercialization stage with limited revenues. Basis of Presentation These unaudited interim condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures included in these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2024, filed with the SEC on May 29, 2024. 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 also owns, through Loop Innovations, LLC, a 50 % interest in a joint venture, Indorama Loop Technologies, LLC, which is accounted for under the equity method. Intercompany balances and transactions are eliminated on consolidation. The condensed consolidated balance sheet as of February 29, 2024, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by US GAAP on an annual reporting basis. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods. The results for the three- and nine-month periods ended November 30, 2024 are not necessarily indicative of the results to be expected for any subsequent quarter, for the fiscal year ending February 28, 2025, 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. 2. Summary of Significant Accounting Policies Liquidity risk assessment Since its inception, the Company has been in the pre-commercialization stage with no material revenues from customers, and its ongoing operations and commercialization plans have been financed primarily by raising equity. The Company has incurred net losses and negative cash flow from operating and investing activities since its inception and expects to incur additional net losses while it continues to develop and plan for commercialization. As at November 30, 2024, the Company’s available liquidity was $ 450 , consisting of cash and cash equivalents of $ 323 and an undrawn amount on a senior credit facility from a Canadian bank of $ 127 . Also, current liabilities exceeded current assets by $ 7,085 as at November 30, 2024. On December 23, 2024, the Company received cash proceeds of $ 20,790 from the closing of transactions with Reed Management SAS (“Reed”), consisting of the issuance of Series B Convertible Preferred Stock and its first technology licensing agreement (see Note 20 for additional details). F-7 Table of Contents Management continuously monitors the Company’s cash resources against its short-term cash commitments to ensure there is sufficient liquidity to fund its costs for at least twelve months from the financial statement issuance date. It evaluates the Company’s liquidity to determine if there is substantial doubt about its ability to continue as a going concern. In preparing this going concern assessment, management applies significant judgment in estimating future cash flow requirements of the Company based on budgets and forecasts, which includes developing assumptions related to the estimation of amount and timing of future cash outflows and inflows. Based on this assessment and considering the $20,790 proceeds received on December 23, 2024, management is comfortable that current available liquidity will be sufficient to meet the Company’s obligations, commitments and budgeted expenditures for no less than twelve months from the issuance date of these unaudited interim condensed consolidated financial statements. The Company’s ability to move to the next stage of its strategic development and construct manufacturing plants is dependent on, among other factors, whether the Company can obtain the necessary financing through a combination of further technology licensing arrangements, government incentive programs, and/or the issuance of debt and/or equity. However, there is no assurance that the Company will be successful in attracting additional funding. Even if additional financing is available, it may not be available on terms favorable to the Company. Failure to secure additional financing on favorable 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. Use of estimates The preparation of financial statements in conformity with US GAAP requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include the going concern assessment, estimates for depreciable lives of property, plant and equipment and intangible assets, recoverability of property, plant and equipment, recoverability of tax credits receivable, assumptions made in calculating the fair value of stock-based compensation and other equity instruments, and the assessment of performance conditions for stock-based compensation awards. Unearned revenue Unearned revenue represents obligations to our customers for which payment has been received in advance of the delivery of goods or performance of services. Such revenue is recognized on the balance sheet as a contract liability until we fulfill our contractual obligations. The timing of revenue recognition is based upon the transfer of control of the specified goods or services to the customer. For goods, this typically occurs at the time of shipment or delivery, depending on the terms of the contract. For services, revenue is recognized as the services are performed, either at a point in time or over a specified period. Net earnings (loss) per share The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share . Basic earnings (loss) per share is computed by dividing the net