What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-05-29 compared with 2024-05-29 · 271 added, 266 removed, 613 unchanged (47% of the section changed)

13 unchanged sentences

We have audited the accompanying consolidated balance sheets of Loop Industries, Inc.

and its subsidiaries (together, the Company) as of February 29, 2024 and February 28, 2023, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements).

and its subsidiaries (the Company) as of February 28, 2025 and February 29, 2024, and the related consolidated statements of operations and comprehensive loss, of changes in stockholders’ equity and of cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 28, 2025 and February 29, 2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has incurred net losses and negative cash flow from operating and investing activities since its inception that and has stated that these events or conditions indicate that a material uncertainty exists that raises substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

This matter is also described in the Critical Audit Matters section of our report.

Basis for Opinion

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We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Going Concern Assessment

As described in note 1 to the consolidated financial statements, the Company’s consolidated financial statements have been prepared on a going concern basis.

For the year ended February 29, 2024, the Company incurred a net loss of $21.1 million and the net cash flows used from operating activities was $18.0 million.

As of February 29, 2024, the Company’s available liquidity was $9.5 million, consisting of cash and cash equivalents of $6.9 million and an undrawn senior loan facility from a Canadian bank of $2.6 million.

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 for the next twelve months from the consolidated financial statements issuance date.

Liquidity risk assessment

As described in Note 1 and 2 to the consolidated financial statements, the Company’s consolidated financial statements have been prepared on a going concern basis, as management has assessed and determined that the Company will be able to realize its assets and discharge its liabilities in the normal course of business as they become due for at least twelve months from the issuance date of these consolidated financial statements.

For the year ended February 28, 2025, the Company incurred a net loss of $15.1 million and net cash used in operating activities was $2.1 million.

As of February 28, 2025, the accumulated deficit amounted to $192.0 million.

Management evaluates the Company’s liquidity to determine if there is substantial doubt about the Company’s 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.

This matter is also described in the Substantial Doubt About the Company’s Ability to Continue as a Going Concern section of our report.

The principal considerations for our determination that performing procedures relating to the going concern assessment is a critical audit matter are the significant judgment by management 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.

This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s estimation of amount and timing of future cash outflows and inflows.

In preparing this liquidity 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 (i) the estimation of amount and timing of future cash outflows and cash inflows;

and (ii) determining what future expenditures are committed and what could be considered discretionary.

The principal considerations for our determination that performing procedures relating to the liquidity risk assessment is a critical audit matter are the significant judgments made by management in estimating the future cash flow requirements of the Company based on budgets and forecasts and in developing the related assumptions.

This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s liquidity risk assessment and the development of assumptions included in the estimated future cash flows.

Additionally, these procedures included evaluating the sufficiency of the Company’s liquidity risk disclosure.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others, evaluating management’s assessment of whether the Company has sufficient cash resources for the next 12 months from the date of the issuance of the consolidated financial statements.

This included (i) testing the completeness and accuracy of the underlying data used in management’s estimation of future cash flow requirements;

and (ii) evaluating the reasonableness of management’s assumptions related to the estimation of the amount and timing of future cash outflows and inflows.

The evaluation of these assumptions considered (i) management’s historical accuracy in forecasting cash flows and settling budgets;

These procedures included, among others, (i) evaluating management’s assessment of whether the Company has sufficient cash resources for at least twelve months from the issuance date of the consolidated financial statements;

(ii) testing the completeness and accuracy of the underlying data used in management’s estimation of future cash flow requirements;

(iii) evaluating the reasonableness of management’s assumptions related to the estimation of the amount and timing of future cash outflows and cash inflows;

and (iv) determining what future expenditures are committed and what could be considered discretionary.

The evaluation of these assumptions considered (i) management’s historical accuracy in forecasting cash flows and setting budgets;

and (ii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Additionally, these procedures included evaluating the sufficiency of the Company’s going concern disclosure.

/s/ PricewaterhouseCoopers LLP

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dollars, except per share data)

February 29, 2024

February 28, 2023

Current assets

Cash and cash equivalents

Restricted cash (Note 11)

Sales tax, tax credits and other receivables (Note 3)

Accounts receivable (Note 3)

Inventories (Note 4)

Deposits on machinery and equipment (Note 5)

Prepaid expenses and other deposits (Note 6)

Prepaid expenses (Note 5)

Total current assets

Investment in joint venture (Note 12)

Investments in joint ventures (Note 11)

Property, plant and equipment, net (Note 6)

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Accounts payable and accrued liabilities (Note 9)

Customer deposits (Note 11)

Unearned revenue (Note 16)

Current portion of long-term debt (Note 13)

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Due to customer (Note 10)

Series B Convertible Preferred stock (Note 12)

Long-term debt (Note 13)

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Total liabilities and stockholders' equity

Going Concern (Note 1)

Commitments (Note 24)

See accompanying notes to the consolidated financial statements .

3 unchanged sentences

dollars, except for share data)

February 29, 2024

February 28, 2023

Revenues (Note 16)

Research and development (Note 17)

General and administrative (Note 18)

Impairment of equipment (Note 6)

Depreciation and amortization (Notes 6 and 7)

Total expenses

Other (income) loss :

Gain on disposition of land (Note 7)

Other loss (income) :

Loss on equity accounted investment (Note 11)

Interest and other financial expenses (income) (Note 22)

1 unchanged sentence

Foreign exchange gain

Total other loss (income)

Other comprehensive income (loss) -

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Basic and diluted

Going Concern (Note 1)

See accompanying notes to the consolidated financial statements.

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Year ended February 28, 2025

Preferred stock

par value $0.0001

Preferred stock

par value $0.0001

Accumulated Other

Accumulated Deficit

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$ ( 176,970 )

Issuance of shares upon the vesting of restricted stock units (Notes 15 and 18)

Issuance of shares upon the exercise of stock options (Notes 15 and 18)

Stock options issued (Note 18)

Restricted stock units issued (Note 18)

Issuance of shares upon the settlement of restricted stock units (Notes 15 and 19)

Expiration of warrants (Note 21)

Stock options issued for services (Note 19)

Restricted stock units issued for services (Note 19)

Foreign currency translation

1 unchanged sentence

$ ( 192,027 )

Going Concern (Note 1)

See accompanying notes to the consolidated financial statements.

