Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Aug. 31, 2017 | Oct. 05, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Loop Industries, Inc. | |
Entity Central Index Key | 1,504,678 | |
Document Type | 10-Q | |
Document Period End Date | Aug. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-28 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 32,807,137 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Aug. 31, 2017 | Feb. 28, 2017 |
Current Assets | ||
Cash | $ 5,383,651 | $ 916,487 |
Valued added tax and other receivables | 100,741 | 259,297 |
Prepayments and other current assets | 15,954 | |
Total current assets | 5,500,346 | 1,175,784 |
Property and Equipment, net of accumulated depreciation of $661,414 and $497,244, respectively | 1,681,513 | 1,566,969 |
Intellectual Property, net of accumulated amortization of $168,839 and $137,050, respectively | 276,211 | 308,000 |
Total assets | 7,458,070 | 3,050,753 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 818,963 | 161,536 |
Accrued officer compensation | 360,000 | |
Advances from majority stockholder | 28,710 | 391,695 |
Stock subscriptions | 54,780 | |
Total current liabilities | 902,453 | 913,231 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Common stock par value $0.0001: 250,000,000 shares authorized; 32,789,009 and 31,451,973 shares issued and outstanding, respectively | 3,279 | 3,146 |
Additional paid-in capital | 16,682,984 | 8,723,390 |
Common stock issuable, 1,000,000 shares at August 31 and February 28, 2017 | 5,500,000 | 5,500,000 |
Accumulated deficit | (15,636,857) | (11,937,803) |
Accumulated other comprehensive (loss) gain | 6,211 | (151,211) |
Total stockholders' equity | 6,555,617 | 2,137,522 |
Total liabilities and stockholders' equity | 7,458,070 | 3,050,753 |
Series A Preferred Stock [Member] | ||
Stockholders' Equity | ||
Preferred stock, value |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Aug. 31, 2017 | Feb. 28, 2017 |
Current Assets | ||
Property and Equipment, net of accumulated depreciation | $ 661,414 | $ 497,244 |
Intellectual Property, net of accumulated amortization | $ 168,839 | $ 137,050 |
Stockholders' Equity | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 32,789,009 | 31,451,973 |
Common stock, shares outstanding | 32,789,009 | 31,451,973 |
Common stock issuable | 1,000,000 | 1,000,000 |
Series A Preferred Stock [Member] | ||
Stockholders' Equity | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, share authorised | 25,000,000 | 25,000,000 |
Preferred stock, share issued | 1 | 1 |
Preferred stock, share outstanding | 1 | 1 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Aug. 31, 2017 | Aug. 31, 2016 | Aug. 31, 2017 | Aug. 31, 2016 | |
Condensed Consolidated Statements Of Operations And Comprehensive Loss | ||||
Revenue | ||||
Operating Expenses - | ||||
General and administrative | 1,081,634 | 316,310 | 1,971,216 | 756,056 |
Research and development | 950,775 | 433,629 | 1,447,309 | 849,198 |
Depreciation and amortization | 91,774 | 75,128 | 182,261 | 188,152 |
Foreign exchange loss (gain) | 52,529 | 99 | 98,268 | (3,689) |
Total operating expenses | 2,176,712 | 825,166 | 3,699,054 | 1,789,717 |
Net Loss | (2,176,712) | (825,166) | (3,699,054) | (1,789,717) |
Other comprehensive loss - | ||||
Foreign currency translation adjustment | (167,398) | (3,865) | (157,422) | (24,358) |
Comprehensive Loss | $ (2,344,110) | $ (829,031) | $ (3,856,476) | $ (1,814,075) |
Loss per share- Basic and Diluted | $ (0.07) | $ (0.03) | $ (0.11) | $ (0.06) |
Weighted average common shares outstanding- Basic and Diluted | 32,625,928 | 31,176,269 | 31,830,628 | 30,809,266 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 6 months ended Aug. 31, 2017 - USD ($) | Common stock par value $0.0001 | Preferred Stock par value $0.0001 | Additional Paid-In Capital | Common Stock Issuable | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning Balance, Shares at Feb. 28, 2017 | 31,451,973 | 1 | |||||
Beginning Balance, Amount at Feb. 28, 2017 | $ 3,146 | $ 8,723,390 | $ 5,500,000 | $ (11,937,803) | $ (151,211) | $ 2,137,522 | |
Issuance of common shares for cash, Shares | 1,123,266 | ||||||
Issuance of common shares for cash, Amount | $ 112 | 5,897,076 | 5,897,188 | ||||
Fair value of Warrants issued for services | 920,373 | 920,373 | |||||
Issuance of shares upon exercise of warrants for cash, Shares | 193,770 | ||||||
Issuance of shares upon exercise of warrants for cash, Amount | $ 19 | 1,162,997 | 1,163,016 | ||||
Issuance of shares upon cash-less exercise of warrants, Shares | 20,000 | ||||||
Issuance of shares upon cash-less exercise of warrants, Amount | $ 2 | (2) | |||||
Share issuance costs | (20,850) | (20,850) | |||||
Foreign currency translation | 157,422 | 157,422 | |||||
Net Loss | (3,699,054) | (3,699,054) | |||||
Ending balance, Shares at Aug. 31, 2017 | 32,789,009 | 1 | |||||
Ending Balance, Amount at Aug. 31, 2017 | $ 3,279 | $ 16,682,984 | $ 5,500,000 | $ (15,636,857) | $ 6,211 | $ 6,555,617 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Aug. 31, 2017 | Aug. 31, 2016 | |
Cash Flows from Operating Activities | ||
Net loss | $ (3,699,054) | $ (1,789,717) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 150,472 | 156,363 |
Amortization expense | 31,789 | 31,789 |
Fair value of warrants issued for services | 920,373 | 73,707 |
Changes in operating assets and liabilities: | ||
Valued added tax and other receivables | 45,333 | (105,816) |
Prepayments and other current assets | (15,954) | 36,129 |
Accounts payable and accrued liabilities | 657,426 | (134,424) |
Accrued officer compensation | (360,000) | 90,000 |
Net Cash Used in Operating Activities | (2,269,615) | (1,641,969) |
Cash Flows from Investing Activities | ||
Purchases of property and equipment | (168,002) | (247,861) |
Net Cash Used in Investing Activities | (168,002) | (247,861) |
Cash Flows from Financing Activities | ||
Proceeds from sales of common shares and exercise of warrants, net of share issuance costs | 7,039,354 | 3,826,016 |
Repayment of advances from majority stockholder | (249,762) | (86,764) |
Stock subscriptions | 54,780 | |
Net Cash Provided by Financing Activities | 6,844,372 | 3,739,252 |
Effect of exchange rate changes | 60,409 | (75,848) |
Net Change in Cash | 4,467,164 | 1,773,574 |
Cash - beginning of period | 916,487 | 422,586 |
Cash - end of period | 5,383,651 | 2,196,160 |
Supplemental disclosure of cash flow information: | ||
Income tax paid | ||
Non Cash Financing and Investing Activities | ||
Reclass of value added tax and other receivables to advances from majority stockholder | $ 113,223 |
The Company and Basis of Presen
The Company and Basis of Presentation | 6 Months Ended |
Aug. 31, 2017 | |
Notes to Financial Statements | |