income (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 earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive. For the three- and nine-month periods ended November 30, 2024 and 2023, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at November 30, 2024, the potentially dilutive securities consisted of 2,771,216 outstanding stock options (2023 – 2,772,000 ), 4,448,179 outstanding restricted stock units (2023 – 4,417,688 ), and 2,357,407 outstanding warrants (2023 – 7,089,400 ). F-8 Table of Contents Recently issued accounting pronouncements not yet adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The amendments in this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures. The updated standard is effective for our annual period beginning after December 15, 2024, which for the Company will be the annual period ending February 28, 2026. Early adoption is permitted. Management is currently evaluating the impact that the updated standard will have on our financial statement disclosures. In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The updated standard is effective for our annual period ending February 28, 2025. Management is currently evaluating the impact that the updated standard will have on our financial statement disclosures. In August 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-05, Joint Venture Formations, which requires joint ventures to apply a new basis of accounting by measuring assets and liabilities at fair value upon formation. The amendments address diversity in practice by establishing requirements for recognition and measurement of net assets and liabilities on the formation date. The updated standard is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted. Management is currently evaluating the impact that the updated standard will have on our consolidated financial statements and related disclosures. 3. Sales Tax, Tax Credits and Other Receivables Sales tax, research and development tax credits and other receivables as at November 30, 2024 and February 29, 2024 were as follows: November 30, 2024 February 29, 2024 Sales tax $ 127 $ 75 Research and development tax credits 57 160 Interest income receivable - 70 Other receivables 16 46 $ 200 $ 351 4. Inventories Inventories as at November 30, 2024 and February 29, 2024 were as follows: November 30, 2024 February 29, 2024 Finished goods $ 515 $ 552 Work in process 315 333 Raw materials 10 34 Allowance for inventory write-down ( 762 ) ( 817 ) $ 78 $ 102 As at November 30, 2024 and February 29, 2024, inventories included finished goods, work in process and raw materials. Finished goods inventories consist of bottle grade and fiber grade Loop ™ PET resin. Work in process inventories consist of recycled monomers (dimethyl terephthalate (“rDMT”) and monoethylene glycol (“rMEG”), either purified or yet to be purified, resulting from the depolymerization of PET feedstock. These monomers can be polymerized into Loop ™ PET. Raw materials inventories consist of chemicals which are used as inputs in the PET depolymerization process. As at November 30, 2024 and February 29, 2024, finished goods and work in process inventories were presented at their net realizable value, while raw materials were presented at average cost. As at November 30, 2024, the Company recorded an allowance for inventory write-down of $ 762 (February 29, 2024 – $ 817 ) on finished goods and work in process inventories related to inventory volumes not expected to be sold in the next twelve months. F-9 Table of Contents 5. Prepaid Expenses Prepaid expenses as at November 30, 2024 and February 29, 2024 were as follows: November 30, 2024 February 29, 2024 Insurance $ 233 $ 449 Other 160 128 $ 393 $ 577 6. Property, Plant and Equipment, Net As at November 30, 2024 Cost Accumulated depreciation, write-down and impairment Net book value Machinery and equipment $ 8,460 $ ( 8,460 ) $ - Building 1,770 ( 404 ) 1,366 Land 218 - 218 Building and Land Improvements 1,795 ( 1,608 ) 187 Office equipment and furniture 266 ( 173 ) 93 $ 12,509 $ ( 10,645 ) $ 1,864 As at February 29, 2024 Cost Accumulated depreciation, write-down and impairment Net book value Machinery and equipment $ 8,460 $ - $ 8,460 Building 1,827 ( 371 ) 1,456 Land 226 - 226 Building and Land Improvements 1,853 ( 1,472 ) 381 Office equipment and furniture 275 ( 162 ) 113 $ 12,641 $ ( 2,005 ) $ 10,636 Depreciation expense for the three- and nine-month periods ended November 30, 2024 amounted to $ 79 and $ 249 , respectively (2023 – $ 93 and $ 295 ). During the three-month period ended November 30, 2024 the Company recorded an impairment charge for machinery and equipment of $ 8,460 . This impairment was due to the termination of the joint venture arrangement between the Company and SK Geo Centric Co. Ltd. (“SKGC”) under which they had intended to construct and operate an Infinite Loop™ manufacturing facility in Ulsan, South Korea (see note 20 for additional details). The Company plans to utilize the equipment in a future commercial production facility. However, the deployment plans for the use of this equipment are not fully developed at this time and therefore the carrying value of the equipment was considered to be impaired, resulting in an expense of $8,460 being recognized in the three-month period ended November 30, 2024. 