Financial Data and Key Metrics Changes - Cash operating expenses for the quarter were $2,430,000, reflecting a year-over-year decrease of $1,740,000 [13] - Total available liquidity at the end of the second quarter was $9,860,000 [13] Business Line Data and Key Metrics Changes - The company executed a supply contract with a leading sports apparel company for a fixed amount of textile to textile polyester resin, which includes a guaranteed take or pay element [6][7] - A supply contract was also executed with Taro Plast for DMT produced from the Infinite Loop India project, highlighting the company's ability to supply virgin quality DMT made from 100% recycled content [7][8] Market Data and Key Metrics Changes - The company is currently in discussions with several consumer packaged goods (CPG) and apparel brand companies to secure additional offtake agreements for the Infinite Loop India project [8] - The textile industry partnerships with Xingkong and Hyosung are expected to expand the reach of the company's polyester resin products [10][11] Company Strategy and Development Direction - The company is focused on constructing the Infinite Loop India manufacturing facility, with a total cost estimate of $176,000,000, and is currently trending to complete construction below this estimate [8][9] - The company plans to expand its capacity in India, with the land acquired allowing for a second facility of 100,000 tons, which would represent a 50% increase in capacity [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the progress of the India project, with expectations to have it operational by 2027 [22] - The company is optimistic about securing additional supply agreements by the end of the year and believes that the current market conditions allow for a diversified portfolio [20][38] Other Important Information - The company has received positive feedback from lenders regarding the debt syndication process for the India project, with several term sheets already received [21][48] - The removal of cash covenants on the line of credit was seen as a vote of confidence in the company's predictable revenue streams and profitability [43] Q&A Session Summary Question: Can you expand on the anchor offtake agreement with the Global Sports brand? - The company did not disclose specific volumes for negotiation reasons but confirmed it is a significant contract [20] Question: What is the construction timeline for the India project? - The project is on schedule to be operational by 2027, with customer contracts being a gating item for debt financing [22] Question: Can you discuss the commercial pipeline for DMT and polymers beyond automotive? - The company is exploring various markets for DMT, emphasizing its unique position in supplying virgin quality DMT made from recycled content [25] Question: What does the partnership with Xingkong and Hyosung entail? - The partnerships allow the company to integrate its products into the supply chains of textile and apparel brands, facilitating easier access to its materials [33] Question: How does the company plan to diversify its portfolio? - The company aims to balance its offerings across textiles, packaging, and chemicals to mitigate market fluctuations [38] Question: What is the status of the engineering services agreement? - Revenue from the engineering services agreement is expected to start in November once the detailed engineering phase kicks off [50]

[Executive Summary & Business Update](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Update) Loop Industries reports significant progress in its India and European projects, securing key agreements and advancing towards commercialization, alongside its Q2 FY2026 financial results [Company Overview and Mission](index=1&type=section&id=Company%20Overview%20and%20Mission) Loop Industries is a clean technology company dedicated to accelerating a circular economy for polyester by producing 100% recycled PET plastic and textile-to-textile polyester - Loop Industries' mission is to accelerate a circular economy for polyester by manufacturing **100% recycled polyethylene terephthalate ("PET") plastic** and textile-to-textile (T2T) polyester[2](index=2&type=chunk) [Key Business Milestones and Progress](index=1&type=section&id=Key%20Business%20Milestones%20and%20Progress) Loop Industries reported significant progress in its Infinite Loop™ India project, securing crucial offtake agreements, strategic alliances, and a site acquisition, while also advancing its European partnership towards commercialization. The CEO highlighted these achievements as landmark milestones for the company's growth - Loop Industries reported consolidated financial results for the second quarter of fiscal year 2026 and provided an update on key milestones, indicating positive progress towards commercialization[1](index=1&type=chunk)[2](index=2&type=chunk) - CEO Daniel Solomita described the quarter as a 'landmark' for the Infinite Loop India project, with the strategic site secured, foundational anchor customer agreements, and significant progress in project debt financing[10](index=10&type=chunk) - The European project is also progressing well, nearing final site selection, and is expected to generate new revenue streams from initial engineering services and subsequent milestone licensing payments[10](index=10&type=chunk) Cash Operating Expenses and Liquidity | Metric | Q2 FY2026 | Q2 FY2025 (estimated) | | :---------------------- | :-------- | :-------------------- | | Cash operating expenses | $2.43M | $4.17M | | Total available liquidity | $9.86M | N/A | [Infinite Loop™ India Project](index=1&type=section&id=Infinite%20Loop%20India%20Update) The India project achieved major milestones including securing offtake agreements, forming strategic alliances, acquiring a site, and making progress on debt financing - Secured a multi-year offtake agreement with a leading global branded sports apparel company for **Twist™ polyester** from the Infinite Loop India facility[5](index=5&type=chunk) - Executed an offtake agreement with Taro Plast S.p.A. for **Loop™ DMT** from the Infinite Loop India facility[5](index=5&type=chunk) - Formed strategic alliances with Shinkong Synthetic Fibers Corporation and Hyosung TNC to support the shift to textile-to-textile circular polyester[5](index=5&type=chunk) - ELITe, the India JV, acquired a **93-acre site in Gujarat, India**, for **$10.5 million**, representing a **$5 million reduction** in the project cost estimate[5](index=5&type=chunk) - Positive progress is being made in discussions with potential lenders for project debt financing for the Infinite Loop™ India facility, managed by KPMG[5](index=5&type=chunk) [European Partnership with Reed Societe Generale Group](index=2&type=section&id=European%20Partnership%20with%20Reed%20Societe%20Generale%20Group) The European partnership is advancing with final site selection, engagement with government entities for incentives, and anticipated engineering revenues in 2026 - Loop and Reed Societe Generale Group are in advanced stages of selecting a final project location for the first Infinite Loop™ facility in Europe[9](index=9&type=chunk) - Engaging with government entities regarding available subsidies and incentives, and identifying strategic partners for project execution[9](index=9&type=chunk) - Loop expects to provide engineering services and a modular construction solution for the European project, anticipating engineering revenues in **2026**[9](index=9&type=chunk) [CEO Commentary](index=3&type=section&id=CEO%20Comment) The CEO highlights Q2 FY2026 as a landmark quarter for the India project due to site acquisition and customer agreements, with the European project also progressing well towards new revenue streams - CEO Daniel Solomita highlighted Q2 FY2026 as a 'landmark quarter' for the Infinite Loop India project, with the strategic site secured and foundational anchor customer agreements[10](index=10&type=chunk) - Significant headway is being made in securing project debt financing for the India facility from a strong syndicate of international and local Indian banks[10](index=10&type=chunk) - The European project is progressing well, with site selection in final stages, and is anticipated to generate meaningful new revenue streams from initial engineering services and subsequent milestone licensing payments[10](index=10&type=chunk) [Financial Highlights & Performance](index=2&type=section&id=Financial%20Highlights%20%26%20Performance) Loop Industries reported a reduced net loss for both the quarter and six-month period, driven by expense reductions, while maintaining sufficient liquidity for operations [Second Quarter Fiscal 2026 Financial Highlights](index=2&type=section&id=Second%20Quarter%20Fiscal%202026%20Financial%20Highlights) For Q2 FY2026, Loop Industries reported a net loss of $3.204 million, a decrease of $1.635 million year-over-year. This improvement was primarily driven by significant decreases in research and development and general and administrative expenses, partially offset by an increase in interest and other financial expenses. Revenues for the quarter were $0 Q2 FY2026 Financial Performance | Metric (in thousands USD) | Q2 FY2026 | Q2 FY2025 | Change (favorable/(unfavorable)) | | :------------------------ | :-------- | :-------- | :------------------------------- | | Revenues | $0 | $23 | $(23) | | Total Research and Development | $843 | $1,945 | $1,102 | | Total General and Administrative | $1,871 | $2,595 | $724 | | Interest and other financial expenses | $419 | $119 | $(300) | | Net Loss | $(3,204) | $(4,839) | $1,635 | - Cash operating expenses for Q2 FY2026 were **$2.43 million**, reflecting a year-over-year decrease of **$1.74 million**[7](index=7&type=chunk) - Total available liquidity at the end of Q2 FY2026 was **$9.86 million**, which the company believes is sufficient to fund operations while securing additional financing[7](index=7&type=chunk) [Six Months Ended August 31, 2025 Financial Highlights](index=6&type=section&id=Six%20Months%20Ended%20August%2031%2C%202025%20Financial%20Highlights) For the six months ended August 31, 2025, Loop Industries reported a net loss of $6.651 million, a decrease of $3.377 million year-over-year. This improvement was primarily due to substantial reductions in general and administrative and research and development expenses, partially offset by increased interest and other financial expenses and a loss on equity accounted investment. Revenues significantly increased to $252 thousand, mainly from engineering fees H1 FY2026 Financial Performance | Metric (in thousands USD) | H1 FY2026 | H1 FY2025 | Change (favorable/(unfavorable)) | | :------------------------ | :-------- | :-------- | :------------------------------- | | Revenues | $252 | $29 | $223 | | Total Research and Development | $2,217 | $4,182 | $1,965 | | Total General and Administrative | $3,519 | $5,506 | $1,987 | | Loss on equity accounted investment | $345 | $0 | $(345) | | Interest and other financial expenses | $837 | $179 | $(658) | | Net Loss | $(6,651) | $(10,028) | $3,377 | - Revenues for the six-month period ended August 31, 2025, included **$244 thousand in engineering fees** and **$8 thousand from sales of Loop™ PET resin**[21](index=21&type=chunk) [Detailed Results of Operations](index=4&type=section&id=Detailed%20Results%20of%20Operations) This section provides a granular analysis of the company's revenues, research and development, general and administrative, interest, and net loss for the three and six-month periods [Three Months Ended August 31, 2025](index=4&type=section&id=Three%20Months%20Ended%20August%2031%2C%202025) For the three months ended August 31, 2025, Loop Industries reported a decrease in revenues to $0, while significantly reducing Research and Development and General and Administrative expenses. However, interest and other financial expenses increased due to accrued PIK dividends, resulting in an overall reduced net loss compared to the prior year [Revenues](index=4&type=section&id=Revenues_Q2) Revenues for Q2 FY2026 decreased to zero, reflecting a halt in sales of Loop™ PET resin compared to the prior year | Metric (in thousands USD) | Q2 FY2026 | Q2 FY2025 | Change | | :------------------------ | :-------- | :-------- | :----- | | Revenues | $0 | $23 | $(23) | - Revenues decreased by **$23 thousand** to **$0** in Q2 FY2026, compared to **$23 