Loop Industries, Inc 10-Q for FY2027 Q2
Loop Industries, Inc. (LOOP)
About this 10-Q
Loop Industries, Inc filed this 10-Q on October 16, 2026, covering the quarter ended August 31, 2026 (FY2027 Q2).
Loop Industries, Inc. reported a net loss of $2,988 for the three months ended August 31, 2026 and $6,372 for the six-month period, with total stockholders' deficit of $(14,134). The company cited material uncertainties raising substantial doubt about its ability to continue as a going concern. AI summary
Headline figures
Quarter ended August 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $117K
- compared with $0 a year earlier
- Net loss
- $2.99M
- compared with a net loss of $3.2M a year earlier
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended |
or
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from ___________ to __________ |
Commission File No.
| Loop Industries, Inc. |
| (Exact name of Registrant as specified in its charter) |
| | | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices zip code)
Registrant's telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As at October 15, 2026, there were
LOOP INDUSTRIES, INC.
| Page No. |
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| Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Loop Industries, Inc.
Three and Six Months Ended August 31, 2026
Index to the Unaudited Interim Condensed Consolidated Financial Statements
| Contents |
Page(s) |
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| Condensed consolidated balance sheets as at August 31, 2026 (Unaudited) and February 28, 2026 |
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| Notes to the condensed consolidated financial statements (Unaudited) |
Condensed Consolidated Balance Sheets
(Unaudited)
| (in thousands of U.S. dollars, except per share data) | As at | |||||||
| August 31, | February 28, | |||||||
| 2026 | 2026 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable and other (Note 3) | ||||||||
| Prepaid expenses (Note 4) | ||||||||
| Total current assets | ||||||||
| Equity method investments (Note 9) | ||||||||
| Property, plant and equipment, net (Note 5) | ||||||||
| Intangible assets, net (Note 6) | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities (Note 8) | $ | $ | ||||||
| Credit Facility (Note 11) | ||||||||
| Unearned revenue | ||||||||
| Current portion of long-term debt (Note 11) | ||||||||
| Total current liabilities | ||||||||
| Due to customer | ||||||||
| Series B Convertible Preferred stock (Note 10) | ||||||||
| Long-term debt (Note 11) | ||||||||
| Total liabilities | ||||||||
| Stockholders’ Deficit | ||||||||
| Common stock par value $; shares authorized; shares issued and outstanding (February 28, 2026 – ) (Note 12) | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
| Going Concern (Note 1) | ||||||||
See accompanying notes to the condensed consolidated financial statements.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| (in thousands of U.S. dollars, except per share data) | Three Months Ended | Six Months Ended | ||||||||||||||
| August 31, 2026 | August 31, 2025 | August 31, 2026 | August 31, 2025 | |||||||||||||
| Revenues | ||||||||||||||||
| Products | $ | $ | $ | $ | ||||||||||||
| Services | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of services | ||||||||||||||||
| Cost of services | ||||||||||||||||
| Total cost of services | ||||||||||||||||
| Expenses | ||||||||||||||||
| Research and development (Note 13) | ||||||||||||||||
| General and administrative (Note 14) | ||||||||||||||||
| Depreciation and amortization (Notes 5 and 6) | ||||||||||||||||
| Total expenses | ||||||||||||||||
| Other loss | ||||||||||||||||
| Loss on equity accounted investments (Note 9) | ||||||||||||||||
| Interest and other financial expenses | ||||||||||||||||
| Interest income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Foreign exchange loss (gain) | ( | ) | ||||||||||||||
| Total other loss | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive loss | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
| Going Concern (Note 1) | ||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
Condensed Consolidated Statement of Changes in Stockholders' Deficit
(Unaudited)
| (in thousands of U.S. dollars, except for share data) | Three months ended August 31, 2026 | |||||||||||||||||||||||||||||||||||
| Common stock | Preferred stock | Additional | Accumulated | |||||||||||||||||||||||||||||||||
| par value $0.0001 | par value $0.0001 | Additional | Paid-in | Other | Total | |||||||||||||||||||||||||||||||
| Number of | Number of | Paid-in | Capital– | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Warrants | Deficit | Loss | Deficit | ||||||||||||||||||||||||||||
| Balance, May 31, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Issuance of shares upon the vesting of restricted stock units (Note 15) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock under ATM Equity Offering (Note 12) | ||||||||||||||||||||||||||||||||||||
| Stock options issued for services (Note 15) | - | - | ||||||||||||||||||||||||||||||||||
| Restricted stock units issued for services (Note 15) | - | - | ||||||||||||||||||||||||||||||||||
| Share issuance costs | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, August 31, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| (in thousands of U.S. dollars, except for share data) | Three months ended August 31, 2025 | |||||||||||||||||||||||||||||||||||
| Common stock | Preferred stock | Additional | Accumulated | |||||||||||||||||||||||||||||||||
| par value $0.0001 | par value $0.0001 | Additional | Paid-in | Other | Total | |||||||||||||||||||||||||||||||
| Number of | Number of | Paid-in | Capital– | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Warrants | Deficit | Loss | Deficit | ||||||||||||||||||||||||||||
| Balance, May 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Issuance of shares upon the vesting of restricted stock units (Note 15) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock under ATM Equity Offering (Note 12) | ||||||||||||||||||||||||||||||||||||
| Stock options issued for services (Note 15) | - | - | ||||||||||||||||||||||||||||||||||
| Restricted stock units issued for services (Note 15) | - | - | ||||||||||||||||||||||||||||||||||
| Share issuance costs | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, August 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Going Concern (Note 1) | ||||||||||||||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
Loop Industries, Inc.
Condensed Consolidated Statement of Changes in Stockholders' Deficit
(Unaudited)
| (in thousands of U.S. dollars, except for share data) | Six months ended August 31, 2026 | |||||||||||||||||||||||||||||||||||
| Common stock | Preferred stock | Additional | Accumulated | |||||||||||||||||||||||||||||||||
| par value $0.0001 | par value $0.0001 | Additional | Paid-in | Other | Total | |||||||||||||||||||||||||||||||
| Number of | Number of | Paid-in | Capital– | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Warrants | Deficit | Loss | Deficit | ||||||||||||||||||||||||||||
| Balance, February 28, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Issuance of shares upon the vesting of restricted stock units (Note 15) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock under ATM Equity Offering (Note 12) | ||||||||||||||||||||||||||||||||||||
| Stock options issued for services (Note 15) | - | - | ||||||||||||||||||||||||||||||||||
| Restricted stock units issued for services (Note 15) | - | - | ||||||||||||||||||||||||||||||||||
| Share issuance costs | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, August 31, 2026 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Going Concern (Note 1) | ||||||||||||||||||||||||||||||||||||
| (in thousands of U.S. dollars, except for share data) | Six months ended August 31, 2025 | |||||||||||||||||||||||||||||||||||
| Common stock | Series A Preferred stock | Additional | Accumulated | |||||||||||||||||||||||||||||||||
| par value $0.0001 | par value $0.0001 | Additional | Paid-in | Other | Total | |||||||||||||||||||||||||||||||
| Number of | Number of | Paid-in | Capital– | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Warrants | Deficit | Loss | Deficit | ||||||||||||||||||||||||||||
| Balance, February 28, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||
| Issuance of shares upon the vesting of restricted stock units (Note 15) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock under ATM Equity Offering (Note 12) | ||||||||||||||||||||||||||||||||||||
| Stock options issued for services (Note 15) | - | - | ||||||||||||||||||||||||||||||||||
| Restricted stock units issued for services (Note 15) | - | - | ||||||||||||||||||||||||||||||||||
| Share issuance costs | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, August 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| (in thousands of U.S. dollars) | Six Months Ended August 31, | |||||
| 2026 | 2025 | |||||
| Cash Flows from Operating Activities | ||||||
| Net loss | $ | ( | ) | $ | ( | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
| Depreciation and amortization (Notes 5 and 6) | ||||||
| Stock-based compensation (Note 15) | ||||||
| Accrued interest and other financing costs (Note 11) | ||||||
| Loss on equity method investments (Note 9) | ||||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable and other (Note 3) | ( | ) | ||||
| Prepaid expenses (Note 4) | ( | ) | ||||
| Accounts payable and accrued liabilities (Note 8) | ( | ) | ||||
| Unearned revenue | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||
| Cash Flows from Investing Activities | ||||||
| Investment in joint venture (Note 9) | ( | ) | ||||
| Additions to intangible assets (Note 6) | ( | ) | ( | ) | ||
| Net cash used in investing activities | ( | ) | ( | ) | ||
| Cash Flows from Financing Activities | ||||||
| Proceeds from ATM equity offering, net of issuance costs (Note 12) | ||||||
| Borrowings under credit facility (Note 11) | ||||||
| Repayment of long-term debt (Note 11) | ( | ) | ( | ) | ||
| Net cash provided by financing activities | ||||||
| Effect of exchange rate changes | ( | ) | ||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||
| Cash and cash equivalents, beginning of period | ||||||
| Cash and cash equivalents, end of period | $ | $ | ||||
| Supplemental Disclosure of Cash Flow Information: | ||||||
| Income tax paid | $ | $ | ||||
| Interest paid | $ | $ | ||||
| Interest received | $ | $ | ||||
| Going Concern (Note 1) | ||||||
See accompanying notes to the condensed consolidated financial statements.
Three and Six Months Ended August 31, 2026 and 2025
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
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 depolymerizes no and low-value waste polyethylene terephthalate (“PET”) plastic and polyester fiber to its base building blocks (monomers). The monomers are filtered, purified and polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber. The Company is currently in the pre-commercialization stage with limited revenues.
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures included in these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended February 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
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 does not include all disclosures including certain notes required by US GAAP on an annual reporting basis. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods. The results for the three- and six-month periods ended August 31, 2026 are not 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.
Since its inception, the Company has been in the pre-commercialization stage with no 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 least twelve 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 ASC 205-40 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, 2026 with the under its credit facility, will not be sufficient to fund the Company's ongoing operations, obligations and commitments for the next twelve 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 $
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 is no 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 do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.
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 ASC 260, 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 the three- and six-month periods ended August 31, 2026 and 2025, 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
Recently adopted accounting pronouncements
Recently issued accounting pronouncements not yet adopted
In January 2025, the Financial Accounting Standards Board (FASB) issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update clarifies the effective date of ASU 2024-03, which requires public business entities to provide disaggregated disclosures of certain income statement expenses. Specifically, ASU 2025-01 confirms that the guidance in ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. Management is currently evaluating the impact that the updated standard will have on our 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:
| August 31, 2026 | February 28, 2026 | |||||||
| Accounts receivable from services to the India JV | $ | $ | ||||||
| Research and development tax credits | ||||||||
| Sales tax | ||||||||
| Other receivables | ||||||||
| $ | $ | |||||||
4. Prepaid Expenses
Prepaid expenses as at August 31, 2026 and February 28, 2026 were as follows:
| August 31, 2026 | February 28, 2026 | |||||||
| Insurance | $ | $ | ||||||
| Utilities | ||||||||
| Software | ||||||||
| Other | ||||||||
| $ | $ | |||||||
5. Property, Plant and Equipment, Net
| As at August 31, 2026 | ||||||||||||
| Accumulated | ||||||||||||
| depreciation, | ||||||||||||
| write-down | ||||||||||||
| Cost | and impairment | Net book value | ||||||||||
| Machinery and equipment | $ | $ | ( | ) | $ | |||||||
| Building | ( | ) | ||||||||||
| Land | ||||||||||||
| Building and Land Improvements | ( | ) | ||||||||||
| Office equipment and furniture | ( | ) | ||||||||||
| $ | 12,551 | $ | (10,924 | ) | $ | 1,627 | ||||||
| As at February 28, 2026 | ||||||||||||
| Accumulated | ||||||||||||
| depreciation, | ||||||||||||
| write-down | ||||||||||||
| Cost | and impairment | Net book value | ||||||||||
| Machinery and equipment | $ | $ | ( | ) | $ | |||||||
| Building | ( | ) | ||||||||||
| Land | ||||||||||||
| Building and Land Improvements | ( | ) | ||||||||||
| Office equipment and furniture | ( | ) | ||||||||||
| $ | $ | ( | ) | $ | ||||||||
Depreciation expense for the three- and six-month periods ended August 31, 2026 amounted to $
6. Intangible Assets, Net
Intangible assets as at August 31, 2026 and February 28, 2026 were $
During the six-month periods ended August 31, 2026 and 2025, the Company made additions relating to patent application costs to intangible assets of $
Amortization expense for the three- and six-month periods ended August 31, 2026 amounted to $
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:
| Fair Value at August 31, 2026 | |||||||||
| Carrying | Level in the | ||||||||
| Amount | Fair Value | hierarchy | |||||||
| Financial liabilities accounted for at amortized cost: | |||||||||
| Series B Convertible Preferred stock (Note 10) | $ | $ | Level 2 | ||||||
| Credit Facility (note 11) | $ | Level 2 | |||||||
| Long-term debt (Note 11) | $ | $ | Level 2 | ||||||
| Due to customer | $ | $ | Level 2 | ||||||
| Fair Value at February 28, 2026 | |||||||||
| Carrying | Level in the | ||||||||
| Amount | Fair Value | hierarchy | |||||||
| Financial liabilities accounted for at amortized cost: | |||||||||
| Series B Convertible Preferred stock (Note 10) | $ | $ | Level 2 | ||||||
| Long-term debt (Note 11) | $ | $ | Level 2 | ||||||
| Due to customer | $ | $ | Level 2 | ||||||
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:
| August 31, 2026 | February 28, 2026 | |||||||
| Trade accounts payable | $ | $ | ||||||
| Accrued employee compensation | ||||||||
| Accrued engineering fees | ||||||||
| Accrued professional fees | ||||||||
| Other accrued liabilities | ||||||||
| $ | $ | |||||||
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 a 50/50 joint venture based in India (“India JV”). The purpose of the India JV is to build and operate an Infinite Loop™ manufacturing facility in India which will produce lower carbon footprint rDMT, rMEG and specialty polymers, using the Infinite Loop™ Technology. During the year ended February 28, 2025, Ester Loop Infinite Technologies Private Limited (“ELITe”) was incorporated 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 the six-month period ended August 31, 2026, Loop and Ester each made $
The summarized financial information for ELITe is presented below, on a quarterly lag (in thousands).
| Balance sheet | June 30, 2026 | |||
| Assets | $ | |||
| Liabilities | ||||
| Equity | $ | |||
| Results of Operations (1) | Six months ended June 30, 2026 | |||
| Revenues | $ | |||
| Pre-tax loss | ( | ) | ||
| Net loss | ( | ) | ||
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:
| August 31, 2026 | February 28, 2026 | |||||||
| Stated value | $ | $ | ||||||
| Accrued PIK dividends | ||||||||
| Series B Convertible Preferred Stock | $ | $ | ||||||
During the three- and six-month periods ended August 31, 2026, the Company recorded PIK dividends of $
11. Long‑Term Debt
Long-term debt as of August 31, 2026 and February 28, 2026, was comprised of the following:
| August 31, 2026 | February 28, 2026 | |||||||
| Investissement Québec financing facility: | ||||||||
| Principal amount | $ | $ | ||||||
| Unamortized discount | ( | ) | ( | ) | ||||
| Accrued interest | ||||||||
| Total Investissement Québec financing facility | ||||||||
| Less: current portion of long-term debt | ( | ) | ( | ) | ||||
| Long-term debt, net of current portion | $ | $ | ||||||
Investissement Québec financing facility
The Company recorded interest expense on the Investissement Québec loan for the three- and six-month periods ended August 31, 2026 in the amount of $
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 $
Total repayments due on the Company's indebtedness over the next five years are as follows:
| Years ending | Amount | |||
| February 28, 2027 | ||||
| February 29, 2028 | ||||
| February 28, 2029 | ||||
| February 28, 2030 | ||||
| Total | $ | |||
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 $
All borrowings under the Credit Facility bear interest at an annual rate equal to the bank's Canadian prime rate plus
12. Stockholders' Deficit
Common Stock
| For the period ended August 31, 2026 | Number of shares | Amount | ||||||
| Balance, February 28, 2026 | $ | |||||||
| Issuance of shares upon settlement of restricted stock units | - | |||||||
| Issuance of shares for cash | - | |||||||
| Balance, August 31, 2026 | $ | |||||||
| For the period ended August 31, 2025 | Number of shares | Amount | ||||||
| Balance, February 28, 2025 | $ | |||||||
| Issuance of shares upon settlement of restricted stock units | - | |||||||
| Issuance of shares for cash | - | |||||||
| Balance, August 31, 2025 | $ | |||||||
During the six-months ended August 31, 2026, the Company recorded the following common stock transactions:
| (i) | The Company issued |
| (ii) | The Company issued |
During the six-months ended August 31, 2025, the Company recorded the following common stock transaction:
| (i) | The Company issued |
| (ii) | The Company issued |
13. Research and Development Expenses
Research and development expenses for the three-month periods ended August 31, 2026 and 2025 were as follows:
| August 31, 2026 | August 31, 2025 | |||||||
| Employee compensation | $ | $ | ||||||
| External engineering | $ | |||||||
| Plant and laboratory operating expenses | $ | |||||||
| Other | ||||||||
| $ | $ | |||||||
Research and development expenses for the six-month periods ended August 31, 2026 and 2025 were as follows:
| August 31, 2026 | August 31, 2025 | |||||||
| Employee compensation | $ | $ | ||||||
| External engineering | ||||||||
| Plant and laboratory operating expenses | ||||||||
| Other | ||||||||
| $ | $ | |||||||
14. General and Administrative Expenses
General and administrative expenses for the three-month periods ended August 31, 2026 and 2025 were as follows:
| August 31, 2026 | August 31, 2025 | |||||||
| Employee compensation | $ | $ | ||||||
| Insurance | ||||||||
| Professional fees | ||||||||
| Other | ||||||||
| $ | $ | |||||||
General and administrative expenses for the six-month periods ended August 31, 2026 and 2025 were as follows:
| August 31, 2026 | August 31, 2025 | |||||||
| Employee compensation | $ | $ | ||||||
| Insurance | ||||||||
| Professional fees | ||||||||
| Other | ||||||||
| $ | $ | |||||||
15. Share-based Payments
Stock Options
The following table summarizes the continuity of the Company's stock options during the three-month periods ended August 31, 2026 and 2025:
| 2026 | 2025 | |||||||||||||||
| Number of | Weighted average | Number of | Weighted average | |||||||||||||
| stock options | exercise price | stock options | exercise price | |||||||||||||
| Outstanding, beginning of period | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Expired | ||||||||||||||||
| Outstanding, end of period | $ | $ | ||||||||||||||
| Exercisable, end of period | $ | $ | ||||||||||||||
The following table summarizes the continuity of the Company's stock options during the six-month periods ended August 31, 2026 and 2025:
| 2026 | 2025 | |||||||||||||||
| Number of | Weighted average | Number of | Weighted average | |||||||||||||
| stock options | exercise price | stock options | exercise price | |||||||||||||
| Outstanding, beginning of period | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Expired | ||||||||||||||||
| Outstanding, end of period | $ | $ | ||||||||||||||
| Exercisable, end of period | $ | $ | ||||||||||||||
The Company applies the fair value method of accounting for stock-based compensation awards granted. Fair value is calculated based on a Black-Scholes option pricing model. The principal components of the pricing model for the stock options granted in the six-month period ended August 31, 2026 and 2025 were as follows:
| 2026 | 2025 | |||||||
| Exercise price | $ | 0.85-1.44 | $ | |||||
| Risk-free interest rate | - | - | ||||||
| Expected dividend yield | % | % | ||||||
| Expected volatility | - | - | ||||||
| Expected life (years) | 3.5 - 5.0 years | 3.5 - 5.0 years | ||||||
The weighted-average grant-date fair value of options granted during the six-month periods ended August 31, 2026 and 2025 was $
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:
| 2026 | ||||||||
| Number of | Weighted average | |||||||
| stock options | exercise price | |||||||
| Nonvested, beginning of period | $ | |||||||
| Granted | ||||||||
| Exercised | - | |||||||
| Forfeited | ||||||||
| Vested | ( | ) | ||||||
| Nonvested, end of period | $ | |||||||
During the three-month periods ended August 31, 2026 and 2025, stock-based compensation expense attributable to stock options amounted to $
Restricted Stock Units
The following table summarizes the continuity of the restricted stock units during the three-month periods ended August 31, 2026 and 2025:
| 2026 | 2025 | |||||||||||||||
| Weighted average | Weighted average | |||||||||||||||
| Number of units | fair value price | Number of units | fair value price | |||||||||||||
| Outstanding, beginning of period | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Settled | ( | ) | ( | ) | ||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Outstanding, end of period | $ | $ | ||||||||||||||
| Outstanding vested, end of period | $ | $ | ||||||||||||||
The following table summarizes the continuity of the restricted stock units during the six-month periods ended August 31, 2026 and 2025:
| 2026 | 2025 | |||||||||||||||
| Weighted average | Weighted average | |||||||||||||||
| Number of units | fair value price | Number of units | fair value price | |||||||||||||
| Outstanding, beginning of period | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Settled | ( | ) | ( | ) | ||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Outstanding, end of period | $ | $ | ||||||||||||||
| Outstanding vested, end of period | $ | $ | ||||||||||||||
The Company applies the fair value method of accounting for awards granted through the issuance of restricted stock units. Fair value is calculated based on the intrinsic value at grant date multiplied by the number of restricted stock unit awards granted.