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Year ended February 29, 2024

Preferred stock

par value $0.0001

Preferred stock

par value $0.0001

Additional Paid-in Capital

Accumulated Other

Accumulated Deficit

3 unchanged sentences

$ ( 155,883 )

Issuance of shares upon the vesting of restricted stock units (Notes 15 and 18)

Expiration of warrants (Note 20)

Issuance of shares upon the settlement of restricted stock units (Notes 15 and 19)

Issuance of shares upon the exercise of stock options (Notes 15 and 19)

Stock options issued (Note 19)

3 unchanged sentences

$ ( 176,970 )

Going Concern (Note 1)

See accompanying notes to the consolidated financial statements.

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(in thousands of U.S.

February 29, 2024

February 28, 2023

Cash Flows from Operating Activities

3 unchanged sentences

Write-down of inventory (Note 4)

Discount on due to customer (Note 11)

Gain on disposition of land (Note 7)

Payment of legal settlement, net (Note 23)

Accretion and accrued interest (Notes 11, 13 and 21)

Accrued interest and other financing costs (Note 22)

Impairment of equipment (Note 6)

Loss on equity accounted investment (Note 11)

Customer deposits

Changes in operating assets and liabilities:

1 unchanged sentence

Inventories (Note 4)

Prepaid expenses and other deposits (Note 6)

Prepaid expenses (Note 5)

Accounts payable and accrued liabilities (Note 9)

Unearned revenue (Note 16)

Net cash (used in) operating activities

Cash Flows from Investing Activities

Proceeds from disposition of land (Note 7)

Deposits on machinery and equipment (Note 5)

Investment in joint venture (Note 11)

Distribution from equity investment (Note 11)

Additions to property, plant and equipment (Note 6)

Additions to intangible assets (Note 7)

Net cash (used in) provided by investing activities

Net cash (used in) investing activities

Cash Flows from Financing Activities

Customer deposits (Note 11)

Proceeds from issuance of series B Convertible Preferred stock (Note 12)

Repayment of long-term debt (Note 13)

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes

Net change in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of year

Cash, cash equivalents and restricted cash, end of year

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Supplemental Disclosure of Cash Flow Information:

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Interest received

Going Concern (Note 1)

See accompanying notes to the consolidated financial statements.

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(in thousands of United States dollars except where otherwise indicated)

The Company and Basis of Presentation and Going Concern

The Company and Basis of Presentation

Loop Industries, Inc.

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(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.

The Company owns, through Loop Innovations, LLC, a 50 % interest in a joint venture, Indorama Loop Technologies, LLC, which is accounted for under the equity method.

The Company also owns a 50 % interest in a joint venture, Ester Loop Infinite Technologies Private Limited, which is accounted for under the equity method.

Intercompany balances and transactions are eliminated on consolidation.

The consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the continuing of operations, the realization of assets and the settlement of liabilities in the normal course of business.

All monetary amounts in these notes to the condensed consolidated financial statements are in thousands of U.S.

All monetary amounts in these notes to the consolidated financial statements are in thousands of U.S.

dollars unless otherwise specified, except for per share data.

Going Concern

These consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and settlement of liabilities in the normal course of business as they come due.

In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to, twelve months from the date of issuance of these consolidated financial statements.

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 .

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.

Management evaluates the Company’s liquidity to determine if there is substantial doubt about its ability to continue as a going concern.

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 consolidated financial statements issuance date.

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

The Company’s ability to 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 the issuance of debt, equity, and/or joint ventures, and/or government incentive programs and/or customers.

However, there is no assurance that the Company will be successful in attracting additional funding.

Summary of Significant Accounting Policies

Liquidity risk assessment

Since its inception, the Company has been in the pre-commercialization stage with its ongoing operations and commercialization plans 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 advance its commercialization efforts.

As at February 28, 2025, the Company had cash and cash equivalents of $ 12,973 .

On December 23, 2024, the Company received cash proceeds of $ 20,790 from the closing of transactions with Reed Societe Generale Group consisting of the issuance of Series B Convertible Preferred Stock and its first technology licensing agreement (see Notes 12 and 16 for additional details).

It evaluates the Company’s liquidity to determine if there is substantial doubt about its ability to continue as a going concern.

(i) the estimation of amount and timing of future cash outflows and inflows, and (ii) determining what future expenditures are committed and what could be considered discretionary.

Based on this assessment, management has determined that current available liquidity will be sufficient to meet the Company’s obligations, commitments and budgeted expenditures for at least twelve months from the issuance date of these consolidated financial statements.

The Company’s ability to move to the next stage of its strategic development and construct manufacturing facilities 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.

In particular, the Company will require capital sufficient to fund its equity contributions to the India JV for the construction of the planned Infinite Loop™ facility in India, as well as its ongoing cash requirements until Loop begins receiving returns from the India JV.

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.

The Company is seeking to finalize the negotiation of previously announced financing initiatives on acceptable terms, although there is no assurance it will succeed.

These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations.

Such adjustments could be material.

Summary of Significant Accounting Policies

Revenue recognition

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Shipping and handling costs are accounted for as a fulfillment cost.

The Company enters into licensing agreements with customers, or licensees, for the use of the Company’s proprietary technology.

Licensing agreements may include various types of payments, including upfront fees, milestone payments, and royalties.

Upfront licensing fees are generally recognized at a point in time, when the license is made available for the customer’s benefit and the customer can benefit from the technology independently.

Milestone payments are recognized when the milestone is achieved and the payment is no longer subject to reversal.

Royalties are recognized when the underlying transactions occur.

The Company also enters into agreements to provide engineering services for Infinite Loop™ facilities.

Engineering fees are recognized over time, as services are performed.

Use of estimates

1 unchanged sentence

Actual results could differ from those estimates.

Those estimates and assumptions include the going concern assessment, the net realizable value of inventories, estimates for depreciable lives of property, plant and equipment and intangible assets, 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.