Note 1. The Company and Basis of Presentation | The Company 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 subsequently changed our name to , Loop Industries, Inc., effective July 21, 2015. On June 29, 2015, Loop Industries, Inc. (the Company) entered into a Share Exchange Agreement (the Share Exchange Agreement), by and among the Company, and the holders of common stock of Loop Holdings, Inc. (Loop Holdings). 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. 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 the former owners and management of Loop Industries had voting and operating control of the Company after the share exchange, the transaction has been accounted for as a recapitalization with Loop Holdings deemed the acquiring company for accounting purposes, and the Company deemed the legal acquirer. No step-up in basis or intangible assets or goodwill was 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 Report on Form 10-Q give retroactive effect to a one-for-four (1:4) reverse split of the Companys issued and outstanding shares of common stock, which reverse split took effect on the OTCQB on September 21, 2015. On May 24, 2016, 9449507 Canada Inc. was incorporated to carry on the Companys depolymerization business. On November 11, 2016, the shares of 9449507 Canada Inc., which was wholly owned by Mr. Solomita, were transferred to Loop Industries Inc. On December 23, 2016, 9449507 Canada Inc. changed its legal name to Loop Canada Inc. On December 31, 2016, all employees, assets, liabilities, and operations pertaining to the Companys depolymerization business, were transferred to Loop Canada Inc. from 8198381 Canada Inc., a company wholly owned by Mr. Solomita. On March 9, 2017, Loop Holdings, a wholly-owned subsidiary of the Company, merged with and into the Company, with the Company being the surviving entity as a result of the merger. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements of Loop Industries, Inc. and its wholly-owned subsidiary Loop Canada Inc. (collectively, the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial information as of August 31, 2016 is derived from the Companys audited consolidated financial statements and related notes for the fiscal year ended February 28, 2017, which is included in Item 8 of the Companys 2017 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on May 30, 2017. These unaudited interim condensed consolidated financial statements should be read in conjunction with those consolidated financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three and six months ended August 31, 2017 are not necessarily indicative of the results that may be expected for the year ending February 28, 2018. Intercompany balances and transactions have been eliminated in consolidation. Liquidity The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has no recurring source of revenue and during the six months ended August 31, 2017, the Company incurred a net loss of $3,699,054 and used cash in operations of $2,269,615. As of August 31, 2017, the Company had cash on hand of $5,383,651 and stockholders equity of $6,555,617. Management estimates that the current funds on hand will be sufficient to continue operations through the next twelve months. However, the Company will need additional financing through either debt or equity to finalize the transition from pilot scale to a full scale commercial manufacturing facility. Management may consider seeking additional funds, primarily through the issuance of debt and equity securities for cash and estimates that a significant amount of capital will be necessary to advance the development of our projects to the point at which they will become commercially viable. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company could 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Aug. 31, 2017 | |
Notes to Financial Statements | |
Note 2. Summary of Significant Accounting Policies | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 and equipment, analysis of impairments of recorded intellectual property, accruals for potential liabilities and assumptions made in calculating the fair value of certain stock instruments. Foreign Currency Translations and Transactions The accompanying consolidated financial statements are presented in United States 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 are translated at the exchange rate as of the balance sheet date. Income and expenses are translated at the average exchange rate of the period. As a result, currency exchange fluctuations may impact our revenue and the costs of our operations. We currently do not engage in any currency hedging activities. The following table summarizes the exchange rates used: Six Months Ended August 31, 2017 2016 Period end Canadian $: US Dollar exchange rate $ 0.80 $ 0.76 Average period Canadian $: US Dollar exchange rate $ 0.76 $ 0.77 Expenditures are translated at the average exchange rate for the period presented. Value added tax, tax credits and other receivables The Company is registered for the Canadian Federal and Provincial Goods and Services Taxes. As a registrant, the company 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 August 31 and February 28, 2017, the computed net recoverable sale taxes amounted to $79,723 and $198,830, respectively. Research and Development Costs Research and development expenses relate primarily to the development, design, testing of preproduction samples, prototypes and models, compensation, and consulting fees, and are expensed as incurred. Total research and development costs recorded amounted to $950,775 and $433,629 for the three months ended August 31, 2017 and 2016, respectively, and to $1,447,309 and $849,198 for the six months ended August 31, 2017 and 2016, respectively. Research and development costs are net of $4,472 of grants received and research and development tax credit of $127,713 claimed during the period ended August 31, 2017. Net Loss per Share The Company computes net loss per share in accordance with FASB ASC 260 Earnings per share. Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive. For the three and six months ended August 31, 2017 and 2016, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The potentially dilutive securities consisted of 1,000,000 common shares issuable and 2,004,582 outstanding warrants as of August 31, 2017 and 2,035,004 outstanding warrants as of August 31, 2016. Stock Compensation In March 2016, the FASB issued ASU 2016-09, CompensationStock Compensation (Topic 718) Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), 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 beginning 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. As the Company does not currently have any revenues from contracts with customers, the adoption of ASU 2014-09 on March 1, 2018 will not to have an impact, on transition. In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases |
Property and Equipment
Property and Equipment | 6 Months Ended |
Aug. 31, 2017 | |
Notes to Financial Statements | |
Note 3. Property and Equipment | Estimated Useful August 31, February 28, Life 2017 2017 (years) Machinery and Equipment 5 - 7 $ 1,796,015 $ 1,590,187 Office equipment and furniture 5 - 8 158,242 131,607 Leasehold improvements 3 388,670 342,419 2,342,927 2,064,213 Less: accumulated depreciation (661,414 ) (497,244 ) Property and equipment, net $ 1,681,513 $ 1,566,969 Depreciation expense amounted to $75,880 and $65,596 for the three months ended August 31, 2017 and 2016, respectively and to $150,472 and $156,363 for the six months ended August 31, 2017 and 2016, respectively. |