During the three-month periods ended August 31, 2026 and 2025, stock-based compensation attributable to RSUs amounted to $
Stock-Based Compensation Expense
During the three-month periods ended August 31, 2026 and 2025, stock-based compensation included in research and development expenses amounted to $
16. Equity Incentive Plan
On July 6, 2017, the Company adopted the 2017 Equity Incentive Plan (the “Plan”). The Plan permits the granting of warrants, stock options, stock appreciation rights and restricted stock units to employees, directors and consultants of the Company. A total of
The following table summarizes the continuity of the units that were authorized for issuance under the Plan as at and during the six-month periods ended August 31, 2026 and 2025:
| 2026 | 2025 | |||||||
| Number of units* | Number of units* | |||||||
| Authorized, beginning of period | ||||||||
| Automatic share reserve increase | ||||||||
| Additional Share reserve increase | ||||||||
| Units granted | ( | ) | ( | ) | ||||
| Units forfeited | ||||||||
| Units expired | ||||||||
| Authorized, end of period | ||||||||
*The use of the term “units” in the table above describes a combination of stock options and RSUs.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information and any forward-looking statements should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q, including those risks identified in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended February 28, 2026, filed with the SEC on May 27, 2026 (the “2026 Annual Report”).
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of Loop Industries, Inc., a Nevada corporation (the “Company,” “Loop,” “we,” or “our”), contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, ability to improve and expand our capabilities, competition, expected activities and expenditures as we pursue our business plan, the adequacy of our available cash resources, regulatory compliance, plans for future growth and future operations, the size of our addressable market, and market and industry trends. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Actual results may differ materially from the projections discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These risks and other factors include, but are not limited to, those listed under “Risk Factors.” Additional factors that could materially affect these forward-looking statements and/or projections include, among other things: (i) our ability to commercialize our technology and products, (ii) the status of our relationships with our partners, (iii) development and protection of our intellectual property and products, (iv) industry competition, (v) our need for and ability to obtain additional funding relative to our current and future financial commitments, (vi) our ability to continue as a going concern, (vii) engineering, contracting, and building our manufacturing facilities, (viii) our ability to scale, manufacture, and sell our products and to license our technology in order to generate revenues, (ix) our proposed business model and our ability to execute it, (x) our ability to obtain the necessary approvals or satisfy any closing conditions in respect of any of our proposed partnerships, (xi) our joint venture projects and our ability to recover certain expenditures in connection with them, (xii) adverse effects on the Company's business and operations as a result of increased regulatory, media, or financial reporting scrutiny, practices, rumors, or otherwise, (xiii) public health issues, such as disease epidemics, which may lead to reduced access to capital markets, supply chain disruptions, and government-imposed business closures, (xiv) war, regional tensions, and economic or other conflicts including trade disputes and increasing protectionist measures that could impact market stability and our business; (xv) the effect of the continuing worldwide macroeconomic uncertainty and its impacts, including inflation, market volatility and fluctuations in foreign currency exchange and interest rates, (xvi) the outcome of any SEC investigations or class action litigation filed against us, (xvii) our ability to hire and/or retain qualified employees and consultants, (xviii) our ability to regain and maintain compliance with the continued listing requirements of Nasdaq; (xix) other events or circumstances over which we have little or no control, and (xx) other factors discussed in our subsequent filings with the Securities and Exchange Commission (the “SEC”).
Management has included projections and estimates in this Form 10-Q, which are based primarily on management's experience in the industry, assessments of our results of operations, discussions and negotiations with third parties, and a review of information filed by our competitors with the SEC or otherwise publicly available.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as at the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
We caution readers not to place undue reliance on any such forward-looking statements, which speak only as at the date made. Except as required by law, we disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
General
As used in this Quarterly Report on Form 10-Q, the following terms are being provided so investors can better understand our business:
Depolymerization refers to the chemical process of breaking down a polymer molecule into its constituent monomers or smaller subunits. Depolymerization is the opposite of polymerization.
DMT is an acronym for dimethyl terephthalate, which is a monomer used in the production of polyethylene terephthalate (“PET”), as well as other products.
MEG is an acronym for monoethylene glycol, which is a monomer used in the production of PET, as well as other products.
Polymerization refers to a process of reacting monomer molecules together in a chemical reaction to form polymer chains or three-dimensional networks.
PET is an acronym for polyethylene terephthalate, which is a resin and a type of polyester showing excellent tensile and impact strength, chemical resistance, clarity, and processability, and reasonable thermal stability. PET is the material which is most commonly used for the production of polyester fiber and plastic packaging, including plastic bottles for water and carbonated soft drinks, containers for food and other consumer products; it is commonly identified by the number “1”, often inside an image of a triangle, on the packaging. PET is also used as a polyester fiber for a variety of applications including textiles, clothing and apparel.
rPET, rDMT and rMEG are acronyms for recycled PET, DMT and MEG.
$ refers to U.S. dollars unless otherwise indicated.
Introduction
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 our dependence on fossil fuels. Loop Industries owns patented and proprietary technology that depolymerizes no and low-value waste PET plastic and polyester fiber, including plastic bottles, packaging, and textiles such as carpets and clothing, into its base building block monomers, DMT and MEG. The monomers are separated, purified and polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber, thus enabling our customers to meet their sustainability objectives. Loop™ PET plastic and polyester fiber can be recycled infinitely without degradation of quality, helping to close the plastic loop. Loop Industries is committed to contributing to the global movement towards a circular economy by reducing plastic waste and recovering waste plastic for a sustainable future.
Loop plans to commercialize the Infinite Loop™ technology by developing facilities throughout the world which use its technology to produce rPET. These facilities will be developed through a combination of direct investments with strategic partners and the licensing of its technology to companies with industry expertise.
As the initial phase of our plan for the commercialization of future Infinite Loop™ manufacturing facilities, we constructed and have successfully operated our Terrebonne, Québec depolymerization production facility (the “Terrebonne Facility”) for over five years, demonstrating the effectiveness of our technology and supplying Loop PET resin and polyester fiber to customers. The facility has also been used for research and development activities.
Loop is currently executing on its commercialization strategy through two key strategic partnerships. The Company is advancing towards the construction of an Infinite Loop™ manufacturing facility in India through its 50/50 joint venture in India with Ester Industries Ltd. (“Ester”). In addition, the Company sold its first technology license to Reed Management SAS, ("Reed Societe Generale Group"), for one Infinite Loop™ manufacturing facility in Europe for an initial payment of $10.4 million (€10.0 million) with additional milestone payments to be received by Loop as the project advances. Infinite Loop Europe SAS (“Infinite Loop Europe”), an entity owned 10% by Loop and 90% by Reed Circular Economy (“RCE”), an affiliate of Reed Societe Generale Group, was formed with the purpose of developing Infinite Loop™ manufacturing facilities in Europe. These initiatives represent key steps in implementing the Company's plan to deploy its proprietary depolymerization technology in global markets.
Background
Industry Background and Competitive Landscape
PET resin is primarily derived from fossil fuel-based monomers and is referred to as “virgin PET” when used for packaging and “virgin polyester” when used for fibers. PET is widely used in packaging, especially for beverage bottles and food containers, due to its excellent barrier properties, durability, and food safety profile. Virgin polyester fiber is also the dominant synthetic fiber in the textile industry, valued for its strength, durability, wrinkle resistance, and versatility in apparel, home furnishings, and industrial applications.
Despite growing regulatory and consumer pressure for sustainable alternatives, most of the PET and polyester fiber used globally today is still comprised of fossil fuel-based monomers. In many applications, virgin material is still preferred or required, either alone or blended with recycled content, in order to meet quality specifications. As a result, the global markets for both PET packaging and polyester fiber remain heavily dependent on fossil fuels, underscoring the need for scalable, cost-effective recycling technologies that can produce high-quality PET and polyester fiber from waste plastic.
Mechanical recycling is the most common method for recycling PET waste. This multi-step physical process transforms waste PET into reusable materials. The process begins with the collection of waste PET bottles and packaging through various systems, such as curbside programs and deposit returns. The waste is sorted at materials recovery facilities to separate PET from other plastics or materials, then compressed into bales.
The bales are broken down and the waste PET shredded into flakes after removal of contaminants like stones, sand, metals, labels, and bottle caps. These flakes undergo rigorous washing and cleaning stages, often using hot water and detergents, to remove dirt, adhesives, and residues. Separation techniques like flotation and air classification are then used to eliminate remaining impurities, and the flakes are dried. Next, the flakes may go through optical color sorting to produce rPET for higher value uses such as clear beverage bottles. The cleaned flakes are then melted at high temperatures, extruded, and cut into uniform pellets. For applications like food-grade packaging, the rPET pellets typically undergo further processing to ensure compliance with safety and quality standards for direct food contact.
We believe mechanically recycled PET faces significant challenges in meeting the quality specifications and increasing volume requirements driven by brand commitments and regulatory pressures. Impurities like labels, adhesives, and other types of plastic contained in the waste feedstock compromise the purity of the rPET. While sorting and cleaning technologies help, they are not always effective enough to produce consistently high-quality recycled material. Feedstock limitations also exist because certain PET products, such as colored or multi-layered packaging, are challenging to process mechanically while maintaining quality and consistency, leading to them being sent to landfill or incineration.
A key challenge in mechanical recycling is the degradation of PET's physical properties with each recycling cycle. Processes like shredding, washing, and melting can break down polymer chains, reducing strength and clarity, often leading to “downcycling” where the rPET is limited to lower-value applications rather than being recycled back into bottles or food packaging. Due to the progressive degradation of material properties and the accumulation of impurities, PET can typically only be mechanically recycled a limited number of times before its quality is too poor for further processing or valuable applications. The quality of mechanically recycled PET can vary considerably and often requires blending with virgin PET to meet performance standards. This inconsistency poses difficulties for manufacturers aiming to incorporate rPET into products, particularly for demanding applications like food packaging.
Mechanical recycling does not effectively handle polyester fiber waste. A substantial portion of polyester fiber waste consists of polyester blended with other fibers like cotton or spandex, which mechanical processes are largely ineffective at separating. Additionally, waste polyester fiber often contains dyes, finishes, and other chemicals that cannot be removed through mechanical recycling. Today, most recycled polyester on the market is produced from recycled PET bottles and packaging. A significant portion of PET bottles collected for recycling is diverted into polyester fiber production for textile applications, rather than being recycled back into new bottles.
We believe these inherent limitations of mechanical recycling further re-enforce the need for depolymerization technologies capable of processing a wider range of PET and polyester fiber waste while yielding high-quality material. Depolymerization is a process in which plastics are broken down into their base monomers through chemical reactions, rather than being physically melted down and reprocessed as in mechanical recycling.
Among existing depolymerization technologies, we believe that Loop's process offers advantages in handling more contaminated feedstock and in its scalability, which differentiates it from other available methods. This belief is supported by available technical information and due diligence on Loop's technology carried out by multiple industry sources. To our knowledge, other existing depolymerization technologies often require high temperatures and pressures, resulting in substantial energy consumption and potential unwanted chemical reactions which can reduce the yield and purity of the recovered monomers.
Infinite Loop™ Technology
Our depolymerization technology breaks down waste PET and polyester fiber into its base monomers DMT and MEG. The monomers are purified and then recombined into virgin quality PET resin suitable for use in food-grade packaging and polyester fiber made from 100% recycled content. Our depolymerization operates at low temperature with no added pressure which enables a wider range of PET and polyester fiber to be recycled. Our technology can recycle a wide range of waste PET plastic bottles and packaging of any color, transparency or condition, as well as polyester textiles such as carpet and clothing that contain dyes, additives, or other textiles blended into the fabrics. We believe that our ability to use contaminated feedstocks that other recycling methods cannot process is an important advantage of our technology.
Loop’s depolymerization technology has the potential to create a closed-loop system for PET plastic and polyester fiber waste, whereby they can be recycled an infinite number of times without degrading the quality of the material, unlike mechanical recycling. This is because the DMT and MEG monomers are purified back to their original state prior to being repolymerized.
The Infinite Loop™ Technology is also designed to provide a solution for recycling polyester textile waste, regardless of color or contamination, into 100% recycled virgin-quality polyester. Loop branded polyester fiber can be seamlessly integrated into existing supply chains and manufacturing processes. This closed-loop approach aims to offer a sustainable alternative for the textile industry, addressing the growing issue of textile waste while maintaining high quality and performance.
Loop has been operating its Terrebonne Facility for over five years producing DMT and MEG. The facility has been achieving consistent monomer recovery, demonstrating the effectiveness of our technology and supplying customers with virgin quality PET resin for packaging and polyester fiber for textiles.
Agreements with Reed Societe Generale Group
On December 12, 2024, the Company entered into an Amended and Restated Share Purchase Agreement (the “Amended Agreement”) with Reed Societe Generale Group, a European investment firm focused on high impact and technology-enabled infrastructure majority-owned by the bank Societe Generale. The Amended Agreement amends the original Share Purchase Agreement dated May 30, 2024 previously reported by the Company in a current report on Form 8-K filed on June 4, 2024. To facilitate the closing of the transactions contemplated by the Amended Agreement and to develop Infinite Loop™ manufacturing facilities in Europe, Infinite Loop Europe was incorporated under French law.
On December 23, 2024, the Company closed the financing and licensing transactions contemplated by the Amended Agreement. The Company issued and sold 1,044,430 shares of Series B Convertible Preferred Stock at $10.00 per share to RCE. Additionally, the Company entered into a License Agreement with RCE, acting on behalf of Infinite Loop Europe, granting a non-transferable, royalty-bearing license to use Loop's proprietary depolymerization technology for one facility within Europe.
The Company received total cash proceeds of $20,790 (€20,000) on December 23, 2024.
Key terms of the Series B Convertible Preferred Stock include:
| ● |
13% PIK dividend rate |
|
| ● |
5-year term |
|
| ● |
Convertible to Loop common stock at $4.75 per share or redeemable in cash |
We believe the licensing and financing transactions marked an important step in Loop's commercialization strategy, enabling the deployment of its patented recycling technology across Europe and supporting capital investment in cost-effective manufacturing regions, including its joint venture in India with strategic partner Ester. Proceeds from these transactions have been used to fund the India JV project and Loop's operational cash flow needs.
We further believe the sale of our first license underscores the commercial readiness of Loop's technology, which has been validated by over five years of operations at its Terrebonne facility.
On September 23, 2025, Loop entered into a formal agreement with RCE to establish the framework for the governance, ownership, and operations of Infinite Loop Europe, a European entity formed to pursue the non-exclusive development, financing, construction, ownership, operation, and commercialization of chemical upcycling plants and related products using Loop’s technology within Europe. Under this agreement, RCE and Loop hold equity interests in Infinite Loop Europe on a 90/10 basis. In September 2025, Loop purchased 250 shares of Infinite Loop Europe for $0.3 (€0.3) in consideration for its 10% ownership stake. The agreement provides Infinite Loop Europe with priority rights to evaluate European project opportunities, establishes financing arrangements between the shareholders, grants Loop options to participate in up to 50% of project-level equity, and confirms that Loop retains ownership of its intellectual property while granting Infinite Loop Europe limited use rights.
Infinite Loop Europe is managed by a chief executive officer proposed by RCE, with governance provided by a four-member board of directors, of which one director has been nominated by Loop and the remaining three directors have been nominated by RCE. Certain transactions that could risk the disclosure of Loop’s technology, as well as certain related-party transactions, require unanimous board approval. RCE has provided Infinite Loop Europe with a $10.4 million (€10.0 million) shareholder loan to fund the first royalty tranche under the license agreement, which accrues payment-in-kind interest at 11.9% per annum and matures on December 27, 2027.
On February 17, 2026, Loop announced that Infinite Loop Europe has selected BASF Industriepark Lausitz in Schwarzheide, Germany, as the site for its inaugural European manufacturing facility. The project will be the first under Loop’s licensed technology model. This selection marks a major step in Loop’s global commercialization strategy, with the site expected to be operational by 2030. The facility is designed to utilize Loop’s proprietary depolymerization technology to produce 70,000 metric tons per year of virgin-quality Loop™ PET made from 100% recycled content. By addressing a critical supply gap for food-grade and pharmaceutical applications in the European market, the project pairs technical reliability with a high-demand commercial opportunity. Integration within BASF’s Industriepark Lausitz provides access to world-class industrial infrastructure and operational expertise, while the partnership with Reed Societe Generale Group brings strong institutional capital support, reducing execution risk and accelerating commercialization. The facility is positioned to benefit from the European Commission’s 2025 pilot actions aimed at modernizing and strengthening the EU plastics recycling sector. Following site selection, the project moves into the engineering and permitting phase.
Joint Venture with Ester
On May 1, 2024, Loop entered into an agreement with Ester, one of India's leading manufacturers of polyester films and specialty polymers, to form a 50/50 India joint venture (“India JV”). The purpose of the India JV is to build and operate an Infinite Loop™ manufacturing facility in India which will produce 100% recycled Loop™ PET resin, using the Infinite Loop™ Technology, in order to meet growing demand from leading global brands in different sectors, including strong demand for textile-to-textile polyester fiber to enable circular fashion for apparel brands, a trend we have observed and anticipate to continue.
Loop and Ester have a well-established working relationship, with Ester producing Loop™ PET using monomers produced at Loop's Terrebonne Facility for global brand companies for over five years. The India JV intends to leverage the complementary skill sets of each partner by combining Loop's innovative technology and global customer relationships with Ester's nearly 40 years of specialized polymer production, operational proficiency, and local expertise, including sourcing of PET plastic and polyester fiber waste feedstocks. The India facility will leverage the Infinite Loop™ Technology and Loop’s existing engineering package.
Following the completion of a detailed land study by an external engineering firm, the India JV partners identified the state of Gujarat, India's synthetic textile capital as the optimal location for the facility based on several key requirements such as infrastructure, proximity to a seaport for exports, renewable energy for a reduction in CO₂ emissions and proximity to waste PET and polyester feedstocks.
In December 2025, the India JV awarded the detailed engineering contract for the Infinite Loop™ India facility to Toyo Engineering India Private Limited, covering the full scope of detailed design, procurement engineering, and technical documentation.
In connection with the ongoing development of our commercial operations in India, we have updated the design and operational strategy for our first commercial facility in the region, adjusting its planned production capacity to 45,000 metric tons per year of Loop-branded PET resin and polyester fiber. In connection with an ongoing front end engineering analysis by Toyo Engineering India Private Limited, this refined capacity is expected to reduce the estimated total investment cost and lower both our projected debt and equity financing requirements for construction. Furthermore, the streamlined design is anticipated to enable a more efficient capital-raising process and an accelerated construction timeline, with the project currently targeted for completion by the end of 2028.
This facility is designed as the first of two total installations on the India site, with the subsequent facility expected to be larger and constructed following the successful startup of the first. Strategically, we believe that the India joint venture offers attractive projected economic returns—without the need for substantial sustainability-linked premium pricing—driven by low operating costs that benefit from low-value feedstock, low-temperature operations requiring no added pressure, and competitive regional labor costs. This optimized capital allocation policy is expected to allow us to scale our manufacturing footprint efficiently while maintaining strong project economics.
Loop and Ester anticipate that the total funding required for the India JV for the purposes of construction, development and operationalization of the project, including the initial working capital requirements, will be financed by a combination of debt and equity capital. Ester and Loop are each contributing 50% of the equity capital of the India JV. As of August 31, 2026, Loop and Ester had each made total equity contributions of $3.6 million in cash to the India JV. The funds injected in the India JV are being used for preliminary project costs, which are mainly engineering fees and the purchase of land.
Loop has entered into two engineering services agreements with the India JV to provide engineering services, underscoring the role of engineering services in Loop's commercialization strategy as an important and growing source of revenue. The first engineering services agreement with the India JV has a contractual revenue amount of $0.5 million and was fulfilled over the fourth quarter of the fiscal year ended February 28, 2025 and the first quarter of the fiscal year ended February 28, 2026. It resulted in $0.2 million of revenue in the first quarter ended May 31, 2025. On June 22, 2025, Loop entered into its second engineering services agreement with the India JV to support it through construction as it moves towards breaking ground on the Infinite Loop™ India facility. This agreement has a contractual revenue amount of $1.5 million, and the Company commenced performance under it in November 2025, resulting in Loop generating $0.4 million of engineering services revenue in the year ended February 28, 2026 and $0.3 million in the first two quarters ended August 31, 2026. Engineering services revenue is currently recognized only to the extent of costs incurred, the associated revenue and cost of sales are recognized in equal amounts, yielding no gross profit margin during the period.
On August 13, 2025, the India JV executed an agreement with a group of sellers for the acquisition of approximately 93 acres in Gujarat, India, for total consideration of approximately US $0.1 million (9.1 million Indian rupees) per acre. The sellers are obligated to consolidate the parcels, deliver marketable title with requisite governmental approvals, and construct access road infrastructure. The purchase price is payable through advance payments secured by equitable mortgages over designated parcels, with remaining consideration due upon title transfer. The agreement incorporates customary representations, warranties, and covenants, together with termination provisions permitting India JV to reject non-compliant parcels or terminate for material breach, including failure to deliver contiguous parcels, with full restitution of payments made.
Strategically located within the Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR), the site offers direct access to abundant polyester textile waste feedstock, a skilled petrochemical workforce, and a streamlined permitting process. Its proximity to a deep-water seaport will further support cost-efficient exports of the India JV’s products.
Feedstock sourcing for the facility, of which there is abundant supply from textile waste in India, is well advanced. Loop has signed a multi-year offtake agreement with Nike, Inc. ("Nike") which will serve as an anchor customer for the facility. Loop has also signed an offtake agreement with Taro Plast S.p.A. to supply 100% recycled, virgin-quality Loop™ DMT. Furthermore, the India JV has engaged a leading global advisory firm to manage the debt syndication process for financing the construction of the Infinite Loop™ India facility. The debt financing process is progressing, with term sheets having been received from international lenders who are moving into the technical due diligence stage of the process.