Those estimates and assumptions include the going concern assessment, estimates for depreciable lives and recoverability of property, plant and equipment and intangible assets, assumptions made in the classification of convertible preferred securities, assumptions made in the revenue recognition for licensing contracts, 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.

Joint Ventures

The Company accounts for investments in joint ventures in which it exercises significant influence but does not have a controlling financial interest using the equity method of accounting in accordance with ASC 323, Investments—Equity Method and Joint Ventures.

Under the equity method, the Company's share of the investee’s net income or loss is recognized in the consolidated statements of operations and added to or deducted from the carrying value of the investment.

Distributions received from joint ventures are recorded as reductions to the carrying amount of the investment.

The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable.

If an impairment is identified and deemed other-than-temporary, the investment is written down to its fair value.

The Company assesses whether a joint venture is a variable interest entity (VIE) under ASC 810, Consolidation, and consolidates the entity if it is deemed to be the primary beneficiary.

Convertible Preferred Stock

The Company accounts for convertible preferred stock in accordance with applicable accounting guidance, including ASC 480, Distinguishing Liabilities from Equity and ASC 470, Debt.

Instruments are classified as liabilities when they include contractual obligations that may require the issuer to settle in cash or other financial assets, or when redemption is outside the issuer’s control.

Convertible preferred stock is classified as a liability when it contains redemption features or other settlement terms that result in an obligation for the Company, including mandatory or holder-initiated redemption rights, even when the instrument ultimately settles in equity securities.

Such instruments may also accrue fixed paid-in-kind (“PIK”) dividends, which are recognized through periodic accretion to the carrying amount of the liability.

These instruments are initially recorded at fair value, net of issuance costs, and subsequently measured at amortized cost using the effective interest method.

Periodic accretion of the carrying value and dividend accruals are recognized in the consolidated statement of operations as interest expense.

The Company evaluates all convertible instruments for potential embedded features requiring separate accounting under ASC 815, Derivatives and Hedging.

If applicable, bifurcated derivative components are measured at fair value, with changes recognized in earnings.

Fair value of financial instruments

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The valuation methodologies described above may produce a fair value calculation that may not be indicative of future net realizable value or reflective of future fair values.

The fair value of cash, cash equivalents and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturity.

The fair value of cash, cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturity.

Research and development expenses

Research and development costs are charged to expense as costs are incurred in performing research and development activities.

Research and development costs are charged to expense as they are incurred.

Research and development expenses relate primarily to process development and design, customer trials and characterization studies, testing of pre-production samples, machinery and equipment expenditures for use in the production facility in Terrebonne, Québec (the “Terrebonne Facility”), compensation, and consulting and engineering fees.

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Reimbursable tax credits are recognized when amounts can be reasonably estimated on a systematic basis over the periods in which the Company recognizes the related costs.

The Company is currently eligible for reimbursable Provincial research and development tax credits and investment tax credits, which are related to costs associated with our Terrebonne Facility and recorded as a reduction of research and development expenses.

The Company is currently eligible for reimbursable Provincial research and development tax credits and investment tax credits, which are related to costs associated with its Terrebonne Facility and recorded as a reduction of research and development expenses.

Deferred financing costs, debt discounts, discount on due to customer and other transaction costs

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The finished goods category includes goods that have completed the production process at the balance sheet date and mainly comprises Loop ™ branded PET resin.

Restricted cash

Cash held by the Company restricted as to withdrawal or use is presented as restricted cash in the consolidated balance sheet.

As at February 28, 2023, restricted cash comprised a customer deposit which is restricted for use on a commercial project, as discussed in Note 11.

There was no restricted cash as at February 29, 2024.

Intangible assets

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The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

Net earnings (loss) per share

Net 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.

Basic loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the year.

The Company includes common stock issuable in its calculation.

Diluted 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.

Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method.

Potential common shares are excluded from the computation if their effect is antidilutive.

For the years ended February 28, 2025 and February 29, 2024, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect.

As at February 29, 2024, the potentially dilutive securities consisted of 2,772,000 outstanding stock options (2023 – 2,542,000 ), 4,368,897 outstanding restricted stock units (2023 – 3,888,618 ), and 7,089,400 outstanding warrants (2023 – 7,089,400 ).

As at February 28, 2025, the potentially dilutive securities consisted of 2,771,216 outstanding stock options (2024 – 2,772,000 ), 4,466,958 outstanding restricted stock units (2024 – 4,368,897 ), and nil outstanding warrants (2024 – 7,089,400 ).

Recently adopted accounting pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued 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.

The adoption of this accounting guidance for the year ended February 28, 2025 resulted in the inclusion of Note 24.

Segment Reporting in our consolidated financial statements.

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):

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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 periods beginning after December 15, 2024.

The updated standard is effective for our annual period beginning after December 15, 2024 and all joint ventures formed on or after January 1, 2025, which for the Company will be the annual period ending February 28, 2026.

Early adoption is permitted.

We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements, other than additional disclosures in our notes to the consolidated financial statements.

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 periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026.

Management is currently evaluating the impact that the updated standard will have on our annual financial statement disclosures.

In August 2023, the Financial Accounting Standards Board (“FASB”) issued 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.

We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

The Company has determined that all other recently issued accounting pronouncements will not have a material impact on the Company’s consolidated financial statements or do not apply to its operations.

Sales Tax, Tax Credits and Other Receivables

Sales tax, research and development tax credits and other receivables as at February 29, 2024 and February 28, 2023 were as follows:

February 29, 2024

February 28, 2023

Investment tax credits

Management is currently evaluating the impact that the updated standard will have on our consolidated financial statements and related disclosures.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires public business entities to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements.

The updated standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

Management is currently evaluating the impact that the updated standard will have on our financial statement disclosures.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments, which clarifies the accounting for settlements of convertible debt instruments that occur on terms different from the original contractual conversion terms.

The amendments introduce a "preexisting contract approach," requiring that, to qualify for induced conversion accounting, the inducement offer must preserve the form of consideration and provide an amount of consideration that is no less than what was issuable under the original conversion privileges.

This guidance applies to convertible debt instruments with cash conversion features and to instruments that are not currently convertible but had substantive conversion features at issuance and at the time the inducement offer is accepted.

