What changed in this filing

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Item 1A. Risk Factors

2025-05-29 compared with 2024-05-29 · 112 added, 75 removed, 223 unchanged (46% of the section changed)

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We expect to continue to incur losses for the foreseeable future and may never achieve or maintain profitability.

We have never generated material revenue and may never be profitable.

Since our inception in 2010, we have incurred net losses.

Our net loss for the year ended February 28, 2025 was $15.1 million and we have earned limited revenues to date.

We have financed our operations primarily through sales of common stock and incurrence of debt and have devoted substantial efforts to research and development, process engineering, as well as building our team.

We expect to continue to incur significant expenses and operating losses for the foreseeable future.

The net losses we incur may fluctuate significantly from quarter to quarter.

Although we believe that our business plan has significant profit potential, we may not attain profitable operations and management may not succeed in realizing our business objectives.

Our ability to generate revenue at a large scale depends on our ability to successfully complete the development of our technology and products, obtain the regulatory approvals necessary to commercialize our products, attract additional customers, and finance, build and operate commercial facilities.

We expect to incur operating losses in future periods.

These losses will occur as we do not have sufficient revenues to offset the expenses associated with our business operations.

We may not generate material revenues from product sales for the next several years, if ever.

If we are not able to develop our business as anticipated, we may not be able to generate revenues or achieve profitability.

We cannot guarantee that we will ever be successful in generating revenues in the future.

If we are unable to generate revenues, we will not be able to earn profits or continue operations.

Based on its assessment, management estimates that current available liquidity and forecasted net cash flows will not be sufficient to meet the Company’s obligations, commitments and budgeted expenditures the next twelve months from the date of this Annual Report on Form 10-K.

These events and conditions are material uncertainties that raise substantial doubt upon the Company’s ability to continue as a going concern and accordingly, the appropriateness of the use of accounting principles applicable to a going concern.

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.

Therefore, 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 February 29, 2024, the Company’s available liquidity was $9,537, consisting of cash and cash equivalents of $6,958 and an undrawn senior loan facility from a Canadian bank of $2,579.

Our ability to continue as a going concern is dependent on our ability to generate sufficient cash flows to meet our obligations and to obtain additional financing, as needed.

There can be no assurance that we will be able to achieve these objectives.

If we are unable to generate sufficient cash flows or obtain adequate financing, we may be required to significantly reduce, delay, or eliminate planned expenditures and other costs, which could have a material adverse effect on our business, financial condition, and results of operations.

Additionally, we may be forced to seek protection under applicable bankruptcy laws and/or liquidate or reorganize our assets and liabilities.

The existence of a substantial doubt about our ability to continue as a going concern could materially limit our ability to raise additional funds through the issuance of new debt or equity securities or otherwise.

The existence of substantial doubt about our ability to continue as a going concern may also adversely affect our relationships with current and potential customers, suppliers, and employees, making it more difficult to operate our business.

Investors should consider our financial condition, results of operations, and business prospects in light of the substantial doubt about our ability to continue as a going concern.

If we are unable to continue as a going concern, our shareholders may lose all or a significant portion of their investment in our company.

We have financed our operations primarily through sales of capital stock and incurrence of debt and have devoted substantial efforts to research and development, process engineering, as well as building our team and business partnerships.

We expect to continue to incur significant expenses and operating losses for the foreseeable future, and our net losses may fluctuate significantly from quarter to quarter.

Although we believe that our business plan has significant profit potential, there is no assurance that we will attain profitable operations or that management will succeed in realizing our business objectives.

Our ability to generate revenue at scale depends on the successful commercialization of our technology and products, including the scale-up of our technology, obtaining and maintaining necessary regulatory approvals, attracting additional partners and customers, and securing financing to build and operate commercial facilities.

With the development of our core technology substantially complete, our ability to advance to the next stage, including constructing manufacturing plants and commercializing our products at scale, is dependent on our ability to secure financing through a combination of debt, equity, joint ventures, government incentives, and/or customer contributions.

We expect to continue incurring operating losses, as our revenues are not yet sufficient to offset the costs of our business operations.