thousand** from sales of Loop™ PET resin in Q2 FY2025[14](index=14&type=chunk) [Research and Development Expenses](index=4&type=section&id=Research%20and%20Development%20Expenses_Q2) Research and development expenses significantly decreased in Q2 FY2026, primarily due to reductions in external engineering and employee compensation costs | Metric (in thousands USD) | Q2 FY2026 | Q2 FY2025 | Change | | :------------------------ | :-------- | :-------- | :----- | | Total R&D Expenses | $843 | $1,945 | $1,102 | | External engineering | $9 | $651 | $642 | | Employee compensation | $597 | $862 | $265 | - Research and development expense decreased by **$1,102 thousand**, primarily due to a **$642 thousand decrease** in external engineering expenses and a **$265 thousand decrease** in employee compensation expenses[15](index=15&type=chunk) [General and Administrative Expenses](index=5&type=section&id=General%20and%20Administrative%20Expenses_Q2) General and administrative expenses saw a notable reduction in Q2 FY2026, mainly driven by lower professional fees and employee compensation | Metric (in thousands USD) | Q2 FY2026 | Q2 FY2025 | Change | | :------------------------ | :-------- | :-------- | :----- | | Total G&A Expenses | $1,871 | $2,595 | $724 | | Professional fees | $612 | $1,007 | $395 | | Employee compensation | $423 | $585 | $162 | - General and administrative expenses decreased by **$724 thousand**, mainly due to a **$395 thousand decrease** in professional fees (legal costs related to partnerships in the prior year) and a **$162 thousand decrease** in employee compensation[16](index=16&type=chunk) [Interest and Other Financial Expenses](index=5&type=section&id=Interest%20and%20Other%20Financial%20Expenses_Q2) Interest and other financial expenses increased in Q2 FY2026, primarily due to accrued PIK dividends on Series B Convertible Preferred Stock | Metric (in thousands USD) | Q2 FY2026 | Q2 FY2025 | Change | | :------------------------ | :-------- | :-------- | :----- | | Interest and other financial expenses | $419 | $119 | $(300) | - Interest and other financial expenses increased by **$300 thousand**, primarily attributable to **$341 thousand** in accrued PIK dividend on Series B Convertible Preferred Stock[17](index=17&type=chunk) [Net Loss](index=5&type=section&id=Net%20Loss_Q2) The net loss for Q2 FY2026 decreased due to lower operating expenses, partially offset by increased financial expenses | Metric (in thousands USD) | Q2 FY2026 | Q2 FY2025 | Change | | :------------------------ | :-------- | :-------- | :----- | | Net Loss | $(3,204) | $(4,839) | $1,635 | - The net loss decreased by **$1,635 thousand**, primarily due to decreases in research and development and general and administrative expenses, partially offset by the increase in interest and other financial expenses[18](index=18&type=chunk) [Six Months Ended August 31, 2025](index=6&type=section&id=Six%20Months%20Ended%20August%2031%2C%202025) For the six months ended August 31, 2025, Loop Industries experienced a significant increase in revenues, mainly from engineering fees, coupled with substantial reductions in Research and Development and General and Administrative expenses. However, these positive impacts were partially offset by increased interest expenses and a loss from equity accounted investment, leading to an overall reduced net loss for the period [Revenues](index=6&type=section&id=Revenues_H1) Revenues for the six-month period significantly increased, primarily driven by engineering fees and a small contribution from PET resin sales | Metric (in thousands USD) | H1 FY2026 | H1 FY2025 | Change | | :------------------------ | :-------- | :-------- | :----- | | Revenues | $252 | $29 | $223 | - Revenues increased by **$223 thousand** to **$252 thousand**, primarily from **$244 thousand in engineering fees** and **$8 thousand from sales of Loop™ PET resin**[21](index=21&type=chunk) [Research and Development Expenses](index=6&type=section&id=Research%20and%20Development%20Expenses_H1) Research and development expenses for the six-month period decreased substantially, mainly from reduced external engineering and employee compensation | Metric (in thousands USD) | H1 FY2026 | H1 FY2025 | Change | | :------------------------ | :-------- | :-------- | :----- | | Total R&D Expenses | $2,217 | $4,182 | $1,965 | | External engineering | $14 | $1,279 | $1,265 | | Employee compensation | $1,299 | $1,877 | $578 | - Research and development expense decreased by **$1,965 thousand**, primarily due to a **$1,265 thousand decrease** in external engineering expenses and a **$578 thousand decrease** in employee compensation expenses[22](index=22&type=chunk) [General and Administrative Expenses](index=7&type=section&id=General%20and%20Administrative%20Expenses_H1) General and administrative expenses for the six-month period decreased significantly, primarily due to lower professional fees and employee compensation | Metric (in thousands USD) | H1 FY2026 | H1 FY2025 | Change | | :------------------------ | :-------- | :-------- | :----- | | Total G&A Expenses | $3,519 | $5,506 | $1,987 | | Professional fees | $973 | $2,262 | $1,289 | | Employee compensation | $992 | $1,221 | $229 | - General and administrative expenses decreased by **$1,987 thousand**, mainly due to a **$1,289 thousand decrease** in professional fees and a **$229 thousand decrease** in employee compensation expenses[23](index=23&type=chunk) [Loss on Equity Accounted Investment](index=7&type=section&id=Loss%20on%20Equity%20Accounted%20Investment_H1) A new loss on equity accounted investment was recorded for the six-month period, reflecting the India JV's preliminary project costs | Metric (in thousands USD) | H1 FY2026 | H1 FY2025 | Change | | :------------------------ | :-------- | :-------- | :----- | | Loss on equity accounted investment | $345 | $0 | $(345) | - Loss on equity accounted investment increased by **$345 thousand**, relating to the Company's **50% portion of the loss** incurred by the India JV for preliminary project costs, mainly engineering fees[24](index=24&type=chunk) [Interest and Other Financial Expenses](index=7&type=section&id=Interest%20and%20Other%20Financial%20Expenses_H1) Interest and other financial expenses for the six-month period increased, largely due to accrued PIK dividends on Series B Convertible Preferred Stock | Metric (in thousands USD) | H1 FY2026 | H1 FY2025 | Change | | :------------------------ | :-------- | :-------- | :----- | | Interest and other financial expenses | $837 | $179 | $(658) | - Interest and other financial expenses increased by **$658 thousand**, mainly attributable to **$681 thousand** in accrued PIK dividend on Series B Convertible Preferred Stock[25](index=25&type=chunk) [Net Loss](index=7&type=section&id=Net%20Loss_H1) The net loss for the six-month period decreased due to reduced operating expenses, partially offset by increased financial expenses and equity investment losses | Metric (in thousands USD) | H1 FY2026 | H1 FY2025 | Change | | :------------------------ | :-------- | :-------- | :----- | | Net Loss | $(6,651) | $(10,028) | $3,377 | - The net loss decreased by **$3,377 thousand**, primarily due to decreases in general and administrative and research and development expenses, partially offset by increased interest and other financial expenses and loss on equity accounted investment[26](index=26&type=chunk) [Condensed Consolidated Financial Statements](index=8&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's unaudited consolidated statements of operations, balance sheets, and cash flows for the reported periods [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section presents the unaudited condensed consolidated statements of operations and comprehensive loss for the three and six-month periods ended August 31, 2025 and 2024, detailing revenues, expenses, other income/loss, net loss, and comprehensive loss, along with per share data Consolidated Statements of Operations and Comprehensive Loss | (in thousands of U.S. dollars, except per share data) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :---------------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Revenues | $ - | $ 23 | $ 252 | $ 29 | | Research and development | 843 | 1,945 | 2,217 | 4,182 | | General and administrative | 1,871 | 2,595 | 3,519 | 5,506 | | Depreciation and amortization | 96 | 129 | 197 | 266 | | Loss on equity accounted investments | 43 | - | 345 | - | | Total expenses | 2,853 | 4,669 | 6,278 | 9,954 | | Interest and other financial expenses | 419 | 119 | 837 | 179 | | Interest income | (70) | (6) | (170) | (132) | | Foreign exchange loss (gain) | 2 | 80 | (42) | 56 | | Total other loss | 351 | 193 | 625 | 103 | | Net loss | (3,204) | (4,839) | (6,651) | (10,028) | | Foreign currency translation adjustment | (6) | 43 | (25) | (12) | | Comprehensive loss | $ (3,210) | $ (4,796) | $ (6,676) | $ (10,040) | | Net loss per share Basic and diluted | $ (0.07) | $ (0.10) | $ (0.14) | $ (0.21) | | Weighted average common shares outstanding Basic and diluted | 47,769,800 | 47,573,302 | 47,716,964 | 47,554,357 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides the unaudited condensed consolidated balance sheets as of August 31, 2025, and February 28, 2025, detailing assets, liabilities, and stockholders' equity (deficit) Consolidated Balance Sheets | (in thousands of U.S. dollars, except per share data) | As at August 31, 2025 | As at February 28, 2025 | | :---------------------------------------------------- | :-------------------- | :---------------------- | | **Assets** | | | | Cash and cash equivalents | $ 7,310 | $ 12,973 | | Total current assets | 8,800 | 13,852 | | Investments in joint ventures | 936 | 1,281 | | Property, plant and equipment, net | 1,754 | 1,737 | | Intangible assets, net | 1,800 | 1,708 | | Total assets | $ 13,290 | $ 18,578 | | **Liabilities and Stockholders' Equity (Deficit)** | | | | Total current liabilities | $ 3,901 | $ 3,959 | | Due to customer | 865 | 832 | | Series B Convertible Preferred stock | 11,328 | 10,647 | | Long-term debt | 2,664 | 2,773 | | Total liabilities | 18,758 | 18,211 | | Total stockholders' equity (deficit) | (5,468) | 367 | | Total liabilities and stockholders' equity (deficit) | $ 13,290 | $ 18,578 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited condensed consolidated statements of cash flows for the six-month periods ended August 31, 2025 and 2024, outlining cash flows from operating, investing, and financing activities, and the net change in cash and cash equivalents Consolidated Statements of Cash Flows | (in thousands of U.S. dollars) | Six Months Ended August 31, 2025 | Six Months Ended August 31, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $ (5,604) | $ (6,775) | | Net cash used in investing activities | $ (133) | $ (325) | | Net cash (used) provided by financing activities | $ 51 | $ 1,537 | | Net decrease in cash | $ (5,663) | $ (5,563) | | Cash and cash equivalents, beginning of period | $ 12,973 | $ 6,958 | | Cash and cash equivalents, end of period | $ 7,310 | $ 1,395 | [Additional Information](index=3&type=section&id=Additional%20Information) This section provides details on an upcoming corporate update call, an overview of Loop Industries' mission and technology, and important forward-looking statements [Corporate Update Call Details](index=3&type=section&id=Corporate%20Update%20Call) Loop Industries will host a corporate update call on Thursday, October 16, 2025, at 8:45 AM ET, with details provided for telephone access and online registration - Senior Management of Loop will host a corporate update call on Thursday, **October 16, 2025**, at **8:45 AM Eastern Time**[11](index=11&type=chunk) - Participants can join by telephone using provided dial-in numbers and access code, or register online to bypass wait times and receive a calendar invitation[11](index=11&type=chunk) [About Loop Industries](index=11&type=section&id=About%20Loop%20Industries) Loop Industries is a technology company focused on sustainable PET plastic and polyester fiber, utilizing patented technology to depolymerize waste into virgin-quality monomers for infinite recycling, thereby contributing to a circular economy - Loop Industries is a technology company whose mission is to accelerate the world's shift toward sustainable PET plastic and polyester fiber and away from its dependence on fossil fuels[33](index=33&type=chunk) - The company owns patented technology that depolymerizes low-value waste PET plastic and polyester fiber into base monomers (DMT and MEG), which are then purified and polymerized to create virgin-quality Loop™ & Twist™ branded PET resin[33](index=33&type=chunk) - Loop™ & Twist™ PET can be recycled infinitely without degradation of quality, helping to close the plastic loop and contributing to a circular economy[33](index=33&type=chunk) [Forward-Looking Statements](index=11&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding anticipated project timelines, capital requirements, and revenue opportunities, which are inherently subject to various risks and uncertainties, including commercialization ability, partner relationships, and macroeconomic factors. Investors are advised to consult SEC filings for detailed risk factors - The news release contains 'forward-looking statements' regarding anticipated project timelines, capital requirements, and revenue opportunities for projects in India and Europe, as well as expected benefits of agreements and partnerships[34](index=34&type=chunk) - Forward-looking statements are inherently subject to risks and uncertainties, including the ability to commercialize technology, status of partner relationships, intellectual property, industry competition, and the need for additional funding[34](index=34&type=chunk) - Investors and security holders are urged to read Loop's Annual Report on Form 10-K and subsequent SEC filings for more detailed information about risk factors[34](index=34&type=chunk)