The updated standard is effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years.

Early adoption is permitted for entities that have adopted the amendments in ASU 2020-06.

Management is currently evaluating the impact that the updated standard will have on our consolidated financial statements and related disclosures.

In January 2025, the Financial Accounting Standards Board (FASB) issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date.

This update clarifies the effective date of ASU 2024-03, which requires public business entities to provide disaggregated disclosures of certain income statement expenses.

Specifically, ASU 2025-01 confirms that the guidance in ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

Management is currently evaluating the impact that the updated standard will have on our financial statement disclosures.

Accounts Receivable

Accounts receivable as at February 28, 2025 and February 29, 2024 were as follows:

Accounts receivable from customers

Research and development tax credits

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Inventories as at February 28, 2025 and February 29, 2024 were as follows:

February 29, 2024

February 28, 2023

Finished goods

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As at February 28, 2025 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 February 29, 2024, the Company recorded an allowance for inventory write-down of $ 817 (2023 – nil) on finished goods and work in process inventories related to inventory volumes not expected to be sold in the next twelve months.

Deposits on Machinery and Equipment

As at February 28, 2023, the Company had $ 3,395 of non-refundable cash deposits on long-lead equipment that are intended to be used in a planned Infinite Loop ™ manufacturing facility.

During the year ended February 29, 2024, the Company made additional payments of $ 5,065 on the long-lead equipment and on December 20, 2023 ownership was transferred to the Company.

The total carrying amount of $ 8,460 related to the long-lead equipment is presented in property, plant and equipment as at February 29, 2024 (Note 7), with no amounts remaining as deposits.

Prepaid Expenses and Other Deposits

Prepaid expenses and other deposits as at February 29, 2024 and February 28, 2023 were as follows:

February 29, 2024

February 28, 2023

As at February 28, 2025, the Company recorded an allowance for inventory write-down of $ 738 (2024 – $ 817 ) on finished goods and work in process inventories related to inventory volumes not expected to be sold in the next twelve months.

Prepaid Expenses

Prepaid expenses as at February 28, 2025 and February 29, 2024 were as follows:

Property, Plant and Equipment, net

As at February 28, 2025

Accumulated depreciation, write-down and impairment

depreciation,

write-down and

Net book value

Machinery and equipment

Machinery and equipment – pre-construction

Building and Land Improvements

1 unchanged sentence

As at February 29, 2024

Accumulated depreciation, write-down and impairment

depreciation,

write-down and

Net book value

Machinery and equipment – pre-construction

Building and Land Improvements

Office equipment and furniture

In December 2021, the Company entered into an agreement for the purchase of long-lead equipment in connection with the construction of a planned Infinite Loop ™ manufacturing facility.

Pursuant to the agreement, the Company has paid $ 8,460 , and no additional amounts were owing as at February 29, 2024.

During the year ended February 29, 2024, the manufacturing of the long-lead equipment was completed and its ownership was transferred to the Company and is not currently in use.

The equipment is being held in storage with the intention to be used in the planned Infinite Loop ™ manufacturing facility in Ulsan, South Korea.

Pursuant to the joint venture agreement (the “Agreement”) entered into by the Company and SK Geo Centric Co.

(“SKGC”) on April 27, 2023, a new entity, owned 51 % by SKGC and 49 % by the Company, will be formed to build and operate the Infinite Loop ™ manufacturing facility in Ulsan.

As at February 29, 2024, the long-lead equipment was presented in machinery and equipment at cost, which represents the amount at which it is expected to be transferred to the new entity.

During the year ended February 28, 2025 the Company recorded an impairment charge for equipment of $ 8,460 .

This impairment was due to the termination of the joint venture arrangement between the Company and SK Geo Centric Co.

(“SKGC”) under which they had intended to construct and operate an Infinite Loop™ manufacturing facility in Ulsan, South Korea.

While the equipment may be utilized in a future commercial production facility, the deployment plans for the use of this equipment are not fully developed at this time, therefore the recoverability of the carrying value of the equipment was tested for impairment, resulting in an impairment loss of $ 8,460 being recognized in the year ended February 28, 2025.

Depreciation expense amounted to $ 322 for the year ended February 28, 2025 (2024 – $ 387 ).

During the year ended February 28, 2022, the Company acquired land in Bécancour, Québec for cash of $ 4,335 (CDN $5,900) and subsequently incurred civil construction costs of $ 1,074 in land improvements.

During the year ended February 28, 2023, the Company sold the land for cash net proceeds of $ 22,314 (CDN $29,900) and a gain on disposition of the asset of $ 16,683 .

The table below summarizes the amounts related to the gain on disposition of land:

Gross proceeds of disposition

Transaction costs

Net proceeds of disposition

Cost of land improvements

Foreign exchange effect

Gain on disposition of land

Intangible Assets, net

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Patents, net – end of year

On April 9, 2019, the first GEN II U.S.

patent was issued.

During the year ending February 29, 2024, the Company continued to develop its next Generation II (“GEN II”) technology and filed various patents in jurisdictions around the world.

The GEN II technology portfolio currently consists of four patent families for which the company has eight issued U.S.

patents and five pending U.S.

On April 9, 2019, the first U.S.

patent was issued for the Infinite Loop™ technology.

During the year ending February 28, 2025, the Company continued to develop the Infinite Loop™ technology and filed various patents in jurisdictions around the world.

The Infinite Loop™ technology portfolio currently consists of four patent families for which the Company has 10 issued U.S.

patents and four pending U.S.

applications.

Internationally, the Company also has issued or allowed patents in many foreign jurisdictions, including Algeria, Brazil, Bangladesh, China, India, Indonesia, Japan, Morocco, South Korea, and Taiwan for certain aspects of the technology and pending applications in Canada, China, the Eurasian Patent Organization, Europe, the Gulf Cooperation Council, India, Japan, Mexico, Singapore, South Korea, and various other countries.

Internationally, the Company also has issued or allowed patents in various foreign jurisdictions.

All patents and patent applications, if granted are expected to expire between 2038 and 2044, not including any patent term extension.

