| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal year ended February 28, 2019 |
THE SECURITIES EXCHANGE ACT OF 1934
transition period from ___________ to __________
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(Exact name of |
Nevada | 27-2094706 | |
(State or other jurisdiction of |
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incorporation or organization) | (I.R.S. Employer Identification No.) | |
1999 Avenue of the Stars, Suite 2520
Los Angeles, California 90067
(Registrant'sRegistrant’s telephone number, including area code)code (450) 951-8555
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Securities registered pursuant to Section 12(b) of the Act: None
Common Stock, $.0001 Par Value
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock | LOOP | Nasdaq Global Market |
☒
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. Yes x ☒ No ☐¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
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Large accelerated filer |
| Accelerated filer |
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Non-accelerated filer |
| Smaller reporting company |
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(Do not check if a smaller reporting company) | Emerging growth company | ☐ | ||
Page No. | |||||
PART I | |||||
Item 1. | Business | 4 | |||
Item 1A. | Risk Factors |
| 10 | ||
Item 1B. | Unresolved Staff Comments |
| 17 | ||
Item 2. | Properties |
| 17 | ||
Item 3. | Legal Proceedings |
| 18 | ||
Item 4. | Mine Safety Disclosures |
| 18 | ||
PART II | |||||
Item 5. | Market for |
| 19 | ||
Item 6. | Selected Financial Data |
| 19 | ||
Item 7. |
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| 20 | ||
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
| 28 | ||
Item 8. | Financial Statements and Supplementary Data |
| 29 | ||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
| 30 | ||
Item 9A. | Controls and Procedures |
| 30 | ||
Item 9B. | Other Information |
| 31 | ||
PART III | |||||
Item 10. | Directors, Executive Officers and Corporate Governance |
| 32 | ||
Item 11. | Executive Compensation |
| 32 | ||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
| 32 | ||
Item 13. | Certain Relationships and Related Transactions, and Director Independence |
| 32 | ||
Item 14. | Principal Accounting Fees and Services |
| 32 | ||
PART IV | |||||
Item 15. | Exhibits and Financial Statement Schedules |
| 33 | ||
| Item 16 | Form 10-K Summary | 37 | |||
Signatures |
| 38 | |||
Our management
ITEM 1. BUSINESS
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS
Our Corporate History and Background
Loop Holdings, Inc. was incorporated on March 11, 2010 under the laws of the State of Nevada, under the name "Radikal Phones Inc." We changed our name to "First American Group Inc." on October 7, 2010, and then we changed our name to our current name, "Loop Industries, Inc.", effective July 21, 2015. From our formation on March 11, 2010 until June 29, 2015, we were engaged in the development, sales and marketing of VoIP telephone services to enable end-users to place free phone calls over the Internet in return for viewing and listening to advertising. Mazen Kouta served as President, Treasurer and a director, and Zeeshan Sajid served as Secretary and a director of our company from April 27, 2010 until their resignation on June 29, 2015. Concurrent with their resignation, Messrs. Kouta and Sajid appointed Daniel Solomita, the President, Secretary, Treasurer and Chairman of the Board Directors of Loop Holdings. Upon his appointment as a director on June 29, 2015, Mr. Solomita appointed himself as President and Chief Executive Officer, Secretary and Treasurer, and appointed Don Danks as a director.
Reverse Acquisition of Loop Holdings
All references to shares of common stock in this Annual Report on Form 10-K give effect to a one-for-four (1:4) reverse split of the Company's issued and outstanding shares of common stock, which reverse split took effect on the OTCQB on September 21, 2015.
On June 29, 2015, Loop Industries, Inc., a Nevada corporation (the "Company"), entered into a Share Exchange Agreement, 2015 (the "Share Exchange Agreement"), by and among the Company, Loop Holdings, Inc., a Nevada corporation ("Loop Holdings"), and the holders of common stock of Loop Holdings. The holders of the common stock of Loop Holdings consisted of 40 stockholders. Closing of the transactions under the Share Exchange Agreement also took place on June 29, 2015.
Under the terms and conditions of the Share Exchange Agreement, the Company offered, sold and issued 23,257,500 shares of common stock in consideration for all the issued and outstanding shares in Loop Holdings. The effect of the issuance was that Loop Holdings shareholders held approximately 78.1% of the issued and outstanding shares of common stock of the Company upon consummation of the Share Exchange Agreement. Additionally, Daniel Solomita, the Company's new President and Chief Executive Officer, Secretary, Treasurer and Chairman of the Board of Directors, became the holder of 17,000,000 shares of common stock of the Company, or 57.1% of the outstanding common stock of the Company, on a fully diluted basis. Donald Danks, also a director of the Company, became the beneficial holder of 1,000,000 shares of common stock of the Company. Pursuant to a Stock Redemption Agreement dated June 29, 2015 entered into commensurate with the share exchange, the Company redeemed 25,000,000 shares of First American Group common stock from two stockholders' for an aggregate redemption price of $16,000.
As a result of the share exchange, Loop Holdings became a wholly-owned subsidiary of the Company.
The share exchange transaction with Loop Holdings was treated as a reverse acquisition, with Loop Holdings as the acquiror and the Company as the acquired party. Unless the context suggests otherwise, when we refer in this Annual Report on Form 10-K to business and financial information for periods prior to the consummation of the reverse acquisition, we are referring to the business and financial information of Loop Holdings.
Issuance of One Share of Series A Preferred Stock to Daniel Solomita
On February 15, 2016, the Company and Mr. Solomita entered into an Amendment No. 1 to Employment Agreement (the "Amendment No. 1"), which amends the Employment Agreement. Amendment No. 1 provides that the Company shall issue Mr. Solomita one share of the Company's Series A Preferred Stock for consideration of Mr. Solomita agreeing not to terminate his employment with the Company for a period of five years from the date of Amendment No. 1. The effect of Amendment No. 1 is to provide Mr. Solomita control of the Company in the event that his presently-held 57% of the issued and outstanding shares of common stock of the Company is diluted to less than a majority. In order to issue Mr. Solomita his one share of Series A Preferred Stock under Amendment No. 1, the Company created "blank check" preferred stock. Subsequently, the board of directors of the Company approved a Certificate of Designation creating the Series A Preferred Stock. Subsequently, the Company issued one share of Series A Preferred Stock to Mr. Solomita.
The one share of Series A Preferred Stock issued to Mr. Solomita equals voting power equal to 65% of the voting power of the issued and outstanding shares of common stock of the Company so long a Mr. Solomita holds not less than 7.5% of the issued and outstanding shares of common stock of the Company, assuring Mr. Solomita of control of the Company in the event that his presently-held 57% of the issued and outstanding shares of common stock of the Company is diluted to a level below a majority.
Additionally, the one share of Series A Preferred Stock issued to Mr. Solomita contains protective provisions, which precludes the Company from taking the certain actions without Mr. Solomita's (or that of any person to whom the one share of Series A Preferred Stock is transferred) approval. More specifically, so long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock, voting as a separate class:
(a) amend the Articles of Incorporation or, unless approved by the Board of Directors, including by the Series A Director, amend the Company's Bylaws;
(b) change or modify the rights, preferences or other terms of the Series A Preferred Stock, or increase or decrease the number of authorized shares of Series A Preferred Stock;
(c) reclassify or recapitalize any outstanding equity securities, or, unless approved by the Board of Directors, including by the Series A Director, authorize or issue, or undertake an obligation to authorize or issue, any equity securities or any debt securities convertible into or exercisable for any equity securities (other than the issuance of stock-options or securities under any employee option or benefit plan);
(d) authorize or effect any transaction constituting a Deemed Liquidation (as defined in this subparagraph) under the Articles, or any other merger or consolidation of the Company;
(e) increase or decrease the size of the Board of Directors as provided in the Bylaws of the Company or remove the Series A Director (unless approved by the Board of Directors, including the Series A Director);
(f) declare or pay any dividends or make any other distribution with respect to any class or series of capital stock (unless approved by the Board of Directors, including the Series A Director);
(g) redeem, repurchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any outstanding shares of capital stock (other than the repurchase of shares of common stock from employees, consultants or other service providers pursuant to agreements approved by the Board of Directors under which the Company has the option to repurchase such shares at no greater than original cost upon the occurrence of certain events, such as the termination of employment) (unless approved by the Board of Directors, including the Series A Director);
(h) create or amend any stock option plan of the Company, if any (other than amendments that do not require approval of the stockholders under the terms of the plan or applicable law) or approve any new equity incentive plan;
(i) replace the President and/or Chief Executive Officer of the Company (unless approved by the Board of Directors, including the Series A Director);
(j) transfer assets to any subsidiary or other affiliated entity (unless approved by the Board of Directors, including the Series A Director);
(k) issue, or cause any subsidiary of the Company to issue, any indebtedness or debt security, other than trade accounts payable and/or letters of credit, performance bonds or other similar credit support incurred in the ordinary course of business, or amend, renew, increase or otherwise alter in any material respect the terms of any indebtedness previously approved or required to be approved by the holders of the Series A Preferred Stock (unless approved by the Board of Directors, including the Series A Director);
(l) modify or change the nature of the Company's business;
(m) acquire, or cause a Subsidiary of the Company to acquire, in any transaction or series of related transactions, the stock or any material assets of another person, or enter into any joint venture with any other person (unless approved by the Board of Directors, including the Series A Director); or
(n) sell, transfer, license, lease or otherwise dispose of, in any transaction or series of related transactions, any material assets of the Company or any Subsidiary outside the ordinary course of business (unless approved by the Board of Directors, including the Series A Director).
Overview of Loop Holdings
Our wholly owned subsidiary, Loop Holdings was incorporated on October 23, 2014, in Nevada.
The business of Loop Holdings is the principal business of the Company. Loop Holdings is in the business of depolymerizing waste plastics and converting them into valuable chemicals. We have never generated any revenues. The commercialization of our depolymerization technology is in its incipient stages must be scaled-up before we can commercialize the technology and generate any revenues. Commercialization will consist of selling depolymerized PET, and could, secondarily, the licensing of our depolymerization technology.
In addition to $445,050 paid by the Company under the Intellectual Property Assignment Agreement on April 1, 2015, the agreement provides that the Company will make additional payments totaling CDN$800,000 to be paid to Mr. Essaddam within sixty (60) days of each of the following milestones (the "Milestones") having been met, as follows:
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As of February 29, 2016, and as of June 8, 2016, none of the Milestones have been met, and accordingly no CDN$200,000 payment has been made.
Additionally, the Company is obligated to make royalty payments of up to CDN$27,000,000, payable as follows:
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As of February 29, 2016, and as of June 8, 2016, we have not made any royalty payments under the Intellectual Property Assignment Agreement.
Closing of the transactions under the Intellectual Property Assignment Agreement occurred on October 27, 2014, when Mr. Essaddam and 9319-7218 Quebec Inc., an entity controlled by Mr. Essaddam, executed an Assignment and Moral Rights Waiver to Loop Holdings, assigning the depolymerization technology underlying the business of Loop Holdings to Loop Holdings. Loop Holdings has paid all consideration (except for possible future royalty payments) and met all closing conditions under the Intellectual Property Assignment Agreement. As of October 27, 2014, and as of the date of the filing of this Annual Report on Form 10-K, Loop Holdings has full and unconditional title to, and there are no restrictions to the use of, the depolymerization technology and any other intellectual property the subject of Intellectual Property Assignment Agreement.
business:
Depolymerizationpackaging as well as on polyester fiber for a variety of PETapplications including textiles.
Our depolymerization of PET process is completed through a series of chemical reactions. Once PET is depolymerized, the result is two principal parts called "monomers." The two monomers are called "purified terephthalic acid and ethylene glycol.
Our depolymerization process is summarized as follows:
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Our principal administrative offices are located at 1999 Avenue of the Stars, Suite 2520, Los Angeles, California 90067. We operate from facilities near Montreal, Canada. Our website is www.loopindustries.com.
Summary of our Business
Our business focuses on depolymerizing waste plastics and converting them into valuable chemicals, ready to be reintroduced into the manufacturing of virgin plastics. Our proprietary technology breaks down polyethylene yerephthalate ("PET") into its base chemicals, purified terephthalic acid ("PTA")that depolymerizes no and ethylene glycol ("EG"), at a recovery rate of 100%.
Loop Holdings' technology useslow value waste PET plastics such as water bottles, soda bottles, consumer packaging, carpets and industrial waste as feedstock to process. These feedstock are readily available through municipal triage centers, industrial recycling and landfill reclamation projects.
Purified terephthalic acid is a high-value chemical currently selling at approximately $1,000 per metric ton, used mainly in the production of PET plastic and polyester fiber.fiber, including plastic bottles and packaging, carpet and polyester textile of any color, transparency or condition and even ocean plastics that have been degraded by the sun and salt, to its base building blocks (monomers). The resulting product appears as a crystalline substance, which is thenmonomers are filtered, purified dried and stored. repolymerized to create virgin-quality Loop™ branded PET plastic resin and polyester fiber suitable for use in food-grade packaging to be sold to consumer goods companies to help them meet their sustainability objectives. Through our customers and production partners, Loop is leading a global movement toward a circular economy by commercializing a leading-edge technology which will ensure plastic stays in the economy for a more sustainable future for all.
Ethylene glycol ("EG") is an organic compound primarily used as a raw materialbe present in the manufactureocean than fish (by mass). Couple this information with the global annual market demand for PET plastic and polyester fiber at nearly $130 billion, and the current growth projections from the 2018 IHS Polymer Market Report indicating this will exceed $160 billion by 2022, and the need for governments and consumer brands to take decisive action to stem this global plastic crisis becomes readily apparent.
Raw Material
sustainable Loop™ PET plastic resin and is our sourcefully subscribed by leading global consumer brands.
PET does not create a direct hazardCompany has contributed $500,000 to the environment, butjoint venture. Also, due to its substantial fraction volume inincreasing market demand from existing and potential customers, and the plastic waste streampositive work on the preliminary engineering conducted at the facility, the joint venture is evaluating options to increase the capacity at the plant to 40,000 metric tonnes and its high resistancethe Company anticipates a decision to atmospheric and biological agents, it could be considered as a noxious material. PET accounts for 8%made by weight and 12% by volumethe second quarter of the world's solid waste.
PET recycling represents one offiscal year 2020. If the most successful and widespread examples of polymer recycling. The main driving force responsible forjoint venture decides to expand production capacity, this extremewould increase in recycling of post-consumer PET is its widespread use, particularly in the beverage and food industry.
PET bottles are characterized by high strength, low weight and permeability of gases (mainly CO 2), as well as by their aesthetic appearance (good light transmittance, smooth surface). They do not have any side effect on the human organism. Many attempts are currently directed toward recycling of PET waste, because of the interests in environmental protection, energy preservation and economic benefits.
Among the different recycling techniques (primary, mechanical, chemical and energy recovery), the acceptable one accordingCompany’s required equity contribution to the principles of "sustainable development" is chemical recycling, since it leads tojoint venture. The Company expects that the formation of the raw materials from which the polymer is made, as well as of other secondary value-added products. Chemical recycling has been defined as the process leading to total Depolymerization of PET into monomers, or partial Depolymerization into oligomers and other chemical substances.
According to NAPCOR (National Association for PET Container Resources), in 2012 in the US:
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The NAPCOR United Kingdom Statistics for 2011 PET Recycling include:
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Among the various methods of PET recycling the most common is mechanical recycling, which refers to operations that aim to recover plastics waste via mechanical processes (grinding, washing, separating, drying, re-granulating and compounding), thus producing recycled plastic that can be converted into new plastics products, often substituting for virgin plastics.