7. Intangible Assets, Net Intangible assets as at November 30, 2024 and February 29, 2024 were $ 1,808 and $ 1,548 , respectively. During the nine-month periods ended November 30, 2024 and 2023, we made additions relating to patent application costs to intangible assets of $ 454 and $ 378 , respectively. Amortization expense for the three- and nine-month periods ended November 30, 2024 amounted to $ 53 and $ 149 , respectively (2023 – $ 38 and $ 105 ). F-10 Table of Contents 8. Fair Value of Financial Instruments The following tables presents the fair value of the Company’s financial liabilities as at November 30, 2024 and February 29, 2024: Fair Value at November 30, 2024 Carrying Amount Fair Value Level in the hierarchy Financial liabilities measured at amortized cost: Long-term debt $ 3,186 $ 3,248 Level 2 Due to customer $ 816 $ 816 Level 2 Fair Value at February 29, 2024 Carrying Amount Fair Value Level in the hierarchy Financial liabilities measured at amortized cost: Long-term debt $ 3,320 $ 3,377 Level 2 Due to customer $ 770 $ 770 Level 2 The fair value of cash, restricted cash, due to customer, credit facility, other receivables, and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturity. 9. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities as at November 30, 2024 and February 29, 2024 were as follows: November 30, 2024 February 29, 2024 Trade accounts payable $ 3,509 $ 602 Accrued employee compensation 837 801 Accrued engineering fees 314 511 Accrued professional fees 293 274 Other accrued liabilities 133 133 $ 5,086 $ 2,321 F-11 Table of Contents 10. Credit Facility On July 26, 2022, Loop Canada, Inc., a wholly-owned subsidiary of the Company, entered into an Operating Credit Facility (the “Credit Facility”) with a Canadian bank. The Credit Facility allows for borrowings of up to $ 2,498 (CDN $3,500) in aggregate principal amount and provides for a two-year term on amounts drawn. All borrowings under the Credit Facility bear interest at an annual rate equal to the bank’s Canadian prime rate plus 1.0 %. The Credit Facility is collateralized by the Company’s Terrebonne, Québec property and is subject to a minimum equity covenant, tested quarterly, with which the Company was not in compliance as at November 30, 2024. On December 12, 2024, the Company received a waiver from the bank, confirming they have no intention of demanding payment, provided that the Company receives capital injections for at least CDN $10,000 by December 31, 2024 and CDN $10,000 by January 31, 2025 . The Company received $20,790 from Reed on December 23, 2024 which meets the requirements set forth in the waiver (see Note 20 for additional details). As at November 30, 2024, the Company borrowed $ 2,372 under the Credit Facility. The Company recorded interest expense on the Credit Facility for the three- and nine-month periods ended November 30, 2024 in the amount of $ 41 and $ 86 , respectively (2023 – nil and nil). 11. Unearned revenue As at November 30, 2024, unearned revenue was $ 102 (2023 – nil), comprised of a payment received from a customer while the Company has not yet fulfilled its obligation to deliver rPET. 12. Long‑Term Debt Long-term debt as of November 30, 2024 and February 29, 2024, was comprised of the following: November 30, 2024 February 29, 2024 Investissement Québec financing facility: Principal amount $ 3,206 $ 3,353 Unamortized discount ( 156 ) ( 191 ) Accrued interest 136 158 Total Investissement Québec financing facility 3,186 3,320 Less: current portion of long-term debt ( 519 ) ( 100 ) Long-term debt, net of current portion $ 2,667 $ 3,220 Investissement Québec financing facility The Company recorded interest expense on the Investissement Québec loan for the three- and nine-month periods ended November 30, 2024 in the amount of $ 29 and $ 87 , respectively (2023 – $ 21 and $ 63 ) and an accretion expense of $ 13 and $ 41 , respectively (2023 – $ 18 and $ 53 ). During the nine-month period ended November 30, 2024, the Company made repayments of $ 60 (2023 – $ 47 ) 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, 2025 $ 20 February 28, 2026 664 February 28, 2027 664 February 29, 2028 664 February 28, 2029 665 Thereafter 665 Total $ 3,342 F-12 Table of Contents 13. Stockholders’ Equity Common Stock For the period ended November 30, 2024 Number of shares Amount Balance, February 29, 2024 47,528,908 $ 5 Issuance of shares upon settlement of restricted stock units 91,355 - Balance, November 30, 2024 47,620,263 $ 5 For the period ended November 30, 2023 Number of shares Amount Balance, February 28, 2023 47,469,224 $ 5 Issuance of shares upon settlement of restricted stock units 51,963 - Issuance of shares upon the exercise of stock options 7,721 - Balance, November 30, 2023 47,528,908 $ 5 During the nine months ended November 30, 2024, the Company recorded the following common stock transaction: (i) The Company issued 91,355 shares of the common stock to settle restricted stock units that vested in the period. During the nine months ended November 30, 2023, the Company recorded the following common stock transaction: (i) The Company issued 51,963 shares of the common stock to settle restricted stock units that vested in the period. (ii) The Company issued 7,721 shares of the common stock to settle stock options exercised in the period. 