In May 2026, the India JV has signed a memorandum of understanding with the government of Gujarat providing formal alignment to support the development of Loop's first large-scale commercial manufacturing platform. The agreement is expected to streamline permitting, infrastructure coordination, and administrative processes, reinforcing a clear path forward and enabling a phased expansion strategy at the site which is capable of supporting multiple facilities. The Company currently expects the Infinite Loop™ India facility to be completed in calendar 2028.
On August 13, 2026, the India JV entered into (i) a License Agreement, (ii) a Marketing Agreement, and (iii) a Services Agreement, effective as of February 4, 2026. Under the License Agreement, Loop granted the India JV an exclusive (subject to certain exceptions), royalty-bearing license to use Loop’s proprietary depolymerization technology and related intellectual property rights in India and certain other agreed territories to manufacture licensed products and sell such products worldwide. The India JV is required to pay royalties to Loop based on annual net sales of licensed products pursuant to a tiered royalty structure following the first commercial sale of a licensed product at the applicable facility. Under the Marketing Agreement, the India JV appointed Loop as its exclusive sales, marketing and promotional representative for licensed products. Loop is entitled to receive marketing service fees based on annual net sales of licensed products pursuant to a tiered fee structure. Under the Services Agreement, Ester will provide the India JV with certain project management, operational and technical support services and will receive service fees based on annual net sales of licensed products pursuant to a tiered fee structure.
Commercialization Strategy
Our commercialization strategy to achieve global expansion of the Infinite Loop™ Technology is founded on a combination of direct investments with strategic partners to own and operate commercial facilities and the licensing of our technology.
The global expansion plan for our technology will allow our target customers, mostly comprised of apparel companies and CPG companies, to integrate Loop™ PET resin and polyester fiber into their products and packaging. As countries around the globe continue to impose sustainability targets and recycled content mandates, we observe that companies are increasingly seeking to incorporate sustainably produced materials into their products. Our market strategy is to assist global consumer goods and apparel companies in meeting these requirements as well as their own stated sustainability commitments by offering co-branded packaging or polyester fibers that are made with Loop 100% recycled, virgin-quality PET. We believe that Loop™ recycled PET resin and polyester fiber could command premium pricing over virgin, petroleum-based PET resin and provide attractive economic returns.
The Infinite Loop™ Technology is the key pillar of our commercialization strategy. We believe our technology is well positioned to respond to the global transition away from fossil fuels and petrochemicals and into the circular economy, where PET plastic and polyester fiber are produced by recycling waste polyester that would otherwise typically be destined for landfill or incineration, rather than relying on fossil-based resources.
We have completed our process design package for the Infinite Loop™ full-scale manufacturing facilities to be used as the base engineering platform for all future facilities. We believe this approach allows for quick execution, speed to market, and lends itself well to modular construction.
We are focused on direct investments in Infinite Loop™ commercial facilities located in low-cost manufacturing regions. By strategically selecting cost-efficient locations, we aim to optimize production costs and improve overall financial performance, while limiting our capital contributions.
This direct investment approach also includes leveraging partnerships to integrate Loop's proprietary technology and sales and marketing expertise with the operational and construction capabilities of experienced partners. We believe this combination of complementary skill sets allows for more efficient project execution, accelerated market adoption, and scalable growth.
We expect that revenue generation from direct investments in commercial facilities will be driven by two key streams: (i) profits from the operation of commercial facilities, and (ii) royalties paid to Loop for licensing its technology and exclusive responsibility for sales and marketing. We believe these income sources will support long-term financial sustainability and growth.
This approach is currently being deployed through the Company's 50/50 joint venture in India with Ester, which is advancing towards the construction of the first of its two planned Infinite Loop™ manufacturing facility in Gujarat, India. The first facility's planned production capacity is 45,000 metric tons per year of Loop branded PET resin and polyester fiber. The second facility is expected to be at least 100,000 metric tons per year. The India JV intends to leverage the complementary skill sets of each partner by combining Loop's innovative technology and global customer relationships with Ester's nearly 40 years of specialized polymer production, operational proficiency, and local expertise, including sourcing of PET plastic and polyester fiber waste feedstocks. Loop has granted a royalty-bearing license to the India JV and is the exclusive seller and marketing agent of the India JV's products.
We also aim to accelerate the roll-out of the Infinite Loop™ technology through the sale of technology licenses for commercial facilities in which Loop may take limited or no ownership. We expect licensee-owned facilities to allow us to scale our technology efficiently, without requiring significant capital investment from Loop. Revenue generation through technology licensing is expected to come from a combination of up-front and recurring royalties.
This approach focused on licensing is currently being deployed in our European partnership with Reed Societe Generale Group. The Company sold its first technology license to Reed Societe Generale Group for one Infinite Loop™ manufacturing facility in Europe for an initial down payment of $10.4 million (€10.0 million) with additional milestone payments to be received by Loop as the project advances. Infinite Loop Europe was formed with the purpose of developing Infinite Loop™ manufacturing facilities in Europe to be owned 10% by Loop and 90% by RCE. Loop has the right to increase its ownership in each project developed through Infinite Loop Europe up to 50% subject to a binding funding commitment.
Additionally, we aim to generate income by providing engineering services throughout all phases of project development, construction, and startup for all Infinite Loop™ commercial facilities, supporting efficient project execution and creating a steady revenue stream prior to the startup of the facility.
Loop has entered into an engineering services agreement with the India JV to provide engineering services and support the completion of the engineering for the planned Infinite Loop™ manufacturing facility in India. This has resulted in Loop generating engineering services revenue of $0.3 million in the six month period ended August 31, 2026.
We are also in the process of implementing a modular construction strategy, in order to reduce overall capital expenditures and operating expenses, while improving project timelines and ensuring standardized design and quality. This strategy consists of the manufacture of plant modules in a low-cost country which can then be transported and assembled on site at global locations. This would provide a more economical scalable approach for global expansion and would potentially provide an additional income stream for Loop as it coordinates the process.
The Company’s ability to move to the next stage of its strategic development, including the construction of manufacturing plants and the commercialization of its technology and products at scale, is dependent on, among other factors, its ability to obtain the necessary financing through a combination of the issuance of equity and/or debt and/or government incentive programs.
Market Development and Strategic Relationships
Letter of Intent with global apparel company
In June 2026, Loop executed a letter of intent for an initial multi-year offtake agreement with a major global apparel company. This letter of intent forms the framework for an ongoing collaboration targeting up to 15,000 metric tons annually of Loop’s proprietary PET fiber-grade resin.
Offtake Agreement with Nike
In September 2025, we entered into a multi-year offtake agreement with Nike, a global leader in athletic footwear and apparel. Under this agreement and subject to its terms, we will supply agreed minimum volumes of Twist™, our virgin-quality circular polyester resin made exclusively from textile waste, once the Company's planned Infinite Loop™ India Facility becomes operational.
Offtake Agreement with Taro Plast
In September 2025, we entered into an offtake agreement with Taro Plast S.p.A. ("Taro Plast"), an Italy-based manufacturer of engineering plastics and compounds. Under this agreement and subject to its terms, we will supply Taro Plast with agreed volumes of our 100% recycled, virgin-quality Loop™ DMT produced using our proprietary depolymerization technology at our planned Infinite Loop™ facility in India, once the facility becomes operational. This agreement will expand our product offering beyond bottle-grade and fiber-grade PET resin into the specialty polymers market, where Loop™ DMT can be used for automotive and specialty polymer applications. Taro Plast has conducted independent testing confirming the high purity and performance of Loop™ DMT, and is expected to be the first company to integrate Loop™ DMT into their product portfolio.
Strategic Alliance with Shinkong
In August 2025, we announced a strategic alliance with Shinkong Synthetic Fibers Corporation ("Shinkong"), a leader in Taiwan's polyester industry and global leader in sustainable polyester yarn solutions. This partnership combines our textile-to-textile manufacturing technology with Shinkong's polyester fiber spinning capabilities and distribution network. Under this alliance, Shinkong can convert our Twist™ polyester resin into high-performance yarns for their network of over 100 customers worldwide, while we can now offer high-quality circular polyester yarns to customers. This collaboration supports our planned Infinite Loop™ India project by providing additional distribution channels and supply chain options for apparel and textile brands across Asian, European, and North American markets.
Strategic Alliance with Hyosung TNC
In September 2025, we announced a strategic alliance with Hyosung TNC, a complete sustainable textile solutions provider and the world's largest manufacturer of spandex by market share. This alliance combines our Infinite Loop™ depolymerization technology with Hyosung TNC's expertise in advanced textile materials to expand access to circular polyester through textile-to-textile supply chains. Hyosung TNC will convert our Twist™ polyester resin into performance yarns under its regen™ brand portfolio, trusted by leading brands across fashion, activewear, and other textile markets. The relationship has been established for products from our Terrebonne facility and will be significantly expanded once our planned India Infinite Loop™ facility is operational.
Launch of Twist™
During the quarter ended August 31, 2025, the Company announced the launch of Twist™, a new branded circular polyester resin made entirely from textile waste. This product represents a strategic evolution of the Company's fiber-grade PET resin offering, now repositioned to serve the growing textile-to-textile recycling market. Twist™ utilizes the Company's patented depolymerization technology to break down polyester textile waste into base monomers, which are then purified and polymerized into virgin-quality resin that is chemically identical to traditional polyester while providing complete traceability from feedstock to final product. The Company is advancing discussions with apparel brands for offtake agreements from its planned India joint venture facility, where Twist™ will be produced alongside the Company's existing Loop™ branded products.
Human Capital
As of August 31, 2026, we had 37 employees of which 17 work in research and development, 12 in engineering and operations, and 8 in administrative functions.
Results of Operations
All monetary amounts are in thousands of U.S. dollars unless otherwise specified.
The following table summarizes our operating results for the three-month periods ended August 31, 2026 and 2025, in thousands of U.S. Dollars.
| Three months ended August 31, |
||||||||||||
| Change |
||||||||||||
| 2026 |
2025 |
favorable / (unfavorable) |
||||||||||
| Revenues |
||||||||||||
| Services |
117 | - | 117 | |||||||||
| Total revenues |
117 | - | 117 | |||||||||
| Cost of services |
||||||||||||
| Cost of services |
113 | - | (113 | ) | ||||||||
| Total cost of services |
113 | - | (113 | ) | ||||||||
| Expenses |
||||||||||||
| Research and development |
||||||||||||
| Employee compensation |
247 | 597 | 350 | |||||||||
| Stock-based compensation |
98 | 32 | (66 | ) | ||||||||
| Plant and laboratory operating expenses |
117 | 149 | 32 | |||||||||
| External engineering |
4 | 6 | 2 | |||||||||
| Other |
74 | 59 | (15 | ) | ||||||||
| Total research and development |
540 | 843 | 303 | |||||||||
| General and administrative |
||||||||||||
| Employee compensation |
342 | 423 | 81 | |||||||||
| Stock-based compensation |
331 | 248 | (83 | ) | ||||||||
| Professional fees |
416 | 612 | 196 | |||||||||
| Insurance |
111 | 423 | 312 | |||||||||
| Other |
278 | 165 | (113 | ) | ||||||||
| Total general and administrative |
1,478 | 1,871 | 393 | |||||||||
| Loss on equity accounted investment |
431 | 43 | (388 | ) | ||||||||
| Depreciation and amortization |
83 | 96 | 13 | |||||||||
| Interest and other financial expenses |
460 | 419 | (41 | ) | ||||||||
| Interest income |
(6 | ) | (70 | ) | (64 | ) | ||||||
| Foreign exchange loss (gain) |
6 | 2 | (4 | ) | ||||||||
| Total expenses |
3,105 | 3,204 | 99 | |||||||||
| Net loss |
$ | (2,988 | ) | $ | (3,204 | ) | $ | 216 | ||||
Second Quarter Ended August 31, 2026
Revenues
Revenues for the three-month period ended August 31, 2026, increased $117 to $117, as compared to $0 for the same period in 2025. The revenues of $117 for the three-month period ended August 31, 2026 resulted from engineering services provided to the India JV.
Cost of Services
Cost of Services for the three-month period ended August 31, 2026 increased $113 to $113 compared to $0 for the same period in 2025.
Research and Development
Research and development expense for the three-month period ended August 31, 2026, decreased $303 to $540, as compared to $843 for the same period in 2025. The decrease was primarily attributable to a $350 decrease in employee compensation expenses, a $32 decrease in plant and laboratory expenses, partially offset by a $66 increase in stock compensation.
General and administrative expenses
General and administrative expenses for the three-month period ended August 31, 2026, decreased $393 to $1,478, as compared to $1,871 for the same period in 2025. The decrease was primarily attributable to a $312 decrease in insurance expenses, a $196 decrease in professional fees, partially offset by a $113 increase in other miscellaneous expenses and $83 increase in stock compensation.
Interest and other financial expenses
Interest and other financial expenses increased by $41 for the three-month period ended August 31, 2026.
Net Loss
The net loss for the three-month period ended August 31, 2026, decreased $216 to $2,988, as compared to $3,204 for the same period in 2025. This decrease was primarily due to the decrease of $303 in research and development expenses, a decrease of $393 in general and administrative expenses. These decreases were partially offset by the increase of $388 in equity investment, decrease of $64 in interest income and increase of $41 in interest and other financial expenses.
Six Months Ended August 31, 2026
The following table summarizes our operating results for the six-month periods ended August 31, 2026 and 2025, in thousands of U.S. Dollars.
| Six months ended August 31, |
||||||||||||
| 2026 |
2025 |
Change |
||||||||||
| Revenues |
||||||||||||
| Products |
$ | - | $ | 8 | $ | (8 | ) | |||||
| Services |
296 | 244 | 52 | |||||||||
| Total revenues |
296 | 252 | 44 | |||||||||
| Cost of services |
||||||||||||
| Cost of services |
292 | 114 | (178 | ) | ||||||||
| Total cost of services |
292 | 114 | (178 | ) | ||||||||
| Expenses |
||||||||||||
| Research and development |
||||||||||||
| Employee compensation |
496 | 1,187 | 691 | |||||||||
| Stock-based compensation |
556 | 344 | (212 | ) | ||||||||
| Plant and laboratory operating expenses |
298 | 383 | 85 | |||||||||
| External engineering |
13 | 61 | 48 | |||||||||
| Other |
138 | 127 | (11 | ) | ||||||||
| Total research and development |
1,501 | 2,102 | 601 | |||||||||
| General and administrative |
||||||||||||
| Employee compensation |
730 | 992 | 262 | |||||||||
| Stock-based compensation |
852 | 311 | (541 | ) | ||||||||
| Professional fees |
659 | 974 | 315 | |||||||||
| Insurance |
266 | 876 | 610 | |||||||||
| Other |
545 | 366 | (179 | ) | ||||||||
| Total general and administrative |
3,052 | 3,519 | 467 | |||||||||
| Loss on equity accounted investment |
750 | 345 | (405 | ) | ||||||||
| Depreciation and amortization |
167 | 197 | 30 | |||||||||
| Interest and other financial expenses |
897 | 837 | (60 | ) | ||||||||
| Interest income |
(12 | ) | (170 | ) | (158 | ) | ||||||
| Foreign exchange loss (gain) |
21 | (41 | ) | (62 | ) | |||||||
| Total expenses |
6,668 | 6,903 | 235 | |||||||||
| Net loss |
$ | (6,372 | ) | $ | (6,651 | ) | $ | 279 | ||||
Revenues
Revenues for the six-month period ended August 31, 2026, increased $44 to $296, as compared to $252 for the same period in 2025. The revenues of $296 for the six-month period ended August 31, 2026 resulted from engineering services provided to the India JV. The revenues of $252 for the six-month period ended August 31, 2025 resulted from engineering services provided to the India JV for $244 and sales of Loop™ PET resin for $8.
Cost of Services
Cost of Services for the six-month period ended August 31, 2026 increased $178 to $292 compared to $114 for the same period in 2025.
Research and Development
Research and development expense for the six-month period ended August 31, 2026, decreased $601 to $1,501, as compared to $2,102 for the same period in 2025. The decrease was primarily attributable to a $691 decrease in employee compensation expenses, a $48 decrease in external engineering expenses, a $85 decrease in plant and laboratory expenses, partially offset by a $212 increase in stock compensation.
General and administrative expenses
General and administrative expenses for the six-month period ended August 31, 2026, decreased $467 to $3,052, as compared to $3,519 for the same period in 2025. The decrease was primarily attributable to a $610 decrease in insurance expenses, a $315 decrease in professional fees, a $262 decrease in employee compensation, partially offset by a $541 increase in stock compensation and a $179 increase in other miscellaneous expenses.
Interest and other financial expenses
Interest and other financial expenses increased by $60 for the six-month period ended August 31, 2026.
Net Loss
The net loss for the six-month period ended August 31, 2026, decreased $279 to $6,372, as compared to $6,651 for the same period in 2025. This decrease was primarily due to the decrease of $601 in research and development expenses, a decrease of $467 in general and administrative expenses. These decreases were partially offset by the decrease of $158 in interest income, increase of $405 in equity investment, increase of $178 in cost of services and increase of $60 in interest and other financial expenses.
Recent Developments
On September 17, 2026, our Board of Directors formed a Strategic Alternatives Committee to evaluate our capital needs and strategic and financial alternatives. The Committee’s immediate priority is to support management in securing our required capital contribution and the broader project financing for the planned India joint venture. The Committee will also evaluate other alternatives, including strategic investments, licensing and commercial partnerships, regional joint ventures, business combinations, corporate-structure alternatives, a potential sale, merger or going-private transaction, and other initiatives to enhance shareholder value. We have not made any decision regarding any specific alternative, no timetable has been established for completing the review, and there can be no assurance that the review will result in any transaction or other outcome.
LIQUIDITY AND CAPITAL RESOURCES
All monetary amounts are in thousands of U.S. dollars unless otherwise specified.
Since its inception, the Company has been in the pre-commercialization stage with no 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 least twelve months from the 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 ASC 205-40 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, 2026 of $836, together with the $1,113 available under its credit facility, will not be sufficient to fund the Company's ongoing operations, obligations and commitments for the next twelve months from the issuance date 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 is no 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 do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.
Investissement Québec financing facility
We have a long-term debt obligation to Investissement Québec in connection with a financing facility (the “Financing Facility”) for the expansion of the Terrebonne Facility up to a maximum of $3,390. We received the first disbursement in the amount of $1,628 on February 21, 2020 and the second disbursement in the amount of $1,762 on August 26, 2021. The loan can be repaid at any time by us without penalty. The loan’s interest rate was initially set at 2.36% and there was a 36-month moratorium on both capital and interest repayments as of the first disbursement date. Under the original terms of the Financing Facility, at the end of the 36-month moratorium, capital and interest was repayable in 84 monthly installments. There is no remaining amount available for disbursement under the Financing Facility.
On November 21, 2022, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “Financing Facility Amendment”). As per the Financing Facility Amendment, a total of $37 (CDN $50) of the principal amount was repayable in monthly installments in the fiscal year ended February 28, 2025, with the remainder of the principal amount being repayable in 72 monthly installments.
On February 28, 2024, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “Second Financing Facility Amendment”). As per the Second Financing Facility Amendment, a total of $74 (CDN $100) of the principal amount was repayable in monthly installments in the fiscal year ended February 28, 2026, with the remainder of the principal amount being repayable in 60 monthly installments. Pursuant to the Second Financing Facility Amendment the interest rate of the Financing Facility was increased from 2.36% to 3.36%.
On February 5, 2025, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “Third Financing Facility Amendment”). As per the Third Financing Facility Amendment, total annual principal repayments in monthly installments are of $599 for the fiscal year ending February 28, 2027 and $834 for the fiscal year ending February 28, 2028, with the remainder of the principal amount being repayable in 24 monthly installments. Pursuant to the Third Financing Facility Amendment the interest rate of the Financing Facility was increased from 3.36% to 4.36%.
37
Under the original terms of the Financing Facility, the principal amount was repayable in 84 monthly installments beginning in March of 2023. The amendments do not modify the repayment terms of accrued interest or any of the other terms of the Financing Facility that are not mentioned above. The amendments did not meet the criteria of ASC 470, Debt for an extinguishment of debt as the amendments did not substantially modify the terms of the Financing Facility. The Company therefore applied modification accounting and no immediate gain or loss was recognized related to the amendments.
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.
Credit facility from a Canadian bank
On July 26, 2022, Loop Canada, Inc., a wholly-owned subsidiary of the Company, entered into an Operating Credit Facility (the “Credit Facility”) with a Canadian bank. The Credit Facility allows for borrowings of up to $2,524 (CDN $3,500) in aggregate principal amount. The Credit Facility is secured by the Company’s Terrebonne, Québec property. All borrowings under the Credit Facility will 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 under the Credit Facility.
At-the-Market Offering
During the three months ended August 31, 2026, the Company issued and sold an aggregate of 428,203 shares of its common stock pursuant to its ATM Equity Offering program for aggregate gross proceeds of approximately $466. After deducting sales agent commissions and other offering expenses totaling approximately $14, the Company received net proceeds of $452 from such sales. The shares were sold at prevailing market prices at the time of sale, with an average selling price of $1.09 per share. The net proceeds from these equity transactions were used for general corporate purposes and to strengthen the Company's working capital position. The Company may, from time to time, continue to utilize its ATM Equity Offering program to raise additional capital, subject to market conditions and the Company's capital needs, though there can be no assurance as to if or when any additional sales may occur under the program.
Flow of Funds
Summary of Cash Flows
A summary of cash flows for the six-month ended August 31, 2026 and 2025 was as follows, in thousands of U.S. Dollars:
| Six Months Ended August 31, |
||||||||
| 2026 |
2025 |
|||||||
| Net cash used in operating activities |
$ | (2,394 | ) | $ | (5,604 | ) | ||
| Net cash used in investing activities |
(819 | ) | (133 | ) | ||||
| Net cash provided by (used in) financing activities |
1,731 | 51 | ||||||
| Effect of exchange rate changes on cash |
(38 | ) | 23 | |||||
| Net decrease in cash |
$ | (1,520 | ) | $ | (5,663 | ) | ||
Net Cash Used in Operating Activities
During the six-month period ended August 31, 2026, we used $2,394 in operations compared to $5,604 during the six-month period ended August 31, 2025. As discussed above in the Results of Operations, the decrease was mainly due to a decrease in operating expenses in addition to decreased general and administrative expenses.