While we have begun generating revenue, including a €10.0 million upfront licensing fee under our transactions with Reed and $0.4 million in engineering services revenue from our India JV in the quarter ended February 28, 2025, we may not generate material revenues from licensing or product sales for several years.

If we are not able to develop our business as anticipated, the revenues we generate may not be sufficient to support our operations or achieve profitability.

There can be no assurance that we will successfully generate sufficient revenues in the future, and failure to do so would prevent us from earning profits or continuing operations.

We may not be able to execute our business plan or stay in business without additional funding.

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We are pursuing financial incentives and financing for our proposed projects with several countries through multiple programs that involve various branches of government.

If we are unable to attract government incentives and financing to our projects or investors to invest in our business, we may not be able to acquire additional financing through debt or equity markets.

Our failure to secure additional financing on favorable terms when it becomes required would have an adverse effect on our ability to execute our business plan or remain in business.

Our anticipated partnership and related financing arrangements are subject to closing conditions and no assurance can be given that those closing conditions will be completed.

Once binding agreements with respect to the Proposed Transaction (the “Reed Agreement”) are signed, in order to close, all the closing conditions under the Reed Agreement must be completed, prior to the termination of the Reed Agreement.

As currently drafted, The Reed Agreement may be terminated upon the occurrence of certain events, including, but not limited to, voluntarily, by either party, if a closing has not occurred within six (6) months of signing.

While Reed and Loop are working diligently to finalize and execute the Reed Agreement, and to accomplish the closing conditions in a timely manner, no assurance can be given that the closing conditions will be completed or that the transaction between Reed and the Company will be consummated.

There is no assurance that we will be able to attract government incentives and financing to our projects or investors to invest in our business, or acquire additional financing through debt or equity markets.

Our failure to secure additional financing on acceptable terms when it becomes required would have an adverse effect on our ability to execute our business plan or remain in business.

Conditions in the financial markets and economic conditions in general may adversely affect our ability to raise additional capital, execute our business plan or remain in business.

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Economic activity improved slightly during 2024;

however, economic concerns remain as a result of the cumulative weight of uncertainty regarding the economic conditions domestically and in foreign countries, including global political hostilities and other financial crises.

Inflation has become elevated, reflecting demand and supply imbalances, supply chain issues, higher energy prices, fiscal stimulus and broader price pressures.

Uncertainty surrounding the near-term direction of global markets, and the potential impact of these trends on the global economy, are expected to persist for the near term.

Strategic risk, including threats to business models from rising interest rates and modest economic growth, remain high.

however, economic concerns remain as a result of the cumulative weight of uncertainty regarding the economic conditions in the United States, where our securities are listed and in foreign countries, including global political hostilities and other financial disruptions.

The imposition of broad tariffs by the United States in April 2025 has contributed to global market volatility.

These protectionist measures have intensified trade tensions and heightened economic uncertainty, which may adversely impact investor confidence and constrain the availability of capital.

Inflationary pressures have persisted and may continue to rise, driven by supply-demand imbalances, ongoing supply chain disruptions, and broader pricing pressures.

The near-term outlook for global markets remains uncertain, and strategic risks, including potentially rising interest rates and sluggish economic growth, continue to pose challenges to many business models.

It is difficult to predict the extent to which these challenging economic conditions will persist or whether recent progress in the economic recovery will instead shift to the potential for further decline.

If the economy does weaken in the future, it is uncertain how our business would be affected and whether we would be able successfully to mitigate any such effects on our business.

We are not directly affected by U.S.

tariff policies, given the nature of our current business, including the fact that our principal operations are based in Canada and that the joint ventures we are focused on establishing and expanding are with non-U.S.

However, while we have begun to generate some revenue, our ability to scale operations and achieve profitability depends on continued access to external capital and execution of our business plan.

If macroeconomic conditions worsen affecting market demand for our technology and products, and if capital becomes less available, it is uncertain how our business would be affected or whether we could successfully mitigate those impacts.

Accordingly, these factors in the global economy could have an adverse effect on our ability to raise additional capital, execute our business plan or remain in business.

In 2023, multiple regional banks were either taken over by the Federal Deposit Insurance Corporation (FDIC) or entered receivership.

If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.

Weakness and volatility in capital markets and the economy, in general or as a result of bank failures or macroeconomic conditions such as rising inflation, could limit our access to capital markets and increase our costs of borrowing.