Core Insights - Loop Industries has secured a multi-year offtake agreement with a leading global branded sports apparel company for the sale of Twist™ polyester from the Infinite Loop India facility [1] - The company has also established an offtake agreement to supply DMT to Taro Plast from Infinite Loop India [1] - Strategic alliances have been formed with Shinkong and Hyosung TNC to support the shift by global apparel brands towards textile-to-textile circular polyester [1] - An acquisition agreement has been made for a 93-acre site for the Infinite Loop facility in India [1] - Positive progress has been reported on project debt financing for Infinite Loop India [1] - The commercialization timeline for Infinite Loop Europe is advancing [1] - Loop Management will hold an update call on October 16, 2025, at 8:45 AM ET [1]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited interim condensed consolidated financial information for Loop Industries, Inc. [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited interim condensed consolidated financial statements of Loop Industries, Inc. for the three and six months ended August 31, 2025 and 2024, prepared in conformity with US GAAP. It includes the balance sheets, statements of operations and comprehensive loss, statements of changes in stockholders' equity (deficit), statements of cash flows, and accompanying notes detailing the company's financial position, performance, and significant accounting policies. [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position at specific points in time. Condensed Consolidated Balance Sheets (in thousands of U.S. dollars) | Metric | August 31, 2025 | February 28, 2025 | | :-------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $7,310 | $12,973 | | Total current assets | $8,800 | $13,852 | | Total assets | $13,290 | $18,578 | | Total current liabilities | $3,901 | $3,959 | | Series B Convertible Preferred stock | $11,328 | $10,647 | | Total liabilities | $18,758 | $18,211 | | Total stockholders' equity (deficit) | $(5,468) | $367 | - The company's **total assets decreased from** **$18,578 thousand** as of February 28, 2025, to **$13,290 thousand** as of August 31, 2025, **primarily driven by a decrease in cash and cash equivalents**[11](index=11&type=chunk) - **Stockholders' equity shifted from a positive balance of** **$367 thousand** **to a deficit of** **$(5,468) thousand**, **indicating a deterioration in the company's equity position**[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details the company's financial performance over specific periods. Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands of U.S. dollars) | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :---------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Revenues | $0 | $23 | $252 | $29 | | Research and development expenses | $843 | $1,945 | $2,217 | $4,182 | | General and administrative expenses | $1,871 | $2,595 | $3,519 | $5,506 | | Total expenses | $2,853 | $4,669 | $6,278 | $9,954 | | Net loss | $(3,204) | $(4,839) | $(6,651) | $(10,028) | | Basic and diluted net loss per share | $(0.07) | $(0.10) | $(0.14) | $(0.21) | - **Revenues for the three months ended August 31, 2025, were** **$0**, down from **$23 thousand** in the prior year, while **six-month revenues increased significantly to** **$252 thousand** from **$29 thousand**, **primarily due to engineering services**[14](index=14&type=chunk)[158](index=158&type=chunk) - **Net loss decreased for both the three-month period** (from **$(4,839) thousand** to **$(3,204) thousand**) and the six-month period (from **$(10,028) thousand** to **$(6,651) thousand**) year-over-year, **driven by reduced R&D and G&A expenses**[14](index=14&type=chunk)[155](index=155&type=chunk)[163](index=163&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Deficit)) This section outlines changes in the company's equity over specific periods. - **Total stockholders' equity (deficit) decreased from** **$367 thousand** at February 28, 2025, to **$(5,468) thousand** at August 31, 2025, **primarily due to a net loss of** **$(6,651) thousand**[18](index=18&type=chunk) - **During the six months ended August 31, 2025, the company issued** **126,857 shares upon settlement of restricted stock units and** **116,358 shares for cash under its ATM Equity Offering, contributing to additional paid-in capital**[18](index=18&type=chunk)[58](index=58&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports on the company's cash inflows and outflows from operating, investing, and financing activities. Condensed Consolidated Statements of Cash Flows (in thousands of U.S. dollars) | Cash Flow Activity | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :---------------------------------- | :---------------------------- | :---------------------------- | | Net cash used in operating activities | $(5,604) | $(6,775) | | Net cash used in investing activities | $(133) | $(325) | | Net cash provided by (used in) financing activities | $51 | $1,537 | | Net decrease in cash | $(5,663) | $(5,563) | | Cash and cash equivalents, end of period | $7,310 | $1,395 | - **Net cash used in operating activities decreased to** **$(5,604) thousand** for the six months ended August 31, 2025, from **$(6,775) thousand** in the prior year, **mainly due to decreased operating expenses**[21](index=21&type=chunk)[181](index=181&type=chunk) - **Net cash provided by financing activities significantly decreased to** **$51 thousand** in 2025 from **$1,537 thousand** in 2024, **as 2024 included** **$1,587 thousand** **in borrowings under a credit facility**[21](index=21&type=chunk)[183](index=183&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information for the financial statements. [1. The Company, Basis of Presentation and Liquidity Risk Assessment](index=12&type=section&id=1.%20The%20Company,%20Basis%20of%20Presentation%20and%20Liquidity%20Risk%20Assessment) This note describes the company's business, financial statement preparation, and liquidity assessment. - **Loop Industries, Inc. is a technology company in the pre-commercialization stage**, owning patented technology for depolymerizing waste PET plastic and polyester fiber into virgin-quality PET resin[24](index=24&type=chunk) - The company has **recurring net losses and negative cash flow from operating activities**, with **available liquidity of** **$9,857 thousand** as of August 31, 2025, which **management deems sufficient for at least twelve months**[28](index=28&type=chunk)[29](index=29&type=chunk) - **Future strategic development and manufacturing facility construction depend on securing additional funding** **through technology licensing, engineering services, government incentives, and/or debt/equity issuance**[30](index=30&type=chunk) [2. Summary of Significant Accounting Policies](index=14&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements. - The financial statements are **prepared in conformity with US GAAP and SEC regulations for interim reporting**, with **estimates and assumptions affecting reported amounts**[25](index=25&type=chunk)[32](index=32&type=chunk) - **Basic and diluted loss per share calculations are the same due to the antidilutive effect of potential dilutive securities**, which **included 5,493,138 stock options and 4,256,532 restricted stock units as of August 31, 2025**[33](index=33&type=chunk) - The company is **evaluating the impact of recently issued accounting pronouncements**, including ASU 2023-09 (Income Tax Disclosures), ASU 2024-03 (Expense Disaggregation), ASU 2024-04 (Convertible Debt), ASU 2025-01 (Effective Date Clarification), and ASU 2025-05 (Credit Losses)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) [3. Accounts Receivable and Other](index=15&type=section&id=3.%20Accounts%20Receivable%20and%20Other) This note details the composition and changes in accounts receivable and other current assets. Accounts Receivable and Other (in thousands of U.S. dollars) | Category | August 31, 2025 | February 28, 2025 | | :-------------------------- | :-------------- | :---------------- | | Accounts receivable from customers | $616 | $420 | | Other receivables | $286 | $219 | | **Total** | **$902** | **$639** | - **Accounts receivable from customers increased by** **$196 thousand**, and **other receivables increased by** **$67 thousand**, **contributing to a total increase of** **$263 thousand** in Accounts Receivable and Other from February 28, 2025, to August 31, 2025[40](index=40&type=chunk)[41](index=41&type=chunk) [4. Prepaid Expenses](index=17&type=section&id=4.%20Prepaid%20Expenses) This note provides a breakdown of the company's prepaid expenses. Prepaid Expenses (in thousands of U.S. dollars) | Category | August 31, 2025 | February 28, 2025 | | :---------- | :-------------- | :---------------- | | Insurance | $336 | $69 | | Utilities | $32 | $29 | | Software | $44 | $28 | | Other | $90 | $32 | | **Total** | **$502** | **$158** | - **Prepaid expenses significantly increased from** **$158 thousand** to **$502 thousand**, **primarily driven by a substantial increase in prepaid insurance from** **$69 thousand** to **$336 thousand**[42](index=42&type=chunk) [5. Property, Plant and Equipment, Net](index=17&type=section&id=5.%20Property,%20Plant%20and%20Equipment,%20Net) This note presents the company's net property, plant, and equipment and related depreciation. Property, Plant and Equipment, Net (in thousands of U.S. dollars) | Category | August 31, 2025 Net Book Value | February 28, 2025 Net Book Value | | :-------------------------- | :----------------------------- | :----------------------------- | | Machinery and equipment | $0 | $0 | | Building | $1,347 | $1,311 | | Land | $223 | $212 | | Building and Land Improvements | $95 | $125 | | Office equipment and furniture | $89 | $89 | | **Total** | **$1,754** | **$1,737** | - **Net property, plant and equipment remained relatively stable**, **increasing slightly from** **$1,737 thousand** to **$1,754 thousand**, with **machinery and equipment fully depreciated**[43](index=43&type=chunk) - **Depreciation expense for the three and six months ended August 31, 2025, was** **$36 thousand** and **$70 thousand**, respectively, **a decrease from** **$79 thousand** and **$170 thousand** in the prior year[43](index=43&type=chunk) [6. Intangible Assets, Net](index=18&type=section&id=6.%20Intangible%20Assets,%20Net) This note details the company's intangible assets and related amortization. - **Intangible assets, net, increased from** **$1,708 thousand** at February 28, 2025, to **$1,800 thousand** at August 31, 2025[45](index=45&type=chunk) - **Additions to intangible assets, primarily patent application costs, were** **$133 thousand** for the six months ended August 31, 2025, **a decrease from** **$325 thousand** in the prior year[45](index=45&type=chunk) - **Amortization expense for the three and six months ended August 31, 2025, was** **$61 thousand** and **$126 thousand**, respectively, **an increase from** **$50 thousand** and **$96 thousand** in the prior year[45](index=45&type=chunk) [7. Fair Value of Financial Instruments](index=18&type=section&id=7.