Loop Industries, Inc.

Three and Six Months Ended August 31, 2026 and 2025

Notes to the Condensed Consolidated Financial Statements

1. The Company, Basis of Presentation and Going Concern

The Company

Loop Industries, Inc. (the “Company,” “Loop,” “we,” or “our”) is a technology company that owns patented and proprietary technology that depolymerizesno and low-value waste polyethylene terephthalate (“PET”) plastic and polyester fiber to its base building blocks (monomers). The monomers are filtered, purified and polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber. The Company is currently in the pre-commercialization stage with limited revenues.

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures included in these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form10-K for the fiscal year ended* February 28, 2026,filed with the SEC on May 27, 2026.The unaudited interim condensed consolidated financial statements comprise the consolidated financial position and results of operations of Loop Industries, Inc. and its subsidiaries, Loop Innovations, LLC and Loop Canada Inc. All subsidiaries are, either directly or indirectly, wholly owned subsidiaries of Loop Industries, Inc. (collectively, the “Company”). The Company owns, through Loop Innovations, LLC, a 50% interest in a joint venture, Indorama Loop Technologies, LLC, which is accounted for under the equity method. The Company also owns a 50% interest in a joint venture, Ester Loop Infinite Technologies Private Limited ("India JV"), which is accounted for under the equity method. The Company owns a 10% equity interest in Infinite Loop Europe SAS ("Infinite Loop Europe"), accounted for under the equity method, over which it has significant influence butnot* joint control; the remaining 90% is owned by Reed Circular Economy ("RCE").

Intercompany balances and transactions are eliminated on consolidation. The condensed consolidated balance sheet as of* February 28, 2026,included herein, was derived from the audited financial statements as of that date, but doesnot* include all disclosures including certain notes required by US GAAP on an annual reporting basis. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods. The results for thethree- andsix-month periods ended* August 31, 2026arenot* necessarily indicative of the results to be expected for any subsequent quarter, for the fiscal year ending* February 28, 2027,*or for any other period.

All monetary amounts in these notes to the condensed consolidated financial statements are in thousands of U.S. dollars unless otherwise specified, except for per share data.

Going Concern

These unaudited interim condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and settlement of liabilities in the normal course of business as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, butnot limited to,twelve months from the date of issuance of the unaudited interim condensed consolidated financial statements.

Since its inception, the Company has been in the pre-commercialization stage withno recurring revenues, and its ongoing operations and commercialization plans have been financed primarily by raising equity and debt. The Company has recurring net losses, negative cash flow from operating activities since its inception, and a net capital deficiency. Management continuously monitors the Company's cash resources against its cash commitments to determine whether there is sufficient liquidity to fund its costs for at leasttwelve months from the unaudited interim condensed consolidated financial statement issuance date. In preparing this going concern assessment in accordance with US GAAP, the Company included cash flows that meet the 'probable' threshold under ASC205-40 in its going concern evaluation and has excluded forecasted cash flows that lack substantive support or binding commitments.

Management has determined that current cash and cash equivalents on hand as of* August 31, 2026of $836, together with the$1,113 available under its credit facility, willnot* be sufficient to fund the Company's ongoing operations, obligations and commitments for the nexttwelve months from the date of issuance of these unaudited interim condensed consolidated financial statements. The Company's current cash and cash equivalents on hand as of* October 13, 2026*is $757, together with $629 available under its credit facility. These events and conditions are material uncertainties that raise substantial doubt upon the Company's ability to continue as a going concern and, accordingly, the appropriateness of the use of accounting principles applicable to a going concern.

The Company’s ability to continue as a going concern and execute upon management's plans to move to the next stage of its strategic development is dependent on, among other factors, whether the Company can obtain the necessary financing through a combination of the issuance of debt and/or equity, technology licensing and engineering services arrangements, and/or financing from government incentive programs. In particular, the Company will require capital sufficient to fund its equity contributions to the India JV for the construction of the planned Infinite Loop™ facility in India, as well as its ongoing cash requirements. While the Company is actively engaged in financing discussions, there isno assurance that the Company will be successful in attracting additional funding on terms acceptable to the Company. Failure to secure additional financing on acceptable terms when it becomes required would have an adverse effect on the Company’s financial position and on its ability to execute its business plan.