Our technology may not be successful in developing commercial products.

We and our potential future collaborators may spend many years and dedicate significant financial and other resources to developing our technology that may never be successfully commercialized.

Our technology may never become successfully commercialized for, among others, any of the following reasons:

We and our collaborators may spend many years and dedicate significant financial and other resources to developing our technology that may never be successfully commercialized at scale.

Our technology may never achieve widespread commercial success for, among others, any of the following reasons:

We may not be able to secure sufficient funding to progress our technology through development and commercial validation;

We or our future collaborators may be unable to obtain the requisite regulatory approvals for our technology;

We or our collaborators may be unable to obtain the requisite regulatory approvals for our technology or may be adversely affected by changes in applicable laws and regulations;

Competitors may launch competing or more effective technology;

Our technology may not be commercially successful;

Our technology may not achieve broad market adoption or sustained commercial success;

Current and future collaborators may be unable to fully develop and commercialize products containing our technology or may decide, for whatever reason, not to commercialize such products;

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If any of these things were to occur, it could have an adverse effect on our ability to raise additional capital, execute our business plan, or remain in business.

We face business risks due to our relationships with strategic partners.

We face business risks due to our relationships with strategic partners and other factors that may affect our joint venture endeavors.

We rely on our strategic partner relationships for the scaling, manufacturing and commercialization of our technology.

We have various arrangements with SKGC, Suez, Ester and Reed to commercially scale our technology in Asia and Europe and with Chemtex and our external engineering partners.

We also have various supply agreements with Danone, L’Oréal and L’OCCITANE en Provence for our planned commercial facilities.

We have arrangements with Ester and Reed Societe Generale Group to commercially scale our technology in India and Europe, respectively.

Termination of any of these agreements could have an adverse effect on our business.

In particular, certain of our agreements with our strategic partners have termination rights related to the satisfaction of milestones, some of which we have not achieved.

Though we have not received any indication from our strategic partners as to their indication to terminate, we cannot provide assurance that these strategic partners with whom we have entered into such agreements will not exercise their applicable termination rights, which are not within our control.

Although we have not received any indication from our strategic partners of an intent to terminate and we expect these relationships to continue progressing, we cannot guarantee that our partners will not exercise their applicable termination rights, which are outside our control, or that other unforeseen factors will not affect the continuation of these collaborations.

There are various reasons, whether operational, strategic, or external, that could lead either us or our partners to determine not to proceed with a joint venture project.

For example, we and our partner SKGC mutually agreed in January 2025 to terminate our joint venture agreement to build an Infinite Loop™ facility in South Korea.

This decision reflected our shift in strategy to focus on capital deployment in lower-cost jurisdictions and emphasized licensing and engineering services in higher-cost regions, while SKGC underwent a broader strategic restructuring.

Similarly, a planned European partnership with SUEZ and SKGC was suspended in 2022 after the parties determined not to proceed.

These decisions, while strategic, resulted in the suspension or winding down of planning efforts with associated sunk costs.

Joint ventures and strategic partnerships require significant time, financial investment, and management attention during early-stage planning, engineering, and feasibility activities, all of which may be incurred before a final investment decision is made.

If a joint venture is suspended or terminated prior to commercialization, we may be unable to recover these investments.

Moreover, strategic shifts by partners, changes in market or regulatory conditions, misalignment of commercial priorities, or challenges in achieving project economics could impact the long-term viability and expected benefits of such arrangements.

Any failure of our strategic partners or us to meet our required commitments, whether financial or otherwise, could result in a termination of such agreements as described above, operational issues, increased expenditures, or damage to our reputation or loss of clients or customers, any of which could adversely affect our business and operations, financial performance, or prospects.

If we are unable to successfully scale our manufacturing processes, we may not meet customer demand.

To be successful, we will have to scale our manufacturing processes while maintaining high product quality and reliability.

If we cannot maintain high product quality at a large scale, our business will be adversely affected.

We may encounter difficulties in scaling up production, including problems with the supply of key components.

Even if we are successful in developing our manufacturing capability, we do not know whether we will do so in time to satisfy the requirements of our customers.