Intellectual Property
Intellectual Property | 6 Months Ended |
Aug. 31, 2017 | |
Notes to Financial Statements | |
Note 4. Intellectual Property | On October 27, 2014, the Company entered into an intellectual property agreement with Mr. Hatem Essaddam wherein the Company purchased for cash of $445,050, a certain technique and method for the depolymerization of polyethylene terephthalate at ambient temperature and atmospheric pressure. The Company is using such intellectual property as part of their research and development activities. The technology is being amortized using the straight-line method over the 7 years estimated useful life of the patents. In addition to the $445,050 paid by the Company under the Intellectual Property Assignment Agreement, the Company is required to make additional payments totaling CDN$800,000 to Mr. Essaddam within sixty (60) days of each of the following milestones (the Milestones) having been met, as follows: (i) CDN$200,000 when an average of twenty (20) metric tons per day of terephthalic acid 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 August 31, 2017, the Company is still in its test pilot program, none of the Milestones have been met, and accordingly no additional payments have been made. Additionally, the Company is obligated to make royalty payments to Mr. Essaddam of up to CDN$25,700,000, 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. As of August 31, 2017, the Company has not made any royalty payments under the Intellectual Property Assignment Agreement. Amortization expense amounted to $15,895 and $9,532 for the three months ended August 31, 2017 and 2016, respectively and to $31,789 and $31,789 for the six months ended August 31, 2017 and 2016, respectively. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Aug. 31, 2017 | |
Notes to Financial Statements | |
Note 5. Related Party Transactions | Advances from Major Shareholder Mr. Daniel Solomita, the Companys major stockholder and CEO, or companies controlled by him, previously made advances to the Company. The advances were unsecured, non-interest bearing with no formal terms of repayment. During the period ended August 31, 2017, the Company repaid to Mr. Solomita or companies controlled by him, as applicable, an aggregate amount of $249,762 and netted against the advances an aggregate amount of $113,223 representing value added taxes and other receivables owing. The amounts due to these entities as of February 28, 2017 were $391,695. Employment Agreement and Accrued Compensation due to Major Shareholder The Company entered into an employment agreement with Daniel Solomita, the Companys President and Chief Executive Officer for an indefinite term. During the term, the officer shall receive monthly salary of $15,000. Compensation expense under this agreement amounted to $45,000. As at February 28, 2017, accrued compensation $360,000 was due to Mr. Solomita. As at August 31, 2017, the total accrued compensation due to Mr. Solomita was paid. In addition, the Company agreed to grant the officer 4 million shares of the Companys common stock, form of equity to be determined, if certain milestones were met. Effective April 10, 2017, the Company qualified to trade on the OTCQX and began trading the same date. Accordingly, as at August 31, 2017, the officers entitlement to 1,000,000 shares with a fair value of $5,500,000, in aggregate, have vested. The milestones for the remaining 3,000,000 shares of common stock have not yet been met. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Aug. 31, 2017 | |
Notes to Financial Statements | |
Note 6. Stockholders' Equity | Common Stock During the six months ended August 31, 2017 the Company sold 1,123,266 shares of its common stock at an offering price of $5.25 per share, resulting in net proceeds to the Company of $5,897,188. Equity Incentive Plan On July 6, 2017, the Company adopted the 2017 Equity Incentive Plan (the Plan). The Plan permits the granting of options to employees, directors and consultants of the Company. A total of 3,000,000 shares of common stock were reserved for issuance under the Plan with an automatic share reserve increase, as defined in the Plan, effective commencing March 1, 2018. The Plan is administered by the Board of Directors who designates eligible participants to be included under the Plan, the number of stock options granted, the share price pursuant to the stock options and the vesting conditions and period. The options, when granted, will have an exercise price of no less than the estimated fair value of shares at the date of grant and a life not exceeding 10 years from the grant date. However, where a participant, at the time of the grant, owns stock representing more than 10% of the voting power of the Company, the life of the option will not exceed 5 years. During the period ended August 31, 2017, the Company issued to its Chief Financial Officer a warrant to purchase up to 400,000 shares of our common stock at an exercise price of $5.25 per share, which vests quarterly in equal amounts over 24 months beginning on April 3, 2017, and have a contractual life of 10 years. This warrant has a grant date fair value of $1,836,360 as determined by a Black Scholes option pricing model and will be amortized over the vesting period. In addition, the Company issued to its Chief Financial Officer a warrant to purchase up to 150,000 additional shares of our common stock at an exercise price of $5.25 per share that will vest when certain milestones are achieved. This warrant has a grant date fair value of $688,635 as determined by a Black Scholes option pricing model and amortization will commence when it is probable that the milestones will be achieved. During the period ended August 31, 2017, the Company issued three warrants to two employees, not covered under the Plan to purchase up to 530,000 shares of our common stock, in aggregate, at an exercise price of $5.25 per share. The warrants to purchase up to an aggregate of 100,000 and 380,000 shares of our common stock, respectively, each vest quarterly in equal amounts over 24 and 48 months, respectively, beginning on July 24, 2017 and June 13, 2017, respectively, and each have a contractual life of 10 years. These warrants collectively have a grant date fair value of $4,786,142 as determined by a Black Scholes option pricing model and will be amortized over the vesting period. In addition, a warrant to purchase up to 50,000 additional shares of our common stock will vest when certain milestones are achieved. This warrant had a grant date fair value of $479,885 as determined by a Black Scholes option pricing model and amortization will commence when it is probable that the milestones will be achieved. The warrants grant date fair value were determined by a Black Scholes option pricing model with the following assumptions: Risk-free interest rate 1.60 to 2.02% Expected dividend yield 0% Expected volatility 82 to 84% Expected life 4 to 6 years During the period ended August 31, 2017, the Company amended the terms of warrants to purchase up to 702,452 shares of our common stock which were originally issued on December 1, 2015 to three employees. The amendment extended the expiry