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Carrying Amount

Level in the hierarchy

Financial liabilities measured at amortized cost:

Long-term debt

Due to customer

Long-term debt (Note 13)

Due to customer (Note 10)

Fair Value as at February 29, 2024

Carrying Amount

Level in the hierarchy

Financial liabilities measured at amortized cost:

Long-term debt

The fair value of cash, restricted cash, due to customer, other receivables, and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturity.

Long-term debt (Note 13)

Due to customer (Note 10)

The fair value of cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturity.

Currency Risk

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Our reporting currency is the U.S.

We mainly finance our operations through the sale and issuance of shares of common stock of Loop Industries, Inc.

We mainly finance our operations through the sale and issuance of equity in U.S.

dollars while our operations are concentrated in our wholly-owned subsidiary, Loop Canada.

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Accounts payable and accrued liabilities as at February 28, 2025 and February 29, 2024 were as follows:

February 29, 2024

February 28, 2023

Trade accounts payable

Accounts payable

Accrued employee compensation

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Other accrued liabilities

Customer Deposit & Due to Customer

Due to Customer

In October 2022, the Company received a cash deposit from a customer of $ 1,000 in relation to an executed capacity reservation agreement.

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Under the terms of the capacity reservation agreement, the cash deposit was designated for expenditures related to a planned Infinite Loop ™ manufacturing facility and was refundable to the customer in the event that the Infinite Loop ™ manufacturing facility was not constructed.

As the cash deposit was restricted in its use, it was reflected as restricted cash as at February 28, 2023 and a corresponding contract liability was recognized in the consolidated balance sheet.

Upon mutual agreement, the capacity reservation agreement with the customer was terminated on January 18, 2024.

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The amount bears no interest.

The cause of the termination is related to the customer’s decision to abandon its plans to incorporate rPET in its products for technical reasons.

The cause of the termination is related to the customer’s decision to abandon its plans to incorporate recycled PET in its products for technical reasons.

The Company reclassified the customer deposit as a due to customer and established its fair value at $ 762 based on a discount rate of 8.20 %, which reflected a discount of $ 238 .

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The discount on due to customer is amortized to “Interest and other financial expenses” in our Consolidated Statements of Operations and Comprehensive Loss.

During the year ended February 29, 2024, the Company recorded an accretion expense of $ 8 (2023 – nil).

Investment in Joint Venture

On September 15, 2018, the Company, through its wholly-owned subsidiary Loop Innovations, LLC, a Delaware limited liability company, entered into a Joint Venture Agreement (the “Joint Venture Agreement”) with Indorama Ventures Holdings LP, USA, an indirect subsidiary of Indorama Ventures Public Company Limited, to manufacture and commercialize sustainable polyester resin.

During the year ended February 28, 2025, the Company recorded an accretion expense of $ 62 (2024 – $ 8 ).

Investments in Joint Ventures

Joint venture with Indorama

On September 15, 2018, the Company, through its wholly-owned subsidiary Loop Innovations, LLC, a Delaware limited liability company, entered into a Joint Venture Agreement (the “Joint Venture Agreement”) with Indorama Ventures Holdings LP, USA (“Indorama”), an indirect subsidiary of Indorama Ventures Public Company Limited, to manufacture and commercialize sustainable polyester resin.

Each company has a 50/50 equity interest in Indorama Loop Technologies, LLC (“ILT”), which was specifically formed to operate and execute the joint venture.

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There were no operations in ILT from the date of inception of September 24, 2018 to February 28, 2025.

During the year ended February 29, 2024, we made no contributions to ILT (2023 – nil).

All contributions to ILT, which have been matched by Indorama Ventures, were used to fund engineering design costs which were capitalized in ILT.

As at February 29, 2024, the carrying value of the equity investment was $ 381 (2023 – $ 381 ), which represents 50 % of the cash balance in ILT.

During the year ended February 28, 2025, we made no contributions to ILT (2024 – nil).

As at February 29, 2024, the carrying value of the equity investment was $ 381 , which represented 50 % of the cash balance in ILT.

On October 9, 2024, ILT distributed a total of $ 735 in cash to the Company and Indorama, of which $ 368 was received by the Company.

The carrying value of the Company’s investment ILT was $ 13 after the distribution and as of February 28, 2025.

Joint Venture with Ester

On May 1, 2024, the Company entered into an agreement with Ester Industries Ltd.

(“Ester”), a manufacturer of polyester films and specialty polymers in India, to form a 50/50 joint venture based in India (“India JV”).

The purpose of the India JV is to build and operate an Infinite Loop™ manufacturing facility in India which will produce lower carbon footprint rDMT, rMEG and specialty polymers, using the Infinite Loop™ Technology.

During the year ended February 28, 2025, Ester Loop Infinite Technologies Private Limited (“ELITe”) was incorporated to form 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 contracted 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.

ELITe meets the accounting definition of a joint venture where neither party has control of the joint venture entity and both parties have joint control over the decision-making process.

As such, the Company uses the equity method of accounting to account for its share of the investment in ELITe.

During the year ended February 28, 2025, Loop and Ester each contributed $ 1,954 (2024 – nil) to ELITe to fund preliminary project costs for the planned Infinite Loop™ facility in India, which are mainly engineering costs.

ELITe incurred losses of $ 1,374 (2024 – nil) during the year ended February 28, 2025, resulting in the Company recording a loss on equity accounted investment of $ 687 (2024 – nil) for the period.

As a result, the value of the carrying value of the Company’s investment in ELITe was $ 1,268 (2024 – nil) as at February 28, 2025.

Series B Preferred Stock

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

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

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

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

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

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

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

The Series B CPS is classified as a liability in accordance with ASC 480, Distinguishing Liabilities from Equity.

Although the Series B CPS is mandatorily convertible into a fixed number of common shares after five years, it contains provisions that create obligations for the Company that meet the definition of a liability under US GAAP.

Because the holder has the right to demand redemption for cash at maturity, and the issuer can redeem the instrument prior to conversion, the instrument is not solely within the Company’s control to avoid settlement in a form that would require asset transfer.

Accordingly, liability classification is required under ASC 480-10-25-4.