To be successful, we will need to scale our manufacturing processes in a cost-effective manner while maintaining high product quality and reliability.

If we cannot maintain high product quality at a large scale and with an acceptable cost structure, our business will be adversely affected.

We may encounter difficulties in scaling up production, including problems with the supply of key components, cost over-run, or quality control.

Even if we are successful in developing our manufacturing capability including through joint ventures, we do not know whether we will do so quickly and efficiently enough to satisfy the requirements of our customers.

Our current manufacturing facility is a small-scale plant with limited production capacity used principally for research and development, training, and customer marketing purposes.

In order to fully implement our business plan, we will need to scale the operations to a larger industrial commercial facility, develop strategic partnerships, or find other means to produce greater volumes of finished product.

We, however, have not yet tested our technology at the scale that will be required for large commercial use nor at a scale sufficient to conclude the success of our technology.

We, however, have not yet tested our technology at the scale that will be required for large commercial use nor at a scale and cost structure sufficient to conclude the commercial success of our technology.

Disruption at, damage to, or destruction of our Terrebonne Facility could impede our ability to continue innovating and refining our technological process, and supporting our commercial projects, which would harm our business, financial condition, and operating results.

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Our continued innovation activities rely on an uninterrupted and fully functioning plant.

Interruptions in operations at this location could result in our inability to provide the most efficient and effective technological solution to our customers.

In addition to supporting innovation and process optimization, the Terrebonne Facility also serves as a technical reference point for our plans to deploy modular construction in lower-cost jurisdictions.

Interruptions in operations at this location could result in our inability to provide the most efficient and effective technological solution to our partners and customers, as well as hinder continued validation of our technology.

A number of factors could cause interruptions, including, but not limited to, equipment malfunctions or failures, technology malfunctions, work stoppages or slow-downs, damage to or destruction of the facility, or regional power shortages.

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Any disruption that impedes our ability to optimize our process and provide support for our commercial projects in a timely manner could reduce our revenues and materially harm our business.

Additionally, the repair or replacement of critical equipment, and the restoration of operations at the Terrebonne Facility if a disruption occurs, could result in substantial costs, operational delays, and the diversion of management’s time and resources.

Our joint venture with Ester to construct and operate a manufacturing facility in India involves significant risks, and any delays or disruptions could adversely affect our business, financial condition, and prospects.

We are currently advancing a joint venture with Ester to construct the Infinite Loop™ India manufacturing facility, which is expected to produce approximately 70,000 tons per year of Loop branded PET resin and polyester fiber.

This project is in the early stages of development, with groundbreaking expected in the second half of calendar 2025 and commercial operations projected to begin in calendar 2027.

The total initial funding requirement is estimated at approximately $176 million and is expected to be financed through a combination of debt and equity capital.

The success of the facility depends on a number of factors, many of which are outside of our control.

Risks related to this joint venture and facility construction include, but are not limited to:

Delays in securing required permits, land use approvals, or regulatory clearances in India;

Increases in construction costs or supply chain disruptions that could affect budget and timeline;

Inability to raise sufficient debt or equity capital on acceptable terms or within the expected timeframe;

Engineering or technical challenges during construction or commissioning;

Risks associated with political, regulatory, or economic changes in India that could impact construction or operations;

Potential misalignment between joint venture partners on key strategic or operational decisions;

Failure to achieve expected operating efficiencies or projected economic returns.

Although we and Ester have a well-established working relationship and have made initial equity contributions to support engineering work, the facility remains in the pre-construction phase.

If we or our joint venture partner are unable to meet our respective obligations, secure financing, or complete the facility as planned, our commercialization strategy could be delayed, and our business, financial condition, and results of operations could be adversely affected.

We may not realize the expected benefits and may face risks associated with our licensing arrangements, and our ability to continue to generate significant revenue from technology licensing may be limited or delayed.

A key component of our commercialization strategy is the licensing of our proprietary depolymerization technology to third parties for the development and operation of Infinite Loop™ manufacturing facilities.

Under the License Agreement entered with RCE, acting on behalf of Infinite Loop Europe SAS, we granted a non-transferable, royalty-bearing license to use our technology at a single facility in Europe, with the possibility of sublicensing to a third-party operator under certain conditions.