%20Fair%20Value%20of%20Financial%20Instruments) This note describes the fair value measurements of the company's financial instruments. Fair Value of Financial Liabilities (in thousands of U.S. dollars) | Financial Liability | August 31, 2025 Carrying Amount | February 28, 2025 Carrying Amount | | :---------------------------------- | :------------------------------ | :------------------------------ | | Series B Convertible Preferred stock | $11,328 | $10,647 | | Long-term debt | $3,128 | $3,085 | | Due to customer | $865 | $832 | - **The fair value of Series B Convertible Preferred Stock, long-term debt, and due to customer are approximated by their carrying amounts and are classified as Level 2 in the fair value hierarchy**[46](index=46&type=chunk) [8. Accounts Payable and Accrued Liabilities](index=18&type=section&id=8.%20Accounts%20Payable%20and%20Accrued%20Liabilities) This note provides a breakdown of the company's accounts payable and accrued liabilities. Accounts Payable and Accrued Liabilities (in thousands of U.S. dollars) | Category | August 31, 2025 | February 28, 2025 | | :-------------------------- | :-------------- | :---------------- | | Trade accounts payable | $1,601 | $2,010 | | Accrued employee compensation | $602 | $554 | | Accrued engineering fees | $455 | $431 | | Accrued professional fees | $338 | $276 | | Other accrued liabilities | $339 | $274 | | **Total** | **$3,335** | **$3,545** | - **Total accounts payable and accrued liabilities decreased from** **$3,545 thousand** to **$3,335 thousand**, **primarily due to a reduction in trade accounts payable**[47](index=47&type=chunk) [9. Investments in Joint Ventures](index=19&type=section&id=9.%20Investments%20in%20Joint%20Ventures) This note details the company's equity investments in joint ventures and their financial impact. - **Loop Industries formed a 50/50 joint venture, Ester Loop Infinite Technologies Private Limited ('India JV'), with Ester Industries Ltd. in India to build and operate an Infinite Loop™ manufacturing facility**[48](index=48&type=chunk) - **The India JV incurred losses of** **$86 thousand** and **$689 thousand** for the three and six months ended August 31, 2025, respectively, **resulting in Loop recording its share of the loss as** **$43 thousand** and **$345 thousand**[50](index=50&type=chunk) - **The carrying value of Loop's investment in the India JV decreased from** **$1,267 thousand** at February 28, 2025, to **$923 thousand** at August 31, 2025[50](index=50&type=chunk) [10. Series B Convertible Preferred Stock](index=19&type=section&id=10.%20Series%20B%20Convertible%20Preferred%20Stock) This note describes the terms and balance of the company's Series B Convertible Preferred Stock. Series B Convertible Preferred Stock (in thousands of U.S. dollars) | Category | August 31, 2025 | February 28, 2025 | | :-------------------------- | :-------------- | :---------------- | | Stated value at issuance | $10,395 | $10,395 | | Accrued PIK dividends | $933 | $252 | | **Total** | **$11,328** | **$10,647** | - **The balance of Series B Convertible Preferred Stock increased from** **$10,647 thousand** to **$11,328 thousand**, **primarily due to** **$681 thousand** **in accrued PIK dividends for the six months ended August 31, 2025**[51](index=51&type=chunk) [11. Long-Term Debt](index=19&type=section&id=11.%20Long-Term%20Debt) This note outlines the company's long-term debt obligations and repayment schedules. Long-Term Debt (in thousands of U.S. dollars) | Category | August 31, 2025 | February 28, 2025 | | :---------------------------------- | :-------------- | :---------------- | | Total Investissement Québec financing facility | $3,128 | $3,085 | | Less: current portion of long-term debt | $(464) | $(312) | | **Long-term debt, net of current portion** | **$2,664** | **$2,773** | - **The company's long-term debt, net of current portion, decreased slightly from** **$2,773 thousand** to **$2,664 thousand**[52](index=52&type=chunk) - **Total repayments due on indebtedness over the next five years are** **$191 thousand** (FY2026), **$546 thousand** (FY2027), **$838 thousand** (FY2028), **$838 thousand** (FY2029), and **$837 thousand** (FY2030)[54](index=54&type=chunk) - **A credit facility from a Canadian bank was undrawn as of August 31, 2025, and its minimum equity covenant was amended in October 2025 to be removed for the duration of the term**[55](index=55&type=chunk)[57](index=57&type=chunk) [12. Stockholders' Equity (Deficit) - Common Stock](index=21&type=section&id=12.%20Stockholders'%20Equity%20(Deficit)%20-%20Common%20Stock) This note details transactions affecting the company's common stock and overall equity. Common Stock Transactions | Period Ended August 31, 2025 | Number of shares | | :--------------------------------------- | :--------------- | | Balance, February 28, 2025 | 47,620,263 | | Issuance of shares upon settlement of restricted stock units | 126,857 | | Issuance of shares for cash (ATM Equity Offering) | 116,358 | | **Balance, August 31, 2025** | **47,863,478** | | Period Ended August 31, 2024 | Number of shares | | :--------------------------------------- | :--------------- | | Balance, February 29, 2024 | 47,528,908 | | Issuance of shares upon settlement of restricted stock units | 91,355 | | **Balance, August 31, 2024** | **47,620,263** | - **During the six months ended August 31, 2025, the company issued** **126,857 shares** from RSU settlements and **116,358 shares** through its ATM Equity Offering, **increasing total outstanding shares to** **47,863,478**[58](index=58&type=chunk)[61](index=61&type=chunk) [13. Revenues](index=21&type=section&id=13.%20Revenues) This note provides a breakdown of the company's revenue streams. Revenues (in thousands of U.S. dollars) | Category | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :----------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Engineering services | $0 | $0 | $244 | $0 | | Sales of PET | $0 | $23 | $8 | $29 | | **Total** | **$0** | **$23** | **$252** | **$29** | - **Total revenues for the six months ended August 31, 2025, significantly increased to** **$252 thousand** from **$29 thousand** in the prior year, **primarily driven by** **$244 thousand** **in engineering services revenue**[59](index=59&type=chunk)[158](index=158&type=chunk) [14. Research and Development Expenses](index=21&type=section&id=14.%20Research%20and%20Development%20Expenses) This note details the components of the company's research and development expenditures. Research and Development Expenses (in thousands of U.S. dollars) | Category | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Employee compensation | $629 | $993 | $1,643 | $2,138 | | External engineering | $9 | $651 | $14 | $1,279 | | Plant and laboratory operating expenses | $148 | $197 | $379 | $467 | | Other | $57 | $104 | $181 | $298 | | **Total** | **$843** | **$1,945** | **$2,217** | **$4,182** | - **Research and development expenses decreased by** **$1,102 thousand** for the three-month period and **$1,965 thousand** for the six-month period ended August 31, 2025, **primarily due to significant reductions in external engineering expenses and employee compensation**[60](index=60&type=chunk)[152](index=152&type=chunk)[159](index=159&type=chunk) [15. General and Administrative Expenses](index=23&type=section&id=15.%20General%20and%20Administrative%20Expenses) This note outlines the components of the company's general and administrative expenditures. General and Administrative Expenses (in thousands of U.S. dollars) | Category | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Employee compensation | $671 | $816 | $1,303 | $1,692 | | Insurance | $423 | $476 | $876 | $968 | | Professional fees | $612 | $1,007 | $973 | $2,262 | | Other | $165 | $296 | $367 | $584 | | **Total** | **$1,871** | **$2,595** | **$3,519** | **$5,506** | - **General and administrative expenses decreased by** **$724 thousand** for the three-month period and **$1,987 thousand** for the six-month period ended August 31, 2025, **mainly due to reduced professional fees and employee compensation**[63](index=63&type=chunk)[153](index=153&type=chunk)[160](index=160&type=chunk) [16. Share-based Payments](index=23&type=section&id=16.%20Share-based%20Payments) This note describes the company's share-based compensation arrangements and related expenses. Stock Options Continuity (Number of stock options) | Period | Outstanding, beginning | Granted | Forfeited | Outstanding, end | | :-------------------------------- | :--------------------- | :------ | :-------- | :--------------- | | Three months ended Aug 31, 2025 | 5,573,138 | 0 | (80,000) | 5,493,138 | | Three months ended Aug 31, 2024 | 2,971,216 | 0 | (200,000) | 2,771,216 | | Six months ended Aug 31, 2025 | 2,771,216 | 2,801,922 | (80,000) | 5,493,138 | | Six months ended Aug 31, 2024 | 2,772,000 | 199,216 | (200,000) | 2,771,216 | Restricted Stock Units Continuity (Number of units) | Period | Outstanding, beginning | Granted | Settled | Forfeited | Outstanding, end | | :-------------------------------- | :--------------------- | :------ | :------ | :-------- | :--------------- | | Three months ended Aug 31, 2025 | 3,981,121 | 310,770 | (28,770) | (6,589) | 4,256,532 | | Three months ended Aug 31, 2024 | 4,399,060 | 144,276 | (81,518) | 0 | 4,461,818 | | Six months ended Aug 31, 2025 | 4,466,958 | 310,770 | (126,857) | (394,339) | 4,256,532 | | Six months ended Aug 31, 2024 | 4,368,897 | 184,276 | (91,355) | 0 | 4,461,818 | - **Stock-based compensation expense for stock options increased significantly for the six-month period to** **$651 thousand** in 2025 from **$295 thousand** in 2024, while **RSU compensation decreased to** **$4 thousand** in 2025 from **$437 thousand** in 2024, **including a** **$(291) thousand** **forfeiture adjustment**[66](index=66&type=chunk)[69](index=69&type=chunk) [17. Equity Incentive Plan](index=26&type=section&id=17.%20Equity%20Incentive%20Plan) This note details the company's equity incentive plan and authorized share reserve. - **The 2017 Equity Incentive Plan allows for granting warrants, stock options, stock appreciation rights, and restricted stock units to employees, directors, and consultants**[71](index=71&type=chunk) - **The share reserve under the plan was increased by** **1,500,000 shares** **on March 1, 2025, and March 1, 2024**[71](index=71&type=chunk) Equity Incentive Plan Authorized Units Continuity (Number of units) | Category | 2025 | 2024 | | :-------------------------- | :--------- | :--------- | | Authorized, beginning of period | 2,159,612 | 848,244 | | Automatic share reserve increase | 1,500,000 | 1,500,000 | | Units granted | (3,112,692) | (383,492) | | Units forfeited | 474,339 | 200,000 | | **Authorized, end of period** | **1,021,259** | **2,164,752** | [18. Subsequent Event](index=27&type=section&id=18.