The Series B CPS is initially recognized at fair value, net of issuance costs, and is subsequently measured at amortized cost using the effective interest method.

The PIK dividends are accrued over the term of the instrument and increase the carrying amount of the liability.

Although the instrument includes voting rights on an as-converted basis, such rights do not affect the classification assessment under US GAAP.

The Company has evaluated the instrument for any embedded features requiring bifurcation under ASC 815, such as derivative elements, and has concluded that separate accounting is not required.

Changes in the carrying value of the instrument, including accrued PIK dividends, are recorded in “Interest and other financial expenses” in our Consolidated Statements of Operations and Comprehensive Loss.

The balance of Series B CPS as at February 28, 2025 and February 29, 2024 was as follows:

Stated value at issuance

Accrued PIK dividends

Series B Convertible Preferred Stock

Long-Term Debt

February 29, 2024

February 28, 2023

Investissement Québec financing facility:

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On February 21, 2020, the Company received $ 1,530 (CDN$2,209) from Investissement Québec as the first disbursement of our financing facility, out of a maximum of $ 3,186 (CDN$4,600) (the “Financing Facility”).

The loan’s interest rate was initially set at 2.36 % and there is a 36-month moratorium on both capital and interest repayments starting on the date of the first disbursement, after which capital and interest is repayable in 84 monthly installments.

The loan’s interest rate was initially set at 2.36 % and there was a 36-month moratorium on both capital and interest repayments starting on the date of the first disbursement, after which capital and interest is repayable in 84 monthly installments.

The Company established the fair value of the loan for the first disbursement at $ 1,354 based on a discount rate of 5.45 %, which reflected a debt discount of $ 291 .

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The fair value of the First Disbursement Warrant was determined to be $ 69 and is included in “Additional paid-in capital – Warrants” in our Condensed Consolidated Balance Sheets.

The First Disbursement Warrants expired in the year ended February 28, 2023 and the Second Disbursement Warrants remain outstanding as at February 29, 2024.

The First Disbursement Warrants expired in the year ended February 28, 2023 and the Second Disbursement Warrants expired in the year ended February 28, 2025.

On November 21, 2022, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “Financing Facility Amendment”).

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On February 28, 2024, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “Second Financing Facility Amendment”).

As per the Second Financing Facility Amendment, a total of $ 74 (CDN $100) of the principal amount is repayable in monthly installments in the fiscal year ending February 28, 2025, with the remainder of the principal amount being repayable in 60 monthly installments.

As per the Second Financing Facility Amendment, a total of $ 74 (CDN $100) of the principal amount was repayable in monthly installments in the fiscal year ended February 28, 2025, with the remainder of the principal amount being repayable in 60 monthly installments.

Pursuant to the Second Financing Facility Amendment the interest rate of the Financing Facility was increased from 2.36 % to 3.36 %.

On February 5, 2025, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “Third Financing Facility Amendment”).

As per the Second Financing Facility Amendment, total annual principal repayments in monthly installments are of $ 287 (CDN $414) for the fiscal year ending February 28, 2026 and $ 495 (CDN $714) for the fiscal year ending February 28, 2027, with the remainder of the principal amount being repayable in 36 monthly installments.

Pursuant to the Third Financing Facility Amendment the interest rate of the Financing Facility was increased from 3.36 % to 4.36 %.

Under the original terms of the Financing Facility, the principal amount was repayable in 84 monthly installments beginning in March of 2023.

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On July 26, 2022, Loop Canada, Inc., a wholly-owned subsidiary of the Company, entered into an Operating Credit Facility (the “Credit Facility”) with a Canadian bank.

The Credit Facility allows for borrowings of up to $ 2,579 (CDN $3,500) in aggregate principal amount and provides for a two-year term on amounts drawn.

The Credit Facility is secured by the Company’s Terrebonne, Québec property and is subject to a minimum equity covenant, tested quarterly with which the Company was in compliance as at February 29, 2024.

The Credit Facility allows for borrowings of up to $ 2,424 (CDN $3,500) in aggregate principal amount.

The Credit Facility is secured 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 February 28, 2025.

All borrowings under the Credit Facility will bear interest at an annual rate equal to the bank’s Canadian prime rate plus 1.0 %.

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The amendment clarified the milestones consistent with the shift in the Company’s business from the production of terephthalate to the production of dimethyl terephthalate, another proven monomer used to produce PET plastic.

As at February 29, 2024, 3,400,000 (2023 – 3,400,000 ) of Mr.

Solomita’s RSUs were outstanding of which 1,400,000 were vested (2023 – 1,400,000 ).

When a milestone becomes probable, the corresponding expense will be valued based on the grant date fair value on April 30, 2020, the date of the last modification of Mr.

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This amount was reflected as stock-based compensation expense during the year ended February 28, 2023.

As at February 28, 2025, 3,400,000 (2024 – 3,400,000 ) of Mr.

Solomita’s RSUs were outstanding of which 1,400,000 were vested (2024 – 1,400,000 ).

On October 12, 2023, Mr.

Solomita and the Company agreed to defer by one year the settlement of 400,000 RSUs that were set to settle on October 15, 2022.

Solomita and the Company agreed to defer by one year the settlement of 800,000 RSUs that would have otherwise settled on October 15, 2023.

On October 9, 2024, Mr.

Solomita and the Company agreed to defer by one year the settlement of 800,000 RSUs that were set to settle on October 15, 2023.

During the year ended February 29, 2024, no outstanding milestones were probable of being met and, accordingly, no additional stock-based compensation expense was recorded.

Solomita and the Company agreed to defer by one year the settlement of 1,000,000 RSUs that would have otherwise settled on October 15, 2024.

During the year ended February 28, 2025, no outstanding milestones became probable of being met and, accordingly, no additional stock-based compensation expense was recorded.

Stockholders’ Equity

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Solomita of control of the Company in the event that his ownership of the issued and outstanding shares of common stock of the Company is diluted to a level below a majority.

Currently, Mr.

Solomita’s ownership of 19,210,000 shares of common stock and 1 share of Series A Preferred Stock provides him with 75.7% of the voting control of the Company .