While the agreement includes an upfront €10.0 million upfront licensing fee payment and provides for additional royalty payments upon satisfaction of certain conditions, future revenues are dependent on Infinite Loop Europe SAS’s ability and willingness to proceed with facility construction and commercialization activities.

Our ability to scale this model and generate meaningful revenue from licensing depends on a number of uncertain factors, including the relevant joint venture’s progress in executing the project, satisfaction of conditions that trigger payments, and our ability to enter into new license agreements with additional partners or for new facilities.

If a joint venture project is delayed, canceled, or otherwise fails to meet commercial expectations, or if we are unable to enter into additional license agreements on favorable terms, our ability to generate recurring revenue from licensing may be adversely affected.

Furthermore, any termination of existing or future licensing agreements due to breach, failure to meet payment obligations, or other triggering events could materially impact our revenue streams and strategic growth plans.

There can be no assurance that our licensing model will be adopted at scale or that it will result in meaningful or sustained revenue.

Licensing arrangements also present legal and operational risks, including challenges in protecting our intellectual property, especially as our technology is deployed in multiple jurisdictions with differing enforcement standards.

While we retain ownership of our technology and all related intellectual property rights under our license agreements, we rely on licensees to comply with confidentiality and use restrictions and to notify us of any potential infringement or misuse.

Failure by a licensee to adequately safeguard our intellectual property or unauthorized use or disclosure of our proprietary technology could compromise our competitive advantage.

In addition, sublicensing rights, where permitted, may create added complexity and limit our direct oversight over third-party operators.

We operate in a highly competitive and rapidly evolving industry, and increased competition or technological advances could adversely affect our business, financial condition, and results of operations.

The plastics manufacturing industry is extremely price-competitive because of the commodity-like nature of virgin PET resin, and its correlation to the price of crude oil.

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The demand for rPET has historically fluctuated with the price of crude oil.

Recent volatility in global financial markets and a resulting decline in oil prices have increased uncertainty in the pricing dynamics of the plastics industry.

If crude oil prices decline, the cost to manufacture rPET may become comparatively higher than the cost to manufacture virgin alternatives.

This could reduce demand for recycled alternatives if customers prioritize cost over sustainability.

Our ability to penetrate the market will depend in part on the cost of manufacturing of our products, and if we do not successfully distinguish our products from those of virgin manufacturers our entry into the market and our ability to secure customer contracts can be adversely affected.

In addition, we operate in a highly competitive market that is attracting increased interest from both industrial and environmental stakeholders, which may lead to greater competition, particularly from new entrants promoting circular economy solutions.

The development of competing recycling technologies, especially those based on chemical depolymerization processes, has gained momentum in recent years and may benefit from greater financial, technical, or operational resources.

While we believe our depolymerization process offers advantages in handling more contaminated feedstock and in its scalability, which is expected to differentiate it from other available methods, there can be no assurance that technically, environmentally, or economically superior solutions will not be developed and brought to market.

If competing technologies offer better performance, cost advantages, or gain greater customer or regulatory acceptance, our competitive position could be materially impacted, which could have a material adverse effect on our business, financial condition, or results of operations.

We are vulnerable to fluctuations in the supply and price of raw materials.

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Daniel Solomita, our President and Chief Executive Officer, and Chairman of the Board of Directors, or our failure to timely identify and retain competent personnel could negatively impact our ability to develop our business.

The development of our business and the marketing of our prospective products will continue to place a significant strain on our limited personnel, management, and other resources.

The development of our business and the marketing of our products will continue to place a significant strain on our limited personnel, management, and other resources.

Our future success depends upon the continued services of our executive officers who are developing our business, and on our ability to identify and retain competent consultants and employees with the skills required to execute our business objectives.

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Additionally, applicable regulations may change, and additional government regulations may be enacted that could impact our business.

We cannot predict the likelihood, nature, or extent of government regulation that may arise from future legislation or administrative action, either in Canada, the United States or abroad.

We cannot predict the likelihood, nature, or extent of government regulation that may arise from future legislation or administrative action, either in Canada or in other jurisdictions where we or our partners will operate manufacturing facilities.