%20Subsequent%20Event) This note reports on significant events that occurred after the balance sheet date. - **On September 23, 2025, Loop entered into a Securityholders Agreement with Reed Circular Economy (RCE) to establish Infinite Loop Europe SAS, a 90/10 joint venture (RCE/Loop) for developing chemical upcycling plants in Europe**[74](index=74&type=chunk) - **The agreement grants Infinite Loop Europe priority rights for European projects, outlines financing, provides Loop options for project equity, and confirms Loop's IP ownership with limited use rights for the JV**[74](index=74&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Loop Industries' financial condition and results of operations for the three and six months ended August 31, 2025. It covers the company's business overview, commercialization strategy, recent developments, detailed analysis of revenues and expenses, and an assessment of liquidity and capital resources, highlighting the company's pre-commercialization stage and reliance on external funding. [CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS](index=28&type=section&id=CAUTIONARY%20STATEMENTS%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns readers about the inherent uncertainties and risks associated with forward-looking statements in the report. - **The report contains forward-looking statements regarding market opportunity, strategies, funding, commercialization, and partnerships, which are subject to risks and uncertainties**[76](index=76&type=chunk) - **Readers are cautioned not to place undue reliance on these statements, as actual results may differ materially due to various factors including commercialization ability, funding, competition, and regulatory scrutiny**[76](index=76&type=chunk)[79](index=79&type=chunk) [General](index=29&type=section&id=General) This section defines key technical terms relevant to the company's business. - **Key terms defined include Depolymerization (breaking down polymers), DMT (dimethyl terephthalate), MEG (monoethylene glycol), Polymerization (forming polymer chains), PET (polyethylene terephthalate), and rPET/rDMT/rMEG (recycled versions)**[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) [Introduction](index=29&type=section&id=Introduction) This section introduces Loop Industries' core business, technology, and commercialization strategy. - **Loop Industries is a technology company focused on accelerating the shift to sustainable PET plastic and polyester fiber by depolymerizing waste into virgin-quality Loop™ branded PET resin**[85](index=85&type=chunk) - **The company's commercialization strategy involves direct investments with strategic partners to operate facilities and licensing its Infinite Loop™ technology**[86](index=86&type=chunk) - **Loop is executing its strategy through a 50/50 joint venture in India with Ester Industries Ltd. and a technology license to Reed Management SAS for a facility in Europe**[88](index=88&type=chunk) [Background](index=30&type=section&id=Background) This section provides context on the industry, competitive landscape, and the company's technology and partnerships. [Industry Background and Competitive Landscape](index=30&type=section&id=Industry%20Background%20and%20Competitive%20Landscape) This section discusses the market for PET and polyester fiber, current recycling challenges, and the need for advanced depolymerization technologies. - **The global PET and polyester fiber markets are heavily dependent on fossil fuels, with virgin material often preferred or required for quality specifications**[89](index=89&type=chunk)[90](index=90&type=chunk) - **Mechanical recycling, the most common method, faces challenges such as impurity contamination, feedstock limitations, and material degradation (downcycling), which limit its ability to produce high-quality, infinitely recyclable PET**[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - **Depolymerization technologies, like Loop's, are needed to process a wider range of PET and polyester fiber waste and yield high-quality material, offering advantages over existing methods in handling contaminated feedstock and scalability**[97](index=97&type=chunk)[98](index=98&type=chunk) [Infinite Loop™ Technology](index=31&type=section&id=Infinite%20Loop%E2%84%A2%20Technology) This section describes Loop's proprietary depolymerization technology and its capabilities. - **Loop's depolymerization technology breaks down waste PET and polyester fiber into base monomers (DMT and MEG) at low temperature and no added pressure, then purifies and recombines them into virgin-quality PET resin**[99](index=99&type=chunk) - **The technology can recycle a wide range of contaminated feedstocks, including colored plastic bottles and polyester textiles, creating a closed-loop system for infinite recycling without quality degradation**[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - **The Terrebonne Facility has successfully operated for five years, demonstrating the technology's effectiveness and supplying virgin-quality PET resin to customers**[102](index=102&type=chunk) [Agreements with Reed Societe Generale Group](index=31&type=section&id=Agreements%20with%20Reed%20Societe%20Generale%20Group) This section details the financing and licensing agreements with Reed Management SAS. - **Loop closed financing and licensing transactions with Reed Management SAS, issuing** **1,044,430 shares of Series B Convertible Preferred Stock to Reed Circular Economy (RCE) and granting a non-transferable, royalty-bearing license for one European facility**[104](index=104&type=chunk) - **The Series B Convertible Preferred Stock has a** **13%** **PIK dividend rate, a 5-year term, and is convertible to common stock at** **$4.75** **per share or redeemable in cash**[107](index=107&type=chunk)[178](index=178&type=chunk) - **A Securityholders Agreement established Infinite Loop Europe SAS (90% RCE, 10% Loop) for European development, with RCE providing a** **€10 million** **shareholder loan to fund the first royalty tranche**[108](index=108&type=chunk)[109](index=109&type=chunk) [Joint Venture with Ester](index=33&type=section&id=Joint%20Venture%20with%20Ester) This section describes the 50/50 joint venture with Ester Industries Ltd. in India. - **Loop formed a 50/50 India joint venture with Ester Industries Ltd. to build and operate an Infinite Loop™ manufacturing facility with a planned capacity of** **70,000 tons** **per year of Loop™ PET resin and polyester fiber**[112](index=112&type=chunk)[114](index=114&type=chunk) - **The India JV will integrate a continuous polymerization line for improved efficiency and lower operating costs, with total estimated investment cost of approximately** **$176 million**[115](index=115&type=chunk)[124](index=124&type=chunk) - **Loop generated** **$0.2 million** **in engineering services revenue from the India JV and executed a new** **$1.5 million** **agreement to support construction, with groundbreaking expected by end of fiscal year 2026 and commercial operations in calendar 2027**[119](index=119&type=chunk)[124](index=124&type=chunk) [Commercialization Strategy](index=35&type=section&id=Commercialization%20Strategy) This section outlines Loop's approach to global expansion through direct investments and technology licensing. - **Loop's commercialization strategy combines direct investments with strategic partners in low-cost manufacturing regions and technology licensing to achieve global expansion of its Infinite Loop™ Technology**[125](index=125&type=chunk)[129](index=129&type=chunk)[133](index=133&type=chunk) - **Revenue generation from direct investments is expected from facility profits and royalties, while licensing will generate up-front and recurring royalties, with Loop retaining exclusive sales and marketing rights for JV products**[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - **The company aims to provide engineering services for all project phases and implement a modular construction strategy to reduce costs, improve timelines, and enable scalable global expansion**[135](index=135&type=chunk)[137](index=137&type=chunk) [Recent Developments](index=36&type=section&id=Recent%20Developments) This section highlights key business updates and strategic initiatives. [Offtake Agreement with Leading Sports Apparel Company](index=36&type=section&id=Offtake%20Agreement%20with%20Leading%20Sports%20Apparel%20Company) This section reports on a new multi-year agreement to supply Twist™ circular polyester resin. - **In September 2025, Loop entered a multi-year offtake agreement to supply its Twist™ circular polyester resin from the planned India facility to a leading sports apparel company**[139](index=139&type=chunk) [Offtake Agreement with Taro Plast](index=36&type=section&id=Offtake%20Agreement%20with%20Taro%20Plast) This section details an agreement to supply Loop™ DMT for specialty polymer applications. - **In September 2025, Loop signed an offtake agreement with Taro Plast S.p.A. to supply Loop™ DMT for specialty polymer applications, expanding its product offering beyond bottle-grade and fiber-grade PET resin**[140](index=140&type=chunk) [Strategic Alliance with Shinkong](index=36&type=section&id=Strategic%20Alliance%20with%20Shinkong) This section describes a partnership with Shinkong Synthetic Fibers Corporation for high-performance yarns. - **In August 2025, Loop formed a strategic alliance with Shinkong Synthetic Fibers Corporation, where Shinkong will convert Loop's Twist™ polyester resin into high-performance yarns for its global customer network**[141](index=141&type=chunk) [Strategic Alliance with Hyosung TNC](index=36&type=section&id=Strategic%20Alliance%20with%20Hyosung%20TNC) This section announces a collaboration with Hyosung TNC to convert Twist™ polyester resin into performance yarns. - **In September 2025, Loop announced a strategic alliance with Hyosung TNC to convert Twist™ polyester resin into performance yarns under Hyosung's regen™ brand, expanding access to circular polyester**[142](index=142&type=chunk)[143](index=143&type=chunk) [Launch of Twist™](index=37&type=section&id=Launch%20of%20Twist%E2%84%A2) This section introduces Loop's new branded circular polyester resin made from textile waste. - **During the quarter ended August 31, 2025, Loop launched Twist™, a new branded circular polyester resin made entirely from textile waste, repositioning its fiber-grade PET resin for the textile-to-textile recycling market**[144](index=144&type=chunk) [At-The-Market Offering](index=37&type=section&id=At-The-Market%20Offering) This section reports on the company's ATM Equity Offering for common stock sales. - **On July 3, 2025, Loop entered an At the Market Offering Agreement to sell up to** **$15 million** **of common stock through Roth Capital Partners, LLC**[145](index=145&type=chunk) - **As of August 31, 2025, the company sold** **116,358 shares** **for net proceeds of approximately** **$186,557**, **with** **$14.8 million** **remaining capacity**[146](index=146&type=chunk) [Human Capital](index=37&type=section&id=Human%20Capital) This section provides information on the company's employee count and departmental distribution. - **As of August 31, 2025, Loop had** **42 employees:** **18 in R&D,** **15 in engineering and operations, and** **9 in administrative functions**[147](index=147&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance for the reported periods. [Second Quarter Ended August 31, 2025](index=38&type=section&id=Second%20Quarter%20Ended%20August%2031,%202025) This section provides a detailed analysis of the company's operating results for the three months ended August 31, 2025. Operating Results (Three Months Ended August 31, in thousands of U.S. Dollars) | Metric | 2025 | 2024 | Change (favorable / (unfavorable)) | | :---------------------------------- | :--- | :--- | :--------------------------------- | | Revenues | $0 | $23 | $(23) | | Research and development | $843 | $1,945 | $1,102 | | General and administrative | $1,871 | $2,595 | $724 | | Loss on equity accounted investment | $43 | $0 | $(43) | | Interest and other financial expenses | $419 | $119 | $(300) | | Net loss | $(3,204) | $(4,839) | $1,635 | - **Net loss decreased by** **$1,635 thousand** to **$(3,204) thousand**, **primarily due to a** **$1,102 thousand** **decrease in R&D expenses and a** **$724 thousand** **decrease in G&A expenses, partially offset by a** **$300 thousand** **increase in interest and other financial expenses**[155](index=155&type=chunk) - **The increase in interest and other financial expenses was mainly due to** **$341 thousand** **in accrued PIK dividends on Series B Convertible Preferred Stock**[154](index=154&type=chunk) [Six Months Ended August 31, 2025](index=39&type=section&id=Six%20Months%20Ended%20August%2031,%202025) This section provides a detailed analysis of the company's operating results for the six months ended August 31, 2025. Operating Results (Six Months Ended August 31, in thousands of U.S. Dollars) | Metric | 2025 | 2024 | Change (favorable / (unfavorable)) | | :---------------------------------- | :--- | :--- | :--------------------------------- | | Revenues | $252 | $29 | $223 | | Research and development | $2,217 | $4,182 | $1,965 | | General and administrative | $3,519 | $5,506 | $1,987 | | Loss on equity accounted investment | $345 | $0 | $(345) | | Interest and other financial expenses | $837 | $179 | $(658) | | Net loss | $(6,651) | $(10,028) | $3,377 | - **Net loss decreased by** **$3,377 thousand** to **$(6,651) thousand**, **driven by a** **$1,987 thousand** **decrease in G&A and a** **$1,965 thousand** **decrease in R&D, partially offset by a** **$658 thousand** **increase in interest