Solomita’s ownership as of February 28, 2025 of 19,108,722 shares of common stock and 1 share of Series A Preferred Stock provided him with 74.2% of the voting control of the Company .

Additionally, the one share of Series A Preferred Stock issued to Mr.

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Issuance of shares upon settlement of restricted stock units

Issuance of shares upon the exercise of stock options

Balance, February 28, 2025

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Issuance of shares upon settlement of restricted stock units

Issuance of shares upon the exercise of stock options

Balance, February 29, 2024

During the year ended February 28, 2025, the Company recorded the following common stock transactions:

The Company issued 51,963 shares of the common stock to settle restricted stock units that vested in the period.

The Company issued 7,721 shares of the common stock to settle stock options exercised in the period.

The Company issued 91,355 shares of the common stock to settle restricted stock units.

During the year ended February 29, 2024, the Company recorded the following common stock transactions:

The Company issued 81,168 shares of the common stock to settle restricted stock units that vested in the period.

The Company issued 51,963 shares of the common stock to settle restricted stock units.

The Company issued 7,721 shares of the common stock to settle stock options exercised in the period.

Revenue for the years ended February 28, 2025 and February 29, 2024 were as follows:

Technology licensing

Engineering services

During the year ended February 28, 2025, the Company recorded revenues of $ 10,395 (2024 – nil) for technology licensing fees, which were related to the sale of a license to Reed Societe Generale Group.

The Company entered into a license agreement with Reed Circular Economy (“RCE”), an affiliate of Reed Societe Generale Group, granting a non-transferable, royalty-bearing license to use Loop's proprietary depolymerization technology for one facility within Europe.

Pursuant to the terms of the license agreement, the Company received an upfront royalty payment of $ 10,395 (€10,000).

During the year ended February 28, 2025, the Company recorded revenues of $ 368 (2024 – nil) for engineering fees, which were related to an engineering services agreement between Loop and ELITe.

Pursuant to the agreement, Loop is providing engineering services and support the local engineering firm for the planned Infinite Loop™ facility in India.

During the year ended February 28, 2025, the Company recorded revenues of $ 126 (2024 – $ 153 ) for sales of Loop™ PET resin.

As at February 28, 2025, 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 PET.

Research and Development Expenses

Research and development expenses for the years ended February 28, 2025 and February 29, 2024 were as follows:

February 29, 2024

February 28, 2023

Employee compensation

Machinery and equipment expenditures

External engineering

Plant and laboratory operating expenses (1)

The amount for the year ended February 29, 2024 includes an inventory write-down of $ 817 (2023 – nil) on finished goods and work in process inventories related to inventory volumes not expected to be sold in the next twelve months (Note 4).

Machinery and equipment expenditures

The amount for the year ended February 29, 2024 includes an inventory write-down of $ 817 on finished goods and work in process inventories related to inventory volumes not expected to be sold in the next twelve months (Note 4).

General and Administrative Expenses

General and administrative expenses for the years ended February 28, 2025 and February 29, 2024 were as follows:

February 29, 2024

February 28, 2023

Employee compensation

Professional fees

Includes stock-based compensation expense.

During the year ended February 28, 2023, the Company recorded a stock-based compensation expense of $ 7,740 related to the achievement of a performance milestone for 1,000,000 RSUs (Note 14).

Share-Based Payments

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The following tables summarizes the continuity of the Company’s stock options during the years ended February 28, 2025 and February 29, 2024:

Number of stock options

Weighted average exercise price

Number of stock options

Weighted average exercise price

stock options

Weighted average

exercise price

stock options

average exercise

Outstanding, beginning of year

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Exercise price

Number of stock options outstanding

Weighted average remaining life (years)

Number of stock options outstanding

Weighted average remaining life (years)

stock options

Weighted average remaining

Number of stock

Weighted average

remaining life (years)

Outstanding, end of year

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The following table summarizes the continuity of the restricted stock units (“RSUs”) during the years February 28, 2025 and February 29, 2024:

Number of units

Weighted average fair value price

Number of units

Weighted average fair value price

Weighted average

fair value price

Weighted average

fair value price

Outstanding, beginning of year

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During the year ended February 28, 2025, stock-based compensation attributable to RSUs amounted to $ 797 (2024 - $ 778 ).

During the year ended February 28, 2023, the Company recorded a stock-based compensation expense of $ 7,740 related to the achievement of a performance milestone for 1,000,000 RSUs.

Stock-Based Compensation Expense

During the year ended February 28, 2025, stock-based compensation included in research and development expenses amounted to $ 471 (2024 – $ 542 ), and in general and administrative expenses amounted to $ 881 (2024 – $ 880 ).

The amount recorded in general and administrative expenses for the year ended February 28, 2023 includes $ 7,740 related to the achievement of a performance milestone for 1,000,000 RSUs.

Equity Incentive Plan

On July 6, 2017, the Company adopted the 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, 2023, the share reserve was increased by 1,500,000 shares.

On March 1, 2022, the Board of Directors opted to waive the annual share reserve increase.

On March 1, 2023 and 2024, the share reserve was increased by 1,500,000 shares.

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.

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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 years ended February 29, 2024 and February 28, 2023:

The following table summarizes the continuity of the Plan units that were authorized for issuance as at and during the years ended February 28, 2025 and February 29, 2024:

Number of units*

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Units granted

( 1,123,605 )

Units forfeited

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The following table summarizes the continuity of warrants during the years ended February 28, 2025 and February 29, 2024:

Weighted average exercise price

Weighted average

exercise price

Weighted average

exercise price

Outstanding, beginning of year

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Outstanding, end of year

The expiration dates of the warrants outstanding as at February 29, 2024 are as follows:

Weighted average exercise price

July 29, 2024

August 26, 2024

Outstanding, end of year

Warrant granted to SK Geo Centric, Ltd.

(“SKGC”) pursuant to the securities purchase agreement entered into by the Company and SKGC on June 22, 2021:

Expiration date is the earlier of (A) the date that is the third anniversary of the start of construction of the JV’s first facility, (B) 18 months after the date both parties have approved the basic design package to be used for the JV facilities, provided that the agreements to form the JV have not been executed by that date, and (C) the third anniversary of the date that both parties approved the basic design package to be used for the JV facilities, provided that the start of construction of the JV’s first facility has not occurred as of such date.