If we are not able to maintain regulatory compliance, are slow or unable to adopt new requirements or policies, or effect changes to existing requirements, our business may be adversely affected.

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We rely on a combination of patent, trademark and trade secret protection, confidentiality, nondisclosure and non-use agreements to protect our proprietary rights.

The steps we have taken may not be sufficient to prevent the misappropriation of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.

As we expand our business through licensing and joint venture arrangements, our intellectual property is increasingly exposed to third-party use and international enforcement environments.

Moreover, as we allow third-party partners to access and implement our technology under license or through engineering collaboration, we rely on contractual safeguards and partner cooperation to ensure appropriate protection and restricted use of our intellectual property.

Even with these measures in place, there is a risk that partners, sublicensees, contractors, or others may misappropriate our trade secrets or reverse-engineer our technology, knowingly or inadvertently, which could compromise our competitive position.

The patent and trademark law and trade secret protection may not be adequate to deter third party infringement or misappropriation of our patents, trademarks and similar proprietary rights.

If we are unable to adequately protect our intellectual property or enforce our rights, our ability to generate licensing revenue, maintain strategic control over our technology, and preserve long-term value may be materially impaired.

Additionally, we may be required to expend significant time and resources to monitor compliance, enforce our rights, or defend against claims of infringement, any of which could adversely affect our business and financial condition.

We may face costly intellectual property infringement claims, the result of which would decrease the amount of cash available to operate and complete our business plan.

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This report must also include disclosure of any material weaknesses in internal control over financial reporting that we have identified.

The process of designing and implementing internal control over financial reporting required to comply with Section 404 of the Sarbanes-Oxley Act is time consuming, costly and complicated.

If, during the evaluation and testing process, we identify one or more other material weaknesses in our internal control over financial reporting or determine that existing material weaknesses have not been remediated, our management will be unable to assert that our internal control over financial reporting is effective.

The process of designing and implementing internal control over financial reporting required to comply with Section 404 of the Sarbanes-Oxley Act is time consuming, costly and complex.

If, during the evaluation and testing process, we identify one or more material weaknesses in our internal control over financial reporting or determine that existing material weaknesses have not been remediated, our management will be unable to assert that our internal control over financial reporting is effective.

Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal controls or the level at which our internal controls are documented, designed, implemented or reviewed.

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dollar to Canadian dollar exchange rates could materially affect our result of operations, cash position and funding requirements.

In addition, as we expand internationally through joint ventures and other arrangements, including agreements entered into with strategic partners in Europe and India, we expect to become subject to additional foreign exchange risks related to local currencies, contract payments, and operating costs in other jurisdictions.

Volatility in these regions could impact the financial performance of our joint ventures, the timing and value of payments, and the funding requirements of our global commercialization strategy.

To the extent that fluctuations in currency exchange rates cause our results of operations to differ materially from our expectations or the expectations of our investors, the trading price of our common stock could be adversely affected.

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If our hedging activities are not effective, changes in currency exchange rates may have a more significant impact on the trading price of our common stock.

We are subject to various federal, provincial, state and local laws and regulations and failure to secure and maintain permits could result in costs that have a material adverse effect on our business, results of operations and financial condition.

Many federal, provincial, state and local regulations govern plants and facilities and licenses to be held by individuals.

We are in the process of obtaining all necessary permits and approvals for the operation of our business;

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

The requirements for such permits vary depending on the location where our regulated activities are operated.

As these are governmental permitting processes, there is a degree of uncertainty as to whether a permit will be granted, the time it will take for a permit to be issued, the duration of the permit and the conditions that may be imposed in connection with the granting of the permit.

We believe that we have all licenses required to conduct our operations and are in material compliance with applicable regulatory requirements.

Failure to comply with applicable regulations could result in substantial fines or revocation of our permits and licenses or an inability to perform work, which could adversely affect our business.

We are subject to extensive and evolving domestic and global legal and regulatory requirements, and failure to obtain or maintain necessary approvals and comply with applicable laws could adversely affect our ability to commercialize our technology and operate our business.

As part of our commercialization strategy, we plan to expand the deployment of our proprietary Infinite Loop™ technology globally through a mix of owned facilities, joint ventures, licensing arrangements, and engineering services.