The disadvantages to mechanical recycling of PET are that sorting is very labor intensive, and high energy costs are associated with the processing of material. Mechanical PET recycling is also limited to single stream PET with no contamination. Other challenges include quality degradation and color of the feedstock.
Depolymerization
Depolymerization presents two unique advantages in recycling resin-based products: (i) the ability to return a recovered resin to virgin-resin-like quality, and (ii) the potential to recover a valuable feedstock from products that are economically challenging to recycle. When plastic is mechanically recycled, even small levels of contamination can compromise the performance of the resin. However, because Depolymerization breaks down plastics into monomer form, that contamination is removed.
We have developed a proprietary process that enables us to depolymerize PET into its purest form of purified terephthalic acid ("PTA") and ethylene glycol ("EG"), under normal atmospheric pressure and at room temperature. Our unique Depolymerization process can bring even degraded, colored or heavily contaminated PET that is not recyclable back to life in the form of its base monomers, terephthalic acid and ethylene glycol. The resulting monomers (PTA & EG)additional capacity will be sold to virginexisting and new customers that are currently under negotiation.
even consumer good companies around the world is compelling. We have had our depolymerizedfurther believe this will create a recurring licensing revenue stream for us while expanding the capacity of Loop™ PET tested in third-party laboratory settings. Samples of PTAplastic resin and EG have been sent to the University of Montreal, Canada, where purity testing has been conducted using a process known as high performance liquid chromatography ("HPLC-MS"), which tests for the level of impurities on a parts-per-million basispolyester fiber in the samples ofmarketplace to meet the substantial demand from consumer goods companies.
The demandDrinkworks by Keurig®, to return used Drinkworks pods to Loop where the PET from the pods will be processed using Loop’s technology to make Loop™ PET plastic resin and polyester fiber and all other recyclable components are sent for terephthalic acid is expectedrecycling;
The global market volume for ethylene glycols was 16.5 million metric tons (36 billion pounds) in 2013 and is expected to reach 22.8 million metric tons (45 billion pounds) by 2020, growing at a CAGR of 4.7% from 2014 to 2020.
Prospective Future growth
We believe that PET depolymerization expansion will drive near-term growth for Loop Holdings by opening strategically depolymerization plants close to large supplies of raw PET plastic. The largest citieswork towards becoming the first major cosmetics company in the world produceto close the most waste. By openingloop on their PET plastic packaging by incorporating Loop™ PET; and
Medium-term growth will occur with the production of virginLoop™ PET resin manufactured using our feedstock ofover mechanically recycled PTA and glycol. We will attempt to be the first company with the ability to market virgin PET, resin made from 100% recycled material.
Our long-term growth is tied to our ability to depolymerizeuse materials that nearly all other plastics, such as Nylon 6, Nylon 6/6, HIPSrecyclers do not use. This also means we are creating a new market for materials that have persistently been leaking out of the waste management system and PE. into our shared rivers, oceans and natural areas.
material traditionally available for recycling, but how material can be effectively diverted from landfill, rivers, oceans and natural areas by providing a new outlet for what was formerly considered waste.
On February 1, 2016, we received a Notice of Allowance for a U.S.
expected to expire no earlier than 2039, if granted.
We will be required to comply with regulations, rules and directives of governmental authorities and agencies applicable to the construction and operation of any facility in any jurisdiction which we would conduct activities.
We do not believe that government regulation will have a material impactmerger.
Employees
Ascommon stock was quoted on the OTCQB tier of the date hereof, we have 12 employees, our President and Chief Executive Officer, Secretary, Treasurer and Chairman ofOTC Markets Group Inc. under the Board of Directors Daniel Solomita, who works full-time for the Company.
Research and Development Expenditures
For the years ended February 29, 2016 and the period fromstock symbol “LLPP.” From September 26, 2012 to October 24, 2014 to February 28, 2015, our research expenditures were $801,666 and $40,614, respectively.
Bankruptcy or Similar Proceedings
We have never been subject to bankruptcy, receivership or any similar proceeding.
Reorganizations, Purchase or Sale of Assets
Other thatcommon stock was quoted on the closingOTCQB tier of the transactionsOTC Markets Group Inc. under the Sharestock symbol “FAMG.”
annual report before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected. adequate for our current needs. our intellectual property rights in the future if we believe that our rights have been violated. It is also possible that we may expend financial and managerial resources to defend against claims that our products and services infringe upon the intellectual property rights of third parties. Common Stock Bid Price Financial Quarter Ended High ($) Low ($) February 29, 2016 November 30, 2015 August 31, 2015 May 31, 2015 February 29, 2015 November 30, 2014 August 31, 2014 May 31, 2014 “FAMG.” future. There are no coupled with investment representations obtained from the purchasers. 28, 2019. page 4. Operation our ongoing operations. straight-line method over 7 years. 28, 2019 Contents Page(s) F-1 Consolidated balance sheets as at February Consolidated statements of operations and comprehensive loss for the Consolidated statement of changes in Consolidated statement of cash flows for the Notes to the consolidated financial statements February 29, 2016 February 28, Assets Current Assets Cash Valued added tax and other receivables Prepayments and other current assets Total current assets Property and Equipment Machinery and equipment Office equipment and furniture Leasehold improvements Accumulated depreciation and amortization Property and equipment, net Intellectual Property Intellectual property Accumulated amortization Intellectual property, net Total assets Liabilities and Stockholders' Equity Current Liabilities Accounts payable and accrued liabilities Accrued Officers Compensation Intellectual Property Obligation Advances from majority stockholder Total current liabilities Commitments and Contingencies Stockholders' Equity Series A Preferred stock par value $0.001; 25,000,000 shares authorized; one share issued and outstanding at February 29, 2016 Common stock par value $0.0001: 250,000,000 shares authorized; 29,910,800 and 20,498,750 shares issued and outstanding, respectively Additional paid-in capital Common stock issuable, 204,667 shares Accumulated deficit Accumulated other comprehensive gain Total stockholders' equity Total liabilities and stockholders' equity See accompanying notes to the consolidated financial . For the ended For the period from October 23, 2014 (inception) to February 29, February 28, Revenue Operating Expenses - General and administrative Research and development Depreciation of fixed assets and amortization of intangible assets Cost of reverse merger Foreign exchange loss (gain) Total operating expenses Net Loss Other comprehensive income - Foreign currency translation adjustment Comprehensive Loss Loss per share - Basic and Diluted Weighted average common shares outstanding - Basic and Diluted Common stock Preferred stock Common Accumulated Other Comprehensive Number of Shares Amount Number of shares Amount Paid-in Capital Stock Accumulated Deficit Income (Loss) Stockholders' Equity October 23, 2014 (inception) - $ - Issuance of common shares upon formation Issuance of common shares for cash Issuance of fully vested, nonforfeitable common shares for future services Issuance of common shares for services Net loss Balance, February 28, 2015 - - - - Issuance of common shares for cash Common stock issuable Fair value of Warrants issued for services Fair value of Shares Issued as a Settlement Issuance of common shares upon reverse merger Foreign currency translation Issuance of preferred share to an officer Net loss Balance, February 29, 2016 $ 28, 2019, 2018 and 2017 For the Period from For the ended October 23, February 29, February 28, 2015 Cash Flows from Operating Activities Net loss Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense Amortization expense Amortization of the fair value of common shares issued for services Fair value of shares issued for services and settlement Fair value of warrants issued for services Cost of reverse merger Changes in operating assets and liabilities: Valued added tax and other receivables Prepayments and other current assets Accounts payable and accrued liabilities Accrued officer compensation Intellectual property obligation Advances from majority stockholder Net Cash Provided by (Used in) Operating Activities Cash Flows from Investing Activities Purchases of property and equipment Purchases of intellectual property Net Cash Used in Investing Activities Cash Flows from Financing Activities Proceeds from sales of common shares Advances from issuable common shares Net Cash Provided by Financing Activities Effect of exchange rate changes Net Change in Cash Cash - beginning of period Cash - end of period Supplemental disclosure of cash flow information: Income tax paid Non-cash investing and financing activities: Fair value of common stock issued for services that was recorded as prepaid expense Net Liabilities assumed upon reverse merger 2019, 2018 and 2017 and Going Concern 2010. On the OTCQB tier of the OTC Markets Group Inc. under the stock symbol “FAMG.” presentation (collectively, the “Company”). The Company estimates stock-based compensation and the fair value of convertible notes and related warrants. Level 1 A quoted price in an active market for identical assets or liabilities. Level 2 Significant pricing inputs are observable inputs, which are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Level 3 Significant pricing inputs are unobservable inputs, which are inputs that reflect the Generally, warrants that are both indexed to the Company’s own stock and that would be classified as equity instruments are not classified as derivative instruments under this guidance. A key element to consider in determining if a warrant would be considered indexed to the Company’s own stock is if the warrants settlement amount is equal to the difference between the fair value of a fixed number of equity shares and a fixed monetary amount. This criterion is sometimes known as the “fixed-for fixed” criteria. In cases where the fixed for fixed criteria are not met, the warrants are classified as derivative instruments. transactions Year Ended, 2016 2015 Period end Canadian $: US Dollar exchange rate Average period Canadian $: US Dollar exchange rate net investment in the subsidiary which are included in OCI. tax credits receivable use these non-refundable federal research and development tax credits. During the year ended February 28, 2019, the Company was eligible for non-cash research and development tax credits in the amount of $255,975 (2018 - $248,690; 2017 – $25,227). equipment Building Machinery and operations and comprehensive loss. cost and are amortized over their estimated useful lives, unless the useful life is indefinite, using the straight-line method over 7 years. grant. taxes development expenses $1.5 million, respectively, and are net of government research and development tax credits and government grants from the federal and provincial taxation authorities accrued and recorded during the year based on qualifying expenditures incurred during the fiscal year. share (2018 – 140,667; 2017 – 637,670). adopted accounting pronouncements Estimated Useful February 29, February 28, Life 2016 2015 (years) Machinery and Equipment 5 - 7 $ $ Office equipment and furniture 5 - 8 Leasehold improvements 3 Less: accumulated depreciation Property and equipment, net $ $ 2017 in which the Company previously was a tenant, the Company performed a review of the useful lives of its property, plant and equipment. Building improvements, previously classified as leasehold improvements, have had their useful lives adjusted to 5 years from 3 years. During the year ended February 28, 2018, the Company recorded an adjustment of $8,000 to reflect the deceleration of the depreciation. basis Agreement, referred to as the GEN I technology. The Company has determined that it have no intent of commercializing the GEN I technology. Amount 2017 2018 2019 2020 2021 Thereafter Total Also, as at February 28, 2017, accrued compensation totaling $360,000 was owed to Mr. Solomita. During the year ended February 28, 2018, the Company paid to Mr. Solomita or companies controlled by him, as applicable, an aggregate amount of $638,472. As at February 28, 2019, no amounts were owed to Mr. Solomita or to companies controlled by him. restated on July 13, 2018. record any additional compensation expense. warrants, and standard anti-dilution protection for a period of ninety days, following the date of closing of the private placement round, which in the event the Company issues common stock for consideration of less than $12.00 per share, allows for an adjustment to the conversion ratio. the pricing model were as follows: Number of Warrant Shares Exercise Price Range Per Share Weighted Average Exercise Price Aggregate Intrinsic Value Balance, February 28, 2015 $ Granted $ Canceled Exercised - Expired Balance, February 29, 2016 $ Earned and exercisable, February 29, 2016 $ Unvested, February 29, 2016 $ Warrants Outstanding Warrants Exercisable Range of Exercise Prices Number Outstanding Average Remaining Contractual Life (in years) Weighted Average Exercise Price Number Exercisable Average Remaining Contractual Life (in years) Weighted Average Exercise Price 0.80 6.00 February 29, 2016 February 28, 2015 Net deferred tax assets – non current: Expected income tax benefit from NOL carry-forwards Less valuation allowance Deferred tax assets, net of valuation allowance For the reporting period ended February 29, 2016 For the reporting period ended February 28, 2015 Federal statutory income tax rate Change in valuation allowance on net operating loss carry-forwards Effective income tax rate February, 2016 February 2017 $ February 2018 Total $ Year ended February 29, 2016 United States Canada Total Revenue Cost of revenue - - - General and administrative Research and development Depreciation and amortization Cost of reverse merger Foreign exchange loss (gain) Loss from operations As at February 29, 2016 United States Canada Total Current assets $ Property and equipment, net Intangible assets, net Total assets $ Current liabilities 182,673 882,538 1,065,211 Equity 2,702,980 (1,285,502 1,417,478 Total liabilities and equity 2,885,653 (402,964 2,482,689 Period ended February 29, 2015 United States Canada Total Revenue Cost of revenue General and administrative Research and development Depreciation and amortization Cost of reverse merger Foreign exchange loss (gain) Loss from operations As at February 29, 2015 United States Canada Total Current assets Property and equipment, net Intangible assets, net Total assets Current liabilities Equity Total liabilities and equity joint venture with Indorama Ventures Holdings LP, USA. over Financial Reporting our security holder director nomination procedures is incorporated by reference to the information set forth in the section entitled “Corporate Governance” in our Proxy Statement. Information regarding Section 16 reporting compliance is incorporated by reference to the information set forth in the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” in our Proxy Statement. following hyperlink: Name and Year Salary Bonus Stock Option Non-Equity Nonqualified All Other Total Mazen Kouta (1) 2016 2015 Zeeshan Zajid (2) 2016 2015 Daniel Solomita (3) 2016 2015 Proxy Statement. Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) Mazen Kouta (1) Zeeshan Zajid (2) Daniel Solomita (3) Don Danks (4) Name Fees Earned or Paid in Cash Stock Awards Option Awards Non-Equity Incentive Plan Compensation($) Nonqualified Deferred Compensation Earnings All Other Compensation($) Total Mazen Kouta (1) Zeeshan Sajid (2) Daniel Solomita (3) Donald Danks (4) Title of Class Name and Address of Beneficial Owner (5) Amount and Nature of Beneficial Ownership (4) Percent of Stock (1) Common Stock Daniel Solomita (2) Common Stock Donald Danks (3) All directors and executive officers as a group (2 persons) Proxy Statement. Proxy Statement. section entitled “Ratification of Appointment of Independent Registered Public Accounting Firm” in our Proxy Statement. LOOP INDUSTRIES, INC. /s/ Daniel Solomita Name: Daniel Solomita Title: Chief Executive Officer, President, As a "smaller reporting company," as defined in Rule 12b-2Exchange Act,other information included in this Form 10-K before making an investment decision with regard to our securities. The statements contained in or incorporated herein that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, you may lose all or part of your investment.calledespecially where we believe patent protection is not appropriate or obtainable. However, trade secrets are difficult to protect. Litigating a claim that a third party had illegally obtained and used our trade secrets would be expensive and time consuming, and the outcome would be unpredictable. Moreover, if our competitors independently develop similar knowledge, methods and know-how, it will be difficult for us to enforce our rights and our business could be harmed.Item.ITEMITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEMITEM 2. PROPERTIESWe currently do not own any physical property or own any real property. Ourare located at 1999 Avenue of the Stars, Suite 2520, Los Angeles, California 90067. Ourand 17,962 square feet for our innovation and operational activities. We believe that our existing facilities are located near Montreal, Quebec, Canada. We do not own any real estate or other physical propertiesITEMITEM 3. LEGAL PROCEEDINGScurrently involved inpresently 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.are not awaremay expend financial and managerial resources in the defense of any pending or potential legal actions.ITEMITEM 4. MINE SAFETY DISCLOSURESITEMITEM 5. MARKET FOR REGISTRANT'SREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESSince19,29, 2015 through April 7, 2017, our common stock was quoted on the OTCQB tier of the OTC Markets Group Inc., under the stock symbol "LLPP." Between“LLPP.” From September 26, 2012 andto October 28, 2015, our shares of common stock werewas quoted on the OTCQB tier of the OTC Bulletin Board and the OTCQB,Markets Group Inc. under the stock symbol "FAMG". The following table shows the reported high and low closing bid prices per share for our common stock based on information provided by the OTCQB. The over-the-counter market quotations set forth for our common stock reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.3.20 4.00 3.93 4.25 1.06 1.06 1.06 1.06 1.06 1.06 1.06 1.06 1.06 1.06 1.06 1.06 HOLDERSof June 9, 2016,at May 2, 2019, there were 29,773,30034,875,032 shares of common stock issued and outstanding (excluding shares of common stock issuable upon conversion or conversion into shares of common stock of all of our currently outstanding Series A Preferred Stock and exercise of our warrants) held by approximately 8778 stockholders of record. We believe that we have moreThe actual number of stockholders is greater than 100this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of our common stock.TRANSFER AGENTOur transfer agent is Empire Stock Transfer of Henderson, Nevada. Their address is 1859 Whitney Mesa Dr., Henderson, Nevada 89014, and their telephone number is (702) 818-5898.DIVIDENDSHistorically, werecord also does not include stockholders whose shares may be held in trust by other entities.paiddeclared any dividends to the holders of our common stock and we do not expectplan to paydeclare any such dividends in the foreseeable future as we expect to retain our future earnings for use in the operation and expansion of our business.RECENT SALES OF UNREGISTERED SECURITIESunreported salesrestrictions in our Articles of equityIncorporation or By-laws that prevent us from declaring dividends. The Nevada Revised Statutes, however, prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:at February 29, 2016.coupled with investment representations obtained from the purchasers.SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANShave not established any compensation plans under which equityrelied on Section 4(a)(2) of the Securities Act or the private offering safe harbor provision of Rule 506 of Regulation D promulgated thereunder based on the following factors: (i) the number of offerees or purchasers, as applicable, (ii) the absence of general solicitation, (iii) representations obtained from the purchasers relative to their accreditation and/or sophistication and/or their relationship to the company (directors and officers), (iv) the provision of appropriate disclosure, and (v) the placement of restrictive legends on the certificates reflecting the securities are authorized for issuance.12PURCHASES OF EQUITY SECURITIES BY THE REGISTRANT AND AFFILIATED PURCHASERS29, 2016."smaller“smaller reporting company,"” as defined in Rule 12b-2 of the Exchange Act, and therefore, we are not required to provide the information called for by this Item.ITEMITEM 7. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSdiscussioninformation and analysis of our financial condition and results of operationsany forward-looking statements should be read in conjunction with our financial statements and related notes included“Risk Factors” discussed elsewhere in this report.All referencesReport. Please refer to shares of common stock in this Annual Reportthe Cautionary Note Regarding Forward-Looking Statements on Form 10-K give effect to a one-for-four (1:4) reverse split of the Company's issued and outstanding shares of common stock, which reverse split took effect on the OTCQB on September 21, 2015.Recent DevelopmentsReverse Acquisition of Loop HoldingsOn June 29, 2015, we completed a reverse acquisition transaction through a share exchange with Loop Holdings whereby we acquired all of the issued and outstanding shares of Loop Holdings in exchange for 23,257,500 shares of our common stock.Under the terms and conditions of the Share Exchange Agreement, First American Group issued 23,257,500 shares of its common stock for the acquisition of all of the issued and outstanding shares of Loop Holdings. The number of common shares issued represented approximately 78.1% of the issued and outstanding common stock immediately after the consummation of the Share Exchange Agreement and Stock Redemption Agreements. The board of directors and the members of the management of First American Group resigned and the board of directors and the member of the management of Loop Holdings became the board of directors and the member of the management of the combined entities upon consummation of the Share Exchange Agreement.As a result of the controlling financial interest of the former stockholders of Loop Holdings, Inc., for financial statement reporting purposes, the merger between First American Group and Loop Holdings was treated as a reverse acquisition, with Loop Holdings deemed the accounting acquirer and First American Group deemed the accounting acquiree under the acquisition method of accounting in accordance with the Section 805-10-55 of the FASB Accounting Standards Codification. The reverse acquisition is deemed a capital transaction in substance whereas the assets and liabilities of Loop Holdings, Inc. (the accounting acquirer) are carried forward to First American Group (the legal acquirer and the reporting entity) at their carrying value before the combination and the equity structure (the number and type of equity interests issued) of Loop Holdings,Industries, Inc. is being retroactively restated usingan innovative technology company focused on sustainability. Our mission is to accelerate the exchange ratio established in the Share Exchange Agreementworld’s shift toward sustainable plastic and Stock Redemption Agreementsaway from its dependence on fossil fuels. Loop’s patented and proprietary technology decouples plastic from fossil fuels by depolymerizing waste polyester plastic and fiber to reflect the number of shares of First American Group issued to effect the acquisition. The number of common shares issued and outstanding and the amount recognized as issued equity interests in the consolidated financial statements is determined by adding the number of common shares deemed issued and the issued equity interests of Loop Holdings, Inc. immediately prior to the business combination to the unredeemed shares and the fair valueof First American Group determined in accordance with the guidance in ASC Section 805-40-55 applicable to business combinations, i.e. the equity structure (the number and type of equity interests issued) in the consolidated financial statements immediately post combination reflects the equity structure of First American Group, including the equity interests the legal acquirer issued to effect the combination.Loop Holdings was incorporated on October 23, 2014, in Nevada. We are a development company and have never generated any revenues. The commercialization of our depolymerization technology is in its incipient stages and must be scaled-up before we can commercialize the technology and generate any revenues. The depolymerization technology underlying the business of Loop Holdings was originally developed by Hatem Essaddam, who sold the depolymerization technology to Loop Holdings for a purchase price of up to $445,050 and contingent consideration consistent in up to CDN$800,000 pursuant to an Intellectual Property Assignment Agreement dated October 27, 2014, by and among Hatem Essadam, Loop Holdings, and Daniel Solomita, our President and Chief Executive Officer, Secretary, Treasurer and Chairman of the Board of Directors.13Our depolymerization of polyethylene terephthalate (PET) process is completed through a series of chemical reactions is completed at room temperature and under normal atmospheric pressure.base building blocks (monomers). The resulting monomers of the depolymerization is purified terephthalic acid and ethylene glycol.Our depolymerization process is summarized as follows:·PET bottles are shredded into 5 mm size pieces;·Shredded PET is put into a large reactor, where certain chemicals are added;·The PET molecular chain begins to be broken down in 20 minutes;·Purified terephthalic acid (solid) and ethylene glycol (liquid) and mother liquor are separated using a combination of centrifugation and distillation;·The mother liquor is returned to the reactor to be reused in the process; and·Purified terephthalic acid and Ethylene Glycol are processed and packaged.PLAN OF OPERATIONWe have not yet generated or realized any revenues from our business. We are aiming to become an environmentally friendly manufacturer of purified terephthalic acid (PTA) and mono ethelyne glycol (MEG), these high purity specialty chemicals are mainly used in the production of Polyethylene terephthalate. We have completed the construction of our pilot plant facility which is capable of producing 5000 lbs. per day of high purity PTA and MEG, we are currently doing qualification testing of the resulting resin with potential costumers. We are currently refining our process to ensure an easy transition from pilot scale to full scale commercial manufacturing facility. We anticipate that this facility will have the initial capacity to process approximately 36,000,000 lbs. ofthen polymerized into virgin-quality PET plastic per year. Estimated coststhat meets FDA requirements for use in food-grade plastic packaging, such as water and soda bottles, and polyester fiber for textile applications.facilityprovides it with an innovative technology to help achieve our mission.approximately $15 million dollars.Resultsavailable through municipal triage centers, industrial recycling and landfill reclamation projects.OperationsForDuring the year ended February 29, 201628, 2019, we continued executing our corporate strategy where Loop focused on developing three major streams of revenue. These revenue streams are expected to be from the sale of Loop™ PET plastic resin and polyester fiber to customers from our joint venture with Indorama Ventures Limited (“IVL”), license fees from our Waste-to-Resin (“WtR™”) facilities and development fees from the sale and construction of WtR™ facilities around the world. In September of 2018, in connection with the first of these streams, we announced a joint venture with IVL to manufacture and commercialize sustainable Loop™ branded PET plastic resin and polyester fiber to meet the growing global demand from beverage and consumer packaged goods companies. The 50/50 joint venture has an exclusive world-wide license to use our technology to retrofit existing IVL facilities, so each can produce 100% sustainable Loop™ PET plastic resin and polyester fiber. The first facility, in Spartanburg, South Carolina, is anticipated to begin commercial production in the second half of the calendar year 2020 and is expected to produce 20,700 metric tonnes of sustainable Loop™ PET plastic resin and is fully subscribed by leading global consumer brands. As part of the joint venture agreement to establish the facility to produce 20,700 metric tonnes, the Company is committed to contribute its equity share of the costs under the joint venture agreement to construct the facility. As at May 2, 2019, the Company has contributed $500,000 to the joint venture. Also, due to increasing market demand from existing and potential customers, as well as the positive work on the preliminary engineering work conducted at the facility, the joint venture is evaluating options to increase the capacity at the plant to 40,000 metric tonnes and anticipates a decision to be made by the second quarter of the fiscal year 2020. This would entail increasing the Company’s equity contribution. Revenues Operating expenses Research and development Stock based compensation Other research and development Total research and development General and administrative Stock-based compensation Legal settlement Other general and administrative Total general and administrative Depreciation and amortization Impairment of intangible assets Interest and other finance costs Foreign exchange loss (gain) from October 23, 2014 (Inception) toended February 28, 2015We recorded no revenues2018. Other variances were attributable to higher employee related expenses of $0.4 million associated with an increased number of employees, offset by lower legal, accounting and other professional fees of $0.1 million and by lower other general operating expenses of $0.2 million. Stock-based compensation expense for the three-month period ended February 28, 2019 amounted to $0.6 million compared to $0.8 million for the three-month period ended February 28, 2018, representing an increase of $0.2 million. The decrease was mainly attributable the timing of certain stock awards provided to executives. Revenues Operating expenses 29, 2016 and28, 2019 increased by $3.5 million, to $17.5 million, as compared to the period from October 23, 2014 (inception) to February 28, 2015.Fornet loss for the year ended February 29, 201628, 2018 which was $14.0 million. The increase is primarily explained by higher general and the period from October 23, 2014 (inception) toadministrative expenses of $6.0 million, an increase in depreciation and amortization and impairment of intangible assets of $0.4 million, an increase in interest and other finance costs of $0.5 million, offset by lower research and development expenses of $3.3 million and foreign exchange of $0.1 million.2015, 2019 amounted to $3.5 million compared to $6.7 million for the year ended February 28, 2018, representing a decrease of $3.2 million, or $0.8 million excluding stock-based compensation. The decrease of $0.8 million was primarily attributable to lower employee related expenses of $0.2 million as well as lower professional fees of $0.6 million. The decrease in non-cash stock-based compensation expense of $2.4 million was attributable to a one-time charge in the prior year corresponding to stock options that fully vested upon their issuance in the third quarter of fiscal 2018.were $1,748,044, and $285,908, respectively. The increase of $1,462,136 was due primarily to the short 2015 period which included 5 months only vs twelve months in the year 2016. In addition, the increase is due to the intensification of the Company's operations including rent of a corporate office in Montreal, increased head count and additional costs related to compliance and public company operations, including professional fees, filing fees, payroll and related expenses. The increase is also the result of a charge of $277,700 corresponding to the fair value of warrants granted to employees and the amortization of $534,000 prepaid stock compensation costs.Forfor the year ended February 29, 2016 and the period from October 23, 2014 (inception)28, 2019 totaled $12.9 million compared to February 28, 2015, Research and development expenses were $801,666, and $40,614, respectively. The increase of $761,052 was due primarily to the short 2015 period which included 5 months only vs twelve months in the year 2016. In addition, the increase is due to the intensification of the Company's operations including the start-up of a pilot plant in Montreal and increased head count. The increase is also the result of a charge of $126,806 corresponding to the fair value of warrants granted to employees.14For$6.9 million for the year ended February 29, 201628, 2018, representing an increase of $6.0 million, or $2.1 million excluding stock-based compensation and the legal settlement. The increase of $6.0 million was primarily attributable to the legal settlement expense which amounted to $4.0 million compared to nil for the three-month period from October 23, 2014 (inception) toended February 28, 2015, 2018. Other variances were attributable to higher employee related expenses of $1.0 million as well as higher legal fees of $1.0 million, which was related to the defense and subsequent settlement of litigation that had been brought against the Company, and to higher Directors’ and Officers’ insurance of $0.3 million. Stock-based compensation expense for the year ended February 28, 2019 amounted to $2.8 million compared to $2.9 million for the year ended February 28, 2018, representing a decrease of $0.1 million. The decrease was mainly attributable to the timing of certain stock awards provided to executives.amortizationcorporate offices. Impairment of intangible assets were $211,845, and $11,377, respectively.for the year ended February 28, 2019 totaled $0.3 million compared to nil for the year ended February 28, 2018, representing an increase of $0.3 million. The increase of $200,468 was due primarilyis mainly attributable to the short 2015 period which included 5 months only vs twelve monthswrite-off of the remaining intangible asset balance of the GEN I technology of $0.3 million and a $0.1 million increase due to additions of capital assets in the pilot plant for research and development.2016. In addition,ended February 28, 2019 totaled $0.5 million compared to a negligible amount for the year ended February 28, 2018, representing an increase of $0.5 million. The increase is duemainly attributable to increased interest costs on the long-term debt, which was used to acquire the land and building of our pilot plant and executive offices, in the amount of $0.05 million, an increase in interest expense relating to the intensificationconvertible notes issued during the year in the amount of $0.1 million, an increase in accretion expense also relating to the convertible notes issued during the year in the amount of $0.2 million, an increase in the amortization of deferred financing costs also related to the convertible notes issued during the year in the amount of $0.05 million and an increase in the revaluation expense of the Company'sNovember 2018 Warrants in the amount of $0.07 million.includingare being financed by raising new equity and debt capital. To date, we have been successful in raising capital to finance our ongoing operations, reflecting the potential for commercializing our branded resin and the progress made to date in implementing our business plans. As at February 28, 2019, we had cash on hand of $5.8 million. Subsequent to the year end, on March 1, 2019, we completed a registered direct offering for net proceeds of approximately $4.2 million.a pilot plant in Montrealcommercial operations and continue to fund the acquisitionfurther development of approximately $1.5 Million of machinery and equipment during 2016.Going Concern; Need for Additional Capitalincluded elsewhere in this Form 10K, the Company has no recurring sourcewe are a development stage company, we have not yet begun commercial operations and we do not have any sources of revenue and duringrevenue. During the year ended February 29, 2016, the Company28, 2019, we incurred a net loss of $2.8 Million and$17.5 million, used $1.1 Million cash in operations. Theseoperations of $7.6 million and had an accumulated deficit as at February 28, 2019 of $38,811,592, all of these factors raise substantial doubt about the Company'sour ability to continue as a going concern. There can be no assurance that any future financing will be available or, if available, that it will be on terms that are satisfactory to us.abilityLoan bears interest at the bank’s Canadian prime rate plus 1.5%. By agreement, the Loan is repayable in monthly payments of CDN $5,833 plus interest, until January 2021, at which time it will be subject to renewal. It includes an option allowing for the prepayment of the Loan without penalty. Net cash used in operating activities Net cash used in investing activities Net cash provided by financing activities Effect of exchange rate changes on cash Net (decrease) increase in cash continue as a going concern is dependent upon the Company's ability to raise additional fundscomply with certain financial covenants. As at February 28, 2019 and implement its business plan. The financial statements do not include any adjustments that might be necessary if2018, the Company is unablewas in compliance with its financial covenants.as a going concern. Our auditor's report regardingto execute our February 29, 2016, financial statements expresses an opinion that substantial doubt exists as to whethercorporate strategy. We believe we can continue as an ongoing businessThere is no sufficient historical financial information about the Company upon which to base an evaluationmust execute on several areas of our performance. We have not generated any revenues from our business. We cannot guarantee we will be successful in our business plans. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in our research and/or development, and possible cost overruns due to price and cost increases in services.Liquidity and Capital ResourcesAt February 29, 2016 we had a cash balance of $422,586 and a negative working capital balance of $(353,455). Such cash amount will not beoperational strategic plan, namely: to continue our next 12-month plan of operations and fund our ongoing operational expenses. Subsequent to February 29, 2016, and up to the filing date, the Company sold 857,335 shares and received total proceeds of $2,572,006, including 204,667 shares for which the Company had received advances of $614,001 as of February 29, 2016. We will need to raise additional funds to finance our operations, including through the transition fromissuance of debt and/or equity;scaleplant to ensure the highest quality of sustainable Loop™ PET plastic resin and polyester fiber is produced at the facility;manufacturing facilityagreements with our customers; andthat additional funding will likely come from debt financing or equity financing from the saleis a key pillar of our common stock. Ifambition to license our technology to potential commercial partners.are successful in completing equity financing, existing shareholders will experience dilution of their interest in our Company. We dodid not have any financing arrangedoff-balance sheet arrangements as defined in the rules and regulations of the SEC.cannot provide investorsdid not have any significant lease obligations to third parties.any assurance that wethe purchase, in Fiscal 2018, of the land and building where our pilot plant and corporate offices are located at 480 Fernand-Poitras, Terrebonne, Québec, Canada J6Y 1Y4. On January 24, 2018, the Company obtained a CDN$1,400,000 20-year term instalment loan (the “Loan”), from a Canadian bank. The Loan bears interest at the bank’s Canadian prime rate plus 1.5%. By agreement, the Loan is repayable in monthly payments of CDN $5,833 plus interest, until January 2021, at which time it will be able to raise sufficient funding fromsubject be renewal. It includes an option allowing for the sale of our common stock to fund our next 12-month plan of operation and ongoing operational expenses. In the absence of such financing, our business will likely fail. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing.Critical Accounting PoliciesStock Based CompensationThe Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the valueprepayment of the award is measured onLoan without penalty.grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recordedfinancial statements and the then current value onreported amounts of expenses during the datereporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for depreciable lives of vesting. In certain circumstances where there are no future performance requirements byproperty, plant and equipment, intangible assets, analysis of impairments of recorded intangible assets, accruals for potential liabilities and assumptions made in calculating the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.15The fair value of stock-based compensation and the Company's stock optionfair value of convertible notes and warrant grantsrelated warrants.Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.Intangible AssetsManagement performs impairment tests of indefinite-lived intangible assets at least annually, or whenever an event occurs or circumstances change that indicate impairment has more likely than not occurred.Company'sCompany’s estimate of fair value is based on the best information available, in the absence of quoted market prices. The Company generally calculates fair value as the present value of estimated future cash flows that the Company expects to generate from the asset using a discountedan undiscounted cash flow income approach as described above. If the estimate of an intangible asset'sasset’s remaining useful life is changed, the Company amortizes the remaining carrying value of the intangible asset prospectively over the revised remaining useful life.Recently IssuedPronouncementsPlease refer to footnote 2Standards Board (“FASB”) wherein the fair value of the award is measured on the grant date and where there are not performance conditions, recognized as compensation expense on the straight-line basis over the vesting period and where performance conditions exist, recognize compensation expense when it becomes probable that the performance condition has been met.Management'sgains or losses arising from the translation of intercompany balances denominated in foreign currencies that forms part in the net investment in the subsidiary which are included in OCI. Period end Canadian $: US Dollar exchange rate Average period Canadian $: US Dollar exchange rate but not yet effective accounting pronouncements."smaller“smaller reporting company,"” as defined in Rule 12b-2 of the Exchange Act, and therefore, we are not required to provide the information called for by this Item.1629, 2016ReportReports of Independent Registered Public Accounting Firm29, 201628, 2019 and February 28, 2015F-2F-4 twelve monthsyears ended February 29, 201628, 2019 and the period from October 23, 2014 (inception) to February 28, 2015F-3F-5 stockholders'stockholders’ equity for the twelve monthsyears ended February 29, 201628, 2019 and the period from October 23, 2014 (inception) to February 28, 2015F-4F-6 twelve monthsyears ended February 29, 201628, 2019 and the period from October 23, 2014 (inception) to February 28, 2015F-5F-8 F-6F-9 17REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors
Los Angeles, CaliforniaWe have audited the accompanying consolidated balance sheets of Loop Industries, Inc. and subsidiaries as of February 29, 2016 and February 28, 2015 and the related consolidated statements of operations and comprehensive loss, changes stockholders' equity, and cash flows for the year ended February 29, 2016 and the period from October 23, 2014 (inception) to February 28, 2015. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that we considered appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Loop Industries, Inc. and subsidiaries as of February 29, 2016 and February 28, 2015, and the results of their operations and their cash flows for the year ended February 29, 2016 and the period from October 23, 2014 (inception) to February 28, 2015, in conformity with accounting principles generally accepted in the United States of America.The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has no recurring source of revenue and has experienced recurring operating losses and negative operating cash flows since inception. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.WEINBERG & COMPANY, P.A.Los Angeles, California Assets Current assets Cash Sales tax, tax credits and other receivables (Note 2) Prepaid expenses Total current assets Property, plant and equipment, net (Note 3) Intangible assets, net (Note 4) Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities Convertible notes (Note 7) Warrants (Note 7) Current portion of long-term debt (Note 6) Total current liabilities Long-term debt (Note 6) Total liabilities Contingencies (Note 15) Stockholders' Equity Series A Preferred stock par value $0.0001; 25,000,000 shares authorized; one share issued and outstanding (Note 9) Additional paid-in capital (Note 10) Additional paid-in capital – Warrants (Note 7) Additional paid-in capital - Beneficial conversion feature (Note 7) Common stock issuable, 1,000,000 shares (Note 8) Accumulated deficit Accumulated other comprehensive loss Total stockholders' equity Total liabilities and stockholders' equity Going Concern (Note 1) June 15, 2016F-1Loop Industries, Inc.Consolidated Balance Sheets
2015$ 422,586 $ 209,796 253,041 33,114 36,129 539,951 711,756 782,861 1,126,147 11,990 108,030 586 314,786 - (149,609 ) (1,343 ) 1,399,354 11,233 445,050 445,050 (73,471 ) (9,892 ) 371,579 435,158 $ 2,482,689 $ 1,229,252 $ 363,083 $ 6,587 210,000 30,000 - 212,880 492,128 68,031 1,065,211 317,498 - - 2,992 2,050 3,918,356 1,197,140 614,001 - (3,123,802 ) (287,436 ) 5,931 - 1,417,478 911,754 $ 2,482,689 $ 1,229,252 statements.statementsF-2
twelve months
2016
2015$ - $ - 1,748,044 285,908 801,666 40,614 211,845 11,377 60,571 - 14,240 (50,463 ) 2,836,366 287,436 $ (2,836,366 ) $ (287,436 ) 5,931 - $ (2,830,435 ) $ (287,436 ) $ (0.10 ) $ (0.01 ) 27,359,605 19,853,575 Revenue Operating Expenses - Research and development (Note 2) General and administrative Legal settlement (Note15) Depreciation and amortization (Notes 3 and 4) Impairment of intangible assets (Note 4) Interest and other finance costs (Note 7) Foreign exchange loss (gain) Total operating expenses Net loss Other comprehensive loss - Foreign currency translation adjustment Comprehensive loss Loss per share Basic and diluted Weighted average common shares outstanding Basic and diluted F-3Stockholders'Stockholders’ Equityperiod from October 23, 2014 (inception) throughYears Ended February 29, 2016
par value $0.0001
par value $0.001Additional Total
Issuable- $ - $ - $ - $ - $ - $ - 19,000,000 1,900 (1,710 ) 190 593,750 59 474,941 475,000 890,000 89 711,911 712,000 15,000 2 11,998 12,000 (287,436 ) (287,436 ) 20,498,750 2,050 1,197,140 (287,436 ) 911,754 2,796,250 280 2,236,720 2,237,000 614,001 614,001 404,506 404,506 100,000 10 79,990 80,000 6,515,800 652 652 5,931 5,931 1 - (2,836,366 ) (2,836,366 ) 29,910,800 $ 2,992 1 $ - $ 3,918,356 614,001 $ (3,123,802 ) $ 5,931 $ 1,417,478 Balance, February 29, 2016 Issuance of common shares for cash Reclassification of common shares issuable to shares outstanding Warrants issued for services Cancellation of shares issued for services and as a settlement Issuance of common shares upon exercise of warrants for cash Issuance of shares for services Issuance of shares upon cashless exercise of warrants Fair value of issuable shares for services-officer Foreign currency translation Net loss Balance, February 28, 2017 Issuance of common shares for cash, net of share issuance costs Stock options issued for services (Note 10) Issuance of shares upon exercise of warrants for cash (Note 9) Issuance of shares upon cashless exercise of warrants (Note 9) Foreign currency translation Net loss Balance, February 28, 2018 Issuance of shares upon cashless exercise of warrants (Note 9) Issuance of shares upon vesting of restricted stock units (Note 9) Stock options issued for services (Note 10) Restricted stock units issued for services (Note 10 Legal settlement (Note 15) Issuance of Convertible notes (Note 7) Foreign currency translation Net loss Balance, February 28, 2019 F-4
twelve months
2014(inception) through
2016$ (2,836,366 ) $ (287,436 ) 148,266 1,485 63,579 9,892 534,000 178,000 80,000 12,000 404,506 - 60,571 - (219,927 ) (33,114 ) (29,674 ) (5,951 ) 350,345 6,587 180,000 30,000 (212,880 ) 212,880 369,825 68,031 (1,107,755 ) 192,374 (1,598,723 ) (12,718 ) - (445,050 ) (1,598,723 ) (457,768 ) 2,237,000 475,190 614,001 - 2,851,001 475,190 68,267 - 212,790 209,796 209,796 - $ 422,586 $ 209,796 $ - $ - $ - $ 534,000 $ 59,919 $ - Cash Flows from Operating Activities Net loss Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization Impairment of intangible assets Warrants issued for legal settlement Shares issued for legal settlement Stock options issued for services Restricted stock units issued for services Common stock issuable for services Accrued interest Loss on revaluation of warrants Convertible notes debt discount amortization Amortization of deferred financing costs Changes in operating assets and liabilities: Valued added tax and tax credits receivable Prepaid expenses Accounts payable and accrued liabilities Advances from majority stockholder Net cash used in operating activities Cash Flows from Investing Activities Additions to property, plant and equipment Additions to intangible assets Net cash used in investing activities Cash Flows from Financing Activities Proceeds from sales of common shares and exercise of warrants, net of share issuance costs Repayment of advances from majority stockholder Proceeds from issuance of long-term debt Share issue expenses Deferred financing costs Repayment of long-term debt Net cash provided by financing activities Effect of exchange rate changes Net change in cash Cash, beginning of year Cash, end of year Supplemental Disclosure of Cash Flow Information: Income tax paid Interest paid F-5Year Ended February 29, 2016 and the period from October 23, 2014 (Inception) to 2015Note 1 –and basisBasis of PresentationHoldings,Industries, Inc. is a technology and licensing company who owns patented and proprietary technology that depolymerizes no and low value waste PET plastic and polyester fiber to its base building blocks (monomers). The monomers are filtered, purified and repolymerized to create virgin-quality Loop™ branded PET plastic resin and polyester fiber suitable for use in food-grade packaging to be sold to consumer goods companies.onin Nevada in March 11, 2010 under the laws of the State of Nevada, under the name "RadikalRadikal Phones Inc." We, which was changed our name to "FirstFirst American Group Inc." on in October 7, 2010, and then we changed our name to our current name, "Loop Industries, Inc.", effective July 21, 2015. entered into(then known as First American Group) completed a Share Exchange Agreement (the "Share Exchange Agreement"), by and among the Company, and the holders of common stockreverse acquisition of Loop Holdings, Inc. Under the terms and conditions of the Share Exchange Agreement,(“Loop Holdings”), whereby the Company offered, sold and issued 23,257,500acquired all of its outstanding shares of common stock in considerationa share exchange for all the issued and outstanding shares in Loop Holdings. The effect of the issuance was that Loop Holdings shareholders held approximately 78.1% of the issued and outstanding shares of common stockcapital of the Company upon consummationat the time. The depolymerization business of Loop Holdings became our sole operating business. On June 22, 2015, the Board of Directors approved a change in the fiscal year end date from September 30 to the last day of February. On July 21, 2015, the Company changed its name to Loop Industries, Inc.Share Exchange Agreement.Pursuant to a Stock Redemption Agreement dated JuneOTC Markets Group Inc. under the symbol “LLPP.” From October 29, 2015 entered into commensurate with the share exchange, the Company redeemed 25,000,000 shares of First American Groupthrough April 7, 2017, our common stock from two stockholders' for an aggregate redemption price of $16,000.As the former owners and management of Loop industries have voting and operating control of the Company after the share exchange, the transaction has been accounted for as a recapitalization with the Loop deemed the acquiring company for accounting purposes, and the Company deemed the legal acquirer. No step-up in basis or intangible assets or goodwill will be recorded and the aggregate cost of $60,571 representing the net liabilities assumed of $35,243, $16,000 cost of the redeemed shares and closing costs of $9,328 has been reflected as a cost of the transaction. The consolidated financial statements reflect the historical results of Loop Industries prior to the Share Exchange, and that of the combined company following the Share Exchange.The Company engages in the designing, prototyping and building a closed loop plastics recycling business that leverages a proprietary de-polymerization technology.All references to shares of common stock in this Annual Report on Form 10-K give retro actvie effect to a one-for-four (1:4) reverse split of the Company's issued and outstanding shares of common stock, which reverse split took effectwas quoted on the OTCQB tier of the OTC Markets Group Inc. under the stock symbol “LLPP.” From September 26, 2012 to October 28, 2015, our common stock was quoted on September 21, 2015.Presentation("(“US GAAP"GAAP”) and comprise the consolidated financial position and results of operations of Loop Industries, Inc. and an operating division of 8198381its subsidiaries, Loop Innovations, LLC and Loop Canada Inc., (Loop Canada) a Canadian Company that is owned 100% by the majority shareholder All subsidiaries are, either directly or indirectly, wholly-owned subsidiaries of Loop Industries, Inc. determined duealso owns, through Loop Innovations, LLC, a 50% interest in a joint venture, Loop Indorama Technologies, LLC, which is accounted for under the equity method.the close association between the Company and the division of LoopDecember 31, 2016, 819 Canada the ongoing management of Loop Canada by the Company's majority stockholder, that the activities of Loop Canada are principally related to the Loop Industries, Inc., and the Company's the right to receive the outputs from the activities of Loop Canada which could potentially be significant to the Company, Loop Canada iswas accounted for a variable interest entity requiring consolidation with the Company. The Company determined that it is both the Primary beneficiary and provider of financial support to these Loop Canada operations.The financial statements ofas Loop Industries, Inc. have been retroactively restatedwas the primary beneficiary of 819 Canada, having the power to reflectdirect its activities. Onconsolidation ofCompany’s depolymerization business were transferred to Loop Canada beginning with the earliest period presented. Inc.have beenare eliminated inon consolidation.F-6the Company has no recurring sourcewe are a development stage company, we have not yet begun commercial operations and we do not have any sources of revenue and duringrevenue. During the year ended February 29, 2016,28, 2019, the Company incurred a net loss of $2.8 Million,$17.5 million (2018 - $14.0 million; 2017 - $4.1 million), used cash in operations of $1.1 Million. These$7.6 million (2018 - $6.4 million; 2017- $2.8 million) and had an accumulated deficit as at February 28, 2019 of $38,811,592, all of these factors raise substantial doubt about the Company'sCompany’s ability to continue as a going concern. The abilitycontinue asfinance its ongoing operations.going concernsingle institutional investor from the sale of 600,000 shares in a registered direct offering (Note16). Management is dependent upon the Company's abilityevaluating its plans to raise additional fundsfinancing, the proceeds from which would be used to finance the start-up of its joint venture commercial operations, which is estimated to be between $8,000,000-$10,000,000 and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.Management estimates that the current funds on hand will not be sufficient to continue operations through the next twelve months or for us to achieve our business plan to finalize the transition to our facilities from pilot scale to a full scale commerical manufacturing facility. Management is currently seeking additional funds, primarily through the issuance of debt and equity securities for cash to operate our business, and estimates that a significant amount of capital will be necessary to advancefurther fund the development of our projects to the point at which they will become commercially viable.No assuranceits technology and new technologies. There can be givenno assurance that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Evenis ablewere unable to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case of equity financing. The ability of the Company to continuerealize its assets and discharge its liabilities as a going concern is dependent on management's plans, which include further implementationin the normal course of its business plan and continuing to raise funds through debt and/or equity raises.Note 2 –operations. Such adjustments could be material.Estimates generally accepted accounting principlesUS GAAP requires management 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for depreciable lives of property, plant and equipment, intangible assets, analysis of impairments of recorded intangibles,intangible assets, accruals for potential liabilities and assumptions made in calculating the fair value of certain stock instruments.FASB ASCFinancial Accounting Standards Board (“FASB”) Codification (“ASC”) 820, Fair Value Measurement, which defines fair value and establishes a framework for measuring fair value and making disclosures about fair value measurements. FASB ASC 820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is impacted by a number of factors, including the type of financial instruments and the characteristics specific to them. Financial instruments with readily available quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.