expenses and a** **$345 thousand** **loss on equity accounted investment**[163](index=163&type=chunk) - **Revenues increased by** **$223 thousand** to **$252 thousand**, **primarily from** **$244 thousand** **in engineering fees**[158](index=158&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=41&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's ability to meet its short-term and long-term financial obligations and its funding sources. [Liquidity](index=41&type=section&id=Liquidity) This section assesses the company's current cash position and its sufficiency for future operations. - **Loop Industries is in a pre-commercialization stage with recurring net losses and negative operating cash flow, financing operations primarily through equity and debt**[165](index=165&type=chunk) - **As of August 31, 2025, available liquidity was** **$9,857 thousand**, **consisting of** **$7,310 thousand** **in cash and** **$2,547 thousand** **from an undrawn credit facility**[165](index=165&type=chunk) - **Management assesses current liquidity as sufficient for at least twelve months, but future strategic development and facility construction depend on securing additional funding**[166](index=166&type=chunk)[167](index=167&type=chunk) [Sale and issuance of Series B CPS](index=41&type=section&id=Sale%20and%20issuance%20of%20Series%20B%20CPS) This section details the issuance of Series B Convertible Preferred Stock and its key terms. - **On December 23, 2024, Loop issued** **1,044,430 shares of Series B Convertible Preferred Stock to Reed Circular Economy for** **$10,395 thousand** **in cash proceeds**[168](index=168&type=chunk) - **Key features include automatic conversion to common stock at** **$4.75** **per share on the fifth anniversary, a** **13%** **cumulative fixed annual PIK dividend, and issuer/holder redemption options**[169](index=169&type=chunk)[178](index=178&type=chunk) [Investissement Québec financing facility](index=42&type=section&id=Investissement%20Qu%C3%A9bec%20financing%20facility) This section describes the company's long-term debt agreement with Investissement Québec. - **Loop has a long-term debt obligation with Investissement Québec for the Terrebonne Facility expansion, with a maximum of** **$3,347 thousand**[170](index=170&type=chunk) - **The financing facility has been amended multiple times, modifying principal repayment schedules and increasing the interest rate from** **2.36%** **to** **4.36%** **by February 5, 2025**[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) [Credit facility from a Canadian bank](index=42&type=section&id=Credit%20facility%20from%20a%20Canadian%20bank) This section outlines the terms of the company's operating credit facility with a Canadian bank. - **Loop Canada, Inc. has an Operating Credit Facility with a Canadian bank for up to** **$2,547 thousand**, **secured by the Terrebonne property**[175](index=175&type=chunk) - **The credit facility's minimum equity covenant was amended in July 2025 to include Series B Convertible Preferred Stock and was subsequently removed in October 2025 for the term's duration**[176](index=176&type=chunk)[177](index=177&type=chunk) [Flow of Funds](index=43&type=section&id=Flow%20of%20Funds) This section summarizes the company's cash flow activities from operations, investing, and financing. Summary of Cash Flows (Six Months Ended August 31, in thousands of U.S. Dollars) | Cash Flow Activity | 2025 | 2024 | | :---------------------------------- | :----- | :----- | | Net cash used in operating activities | $(5,604) | $(6,775) | | Net cash used in investing activities | $(133) | $(325) | | Net cash provided by (used in) financing activities | $51 | $1,537 | | Net decrease in cash | $(5,663) | $(5,563) | - **Net cash used in operating activities decreased by** **$1,171 thousand** **due to lower operating expenses, while net cash used in investing activities decreased by** **$192 thousand** **due to fewer intangible asset additions**[181](index=181&type=chunk)[182](index=182&type=chunk) - **Net cash provided by financing activities decreased significantly by** **$1,486 thousand**, **primarily because 2024 included** **$1,587 thousand** **in credit facility borrowings, whereas 2025 saw** **$187 thousand** **from ATM equity offering and** **$136 thousand** **in debt repayments**[183](index=183&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Loop Industries, Inc. is not required to provide quantitative and qualitative disclosures about market risk. - **Loop Industries, Inc. is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a 'smaller reporting company' under SEC regulations**[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting. [Management's Evaluation of our Disclosure Controls and Procedures](index=44&type=section&id=Management's%20Evaluation%20of%20our%20Disclosure%20Controls%20and%20Procedures) This section presents management's assessment of the effectiveness of the company's disclosure controls and procedures. - **As of August 31, 2025, management, including the CEO and Interim CFO, concluded that the company's disclosure controls and procedures were effective**[186](index=186&type=chunk) - **Disclosure controls are designed to ensure timely recording, processing, summarizing, and reporting of information required under the Exchange Act**[185](index=185&type=chunk) [Changes in Internal Control over Financial Reporting](index=44&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the period. - **There were no changes in internal control over financial reporting during the quarter ended August 31, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting**[187](index=187&type=chunk) [PART II. Other Information](index=45&type=section&id=PART%20II.%20Other%20Information) This section provides additional legal, risk, and administrative information not covered in the financial statements. [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) This section outlines the company's involvement in legal matters, including an ongoing SEC investigation and general litigation considerations. [SEC Investigation](index=45&type=section&id=SEC%20Investigation) This section details the ongoing SEC investigation into Loop Industries. - **Loop Industries received SEC subpoenas in October 2020 and March 2022, requesting information on its GEN I and GEN II technologies, partnerships, and reverse-merger**[189](index=189&type=chunk) - **The SEC investigation does not imply wrongdoing by the company, and its CEO, Daniel Solomita, is identified as a relief defendant in a separate SEC complaint, not accused of wrongdoing**[190](index=190&type=chunk)[191](index=191&type=chunk) [Litigation](index=45&type=section&id=Litigation) This section discusses the company's general litigation status and potential future legal expenditures. - **The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business, beyond the SEC investigation**[192](index=192&type=chunk) - **Future expenditures may be required for defending intellectual property rights or against infringement claims**[193](index=193&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors previously disclosed in the company's 2025 Annual Report, specifically adding a new risk related to the At-The-Market (ATM) Equity Offering. - **No material changes to existing risk factors occurred during the three months ended August 31, 2025, as outlined in the 2025 Annual Report**[194](index=194&type=chunk) - **A new risk factor highlights that the sale or issuance of common stock through the ATM Equity Offering may cause dilution and could negatively impact the stock price**[195](index=195&type=chunk)[197](index=197&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item states that there were no unregistered sales of equity securities or use of proceeds to report during the period. - **There were no unregistered sales of equity securities or use of proceeds to report for the period**[198](index=198&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item indicates that there were no defaults upon senior securities during the reporting period. - **There were no defaults upon senior securities during the reporting period**[199](index=199&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item states that mine safety disclosures are not applicable to the company. - **Mine safety disclosures are not applicable to Loop Industries, Inc.**[200](index=200&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) This section reports on significant events not covered elsewhere, including a change in the Interim Chief Financial Officer and an amendment to the company's credit facility. - **Nicolas Lafond resigned as Interim Chief Financial Officer, effective October 17, 2025, and Mike De Notaris was appointed as his successor, assuming responsibilities as Principal Financial Officer and Principal Accounting Officer**[201](index=201&type=chunk)[202](index=202&type=chunk) - **On October 10, 2025, an amendment to the Credit Agreement with CIBC removed the quarterly tested minimum equity covenant and clarified the inclusion of the** **$10.65 million** **convertible preferred share instrument in equity calculation**[204](index=204&type=chunk)[205](index=205&type=chunk) - **No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended August 31, 2025**[207](index=207&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents, agreements, and certifications. - **The exhibit index includes corporate documents (Articles of Incorporation, By-laws, Certificate of Designation), key agreements (ATM Offering Agreement, Credit Agreement Amendment), and certifications (Sarbanes-Oxley Act Section 302 and 906)**[210](index=210&type=chunk) [Signatures](index=49&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q, confirming its submission by authorized officers. - **The report is duly signed by Daniel Solomita, President and Chief Executive Officer, and Nicolas Lafond, Interim Chief Financial Officer, on October 15, 2025**[212](index=212&type=chunk)[213](index=213&type=chunk)

Core Insights - Loop will supply Taro Plast with Loop™ DMT from its planned Infinite Loop™ India facility [1] - The Loop™ DMT supplied to Taro Plast will be utilized for automotive and specialty polymer applications [1]

Financial Data and Key Metrics Changes - Cash operating expenses for Q1 fiscal 2026 were $2,600,000, a reduction of $2,200,000 or 46% compared to the same quarter last year [14] - Cash used in operating activities for the quarter was $3,100,000, including working capital outflows of $800,000 [14] - The company ended the quarter with available liquidity of $12,300,000 [14] Business Line Data and Key Metrics Changes - The company is advancing discussions with leading global apparel brands and consumer packaged goods (CPG) brands for textile-to-textile recycling solutions [5][6] - European beverage brands are seeking high-quality recycled PET due to declining quality from mechanical recycling [7][8] - The confirmed CapEx for the Indian facility is $176,000,000, which includes a polymerization unit and all financing costs [9] Market Data and Key Metrics Changes - The Indian textile industry provides a plentiful supply of waste polyester fiber, which is advantageous for the company's operations [6] - The low-cost structure in India allows the company to offer high-quality PET at competitive prices [8][9] Company Strategy and Development Direction - The company is focused on the development of Infinite Loop manufacturing facilities in India and Europe, leveraging local joint venture partners [4][5] - Modularization of projects is expected to significantly reduce CapEx by 50%, enhancing the company's competitive position [12][13] - The long-term vision includes driving significant shareholder value through the rollout of manufacturing facilities and generating multiple revenue streams [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in securing customer contracts and financing for the Indian facility, with a focus on long-term agreements [21][22] - The company is optimistic about the future, citing strong relationships with customers and the potential for additional facilities in India [56][57] Other Important Information - The company is working with KPMG to syndicate debt financing for the Indian facility [30] - The total equity contribution required for the Indian facility is $25,000,000, with a funding gap of approximately $15,000,000 [50][52] Q&A Session Summary Question: Can you provide details on your offtake agreements? - The company is advancing discussions with customers for long-term contracts, which may take longer to finalize due to internal processes [21][22] Question: What is the capital intensity of Loop's facilities? - The gross CapEx per pound for Loop's technology is 61¢, excluding certain costs [36][38] Question: What are the next steps for the project? - The company is focused on securing customer contracts and finalizing land selection in Gujarat [31][32] Question: What is the timeline for the facility's construction? - The facility is expected to be operational by the end of 2027, with an 18-month construction period [43][44] Question: How does the company plan to finance the project? - The company is evaluating several opportunities to cover the $15,000,000 funding gap needed for the project [52] Question: Can you update on the licensing pipeline? - The company is optimistic about potential licensing opportunities, especially with reduced CapEx for future projects [54][56]