This exposes us to a broad range of legal and regulatory regimes, including those related to environmental protection, chemical handling, health and safety, food and pharmaceutical packaging, land use, and foreign investment.

Our operations in Canada, including our Terrebonne Facility, are subject to federal and provincial regulations with which we are required to comply.

While we have obtained relevant certifications for food and pharmaceutical packaging materials in Canada, the U.S., and the EU, maintaining these approvals requires ongoing compliance and may be affected by changes in laws or regulatory interpretations.

As we expand internationally, including through current joint ventures in India and Europe, we will encounter additional permitting, compliance, and operational risks that vary by jurisdiction.

Delays or failures in obtaining required approvals, or changes in regulatory requirements, could impact project timelines, increase costs, or limit our ability to operate.

In addition, our reliance on third-party partners under licensing and joint venture structures adds complexity to compliance, particularly in jurisdictions with less predictable legal enforcement.

Failure to obtain or maintain required permits and approvals, or to ensure compliance by our partners, could result in penalties, project delays, increased costs, reputational damage, or other adverse effects on our business and financial condition.

RISKS ASSOCIATED WITH OUR SECURITIES

Raising additional funds may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies.

Our current arrangements contain certain restrictions and potential cash obligations, and raising additional funds may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies.

We currently have several financing arrangements in place that contain restrictions and potential cash obligations.

For example, our Series B CPS issued to an affiliate of Reed carries voting rights and a 13% cumulative annual PIK dividend, and is redeemable by the holder on the fifth anniversary of issuance.

Additionally, we have a $2.4 million (CDN $3.5 million) secured credit facility with a Canadian bank, which is secured by the Company’s Terrebonne, Québec property and is subject to a minimum equity covenant tested quarterly.

These existing and potential obligations, together with any new financings we may pursue, could impact our future liquidity and operational flexibility.

If we raise additional funds through equity offerings or offerings of equity-linked securities, including warrants or convertible debt securities, our existing stockholders may experience significant dilution, and the terms of such securities may include liquidation or other preferences that may adversely affect the rights of our stockholders.

Our existing $15 and $20 warrants are subject to a broad based weighted average anti-dilution provision, which may result in a reduction of the warrant exercise price if new equity above $65 million is raised under certain levels.

The warrant exercise prices cannot be adjusted to less than $12.45.

Debt financings, if available, may subject us to restrictive covenants that could limit our flexibility in conducting future business activities, including covenants limiting or restricting our ability to incur additional debt, dispose of assets or incur capital expenditures.

We may also incur ongoing interest expense and be required to grant a security interest in our assets in connection with any debt issuance.

We may also incur ongoing interest expenses and be required to grant a security interest in our assets in connection with any debt issuance.

If we raise additional funds through strategic partnerships or licensing agreements with third parties, we may have to relinquish valuable rights to our technologies or grant licenses on terms that are not favorable to us.

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Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.

Notably, pursuant to the Investor Rights Agreement, we are required to register for public resale the Loop common stock held by the Purchaser.

Following the effectiveness of such registration statement, a large number of shares of our common stock could be sold in the public market, depressing our stock price.

Moreover, we cannot in general predict the effect that future sales of our common stock or the market perception that we are permitted to sell a significant number of our securities would have on the market price of our common stock.

We currently have an effective shelf registration statement on Form S-3 (File No.

333-281883), declared effective by the SEC on September 10, 2024, which allows us to offer and sell up to $175 million in any combination of debt securities, common stock, preferred stock, depositary shares, warrants, subscription rights, and units.

In addition, we have an effective resale registration statement on Form S-3 (File No.

333-281224), declared effective by the SEC on August 14, 2024, covering up to 7,072,220 shares of common stock (including up to 4,714,813 shares of outstanding common stock and up to 2,357,407 shares issuable upon exercise of warrants which have since expired) held by a selling stockholder, which was filed pursuant to the Investor Rights Agreement with SKGC entered into in July 2021.

If a significant number of shares is sold in the public market, this could put downward pressure on our stock price.

Moreover, we cannot in general predict the effect that future sales of our common stock, or the market perception that such sales may occur, would have on the market price of our common stock.

Even the perception of potential dilution could adversely affect investor confidence and market value.

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 1A. Risk Factors