date of the warrants to November 30, 2025 from November 30, 2017. As a result of the modification, we recognized additional compensation expense of $63,677. Amortization of these costs amounted to $697,869 and $32,348 for the three months period ended August 31, 2017 and 2016, respectively, and to $920,373 and $73,707 for the six months period ended August 31, 2017 and 2016, respectively, and are included in operating expenses. As of August 31, 2017 and 2016, the unamortized balance of these costs was $7,637,197 and $456,488. The aggregate intrinsic value of the warrants outstanding as of August 31, 2017 was $22,529,036 calculated as the difference between the closing market price of $14.45 and the exercise price of the Companys warrants as of August 31, 2017. The table below summarizes the Companys warrant activities: Number of Warrant Shares Exercise Price Range Per Share Weighted Average Exercise Price Balance, February 28, 2017 1,647,670 $0.80 to $6.00 $ 2.91 Granted 1,080,000 $5.25 $ 5.25 Forfeited (65,418 ) $0.80 to $3.00 $ 2.90 Exercised (213,770 ) $0.80 to $6.00 $ 5.52 Expired (443,900 ) $6.00 $ 6.00 Balance, August 31, 2017 2,004,582 $0.80 to $5.25 $ 3.21 Earned and exercisable, August 31, 2017 616,457 $0.80 to $5.25 $ 1.19 Unvested, August 31, 2017 1,388,125 $0.80 to $5.25 $ 4.11 As at August 31, 2017, 20,000 shares of the Companys common stock were issued as a result of a cashless exercise of 22,919 warrants with an exercise price of $0.80 and a fair value of $0.55. In addition, the Company issued 193,770 shares of its common stock upon the exercise of warrants at an offering price of $6.00 per share, resulting in proceeds of $1,163,016. The following table summarizes information concerning outstanding and exercisable warrants as of August 31, 2017: 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 $ 0.80 912,082 6.50 $ 0.80 557,082 6.48 $ 0.80 $ 3.00 12,500 0.76 $ 3.00 9,375 0.76 $ 3.00 $ 5.25 1,080,000 9.93 $ 5.25 50,000 9.73 $ 5.25 |
Geographic Information
Geographic Information | 6 Months Ended |
Aug. 31, 2017 | |
Notes to Financial Statements | |
Note 7. Geographic Information | As of August 31, 2017 and 2016, the Company had two reportable diverse geographical concentrations (and therefore, two reportable segments), the United States and Canada. Information related to these operating segments, net of eliminations, consists of the following for the periods below: As at August 31, 2017 United States Canada Elimination Total Current Assets $ 3,442,854 $ 2,057,492 $ 5,500,346 Property and equipment, net 141,535 1,539,978 1,681,513 Intangible assets, net 276,211 - 276,211 Loan receivable, parent company - 5,767,440 (5,767,440 ) - Total assets $ 3,860,600 $ 9,364,910 (5,767,440 ) $ 7,458,070 Current liabilities $ 255,716 $ 646,737 $ 902,453 Loan payable, subsidiairy company 5,767,440 - (5,767,440 ) - Equity 9,372,397 (2,816,780 ) 6,555,617 Total liabilities and equity $ 15,395,553 $ (2,170,043 ) (5,767,440 ) $ 7,458,070 Six months ended August 31, 2017 United States Canada Total Revenue $ - $ - $ - Cost of revenue - - - General and administrative 1,238,284 732,932 1,971,216 Research and development 295,400 1,151,909 1,447,309 Depreciation and amortization 47,648 134,613 182,261 Foreign exchange loss (gain) - 98,268 98,268 Loss from operations $ (1,581,332 ) $ (2,117,722 ) $ (3,699,054 ) Three months ended August 31, 2017 United States Canada Total Revenue $ - $ - $ - Cost of revenue $ - $ - - General and administrative $ 755,827 $ 325,807 1,081,634 Research and development $ 237,636 $ 713,139 950,775 Depreciation and amortization $ 21,687 $ 70,087 91,774 Foreign exchange loss (gain) $ - $ 52,529 52,529 Loss from operations $ (1,015,150 ) $ (1,161,562 ) $ (2,176,712 ) Six months ended August 31, 2016 United States Canada Total Revenue $ - $ - $ - Cost of revenue - - - General and administrative 403,614 352,442 756,056 Research and development 303,682 545,516 849,198 Depreciation and amortization 48,652 139,500 188,152 Foreign exchange loss (gain) - (3,689 ) (3,689 ) Loss from operations $ 755,948 $ 1,033,769 $ 1,789,717 Three months ended August 31, 2016 United States Canada Total Revenue $ - $ - $ - Cost of revenue $ - $ - - General and administrative $ 171,817 $ 144,493 316,310 Research and development $ 154,008 $ 279,621 433,629 Depreciation and amortization $ 14,728 $ 60,400 75,128 Foreign exchange loss (gain) $ - $ 99 99 Loss from operations $ (340,553 ) $ (484,613 ) $ (825,166 ) As at February 28, 2017 United States Canada Total Current assets $ 687,899 $ 487,885 $ 1,175,784 Property and equipment, net 157,394 1,409,575 1,566,969 Intangible assets, net 308,000 308,000 Total assets $ 1,153,293 $ 1,897,460 $ 3,050,753 Current liabilities $ 428,714 $ 484,517 $ 913,231 Equity 2,994,003 (856,481 ) 2,137,522 Total liabilities and equity $ 3,422,717 $ (371,964 ) $ 3,050,753 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Aug. 31, 2017 | |
Notes to Financial Statements | |
Note 8. Subsequent Events | Issuance of common shares On September 7, 2017, the Board of Directors approved the issuance and sale of 18,128 common shares of the Companys common stock, par value $0.0001 per share at an offering price of $12.00 per share, for gross proceeds of $217,536. In addition, the Company reclassified the stock subscriptions in the amount of $54,780, in aggregate, to common stock. As at the filing date, the Company had received total proceeds which will be used for working capital and general corporate purpose principally. The shares issued to investors were not registered under the Securities Act of 1933, as amended (the Act), in reliance upon the private offering safe harbor provision of Rule 506 Regulation D. Credit Facility On September 12, 2017, the Company entered into a credit facility consisting of a $50,000 CDN credit card facility, secured by a $50,000 CDN Guaranteed Investment Certificate (GIC) bearing interest at 0.45% maturing on October 1, 2018. Forward Foreign Exchange Contracts On September 12, 2017, the Company entered into a conditional forward foreign exchange contract to sell $250,000 USD with a term of September 12, 2017 to November 14, 2017, with an interim strike date on October 12, 2017 based on the following conditions: · If the spot rate never traded at or below 1.2025 CDN to USD and the spot rate is greater than 1.2025 the Company sells at 1.2025 CDN to USD; · If the spot rate traded at or below 1.2025 CDN to USD and the spot rate is: i) less than or equal to 1.2025 CDN to USD, then the Company sells at 1.2025 CDN to USD; or ii) greater than 1.2025, then no exchange or cash payment will occur. As security for the conditional forward foreign exchange contract the Company has pledged a $50,000 GIC bearing interest at 0.45% maturing on December 29, 2017 in favor of the Companys derivative dealer. In addition to the amount above, the Company entered into two $500,000 USD dual currency contracts, requiring the value of the contract to be deposited in a GIC, having terms of 30 days and 63 days, respectively. For the 30 day contract if the spot rate is less than or equal to 1.23 CDN per USD, then the GIC matures at $500,000 USD plus interest at 4.55% per annum. If the spot rate