14. Research and Development Expenses Research and development expenses for the three-month periods ended November 30, 2024 and 2023 were as follows: November 30, 2024 November 30, 2023 Employee compensation $ 876 $ 1,268 Machinery and equipment expenditures 41 4 External engineering 86 262 Plant and laboratory operating expenses 210 322 Patent legal fees 98 66 Tax credits ( 34 ) ( 221 ) Other 100 132 $ 1,377 $ 1,833 Research and development expenses for the nine-month periods ended November 30, 2024 and 2023 were as follows: November 30, 2024 November 30, 2023 Employee compensation $ 3,014 $ 4,087 Machinery and equipment expenditures 44 1,240 External engineering 1,365 1,558 Plant and laboratory operating expenses 677 1,238 Patent legal fees 246 254 Tax credits ( 69 ) ( 269 ) Other 282 253 $ 5,559 $ 8,361 F-13 Table of Contents 15. General and Administrative Expenses General and administrative expenses for the three-month periods ended November 30, 2024 and 2023 were as follows: November 30, 2024 November 30, 2023 Employee compensation $ 799 $ 835 Insurance 453 645 Professional fees 595 720 Other 301 258 $ 2,148 $ 2,458 General and administrative expenses for the nine-month periods ended November 30, 2024 and 2023 were as follows: November 30, 2024 November 30, 2023 Employee compensation $ 2,491 $ 2,548 Insurance 1,421 2,058 Professional fees 2,858 2,251 Other 884 910 $ 7,654 $ 7,767 16. Share-based Payments Stock Options The following table summarizes the continuity of the Company’s stock options during the three-month periods ended November 30, 2024 and 2023: 2024 2023 Number of stock options Weighted average exercise price Number of stock options Weighted average exercise price Outstanding, beginning of period 2,771,216 $ 5.25 2,782,000 $ 5.08 Granted - - - - Exercised - - ( 10,000 ) 0.80 Forfeited - - - - Expired - - - - Outstanding, end of period 2,771,216 $ 5.25 2,772,000 $ 5.10 Exercisable, end of period 2,040,000 $ 6.12 1,810,000 $ 6.53 The following tables summarizes the continuity of the Company’s stock options during the nine-month periods ended November 30, 2024 and 2023: 2024 2023 Number of stock options Weighted average exercise price Number of stock options Weighted average exercise price Outstanding, beginning of period 2,772,000 $ 5.10 2,542,000 $ 5.27 Granted 199,216 2.89 240,000 3.11 Exercised - - ( 10,000 ) 0.80 Forfeited ( 200,000 ) 0.80 - - Expired - - - - Outstanding, end of period 2,771,216 $ 5.25 2,772,000 $ 5.10 Exercisable, end of period 2,040,000 $ 6.12 1,810,000 $ 6.53 F-14 Table of Contents The Company applies the fair value method of accounting for stock-based compensation awards granted. Fair value is calculated based on a Black-Scholes option pricing model. The principal components of the pricing model for the stock options granted in the nine-month period ended November 30, 2024 and 2023 were as follows: 2024 2023 Exercise price $ 2.89 $ 3.11 Risk-free interest rate 4.09 % 3.84 % Expected dividend yield 0 % 0 % Expected volatility 73 % 79 % Expected life 7 years 3 years During the three-month periods ended November 30, 2024 and 2023, stock-based compensation expense attributable to stock options amounted to $ 146 and $ 168 , respectively. During the nine-month periods ended November 30, 2024 and 2023, stock-based compensation expense attributable to stock options amounted to $ 441 and $ 501 , respectively. Restricted Stock Units The following table summarizes the continuity of the restricted stock units during the three-month periods ended November 30, 2024 and 2023: 2024 2023 Number of units Weighted average fair value price Number of units Weighted average fair value price Outstanding, beginning of period 4,461,818 $ 6.35 4,417,688 $ 6.52 Granted - - - - Settled - - - - Forfeited ( 13,639 ) 4.43 - - Outstanding, end of period 4,448,179 $ 6.36 4,417,688 $ 6.52 Outstanding vested, end of period 1,761,421 $ 5.86 1,635,241 $ 6.22 The following table summarizes the continuity of the restricted stock units during the nine-month periods ended November 30, 2024 and 2023: 2024 2023 Number of units Weighted average fair value price Number of units Weighted average fair value price Outstanding, beginning of period 4,368,897 $ 6.53 3,888,618 $ 7.09 Granted 184,276 2.25 585,364 2.93 Settled ( 91,355 ) 6.74 ( 51,963 ) 8.66 Forfeited ( 13,639 ) 4.43 ( 4,331 ) 8.21 Outstanding, end of period 4,448,179 $ 6.36 4,417,688 $ 6.52 Outstanding vested, end of period 1,761,421 $ 5.86 1,635,241 $ 6.22 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 November 30, 2024 and 2023, stock-based compensation attributable to RSUs amounted to $ 184 and $ 229 , respectively. During the nine-month periods ended November 30, 2024 and 2023, stock-based compensation attributable to RSUs amounted to $ 621 and $ 639 , respectively. F-15 Table of Contents Stock-Based Compensation Expense During the three-month periods ended November 30, 2024 and 2023, stock-based compensation included in research and development expenses amounted to $ 106 and $ 161 , respectively, and in general and administrative expenses amounted to $ 224 and $ 236 , respectively. During the nine-month periods ended November 30, 2024 and 2023, stock-based compensation included in research and development expenses amounted to $ 367 and $ 476 , respectively, and in general and administrative expenses amounted to $ 695 and $ 664 , respectively. 