Financial Data and Key Metrics Changes - Cash operating expenses for Q1 fiscal 2026 were $2,600,000, a reduction of $2,200,000 or 46% compared to the same quarter last year [15] - Cash used in operating activities for the quarter was $3,100,000, including working capital outflows of $800,000 [15] - The company ended the quarter with available liquidity of $12,300,000 [16] Business Line Data and Key Metrics Changes - The company is advancing discussions with leading global apparel brands and consumer packaged goods (CPG) brands for textile-to-textile recycling solutions [6][7] - European beverage brands are seeking high-quality recycled PET due to declining quality from mechanical recycling [8][9] - The company confirmed a $176,000,000 CapEx for the Indian facility, with a total install cost of $95,000,000 for Loop's technology, the lowest in the industry [10] Market Data and Key Metrics Changes - The Indian facility is positioned to provide high-quality PET made from 100% recycled content at competitive prices due to India's low-cost structure [9][10] - The company is focusing on site selection in Gujarat, India, with two locations narrowed down [11][35] Company Strategy and Development Direction - The company aims to drive significant shareholder value through the rollout of manufacturing facilities and generating revenue from licensing, engineering, and modularization [18] - Modularization is expected to reduce CapEx by 50%, allowing for more projects to be built at competitive prices [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in securing customer contracts and financing for the Indian facility, with a focus on long-term agreements [22][30] - The company is optimistic about the future, citing strong relationships with customers and the potential for additional facilities in India [68] Other Important Information - The company is working with KPMG to syndicate debt financing for the Indian facility [32][70] - The total equity contribution required for the India facility is $25,000,000, with a funding gap of approximately $15,000,000 [60][63] Q&A Session Summary Question: Can you provide details on your offtake agreements and their timing? - Management is advancing discussions with customers and expects to secure contracts, although the process may take longer due to internal steps within customer organizations [22][23] Question: What is the structure of the contracts with customers? - The company is offering fixed-price contracts to customers, which provides predictability and stability in pricing [30] Question: What are the next steps for financing and construction? - The company is focused on securing customer contracts and finalizing land selection in India, with a goal to break ground by the end of the year [36][61] Question: What is the capital intensity of Loop's facilities? - The CapEx per pound for Loop's technology is 61¢, excluding certain costs, and is expected to decrease further as facilities scale [40][44] Question: How does the company plan to handle permitting and utilities for the new sites? - The sites are in industrial zones with permitting included in the land acquisition, and the company will provide necessary utilities for the facilities [77][81]

Group 1: Financial Performance - Loop Industries reported a quarterly loss of $0.07 per share, consistent with the Zacks Consensus Estimate, compared to a loss of $0.11 per share a year ago [1] - The company posted revenues of $0.25 million for the quarter ended May 2025, exceeding the Zacks Consensus Estimate by 26.00%, and a significant increase from $0.01 million in the same quarter last year [2] - Over the last four quarters, Loop Industries has surpassed consensus EPS estimates three times [1] Group 2: Stock Performance and Outlook - Loop Industries shares have increased approximately 6.7% since the beginning of the year, slightly outperforming the S&P 500's gain of 6.6% [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at -$0.07 for the coming quarter and -$0.19 for the current fiscal year [4][7] - The estimate revisions trend for Loop Industries was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Group 3: Industry Context - The Technology Services industry, to which Loop Industries belongs, is currently in the top 25% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Another company in the same industry, Amprius Technologies, is expected to report a quarterly loss of $0.09 per share, with revenues projected to be $12.88 million, reflecting a year-over-year increase of 284.5% [9]

[PART I. Financial Information](index=2&type=section&id=PART%20I.%20Financial%20Information) This section presents the company's interim financial statements and management's analysis of its financial condition and operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Loop Industries' unaudited interim condensed consolidated financial statements for Q1 2025 and 2024, including balance sheets, operations, equity, cash flows, and notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific dates, detailing assets, liabilities, and equity | Metric | May 31, 2025 (in thousands) | February 28, 2025 (in thousands) | | :--------------------------------- | :-------------------------- | :----------------------------- | | Cash and cash equivalents | $9,748 | $12,973 | | Total current assets | $11,315 | $13,852 | | Total assets | $15,921 | $18,578 | | Total current liabilities | $4,024 | $3,959 | | Series B Convertible Preferred stock | $10,987 | $10,647 | | Total liabilities | $18,645 | $18,211 | | Total stockholders' equity | $(2,724) | $367 | - Total assets decreased from **$18,578 thousand** as of February 28, 2025, to **$15,921 thousand** as of May 31, 2025[12](index=12&type=chunk) - Total stockholders' equity shifted from a positive **$367 thousand** to a negative **$(2,724) thousand** during the same period[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details the company's revenues, expenses, and net loss over specific periods, reflecting operational performance | Metric (in thousands) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | | Revenues | $252 | $6 | | Research and development | $1,374 | $2,237 | | General and administrative | $1,649 | $2,911 | | Loss on equity accounted investment | $302 | $- | | Total expenses | $3,425 | $5,285 | | Net loss | $(3,447) | $(5,189) | | Basic and diluted net loss per share | $(0.07) | $(0.11) | - Revenues significantly increased to **$252 thousand** in Q1 2025 from **$6 thousand** in Q1 2024[14](index=14&type=chunk)[15](index=15&type=chunk) - Net loss decreased by **$1,742 thousand**, from **$(5,189) thousand** in Q1 2024 to **$(3,447) thousand** in Q1 2025, primarily due to reduced R&D and G&A expenses, partially offset by increased interest expenses and loss from equity accounted investment[14](index=14&type=chunk)[15](index=15&type=chunk)[144](index=144&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section outlines the changes in the company's equity components over a period, including net loss and stock transactions | Metric (in thousands) | Balance, Feb 28, 2025 | Issuance of shares | Stock options issued | Restricted stock units issued | Foreign currency translation | Net loss | Balance, May 31, 2025 | | :-------------------- | :-------------------- | :----------------- | :------------------- | :---------------------------- | :--------------------------- | :------- | :-------------------- | | Total Stockholders' Equity | $367 | $- | $486 | $(111) | $(19) | $(3,447) | $(2,724) | - Total stockholders' equity decreased from **$367 thousand** at February 28, 2025, to **$(2,724) thousand** at May 31, 2025, primarily due to a net loss of **$(3,447) thousand**[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flow Activity (in thousands) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash used in operating activities | $(3,082) | $(3,915) | | Net cash used in investing activities | $(115) | $(176) | | Net cash (used) provided by financing activities | $(55) | $2,492 | | Net decrease in cash | $(3,225) | $(1,667) | | Cash and cash equivalents, end of period | $9,748 | $5,291 | - Net cash used in operating activities decreased by **$833 thousand** YoY, from **$(3,915) thousand** in Q1 2024 to **$(3,082) thousand** in Q1 2025[20](index=20&type=chunk)[21](index=21&type=chunk) - Net cash from financing activities shifted from a positive **$2,492 thousand** in Q1 2024 to a negative **$(55) thousand** in Q1 2025, primarily due to no new borrowings under the credit facility in 2025[20](index=20&type=chunk)[21](index=21&type=chunk)[161](index=161&type=chunk)[163](index=163&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the financial statements, including accounting policies and key transactions - The Company is in the pre-commercialization stage, relying on equity financing and expecting continued net losses[23](index=23&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - Management assesses liquidity to be sufficient for at least twelve months from the financial statements issuance date, but future strategic development and facility construction depend on securing additional financing[30](index=30&type=chunk)[31](index=31&type=chunk) - The India JV with Ester Industries Ltd. incurred losses of **$604 thousand** in Q1 2025, with Loop recording its **50% share of loss** at **$302 thousand**[51](index=51&type=chunk) - The carrying value of Loop's investment in ELITe was **$979 thousand** as of May 31, 2025[51](index=51&type=chunk) - Series B Convertible Preferred Stock accrued PIK dividends of **$340 thousand** in Q1 2025, contributing to the increase in interest and other financial expenses[52](index=52&type=chunk)[143](index=143&type=chunk) - Revenues for Q1 2025 totaled **$252 thousand**, primarily from **$244 thousand** in engineering fees for the India JV and **$8 thousand** from sales of Loop™ PET resin[139](index=139&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - This marks a significant increase from **$6 thousand** in Q1 2024, which was solely from PET resin sales[61](index=61&type=chunk) - Research and development expenses decreased by **$863 thousand** to **$1,374 thousand** in Q1 2025, mainly due to a **$623 thousand** decrease in external engineering expenses and a **$313 thousand** decrease in employee compensation, partially offset by a **$183 thousand** increase in stock-based compensation[140](index=140&type=chunk)[62](index=62&type=chunk) - General and administrative expenses decreased by **$1,262 thousand** to **$1,649 thousand** in Q1 2025, primarily due to an **$894 thousand** decrease in professional fees (related to partnership legal costs in 2024) and a **$178 thousand** decrease in stock-based compensation[141](index=141&type=chunk)[63](index=63&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Loop Industries' Q1 2025 financial condition and operational results, covering pre-commercialization, strategic partnerships, liquidity, and capital resources [Introduction](index=15&type=section&id=Introduction) This section introduces Loop Industries' core business, technology, and commercialization strategy for sustainable plastics - Loop Industries is a technology company focused on depolymerizing waste PET plastic and polyester fiber into virgin-quality Loop™ branded PET resin, aiming to accelerate the shift towards sustainable plastics and a circular