Net Cash Used in Investing Activities
During the six-month ended August 31, 2026, we used $819 in investing activities compared to $133 during the six-month period ended August 31, 2025. During the six-month period ended August 31, 2026, we made investments in joint venture of $737, as compared to nil for the same period in 2025 and investment in intangible assets of $82, as compared to $133 for the same period in 2025, particularly to file patents for the Infinite Loop™ technology in the United States and around the world.
Net Cash Provided by (Used in) Financing Activities
During the six-month ended August 31, 2026, we borrowed $1,411 under Credit Facility, we repaid $132 of long-term debt and received net proceeds from our ATM Equity Offering of $452. During the six-month ended August 31, 2025, we repaid $136 of long-term debt and received net proceeds from our ATM Equity Offering of $187.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES
Management's Evaluation of our Disclosure Controls and Procedures
A. Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
As of the end of the period covered by this Quarterly Report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act), pursuant to Rule 13a-15(b) of the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of August 31, 2026.
B. Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended August 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
SEC Investigation
As previously disclosed, we received a subpoena from the SEC in October 2020 requesting certain information from us, including information regarding testing, testing results and details of results from our GEN I and GEN II technologies, and certain of our partnerships and agreements. In March 2022, we received a second subpoena requesting additional information, including information concerning our reverse-merger in 2015, and communications with certain individuals and entities. There have been no additional information requests from the SEC relating to the Company's business or technology.
The SEC informed us that its investigation does not mean that the SEC has concluded that anyone has violated the law and that the investigation does not mean that the SEC has a negative opinion of us. We cannot predict when this matter will be resolved or what, if any, action the SEC may take following the conclusion of the investigation.
On September 30, 2022, the SEC filed a complaint (the “SEC complaint”) against several named defendants (“Defendants”), and also identified as a relief defendant Daniel Solomita, our Chief Executive Officer. The SEC complaint does not allege wrongdoing by the Company or Mr. Solomita. The SEC complaint identifies Mr. Solomita and an entity he owns as relief defendants because they purportedly received monies from the Defendants in 2015 that the SEC alleges were derived from the Defendants' fraud. The SEC complaint does not allege that Mr. Solomita was aware of the alleged wrongdoing by the Defendants and does not allege that he was aware that any alleged monies received were derived from fraud.
Litigation
From time to time, we may become involved in various lawsuits and legal proceedings or investigations which arise in the ordinary course of business. Except as noted above, we are not presently a party to any legal proceedings, government actions, administrative actions, investigations or claims that are pending against us or involve us that, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business, financial condition or operating results. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
It is possible that we may expend financial and managerial resources in the defense of our intellectual property rights in the future if we believe that our rights have been violated. It is also possible that we may expend financial and managerial resources to defend against claims that our products and services infringe upon the intellectual property rights of third parties.
We are subject to various risks and uncertainties in the course of our business. Risk factors relating to us are set forth under “Risk Factors” in our 2026 Annual Report. Except as set forth below, there have been no material changes to the risk factors disclosed in our 2026 Annual Report during the three months ended August 31, 2026. The risk factor set forth below updates, and should be read together with, the risk factors described in our 2026 Annual Report.
We have received notices from Nasdaq that we are not in compliance with the minimum market value of listed securities and minimum bid price requirements for continued listing on The Nasdaq Global Market. If we are unable to regain compliance or otherwise maintain a Nasdaq listing, the liquidity and market price of our common stock and our ability to raise capital could be adversely affected.
Our common stock is currently listed on The Nasdaq Global Market under the symbol “LOOP.” Continued listing on The Nasdaq Global Market requires us to satisfy certain listing standards, including a minimum market value of listed securities (“MVLS”) and a minimum bid price.
On July 24, 2026, the Company received a notice from Nasdaq indicating that it was not in compliance with the minimum market value of listed securities requirement because its market value of listed securities had remained below $50 million for 30 consecutive business days. The Company has until January 20, 2027 to regain compliance.
On July 27, 2026, the Company received a separate notice from Nasdaq indicating that it was not in compliance with the minimum bid price requirement because the closing bid price of its common stock had remained below $1.00 for 30 consecutive business days. The Company has until January 25, 2027 to regain compliance.
The notices have no immediate effect on the listing or trading of our common stock. However, there can be no assurance that we will regain compliance with either requirement within the applicable compliance period. If we do not regain compliance with the MVLS requirement or the minimum bid price requirement timely, Nasdaq will notify us that our securities are subject to delisting.
We intend to monitor our MVLS and the closing bid price of our common stock and to consider available options to regain compliance. As an alternative to regaining compliance with the MVLS requirement, we may apply to transfer the listing of our common stock to The Nasdaq Capital Market. If we do not regain compliance with the minimum bid price requirement during the initial compliance period, we may be eligible for additional time, subject to additional requirements. Any transfer to The Nasdaq Capital Market would be subject to Nasdaq approval and to our satisfying that market’s applicable listing requirements, and any additional compliance period for the minimum bid price requirement may be conditioned on, among other things, our ability to effect a reverse stock split if necessary. There can be no assurance that any of these alternatives will be available to us or will enable us to regain or maintain compliance with applicable Nasdaq listing requirements.
If our common stock were ultimately delisted from Nasdaq, it could reduce the liquidity and market price of our common stock, reduce the number of investors willing to hold or acquire our common stock, and make it more difficult for us to raise additional capital, which could adversely affect our business and financial condition.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
During the three months ended August 31, 2026, director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
The following Exhibits, as required by Item 601 of Regulation SK, are attached or incorporated by reference, as stated below.
Exhibit Index
| Incorporated by Reference |
||||||||||
| Number |
Description |
Form |
File No. |
Filing Date |
Exhibit No. |
|||||
| 10-K |
001-38301 |
May 29, 2024 |
3.1 |
|||||||
| Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock. | 8-K |
001-38301 |
December 26, 2024 | 3.1 |
||||||
| 3.3 | By-laws, as amended to date | 8-K | 001-38301 | April 10, 2018 | 3.1 | |||||
| 10.1* | License Agreement, effective as of February 4, 2026, by and among Loop Industries, Inc., Ester Loop Infinite Technologies Private Limited and Ester Industries Ltd. | Filed herewith | ||||||||
| 10.2* | Marketing Agreement, effective as of February 4, 2026, by and among Loop Industries, Inc., Ester Loop Infinite Technologies Private Limited and Ester Industries Ltd. | Filed herewith | ||||||||
| Filed herewith |
||||||||||
| Filed herewith |
||||||||||
| Furnished herewith |
||||||||||
| Furnished herewith |
||||||||||
| 101.INS |
Inline XBRL Instance Document |
Filed herewith |
||||||||
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
Filed herewith |
||||||||
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
Filed herewith |
||||||||
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
Filed herewith |
||||||||
| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
Filed herewith |
||||||||
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
Filed herewith |
||||||||
| 104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Filed herewith |
||||||||
* Portions of this document (indicated by “[***]”) have been omitted because such information is not material and is the type of information that the registrant treats as private or confidential.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: October 15, 2026 |
By: |
/s/ Daniel Solomita |
|
| Name: |
Daniel Solomita |
||
| Title: |
President and Chief Executive Officer, and Director (Principal Executive Officer) |
||
| Date: October 15, 2026 |
By: |
/s/ Spencer Hart |
|
| Name: |
Spencer Hart |
||
| Title: |
Chief Financial Officer and Director (Principal financial officer and principal accounting officer) |
Exhibit 10.1
CERTAIN INFORMATION IDENTIFIED BY [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
MARKETING AGREEMENT
This Marketing Agreement (this “Agreement”) is made and entered into as of 4th February 2026 (the “Effective Date”), between
Loop Industries, Inc., a Nevada corporation with a principal place of business at 480 Fernand-Poitras, Terrebonne, Quebec, Canada (“Loop”) and
Ester Industries Limited, a public limited company incorporated under the Indian Companies Act, 1956, with corporate office at Plot No.-11-A, Infocity-1, Sector 33–34, Gurgaon-122001, Haryana, India (“Ester”) and
Ester Loop Infinite Technologies Private Limited, a private limited company incorporated under the provisions of the Companies Act, 2013, bearing Corporate Identification Number U22208HR2024PTC123517, having its registered office at Plot No.11 Block A, Infocity 1, Sector 34 Gurgaon 122001, Haryana, India (“JV Company”)
Each of Loop, Ester and JV Company is a “Party”; together they are the “Parties”
BACKGROUND
|
A. |
The Loop Parties (as defined in the License Agreement) have developed a proprietary depolymerization process, producing dimethyl terephthalate (rDMT) and/or mono ethylene glycol (rMEG) from PET and/or polyester, that can be used for production of specialty polymers. |
|
B. |
Loop and Ester Industries Limited have entered into a Joint Venture Agreement dated May 1st, 2024 (as amended, supplemented, or otherwise modified from time to time, the “Joint Venture Agreement”) to form the JV Company for the purpose of conducting the Business (as defined in the Joint Venture Agreement), and are entering into this Agreement pursuant to the Joint Venture Agreement and concurrently with the formation of the JV Company. |
|
C. |
Concurrently with the execution of this Agreement, the JV Company and Loop are entering into a license agreement (as amended, supplemented, or otherwise modified from time to time, the “License Agreement”) to govern the licensing arrangements necessary for the JV Company to develop, construct, own and operate Licensed Facilities to, among other things, manufacture Licensed Products for sale throughout the Sales Territory (to the extent applicable). |
|
D. |
In connection with the Business, Loop retains its sole and exclusive right to enter into Loop Sales Contracts for the supply of Licensed Products to Authorized Customers, subject to JV Company’s rights set forth in this Agreement. |
|
E. |
Loop desires to assign rights and obligations with respect to the fulfillment of a specific volume and delivery of Licensed Product in the Sales Territory, under Loop Sales Contracts to JV Company, and JV Company desires to manufacture and fulfill such Licensed Product supply requirements, as determined by the Parties, all in accordance with the terms and conditions set forth in this Agreement. |
Now, therefore, in consideration of the mutual covenants and premises contained in this Agreement, and other good and valuable consideration, the Parties agree as follows.
ARTICLE 1
DEFINITIONS
|
1.1 |
Capitalized terms used but not defined in this Agreement have the meanings given to them in the License Agreement. |
|
(a) |
“Acceptance Notice” has the meaning set forth in Section 2.4. |
|
(b) |
“Affiliate” means, with respect to a Party, any corporation or other entity that is directly or indirectly controlling, controlled by or under the common control with such Party. For the purpose of this definition, “control” means the direct or indirect ownership of at least fifty percent (50%) of the outstanding shares or other voting rights of the subject entity to elect directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority), or if not meeting the preceding, any entity owned or controlled by or owning or controlling at the maximum control or ownership right permitted in the country where such entity exists; it being clarified that the JV Company will not be considered as an ‘Affiliate’ of either Ester or Loop for the purposes of this Agreement. |
|
(c) |
“Alternate Producer” means any Loop Party or any third party, wherever located, which has sufficient ownership or license rights of Licensed Subject Matters to manufacture Licensed Products. |
|
(d) |
“Assignment” has the meaning set forth in Section 2.5. |
|
(e) |
“Assignment Date” has the meaning set forth in Section 2.5. |
|
(f) |
“Authorized Customer” means a Loop Party customer that is a party to a Transferred Contract, solely with respect to the Licensed Product quantities covered by the Transferred Contract. |
|
(g) |
“Business Day” means any day, other than a Saturday, Sunday or legal holiday, on which banks in Montreal, Canada or in New Delhi, India are open for the conduct of their commercial banking business. |
|
(h) |
“Confidential Information” has the meaning set forth in Section 4.1. |
|
(i) |
“Fees Record” has the meaning set forth in Section 2.9(d). |
|
(j) |
“JV Board” means the board of directors of the JV Company appointed in accordance with the terms of the Joint Venture Agreement. |
|
(k) |
“Late Payment” has the meaning set forth in Section 5.3. |
|
(l) |
“Loop Representatives” has the meaning set forth in Section 3.1. |
|
(m) |
“Loop Sales Contract” means any contract between a Loop Party and a third-party customer for the Loop Party’s sale to the customer, and the customer’s purchase from the Loop Party, of a specified quantity of Licensed Products to be manufactured and/or sold within the Sales Territory. |
|
(n) |
“Non-Payment Notice” has the meaning set forth in Section 5.3. |
|
(o) |
“Marketing Services Fees” has the meaning set forth in Section 2.9. |
|
(p) |
“Net Sales” means the gross amount actually collected by JV Company on Sales by the JV Company of Licensed Products, determined in accordance with the Ind AS accounting standards and principles, less the following (to the extent not already subtracted from the amounts billed or invoiced): (i) customary trade, quantity, or cash discounts and commissions to non-affiliated brokers or agents to the extent actually allowed and taken; (ii) amounts repaid or credited by reason of rejection or return; (iii) to the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of a Licensed Product which is paid by or on behalf of the JV Company (net of any reimbursements of any such taxes or other governmental charges to the applicable JV Company); and (iv) outbound transportation costs prepaid or allowed and costs of insurance in transit (net of any reimbursements of any such costs from customers to the JV Company). In any transfers of Licensed Products between the JV Company, any of its Subsidiaries, Loop, and/or Ester, Net Sales shall be calculated based on the final sale of the Licensed Product. In the event that the JV Company receives non-monetary consideration for any Licensed Products, Net Sales shall be calculated based on the fair market value of such consideration. |
|
(q) |
“Proposed Contract” has the meaning set forth in Section 2.3. |
|
(r) |
“Proposed Contract Notice” has the meaning set forth in Section 2.3. |
|
(s) |
“Rejection Notice” has the meaning set forth in Section 2.4. |
|
(t) |
“Representatives” has the meaning set forth in Section 3.1. |
|
(u) |
“Review Period” has the meaning set forth in Section 2.4. |
|
(v) |
“Sales Territory” shall mean the entire world. |
|
(w) |
“Specialty Polymer Products” has the meaning set forth in the License Agreement. |
|
(x) |
“Transferred Contract” means any Proposed Contract that is accepted by the JV Board as a Transferred Contract pursuant to Section 2.4. |
ARTICLE 2
LICENSED PRODUCTS SALES
|
2.1 |
Exclusive Appointment. The JV Company hereby appoints Loop (and any other Loop Party designated by Loop from time to time in its sole discretion, but with prior intimation to the JV Company) as their exclusive sales, marketing and promotional representative, for the purpose of selling Licensed Products produced by JV Company to Authorized Customers pursuant to Transferred Contracts. Loop hereby accepts such appointment on its behalf and on behalf of the Loop Parties. Furthermore, Ester, the JV Company hereby undertake not to, and undertake to cause their respective Subsidiaries not to, directly or indirectly, market or sell any Licensed Products or any products bearing Loop Marks (including Loop Logo) to any Person other than to Authorized Customers pursuant to Transferred Contracts that have been negotiated by the applicable Loop Party and approved by the JV Board in accordance with the terms hereof. |
|
2.2 |
Loop Sales Contracts. As between the Parties, Loop (and any other Loop Party designated by Loop from time to time in its sole discretion) shall have the sole and exclusive right to enter into agreements for the sale of Licensed Products and the exclusive right to set the price and quantity to be supplied under each Loop Sales Contract and other terms and conditions as determined by Loop in its commercially reasonable discretion. The JV Board may from time to time prescribe a minimum criteria for Loop Sales Contract that are submitted to the JV Board for its consideration. |
|
2.3 |
Proposed Contracts and Proposed Contract Notice. Loop shall give JV Company prompt written notice, in the form of Exhibit A attached to this Agreement, of each Loop Sales Contract, which is eligible to be assigned in whole or in part to JV Company, as determined by Loop acting reasonably, into which it enters with its customers (each such notice, a “Proposed Contract Notice”). Subject to the foregoing, along with each Proposed Contract Notice, Loop shall deliver to JV Company a complete copy of the executed Loop Sales Contract (the “Proposed Contract”). The Proposed Contract Notice shall contain all other information necessary to allow the JV Board to review the Proposed Contract. |
|
2.4 |
JV Board Approval of Proposed Contracts. Prior to the transfer of each Proposed Contract (or any portion thereof) and as a condition precedent to the assignment by the applicable Loop Party and the assumption by the JV Company of the right and obligations thereunder, each Proposed Contract shall be approved by the JV Board which shall consider same in good faith. Upon receipt of a Proposed Contract Notice, the JV Board will have the right to review and determine whether to accept or reject the Proposed Contract within ten (10) days following JV Company’s receipt of the Proposed Contract Notice (the “Review Period”). The JV Board shall provide Loop with a written acceptance or rejection of each Proposed Contract (“Acceptance Notice” or “Rejection Notice,” as applicable) within the Review Period, which acceptance or rejection shall be in the JV Board’s sole discretion. If the JV Board does not provide an Acceptance Notice or Rejection Notice to Loop within the Review Period, the Proposed Contract will be deemed rejected by the JV Board. Loop shall be entitled to present any rejected Proposed Contract (whether deemed rejected or by receipt of a Rejection Notice) to an Alternate Producer on the same terms and conditions as those presented to JV Company and, for the avoidance of any doubt, Loop shall not be in breach of any covenants contained in the Joint Venture Agreement or the License Agreement, as applicable, if it sells, within the Sales Territory, Licensed Products manufactured by an Alternate Producer in accordance with the provisions of this Section 2.4. If JV Company provides an Acceptance Notice to Loop with respect to a Proposed Contract during the Review Period, that Proposed Contract shall become a Transferred Contract on the date JV Company provides that Acceptance Notice. |
|
2.5 |
Assignment of Transferred Contracts. Promptly after the date a Proposed Contract becomes a Transferred Contract (the “Assignment Date”), Loop and JV Company shall execute and deliver an assignment and assumption agreement substantially in the form of Exhibit B attached to this Agreement (“Assignment”) pursuant to which Loop shall assign to JV Company all or part of Loop’s right, title, and interest in the Transferred Contract and JV Company shall assume all such rights and obligations. Without diminishing JV Company’s obligations to perform under a Transferred Contract pursuant to each applicable assignment and assumption agreement, JV Company shall perform all of its assumed obligations under such Transferred Contract. |
|
2.6 |
Customer Interface and Contract Fulfillment. Following the Assignment Date with respect to a Transferred Contract, Loop shall at all times remain the primary point of contact with the applicable Authorized Customer (on behalf of all Parties hereto) and JV Company shall act as contact for administrative functions arising from the relevant Transferred Contract with the applicable Authorized Customer. Subject to applicable Law, Loop shall use commercially reasonable efforts to invite the JV Company for social and/or promotional events (including attendance of exhibition events that may be conducted by Loop or that may be conducted in collaboration with any third-party) related to the JV products in the Sales Territory. Furthermore, JV Company shall, (i) fulfill each of JV Company’s obligations under and with respect to each Transferred Contract, including with respect to order processing, contract fulfillment, shipping, distributing, and other customer service obligations, (ii) invoice Authorized Customers for all sales of Licensed Products under all Transferred Contracts, and (iii) use commercially reasonable efforts to collect the amounts due under such invoices. At JV Company’s request from time to time, Loop shall provide reasonable assistance to JV Company in such invoicing and collection process without cost. JV Company shall be permitted to correspond with Authorized Customers in the ordinary course of business, only to the extent necessary to fulfill Transferred Contracts. |
|
2.7 |
Amendments to Transferred Contract. Loop (and any other Loop Party designated by Loop from time to time in its sole discretion) shall subject to the prior approval of the JV Board or upon the written request of the JV Board, have the sole and exclusive right to renegotiate, terminate, amend, modify or otherwise alter or revise any Transferred Contract. Furthermore, the Parties agree that JV Company may request from Loop to renegotiate, terminate, amend, modify or otherwise alter or revise any Transferred Contract, which request Loop shall reasonably consider. |
|
2.8 |
Product Branding and Communications. The JV Company shall comply with the brand guidelines relating to Loop Logos and Loop Marks and any update thereof communicated in writing to the JV Company by Loop from time to time. |
|
(a) |
Corporate Branding. Loop shall be entitled to develop and determine the names, logos and other elements of the Loop corporate branding (including all Loop Marks) to be used in connection with the marketing and promotion of Licensed Products as such Licensed Products are offered for sale, sold and/or distributed to any segment of Authorized Customers. |
|
(b) |
Product Branding. The JV Company shall (i) include the Loop Logo and any other applicable Loop Marks on any product packaging for the Licensed Products intended for delivery to consumers as set forth in the applicable Transferred Contract and (ii) comply at all times with Sections 4.1, 4.2, and 4.3 of the License Agreement. |
|
(c) |
External Communications. Loop shall be entitled to approve all external communications and marketing promotional materials related to the Licensed Products, if any, prior to the issuance or use of any such external communications and marketing promotional materials. |
|
(d) |
Bulk Packaging and Containers. Subject to the foregoing provisions of this Section 2.8, the product bags, containers, or other bulk packaging materials may carry the name of JV Company. |
|
2.9 |
Fees. The fees (the “Marketing Services Fees”) payable by the JV Company to Loop for (i) the sales, marketing and promotional services rendered by Loop pursuant to this Agreement; and (ii) the assignment by Loop to JV Company all or part of Loop’s right, title, and interest in the Transferred Contract are set forth below. |
|
(a) |