These unaudited interim condensed consolidated financial statements donot reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.

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2. Summary of Significant Accounting Policies

Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include the going concern assessment, estimates for depreciable lives of property, plant and equipment and intangible assets, recoverability of property, plant and equipment, recoverability of equity accounted investments, assumptions made in calculating the fair value of stock-based compensation and other equity instruments, and the assessment of performance conditions for stock-based compensation awards.

Net loss per share

The Company computes net loss per share in accordance with FASB ASC260, Earnings Per Share. Basic loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the year. The Company includes common stock issuable in its calculation. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive.

For thethree- andsix-month periods ended* August 31, 2026and2025*, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at* August 31, 2026*, the potentially dilutive securities consisted of 8,330,317 outstanding stock options (2025 –5,493,138),4,781,268 outstanding restricted stock units (2025 –4,256,532).

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Recently adopted accounting pronouncements

In* November 2024,the Financial Accounting Standards Board (“FASB”) issued ASUNo.* 2024-04, Debt—Debt with Conversion and Other Options (Subtopic470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the accounting for settlements of convertible debt instruments that occur on terms different from the original contractual conversion terms. The amendments introduce a "preexisting contract approach," requiring that, to qualify for induced conversion accounting, the inducement offer must preserve the form of consideration and provide an amount of consideration that isno less than what was issuable under the original conversion privileges. This guidance applies to convertible debt instruments with cash conversion features and to instruments that arenot currently convertible but had substantive conversion features at issuance and at the time the inducement offer is accepted. The updated standard is effective for annual reporting periods beginning after* December 15, 2025,including interim periods within those fiscal years. Early adoption is permitted for entities that have adopted the amendments in ASU2020*-06. The updated standard was effective for thefirst quarter ending* May 31, 2026.The updated standard is potentially applicable to the future settlement or conversion of its Series B Convertible Preferred Stock (“Series B CPS”), which is classified as a liability and contains a substantive conversion feature (note10*). There has beenno impact of adopting the standard in the condensed consolidated financial statements.

Recently issued accounting pronouncementsnot* yet adopted*

In* November 2024,the Financial Accounting Standards Board (“FASB”) issued ASUNo.* 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements. The updated standard is effective for annual reporting periods beginning after* December 15, 2026,and interim reporting periods within annual reporting periods beginning after December 15, 2027.*Early adoption is permitted. Management is currently evaluating the impact that the updated standard will have on our financial statement disclosures.

In* January 2025,the Financial Accou nting Standards Board (FASB) issued ASU2025*-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40): Clarifying the Effective Date. This update clarifies the effective date of ASU2024-03, which requires public business entities to provide disaggregated disclosures of certain income statement expenses. Specifically, ASU2025-01 confirms that the guidance in ASU2024-03 is effective for annual reporting periods beginning after* December 15, 2026,and for interim periods within annual reporting periods beginning after December 15, 2027.*Early adoption is permitted. Management is currently evaluating the impact that the updated standard will have on our consolidated financial statement disclosures.

3. Accounts Receivable and Other

Accounts Receivable and Other as at* August 31, 2026* and* February 28, 2026* are comprised of the following:

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4. Prepaid Expenses

Prepaid expenses as at* August 31, 2026* and* February 28, 2026* were as follows:

5. Property, Plant and Equipment, Net

Depreciation expense for thethree- andsix-month periods ended* August 31, 2026* amounted to $21 and $44 respectively, (2025 - $36 and $70).

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6. Intangible Assets, Net

Intangible assets as at* August 31, 2026* and* February 28, 2026* were $1,710 and $1,776, respectively.

During the six-month periods ended* August 31, 2026and2025*, the Company made additions relating to patent application costs to intangible assets of $82 and $133 respectively.

Amortization expense for thethree- andsix-month periods ended* August 31, 2026* amounted to $62 and $123 respectively, (2025 - $60 and $127).

