Financial Analysis

15. Share-based Payments Stock Options The following table summarizes the continuity of the Company's stock options during the three month periods ended May 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 6,243,138 $ 2.96 2,771,216 $ 5.25 Granted 1,082,179 1.44 2,801,922 1.16 Exercised - - - - Forfeited - - - - Expired - - - - Outstanding, end of period 7,325,317 $ 5.59 5,573,138 $ 3.19 Exercisable, end of period 4,247,043 $ 3.74 2,711,727 $ 4.98 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 three month period ended May 31, 2026 and 2025 were as follows: 2026 2025 Exercise price $ 1.44 $ 1.16 Risk-free interest rate 3.82% - 3.89% 3.68% - 3.72% Expected dividend yield 0 % 0 % Expected volatility 82.12% - 84.31% 81% - 82% 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 three month periods ended May 31, 2026 and 2025 was $0.94 and $0.63 respectively. A summary of the Companys nonvested shares as of May 31, 2026 , and changes during the three month period ended May 31, 2026 were as follows: 2026 Number of Weighted average stock options exercise price Nonvested, beginning …

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7. Fair Value of Financial Instruments The following tables disclose the estimated fair value of the Company's financial liabilities as at May 31, 2026 and February 28, 2026 : Fair Value at May 31, 2026 Carrying Level in the Amount Fair Value hierarchy Financial liabilities accounted for at amortized cost: Series B Convertible Preferred stock (Note 10) $ 12,429 $ 12,455 Level 2 Long-term debt (Note 11) $ 3,012 $ 2,725 Level 2 Due to customer $ 918 $ 915 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) $ 12,054 $ 11,770 Level 2 Long-term debt (Note 11) $ 3,035 $ 2,873 Level 2 Due to customer $ 900 $ 897 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.

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"11. Long - Term Debt Long-term debt as of May 31, 2026 and February 28, 2026 , was comprised of the following: May 31, 2026 February 28, 2026 Investissement Quebec financing facility: Principal amount $ 2,994 $ 3,027 Unamortized discount (89 ) (101 ) Accrued interest 108 109 Total Investissement Quebec financing facility 3,013 3,035 Less: current portion of long-term debt (807 ) (605 ) Long-term debt, net of current portion $ 2,206 $ 2,430 Investissement Qu e bec financing facility The Company recorded interest expense on the Investissement Quebec loan for the three months ended May 31, 2026 in the amount of $33 , respectively ( 2025 $36 ) and an accretion expense of $11 , respectively ( 2025 $11 ). During the three month period ended May 31, 2026 , the Company made repayments of nil ( 2025 $55 ) on the Investissement Quebec loan. Total repayments due on the Company's indebtedness over the next five years are as follows: Years ending Amount February 28, 2027 599 February 29, 2028 834 February 28, 2029 834 February 28, 2030 834 Total $ 3,101 Credit facility from a Canadian bank On July 26, 2022, Loop Canada, Inc., a wholly-owned subsidiary of the Company (the ""Borrower""), entered into an Operating Credit Facility (the Credit Facility) with a Canadian bank. The Credit Facility allows for borrowings of up to CDN $3,500 in aggregate principal amount. The Credit Facility is secured by the Company's Terrebonne, Quebec property and was initially subject to a minimum equity covena …

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"Recently adopted accounting pronouncements In November 2024, the Financial Accounting Standards Board (FASB) issued ASU No. 2024 - 04, DebtDebt with Conversion and Other Options (Subtopic 470 - 20 ): Induced Conversions of Convertible Debt Instruments, which clarifies the accounting for settlements of convertible debt instruments that occur on terms different from the original contractual conversion terms. The amendments introduce a ""preexisting contract approach,"" requiring that, to qualify for induced conversion accounting, the inducement offer must preserve the form of consideration and provide an amount of consideration that is no less than what was issuable under the original conversion privileges. This guidance applies to convertible debt instruments with cash conversion features and to instruments that are not currently convertible but had substantive conversion features at issuance and at the time the inducement offer is accepted. The updated standard is effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted for entities that have adopted the amendments in ASU 2020 - 06. The updated standard will be effective for the first quarter ending May 31, 2026. The updated standard is potentially applicable to the future settlement or conversion of its Series B Convertible Preferred Stock (Series B CPS), which is classified as a liability and contains a substantive conversion …

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

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12. Stockholders' Deficit Common Stock For the period ended May 31, 2026 Number of shares Amount Balance, February 28, 2026 48,337,555 $ 5 Issuance of shares upon settlement of restricted stock units 42,816 - Issuance of shares upon exercise of stock options - - Issuance of shares for cash - - Balance, May 31, 2026 48,380,371 $ 5 For the period ended May 31, 2025 Number of shares Amount Balance, February 28, 2025 47,620,263 $ 5 Issuance of shares upon settlement of restricted stock units 98,087 - Balance, May 31, 2025 47,718,350 $ 5 During the three months ended May 31, 2026 , the Company recorded the following common stock transactions: (i) The Company issued 42,816 shares of common stock to settle restricted stock units that vested in the period. During the three months ended May 31, 2025 , the Company recorded the following common stock transaction: (i) The Company issued 98,087 shares of common stock to settle restricted stock units that vested in the period.

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