———Company'sCompany’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.F-7carrying amountsfair value of the Company's financial assetscash and liabilities, such as cash, prepayments, accounts payable and accrued expensesliabilities approximate their faircarrying values becausedue to their short-term maturity.shortCompany’s shares at the date of settlement. Depending on the share price, the instrument will be settled either in a manner consistent with ASC Topic 480 liability treatment, by issuing a variable number of shares based on a fixed monetary amount, or in a manner consistent with ASC Topic 480 treatment for an equity instrument, by issuing a fixed number of shares if the share price is above or below certain levels. In these cases, the Company assesses the likelihood of the various possible settlement outcomes at the inception of the instrument. The classification of the instrument is based on the outcome that is more likely than not to occur. Factors that the Company considers in evaluating the likelihood of the outcomes include:thesethe Company’s stock.Currency Translationscurrency translations and TransactionsUnited StatesU.S. dollars, the functional currency of the Company. Capital accounts of foreign subsidiaries are translated into US Dollars from foreign currency at their historical exchange rates when the capital transactions occurred. Assets and liabilities of subsidiaries that have a functional currency other than that of the Company are translated to U.S. dollars at the exchange rate as ofat the balance sheet date. Income and expendituresexpenses are translated at the average exchange rate of the period. The resulting translation adjustments are included in other comprehensive income and loss (“OCI”). As a result, foreign currency exchange fluctuations may impact our revenue and the costs of our operations. Weoperating expenses. The Company currently dohas not engageengaged in any currency hedging activities.The following table summarizesrates used:$ 0.74 $ 0.80 $ 0.77 $ 0.89 Expenditures are translatedrate prevailing at the averagedates of the respective transactions. Foreign exchange rategains and losses resulting from the settlement of such transactions are recognized in the consolidated statements of operations and comprehensive loss, except for gains or losses arising from the period presented.Cash EquivalentsThe Company considers all highly liquid investments with maturitiestranslation of three months or less atintercompany balances denominated in foreign currencies that forms part in the time of purchase to be cash equivalents.other receivablesFederalfederal and Provincial Goodsprovincial goods and Services Taxes.services taxes. As a registrant,such, the companyCompany is obligated to collect, and is entitled to claim sale taxes paid on its expenses and capital expenditures incurred in Canada. As at the Balance Sheet date of February 29, 2016,28, 2019, the computed net recoverable sale taxes amountamounted to $253,041 for which$82,992 (2018 – $177,903).expectscan reasonably estimate the amounts and it is more likely than not, they will be received. During the year ended February 28, 2019, the Company recorded $305,592 (2018 – $221,202; 2017 - $148,547) as a reduction of research and development expenses. During the year ended February 28, 2019, research and development tax credits received by the Company from taxation authorities amounted to receive full reimbursement.nil (2018 – nil; 2017 - $88,080). As at February 28, 2019, research and development tax credits receivable from taxation authorities amounted to $410,997 (2018 - $109,298).filed all necessary returnsnot had taxable income since inception and has not been able to recover this tax.Equipment30 years Land Indefinite Office equipment and furniture 5-88 yearsEquipment5-73-8 yearsLeaseholdBuilding improvements35 yearsF-8Leaseholds improvements are amortized over the shorter of the related lease terms or their estimated useful lives. operations.fairrecoverable value. For the year ended February 29, 2016 and the period from October 23, 2014 (inception) toAs at February 28, 2015,2019, 2018 and 2017, the Company determined that there were no indicators of impairment and did not recognize any impairment forof its property, plant and equipment.AssetsManagement performs impairment tests of indefinite-lived intangibleassetsleast annually, or whenever an event occurs or circumstances change that indicate impairment has more likely than not occurred.Company'sCompany’s estimate of fair value is based on the best information available, in the absence of quoted market prices. The Company generally calculates fair value as the present value of estimated future cash flows that the Company expects to generate from the asset using a discounted cash flow income approach as described above. If the estimate of an intangible asset'sasset’s remaining useful life is changed, the Company amortizes the remaining carrying value of the intangible asset prospectively over the revised remaining useful life.As of February 29, 2016 and February 28, 2015 the Company determined that there were no indicators of impairment of its recorded intangible assets.Stock Based CompensationThe Company and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vestingoptions granted to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereasFASB wherein the fair value of the award is measured on the grant date of grant and where there are no performance conditions, recognized as compensation expense on the straight-line basis over the vesting period. period and where performance conditions exist, recognize compensation expense when it becomes probable that the performance condition will been met. Forfeitures on share-based payments are accounted for by recognizing forfeitures as they occur.option and warrant grants issued and vestingoptions granted to non-employees in accordance with the authoritative guidance of the FASB whereaswherein the fair value of the stock compensation is based upon the measurement date determined as determined at either a)the earlier of the date at which either a) a performance commitment is reached with the counterparty for performance or b) at the date at whichcounterparty completes its performance.necessary performancefair value of restricted stock unit awards to earnemployees and directors based on the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current valueclosing market price of its common stock on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.Company's stock option and warrant grantsoptions granted are estimated using the Black-Scholes-Merton Option Pricing (“Black-Scholes”) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options, or warrants, and future dividends. CompensationStock-based compensation expense is recorded based uponon the value derived from the Black-Scholes-Merton Option PricingBlack-Scholes model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option PricingBlack-Scholes model could materially affect stock-based compensation expense recorded in the current and future periods.F-9Taxes charge on the basis of the tax laws enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income, in accordance with FASB ASC 740, IncomeTaxesIncome Taxes. The Company uses an asset and liability approach for financial accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company'sCompany’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.Development Costsyearyears ended February 29, 201628, 2019, 2018 and the period from October 23, 2014 (inception) to February 28, 20152017 amounted to $801,666$3.5 million,$6.7 million and $40,614, respectively.Lossearnings (loss) per Shareper share.Per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholderscommon stockholders by the weighted average number of shares of Common Stockcommon stock outstanding during the year. The Company includes common stock issuable in its calculation. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholderscommon 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.yearyears ended February 29, 201628, 2019 and the period from October 23, 2014 (inception) to February 28, 2015,2018, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutiveantidilutive effect. TheAs at February 28, 2019, the potentially dilutive securities consisted of 2,322,3341,962,400 outstanding stock options (2018 – 2,374,581; 2017 – 1,010,000), 402,868 outstanding restricted stock units (2018 – 34,102; 2017 - nil) and 802,469 outstanding warrants as of February 29, 2016. There were no warrants outstanding as of February 28, 2015.Issued Accounting Pronouncements2014,2017, the FinancialFASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting Standards Board (FASB), which amends the guidance in Topic 718 to clarify when a change to the terms or conditions of a share-based payment award requires the application of the guidance in Topic 718. The amendments provide that an entity shall account for the effects of a modification of a share-based payment award unless all the following conditions are met: Standards. The amendments in this Update No. 2014-09 (ASU 2014-09), expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. On August 12, 2015, FASB delayed the required implementation to fiscal years ending after December 15, 2017 but now permitted organizations such the Company to adopt earlier. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management has determined to adopt ASU 2014-09 in Fiscal 2017 and has not determined the effect of the standard on our ongoing financial reporting.In June 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation – Stock CompensationCustomers. The pronouncement was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The pronouncement isamendments in this Update are effective for reporting periodspublic entities for fiscal years beginning after December 15, 2015.2018, including interim periods within that fiscal year. The adoption ofCompany does not expect that ASU 2014-122018-07 will not have a significantan impact on the Company'sits consolidated financial positionstatements.resultsinconsistently applied by certain entities and includes Amendments to Subtopic 718-740, Compensation – Stock Compensation – Income Taxes. The guidance in paragraph 718-740-35-2, as amended by the amendments in ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, is unclear on whether an entity should recognize excess tax benefits (or tax deficiencies) for compensation expense that is taken on the entity’s tax return. The amendment to paragraph 718-740-35-2 in this Update clarifies that an entity should recognize excess tax benefits in the period in which the amount of operations.deduction is determined. The amendments in this Update are effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company does not expect that this update will have an impact on its consolidated financial statements.Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02, “Leases,” amended in July by ASU 2018-10, “Codification Improvements to Topic 842, Leases,” ASU 2018-11, “Targeted Improvements,” and ASU 2018-20, “Narrow-Scope Improvements for Lessors,” which requires a lesseelessees to record a right of use asset and a corresponding lease liabilityrecognize leases on the balance sheet while continuing to recognize expenses in the income statement in a manner similar to current accounting standards. For lessors, the new standard modifies the classification criteria and the accounting for all leases with terms longer than 12 months.sales-type and direct financing leases. Enhanced disclosures will also be required to give financial statement users the ability to assess the amount, timing, and uncertainty of cash flows arising from leases. This ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. Amay either be adopted on a modified retrospective transition approach is required for lessees for capital and operating leases existing at or entered into after, the beginning of the earliest comparative period, presented inor through a cumulative-effect adjustment at the financial statements, with certain practical expedients available.adoption date. This update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is required to adopt these standards effective March 1, 2019, but it still in the process of evaluatingdetermining the quantitative impact of ASU 2016-02 on the Company'sCompany’s consolidated financial statements and disclosures.F-10In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Presentation of Financial Statements - Going Concern (Subtopic 205-10). ASU 2014-15 provides guidance as to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management's evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.statements. The Company will adopt ASU 2014-15 onelect to apply the Company's financial statement presentationpackage of practical expedients that allows us not to reassess whether expired or existing contracts contain leases, the classification of these leases and disclosures beginningwhether previously capitalized initial direct costs would qualify for capitalization under Accounting Standards Codification (or “ASC”) 842. Furthermore, we will elect to use hindsight in 2016.Other recent accounting pronouncements issued bydetermining the FASB, including its Emerging Issues Task Force,lease term and assessing impairment of the American Institute of Certified Public Accountants,right-of-use assets.the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. Note 3 – Property and Equipment1,126,147 11,990 108,030 586 314.786 - 1,548,963 12,576 (149,609 ) (1,343 ) 1,399,354 11,233 Building Land Building Improvements Machinery and equipment Office equipment and furniture Building Land Building Improvements Machinery and equipment Office equipment and furniture $148,266 and $1,485$443,146 for the year ended February 29, 2016 and28, 2019 (2018 - $303,597; 2017 - $333,866).period from October 23, 2014 (inception) topurchase of the building during the year ended February 28, 2015, respectively.Note 4 – Intellectual Propertyintellectual property agreementIntellectual Property Assignment Agreement with Mr. Hatem Essaddam wherein the Company purchased a certain technique and method, which was used to develop the Generation I (“GEN I”) technology, for $445,050 allowing for the depolymerization of polyethylene terephthalate at ambient temperature and atmospheric pressure. The Company will use such techniqueGEN I technology patent portfolio has two issued U.S. patents and a pending U.S. application expected to expire on or around July 2035. Internationally, we also have an issued patent in its processing plant. The technology isTaiwan, an allowed application in the members of the Gulf Cooperation Council, and pending patent applications in Argentina, Australia, Brazil, Canada, China, Eurasia, Europe, Israel, India, Japan, Korea, Mexico, the Philippines, and South Africa, all expected to expire on or around July 2036 if granted. At the date of acquisition, the acquired intangible asset has an estimated useful life of 7 years and was being amortized using theon a straight-line method over the estimated used life of the patents 7 years. As of February 28, 2015 $212,800 of the purchase price was outstanding, which amount was paid in full during the year ended February 29, 2016.F-11milestones (the "Milestones") having been met, as follows:(i)CDN$200,000 when an average of twenty (20) metric tons per daymilestones: meeting the is produced by the Company for twenty (20) operating days;(ii)CDN$200,000 when an average of thirty (30) metric tons per day of terephthalic acid is produced by the Company for thirty (30) operating days;(iii)CDN$200,000 when an average of sixty (60) metric tons per day of terephthalic acid is produced by the Company for sixty (60) operating days; and(iv)CDN$200,000 when an average of one hundred (100) metric tons per day of terephthalic acid is produced by the Company for sixty (60) operating days.As of February 29, 2016 the Company, is still in its test pilot program,as a result of the GEN I technology, for 20 operating days;Milestones havemilestones had been met, and accordingly no additional CDN$200,000 payment haspayments have been made.27,000,000,25,700,000, based on the GEN I technology, payable as follows:(a)10% of gross profits on the sale of all products derived by the Company from the technology assigned to the Company under the agreement;(b)10% of any license fee paid to the Company in respect of any licensing or other right to use the technology assigned to the Company and granted to a third party by the Assignee;(c)5% of any royalty or other similar payment made to the Company by a third party to whom a license or other right to use the technology assigned to the Company has been granted by the Company; and(d)5% of any royalty or other similar payment made to the Company by a third party in respect of a sub-license or other right to use the technology assigned to the Company granted by the third party.ofat February 29, 2016, we have28, 2019, the Company had not made any royalty payments under the Intellectual Property Assignment Agreement.