Marketing Services Fees. The Marketing Services Fees shall be calculated as a percentage of the Net Sales of Licensed Products under Transferred Contracts in each applicable fiscal year. As such, the Marketing Services Fees shall be equal to: (i) the Aggregate Net Sales of Licensed Products in the Applicable Fiscal Year; multiplied by (ii) the corresponding Marketing Service Fees percentage (set forth in the table below), being understood however that the Marketing Services Fees shall never be lower than the corresponding Floor (set forth in the table below), nor higher than the corresponding Cap (set forth in the table below). For the avoidance of doubt, if (i) the Marketing Services Fees calculated in accordance with this Section 2.9(a) are lower than the applicable Floor, the Marketing Services Fees shall be deemed to be equal to the Floor; and (ii) the Marketing Services Fees calculated in accordance with this Section 2.9(a) are greater than the applicable Cap, the Marketing Services Fees shall be deemed to be equal to the Cap. The applicable Marketing Services Fees percentage is applied on the total Net Sales for the applicable fiscal year and shall not be applied on a marginal basis nor as a bracket. |
|
Net Sales of Licensed Products in the Applicable Fiscal Year (USD) |
Marketing Service Fees percentage |
Floor (USD) |
Cap (USD) |
|
0 to 500,000,000 |
[***]% |
N.A. |
N.A. |
|
500,000,001 to 1,000,000,000 |
[***]% |
15,000,000 |
25,000,000 |
|
1,000,000,001 to 2,000,000,000 |
[***]% |
25,000,000 |
40,000,000 |
|
2,000,000,001 and up |
The Parties will negotiate in good faith. |
N.A. |
N.A. |
|
|
For illustration purposes only, (i) if the Net Sales in the applicable fiscal year are USD 1,100,000,000, the Marketing Service Fees shall be equal to USD [***] and shall be calculated as follow : 1,100,000,000 * [***]% =[***], which amount is lower that the corresponding Floor, in which case the Marketing Service Fees are equal to the Floor; or (ii) if the Net Sales in the applicable fiscal year are USD 1,700,000,000, the Marketing Service Fees shall be equal to USD [***]and shall be calculated as follow : 1,700,000,000 * [***]% =[***]. |
|
(b) |
Commencement of Fees Payments. The JV Company’s obligation to make Marketing Services Fees payments, as set forth in this Section 2.9, with respect to any Transferred Contract shall commence on the realization of the payments under invoices for such Transferred Contract. It is hereby clarified that the Marketing Services Fees will be paid to Loop by the JV Company after making statutory deductions under applicable Law. |
|
(c) |
Payment of Marketing Services Fees. The JV Company shall make any Marketing Services Fees payments applicable to its Transferred Contracts and owing under this Section 2.9 no later than the earlier of (i) with respect to the first, second, and third fiscal quarters of the JV Company’s fiscal year, forty-five (45) days following the end of the applicable fiscal quarter and (ii) with respect to the fourth fiscal quarter of the JV Company’s fiscal year, promptly following the delivery by the JV Company’s auditor of the audited annual financial statements of the JV Company but no later than ninety (90) days following the end of such fourth fiscal quarter (the “Payment Date”). |
|
(d) |
Fees Records and Audits. The JV Parties shall maintain during the term of this Agreement and for two (2) years thereafter all documents, books, and records that are necessary for or otherwise relate to the calculation of fees hereunder (“Fees Records”) and shall make such Fees Records available for examination by Loop during normal business hours. Loop shall have the option to engage, at its own expense, a reputable independent certified public accountant (from one of the “Big Four” accounting firms provided that such Big Four is not the auditor of any of the Loop Parties) to examine, in consultation with the JV Company and its auditor, the Fees Records to determine the correctness of any payment of Marketing Services Fees hereunder made by the JV Company. If any audit performed under this Section indicates that any payment due hereunder was underpaid, the JV Company shall promptly pay the amount of any underpayment. If any audit performed under this Section indicates that any payment due hereunder was overpaid, Loop shall promptly credit to the JV Company the amount of any overpayment, which credit shall be applied against future payments made under Section 2.9(c). If any audit performed under this Section indicates that any payment hereunder was in error to Loop’s detriment by more than five percent (5%) for any fiscal year of the JV Company, the JV Company shall pay the cost of the audit. |
|
(e) |
Exchange Conversion: For the purposes of determination of Net Sales for a Fiscal Year provided in the table above, and consequently the Marketing Services Fee, the INR to USD conversion rate shall be the average of the applicable reference rate available at https://www.fbil.org.in/#/home, for the relevant Fiscal Year. |
|
2.10 |
Equitable Treatment. Subject to applicable Laws, including anti-trust laws, and other exceptions set forth in this Section, Loop shall ensure that the terms and conditions of Transferred Contracts will be substantially at par with such contracts entered by Loop with other customers of Loop including Alternate Producers or other joint ventures/Affiliates of Loop. Further, Loop shall ensure there shall be equitable treatment given to JV Company with other production facilities of Loop and/or its other joint ventures globally including Alternate Producers and Loop shall ensure volume distribution and suggest pricing between all of Loop’s production facilities and other joint ventures equitably. The foregoing shall at all-time be subject to (i) specific requests from Loop customers which JV Company may not reasonably fulfill, including without limitation, origin or location of production facility and/or feedstock, quantity, quality, product specification, or otherwise, (ii) effect on pricing associated with specific requests from customers, and (iii) any local regulation or restriction applicable in the jurisdiction of the relevant Loop customer. |
ARTICLE 3
INDEMNITY AND LIMITATION OF LIABILITY
|
3.1 |
INDEMNITY AND LIMITATION OF LIABILITY. |
|
(a) |
Each Party agrees to indemnify, protect, defend and hold harmless the other Party and its officers, directors, employees, agents, vendors, successors, assignees and representatives (“Representatives”) from and against any and all costs, direct losses, damages and liabilities (including reasonable legal fees), arising out of or in connection with any claim, action, or proceeding, including any third party claim which in any way may result from or arising in any manner out of: (i) its breach of its representations, warranties, covenants, terms and conditions of this Agreement or contained in a Transferred Contract; (ii) any claim or action in relation to any unauthorized use/disclosure of the Confidential Information of the disclosing Party; and (iii) any violation of applicable Laws. |
|
(b) |
Notwithstanding Clause 3.1(a) above, the JV Company agrees to indemnify, protect, defend and hold harmless Loop and its officers, directors, employees, agents, vendors, successors, assignees and representatives (“Loop Representatives”) from and against any and all costs, direct losses, damages and liabilities (including reasonable legal fees), arising out of or in connection with any claim, action, or proceeding, including any third party claim which may result from or arise in any way out of Loop's obligations under this Agreement or during the provision of the marketing services by Loop under this Agreement. It being understood that JV Company shall not be liable to any of the Loop Representatives as a result (i) of acts or omissions attributable to any of the Loop Representatives, and (ii) fraud, willful misconduct or gross negligence of any Loop Representative. Loop shall perform (and caused to be performed) all reasonable actions to avoid or mitigate any losses which it may suffer as a consequence of any event or circumstance likely to give rise to a claim of indemnity under this Agreement. |
|
(c) |
IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER UNDER THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL, SPECIAL, INCIDENTAL, EXEMPLARY, STATUTORY, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT. |
|
(d) |
THE TOTAL CUMULATIVE LIABILITY OF A PARTY UNDER THIS AGREEMENT, IN ALL CIRCUMSTANCES AND REGARDLESS OF THE THEORY OF RECOVERY, SHALL BE LIMITED TO THE AMOUNT OF MARKETING SERVICE FEES PAID/RECEIVED BY THE RELEVANT PARTY. |
|
(e) |
IT IS HEREBY CLARIFIED THAT THE JV COMPANY SHALL NOT HAVE ANY LIABILITY TO ANY LOOP PARTY WITH RESPECT TO ANY PROPOSED CONTRACT THAT DOES NOT BECOME A TRANSFERRED CONTRACT AS PROVIDED IN SECTION 2.4. NOTWITHSTANDING THE FOREGOING, NONE OF THE FOREGOING LIMITATIONS OF LIABILITY SET FORTH IN THIS SECTION 3.1 SHALL BE AVAILABLE TO EITHER PARTY WITH RESPECT TO A BREACH OF ARTICLE 4, CONFIDENTIAL INFORMATION, OR FOR CLAIMS TO THE EXTENT THEY ARISE OUT OF A PARTY’S GROSS NEGLIGENCE, FRAUD, OR WILLFUL MISCONDUCT. |
ARTICLE 4
CONFIDENTIAL INFORMATION
|
4.1 |
Confidential Information. The term “Confidential Information” means any non-public information of a Party, its Affiliates or their respective businesses, disclosed by one Party to the other (i) prior to the date of this Agreement, or (ii) pursuant to this Agreement, in each case which is in written, graphic, machine readable or other tangible form and is marked “Confidential”, “Proprietary” or in some other manner to indicate its confidential nature. Confidential Information may also include oral information disclosed by one Party to the other pursuant to this Agreement, provided that such information is designated as confidential at the time of disclosure and reduced to a written summary by the disclosing party, within thirty (30) days after its oral disclosure, which is marked in a manner to indicate its confidential nature and delivered to the receiving party. |
|
4.2 |
Obligation. Each Party shall treat as confidential (as set forth herein) all Confidential Information of the other Party and shall not use such Confidential Information except as expressly permitted by this Agreement or as otherwise authorized in writing by the disclosing party. Each Party shall implement reasonable procedures to prohibit the unauthorized disclosure or misuse of the other Party’s Confidential Information and shall not disclose such Confidential Information to any third party except as may be necessary in connection with the rights and obligations of such Party under this Agreement, and subject to confidentiality obligations similar to those set forth in this Article 4. Each of the Parties shall use at least the same procedures and degree of care that it uses to prevent the disclosure of its own confidential information of like importance to prevent the disclosure of Confidential Information disclosed to it by the other Party under this Agreement, but in no event less than reasonable care. |
|
4.3 |
Exclusions. Notwithstanding the foregoing, Confidential Information excludes information that: |
|
(a) |
was publicly available at the time it was disclosed or becomes publicly available through no fault of the receiving party; |
|
(b) |
was known to the receiving Party, without similar confidentiality restriction, at the time of disclosure; |
|
(c) |
is disclosed with the prior written approval of the disclosing party; |
|
(d) |
was independently developed by the receiving party without any use of the Confidential Information of the disclosing party; or |
|
(e) |
becomes known to the receiving party, without similar confidentiality restriction, from a source other than the disclosing party without breach of this Agreement by the receiving party. |
|
4.4 |
Compelled Disclosure. The receiving party may disclose the Confidential Information of disclosing Party if compelled to do so by Law, a court or other authority; provided that the receiving Party shall give the disclosing Party prompt written notice so that the disclosing Party may take steps to oppose such disclosure. |
|
4.5 |
Confidentiality of Agreement. Each Party agrees that the terms and conditions, but not the existence, of this Agreement shall be treated as the other’s Confidential Information and that no public reference to the terms and conditions of this Agreement or to activities pertaining to this Agreement can be made without the prior written consent of the other Party; provided, however, that each Party may disclose the terms and conditions of this Agreement: (i) as required by any court or other governmental body; (ii) as otherwise required by law; (iii) to legal counsel and/or auditors, representatives of the Parties subject to such them agreeing to be bound to similar confidential restrictions; (iv) in public documents, in connection with the requirements of an initial public offering, secondary offering, or debt offering or any securities filing of the Parties; (v) in confidence, to accountants, banks, and financing sources and their advisors; (vi) in confidence, in connection with the enforcement of this Agreement or rights under this Agreement; or (vii) in confidence, in connection with a merger or acquisition or proposed merger or acquisition, or the like. |
|
4.6 |
The confidentiality obligations of the Parties herein shall survive for a period of two (2) years from the date of expiry or termination of this Agreement. Notwithstanding the foregoing, any Confidential Information that is a trade secret (and which has been intimated as being a trade secret) shall remain confidential for as long as such Confidential Information remains a trade secret under applicable law. |
ARTICLE 5
TERM AND TERMINATION
|
5.1 |
Term. This Agreement begins on the Effective Date and shall continue indefinitely unless sooner terminated as provided in this Article 5. |
|
5.2 |
Termination for Breach. If either Party breaches any material obligations under this Agreement, which for the avoidance of doubt excludes the breach of the payment obligations of the JV Company in accordance with Section 2.9 and which shall be dealt with in accordance with Section 5.3 below, then the other Parties shall be entitled to terminate this Agreement by written notice to the defaulting Party, if such breach is not cured within one hundred twenty (120) days after written notice is given by a non-defaulting Party to the defaulting Party specifying the breach. |
|
5.3 |
Termination for Late Payment. If Loop does not receive any payment owed under Section 2.9 of this Agreement by the applicable Payment Date, then the JV Company shall, within thirty (30) days of written notice by Loop to the JV Company (the “Non-Payment Notice”), pay, or cause to be paid, to Loop (i) such outstanding payment and (ii) interest on such outstanding payment from the applicable Payment Date to the date of actual payment at the rate of twelve percent (12%) per annum (collectively, the “Late Payment”). Further, if Loop does not receive the full amount of the Late Payment within one-hundred and twenty (120) days after the issuance of the Non-Payment Notice due to any willful default of the JV Company, then Loop shall be entitled to immediately terminate this Agreement by written notice to JV Company. The Parties further agree and acknowledge that in the event of a ‘cash shortage’ for the JV Company, as determined by the JV Board (including the positive votes of at least one (1) director appointed by Loop and one (1) director appointed by Ester), the payment obligations outlined in this Agreement shall be extended for such period as may be agreed upon by the JV Board. Further, Loop shall not have the right to terminate this agreement for breach of the payment obligations as set out in this Section 5.3 during the pendency of such cash shortage period. |
|
5.4 |
Other Termination. Loop shall be entitled to terminate this Agreement by written notice to Ester and JV Company upon the termination of the License Agreement in accordance with its terms. |
|
5.5 |
Termination by Mutual Agreement. The Parties may terminate this Agreement by mutual written agreement. |
|
5.6 |
Effect of Termination; Survival. The rights and obligations of the Parties under the following Articles and Sections shall survive any expiration or termination of this Agreement: applicable provisions of Article 1 (Definitions), Article 3 (Limitation of Liability), Article 4 (Confidential Information), Section 7.4 (Choice of Law), Section 7.5 (Disputes) and Section 7.6 (Arbitration). Upon termination of this Agreement the royalty rate fixed in the License Agreement shall automatically be amended to a rate equal to [***] of Net Sales of Licensed Products beginning on the termination date of this Agreement. |
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
|
6.1 |
Mutual Representations and Warranties. Without limiting the representations and warranties of the Parties under the Joint Venture Agreements, Each Party hereby represents and warrants to the other Party that: |
|
(a) |
Organization. It is a company/ corporation (or limited liability company) duly organized (or formed), validly existing and in good standing under the Laws of its state of organization (or formation); |
|
(b) |
Authority; Enforceability. It has full corporate power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby; its execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all its requisite corporate or entity action; and it has duly executed and delivered this Agreement, and (assuming due authorization, execution and delivery by the other Party) this Agreement constitutes its legal, valid and binding obligations, enforceable against it in accordance with their respective terms; and |
|
(c) |
No Conflicts; Consents. Its execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not (i) violate or conflict with its organizational documents or (ii) violate or conflict with any provision of law or governmental order applicable to it; and no consent, approval, waiver or authorization is required to be obtained by it from any person (including any governmental authority) in connection with its execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby. |
|
6.2 |
Representation and Warranties of Loop. The marketing services provided by Loop to the JV Company under the terms of this Agreement, shall comply in all material respect with applicable Laws and Loop shall have all the necessary rights, licenses and registrations to perform the marketing services hereunder this Agreement. |
|
6.3 |
NO OTHER REPRESENTATIONS. THE EXPRESS REPRESENTATIONS AND WARRANTIES STATED IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, REGARDING THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, CUSTOM, TRADE OR NON-INFRINGEMENT OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS. |
ARTICLE 7
GENERAL PROVISIONS
|
7.1 |
Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement or done pursuant to this Agreement shall constitute either Party as the agent of the other Party for any purpose or in any sense whatsoever or constitute the Parties as partners or joint venturers. |
|
7.2 |
Amendment. No alteration, amendment, waiver, cancellation or any other change in any term or condition of this Agreement shall be valid or binding on either Party unless mutually assented to in writing by both Parties. |
|
7.3 |
Notices. All notices required or permitted to be given under this Agreement shall be in writing and shall be delivered by electronic transmission (email or fax) or prepaid air express or registered airmail, postage prepaid, to the following: |
If to Loop:
Loop Industries, Inc.
480 rue Fernand-Poitras
Terrebonne, Quebec J6Y 1Y4, Canada
E-mail: [***]
Attention: Daniel Solomita
With a copy to (which does not constitute notice to Loop):
Norton Rose Fulbright Canada LLP
1 Place Ville Marie, Suite 2500
Montreal (Quebec) H3B 1R1, Canada
Email: vincent.filiatrault@nortonorosefulbright.com
Attention: Vincent Filiatrault
If to the JV Company:
Attn: Pradeep Kumar Rustagi and cc to Company Secretary
Address: Plot No.11 Block A, Infocity 1, Sector 34 Gurgaon 122001, Haryana, India
Email: [***]
With cc to: rachi.agarwal@elitepolyester.in
If to Ester:
Attention: Mr. Arvind Singhania and cc to Company Secretary
Address: Plot No.-11-A, Infocity-1, Sector 33–34, Gurgaon-122001, Haryana, India
E-mail: [***]
With cc to [***]
Each Party may change its address set forth above by written notice to the other.
|
7.4 |
Choice of Law. This Agreement shall be governed by and interpreted in accordance with the laws of Republic of India and all disputes arising out of this Agreement shall be dealt with in accordance with Section 7.6 below. |
|
7.5 |
Disputes. Any dispute, difference, controversy or claim between the Parties arising out of or in relation to this Agreement or the construction, interpretation, breach, termination or validity thereof (hereinafter referred to as “Dispute”) shall, upon the written request of any Party be referred to the authorized representatives of that Party for amicable resolution. The authorized representatives shall promptly meet and attempt to negotiate in good faith a resolution of the Dispute. |
|
7.6 |
Arbitration. In the event that the Parties are unable to resolve the Dispute, then the Dispute shall be resolved in accordance with the provisions set out in Clause 17 of the JVA, which are hereby incorporated by reference. |
|
7.7 |
Waiver. Any failure by either Party to enforce at any time any terms and conditions of this Agreement shall not be considered a waiver of that Party’s right thereafter to enforce such terms and conditions or any other terms and conditions of this Agreement. |
|
7.8 |
Severability. Should any clause, sentence, section, article or paragraph of this Agreement judicially be declared to be invalid, unenforceable, or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement. |
|
7.9 |
Assignment. This Agreement shall inure to the benefit of, and shall be binding upon, the Parties and their respective successors and assigns, but neither Party may assign this Agreement, in whole or in part, without the prior written consent of the other Parties except to a person into which it has merged or who has otherwise succeeded to all or substantially all of the business and assets of the assignor, and who has assumed in writing or by operation of law its obligations under this Agreement. |
|
7.10 |
Entire Agreement. This Agreement (including its Exhibits) sets forth the entire agreement between the Parties as to the subject matter hereof and supersedes all previous negotiations, agreements and writings in respect thereto and any usage of trade, and shall not be extended, supplemented or amended except by an instrument in writing duly executed by an authorized officer or representative of each Party. |
|
7.11 |
Counterparts. This Agreement may be executed in counterparts or duplicate originals, both of which shall be regarded as one and the same instrument, and which shall be the official and governing version in the interpretation of this Agreement. |
(signature page follows)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in duplicate, as of the Effective Date, by their duly authorized officers or representatives.
Loop Industries, Inc.
By:
Name: Mr Daniel Solomita
Title: Chairman and CEO
Ester Loop Infinite Technologies Private Limited
By:
Name: Mr Arvind Singhania
Title: Chairman
Ester Industries Ltd.
By:
Name: Pradeep Kumar Rustagi
Title: Director
EXHIBIT A
PROPOSED CONTRACT NOTICE
EXHIBIT B
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
SCHEDULE A TO ASSIGNMENT AND ASSUMPTION AGREEMENT
LOOP SALES CONTRACT
Exhibit 10.2
CERTAIN INFORMATION IDENTIFIED BY [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
LICENSE AGREEMENT
This License Agreement (this “Agreement”) is made and entered into as of 4th February, 2026 (the “Effective Date”), between
Loop Industries, Inc., a Nevada corporation with a principal place of business at 480 Fernand-Poitras, Terrebonne, Québec, Canada J6Y 1Y4 (“Loop”),
Ester Loop Infinite Technologies Private Limited, a private limited company incorporated under the provisions of the Companies Act, 2013, bearing Corporate Identification Number U22208HR2024PTC123517, having its registered office at Plot No.11 Block A, Infocity 1, Sector 34 Gurgaon 122001, Haryana, India (“JV Company”) and
Solely with respect to Article 5, and Article 9 and Article 8.1, Ester Industries Ltd., a company limited by shares with a principal place of business at Plot No.-11-A, Infocity-1, Sector 33–34, Gurgaon-122001, Haryana, India (“Ester”)
Each of Loop, Ester, and JV Company is a “Party”; together they are the “Parties”
BACKGROUND
|
A. |
The Loop Parties (as defined below) have developed a proprietary depolymerization process, producing dimethyl terepthalate (“rDMT”) and/or mono ethylene glycol (“rMEG”) from PET and/or polyester, that can be used for the production of specialty polymers. |
|
B. |
Loop and Ester have entered into a Joint Venture Agreement dated May 1, 2024 (as amended, supplemented, or otherwise modified from time to time, the “Joint Venture Agreement”) to form the JV Company for the purpose of conducting the Business (as such term is defined in the Joint Venture Agreement), and are entering into this Agreement pursuant to the Joint Venture Agreement and concurrently with the formation of the JV Company (collectively the “JV Purpose”). |
|
C. |
Concurrently with the execution of this Agreement, the JV Company, Ester, and Loop are entering into a Marketing Agreement (such Marketing Agreement and any successor thereto mutually agreed upon by the Parties, the “Marketing Agreement”) to establish roles and responsibilities for the marketing of the rDMT, rMEG and/or Specialty Polymer Products (as defined below), and the Parties acknowledge that the JV Company’s license to and rights in respect of the Licensed Subject Matter (as defined below) shall be subject to the terms and conditions of this Agreement and the Marketing Agreement (to the extent applicable). |
|
D. |
In connection with the JV Purpose, JV Company shall own and operate the Licensed Facilities and may utilize Ester’s facilities for production of the Specialty Polymer Products in terms of a separate tolling arrangement to be executed between the JV Company and Ester from time to time. |
|
E. |
Consequently the JV Company wishes to receive from the Loop Parties, and the Loop Parties wish to grant to the JV Company, a license to certain Intellectual Property Rights (as defined below) for the purpose of building and operating the Licensed Facilities (as defined below) to manufacture, use, market, and sell rDMT, rMEG and/or Specialty Polymer Products made from such rDMT and/or rMEG under the terms and conditions set forth in this Agreement and the Marketing Agreement. |
Now, therefore, in consideration of the mutual covenants and premises contained in this Agreement, and other good and valuable consideration, the Parties agree as follows.