is greater than 1.23 CDN per USD, then the GIC matures at $615,000 CDN plus interest of 4.55%. For the 63 day contract if the spot rate is less than or equal to 1.23 CDN per USD, then the GIC matures at $500,000 USD plus interest of 4.8% per annum. If the spot rate is greater than 1.23 CDN per USD, then the GIC matures at $615,000 CDN plus interest of 4.8%. Equity Incentive Plan On September 14, 2017, the Company issued stock options, to two employees, under the Plan to purchase up to 700,000 shares of our common stock in aggregate, of which 200,000 vest immediately and 500,000 vest in equal monthly installments over 60 months beginning on September 14, 2017, at an exercise price of $12.00 per share. The warrants have a grant date fair value of $8,173,550 as determined by a Black Scholes option pricing model with the following assumptions: Risk-free interest rate 1.50% Expected dividend yield 0% Expected volatility 94% Expected life 3 years Purchase of land On September 27, 2017, the Company entered into a promise to purchase land, building and equipment for consideration of $957,240, in aggregate. An amount of $95,724 was deposited in escrow on the date of the agreement. We have 60 days following the acceptance of the promise to purchase to complete our due diligence and proceed to the execution of the deed of sale. |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Aug. 31, 2017 | |
Significant Accounting Policies Policies | |
Use of Estimates | The preparation of financial statements in conformity with generally accepted accounting principles 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 and equipment, analysis of impairments of recorded intellectual property, accruals for potential liabilities and assumptions made in calculating the fair value of certain stock instruments. |
Foreign Currency Translations and Transactions | The accompanying consolidated financial statements are presented in United States 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 are translated at the exchange rate as of the balance sheet date. Income and expenses are translated at the average exchange rate of the period. As a result, currency exchange fluctuations may impact our revenue and the costs of our operations. We currently do not engage in any currency hedging activities. The following table summarizes the exchange rates used: Six Months Ended August 31, 2017 2016 Period end Canadian $: US Dollar exchange rate $ 0.80 $ 0.76 Average period Canadian $: US Dollar exchange rate $ 0.76 $ 0.77 Expenditures are translated at the average exchange rate for the period presented. |
Value added tax, tax credits and other receivables | The Company is registered for the Canadian Federal and Provincial Goods and Services Taxes. As a registrant, the company 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 August 31 and February 28, 2017, the computed net recoverable sale taxes amounted to $79,723 and $198,830, respectively. |
Research and Development Costs | Research and development expenses relate primarily to the development, design, testing of preproduction samples, prototypes and models, compensation, and consulting fees, and are expensed as incurred. Total research and development costs recorded amounted to $950,775 and $433,629 for the three months ended August 31, 2017 and 2016, respectively, and to $1,447,309 and $849,198 for the six months ended August 31, 2017 and 2016, respectively. Research and development costs are net of $4,472 of grants received and research and development tax credit of $127,713 claimed during the period ended August 31, 2017. |
Net Loss per Share | The Company computes net loss per share in accordance with FASB ASC 260 Earnings per share. Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive. For the three and six months ended August 31, 2017 and 2016, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The potentially dilutive securities consisted of 1,000,000 common shares issuable and 2,004,582 outstanding warrants as of August 31, 2017 and 2,035,004 outstanding warrants as of August 31, 2016. |
Stock Compensation | In March 2016, the FASB issued ASU 2016-09, CompensationStock Compensation (Topic 718) |
Recently Issued Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), 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 beginning 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. As the Company does not currently have any revenues from contracts with customers, the adoption of ASU 2014-09 on March 1, 2018 will not to have an impact, on transition. In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Aug. 31, 2017 | |
Summary Of Significant Accounting Policies Tables | |
Foreign Currency Translations and Transactions | Six Months Ended August 31, 2017 2016 Period end Canadian $: US Dollar exchange rate $ 0.80 $ 0.76 Average period Canadian $: US Dollar exchange rate $ 0.76 $ 0.77 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Aug. 31, 2017 | |
Property And Equipment Tables | |
Property and Equipment | Estimated Useful August 31, February 28, Life 2017 2017 (years) Machinery and Equipment 5 - 7 $ 1,796,015 $ 1,590,187 Office equipment and furniture 5 - 8 158,242 131,607 Leasehold improvements 3 388,670 342,419 2,342,927 2,064,213 Less: accumulated depreciation (661,414 ) (497,244 ) Property and equipment, net $ 1,681,513 $ 1,566,969 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Aug. 31, 2017 | |
Stockholders Equity Tables | |
Estimated fair value of warrants on grant date | Risk-free interest rate 1.60 to 2.02% Expected dividend yield 0% Expected volatility 82 to 84% Expected life 4 to 6 years |
Warrants activities | Number of Warrant Shares Exercise Price Range Per Share Weighted Average Exercise Price Balance, February 28, 2017 1,647,670 $0.80 to $6.00 $ 2.91 Granted 1,080,000 $5.25 $ 5.25 Forfeited (65,418 ) $0.80 to $3.00 $ 2.90 Exercised (213,770 ) $0.80 to $6.00 $ 5.52 Expired (443,900 ) $6.00 $ 6.00 Balance, August 31, 2017 2,004,582 $0.80 to $5.25 $ 3.21 Earned and exercisable, August 31, 2017 616,457 $0.80 to $5.25 $ 1.19 Unvested, August 31, 2017 1,388,125 $0.80 to $5.25 $ 4.11 |
Outstanding and exercisable warrants | 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 $ 0.80 912,082 6.50 $ 0.80 557,082 6.48 $ 0.80 $ 3.00 12,500 0.76 $ 3.00 9,375 0.76 $ 3.00 $ 5.25 1,080,000 9.93 $ 5.25 50,000 9.73 $ 5.25 |
Geographic Information (Tables)
Geographic Information (Tables) | 6 Months Ended |
Aug. 31, 2017 | |
Geographic Information Tables | |