7. Fair Value of Financial Instruments

The following tables disclose the estimated fair value of the Company's financial liabilities as at* August 31, 2026* and* February 28, 2026*:

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

8. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities as at* August 31, 2026* and* February 28, 2026* were as follows:

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9. Equity Method Investments

Joint Venture with Ester

On* May 1, 2024,the Company entered into an agreement with Ester Industries Ltd. (“Ester”), a manufacturer of polyester films and specialty polymers in India, to form a50/50* joint venture based in India (“India JV”). The purpose of the India JV is to build and operate an Infinite Loop™ manufacturing facility in India which will produce lower carbon footprint rDMT, rMEG and specialty polymers, using the Infinite Loop™ Technology. During the year ended* February 28, 2025,*Ester Loop Infinite Technologies Private Limited (“ELITe”) was incorporated as the India JV.

ELITe meets the accounting definition of a joint venture where neither party has control of the joint venture entity and both parties have joint control over the decision-making process. As such, the Company uses the equity method of accounting to account for its share of the investment in ELITe.

During thesix-month period ended* August 31, 2026,Loop and Ester each made $737 contribution (2025 –nil) to ELITe. During thethree* andsix-month periods ended* August 31, 2026,ELITe incurred losses of $861 and $1,501 (2025 – $86 and $689), resulting in the Company recording its share of the loss on equity accounted investment of $431 and $750 (2025 – $43 and $345). As at August 31, 2026,and February 28, 2026*the carrying value of the Company's investment in ELITe was $1,452 and $1,465, respectively.

The summarized financial information for ELITe is presented below, on a quarterly lag (in thousands).

10. Series B Convertible Preferred Stock

The balance of Series B Convertible Preferred Stock as at* August 31, 2026* and* February 28, 2026* was as follows:

During thethree- andsix-month periods ended* August 31, 2026*, the Company recorded PIK dividends of $375 and $750 respectively, (2025 – $341 and $681 respectively), which were recorded in “Interest and other financial expenses” in our Consolidated Statements of Operations and Comprehensive Loss.

11. Long‑Term Debt

Long-term debt as of* August 31, 2026* and* February 28, 2026*, was comprised of the following:

Investissement Québec financing facility

The Company recorded interest expense on the Investissement Québec loan for thethree- andsix-month periods ended* August 31, 2026* in the amount of $33 and $66, respectively (2025 - $36 and $72) and an accretion expense of $11 and $22, respectively (2025 - $11 and $23). During thesix-month period ended* August 31, 2026*, the Company made repayments of $132 (2025 - $136) on the Investissement Québec loan.

On* July 17, 2026,the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “Fourth Financing Facility Amendment”). As per the Fourth Financing Facility Amendment, total annual principal repayments in monthly installments is $338 for the fiscal year ending February 28, 2027,*with the remainder of the principal amount being repayable in 36 monthly installments.

Total repayments due on the Company's indebtedness over the nextfive years are as follows:

Credit facility from a Canadian bank

On* July 26, 2022,*Loop Canada, Inc., a wholly-owned subsidiary of the Company (the "Borrower"), entered into an Operating Credit Facility (the “Credit Facility”) with a Canadian bank. The Credit Facility allows for borrowings of up to CDN $3,500 in aggregate principal amount. The Credit Facility is secured by the Company's Terrebonne, Québec property and was initially subject to a minimum equity covenant, tested quarterly.

On* July 4, 2025,the Borrower, the Company and the Canadian bank executed an amendment to the Credit Facility, modifying the minimum equity covenant to include the balance of Series B Convertible Preferred Stock as at February 28, 2026*of $12,054 in the calculation of stockholders' equity.

On* October 10, 2025,*the Borrower, the Company and the Canadian bank executed an amendment to the Credit Facility, which removed the minimum equity covenant tested quarterlyfor the duration of the term of the Credit Facility.

All borrowings under the Credit Facility bear interest at an annual rate equal to the bank's Canadian prime rate plus 1.0%. As at* August 31, 2026*, the Company borrowed $1,411 (CDN $1,957) under the Credit Facility. The Company recorded Interest expense on the Credit Facility for thethree-andsix-month periods ended* August 31, 2026*in the amount of $26 and $26, respectively (2025-nil andnil).