$63,579 and $9,892$59,851 for the year ended February 29, 201628, 2019 (2018 - $63,579; 2017 - $63,579). Intangible assets, as cost - beginning of period Intangible assets, accumulated depreciation - beginning of period Add: Additions in the year Deduct: Amortization of intangibles Deduct: Impairment of intangibles periodjoint venture.October 23, 2014 (inception)the date of inception of September 24, 2018 to February 28, 2015,2019 and, as at February 28, 2019, no transactions have been recorded in the joint venture entity, the carrying value of the equity investment is nil. Instalment loan Less current portion Non-current portion Years ending February 28, 2020 2021 2022 2023 2024 Thereafter Total Future estimated patent amortization upon which date the outstanding principal amount of the November 2018 Notes and all accrued and unpaid interest shall automatically convert into shares of the common stock of the Company at the price per share equal to the lesser of (i) $13.00 and (ii) the average closing price of the Company’s Common Stock on the Nasdaq stock market for the ten days preceding the day to the conversion of the November 2018 Notes (the “November 2018 Conversion Price”). The total number of shares of Common Stock to be issued upon automatic conversion shall equal the outstanding principal amount of the November 2018 Notes and all accrued and unpaid interest on the November 2018 Notes, divided by the November 2018 Conversion Price. November 2018 Convertible Notes - Liability Accrued interest – Liability Deferred financing costs Total are:Year Ended February 28, 63,579 63,579 63,579 63,579 63,579 53,684 $ 371,579 F-12Note 5relating to this issuance were split pro-rata between the November 2018 Notes and the November 2018 Warrants. The portion relating to the November 2018 Notes were deferred and are being amortized over the life of the convertible notes. The portion relating to the November 2018 Warrants was immediately expensed. January 2019 Convertible Notes – Liability Accrued interest - Liability Deferred financing costs January 2019 Beneficial Conversion Option – Equity Major ShareholderDuring the years ended February 29, 2016 and February 28, 2015, majority stockholderCompany's majorCompany’s majority stockholder and CEO, orand companies controlled by him, previously made advances of $369,825 and $68,031 respectively to the Company. The amounts due these entitiesCompany totaling $278,472 as of February 29, 2016 andat February 28, 2015 were of $492,128 and $68,031, respectively.2017. The advances arewere unsecured, non-interest bearing with no formal terms of repayment. and Accrued Compensation due Major ShareholderTheCompany'sCompany’s President and Chief Executive Officer (“CEO”). The employment agreement is for an indefinite term. Duringterm, officer shall receive monthlyCompany and Mr. Solomita entered into an amendment and restatement of the employment agreement. The amended and restated employment agreement provides for an increase in Mr. Solomita’s base salary of $15,000. Compensationand eligibility to participate in an annual cash bonus subject to performance measures. Mr. Solomita’s base salary and bonus opportunity are retroactive effective to March 1, 2018. For the year ended February 28, 2019, compensation expense under this agreementfor the Company’s CEO amounted to $180,000$798,791 (2018 -$189,540; 2017 - $210,618), inclusive of the retroactive adjustment in accordance with the employment agreement as amended and $30,000 during the years ended February 29, 2016 and February 28, 2015, respectively. As of February 29, 2016 and February 28, 2015, accrued compensation of $210,000 and $30,000, respectively, was due to Mr. Solomita.Company agreed to issue the officer 4 millionemployment agreement provided for a long-term incentive grant of 4,000,000 shares of the Company'sCompany’s common stock, in tranches of one million shares each, if certainupon the achievement of four performance milestones. This was modified to provide a grant of 4,000,000 restricted stock units covering 4,000,000 shares of the Company’s common stock while the performance milestones were met.remained the same. The bonusCompany’s board of 4,000,000directors approved the grant of the restricted stock units, effective and contingent upon approval by the Company’s shareholders at the Company’s 2019 annual meeting, of an increase in the number of shares available for grant under the Plan. The restricted stock units vest upon the achievement of applicable performance milestones, as follows:is payableshall be issued to Mr. Solomita when the Company’s securities are listed on an exchange or the OTCQX tier of the OTC Markets;follows:(i)1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's securities are listed on an exchange or the OTCQX tier of the OTCMarkets;(ii)1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company executes a contract for a minimum quantity of 25,000 M/T of PTA/EG or a PET;(iii)1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's first fill-scale production facility is in commercial operation; and(iv)1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's second full-scale production facility is in commercial operation.Thestock-based compensation expense during the year ended February 28, 2017 based on the grant date fair value. During the years ended February 28, 2019 and 2018, no other milestones hadbecame probable of being met and, accordingly, the Company did not been met as of February 29, 2016.entered into an Amendment No. 1agreed to Employment Agreement (the "Amendment No. 1"), which amends the Employment Agreement. Amendment No. 1amend his employment. The amendment provides that the Company shall issue to Mr. Solomita one share of the Company'sCompany’s Series A Preferred Stock in exchange for consideration of Mr. Solomita agreeing not to terminate his employment with the Company for a period of five years from the date of Amendment No. 1 (See Note 6)Note 6 – Stockholders' EquitySeries A Preferred StockOn February 15, 2016, the Company andamendment. The amendment effectively provides Mr. Solomita entered into an Amendment No. 1 to Employment Agreement (the "Amendment No. 1"), which amends the Employment Agreement. Amendment No. 1 provides that the Company shall issue Mr. Solomita one sharewith a “change of the Company's Series A Preferred Stock for consideration of Mr. Solomita agreeing not to terminate his employment with the Company for a period of five years from the date of Amendment No. 1. The effect of Amendment No. 1 is to provide Mr. Solomita control ofcontrol” provision over the Company in the event that his presently-held 57%currently-held 55.0% of the issued and outstanding shares of common stock of the Company is diluted to less than a majority. In order to issue Mr. Solomita his one share of Series A Preferred Stock under Amendment No. 1,the amendment, the Company created "blank check"a “blank check” preferred stock. Subsequently, the board of directors of the Company approved a Certificate of Designation creating the Series A Preferred Stock. Subsequently, the Company issued one share of Series A Preferred Stock to Mr. Solomita.F-13equalsholds a majority of the total voting power equal to 65% of the voting power of the issued and outstanding shares of common stock of the Company so long aas Mr. Solomita holds not less than 7.5% of the issued and outstanding shares of common stock of the Company, assuring Mr. Solomita of control of the Company in the event that his presently-held 57%currently-held 55.0% of the issued and outstanding shares of common stock of the Company is diluted to a level below a majority.Solomita'sSolomita’s (or that of any person to whom the one share of Series A Preferred Stock is transferred) approval. More specifically, so long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock, voting as a separate class:Company'sCompany’s Bylaws;F-14Company'sCompany’s business;During the year ended February 29, 2016, the company sold;(i)2,796,250 shares of its common stock at a price of $.80 per share, resulting in proceeds to the Company of $2,237,000(ii)204,667 shares of its common stock and 102,334, warrants to acquire shares of common stock at $3.00 per share resulting in proceeds to the Company of $614,001. These shares have not yet been issued and have been reflected as common stock issuable on the accompanying statement of stockholders' equity.For the year ended February 28, 2019 Balance, February 28, 2018 Cashless exercise of stock options Issuance of shares upon vesting of restricted stock units Balance, February 28, 2019 For the year ended February 28, 2018 Balance, February 28, 2017
Issuance of shares for cash
Cashless exercise of stock options Issuance of shares upon exercise of warrants Balance, February 28, 2018 2015, the Company issued;(i)593,750 shares of its common stock at a price of $.80 per share for net proceeds of $475,000(ii)905,000 shares of its common stock for services valued at $724,000. The Company determined that services valued at $534,000 were not yet performed as of February 28, 2015, and such amount was recorded as a prepaid expense. Such amount was amortized as an expense during the year ending February 29, 2016.(iii)19,000,000 shares of its common stock upon formation.Upon consummation of the Share Exchange Agreement on June 29, 2015, 2019:6,515,18018,821 shares of common stock upon the cashless exercise of 20,000 warrants.pursuantCompany of $1,642,016; andterms and conditionscommon stock issued in connection with the Private Placement, as well as shares issuable upon the exercise of the Share Exchange Agreement.Warrants Outstanding, beginning of period Granted Exercised Forfeited Expired Outstanding, end of period Exercisable, end of period $0.80 $3.00 $5.25 $8.75 $11.52 $12.00 $13.49 $13.89 has not adoptedapplies the fair value method of accounting for stock-based compensation awards granted. Fair value is calculated based on a formal stockBlack-Scholes option plan. However, it has made periodic non-plan grantspricing model. The principal components of warrants for services and financing. Exercise price $ 8.75 - 11.52 $ 5.25 - 13.89 $ 3.00 Risk-free interest rate 2.70% - 2.82% 1.46 - 2.15% 0.91% Expected dividend yield 0% 0% 0% Expected volatility 78% 80% to 94% 122% Expected life 6.5 to 7 years 3 to 6 years 2 years 29, 2016,28, 2019, stock-based compensation expense attributable to stock options amounted to $3,176,786 (2018 - $6,281,319; 2017 - $135,673) and is included in operating expenses. Outstanding, beginning of period Granted Vested Forfeited Outstanding, end of period Outstanding, beginning of period Issuance upon registration Automatic share reserve increase Units granted Units forfeited Units expired Outstanding, end of period Outstanding, beginning of period Issued Exercised Expired Outstanding, end of period January 15, 2020 January 21, 2020 February 25, 2021 February 25, 2021 Outstanding, end of period U.S. operations Foreign operations Loss before taxes
Federal income tax at statutory rate Effect of foreign jurisdiction Non-deductible expenses Tax credits related to research and development expenditures Impact of Tax Cuts and Jobs Act Enactment Unrecognized tax benefit of net operating losses and other available deductions Effective income tax expense Current Deferred 2035 2036 2037 2038 2039 Indefinite Deferred tax assets Canada net operating loss carry forward U.S. net operating loss carry forward Accrual and reserves Property, plant and equipment Research and development expenditures and credits Unrealized foreign exchange Other Deferred tax liabilities Property, plant and equipment Intangibles Accrual and reserves Investment tax credits Unrealized foreign exchange Deferred tax liabilities Deferred tax assets, net Valuation allowance Deferred tax assets, net Level in the hierarchy Instruments measured at fair value: Warrants (First Issuance) Level 3 Instruments measured at amortized cost: Long-term debt Level 2 Convertible notes (First Issuance) Level 2 Convertible notes (Second Issuance) Level 2 purchase 2,220,000February 28, 2019 of $65,167 and has been included in operating expenses.Company'sCompany’s common stock. On February 25, 2019, the Company and the Plaintiffs entered into a settlement agreement and release (“Settlement Agreement”), which sets forth the parties’ agreement in principle for settlement. Through the Settlement Agreement, Plaintiffs, the Company and certain other parties to the Settlement Agreement agreed to mutual releases of any and all claims.$.80$12.00 per share for services. The fair valuea period of 24 months following the date of the warrants granted during the year ended was determined to be $1,210,788. During the year ended February 29, 2016, the Company amortized $404,506 of these costs whichSettlement Agreement. The remaining 200,000 Plaintiff Warrants are included in operating expense. As of February 29, 2016 the unamortized balance of these costs was $806,282 which will be amortized over the next two years. There was no intrinsic value of these warrants at February 29, 2016.During the year ended February 29, 2016, the Company issued warrants to purchase 102,334exercisable for shares of the Company'sCompany’s common stock at an exercise price of $6.00$11.00 per share for a period of 24 months, but in the event the Company’s 5-day average trading price during any period in the first 18 months following the date of the Settlement Agreement is above $11 per share, then the exercise term of such warrants shall automatically be reduced to certain investors upon18 months instead of 24 months.salelegal settlement, the Company recorded an expense in the amount of its equity securities.The table below summarizes the Company's warrants activities:- $ - $ - - 2,322,334 0.80 to $6.00 1.03 - - - - - - - - - - - - 2,322,334 $ 0.80 to $6.00 $ 1.03 - 782,334 $ 0.80 to $6.00 $ 1.48 - 1,540,000 $ 0.80 to $6.00 $ 0.80 - F-15The following table summarizes information concerning outstanding and exercisable warrants as of February 29, 2016:$ 2,220,000 1.73 $ 0.80 680,000 1.73 $ 0.80 $ 102,334 0.97 $ 6.00 102,334 .97 $ 6.00 The Company estimated$4,041,627, based on the fair value of the warrantsPlaintiff Common Shares and Plaintiff Warrants that were issued on February 25, 2019, under the dateterms of grant using the Black-Scholes option-pricing modelSettlement Agreement.the following weighted-average assumptions:Year endedFebruary 29, 2016Expected life years1 to 2 YearsExpected volatility87.99%Expected annual rate of quarterly dividends0.00%Risk-free rate0.87%Note 7 – Deferred Tax Assets and Income Tax ProvisionDeferred Tax AssetsAt February 29, 2016,a single institutional investor, pursuant to which the Company had net operating loss ("NOL"has agreed to issue and sell to the Purchaser, in a registered direct offering (“Offering”) carry-forwards for Federal income tax purposes, an aggregate of $1,049,031 that may be offset against future taxable income through 2036. No tax benefit has been reported with respect to these net operating loss carry-forwards because the Company believes that the realization600,000 shares (“Shares”) of the Company's net deferred tax assets of approximately $367,000 was not considered more than likely than not and accordingly, the potential tax benefits for the net loss carry-forwards are offset byCompany’s common stock at a full valuation allowance.Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding the probability of its realization. The valuation allowance increased approximately by $295,000 and $72,000 for the reporting period ended February 29, 2016 and the period from October 24, 2014 (inception) to February 28, 2015, respectively.F-16Components of deferred tax assets in the consolidated balance sheet are as follows:$ 367,196 $ 71,960 (367,196 ) (71,960 ) $ - $ - Income Tax Provision in the Consolidated Statements of Operations and Comprehensive Loss:Reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income tax provision is as follows:34.0 % 34.0 % (34.0 ) (34.0 ) 0.0 % 0.0 % Note 8 – Commitments and ContingenciesLeasesThe Company leases its premises and other assets under various operating leases. Future lease payments aggregate $87,464 as at February 29, 2016 and include the following future amounts payable: 74,969 12,495 87,464 F-17Note 9 – Geographic InformationAs of February 29, 2016 and February 28, 2015, the Company had two reportable diverse geographical concentrations, the United States and Canada. Information related to these operating segments, net of eliminations, consists of the following for the periods below:$ - $ - $ - 1,357,728 390,316 1,748,044 274,132 527,534 801,666 71,683 140,162 211,845 60,571 - 60,571 - 14,240 14,240 $ 1,764,114 $ 1,072,252 $ 2,836,366 $ 455,393 256,363 $ 711,756 158,413 1,240,941 1,399,354 371,579 - 371,579 $ 985,385 1,497,304 $ 2,482,689 $ $ $ ) $ $ ) $ $ - $ - $ - - - - 224,877 61,031 285,908 12,241 28,373 40,614 9,892 1,485 11,377 - - - (41,412 ) (9,051 ) (50,463 ) $ 205,598 $ 81,838 $ 287,436 $ 722,443 60,418 $ 782,861 - 11,233 11,233 435,158 - 435,158 $ 1,157,601 71,651 $ 1,229,252 $ 214,010 103,488 $ 317,498 993,591 (81,837 ) 911,754 $ 1,207,601 21,651 $ 1,229,252 F-18Note 10 – Subsequent EventsIssuance of common shares and warrantsIn June 1, 2016, the Board of Directors approved the issuance and sale of 500,000 Units, at an offeringper share purchase price of $6.00 per Unit consisting of two shares of the Corporation's common stock, par value $.0001 per share and one warrant to purchase one share at an exercise price of $6.00$8.55 per share, for aggregate net proceeds of $5,000,000. Asapproximately $4.2 million, after deducting placement agent fees and estimated offering expenses payable by the Company of approximately $0.9 million. The Offering closed on March 1, 2019. The Company intends to use the net proceeds from the Offering for general corporate purposes and working capital.filing date,common stock of the Company has sold 857,335at a newly agreed conversion price per share equal to $8.55 (the “New Conversion Price”), replacing the previous formula whichconverted the November 2018 Notes and accrued and unpaid interest into shares and received total proceeds of $2,572,006, including 204,667 shares for whichthe common stock of the Company had received advancesat the price per share equal to the lesser of $614,001 as of February 29, 2016.Transfer of Assets(i) $13.00 and LiabilitiesOn May 24, 2016, 9449507 Canada Inc. was incorporated in order to absorb all(ii) the average closing price of the assets and liabilities pertainingCompany’s Common Stock on the Nasdaq stock market for the ten days preceding the day to the pilot plant commissioned byconversion of the November 2018 Notes. The Conversion Agreement stipulates that the interest on the November 2018 Notes would be paid up to and including April 3, 2019. Pursuant to the 2018 Note Purchase Agreement, the Investors also received related warrants (the “November 2018 Warrants”) to acquire an additional 50% of the shares issued upon the conversion of the November 2018 Notes. As part of the Conversion Agreement, the exercise price of the November 2018 Warrants will also be the New Conversion Price, replacing the previous formula which established the conversion price for the November 2018 Warrants as the lesser of (i) $15.00 and (ii) the average closing price of the Company’s Common Stock on the Nasdaq stock market for the ten days preceding the day of the conversion of the November 2018 Notes. As a result of the Conversion Agreement, the Company issued 319,326 shares of common stock of the Company and issued 159,663 warrants. The November 2018 Warrants expire eighteen (18) months from the date of the conversion of the November 2018 Notes. 8198381 Canada Inc. The transfer of Loop Indorama Technologies, LLC, the assets and liabilities will be executed following a letter of intent signed to that effect on June 13, 2016. It is intended that, subsequent to such transaction, the shares of 9449507 Canada Inc., which are wholly owned by Mr. Solomita, will be transferred to Loop Industries Inc.F-19ITEMITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSUREprincipal executive officerChief Executive Officer and the principal financial officer,Chief Financial Officer, we are responsible for conducting an evaluation of the effectiveness of the design and operation of our internal controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act, of 1934, as ofat the end of the fiscal year covered by this report. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission ("SEC")SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared. Based on this evaluation, our principal executive officer and principal financial officer concluded as ofassessment, management determined that the evaluation date that ourCompany’s disclosure controls and procedures were not effectiveover financial reporting as of February 29, 2016.MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGAs of February 29, 2016, management assessed the effectiveness of our internal control over financial reporting. The Company's28, 2019 was effective.Company.company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act, of 1934, as amended, as a process designed by, or under the supervision of, the Company'sour Chief Executive Officer and Chief Financial Officer and effected by the Company'sour Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States of America and includes those policies and procedures that:· the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;·Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and·Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement.18In evaluating the effectivenessmaintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;our management usedunder the criteria set forthframework in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO")Commission. The objective of this assessment was to determine whether our internal control over financial reporting was effective at February 28, 2019. Based on this assessment, management determined that the Company’s internal control over financial reporting as of February 28, 2019 was effective.– Integrated Framework. Based on that evaluation, completed only by Daniel Solomita, our President, Secretary, Treasurer and Director, who also serves as our principal financial officer and principal accounting officer, Mr. Solomita concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below.This was due to deficiencies that existedChanges in the design or operation of our internal controls over financial reporting have been reported in the section “Management’s Annual Report on Internal Control Over Financial Reporting” and include the implementation and formalization of certain controls relating to the accounting for stock-based compensation, which included expanding our in-house expertise on accounting for stock-based compensation under US GAAP, as well as establishing formal protocols that adversely affected our internal controls and that may be consideredrequire management to be material weaknesses. The matters involving internal controls and procedures that our management consideredconsult with external third parties on more complex share-based payment arrangements. These changes were implemented to beremediate the material weaknesses were: (i) lackin internal control over accounting for share-based payment arrangements described above.a functioning audit committee duethe remediation procedures identified with respect to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (ii) inadequate segregation of duties consistent with control objectives; and (iii) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by Mr. Solomita, our President, Secretary, Treasurer and Director, who also serves as our principal financial officer and principal accounting officer, in connection with the review of our financial statements as of February 29, 2016.Management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING.Therefor share-based payment arrangements, there were no other changes in the Company'sour internal control over financial reporting that occurred during the fourth quarter of theour most recent fiscal year ended February 29, 2016 that have materially affected, or that arewere reasonably likely to materially affect, the Company'sour internal control over financial reporting.ITEMITEM 9B. OTHER INFORMATIONofficer'sofficers is incorporated by reference to the information set forth in the section entitled “Executive Officers” in our Proxy Statement. Information required by this item concerning our audit committee and director's and their respective age's as of February 29, 2016 are as follows:NameAgePositionsDaniel Solomita40President and Chief Executive Officer, Secretary, Treasurer and Chairman of the Board of DirectorsDonald Danks58DirectorDaniel Solomita, age 40President and Chief Executive Officer, Secretary, Treasurer and Chairman of theOur Board of DirectorsDaniel Solomita has served as adopted a Code of Ethics for all of our Presidentdirectors, officers and Chief Executive Officer, Secretary, Treasurer and Chairmanemployees on January 25, 2017. A copy of the Boardour Code of Directors, since June 29, 2015. Daniel has been involvedEthics is available under Corporate Governance Documents in the plastic recycling business since 2009, focusing on developing landfill remediation projects across North America, working with companies such as Invista, Du Pont, and Ascend Performance Materials. Mr. Solomita has also served as the President, Secretary, Treasurer and sole Director of Loop Holdings, Inc., our wholly-owned subsidiary since November 4, 2014. From 2010 until 2014, Mr. Solomita served as President of Dragon Polymers. Since 2012, Mr. Solomita has owned and operated 8198381 Canada Inc., which does business as "SMH Recycling" and is, a plastics trading business, working with companies from Vietnam, Hong Kong, Germany and China. SMH Recycling has nominal operations, and Mr. Solomita 's duties with 8198381 Canada Inc. are as an owner maintaining the existence of the entity. From 1999 until 2011, Mr. Solomita was a senior infrastructure manager for Bell Canada. From 1977 until 1998, Mr. Solomita attended PPI Montreal, where became a Microsoft Certified System Engineer. From 1993 until 1995 Mr. Solomita attended Dawson College, in Quebec, Canada, where he studied Business Administration and 1996, he attended Concordia University, where he studied Management Information Systems and obtained a degree in Microsoft System Engineering and Veritas Backup Architecture. Mr. Solomita's knowledge of and career at Loop Holdings led to our conclusion that he should serve as a director in lightInvestors section of our businesswebsite, and structure.Donald Danks, age 58DirectorDonald Danks has served as a director ofvia the Company since June 29, 2015. He is a 1979 graduate of UCLA and has devoted his entire career to creating, developing, funding, managing and growing startup and early stage companies. From 1986 through 1994, he was the founder, and held various management positions, including chairman and CEO, of Advantage Life Products, a NASDAQ SmallCap company. Mr. Danks was the cofounder and President of Prosoft Training, Inc., a NASDAQ listed company involved in Internet technology training, education and certification, from 1995 through 1997. He was also a cofounder and served as the CEO of iMergent, Inc., an ecommerce software company listed on the AMEX, from January 2001 through November 2008. During his time at iMergent, he helped build annual revenues from start up to more than $180MM and grew the company's market capitalization from under $3MM to nearly $400MM. Between 1997 and 2004, Mr. Danks was involved in the creation, funding and business development of Auxilio, Inc., a company in the managed print services business for the healthcare industry. In 1998, he co-led the restructuring and recapitalization of Headwaters, Inc., now a NYSE company with a current market cap over $1.5 billion. Since January 2010, Mr. Danks has been a managing member of Touchstone LLC (which has been his principal occupation and employment during the past five years); since April 2014, he has been a director of Trilogy PetroSource Inc.; and since September 2014, Mr. Danks has been a director at Fanattac Inc., all of which are private, non-reporting companies.20TERM OF OFFICEhttp://www.loopindustries.com/assets/docs/Code_of_Ethics.pdfAll directors hold office until the next annual meeting of the stockholders of the Company and until their successors. To date, there have been duly electedno waivers under our Code of Ethics. We will post waivers, if and qualified.when granted, of our Code of Ethics on our website at www.loopindustries.com. The Company's Bylaws provideinformation contained on, or that the Board of Directors will consist of no less than three members. Officers are elected by and serve at the discretion of the Board of Directors.DIRECTOR INDEPENDENCEOur board of directors is currently composed of two members, neither of whom qualifies as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the directorcan be accessed through, our website is not and has not been for at least three years, onea part of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director's business and personal activities and relationships as they may relate to us and our management.CERTAIN LEGAL PROCEEDINGSNo director, nominee for director, or executive officer of the Company has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past ten years.SIGNIFICANT EMPLOYEES AND CONSULTANTSAs of February 29, 2016, Daniel Solomita is our sole significant employee. Don Danks, is a non-employee director of the Company. Other than our two officers and directors, we currently have no significant independent contractors or consultants.AUDIT COMMITTEE AND CONFLICTS OF INTERESTSince we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. The Board of Directors has not established an audit committee and does not have an audit committee financial expert, nor has the Board of Directors established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company is an early exploration stage company and has only two directors, and to date, such directors have been performing the functions of such committees. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions.There are no family relationships among our directors or officers. Other than as described above, we are not aware of any other conflicts of interest with any of our executive officers or directors.SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESection 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who own more than ten percent of a registered class of our equity securities, file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater-than-ten percent stockholders are required by SEC regulations to furnish us with all Section 16(a) forms they file. Basedthis Annual Report on our review of filings made on the SEC website, and the fact of us not receiving certain forms or written representations from certain reporting persons that they have complied with the relevant filing requirements, we believe that, during the year ended February 29, 2016, one of our two executive officers, directors and greater-than-ten percent stockholders complied with all Section 16(a) filing requirements, that person being Daniel Solomita.Form 10-K.21STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORSWe have not implemented a formal policy or procedure by which our stockholders can communicate directly with our Board of Directors. Nevertheless, every effort has been made to ensure that the views of stockholders are heard by the Board of Directors or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely manner. We believe that we are responsive to stockholder communications, and therefore have not considered it necessary to adopt a formal process for stockholder communications with our Board. During the upcoming year, our Board will continue to monitor whether it would be appropriate to adopt such a process.CODE OF ETHICSThe Company has not adopted a code of ethics that applies to its principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Company has not adopted a code of ethics because it has only commenced operations.EMPLOYMENT AGREEMENTSIn connection with the Company's June 29, 2015 share exchange with Loop Holdings, the Company entered into an Employment Agreement, which has no term, with its President and Chief Executive Officer, Daniel Solomita.The Employment Agreement dated June 29, 2015, provides for an initial annual base salary, commencing June 29, 2015 of $180,000. The agreement also provides for (i) a bonus of 4,000,000 shares of common stock, (ii) the Company to pay for Mr. Solomita's costs related to executive's reasonable monthly cell phone and other mobile Internet costs, home office Internet costs, (iii) the Company to pay for executive's car and commuting costs, not to exceed $1,000 per month, and club membership costs, payable not later than 10 days after the end of each month, and (iv) a severance payment for Mr. Solomita equal to his then current annual base salary rate plus one month of salary for each year of employment, not to exceed 24 months of severance, upon the termination of his employment by the Company without cause or by Mr. Solomita for good reason or in the event of a change in control. The employment agreement defines the term "cause" as "any grounds entitling the Company's Board to summarily dismiss" Mr. Solomita.The bonus of 4,000,000 shares of common stock is payable to Mr. Solomita as follows:(i) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's securities are listed on an exchange or the OTCQX tier of the OTCMarkets;(ii) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company executes a contract for a minimum quantity of 25,000 M/T of PTA/EG or a PET;(iii) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's first fill-scale production facility is in commercial operation; and(iv) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's second full-scale production facility is in commercial operation.The employment agreement also requires that Mr. Solomita participate in our employee benefit programs and provide for other customary benefits. In addition, each employment agreement provides compensation pursuant periodic grants of stock options thereafter as recommended by our board of directors. Finally, the employment agreement prohibits Mr. Solomita from engaging in certain activities which compete with the Company, seek to recruit its employees or disclose any of its trade secrets or otherwise confidential information.22INDEMNIFICATION AGREEMENTSEach of Mr. Solomita and Mr. Danks have entered into an Indemnification Agreement dated June 29, 2015, with the Company, pursuant to which the Company agreed to indemnify Mr. Solomita and Mr. Danks for claims against each of them that may arise in connection with the performance of their respective duties as an officer or director for the Company.FAMILY RELATIONSHIPSNo family relationships exist between our President and Chief Executive Officer, Daniel Solomita and any person who is an affiliate of the Company.No family relationships exist between Donald Danks, a director, and any person who is an affiliate of the Company.ITEMITEM 11. EXECUTIVE COMPENSATIONfollowing tablesinformation required by this item regarding director’s compensation table and compensation risk management disclosures are incorporated by reference to the information set forth certain information about compensation paid, earned or accrued for services by our President and all other executive officers (collectively, the "Named Executive Officers") in the fiscal years ended February 29, 2016 and 2015:SUMMARY COMPENSATION TABLEThe table below summarizes allsection titled “Corporate Governance” in our Proxy Statement. All other information required by this item regarding executive compensation awardedis incorporated by reference to earned by, or paid tothe information set forth in the section titled “Executive Compensation” in our Officers for all services rendered in all capacities to us for the fiscal periods indicated.
($)
($)
($)
($)
($)0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 180,000 0 0 0 0 0 0 180,000 30,000 0 0 0 0 0 0 30,000 ______________(1)Appointed President, Treasurer and Director on April 27, 2010, and resigned from all such offices and positions on June 29, 2015.(2)Appointed Secretary, Treasurer and Director on April 27, 2010, and resigned from all such offices and positions on June 29, 2015.(3)Appointed President and Chief Executive Officer, Secretary, Treasurer and Chairman of the Board of Directors on June 29, 2015.23Option Exercises and Fiscal Year-End Option Value Table.There were no stock options exercised by the named executive officers as of the end of the fiscal period ended February 29, 2016.Long-Term Incentive Plans and AwardsThere were no awards made to a named executive officer, under any long-term incentive plan, as of the end of the fiscal period ended February 29, 2016.We currently do not pay any compensation to our directors serving on our board of directors.STOCK OPTION GRANTSThe following table sets forth stock option grants and compensation or the fiscal year ended February 29, 2016:-0- -0- -0- $ -0- N/A -0- -0- -0- -0- -0- -0- -0- $ -0- N/A -0- -0- -0- -0- -0- -0- -0- $ -0- N/A -0- -0- -0- -0- -0- -0- -0- $ -0- N/A -0- -0- -0- -0- ______________ (1)Appointed President, Treasurer and Director on April 27, 2010, and resigned from all such offices and positions on June 29, 2015.(2)Appointed Secretary, Treasurer and Director on April 27, 2010, and resigned from all such offices and positions on June 29, 2015.(3)Appointed President and Chief Executive Officer, Secretary, Treasurer and Chairman of the Board of Directors on June 29, 2015.(4)Appointed a director on June 29, 2015.24DIRECTOR COMPENSATIONThe following table sets forth director compensation or the fiscal year ended February 29, 2016:
($)
($)
($)
($)
($)-0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- ______________ (1)Appointed President, Treasurer and Director on April 27, 2010, and resigned from all such offices and positions on June 29, 2015.(2)Appointed Secretary, Treasurer and Director on April 27, 2010, and resigned from all such offices and positions on June 29, 2015.(3)Appointed President and Chief Executive Officer, Secretary, Treasurer and Chairman of the Board of Directors on June 29, 2015.(4)Appointed a director on June 29, 2015.We currently do not pay any compensation to our directors for serving on our board of directors.ITEMITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSfollowing table lists, as of February 29, 2016, the number of shares of common stock of our Company that are beneficially ownedinformation required by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficialthis item regarding security ownership of common stock by our principal shareholderscertain beneficial owners and management and related stockholder matters is based uponincorporated by reference to the information furnished by each person using "beneficial ownership" concepts underset forth in the rulessections titled “Security Ownership of the SecuritiesCertain Beneficial Owners and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the SecuritiesManagement” and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.25The percentages below are calculated based on 29,910,800 shares of“Executive Compensation” in our common stock issued and outstanding as of February 29, 2016. We do not have any outstanding warrant, options or other securities exercisable for or convertible into shares of our common stock.