ARTICLE 1
DEFINITIONS
|
1.1 |
“Affiliate” means, with respect to a Party, any corporation or other entity that is directly or indirectly controlling, controlled by or under the common control with such Party. For the purpose of this definition, “control” means the direct or indirect ownership of at least fifty percent (50%) of the outstanding shares or other voting rights of the subject entity to elect directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority), or if not meeting the preceding, any entity owned or controlled by or owning or controlling at the maximum control or ownership right permitted in the country where such entity exists; it being clarified that the JV Company will not be considered as an ‘Affiliate’ of either Ester or Loop for the purposes of this Agreement. |
|
1.2 |
“Agreement” means this License Agreement. |
|
1.3 |
“Agreed Claims” has the meaning given to it in Section 8.9. |
|
1.4 |
“Bankruptcy Code” has the meaning given to it in Section 9.2. |
|
1.5 |
“Bankruptcy Rejection” has the meaning given to it in Section 9.2. |
|
1.6 |
“Board” has the meaning set forth in the Joint Venture Agreement. |
|
1.7 |
“Claims” has the meaning given to it in Section 8.5. |
|
1.8 |
“Confidential Information” has the meaning given to it in Section 6.1. |
|
1.9 |
“Direct Indemnity Claim” has the meaning given to it in Section 8.6. |
|
1.10 |
“Effective Date” has the meaning given to it in the preamble of this Agreement. |
|
1.11 |
“Ester” has the meaning given to it in the preamble of this Agreement. |
|
1.12 |
“Ester Personnel” has the meaning given to it in Section 3.3. |
|
1.13 |
“Ester Services Agreement” has the meaning given to it in Section 3.3. |
|
1.14 |
“First Commercial Sale” means, with respect to a Licensed Facility, the first Sale of a Licensed Product manufactured at such Licensed Facility, but excludes any sale or other disposal of a Licensed Product for test marketing, sampling and promotional uses, development, charitable purposes, or similar use. |
|
1.15 |
“Improvement” means any incremental improvement, modification, enhancement, or other change to any Intellectual Property Right or Know-How associated therewith that does not significantly change the scope or nature of such Intellectual Property Right or Know-How. |
|
1.16 |
“Ind AS” shall mean Indian Accounting Standards. |
|
1.17 |
“Indemnitees” has the meaning given to it in Section 8.5. |
|
1.18 |
“Indemnity Claim Notice” has the meaning given to it in Section 8.6. |
|
1.19 |
“Indemnity Dispute Notice” has the meaning given to it in Section 8.7. |
|
1.20 |
“Intellectual Property Rights” means all intellectual property rights arising in any jurisdiction, including: (a) all Patent Rights; (b) all trade-secret rights and all other rights in or to confidential or proprietary Know-How; (c) all copyrights, copyright registrations and applications therefor and all other rights corresponding thereto throughout the world; (d) all Trademarks, and (e) any similar, corresponding or equivalent rights to any of the foregoing. |
|
1.21 |
“IP Violation Notice” has the meaning given to it in Section 7.2(a). |
|
1.22 |
“Joint Venture Agreement” has the meaning given to it in the recitals of this Agreement. |
|
1.23 |
“JV Company” has the meaning given to it in the preamble of this Agreement. |
|
1.24 |
“JV Facility” means a rDMT/rMEG Product and/or Specialty Polymer Product manufacturing facility (i) located in the Manufacturing Territory, (ii) owned or leased by the JV Company, and (iii) operated by a JV Company, whether existing as of the Effective Date or acquired or leased by the JV Company, during the term of this Agreement. |
|
1.25 |
“JV Party” and “JV Parties” means the JV Company and its Subsidiaries. |
|
1.26 |
“JV Purpose” has the meaning given to it in the recitals of this Agreement. |
|
1.27 |
“JV Transaction Documents” has the meaning given to it in the Joint Venture Agreement. |
|
1.28 |
“Know-How” means unpatented or unpatentable technical information, including know-how, show-how, ideas, concepts, formulas, methods, processes, techniques, procedures, manufacturing and production methods, designs, compositions, plans, documents, specifications data, inventions, discoveries and protocols. |
|
1.29 |
“Late Payment” has the meaning given to it in Section 7.2(b). |
|
1.30 |
“Law” means any law, statute, regulation, decree, ordinance, guidelines, directives, requirement, or other legally binding regulation, any holding, decision or order of a court, or any order of all relevant national, local or administrative authorities having competent jurisdiction. |
|
1.31 |
“Licensable” means: (i) in reference to a Party and an Intellectual Property Right, that the Intellectual Property Right can be rightfully licensed by the Party under the scope granted to the other Party under this Agreement, and (ii) in reference to a Party and Know-How, that the Know-How is possessed by the Party, can be rightfully disclosed and delivered to the other Party by the Party, and can be rightfully licensed by the Party under the scope granted to the other Party under this Agreement; in either case without violating the terms of, or incurring any obligations to pay money or other consideration under, any agreement under which the Party as of the Effective Date holds or thereafter first acquires rights in such Intellectual Property Rights or Know-How. |
|
1.32 |
“Licensed Facilities” means, to the extent built or retrofitted for the manufacture of Licensed Products, any JV Facility established by the JV Company in accordance with the Joint Venture Agreement. |
|
1.33 |
“Licensed Facility Foreground IP” has the meaning given to it in Section 3.2. |
|
1.34 |
“Licensed Products” means: (i) rDMT/rMEG Products, and (ii) Specialty Polymer Products that are produced using rDMT and/or rMEG where, in each case, (a) the DMT and/or MEG is produced through the depolymerization of PET and/or polyester, and (b) such depolymerization is covered by or otherwise involves the use of any of the Licensed Subject Matter. |
|
1.35 |
“Licensed Subject Matter” means all Intellectual Property Rights that both (i) subject to Section 2.7, are Licensable by a Loop Party during the term of this Agreement, whether such Intellectual Property Rights are Licensable by a Loop Party as of the Effective Date or after the Effective Date, and (ii) claim or describe (a) manufacturing processes and technologies that were fully developed and tested as of the effective date of the Joint Venture Agreement for the depolymerization of PET and other polyester into rDMT and/or rMEG or (b) Loop Licensed Subject Matter Improvements. The patents that form part of the License Subject Matter are annexed at Exhibit B. |
|
1.36 |
“Licensed Subject Matter Improvements” has the meaning given to it in Section 3.2. |
|
1.37 |
“Loop” has the meaning given to it in the preamble of this Agreement. |
|
1.38 |
“Loop Marks” means the Loop name and logo (such logo, the “Loop Logo”) specified in Exhibit A. |
|
1.39 |
“Loop Background Intellectual Property” has the meaning given to it in Section 3.1. |
|
1.40 |
“Loop Parties” means Loop and its Subsidiaries, excluding the JV Company. |
|
1.41 |
“Losses” has the meaning given to it in Section 8.5. |
|
1.42 |
“Manufacturing Territory” shall mean the Republic of India and such other territories as may be mutually agreed in writing by the Parties. |
|
1.43 |
“Net Sales” means the gross amount actually collected by JV Company on Sales by the JV Company of Licensed Products, determined in accordance with the Ind AS accounting standards and principles, less the following (to the extent not already subtracted from the amounts billed or invoiced): (i) customary trade, quantity, or cash discounts and commissions to non-affiliated brokers or agents to the extent actually allowed and taken; (ii) amounts repaid or credited by reason of rejection or return; (iii) to the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of a Licensed Product which is paid by or on behalf of the JV Company (net of any reimbursements of any such taxes or other governmental charges to the applicable JV Company); and (iv) outbound transportation costs prepaid or allowed and costs of insurance in transit (net of any reimbursements of any such costs from customers to the JV Company). In any transfers of Licensed Products between the JV Company, any of its Subsidiaries, Loop, and/or Ester, Net Sales shall be calculated based on the final sale of the Licensed Product. In the event that the JV Company receives non-monetary consideration for any Licensed Products, Net Sales shall be calculated based on the fair market value of such consideration. Net Sales shall exclude scrap/ waste sales or any other unrelated sales by the JV Company. |
|
1.44 |
“Party” and “Parties” have the meanings given to them in the preamble of this Agreement. |
|
1.45 |
“Patent Rights” means the rights and interests in and to issued patents and pending patent applications and similar government-issued rights (e.g., utility models) protecting inventions in any country, jurisdiction or region (including inventor’s certificates and utility models), including patent term extensions and supplementary protection certificates, international patent applications filed under the Patent Cooperation Treaty (PCT) and any foreign equivalents to any of the foregoing. |
|
1.46 |
“Payment Date” has the meaning given to it in Section 2.4(e). |
|
1.47 |
“Person” has the meaning set forth in the Joint Venture Agreement. |
|
1.48 |
“PET” means polyethylene terephthalate. |
|
1.49 |
“Royalty Commencement Date” means, with respect to a Licensed Facility, the date of the First Commercial Sale of a Licensed Product manufactured by such Licensed Facility. |
|
1.50 |
“Royalty Records” has the meaning given to it in Section 2.4(f). |
|
1.51 |
“rDMT/rMEG Product” means any product that is formed or derived from rDMT and/or rMEG. |
|
1.52 |
“Sale” means any sale of a Licensed Product to any customers by the JV Company, excluding, for the avoidance of doubt, any sale or other disposal of a Licensed Product for test marketing, sampling and promotional uses, development, charitable purposes, or similar use. |
|
1.53 |
“Sales Territory” shall mean the entire world. |
|
1.54 |
“Services” has the meaning given to it in Section 5.1. |
|
1.55 |
“Shareholder” or “Shareholders” has the meaning given to it in the Joint Venture Agreement. |
|
1.56 |
“Specialty Polymer Products” means any specialty polymer product or by-product manufactured using as a raw resource, or otherwise derived from rMEG and/or rDMT produced using the Licensed Subject-Matter, but excluding recycled PET unless otherwise explicitly agreed by all Parties in writing, which unless otherwise agreed to between the Parties shall be produced by Ester pursuant to a tolling arrangement between Ester and the JV Company. |
|
1.57 |
“Sublicense Agreement” has the meaning given to it in Section 2.3. |
|
1.58 |
“Subsidiary” means, with respect to a Party, any Affiliate of the Party that is majority-owned by the Party. |
|
1.59 |
“Third Party Claim” has the meaning given to it in Section 8.11. |
|
1.60 |
“Trademarks” means trademarks, service marks, trade dress rights and similar designation of origin and rights therein. |
ARTICLE 2
LICENSES
|
2.1 |
Grant. |
Subject to the terms and conditions of this Agreement, Loop, on behalf of itself and the Loop Parties, hereby grants to the JV Company a non-transferable (except as provided in Section 9.11), perpetual (subject to termination as provided in Article 7 of this Agreement), exclusive (only as provided in, and subject to, Section 2.2), royalty-bearing (as set forth in Section 2.4) license under the Licensed Subject Matter, without the right to grant sublicenses (unless expressly authorized by Loop in writing, and subject to subsection 2.3), to (a) build or retrofit Licensed Facilities in the Manufacturing Territory for the purpose of manufacturing Licensed Products, (b) manufacture Licensed Products at such Licensed Facilities, (c) sell and distribute the Licensed Products manufactured under subsection 2.1(b) above in accordance with the Marketing Agreement (to the extent it remains in effect) in the Sales Territory; and (d) otherwise use and modify Licensed Products solely to the extent authorized by the JV Transaction Documents in connection with the foregoing. Notwithstanding the above, it is hereby clarified in the event either Party terminates the Joint Venture Agreement, whether in accordance with the termination clause under the Joint Venture Agreement or otherwise, Loop shall continue to grant, and the JV Company shall continue to possess the License under the Licensed Subject Matter until the termination of this Agreement. Loop further covenants that it shall exercise commercially reasonable efforts to ensure that all Intellectual Property Rights comprised in the Licensed Subject Matter shall continue to remain Licensable to the JV Company at all times in accordance with this Agreement and shall continue to procure all third-party consents in this regard, if any. In case any such Intellectual Property Rights cease to be Licensable, Loop shall communicate to JV Company and Ester forthwith of the occurrence of such an event.
|
2.2 |
Exclusive Rights. |
The license granted to the JV Company under Section 2.1 shall, subject to the provisions of Clauses 5.5 and 5.6 of the Joint Venture Agreement, be exclusive to the JV Company until the termination of this Agreement. Additionally, Loop agrees that, subject to the provisions of Clauses 5.5 and 5.6 of the Joint Venture Agreement, it will not (a) manufacture or license any third party to manufacture Licensed Products at any facilities in the Manufacturing Territory, or (b) offer for sale, sell, import, or distribute Licensed Products in the Manufacturing Territory (other than in accordance with the Marketing Agreement), or license any third party to do so (collectively, “Exclusivity Rights”); provided that the Exclusivity Rights shall continue until the termination of the Joint Venture Agreement, where such termination is arising due to any reason other than listing of the securities of the JV Company on a Recognized Stock Exchange (as defined in the Joint Venture Agreement). For the avoidance of doubt it is clarified that in case of termination of the Joint Venture Agreement due to the listing of securities of the JV Company on a Recognized Stock Exchange, the Exclusivity Rights shall continue in perpetuity and Clauses 5.5 and 5.6.5 of the Joint Venture Agreement shall be considered to be incorporated herein by reference and shall continue to apply mutatis mutandis to this Agreement.
Nothing in this Section 2.2 shall prohibit any Loop Party from (i) building or retrofitting any plant located outside of the Manufacturing Territory, for the purpose of manufacturing Licensed Products, (ii) offering for sale, importing, distributing, or otherwise commercializing, marketing, or selling outside of the Manufacturing Territory, or conducting research and development and feedstock analysis with respect to rDMT/rMEG Products or Specialty Polymer Products produced in its demonstration plant in Québec, Canada, or in any other plant located outside of the Manufacturing Territory, or (iii) manufacturing, commercializing, marketing, selling, or otherwise exploiting (or licensing third parties to do the same), anywhere in the world, any products that are not Licensed Products.
|
2.3 |
Sublicensing. In the event, the Parties mutually agree in writing that a sub-licensing of the license under the Licensed Subject Matter is required by the JV Company, the JV Company shall enter into a separate sub-licensing agreement with such sub-licensee, on such terms and conditions as may be approved by the Parties (“Sublicense Agreement”). Notwithstanding the foregoing, JV Company shall no longer be entitled to enter into new sub-licensing agreements relating to the license under the Licensed Subject Matter in the event that Loop holds less than a 50% equity interest in the JV Company unless the dilution of Loop’s shareholding is on account of Loop being a Committed Capital Defaulting Party as defined under the JVA. |
|
2.4 |
Royalties. The royalties applicable to the Licensed Facilities are set forth below. |
|
(a) |
Licensed Facility Royalty. The Licensed Facilities shall have a royalty rate calculated as a percentage of Net Sales of Licensed Products in each applicable fiscal year. As such, the royalty fees payable by JV Company to Loop shall be equal to: (i) the aggregate Net Sales of Licensed Products in the applicable Fiscal Year; multiplied by (ii) the corresponding royalty fees percentage (set forth in the table below), being understood however that the royalty fees shall never be lower than the corresponding Floor (set forth in the table below), nor greater than the corresponding Cap (set forth in the table below). For the avoidance of doubt, if (i) the royalty fees calculated in accordance with this Section 2.4(a) are lower than the applicable Floor, the royalty fees shall be deemed to be equal to the Floor; and (ii) the royalty fees calculated in accordance with this Section 2.4(a) are greater than the applicable Cap, the royalty fees shall be deemed to be equal to the Cap. The applicable royalty fees percentage is applied on the total Net Sales for the applicable fiscal year and shall not be applied on a marginal basis nor as a bracket. |
|
Net Sales of Licensed Products in the Applicable Fiscal Year (USD) |
Royalty Fees percentage |
Floor (USD) |
Cap (USD) |
|
0 to 500,000,000 |
[***]% |
N.A. |
N.A. |
|
500,000,001 to 1,000,000,000 |
[***]% |
10,000,000 |
15,000,000 |
|
1,000,000,001 to 2,000,000,000 |
[***]% |
15,000,000 |
20,000,000 |
|
2,000,000,001 and up |
The Parties will negotiate in good faith. |
N.A. |
N.A. |
For illustration purposes only, (i) if the Net Sales in the applicable fiscal year are USD 1,100,000,000, the royalty fees payable pursuant to this Section 2.4(a) shall be equal to USD [***] and shall be calculated as follow : 1,100,000,000 * [***]% =[***], which amount is lower that the corresponding Floor, in which case the royalty fees are equal to the Floor; or (ii) if the Net Sales in the applicable fiscal year are USD 1,700,000,000, the royalty fees payable pursuant to this Section 2.4(a) shall be equal to USD [***]and shall be calculated as follow : 1,700,000,000 * [***]% =[***].
|
(b) |
Statutory Deductions. |
|
(c) |
It is clarified that the royalty fees set out in Section 2.4(a) will be paid to Loop by the JV Company after making statutory deductions under applicable Law. |
|
(d) |
Commencement of Royalty Payments. The JV Company’s obligation to make royalty payments, as set forth in this Section 2.4, with respect to any Licensed Facility shall commence on the Royalty Commencement Date for such Licensed Facility and shall end upon termination of this Agreement. |
|
(e) |
Payment of Royalties. Subject to the realization of the outstanding amounts from Sales of the Licensed Products, the JV Company shall make any royalty payments applicable to its Licensed Facilities and owing under this Section 2.4 no later than the earlier of (i) with respect to the first, second, and third fiscal quarters of the JV Company’s fiscal year, forty-five (45) days following the end of the applicable fiscal quarter; and (ii) with respect to the fourth fiscal quarter of the JV Company’s fiscal year, promptly following the delivery by the JV Company’s auditor of the audited annual financial statements of the JV Company but no later than ninety (90) days following the end of such fourth fiscal quarter (the “Payment Date”). |
|
(f) |
Royalty Records and Audits. The JV Company shall maintain during the term of this Agreement and for two (2) years thereafter all documents, books, and records that are necessary for or otherwise relate to the calculation of royalties hereunder (“Royalty Records”) and shall make such Royalty Records available for examination by Loop during normal business hours. Loop shall have the option to engage, at its own expense, an independent certified public accountant (from one of the “Big Four” accounting firms provided that such Big Four is not the auditor of any of the Loop Parties) to examine, in consultation with the JV Company and its auditor, the Royalty Records to determine the correctness of any payment of royalties hereunder made by the JV Company, only in the event (i) if there is a disagreement at the Board of JV Company regarding the amount to be paid; or (ii) if none of the Loop Parties are a shareholder in the JV Company or otherwise none of the Loop Parties have detailed access to management and records of the JV Company. If any audit performed under this Section indicates that any payment due hereunder was underpaid, the JV Company shall pay the amount of any underpayment. If any audit performed under this Section indicates that any payment due hereunder was overpaid, Loop shall promptly credit to the relevant JV Parties the amount of any overpayment, which credit shall be applied against future payments made under Section 2.4(c). If any audit performed under this Section indicates that any payment hereunder was in error to Loop’s detriment by more than 5% for any fiscal year of the JV Company, the JV Company shall pay the cost of the audit. |
|
(g) |
Capacity. For the avoidance of doubt, it is hereby clarified that the JV Company may increase the capacity to manufacture Licensed Products at any Licensed Facility, and if the JV Company so increases the capacity of any such Licensed Facility, the royalty rate applicable to such Licensed Facility shall not increase above the applicable royalty rate set forth in this Section 2.4. |
|
(h) |
Increase of Royalty. If the Marketing Agreement is terminated in accordance with its terms thereof, then, subject to relevant regulatory approvals and Applicable Law, the License royalty payable under this Agreement, shall be calculated in the same manner as set forth in Section 2.4(a), with the exception that the table set forth therein shall be deleted and replaced with the following: |
|
Net Sales of Licensed Products in the Applicable Fiscal Year (USD) |
Royalty Fees percentage |
Floor (USD) |
Cap (USD) |
|
0 to 500,000,000 |
[***]% |
N.A. |
N.A. |
|
500,000,001 to 1,000,000,000 |
[***]% |
25,000,000 |
40,000,000 |
|
1,000,000,001 to 2,000,000,000 |
[***]% |
40,000,000 |
60,000,000 |
|
2,000,000,001 and up |
The Parties will negotiate in good faith. |
N.A. |
N.A. |
For illustration purposes only, (i) if the Net Sales in the applicable fiscal year are USD 1,100,000,000, the royalty fees payable pursuant to this Section 2.4(h) shall be equal to USD [***] and shall be calculated as follow: 1,100,000,000 *[***]% =[***], which amount is lower that the corresponding Floor, in which case the royalty fees are equal to the Floor; or (ii) if the Net Sales in the applicable fiscal year are USD 1,700,000,000, the royalty fees payable pursuant to this Section 2.4(h) shall be equal to USD [***]and shall be calculated as follow: 1,700,000,000 * [***]% =[***].