Operating segments, net of eliminations | As at August 31, 2017 United States Canada Elimination Total Current Assets $ 3,442,854 $ 2,057,492 $ 5,500,346 Property and equipment, net 141,535 1,539,978 1,681,513 Intangible assets, net 276,211 - 276,211 Loan receivable, parent company - 5,767,440 (5,767,440 ) - Total assets $ 3,860,600 $ 9,364,910 (5,767,440 ) $ 7,458,070 Current liabilities $ 255,716 $ 646,737 $ 902,453 Loan payable, subsidiairy company 5,767,440 - (5,767,440 ) - Equity 9,372,397 (2,816,780 ) 6,555,617 Total liabilities and equity $ 15,395,553 $ (2,170,043 ) (5,767,440 ) $ 7,458,070 Six months ended August 31, 2017 United States Canada Total Revenue $ - $ - $ - Cost of revenue - - - General and administrative 1,238,284 732,932 1,971,216 Research and development 295,400 1,151,909 1,447,309 Depreciation and amortization 47,648 134,613 182,261 Foreign exchange loss (gain) - 98,268 98,268 Loss from operations $ (1,581,332 ) $ (2,117,722 ) $ (3,699,054 ) Three months ended August 31, 2017 United States Canada Total Revenue $ - $ - $ - Cost of revenue $ - $ - - General and administrative $ 755,827 $ 325,807 1,081,634 Research and development $ 237,636 $ 713,139 950,775 Depreciation and amortization $ 21,687 $ 70,087 91,774 Foreign exchange loss (gain) $ - $ 52,529 52,529 Loss from operations $ (1,015,150 ) $ (1,161,562 ) $ (2,176,712 ) Six months ended August 31, 2016 United States Canada Total Revenue $ - $ - $ - Cost of revenue - - - General and administrative 403,614 352,442 756,056 Research and development 303,682 545,516 849,198 Depreciation and amortization 48,652 139,500 188,152 Foreign exchange loss (gain) - (3,689 ) (3,689 ) Loss from operations $ 755,948 $ 1,033,769 $ 1,789,717 Three months ended August 31, 2016 United States Canada Total Revenue $ - $ - $ - Cost of revenue $ - $ - - General and administrative $ 171,817 $ 144,493 316,310 Research and development $ 154,008 $ 279,621 433,629 Depreciation and amortization $ 14,728 $ 60,400 75,128 Foreign exchange loss (gain) $ - $ 99 99 Loss from operations $ (340,553 ) $ (484,613 ) $ (825,166 ) As at February 28, 2017 United States Canada Total Current assets $ 687,899 $ 487,885 $ 1,175,784 Property and equipment, net 157,394 1,409,575 1,566,969 Intangible assets, net 308,000 308,000 Total assets $ 1,153,293 $ 1,897,460 $ 3,050,753 Current liabilities $ 428,714 $ 484,517 $ 913,231 Equity 2,994,003 (856,481 ) 2,137,522 Total liabilities and equity $ 3,422,717 $ (371,964 ) $ 3,050,753 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Aug. 31, 2017 | |
Subsequent Events Tables | |
Estimated fair value of warrants | Risk-free interest rate 1.50% Expected dividend yield 0% Expected volatility 94% Expected life 3 years |
The Company and Basis of Pres21
The Company and Basis of Presentation (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Sep. 21, 2015 | Jun. 29, 2015 | Aug. 31, 2017 | Aug. 31, 2016 | Aug. 31, 2017 | Aug. 31, 2016 | Feb. 28, 2017 | |
Company And Basis Of Presentation Details Narrative | |||||||
Entity incorporation date | Mar. 11, 2010 | ||||||
Entity incorporation state name | Nevada | ||||||
Description of Share Exchange Agreement | Company offered, sold and issued 23,257,500 shares of common stock in consideration for all the issued and outstanding shares in Loop Holdings | ||||||
Precentage of share exchange agreement | 78.10% | ||||||
Number of redeemed shares of First American Group | 25,000,000 | ||||||
Cost of redeemed shares | $ 16,000 | ||||||
Cost of reverse merger | 60,571 | ||||||
Net liabilities assumed | 35,243 | ||||||
Closing cost of transaction | $ 9,328 | ||||||
Reverse stock split | 1:4 | ||||||
Net Loss | $ (2,176,712) | $ (825,166) | $ (3,699,054) | $ (1,789,717) | |||
Net Cash Used in Operating Activities | 2,269,615 | $ 1,641,969 | |||||
Cash | 5,383,651 | 5,383,651 | $ 916,487 | ||||
Total stockholders' equity | $ 6,555,617 | $ 6,555,617 | $ 2,137,522 |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Details) | 6 Months Ended | |
Aug. 31, 2017 | Aug. 31, 2016 | |
Summary Of Significant Accounting Policies Details | ||
Period end Canadian $: US Dollar exchange rate | 0.80 | 0.76 |
Average period Canadian $: US Dollar exchange rate | 0.76 | 0.77 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Aug. 31, 2017 | Aug. 31, 2016 | Aug. 31, 2017 | Aug. 31, 2016 | Feb. 28, 2017 | |
Summary Of Significant Accounting Policies Details Narrative | |||||
Sales tax receivables | $ 79,723 | $ 79,723 | $ 198,830 | ||
Research and development expenses | $ 950,775 | $ 433,629 | 1,447,309 | $ 849,198 | |
Grant revenue | 4,472 | ||||
Research and development tax credit | $ 127,713 | ||||
Warrants outstanding | 2,004,582 | 2,004,582 | |||
Common shares issuable | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 6 Months Ended | |
Aug. 31, 2017 | Feb. 28, 2017 | |
Property and Equipment, Gross | $ 2,342,927 | $ 2,064,213 |
Less: accumulated depreciation | (661,414) | (497,244) |
Property and Equipment, Net | 1,681,513 | 1,566,969 |
Machinery and equipment [Member] | ||
Property and Equipment, Gross | $ 1,796,015 | 1,590,187 |
Machinery and equipment [Member] | Minimum [Member] | ||
Estimated Useful Life (Years) | 5 years | |
Machinery and equipment [Member] | Maximum [Member] | ||
Estimated Useful Life (Years) | 7 years | |
Office equipment and furniture [Member] | ||
Property and Equipment, Gross | $ 158,242 | 131,607 |
Office equipment and furniture [Member] | Minimum [Member] | ||
Estimated Useful Life (Years) | 5 years | |
Office equipment and furniture [Member] | Maximum [Member] | ||
Estimated Useful Life (Years) | 8 years | |
Leasehold improvements [Member] | ||
Estimated Useful Life (Years) | 3 years | |
Property and Equipment, Gross | $ 388,670 | $ 342,419 |
Property and Equipment (Detai25
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Aug. 31, 2017 | Aug. 31, 2016 | Aug. 31, 2017 | Aug. 31, 2016 | |
Property And Equipment Details Narrative | ||||
Depreciation expense | $ 75,880 | $ 65,596 | $ 150,472 | $ 156,363 |
Intellectual Property (Details
Intellectual Property (Details Narrative) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Oct. 27, 2014USD ($) | Aug. 31, 2017USD ($) | Aug. 31, 2016USD ($) | Aug. 31, 2017USD ($) | Aug. 31, 2017CAD | Aug. 31, 2016USD ($) | |
Amortization expense | $ | $ 15,895 | $ 9,532 | $ 31,789 | $ 31,789 | ||
Royalty payments payable | CAD | CAD 25,700,000 | |||||
Intellectual property agreement [Member] | Mr. Hatem Essaddam [Member] | ||||||
Purchase price of certain technique and method under agreement | $ | $ 445,050 | |||||
Description of milestone payments | (i) CDN$200,000 when an average of twenty (20) metric tons per day of terephthalic acid 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$200,000 when an average of one hundred (100) metric tons per day of terephthalic acid is produced by the Company for sixty (60) operating days. | |||||
Description of royalty payments | (a) 10% of gross profits on the sale of all products derived by the Company from the technology assigned to the Company under the agreement; (b) 10% of any license fee paid to the Company in respect of any licensing or other right to use the technology assigned to the Company and granted to a third party by the Assignee; (c) 5% of any royalty or other similar payment made to the Company by a third party to whom a license or other right to use the technology assigned to the Company has been granted by the Company; and (d) 5% of any royalty or other similar payment made to the Company by a third party in respect of a sub-license or other right to use the technology assigned to the Company granted by the third party. | (a) 10% of gross profits on the sale of all products derived by the Company from the technology assigned to the Company under the agreement; (b) 10% of any license fee paid to the Company in respect of any licensing or other right to use the technology assigned to the Company and granted to a third party by the Assignee; (c) 5% of any royalty or other similar payment made to the Company by a third party to whom a license or other right to use the technology assigned to the Company has been granted by the Company; and (d) 5% of any royalty or other similar payment made to the Company by a third party in respect of a sub-license or other right to use the technology assigned to the Company granted by the third party. | ||||