Common17,000,000 56.8 % 1,000,000 3.3 % 18,000,000 60.1 % _______________ (1)Calculated based on 29,910,800 shares of common stock issued and outstanding on February 29, 2016.(2)Appointed President and Chief Executive Officer, Secretary, Treasurer and Chairman of the Board of Directors on June 29, 2015. Mr. Solomita also holds one share of Series A Preferred Stock, which equals voting power equal to 65% of the voting power of the issued and outstanding shares of common stock of the Company so long a Mr. Solomita holds not less than 7.5% of the issued and outstanding shares of common stock of the Company, assuring Mr. Solomita of control of the Company in the event that his presently-held 57% of the issued and outstanding shares of common stock of the Company is diluted to a level below a majority.(3)Appointed director on June 29, 2015.(4)Numbers of shares of common stock reflect a one-for-four (1:4) reverse split of the Company's issued and outstanding shares of common stock, effected on the OTCQB on September 21, 2015.(5)Unless otherwise specified, the address of each of the persons set forth below is in care of the Company, at the address of: 1999 Avenue of the Stars, Suite 2520, Los Angeles, California 90067.ITEMITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEOn June 29, 2015,Company, entered into a Share Exchange Agreement (the "Share Exchange Agreement"), by and among the Company, Loop Holdings, and the holders of common stock of Loop Holdings. The holders of the common stock of Loop Holdings consisted of 39 stockholders.Under the terms and conditions of the Share Exchange Agreement, the Company offered, sold and issued 23,257,500 shares of common stock in consideration for all the issued and outstanding shares in Loop Holdings. As a result of the Share Exchange Agreement, Daniel Solomita, the Company's new Chief Executive Officer and Chairmanpolicy of the Board that all transactions required to be reported pursuant to Item 404 of Directors, isRegulation S-K be subject to approval by the holder of 17,000,000 shares of common stock, or 57.1%,Audit Committee of the outstanding common stockBoard. In furtherance of relevant Nasdaq rules and our commitment to corporate governance, the charter of the Company.As a resultAudit Committee provides that the Audit Committee shall review and approve any proposed related party transactions including, transactions required to be reported pursuant to Item 404 of Regulation S-K for potential conflict of interest situations. The Audit Committee reviews the material facts of all transactions that require the committee’s approval and either approves or disapproves of the share exchange, Loop Holdingstransaction. In determining whether to approve a transaction, the Audit Committee will take into account, among other factors it deems appropriate, whether the transaction is now a wholly-owned subsidiary of the Company.8198381 Canada Inc., doing business as "SMH Recycling", is a corporation duly formed and existingon terms no less favorable than terms generally available to an unaffiliated third-party under the laws of Canada, ("8198381 Canada Inc."),same or similar circumstances.beneficially owned and controlledincorporated by our President and Chief Executive Officer, Secretary, Treasurer and Chairman of the Board of Directors, Daniel Solomita. We paid $50,000 to 8198381 Canada Inc. to perform certain services relatedreference to the development of PET depolymerization technology, including but not limited to, the design and engineering of production facilities, equipment testing, cost reduction assessment of chemical processes, product purity testing and research and development related to PET plastic production facilities for the period from October 23,2014 (inception) through February 28, 2015.26On June 22, 2015, Loop Holdings, Inc. entered into a Technology Transfer Agreement with 8198381 Canada Inc. whereby 8198381 Canada Inc. and the Company memorialized the transfer of technology and information from 8198381 Canada Inc. to the Company under the 8198381 Canada Inc. Oral Contract.On June 29, 2015, we entered into an Indemnification Agreement, with Daniel Solomita, whereby the Company agreed to indemnify Mr. Solomita for claims against him that may arise in connection with the performance of his duties as an officer or director for the Company.On June 29, 2015, we entered into an Indemnification Agreement, with Donald Danks, whereby the Company agreed to indemnify Mr. Solomita for claims against him that may arise in connection with the performance of his duties as a director for the Company.On June 29, 2015, the Company entered into an Employment Agreement with Daniel Solomita. The Employment Agreement provides for an initial annual base salary, commencing June 29, 2015 of $180,000. The agreement also provides for (i) a bonus of 4,000,000 shares of common stock, (ii) the Company to pay for Mr. Solomita's costs related to executive's reasonable monthly cell phone and other mobile Internet costs, home office Internet costs, (iii) the Company to pay for executive's car and commuting costs, not to exceed $1,000 per month, and club membership costs, payable not later than 10 days after the end of each month, and (iv) a severance payment for Mr. Solomita equal to his then current annual base salary rate plus one month of salary for each year of employment, not to exceed 24 months of severance, upon the termination of his employment by the Company without cause or by Mr. Solomita for good reason orset forth in the event of a change in control. The employment agreement defines the term "cause" as "any grounds entitling the Company's Board to summarily dismiss" Mr. Solomita. Compensation expense under this agreement amounted to $180,000sections titled “Transactions with Related Persons” and $30,000 during the years ended February 29, 2016 and February 28, 2015, respectively. As of February 29, 2016 and February 28, 2015, accrued compensation of $210,000 and $30,000, respectively, was due to Mr. Solomita.The bonus of 4,000,000 shares of common stock is payable to Mr. Solomita as follows:(i) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's securities are listed on an exchange or the OTCQX tier of the OTCMarkets; (ii) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company executes a contract for a minimum quantity of 25,000 M/T of PTA/EG or a PET; (iii) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's first fill-scale production facility is in commercial operation; and (iv) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's second full-scale production facility is in commercial operation. The employment agreement also requires that Mr. Solomita participate“Corporate Governance” in our employee benefit programs and provide for other customary benefits. In addition, each employment agreement provides compensation pursuant periodic grants of stock options thereafter as recommended by our board of directors. Finally, the employment agreement prohibits Mr. Solomita from engaging in certain activities which compete with the Company, seek to recruit its employees or disclose any of its trade secrets or otherwise confidential information. During the years ended February 29, 2016 and February 28, 2015, Mr. Daniel Solomita, the Company's major stockholder and CEO, or companies controlled by him, made advances of $424,097 and $68,031respectively to the Company. The amounts due these entities as of February 29, 2016 and February 28, 2015 were of $492,128 and $68,031, respectively. The advances are unsecured, non-interest bearing with no formal terms of repayment.year ended February 29, 2016 and 2015,information in the total fees charged to the company for audit services, including quarterly reviews were $46,250 and none, for audit-related services.27 Number Description Form File No. Filing Date Exhibit No. Share Exchange Agreement, dated June 29, 2015, by and among First American Group Inc., Loop Holdings, Inc., and the stockholders of Loop Holdings, Inc. 8-K 000-54768 June 30, 2015 2.1 Articles of Incorporation, as a mended to date 10-K 000-54768 May 30, 2017 3.1 By-laws, as amended to date 8-K 000-54768 April 10, 2018 3.1 Description of Securities 8-K 001-38301 Filed herewith Form of Amendment No. 1 to the January 15, 2019 Note Purchase Agreement, dated April 4, 2019. 8-K 001-38301 April 10, 2019 4.1 Form of Amendment to 2019 Warrant, dated April 4, 2019. 8-K 001-38301 April 10, 2019 4.2 Form of Amendment and Conversion Agreement, dated April 5, 2019. 8-K 001-38301 April 10, 2019 4.3 Form of Amendment to November 2018 Warrant, dated April 8, 2019 8-K 001-38301 April 10, 2019 4.4 Form of Convertible Promissory Note, dated January 15, 2019 (under Note and Warrant Purchase Agreement). 8-K 001-38301 January 16, 2019 4.1 Form of Warrant, dated January 15, 2019 (under Note and Warrant Purchase Agreement). 8-K 001-38301 January 16, 2019 4.2 Form of Note and Warrant Purchase Agreement, dated November 13, 2018. 8-K 001-38301 November 13, 2018 4.1 Form of Note, dated November 13, 2018 (under Note and Warrant Purchase Agreement). 8-K 001-38301 November 13, 2018 4.2 Form of Warrant, dated January 11, 2018 8-K 001-38301 January 18, 2018 4.1 Form of Indenture S-3 001-38301 August 10, 2018 4.1 Intellectual Property Assignment Agreement dated October 27, 2014, as supplemented April 10, 2015, by and among Hatem Essaddam, Loop Holdings, Inc. and Daniel Solomita. 10-K 000-54768 May 30, 2017 10.1 Subscription Agreement, dated May 22, 2015, by and between 9121820 Canada Inc. and Loop Holdings, Inc. 10-K 000-54768 May 30, 2017 10.2 Technology Transfer Agreement, dated June 22, 2015 by and between 8198381 Canada Inc. and Loop Holdings, Inc. 8-K 000-54768 June 30, 2015 10.7 Amended and Restated Employment Agreement, dated July 13, 2018, by and between Loop Industries, Inc. and Daniel Solomita. 8-K 001-38301 July 13, 2018 10.12 Master Services Agreement, dated September 1, 2015, by and between 8198381 Canada Inc. and Loop Holdings, Inc 10-K 000-54768 May 30, 2017 10.5 Purchase and Sale Agreement, by and between 8198381 Canada Inc. and Loop Canada Inc. (formerly 9449507 Canada Inc.) 10-K 000-54786 May 30, 2017 10.7 Agreement for Services, dated February 28, 2017, by and between Loop Industries, Inc. and Drinkfinity USA, Inc. 10-K 000-54768 May 30, 2017 10.8 Articles of Merger of Loop Holdings, Inc. into Loop Industries, Inc. 10-K 000-54768 May 30, 2017 10.9 Form of Indemnification Agreement 10-K 000-54768 May 30, 2017 10.10 Employment Agreement, dated September 27, 2017, by and between Loop Industries, Inc. and Antonella Penta 10-K 001-38301 May 14, 2018 10.11 Securities Purchase Agreement, dated February 27, 2019, by and between Loop Industries, Inc. and the purchaser identified therein. 8-K 001-38301 February 28, 2019 10.1 Form of Note and Warrant Purchase Agreement, dated January 15, 2019. 8-K 001-38301 January 16, 2019 10.1 Master Term and Conditions Supply Agreement, dated November 23, 2018, by and between Loop Industries, Inc. and Coca-Cola Cross Enterprise Procurement Group. 8-K 001-38301 November 29, 2018 10.1 Form of Warrant, dated November 13, 2018 (under Note and Warrant Purchase Agreement). 8-K 001-38301 November 13, 2018 10.1 Terms and Conditions Agreement, dated October 9, 2018, by and between Loop Industries, Inc. and Pepsi-Cola Advertising and Marketing, Inc. 8-K 001-38301 October 15, 2018 10.1 Limited Liability Company Agreement, dated September 24, 2018, by and between Loop Industries, Inc. and Indorama Loop Technologies, LLC. 8-K 001-38301 September 28, 2018 10.1 License Agreement, dated September 24, 2018 by and between Loop Industries, Inc. and Indorama Loop Technologies, LLC. 8-K 001-38301 September 28, 2018 10.2 Marketing Agreement, dated September 24, 2018, by and between Loop Industries, Inc. and Indorama Loop Technologies, LLC. 8-K 001-38301 September 28, 2018 10.3 Form of Common Stock Subscription Agreement 8-K 001-38301 January 18, 2018 10.1 Employment Agreement, dated October 20, 2017, by and between Loop Canada Inc. and Frank Zitella. 10-Q 000-54768 January 12, 2018 10.3 Employment Agreement, dated April 10, 2018, by and between Loop Canada Inc. and Nelson Switzer] 10-Q/A 000-54768 July 11, 2018 10.12 Employment Agreement, dated December 19, 2018, by and between Loop Canada Inc. and Nelson Gentiletti. 000-54768 Filed herewith Code of Ethics 8-K 000-54768 Jan 31, 2017 14.1 Subsidiaries of Registrant 10-K 000-54768 May 30, 2017 21.1 24.1 Power of Attorney (contained on signature page to the previously filed Annual Report on Form 10-K) 10-K 000-54768 May 30, 2017 24.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith 101.INS XBRL Instance Document Filed herewith 101.SCH XBRL Taxonomy Extension Schema Document Filed herewith 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith 101.DEF XBRL Taxonomy Extension Definition Linkbase Document Filed herewith 101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed herewith 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith NumberDescription2.1Share Exchange Agreement, dated June 29, 2015, by and among the Company, Loop Holdings, Inc., a Nevada corporation, and the holders common stock of Loop Holdings, Inc. (2)3.1.1Articles of Incorporation, dated March 11, 2010 (1)3.1.2Certificate of Amendment, dated October 10, 2010 (1)3.1.3Certificate of Amendment, dated February 4, 2014*3.1.4Certificate of Change, dated February 4, 2014*3.1.5Certificate of Amendment, dated July 21, 2015 (3)3.1.6Certificate of Change, dated July 21, 2015 (3)3.1.7Certificate of Designation for Series A Preferred Stock, dated February 19, 2016*3.2Bylaws (1)10.1Amendment No. 1 to Employment Agreement, dated February 15, 2016, by and between Loop Industries, Inc. and Daniel Solomita.10.2Letter agreement, dated June 13, 2016, by and among, Loop Industries, Inc., a Nevada corporation; 819381 Canada Inc., a federal Canada corporation, and 9449507 Canada Inc., a federal Canada corporation.21.1Subsidiaries of Registrant31.1Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1Certification of Principal Executive Officer and Principal Financial Officer and pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101.INSXBRL Instance Document*101.SCHXBRL Taxonomy Extension Schema Document*101.CALXBRL Taxonomy Extension Calculation Linkbase Document*101.DEFXBRL Taxonomy Extension Definition Linkbase Document*101.LABXBRL Taxonomy Extension Label Linkbase Document*101.PREXBRL Taxonomy Extension Presentation Linkbase Document*_______________(1)Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No. 333-171091), filed with the Securities and Exchange Commission on December 10, 2010.(2)Incorporated by reference to the Registrant's Current Report on Form 8-K (File No. 000-54768), filed with the Securities and Exchange Commission on June 30, 2015.(3)Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q (File No. 000-54768), filed with the Securities and Exchange Commission on October 20, 2015.*Filed herewith.28SIGNATURESIn accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.(Name of Registrant)Date: May 2, 2019 By: Date: June 15, 2016By: Treasurer, and DirectorDate: May 7, 2019 By: /s/ Daniel Solomita Name: Daniel Solomita Title: Date: May 7, 2019 By: /s/ Nelson Gentiletti Name: Nelson Gentiletti Title: Chief Operating Officer and Chief Financial Officer (principal executive officer, principal accounting officer and principal financial officer), Secretary and TreasurerDate: June 15, 2016By:/s/ Don DanksName:Don DanksDate: May 7, 2019 Title:DirectorName: Sidney Horn Title: Director Date: May 7, 2019 By: /s/ Shaun Higgins Name: Shaun Higgins Title: Director Date: May 7, 2019 By: /s/ Leslie Murphy Name: Leslie Murphy Title: Director Date: May 7, 2019 By: /s/ Laurence Sellyn Name: Laurence Sellyn Title: Lead Director Date: May 7, 2019 By: /s/ Jay Stubina Name: Jay Stubina Title: Director 29