Interest and Other Financial Expenses

Interest and other finance costs for the years ended February 29, 2024 and February 28, 2023 are as follows:

Interest and other financial expenses for the years ended February 28, 2025 and February 29, 2024 are as follows:

Accrued dividends on convertible securities (Note 12)

Interest on long-term debt (Note 13)

Interest on credit facility from a Canadian bank (Note 13)

Accretion expense (Notes 10 and 13)

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The components of the Company’s loss before taxes are summarized below:

February 29, 2024

February 28, 2023

Foreign operations

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income tax rate and the Company’s effective income tax rate, as computed on loss before taxes, is as follows:

February 29, 2024

February 28, 2023

Statutory Federal rate

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Tax credits related to research and development expenditures

Unrecognized tax benefit of net operating losses and other available deductions

Change in valuation allowance and other items

Effective income tax expense

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The tax effect of temporary differences between US GAAP accounting and federal income tax accounting creating deferred income tax assets and liabilities were as follows:

February 29, 2024

February 28, 2023

Deferred tax assets

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Internal Revenue Service and most state jurisdictions, and the years ended February 28, 2019 and forward for the Canadian jurisdiction.

Legal Settlement

On October 13, 2020, the Company and certain of its officers were named as defendants in a proposed class-action lawsuit filed in the United States District Court for the Southern District of New York, captioned Olivier Tremblay, Individually and on Behalf of All Others Similarly Situated v.

Loop Industries, Inc., Daniel Solomita, and Nelson Gentiletti , Case No.

7:20-cv-08538-NSR (“Tremblay Class Action”).

The complaint alleged that the defendants violated Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts about the Company’s business, operations, and prospects, which caused the Company’s securities to trade at artificially inflated prices.

The complaint sought unspecified damages on behalf of a class of purchasers of Loop’s securities between September 24, 2018 and October 12, 2020, inclusive.

On October 28, 2020, the Company and certain of its officers were named as defendants in a second proposed class-action lawsuit filed in the United States District Court for the Southern District of New York, captioned Michelle Bazzini, Individually and on Behalf of All Others Similarly Situated v.

Loop Industries, Inc., Daniel Solomita, and Nelson Gentiletti , Case No.

7:20-cv-09031-NSR.

The complaint allegations were similar in nature to those in the Tremblay Class Action.

On January 4, 2021, the United States District Court for the Southern District of New York consolidated the two proposed class-action lawsuits as In re Loop Industries, Inc.

Securities Litigation , Master File No.

7:20-cv-08538-NSR.

Sakari Johansson and John Jay Cappa were appointed as Co-Lead Plaintiffs and Glancy Prongay & Murray LLP and Pomerantz LLP were appointed as Co-Lead Counsel for the class.

Plaintiffs served a consolidated amended complaint on February 18, 2021, which alleged that the defendants violated Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts about the Company’s business, operations, and prospects, which caused the Company’s securities to trade at artificially inflated prices.

The consolidated amended complaint relied on the October 13, 2020 report published by a third party regarding the Company to support their allegations.

Defendants served a motion to dismiss the consolidated amended complaint on April 27, 2021.

Plaintiffs’ opposition to the motion to dismiss was served on May 27, 2021 and Defendants’ reply in support of the motion to dismiss was served on June 11, 2021.

On March 1, 2022, the Company and the current and former officer defendants entered into an agreement for the settlement of In re Loop Industries, Inc.

Securities Litigation, and, on March 4, 2022, advised the Court of the agreement to settle.

The agreement, which was subject to certain conditions, including court approval, required the Company to pay $ 3.1 million to the plaintiff class.

As a result, the Company recorded a contingency loss of $ 2,519 which was included in accounts payable and accrued liabilities at February 28, 2022 and expected to be the Company’s approximate total cash contribution to the settlement and outstanding legal fees related to the lawsuit, net of the Company’s D&O insurance carriers’ contribution.

On May 24, 2022, Lead Plaintiffs filed their motion for preliminary approval of the proposed class action settlement.

On September 19, 2022, the Court entered an order preliminarily approving the settlement and providing for notice.

The Court held a final settlement hearing on January 5, 2023 after which the Court entered an order and final judgment approving the class action settlement.

In October 2022, the Company made a payment in escrow of $3,100 for the settlement and received $ 838 from its D&O insurance carriers.

As at February 29, 2024, the Company no longer has any amount related to the class action settlement included in accounts payable and accrued liabilities.

The settlement agreement does not constitute an admission, concession, or finding of any fault, liability, or wrongdoing by the Company or any defendant.

Contractual agreement

Agreement with SKGC

On April 27, 2023, the Company and SKGC entered into an agreement to build Infinite Loop ™ manufacturing facilities in Asia.

Pursuant to the agreement, the Company and SKGC agreed to form a new entity, which will be headquartered in Singapore.

To date, no amounts have been contributed by the Company to the new entity.

Subsequent Events

Strategic partnership with Ester Industries Ltd.

On May 1, 2024, Loop 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.

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

Ester and Loop will work in collaboration on all financing activities for the India JV pursuant to the terms of the Agreement and will each contribute 50% of the initial equity capital of the India JV .

Segment Reporting

The Company manages its operations as a single reportable segment for the purpose of assessing performance and making operating and strategic decisions, which currently focuses on the commercialization of its technology.

The accounting policies of the single reportable segment are the same as those described in the summary of significant accounting policies.

The chief operating decision maker, or “CODM,” assesses performance decides whether to allocate resources for the Company’s single reportable segment based on consolidated net loss.

The CODM uses net loss to regularly monitor budget versus actual results which are used in assessing performance and in establishing management’s compensation.

The CODM does not review assets in evaluating the results of the single reportable segment, therefore such information is not presented.

The consolidated statement of operations provides the operating results for the single reportable segment.

Significant segment expenses within the financial statement line items, Research and Development and General and administrative , are further presented in Note 17 and 18, respectively.

Research and development (See components in Note 17)

General and administrative (See components in Note 18)

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data