Additional payments under agreement | CAD | CAD 800,000 | |||||
Intellectual property agreement [Member] | Mr. Hatem Essaddam [Member] | Patents [Member] | ||||||
Estimated Useful Life (Years) | 7 years |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 6 Months Ended | |
Aug. 31, 2017 | Feb. 28, 2017 | |
Advances from majority stockholder | $ 28,710 | $ 391,695 |
Accrued Officers Compensation | 360,000 | |
Daniel Solomita [Member] | ||
Advances from majority stockholder | 391,695 | |
Repayment of advances from majority stockholder | 249,762 | |
Reclassification of value added tax and other receivables to advances from majority stockholder | 113,223 | |
Employment agreement [Member] | Daniel Solomita [Member] | ||
Officers compensation | 45,000 | |
Accrued Officers Compensation | $ 360,000 | |
Monthly salary | $ 15,000 | |
Share based compensation other than options vested in period | 1,000,000 | |
Fair value of common stock Issuable for services - officer | $ 5,500,000 | |
Common stock shares reserved under agreement | 4,000,000 | |
Milestones for remaining common stock, shares | 3,000,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Warrants | 6 Months Ended |
Aug. 31, 2017 | |
Expected dividend yield | 0.00% |
Minimum [Member] | |
Risk-free interest rate | 1.60% |
Expected volatility | 82.00% |
Expected life years | 4 years |
Maximum [Member] | |
Risk-free interest rate | 2.02% |
Expected volatility | 84.00% |
Expected life years | 6 years |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) | 6 Months Ended |
Aug. 31, 2017$ / sharesshares | |
Number of Warrant Shares | |
Balance, beginning | shares | 1,647,670 |
Granted | shares | 1,080,000 |
Forfeited | shares | (65,418) |
Exercised | shares | (213,770) |
Expired | shares | (443,900) |
Balance, ending | shares | 2,004,582 |
Earned and exercisable, Ending | shares | 616,457 |
Unvested, August 31, 2017 | shares | 1,388,125 |
Exercise Price Range Per Share | |
Granted | $ 5.25 |
Expired | 6 |
Weighted Average Exercise Price | |
Balance, beginning | 2.91 |
Granted | 5.25 |
Forfeited | 2.90 |
Exercised | 5.52 |
Expired | 6 |
Balance, ending | 3.21 |
Earned and exercisable, May 31, 2017 | 1.19 |
Unvested, May 31, 2017 | 4.11 |
Minimum [Member] | |
Exercise Price Range Per Share | |
Balance, beginning | 0.80 |
Forfeited | 0.80 |
Exercised | 0.80 |
Balance, ending | 0.80 |
Earned and exercisable, May 31, 2017 | 0.80 |
Unvested, May 31, 2017 | 0.80 |
Maximum [Member] | |
Exercise Price Range Per Share | |
Balance, beginning | 6 |
Forfeited | 3 |
Exercised | 6 |
Balance, ending | 5.25 |
Earned and exercisable, May 31, 2017 | 5.25 |
Unvested, May 31, 2017 | $ 5.25 |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) - $ / shares | 6 Months Ended | |
Aug. 31, 2017 | Feb. 28, 2017 | |
Warrants outstanding | 2,004,582 | 1,647,670 |
Warrants outstanding, Weighted Average Exercise Price | $ 3.21 | $ 2.91 |
Warrants exercisable | 616,457 | |
Exercise Prices 0.80 [Member] | ||
Warrants outstanding | 912,082 | |
Warrants outstanding, Average Remaining Contractual Life (in years) | 6 years 6 months | |
Warrants outstanding, Weighted Average Exercise Price | $ 0.80 | |
Warrants exercisable | 557,082 | |
Warrants exercisable, Average Remaining Contractual Life (in years) | 6 years 5 months 23 days | |
Warrants exercisable, Weighted Average Exercise Price | $ 0.80 | |
Exercise Prices 3.00 [Member] | ||
Warrants outstanding | 12,500 | |
Warrants outstanding, Average Remaining Contractual Life (in years) | 9 months 3 days | |
Warrants outstanding, Weighted Average Exercise Price | $ 3 | |
Warrants exercisable | 9,375 | |
Warrants exercisable, Average Remaining Contractual Life (in years) | 9 months 3 days | |
Warrants exercisable, Weighted Average Exercise Price | $ 3 | |
Exercise Prices 5.25 [Member] | ||
Warrants outstanding | 1,080,000 | |
Warrants outstanding, Average Remaining Contractual Life (in years) | 9 years 11 months 4 days | |
Warrants outstanding, Weighted Average Exercise Price | $ 5.25 | |
Warrants exercisable | 50,000 | |
Warrants exercisable, Average Remaining Contractual Life (in years) | 9 years 8 months 23 days | |
Warrants exercisable, Weighted Average Exercise Price | $ 5.25 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Aug. 31, 2017 | Aug. 31, 2016 | Aug. 31, 2017 | Aug. 31, 2016 | |
Proceeds from sales of common shares | $ 54,780 | |||
Issuance of warrants to purchase | 2,004,582 | 2,004,582 | ||
Amortized costs included in operating expenses | $ 697,869 | $ 32,348 | $ 920,373 | 73,707 |
Unamortized balance of costs | 7,637,197 | $ 456,488 | ||
Aggregate intrinsic value outstanding | $ 22,529,036 | $ 22,529,036 | ||
Closing market price per share | $ 14.45 | $ 14.45 | ||
Exercise Price of fair value | 0.55 | $ 0.55 | ||
Two employees [member] | ||||
Issuance of common shares for cash, Price per share | 530,000 | |||
Issuance of common shares for cash, Per Shares | $ 5.25 | |||
Vesting period | 10 years | |||
Fair value of stock granted | $ 479,885 | |||
Warrants | ||||
Issuance of common shares for cash, Price per share | 193,770 | |||
Issuance of common shares for cash, Per Shares | $ 6 | |||
Issuance of warrants to purchase | 2,004,582 | 2,004,582 | ||
Exercise Price of Warrants | $ 0.80 | $ 0.80 | ||
Fair value of stock granted | $ 688,635 | |||
Shares issued for cash-less exercise warrant | 20,000 | |||
Issuance of shares upon cash-less exercise of warrants, Shares | 22,919 | |||
Issuance of shares upon exercise of warrants for cash | $ 1,163,016 | |||
Warrants | Two employees [member] | ||||
Common stock reserved for future issuance | 50,000 | 50,000 | ||
Fair value of stock granted | $ 4,786,142 | |||
Warrants | Chief Financial Officer [Member] | ||||
Issuance of warrants to purchase | 400,000 | 400,000 | ||
Exercise Price of Warrants | $ 5.25 | $ 5.25 | ||
Vesting period | 10 years | |||
Description of vesting period | Vests quarterly in equal amounts over 24 months beginning on April 3, 2017. | |||
Common stock reserved for future issuance | 150,000 | 150,000 | ||
Fair value of stock granted | $ 1,836,360 | |||
Warrants | December 1, 2015 [Member] | ||||
Issuance of warrants to purchase | 702,452 | 702,452 | ||
Expiry date of warrants | Nov. 30, 2025 | |||
Additional compensation expense | $ 63,677 | |||
Equity incentive plan [member] | ||||
Issuance of common shares for cash, Price per share | 3,000,000 | |||
Vesting period | 10 years | |||
Description of grant | where a participant, at the time of the grant, owns stock representing more than 10% of the voting power of the Company, the life of the option will not exceed 5 years. | |||
Common stock [Member] | ||||
Proceeds from sales of common shares | $ 5,897,188 | |||
Issuance of common shares for cash, Price per share | 1,123,266 | |||