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2.5 |
Delivery. As soon as practicable after the Effective Date, and in any event within sixty (60) business days after the Effective Date, Loop shall use commercially reasonable efforts to deliver to JV Company copies of material documentation that exists as of the Effective Date and is reasonably required by the JV Company to exercise the rights granted with respect to the Licensed Subject Matter, including the JV Company’s use thereof as contemplated by this Agreement, (other than any Licensed Subject Matter Improvements (as defined in Section 3.1)) that is Licensable by the Loop Parties as of the Effective Date. In addition, during the term of this Agreement, Loop will use commercially reasonable efforts, as it would use for its own business, to promptly provide the JV Company with details, in writing, of any material Loop Licensed Subject Matter Improvements (as defined in Section 3.1). The JV Company will use commercially reasonable efforts to promptly provide Loop with details, in writing, and documentation of any Licensed Subject Matter Improvements. To the extent Loop or the JV Company identifies material documentation or other information required to be provided to the JV Company pursuant to this Section 2.5, but that was not provided to the JV Company, Loop agrees to use commercially reasonable efforts, as it would use for its own business, to promptly provide such materials or information to the JV Company. If the JV Company reasonably believes that it requires additional materials or information to exercise the rights granted with respect to the Licensed Subject Matter, including the Loop Licensed Subject Matter Improvements, Loop agrees to discuss in good faith with the JV Company promptly providing such information to the JV Company to the extent in the possession or control of Loop. For the avoidance of doubt, this Section 2.5 sets forth all of Loop’s obligations with respect to delivering copies of documentation of any Licensed Subject Matter or Licensed Subject Matter Improvements (including any Intellectual Property Rights therein). |
|
2.6 |
Ownership. Except as provided in this Article 2 and in Article 3 and Article 4, no Party grants to the other any rights or licenses under its Intellectual Property Rights. At all times each Party retains ownership of its Intellectual Property Rights and Trademarks and, subject to Section 2.2, Loop Parties may use, commercialize and otherwise exploit the Licensed Subject Matter themselves or with third parties. For the avoidance of doubt, in the event of any sale, assignment or transfer of ownership of any Licensed Subject Matter owned by any of the Loop Parties to another Person, the Licensed Subject Matter shall remain subject to the licenses and rights granted to the JV Company in and to such Licensed Subject Matter on the same terms and conditions as set out in this Agreement. Moreover, it is clarified that in the event of any such sale, assignment or transfer Loop and Loop Parties shall: (i) intimate the JV Company and Ester of such sale, assignment or transfer prior to its consummation; and (ii) ensure that such Person adheres to the terms and conditions set forth hereunder this Agreement and may to this end provide for a deed of adherence or similar document to the JV Company. Each Party shall use commercially reasonable efforts to promptly notify the other Party in writing of any known or suspected infringement of the Licensed Subject Matter. Neither Party shall be responsible to the other Party for any costs and expenses related to the preparation, filing, prosecution or maintenance of any applications, registrations or issuances, including all renewals and extensions, of any Intellectual Property Rights owned by the other Party. For the avoidance of doubt, the JV Company will not be responsible for any such costs and expenses related to the Licensed Subject Matter, including with respect to any patents and patent applications contained therein. |
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2.7 |
Registration of License. Any party receiving a license under this Agreement shall have the right to register or record the existence of such license with any applicable governmental authority, including any applicable patent office, as reasonably necessary to perfect or secure such party’s rights in and to such license, in each case, at its own cost and expense, provided that such registration or recordation does not require disclosure of this Agreement or its terms other than the existence of the relevant license. The applicable licensor party agrees to reasonably cooperate with such licensee party as reasonably necessary for the registration or recordation of the existence of such license. |
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2.8 |
Option for Fee-Based Additional Licensed Subject Matter. In the event a Loop Party owns, licenses, develops or otherwise acquires or obtains any rights to Intellectual Property Rights after the Effective Date that are not included as Licensed Subject Matter under this Agreement (which for the avoidance of doubt shall exclude any Licensed Subject Matter Improvements) solely because its license to the JV Company or use by the JV Company would require a payment by a Loop Party to a third party (and therefore it does not fall under the definition of “Licensable” under this Agreement), but otherwise would qualify as Licensed Subject Matter, then Loop shall give the JV Company prompt written notice of such Intellectual Property Rights and the financial terms by which the JV Company may obtain a license to such Intellectual Property Rights on a pass-through basis (with no additional fee to be charged by any Loop Party other than the additional fees that it will incur based on the license being granted to the JV Company under this Agreement). The JV Company shall have the option to include such additional Intellectual Property Rights within the scope of this Agreement upon written notice to Loop, in which case such Intellectual Property Rights shall thereafter be considered Licensed Subject Matter, and the JV Company will be responsible for paying Loop the corresponding payment obligation thereafter. |
|
2.9 |
Licensed Subject Matter Defense. The JV Company will use reasonable efforts to observe the market in their region to identify potential material infringement or misappropriation of the Licensed Subject Matter and will notify Loop Parties promptly about any indication of such material infringement or misappropriation that is discovered. |
|
2.10 |
Exchange Conversion: For the purposes of determination of Net Sales for a Fiscal Year provided in the tables above in this Article 2, and consequently the Royalties in accordance with Section 2.4, the INR to USD conversion rate shall be the average of the applicable reference rate available at https://www.fbil.org.in/#/home, for the relevant Fiscal Year. |
ARTICLE 3
INTELLECTUAL PROPERTY
|
3.1 |
Loop Background Intellectual Property Rights. The JV Company agrees that unless expressly provided otherwise, all Intellectual Property Rights conceived, developed or reduced to practice prior to the Effective Date of this Agreement (including, but not limited to know-how, specifications, database and other information and documents) and to which Loop, in whole or in part, possesses rights as owner, licensee or otherwise and all rights, titles, interests and improvements thereto conceived, developed or reduced to practice by the Loop Parties outside of the scope of this Agreement (“Loop Background Intellectual Property”) shall remain the sole property of Loop. The JV Company shall not be granted any rights, titles or interests whatsoever with respect to such Loop Background Intellectual Property except as set forth in this Agreement. Despite the foregoing, should the Loop Background Intellectual Property be included in or required to use the Licensed Subject Matter created under this Agreement, then Loop agrees to grant to the JV Company a non-transferable (except as provided in Section 9.11), perpetual (subject to termination as provided [in the Joint Venture Agreement and] in Article 7 of this Agreement), exclusive (only as provided in, and subject to, Section 2.2), royalty-free license under the Licensed Subject Matter, without the right to grant sublicenses (unless expressly authorized by Loop in writing, and subject to the restrictions and conditions in subsection 2.3) to in such Loop Background Intellectual Property only to the extent necessary for the necessary JV Company to avail itself of its rights and perform its obligations under this Agreement. |
|
3.2 |
Ownership During the Term and License-Back. During the term of the JV Transaction Documents, Loop shall own all right, title, and interest (including Intellectual Property Rights) in, to, and under any Improvements to the Licensed Subject Matter that are produced, developed, created, authored or reduced to practice in the Licensed Facilities (“Licensed Subject Matter Improvements”) that are made by or on behalf of Loop, or the JV Company (irrespective of the scope of contribution or inventorship); provided, that all Licensed Subject Matter Improvements shall be deemed to be included in the Licensed Subject Matter for purposes of this Agreement. Without limiting the generality of the foregoing, Loop shall own any other Intellectual Property Rights that are produced, developed, created, authored or reduced to practice in the Licensed Facilities that does not constitute Licensed Subject Matter Improvements, irrespective of inventorship, authorship or reduction to practice (“Licensed Facility Foreground IP”). Notwithstanding anything to the contrary contained in this Agreement, it is hereby clarified that in the event Loop makes Improvements to the Licensed Subject Matter by itself or through the Licensed Facilities or the JV Company, such Licensed Subject Matter Improvements shall be deemed to be licensed to the JV Company under this Agreement in perpetuity without any additional cost or any additional royalty payments. |
|
3.3 |
Rights Related to Ester Services. To the extent that personnel of Ester or its Affiliates (“Ester Personnel”) provide services to the JV Company pursuant to one or more written agreements between Ester or its Affiliates and the JV Company (each an “Ester Services Agreement” which will be subject to prior written approval by Loop if the Ester Personnel will have access to any Licensed Subject Matter) and any Licensed Subject Matter Improvements are developed by such Ester Personnel in connection with such services, such Licensed Subject Matter Improvements (together with all other technology developed under such Ester Services Agreement) will be deemed to be Licensed Subject Matter, provided that such Ester Personnel must obtain written approval from the Board prior to developing or implementing any such Licensed Subject Matter Improvements. The JV Company shall ensure that the relevant Ester Services Agreement effectively assigns all right, title, and interest in and to such Licensed Subject Matter Improvements and other technology to the JV Company. |
|
3.4 |
Further Assurances. Loop and the JV Company shall promptly take such steps and actions, including the execution of any documents, files, registrations or other similar items, to ensure that all right, title and interest in the Licensed Subject Matter Improvements and any associated Intellectual Property Rights are properly assigned to or recorded in the name of Loop, provided that such Licensed Subject Matter Improvements and any associated Intellectual Property Rights are licensed to the JV Company in accordance with this Agreement. The JV Company shall also provide reasonable cooperation to Loop, and secure the cooperation of its personnel, as may be reasonably necessary to file, register, or otherwise obtain any Intellectual Property Rights associated with Licensee Improvements. |
|
3.5 |
No Transfer. For the avoidance of doubt, and notwithstanding anything to the contrary in this Agreement, any licenses granted pursuant to of this Agreement, as applicable, shall survive any transfer of ownership of the Licensed Subject Matter Improvements pursuant to this Section 3.5. |
|
3.6 |
Enforcement. JV Company shall promptly provide (but in no event later than ten (10) Business Days after the JV Company becomes aware of it) written notice to Loop reasonably detailing any known or alleged infringement or misappropriation of any of the Licensed Subject Matter by any third party. Loop shall have the first right but not the obligation to institute and direct legal proceedings against any third party believed to be infringing or misappropriating any Licensed Subject Matter or otherwise take action to abate such activities. JV Company will cooperate with Loop as may reasonably be requested by Loop, at its own reasonable cost and expense. |
ARTICLE 4
TRADEMARK LICENSE
|
4.1 |
Grant. Subject to the terms and conditions of this Agreement, Loop hereby grants to the JV Company, in consideration for the payments contemplated by JV Company hereunder, a revocable, non-exclusive, non-transferable, non-assignable, fully-paid, , license, without the right to grant sublicenses, to use the Loop Marks in the Sales Territory, solely in accordance with the Trademark usage guidelines communicated to the JV Company by Loop from time to time and solely in connection with the packaging and sale, in accordance with this Agreement, the Marketing Agreement (to the extent remaining in effect), and the Joint Venture Agreement, of Licensed Products meeting the product quality control standards communicated to the JV Company by Loop from time to time, it being understood that Loop may update Trademark usage guidelines and product quality control standards on the JV Company from time to time, and the JV Company will be obligated to comply with such updated guidelines and standards provided that such updated guidelines and standards are no more stringent than the guidelines and standards Loop has established for itself or its other licensees of the Loop Marks and such updated guidelines and standards do not conflict with or modify the terms of this Agreement. |
|
4.2 |
Usage Audits and Controls. The JV Company shall comply with the following: |
|
(a) |
Acknowledgment and Compliance. The JV Company acknowledges and is familiar with the high standards, quality, style, and image of Loop, and the JV Company at all times shall conduct its business and use the Loop Marks in a manner consistent with these standards, quality, style, and image. Without limiting the foregoing, the JV Company shall comply with the guidelines and standards provided for in accordance with Section 4.1. |
|
(b) |
Usage Audits and Inspections. The JV Company shall permit, and shall use best efforts to obtain permission for, Loop at all reasonable times to inspect any Licensed Facility to ensure compliance with the guidelines and standards set forth in Section 4.1 or any other specifications or requirements set forth in this Agreement. |
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4.3 |
Ownership. JV Company acknowledges that as among the Parties, Loop retains ownership of the Loop Marks and the goodwill associated therewith. JV Company agrees that it will not do anything inconsistent with such ownership and that all use of the Loop Marks by the JV Company will inure to the benefit of and be on behalf of, Loop. JV Company agrees further, that nothing in this Agreement will be construed as granting to JV Company any right, title or interest in the Loop Marks, other than the right to use the Loop Marks in accordance with this Agreement. JV Company, agrees that it will not contest, oppose or challenge Loop’s ownership of and title to the Loop Marks or contest, oppose or challenge the validity of the Loop Marks. |
ARTICLE 5
LOOP SERVICES
|
5.1 |
Provision of Included Services. For the term of this License Agreement, Loop shall provide, as deemed appropriate by Loop, acting reasonably, the following services relating to the Licensed Subject Matter (the “Services”) which are provided at no additional cost to the JV Company other than through the payment of the royalties pursuant to Section 2.4 hereof: |
|
(a) |
maintenance, scale-up renovations and technical adjustments to Loop’s pilot plant, laboratories and facilities to optimize performance; |
|
(b) |
research and development regarding (i) analytical methods, and (ii) research methodology; |
|
(c) |
feedstock testing process and procedure; |
|
(d) |
branding and executed activations; |
|
(e) |
intellectual property management including timely renewals and filing of fresh applications; |
|
(f) |
life-cycle analysis; |
|
(g) |
assist and provide support for the JV Company to obtain all required quality certifications; |
|
(h) |
technology upgrades related to the Licensed Subject Matter as and when developed by Loop; and |
|
(i) |
provide full support to establish productivity and quality of the each JV Facility and the JV Products of the JV Company. |
|
5.2 |
Additional Services. The Parties agree that any services required by the JV Company which do not form a part of the Services, shall be provided by Loop to the JV Company on such terms as may be agreed amongst the Parties. |
|
5.3 |
Service Standard. Loop shall: |
|
(a) |
provide or procure the provision of the applicable Services: |
|
(i) |
in compliance with all applicable Laws; |
|
(ii) |
to a standard which is (including with respect to the nature, quality and timelines) equivalent to the standard to which equivalent services are provided (or procured) by Loop in the ordinary course of business to its other licensees of the Licensed Subject Matter; and |
|
(b) |
without prejudice to the generality of (a), use commercially reasonable efforts to perform or procure the performance of the Services in a professional manner using reasonable skill, care and diligence provided, for greater certainty, that the foregoing shall not require Loop to hire a new employee, contractor or other person or maintain the employment or contract relationship with an employee, contractor or other person if such employee’s, contractor’s or other person’s services within Loop’s organisation would otherwise no longer be required, as long as the Services are performed in accordance with the standard of services contemplated in this Section 5.3. |
|
5.4 |
Service Correction. Without prejudice to any other provision of this Agreement, in the event that Loop commits a demonstrable error with respect to any Service or otherwise fails to perform any Service in accordance with Section 5.3, at the JV Company’s reasonable written request, Loop shall use commercially reasonable efforts and good faith to correct such error and to re-perform or cause to be re-performed such Service at no additional cost to the JV Parties. |
|
5.5 |
No Representation. The JV Company acknowledges and agrees that subject to the obligations of Loop contained in this Agreement and in particular subject to Loop’s obligations to meet the standard of service described in Section 5.3, except as may be agreed-upon between Loop and JV Company for a particular Service, Loop does not make any representations or warranties whatsoever, whether express, implied, statutory or otherwise, regarding the Services. |
|
5.6 |
Intellectual Property Rights. All rights, titles and interests in the Intellectual Property Rights stemming from or related to the Services rendered by Loop or its Affiliates to the JV Company under this Article 5, or embodied in any deliverables related thereto, shall, at all times, remain the property of Loop. The JV Company shall assign to Loop any and all Intellectual Property Rights as needed to affect the foregoing. |
ARTICLE 6
CONFIDENTIAL INFORMATION
|
6.1 |
Confidential Information. The term “Confidential Information” means any information disclosed by one Party to the other (i) prior to the date of this Agreement but with respect to the subject matter of this Agreement, or (ii) pursuant to this Agreement, in each case which is in written, graphic, machine readable or other tangible form and is marked “Confidential,” “Proprietary” or in some other manner to indicate its confidential nature. Confidential Information may also include oral information disclosed by one Party to the other pursuant to this Agreement, pro‐vided that such information is designated as confidential at the time of disclosure and reduced to a written summary by the disclosing Party, within thirty (30) days after its oral disclosure, which is marked in a manner to indicate its confidential nature and delivered to the receiving party. Notwithstanding the foregoing, it is hereby acknowledged and agreed that all Licensed Subject Matter delivered or disclosed to the JV Company under this Agreement shall be considered Loop’s Confidential Information, whether marked or otherwise designated as such, other than publicly accessible information concerning Loop’s issued patents and published patent applications. |
|
6.2 |
Obligation. Each Party shall treat as confidential (as set forth herein) all Confidential Information of the other Parties and shall not use such Confidential Information except as expressly permitted by this Agreement or as otherwise authorized by the disclosing Party in writing. Each Party shall implement reasonable procedures to prohibit the unauthorized disclo‐sure or misuse of the other Parties’ Confidential Information and shall not disclose such Confidential Information to any third party (including any Affiliates) except as may be necessary to exercise the rights and perform the obligations of such Party under this Agreement, and then subject to confidentiality obligations at least as protective of the Confidential Information as those set forth in this Article 6. Furthermore, notwithstanding the foregoing, the JV Company shall not disclose or permit any disclosure of any Licensed Subject Matter to any Ester Personnel, except on a confidential basis to Ester Personnel who are engaged, subject to and in accordance with the foregoing sentence, pursuant to the JV Transaction Documents. Each of the Parties shall use at least the same procedures and degree of care that it uses to prevent the disclosure of its own confidential information of like importance to prevent the disclosure of Confidential Information disclosed to it by the other Parties under this Agreement, but in no event less than reasonable care. |
|
6.3 |
Exclusions. Notwithstanding the foregoing, Confidential Information excludes information that: |
|
(a) |
was publicly available at the time it was disclosed or becomes publicly available through no fault of the receiving Party; |
|
(b) |
was known to the receiving Party, without similar confidentiality restriction, at the time of disclosure; |
|
(c) |
was independently developed by the receiving Party without any use of the Confidential Information of the disclosing Party; or |
|
(d) |
becomes known to the receiving Party, without similar confidentiality restriction, from a source other than the disclosing Party, without similar confidentiality restriction and without breach of this Agreement by the receiving Party. |
|
6.4 |
Compelled Disclosure. The receiving Party may disclose the Confidential Information of disclosing Party to the extent compelled to do so by law, a court or other authority; provided that the receiving Party shall give the disclosing Party prompt written notice so that the disclosing Party may take steps to oppose such disclosure. |
|
6.5 |
Confidentiality of Agreement. Each Party agrees that the terms and conditions, but not the existence, of this Agreement shall be treated as the others’ Confidential Information and that no public reference to the terms and conditions of this Agreement or to activities pertaining to this Agreement can be made without the prior written consent of the other Parties; provided, however, that each Party may disclose the terms and conditions of this Agreement: (i) as required by any court or other governmental body; (ii) as otherwise required by Law; (iii) to legal counsel and/or auditors, representatives of the Parties, subject to such them agreeing to be bound to similar confidential restrictions; (iv) in public documents, in connection with the requirements of an initial public offering, secondary offering, or debt offering or any securities filing of the Parties; (v) in confidence, to accountants, banks, and financing sources and their advisors; (vi) in confidence, in connection with the enforcement of this Agreement or rights under this Agreement; or (vii) in confidence, in connection with a merger or acquisition or proposed merger or acquisition, or the like. |
ARTICLE 7
TERM AND TERMINATION
|
7.1 |
Term. This Agreement begins on the Effective Date and shall continue indefinitely unless sooner terminated as provided in this Article 7, provided that with respect to any Intellectual Property Right or Trademark licensed by a Party to the other Party, the licenses granted herein shall terminate with respect to the Intellectual Property Right or Trademark upon the expiration, abandonment or invalidation of the Intellectual Property Right or Trademark. |
|
7.2 |
Termination by Loop. Loop shall be entitled to terminate this Agreement only as set forth in this Section 7.2 and 7.3. |
|
(a) |
Infringement and Breach of Confidentiality Obligations. If Ester or the JV Company infringes any of Loop’s material Intellectual Property Rights or breaches its obligations under this Agreement or any Ester Services Agreement to not use or disclose any Confidential Information constituting a material trade secret of Loop, then Ester, or the JV Company, as applicable, shall use its best efforts to cure such infringement or breach within thirty (30) days of written notice by Loop to the JV Company (the “IP Violation Notice”). If Ester, or the JV Company, as applicable, has not cured such infringement or breach, as determined in Loop’s reasonable discretion, within ninety (90) days of the original IP Violation Notice, then Loop shall be entitled to immediately terminate this Agreement by written notice to the JV Company and Ester, provided that Loop shall not have the right to terminate this Agreement in accordance with this Section 7.2(a) where such infringement or breach has occurred due to any default of an employee of Ester or the JV Company, where Ester or the JV Company, as the case may be has (1) ensured that such employee has entered into a confidentiality and non-disclosure agreement with Ester or the JV Company, as the case may be, providing that such employee be bound by confidentiality obligations which are materially similar to the confidentiality obligations set out in this Agreement applicable to Ester and the JVCo prior to the occurrence of any such infringement or breach, and (2) used its best efforts to remedy the infringement, violation or breach immediately upon being notified and taken active steps to ensure that such notification may occur. |