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12. Stockholders' Deficit

Common Stock

During the six-months ended* August 31, 2026*, the Company recorded the following common stock transactions:

During the six-months ended* August 31, 2025*, the Company recorded the following common stock transaction:

13. Research and Development Expenses

Research and development expenses for thethree-month periods ended* August 31, 2026and2025* were as follows:

Research and development expenses for the six-month periods ended* August 31, 2026and2025* were as follows:

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14. General and Administrative Expenses

General and administrative expenses for thethree-month periods ended* August 31, 2026and2025* were as follows:

General and administrative expenses for the six-month periods ended* August 31, 2026and2025* were as follows:

15. Share-based Payments

Stock Options

The following table summarizes the continuity of the Company's stock options during thethree-month periods ended* August 31, 2026and2025*:

The following table summarizes the continuity of the Company's stock options during the six-month periods ended* August 31, 2026and2025*:

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The Company applies the fair value method of accounting for stock-based compensation awards granted. Fair value is calculated based on a Black-Scholes option pricing model. The principal components of the pricing model for the stock options granted in thesix-month period ended* August 31, 2026and2025* were as follows:

The weighted-average grant-date fair value of options granted during thesix-month periods ended* August 31, 2026and2025* was $0.73 and $0.62 respectively.

A summary of the Company’s nonvested shares as of* August 31, 2026*, and changes during the six-month period ended* August 31, 2026* were as follows:

During thethree-month periods ended* August 31, 2026and2025*, stock-based compensation expense attributable to stock options amounted to $305 and $165, respectively. During the six-month periods ended* August 31, 2026and2025*, stock-based compensation expense attributable to stock options amounted to $1,157 and $651, respectively.

Restricted Stock Units

The following table summarizes the continuity of the restricted stock units during thethree-month periods ended* August 31, 2026and2025*:

The following table summarizes the continuity of the restricted stock units during thesix-month periods ended* August 31, 2026and2025*:

The Company applies the fair value method of accounting for awards granted through the issuance of restricted stock units. Fair value is calculated based on the intrinsic value at grant date multiplied by the number of restricted stock unit awards granted.

During thethree-month periods ended* August 31, 2026and2025*, stock-based compensation attributable to RSUs amounted to $124 and $115, respectively. During the six-month periods ended* August 31, 2026*, stock-based compensation attributable to RSUs amounted to $251 (comparatively* August 31, 2025*the stock-based compensation was $4, which included $291 for forfeitures).

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Stock-Based Compensation Expense

During thethree-month periods ended* August 31, 2026and2025*, stock-based compensation included in research and development expenses amounted to $86 and $32, respectively, and in general and administrative expenses amounted to $343 and $248, respectively. During the six-month periods ended* August 31, 2026and2025*, stock-based compensation included in research and development expenses amounted to $544 and $344 respectively, and in general and administrative expenses amounted to $864 and $311, respectively.

16. Equity Incentive Plan

On* July 6, 2017,the Company adopted the2017* Equity Incentive Plan (the “Plan”). The Plan permits the granting of warrants, stock options, stock appreciation rights and restricted stock units to employees, directors and consultants of the Company. A total of 3,000,000 shares of common stock were initially reserved for issuance under the Plan at* July 6, 2017,with annual automatic share reserve increases, as defined in the Plan, amounting to the lesser of (i)1,500,000 shares, (ii)5% of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the Administrator of the Plan, effective March 1, 2018.On March 1, 2026,the share reserve was increased by 1,500,000 shares (2025 –1,500,000). On July 23, 2026,the Company’s stockholders approved an amendment to the Plan providing for aone*-time increase of 1,000,000 shares reserved for issuance under the Plan. The Plan is administered by the Board of Directors who designates eligible participants to be included under the Plan, the number of awards granted, the share price pursuant to the awards and the vesting conditions and period. The awards, when granted, will have an exercise price ofno less than the estimated fair value of shares at the date of grant and a lifenot exceeding 10 years from the grant date.

The following table summarizes the continuity of the units that were authorized for issuance under the Plan as at and during thesix-month periods ended* August 31, 2026and2025*:

*The use of the term “units” in the table above describes a combination of stock options and RSUs.

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