Issuance of common shares for cash, Per Shares | $ 5.25 | |||
Issuance of shares upon cash-less exercise of warrants, Shares | 20,000 | |||
Common stock [Member] | Maximum [Member] | ||||
Issuance of warrants to purchase | 100,000 | 100,000 | ||
Vesting period | 24 months | |||
Common stock [Member] | Minimum [Member] | ||||
Issuance of warrants to purchase | 380,000 | 380,000 | ||
Vesting period | 48 months |
Geographic Information (Details
Geographic Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Aug. 31, 2017 | Aug. 31, 2016 | Aug. 31, 2017 | Aug. 31, 2016 | Feb. 28, 2017 | |
Revenue | |||||
Cost of revenue | |||||
General and administrative | 1,081,634 | 316,310 | 1,971,216 | 756,056 | |
Research and development | 950,775 | 433,629 | 1,447,309 | 849,198 | |
Depreciation and amortization | 91,774 | 75,128 | 182,261 | 188,152 | |
Foreign exchange loss (gain) | 52,529 | 99 | 98,268 | (3,689) | |
Loss from operations | (2,176,712) | (825,166) | (3,699,054) | 1,789,717 | |
Current assets | 5,500,346 | 5,500,346 | $ 1,175,784 | ||
Property and equipment, net | 1,681,513 | 1,681,513 | 1,566,969 | ||
Intangible assets, net | 276,211 | 276,211 | 308,000 | ||
Loan receivable, parent company | |||||
Total assets | 7,458,070 | 7,458,070 | 3,050,753 | ||
Current liabilities | 902,453 | 902,453 | 913,231 | ||
Loan payable, subsidiairy company | |||||
Equity | 6,555,617 | 6,555,617 | 2,137,522 | ||
Total liabilities and equity | 7,458,070 | 7,458,070 | 3,050,753 | ||
Elimination [Member] | |||||
Loan receivable, parent company | (5,767,440) | (5,767,440) | |||
Total assets | (5,767,440) | (5,767,440) | |||
Loan payable, subsidiairy company | (5,767,440) | (5,767,440) | |||
Total liabilities and equity | (5,767,440) | (5,767,440) | |||
United States [Member] | |||||
Revenue | |||||
Cost of revenue | |||||
General and administrative | 755,827 | 171,817 | 1,238,284 | 403,614 | |
Research and development | 237,636 | 154,008 | 295,400 | 303,682 | |
Depreciation and amortization | 21,687 | 14,728 | 47,648 | 48,652 | |
Foreign exchange loss (gain) | |||||
Loss from operations | (1,015,150) | (340,553) | (1,581,332) | 755,948 | |
Current assets | 3,442,854 | 3,442,854 | 687,899 | ||
Property and equipment, net | 141,535 | 141,535 | 157,394 | ||
Intangible assets, net | 276,211 | 276,211 | 308,000 | ||
Loan receivable, parent company | |||||
Total assets | 3,860,600 | 3,860,600 | 1,153,293 | ||
Current liabilities | 255,716 | 255,716 | 428,714 | ||
Loan payable, subsidiairy company | 5,767,440 | 5,767,440 | |||
Equity | 9,372,397 | 9,372,397 | 2,994,003 | ||
Total liabilities and equity | 15,395,553 | 15,395,553 | 3,422,717 | ||
Canada [Member] | |||||
Revenue | |||||
Cost of revenue | |||||
General and administrative | 325,807 | 144,493 | 732,932 | 352,442 | |
Research and development | 713,139 | 279,621 | 1,151,909 | 545,516 | |
Depreciation and amortization | 70,087 | 60,400 | 134,613 | 139,500 | |
Foreign exchange loss (gain) | 52,529 | 99 | 98,268 | (3,689) | |
Loss from operations | (1,161,562) | $ (484,613) | (2,117,722) | $ 1,033,769 | |
Current assets | 2,057,492 | 2,057,492 | 487,885 | ||
Property and equipment, net | 1,539,978 | 1,539,978 | 1,409,575 | ||
Intangible assets, net | |||||
Loan receivable, parent company | 5,767,440 | 5,767,440 | |||
Total assets | 9,364,910 | 9,364,910 | 1,897,460 | ||
Current liabilities | 646,737 | 646,737 | 484,517 | ||
Loan payable, subsidiairy company | |||||
Equity | (2,816,780) | (2,816,780) | (856,481) | ||
Total liabilities and equity | $ (2,170,043) | $ (2,170,043) | $ (371,964) |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] | 6 Months Ended |
Aug. 31, 2017 | |
Risk-free interest rate | 1.50% |
Expected dividend yield | 0.00% |
Expected volatility | 94.00% |
Expected life | 3 years |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Sep. 14, 2017 | Sep. 12, 2017 | Sep. 07, 2017 | Aug. 31, 2017 | Aug. 31, 2016 | Feb. 28, 2017 |
Proceeds from sales of common shares | $ 54,780 | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||||
Subsequent Event [Member] | Board of Directors [Member] | ||||||
Proceeds from sales of common shares | $ 217,536 | |||||
Issuance of common shares | 18,128 | |||||
Common stock, par value | $ 0.0001 | |||||
Issuance of common shares price, per shares | $ 12 | |||||
Reclassified subscriptions of stock value | $ 54,780 | |||||
Subsequent Event [Member] | Credit Facility [Member] | ||||||
Credit Facility | $ 50,000 | |||||
Interest rate | 0.45% | |||||
Maturing date | Oct. 1, 2018 | |||||
Subsequent Event [Member] | Foreign Exchange Forward [Member] | ||||||
Credit Facility | $ 50,000 | |||||
Interest rate | 0.45% | |||||
Maturing date | Dec. 29, 2017 | |||||
Description of conditional forward foreign exchange contract | the Company entered into a conditional forward foreign exchange contract to sell $250,000 USD with a term of September 12, 2017 to November 14, 2017, with an interim strike date on October 12, 2017 based on the following conditions: · If the spot rate never traded at or below 1.2025 CDN to USD and the spot rate is greater than 1.2025 the Company sells at 1.2025 CDN to USD; · If the spot rate traded at or below 1.2025 CDN to USD and the spot rate is: i) less than or equal to 1.2025 CDN to USD, then the Company sells at 1.2025 CDN to USD; or ii) greater than 1.2025, then no exchange or cash payment will occur. As security for the conditional forward foreign exchange contract the Company has pledged a $50,000 GIC bearing interest at 0.45% maturing on December 29, 2017 in favor of the Companys derivative dealer. | |||||
Amount of conditional forward foreign exchange contract | $ 250,000 | |||||
Description of USD currency contract | the Company entered into two $500,000 USD dual currency contracts, requiring the value of the contract to be deposited in a GIC, having terms of 30 days and 63 days, respectively. For the 30 day contract if the spot rate is less than or equal to 1.23 CDN per USD, then the GIC matures at $500,000 USD plus interest at 4.55% per annum. If the spot rate is greater than 1.23 CDN per USD, then the GIC matures at $615,000 CDN plus interest of 4.55%. For the 63 day contract if the spot rate is less than or equal to 1.23 CDN per USD, then the GIC matures at $500,000 USD plus interest of 4.8% per annum. If the spot rate is greater than 1.23 CDN per USD, then the GIC matures at $615,000 CDN plus interest of 4.8%. | |||||
Subsequent Event [Member] | Equity incentive plan [member] | ||||||
Common stock reserve for future issuance | 700,000 | |||||
Proceeds from sales of common shares | $ 8,173,550 | |||||
Issuance of common shares price, per shares | $ 12 | |||||
Description of vesting period | which 200,000 vest immediately and 500,000 vest in equal monthly installments over 60 months beginning on September 14, 2017 | |||||
Subsequent Event [Member] | Purchase of Land [Member] | ||||||
Purchase of land, building and equipment | $ 957,240 | |||||
Deposited in escrow | $ 95,724 | |||||
Description of purchase agreement | We have 60 days following the acceptance of the promise to purchase to complete our due diligence and proceed to the execution of the deed of sale. |