17. Equity Incentive Plan On July 6, 2017, the Company adopted the 2017 Equity Incentive Plan (the “Plan”). The Plan permits the granting of warrants, stock options, stock appreciation rights and restricted stock units to employees, directors and consultants of the Company. A total of 3,000,000 shares of common stock were initially reserved for issuance under the Plan at July 6, 2017, with annual automatic share reserve increases, as defined in the Plan, amounting to the lessor of (i) 1,500,000 shares, (ii) 5 % of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the Administrator of the Plan, effective March 1, 2018. On March 1, 2024, the share reserve was increased by 1,500,000 shares (2023 – 1,500,000 ). The Plan is administered by the Board of Directors who designates eligible participants to be included under the Plan, the number of awards granted, the share price pursuant to the awards and the vesting conditions and period. The awards, when granted, will have an exercise price of no less than the estimated fair value of shares at the date of grant and a life not exceeding 10 years from the grant date. However, where a participant, at the time of the grant, owns stock representing more than 10 % of the voting power of the Company, the life of the options shall not exceed 5 years. The following table summarizes the continuity of the Company’s Equity Incentive Plan units that were authorized for issuance as at and during the nine-month periods ended November 30, 2024 and 2023: 2024 2023 Number of units* Number of units* Authorized, beginning of period 848,244 120,486 Automatic share reserve increase 1,500,000 1,500,000 Units granted ( 383,492 ) ( 825,364 ) Units forfeited 213,639 4,331 Units expired - - Authorized, end of period 2,178,391 799,453 *The use of the term “units” in the table above describes a combination of stock options and RSUs. 18. Warrants During the nine-month period ended November 30, 2024, warrants for the purchase of 4,714,813 shares of our common stock, each with an exercise price of $ 15.00 , expired, and warrants for the purchase of 17,180 shares of our common stock, each with an exercise price of $ 11.00 also expired. 19. Contractual agreements Strategic partnership with Ester Industries Ltd. (“Ester”) On May 1, 2024, the Company entered into an agreement with 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. To date, no amounts have been contributed by the Company to the India JV. Subject to the terms of the relevant governing documents, Ester will be the exclusive producer of specialty polymers for the India JV, and the Company will be the exclusive seller and marketing agent of the India JV’s products. Ester and the Company are contacted to work in collaboration on all financing activities for the India JV pursuant to the terms of the agreement. Pursuant to the terms of the relevant governing documents, Loop and Ester parties are required to obtain debt for a minimum of 60% of the total installed cost of the Infinite Loop™ manufacturing facility in India and will each contribute 50% of the initial equity capital of the India JV . F-16 Table of Contents 20. Subsequent events Amended Agreement with Reed Management SAS (“Reed”) On December 12, 2024, the Company entered into an Amended and Restated Share Purchase Agreement (the “Amended Agreement”) with Reed Management SAS (“Reed”), which amends the original Share Purchase Agreement dated May 30, 2024. To facilitate the closing of the transactions contemplated by the Amended Agreement, a simplified joint-stock company is in the process of being incorporated under French law (“Infinite Loop Europe”), to be owned 90 % by Reed and 10 % by Loop. On December 23, 2024, the Company closed the financing and licensing transactions contemplated by the Amended Agreement. The Company issued and sold 1,044,430 shares of Series B Convertible Preferred Stock at $ 10.00 per share to Reed Circular Economy (“RCE”), an affiliate of Reed. Additionally, the Company entered into a License Agreement with RCE, acting on behalf of Infinite Loop Europe, granting a non-transferable, royalty-bearing license to use Loop’s proprietary depolymerization technology for one facility within Europe. The Company received total cash proceeds of $ 20,790 (€20,000) on December 23, 2024. Terminated Agreement with SKGC Effective January 14, 2025, Loop and SKGC have mutually agreed to terminate their joint venture agreement executed by the parties on April 27, 2023 to construct and operate an Infinite Loop™ manufacturing facility in Ulsan, South Korea. F-17 Table of Contents