economy[84](index=84&type=chunk) - The company plans to commercialize its Infinite Loop™ technology through direct investments with strategic partners to operate commercial facilities and by licensing its technology[85](index=85&type=chunk) - Loop is executing its commercialization strategy through a **50/50 joint venture** in India with Ester Industries Ltd. for an Infinite Loop™ manufacturing facility and a technology license sale to Reed Societe Generale Group for a facility in Europe[87](index=87&type=chunk) [Background](index=16&type=section&id=Background) This section outlines the challenges in PET recycling and highlights the advantages of Loop's Infinite Loop™ Technology - The industry faces challenges with mechanical recycling of PET due to impurity issues, degradation of material properties, and inability to effectively handle polyester fiber waste, leading to 'downcycling' and reliance on virgin materials[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - Loop's Infinite Loop™ Technology offers advantages by depolymerizing a wider range of contaminated PET plastic and polyester fiber waste at low temperatures and no added pressure, producing virgin-quality material that can be recycled infinitely without degradation[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) [Agreements with Reed Societe Generale Group](index=17&type=section&id=Agreements%20with%20Reed%20Societe%20Generale%20Group) This section details the partnership with Reed Societe Generale Group for European facilities and the financial proceeds received - Loop entered into an Amended and Restated Share Purchase Agreement with Reed Societe Generale Group, forming Infinite Loop Europe (**90% Reed, 10% Loop**) to develop manufacturing facilities in Europe[101](index=101&type=chunk) - The Company received **$20.8 million (€20.0 million)** cash proceeds, including an initial upfront royalty payment of **$10.4 million (€10.0 million)** for a technology license for one European facility and **$10.4 million (€10.0 million)** from the sale of Series B Convertible Preferred Stock[102](index=102&type=chunk) - Proceeds are funding the India JV project and Loop's operational cash flow needs, validating the commercial readiness of Loop's technology[103](index=103&type=chunk)[104](index=104&type=chunk) [Joint Venture with Ester](index=18&type=section&id=Joint%20Venture%20with%20Ester) This section describes the 50/50 India joint venture with Ester Industries Ltd. for an Infinite Loop™ manufacturing facility - Loop formed a **50/50 India joint venture** with Ester Industries Ltd. to build and operate an Infinite Loop™ manufacturing facility in India with a planned production capacity of **70,000 tons per year** of Loop branded PET resin and polyester fiber[107](index=107&type=chunk)[109](index=109&type=chunk) - The India JV will be financed by a combination of debt and equity, with Loop and Ester each contributing **50% of the equity capital**[111](index=111&type=chunk) - As of May 31, 2025, each partner contributed **$1.9 million** in cash[111](index=111&type=chunk) - The estimated total investment cost for the India facility is approximately **$176 million**, with groundbreaking expected in the second half of calendar 2025 and commercial operations projected to commence in calendar 2027[117](index=117&type=chunk) - Loop generated **$0.2 million** in engineering services revenue in Q1 2025 from its agreement to provide engineering services to the India JV[115](index=115&type=chunk) [Commercialization Strategy](index=19&type=section&id=Commercialization%20Strategy) This section outlines Loop's approach to commercializing its technology through direct investments, licensing, and modular construction - Loop's commercialization strategy involves direct investments with strategic partners in low-cost manufacturing regions and licensing its Infinite Loop™ Technology globally[118](index=118&type=chunk)[123](index=123&type=chunk)[127](index=127&type=chunk) - Revenue generation is expected from profits from commercial facility operations, royalties for technology licensing, and exclusive sales and marketing responsibilities, as well as engineering services during project development[125](index=125&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk) - The company is implementing a modular construction strategy to reduce capital expenditures, optimize operating expenses, and accelerate project timelines for global expansion[131](index=131&type=chunk) [Recent Development – ATM Offering](index=20&type=section&id=Recent%20Development%20%E2%80%93%20ATM%20Offering) This section reports on the company's recent At-the-Market Offering Agreement to sell common stock - On July 3, 2025, Loop entered into an At the Market Offering Agreement to sell up to **$15 million** of common stock through Roth Capital Partners, LLC[133](index=133&type=chunk) [Human Capital](index=20&type=section&id=Human%20Capital) This section provides an overview of the company's employee count and departmental distribution - As of May 31, 2025, Loop had **44 employees**: **18** in R&D, **17** in engineering and operations, and **9** in administrative functions[134](index=134&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenues, expenses, and net loss for the period | Metric (in thousands) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Change (favorable / (unfavorable)) | | :-------------------- | :------------------------------ | :------------------------------ | :--------------------------------- | | Revenues | $252 | $6 | $246 | | Research and development | $1,374 | $2,237 | $863 | | General and administrative | $1,649 | $2,911 | $1,262 | | Loss on equity accounted investment | $302 | $- | $(302) | | Interest and other financial expenses (income) | $419 | $60 | $(359) | | Net loss | $(3,447) | $(5,189) | $1,742 | - Revenues increased significantly by **$246 thousand**, driven by engineering fees (**$244 thousand**) and PET resin sales (**$8 thousand**)[139](index=139&type=chunk) - Net loss decreased by **$1,742 thousand**, primarily due to a **$1,262 thousand** decrease in G&A expenses and an **$863 thousand** decrease in R&D expenses, partially offset by a **$359 thousand** increase in interest and other financial expenses and a **$302 thousand** loss on equity accounted investment[144](index=144&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=22&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's cash position, funding needs, debt obligations, and compliance with financial covenants - As of May 31, 2025, the Company had **$9,748 thousand** in cash and cash equivalents[145](index=145&type=chunk) - Management believes current liquidity is sufficient for at least twelve months, but additional financing is required for strategic development and manufacturing facility construction, particularly for the India JV[146](index=146&type=chunk)[147](index=147&type=chunk) - The Series B Convertible Preferred Stock, issued for **$10,395 thousand**, accrues a **13% cumulative fixed annual PIK dividend** and is convertible to common stock at **$4.75 per share** or redeemable in cash[149](index=149&type=chunk) - The Investissement Québec financing facility's interest rate was increased to **4.36%** and repayment terms were modified, with total annual principal repayments of **$301 thousand** for FY2026 and **$519 thousand** for FY2027[154](index=154&type=chunk) - The Company was not in compliance with the minimum equity covenant of its Canadian bank credit facility as of May 31, 2025[156](index=156&type=chunk) - An amendment on July 4, 2025, modified the covenant to include Series B Convertible Preferred Stock, bringing the Company into compliance[157](index=157&type=chunk) | Cash Flow Activity (in thousands) | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash used in operating activities | $(3,082) | $(3,915) | | Net cash used in investing activities | $(115) | $(176) | | Net cash provided by (used in) financing activities | $(55) | $2,492 | | Net decrease in cash | $(3,225) | $(1,667) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exempt from providing quantitative and qualitative disclosures about market risk as a smaller reporting company - The Company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a 'smaller reporting company'[164](index=164&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of May 31, 2025, with no material changes in internal control - The Chief Executive Officer and Interim Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of May 31, 2025[166](index=166&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended May 31, 2025[167](index=167&type=chunk) [PART II. Other Information](index=25&type=section&id=PART%20II.%20Other%20Information) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, and other relevant disclosures [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) This section details ongoing legal matters, including an SEC investigation and a complaint identifying the CEO as a relief defendant - The SEC investigation, initiated in October 2020, requested information regarding the Company's technologies and partnerships[168](index=168&type=chunk) - A second subpoena in March 2022 requested additional information, but no further requests have been made[168](index=168&type=chunk) - The SEC filed a complaint in September 2022 against other named defendants, identifying the CEO as a relief defendant for purportedly receiving monies from the defendants, but not alleging wrongdoing by the Company or the CEO[170](index=170&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) This section refers to existing risk factors and introduces an additional risk related to the recent At-the-Market (ATM) offering - No material changes to existing risk factors occurred during the three months ended May 31, 2025, as disclosed in the 2025 Annual Report[173](index=173&type=chunk) - An additional risk factor is the potential for dilution and a decrease in common stock price due to the sale or issuance of shares in the At-the-Market (ATM) offering of up to **$15 million**[174](index=174&type=chunk)[175](index=175&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds occurred during the reporting period - No unregistered sales of equity securities or use of proceeds occurred during the period[176](index=176&type=chunk) [Item 3. Defaults Upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - No defaults upon senior securities occurred during the period[177](index=177&type=chunk) [Item 4. Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[178](index=178&type=chunk) [Item 5. Other Information](index=26&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during Q1 2025 - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended May 31, 2025[179](index=179&type=chunk) [Item 6. Exhibits](index=26&type=section&id=Item%206.%20Exhibits) This section lists all required exhibits, including corporate foundational documents and certifications - The exhibits include foundational corporate documents such as Articles of Incorporation, Certificate of Designation of Series B Convertible Preferred Stock, and By-laws, along with certifications required by the Sarbanes-Oxley Act[181](index=181&type=chunk)

Company Overview - Loop Industries has developed a patented technology to produce virgin-quality polyester from 100% recycled content[10] - The technology depolymerizes waste PET into DMT and MEG monomers, which are then purified and recombined[11] - Loop's technology reduces GHG emissions by up to 81% compared to traditional polyester production[12] - The company has been operating a production facility in Canada for 5 years[28] Commercialization Strategy - Loop will deploy its technology through direct investment and licensing[28] - The company sold its first technology license to Reed Societe Generale Group in December 2024[28] - Loop generates revenue through royalties, engineering services, and sales of plant modules[66, 69] - Loop has a 50/50 joint venture with Ester Industries to build a 70kta commercial facility in India, expected to be operational in 2027[72, 73] Market Opportunity - Humankind has produced 83 billion tonnes of plastics since the 1950s[6] - 49 billion tonnes of plastic (60%) have been disposed of in landfills or the environment[6] - Approximately 25 million tonnes of plastic textiles are landfilled or incinerated annually[6] - Estimated Global Demand for PET Tire cord is 518 KTA[115]