|
(b) |
Breach of Payment Obligations. If Loop does not receive any payment owed under Section 2.4(e) of this Agreement by the applicable Payment Date, then the JV Company shall, within thirty (30) days of written notice by Loop to the JV Company (the “Non-Payment Notice”), pay, or cause to be paid, to Loop (i) such outstanding payment and (ii) interest on such outstanding payment from the applicable Payment Date to the date of actual payment at the rate of twelve percent (12%) per annum (collectively, the “Late Payment”). Further, if Loop does not receive the full amount of the Late Payment within 120 (one-hundred and twenty) days after the issuance of the Non-Payment Notice due to any willful default of the JV Company, then Loop shall be entitled to immediately terminate this Agreement by written notice to the JV Company. The Parties further agree and acknowledge that in the event of a ‘cash shortage’ for the JV Company, as determined by the JV Board (including the positive votes of at least one (1) director appointed by Loop and one (1) director appointed by Ester), the payment obligations outlined in this Agreement shall be extended for such period as may be agreed upon by the JV Board. Further, Loop shall not have the right to terminate this Agreement for breach of the payment obligations as set out in this Section 7.2 during the pendency of such cash shortage period. |
|
(c) |
Remedies. For the avoidance of doubt, the termination rights and other remedies set forth in this Section 7.2 shall not be deemed to be Loop’s exclusive remedies, but are be in addition to all other remedies available to Loop under this Agreement, at law, or in equity. |
|
7.3 |
Termination by Mutual Agreement. The Parties may terminate this Agreement by mutual written agreement. |
|
7.4 |
Other Rights. Loop acknowledges that, except as expressly provided in this Article 7 and subject to termination as provided in the Joint Venture Agreement, the licenses granted under Section 2.1 of this Agreement are irrevocable and may not be canceled or terminated by Loop for any reason. However, should the JV Company breach this Agreement, Loop shall have the right to seek (i) an injunction restraining the JV Company from any purported breach of this Agreement, or specific performance requiring JV Company to comply with this Agreement, to the fullest extent permitted by law or equity, (ii) all such amounts to which Loop would be entitled as damages or otherwise under law or at equity, and (iii) any other rights or remedies available at law or equity other than termination of the licenses granted under this Agreement. |
|
7.5 |
Effect of Termination; Survival. From and after the effective date of any termination, the licenses granted to the JV Company under Article 2, Article 3, and Article 4 shall terminate. The other rights and obligations of the Parties under the following Articles and Sections shall survive any expiration or termination of this Agreement: Article 1 (Definitions), Article 3 (Intellectual Property Rights), Article 4 (Trademark License), Article 5 (Loop Services), Article 6 (Confidential Information), Section 7.5 (Survival), Article 8 (Representations, Warranties and Indemnification), Article 9 (General Provisions), and Sections 4.3 (Ownership) and 7.4 (Other Rights). Loop shall be entitled to terminate the Marketing Agreement by written notice to Ester and JV Company upon the termination of this Agreement. |
|
7.6 |
Consequences of Termination/Expiration: |
Upon termination or expiration of this Agreement, the JV Company shall within ninety (90) days of such termination or expiration:
|
(a) |
pay all outstanding amounts to Loop till the date of termination/expiry payable under this Agreement. |
|
(b) |
cease using the Licensed Subject Matter; |
|
(c) |
Erase the Licensed Subject Matter from its internal systems/servers in which it has been stored; |
|
(d) |
Maintain in confidence all knowledge of the Licensed Subject Matter and its use as provided hereunder; and |
|
(e) |
At the option of Loop, either return to Loop or destroy the Licensed Subject Matter or copies thereof and certify to Loop in writing that such destruction has occurred, save and except as may be required to be retained by the JV Company pursuant to any written directions of regulatory or statutory bodies or written order of the competent courts. |
ARTICLE 8
REPRESENTATIONS, WARRANTIES, AND INDEMNIFICATION
|
8.1 |
Mutual Representations and Warranties. Without limiting the representations and warranties of the Parties under the JV Transaction Documents, each Party hereby represents and warrants to the other Party that. |
|
(a) |
Organization. It is a company/corporation (or limited liability company) duly organized (or formed), validly existing and in good standing under the Laws of its state of organization (or formation); |
|
(b) |
Authority; Enforceability. It has full corporate (or limited liability company) power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby; its execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all its requisite entity action; and it has duly executed and delivered this Agreement, and (assuming due authorization, execution and delivery by the other Parties) this Agreement constitutes its legal, valid and binding obligations, enforceable against it in accordance with their respective terms; and |
|
(c) |
No Conflicts; Consents. Its execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not (i) violate or conflict with its organizational documents or (ii) violate or conflict with any provision of law or governmental order applicable to it; and no consent, approval, waiver or authorization is required to be obtained by it from any person (including any governmental authority) in connection with its execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby. |
|
8.2 |
Representations by Loop. Loop hereby represents and warrants to the JV Company that: |
|
(a) |
Loop has sufficient rights to license the Licensed Subject Matter (other than Licensed Subject Matter Improvements) and Loop Marks to the JV Company as specified in this Agreement; |
|
(b) |
as of the Effective Date, Loop is not aware of any material unauthorized use, infringement or misappropriation of the Licensed Subject Matter (other than Licensed Subject Matter Improvements) or Loop Marks by a third party; |
|
(c) |
as of the Effective Date, Loop is not aware of any pending or threatened litigation relating to the Licensed Subject Matter (other than Licensed Subject Matter Improvements) or Loop Marks; |
|
(d) |
as of the Effective Date, Loop is not aware of any Intellectual Property Rights or Trademarks of a third party that would be infringed by the JV Company’s use of the Licensed Subject Matter (other than Licensed Subject Matter Improvements) for the JV Purpose or Loop Marks or making or selling Licensed Products; |
|
(e) |
as of the Effective Date, Loop has in its possession all relevant information required to build, operate and market the Licensed Subject-Matter. |
|
(f) |
to the knowledge of Loop, neither the Licensed Subject Matter nor any element thereof will infringe or misappropriate the Intellectual Property Rights of any third party; |
|
(g) |
Loop has full right and power to enter into and perform this Agreement without the consent of any third party; |
|
(h) |
Loop will comply with all laws and regulations applicable to it under this Agreement; and |
|
(i) |
as of the Effective Date, the Licensed Subject Matter licensed to the JV Company under this Agreement constitutes all Intellectual Property Rights that are necessary or reasonably required by the JV Company to undertake the JV Purpose. |
|
8.3 |
NO OTHER REPRESENTATIONS OR WARRANTIES. THE EXPRESS REPRESENTATIONS AND WARRANTIES STATED IN THIS AGREEMENT AND THE JV TRANSACTION DOCUMENTS ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, REGARDING THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, CUSTOM, TRADE OR NON-INFRINGEMENT OR NON-MISAPPROPRIATION OF THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS. |
|
8.4 |
LIMITATION OF LIABILITY. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER UNDER THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL, SPECIAL, INCIDENTAL, EXEMPLARY, STATUTORY, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, EXCEPT FOR (i) LOOP’S BREACH OF Article 5, (II) SUCH PARTY’S INFRINGEMENT OR MISAPPROPRIATION OF THE OTHER PARTY’S INTELLECTUAL PROPERTY RIGHTS, (iii) SUCH PARTY’S GROSS NEGLIGENCE, FRAUD, OR WILLFUL MISCONDUCT, OR (iv) AMOUNTS PAYABLE TO THIRD PARTIES THAT ARE THE SUBJECT OF LOOP’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 8.4. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, THE AGGREGATE LIABILITY OF EITHER PARTY FOR ANY CLAIM (AS DEFINED BELOW) SHALL BE LIMITED TO THE GREATER OF (i) 100% (ONE HUNDRED PERCENT) OF THE UNITED STATES DOLLAR AMOUNT OF ITS RESPECTIVE SHAREHOLDERS CAPITAL CONTRIBUTION AS DEFINED IN THE JOINT VENTURE AGREEMENT, OR (ii) THE TOTAL AMOUNT OF ROYALTIES APPLICABLE TO THE LICENSED FACILITIES PAID OR PAYABLE AS OF THE DATE OF THE EVENT GIVING RISE TO THE CLAIM. THIS CAP ON LIABILITY SHALL NOT APPLY TO (A) INSTANCES OF FRAUD IN RELATION TO CLAIMS; AND (B) LOOP’S INDEMNITY OBLIGATIONS UNDER SECTION 8.5 BELOW. |
|
8.5 |
Indemnification for Infringement. Loop shall defend the JV Company and Ester and their respective directors, officers, and employees (collectively, the “Indemnitees”) from and against: (i) any documented and demonstrable direct damages and losses, including all reasonable and documented legal fees arising out of any breach of the Representations of Loop set out in Article 8.2 above; and (ii) any and all third party demands, claims, lawsuits, and actions asserted, made, or brought against any Indemnitee by any third party alleging infringement, misappropriation, or other violation of such third party’s Intellectual Property Rights solely by the Licensed Subject Matter and all Licensed Subject Matter Improvements (collectively, “Claims”), and Loop will indemnify the Indemnitees from and against all damages, losses, liabilities, obligations, settlements, judgments, costs and expenses, including all reasonable and documented legal fees, to the extent finally awarded by a court of competent jurisdiction to resolve such Claims or agreed to by Loop in settlement of such Claims (collectively, the “Losses”), except that Loop shall have no duty of indemnification for Claims or Losses arising or growing out of any Indemnitee’s gross negligence or willful misconduct. |
|
8.6 |
Any Claim for indemnity pursuant to Section 8.5 above (“Direct Indemnity Claim”), shall be made by the Indemnitees by notice (“Indemnity Claim Notice”) in writing to Loop as promptly as practicable and in any event within 30 (thirty) days of the Indemnitees becoming aware of the occurrence of any such Claim for indemnity pursuant to Section 8.5 above, which shall set out in reasonable detail, (a) the amount of Losses claimed along with the specific provision of the Agreement pursuant to which the Losses are being claimed, and (b) brief summary of the facts underlying or related to such Claim and a statement that the Indemnitees seeks indemnification for Losses relating to such Claim along with documentary support to substantiate the Claim and ensure that Loop has been given all reasonable information as available with the Indemnitees, to investigate and defend such Claim. It is clarified that the delivery of an Indemnification Notice shall not preclude the Indemnitees from raising additional Claims if after delivering the Indemnity Claim Notice there is any increase in the extent of Losses actually incurred than what was stated in the Indemnification Notice. |
|
8.7 |
Within thirty (30) business days of receipt of the Indemnity Claim Notice of such Direct Indemnity Claim or any such time as mutually agreed between the Parties, Loop may, (a) accept the Direct Indemnity Claim raised by the Indemnitees, or (b) issue a written notice to the Indemnitees stating that it is disputing the Direct Indemnity Claim raised by the Indemnitees and denying the liability to indemnify the Indemnitees for the Loss alleged to have been suffered by the Indemnitees, along with a summary of the basis for such objection (“Indemnity Dispute Notice”). It is hereby agreed that if Loop does not issue the Indemnity Dispute Notice within the aforesaid period, then, the Loop shall be deemed to have accepted the Indemnity Claim raised by the relevant Indemnitee(s). |
|
8.8 |
If the Indemnifying Parties issue an Indemnity Dispute Notice, the Indemnifying Parties and the Indemnified Party shall, within 30 (thirty) days from the date of Indemnity Dispute Notice, attempt in good faith to resolve the dispute in terms of Section 9.7 (Disputes). If the Parties succeed in reaching an agreement on the dispute, the relevant Parties shall promptly prepare and sign a memorandum setting out such agreement. |
|
8.9 |
Claims for indemnity for Loss specified in any indemnity Claim (a) which Loop accepts; and/ or (b) for which Loop issues the Indemnity Dispute Notice and which is determined per Section 9.7 (Disputes) are referred to, collectively, as “Agreed Claims”. |
|
8.10 |
Within 30 (thirty) days of any amounts being accepted or determined as Agreed Claims in accordance with the foregoing, Loop shall pay to the Indemnitees an amount equal to the Agreed Claims. |
|
8.11 |
If any claim or proceeding made against the Indemnitees, covered by the indemnity set forth in this Section 8 is at the behest of a third party (“Third Party Claim”), it shall be dealt with in the manner set out hereinafter: |
|
(a) |
The Indemnitees shall notify Loop of the Third Party Claim in writing as soon as reasonably practicable. Such notice must specify the facts giving rise to the claim as understood by Indemnitees and specify the amount of the claim, if known. It is hereby agreed by Loop that any failure or delay by the Indemnitees to notify Loop as aforesaid shall not prejudice the indemnification rights and/or remedies available to the Indemnitees; |
|
(b) |
Within 30 (Thirty) days of receipt of notice of the Third Party Claim from the Indemnitees, Loop shall have the right, but not the obligation, to (i) conduct and control any proceedings or negotiations, (ii) take such action as it shall deem necessary to avoid, dispute, deny, defend, resist, appeal, compromise or contest any such claim in the name of and on behalf of the Indemnitees; (iii) enter into any compromise or settlement of, or the entry of any judgment arising from, the Third Party Claim and/or make any payments pursuant thereto, in its sole discretion (provided the settlement includes a complete release of the Indemnitees with respect to the claim), and (iv) employ counsel to contest any such claim or liability. If Loop assumes such control, the Indemnitees shall have the right to (i) participate in the negotiation, settlement or defense of such Third Party Claims at its own expense; and (ii) respond to notices from any governmental authority within the timelines indicated in such notices; |
|
(c) |
If Loop fail to assume the defense of any such Third Party Claim, the Indemnitees shall have the right but not the obligation to defend against such claim at Loop’s expense (including attorney’s fee), and Loop shall cooperate with the Indemnitees in defending such Third Party Claim. In such case, Loop shall be bound by the results obtained by the Indemnitees with respect to such Third Party Claim including pursuant to the entry of any compromise or settlement of, or the entry of any judgment arising from, the Third Party Claim in the Indemnitees sole discretion. |
ARTICLE 9
GENERAL PROVISIONS
|
9.1 |
Subsidiaries of JV Company. To the extent that any Subsidiary of the JV Company benefits from this Agreement, JV Company shall procure that such Subsidiary abides by the terms and conditions of this Agreement applicable to JV Company. |
|
9.2 |
Licensor Bankruptcy. Notwithstanding any provision contained in this Agreement to the contrary, if Loop Party becomes a debtor under the United States Bankruptcy Code 11 U.S.C. §101 et. seq. or any similar law in any other country (the “Bankruptcy Code”) and rejects this Agreement pursuant to Section 365 of the Bankruptcy Code or any foreign equivalent provision (a “Bankruptcy Rejection”), then (i) the licenses to the Licensed Subject Matter Improvements and Licensed Subject Matter described under this Agreement shall be deemed fully retained by and vested in the Loop Parties and JV Company respectively, as protected intellectual property rights under Section 365(n)(1)(B) of the Bankruptcy Code, and further shall be deemed to exist immediately before the commencement of the bankruptcy case in which the JV Company or Loop Party is the debtor; and (ii) the non-debtor Loop Parties and JV Company shall have all of the rights afforded to non-debtor licensees under Section 365(n) of the Bankruptcy Code or any equivalent foreign provision. |
|
9.3 |
Independent Contractors. The Parties are independent contractors. Nothing contained in this Agreement or done pursuant to this Agreement shall constitute either Party as the agent of the other Party for any purpose or in any sense whatsoever or constitute the Parties as partners or joint venturers. |
|
9.4 |
Amendment. No alteration, amendment, waiver, cancellation or any other change in any term or condition of this Agreement shall be valid or binding on either Party unless mutually assented to in writing by both Parties. |
|
9.5 |
Notices. All notices required or permitted to be given under this Agreement shall be in writing and shall be delivered by prepaid air express or registered airmail, postage prepaid or by telefax, if confirmed or acknowledged, to the following: |
If to Loop:
Loop Industries, Inc.
480 rue Fernand-Poitras
Terrebonne, Québec J6Y 1Y4
Canada
Email: [***]
Attention: Daniel Solomita
With a copy to:
Norton Rose Fulbright Canada LLP
1 Place Ville Marie, Suite 2500
Montréal (Québec) H3B 1R1, Canada
Email: vincent.filiatrault@nortonrosefulbright.com
Attention: Vincent Filiatrault
If to JV Company:
Attn: Pradeep Kumar Rustagi and cc to Company Secretary
Address: Plot No.11 Block A, Infocity 1, Sector 34 Gurgaon 122001, Haryana, India
Email: [***]
With cc to: [***]
If to Ester:
Attention: Mr. Arvind Singhania and cc to Company Secretary
Address: Plot No.-11-A, Infocity-1, Sector 33–34, Gurgaon-122001, Haryana, India
E-mail: [***]
With cc to [***]
Each Party may change its address set forth above by written notice to the other.
|
9.6 |
Choice of Law. This Agreement shall be governed by and interpreted in accor‐dance with the laws of Republic of India, and all disputes arising out of this Agreement shall be dealt with in accordance with Section 9.8 below. |
|
9.7 |
Disputes. All disputes, difference, controversy or claim between the Parties arising out of or in relation to this Agreement or the construction, interpretation, breach, termination or validity thereof (hereinafter referred to as “Dispute”) shall, upon the written request of any Party be referred to the authorized representatives of that Party for amicable resolution. The authorized representatives shall promptly meet and attempt to negotiate in good faith a resolution of the Dispute. |
|
9.8 |
Arbitration. In the event that the Parties are unable to resolve the Dispute, then the Dispute shall be resolved in accordance with the provisions set out in Clause 17 of the JVA, which are hereby incorporated by reference. |
|
9.9 |
Waiver. Any failure by either Party to enforce at any time any terms and conditions of this Agreement shall not be considered a waiver of that Party’s right thereafter to enforce such terms and conditions or any other terms and conditions of this Agreement. |
|
9.10 |
Severability. Should any clause, sentence, section, article or paragraph of this Agreement judicially be declared to be invalid, unenforceable, or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement. |
|
9.11 |
Assignment. This Agreement shall enure to the benefit of, and shall be binding upon, the Parties and their respective successors and assigns, but no Party may assign this Agreement, in whole or in part, without the prior written consent of the other Parties, except to a person into which it has merged or who has otherwise succeeded to all or substantially all of the business and assets of the assignor, and who has assumed in writing or by operation of law its obligations under this Agreement. |
|
9.12 |
Entire Agreement. This Agreement (including its Exhibits) sets forth the entire agreement between the Parties as to the subject matter hereof and supersedes all previous negotiations, agreements and writings in respect thereto, and shall not be extended, supplemented or amended in any manner, except by an instrument in writing duly executed by authorized officers or representatives of both Parties. |
|
9.13 |
Counterparts. This Agreement may be executed in counterparts or duplicate originals, both of which shall be regarded as one and the same instrument, and which shall be the official and governing version in the interpretation of this Agreement. |
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in duplicate, as of the Effective Date, by their duly authorized officers or representatives.
| Loop Industries, Inc. | Ester Loop Infinite Technologies Private Limited |
| By: | By: |
| Name: Mr Daniel Solomita | Name: Mr Arvind Singhania |
| Title: Chairman and CEO | Title: Chairman |
| Ester Industries Ltd. | |
| By: | |
| Name: Mr Pradeep Kumar Rustagi | |
| Title: Director |
EXHIBIT A
LOOP MARKS
EXHIBIT B
LIST OF PATENTS FORMING PART OF THE LICENSE SUBJECT MATTER
EXHIBIT 31.1
SECTION 302 CERTIFICATION
I, Daniel Solomita, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of Loop Industries, Inc.; |
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|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
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|
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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||
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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||
|
(c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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||
|
(d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
|
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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||
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
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Date: October 15, 2026 |
/s/ Daniel Solomita |
|
|
Daniel Solomita |
||
|
President and Chief Executive Officer (principal executive officer) |
EXHIBIT 31.2
SECTION 302 CERTIFICATION
I, Spencer Hart, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of Loop Industries, Inc.; |
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|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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|
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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|
(c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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|
(d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
|
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
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||
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
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Date: October 15, 2026 |
/s/ Spencer Hart |
|
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Spencer Hart |
||
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Chief Financial Officer (principal financial officer and principal accounting officer) |
EXHIBIT 32.1
SECTION 906 CERTIFICATION
In connection with the accompanying Quarterly Report on Form 10-Q of Loop Industries, Inc. for the quarter ended August 31, 2026, the undersigned, Daniel Solomita, President and Chief Executive Officer of Loop Industries, Inc., does hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
such Quarterly Report on Form 10-Q for the quarter ended August 31, 2026, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
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|
(2) |
the information contained in such Quarterly Report on Form 10-Q for the quarter ended August 31, 2026, fairly presents, in all material respects, the financial condition and results of operations of Loop Industries, Inc. |
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Date: October 15, 2026 |
/s/ Daniel Solomita |
|
|
Daniel Solomita |
||
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President and Chief Executive Officer (principal executive officer) |
EXHIBIT 32.2
SECTION 906 CERTIFICATION
In connection with the accompanying Quarterly Report on Form 10-Q of Loop Industries, Inc. for the quarter ended August 31, 2026, the undersigned, Spencer Hart, Chief Financial Officer of Loop Industries, Inc., does hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
such Quarterly Report on Form 10-Q for the quarter ended August 31, 2026, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
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|
(2) |
the information contained in such Quarterly Report on Form 10-Q for the quarter ended August 31, 2026, fairly presents, in all material respects, the financial condition and results of operations of Loop Industries, Inc. |
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Date: October 15, 2026 |
/s/ Spencer Hart |
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Spencer Hart |
||
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Chief Financial Officer |
||
| (principal financial officer and principal accounting officer) |