Loop Industries (LOOP) 10-Q/A 11 Jul 18 2019 Q1 Quarterly report (amended) Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	May 31, 2018	Jun. 22, 2018
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	May 31, 2018
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	Accelerated Filer
Entity Common Stock, Shares Outstanding		33,805,706
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,019

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	May 31, 2018	Feb. 28, 2018
Current assets
Cash	$ 5,355,015	$ 8,149,713
Sales tax and tax credits receivable	310,935	364,634
Prepaid expenses	271,904	511,573
Total current assets	5,937,854	9,025,920
Property, plant and equipment, net	4,825,133	4,036,903
Intangible assets, net	328,866	332,740
Total assets	11,091,853	13,395,563
Current liabilities
Accounts payable and accrued liabilities	2,100,690	1,983,072
Current portion of long-term debt	54,062	54,649
Total current liabilities	2,154,752	2,037,721
Long-term debt	1,009,165	1,033,777
Total liabilities	3,163,917	3,071,498
Stockholders' Equity
Preferred stock, value
Common stock par value $0.0001: 250,000,000 shares authorized; 33,805,706 shares issued and outstanding (February 28, 2018 - 33,751,088)	3,381	3,376
Additional paid-in capital	32,150,634	30,964,970
Common stock issuable, 1,000,000 shares	800,000	800,000
Accumulated deficit	(24,804,711)	(21,275,181)
Accumulated other comprehensive loss	(221,368)	(169,100)
Total stockholders' equity	7,927,936	10,324,065
Total liabilities and stockholders' equity	11,091,853	13,395,563
Series A Preferred Stock [Member]
Stockholders' Equity
Preferred stock, value

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	May 31, 2018	Feb. 28, 2018
Stockholders' Equity
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	33,805,706	33,751,088
Common stock, shares outstanding	33,805,706	33,751,088
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
	May 31, 2018	May 31, 2017
Condensed Consolidated Statements Of Operations And Comprehensive Loss
Revenue
Operating Expenses -
Research and development	1,066,079	496,538
General and administrative	2,355,550	889,580
Depreciation and amortization	101,069	90,487
Interest expense	12,913
Foreign exchange (gain) loss	(6,081)	46,485
Total operating expenses	3,529,530	1,523,090
Net loss	(3,529,530)	(1,523,090)
Other comprehensive loss -
Foreign currency translation adjustment	(52,268)	9,976
Comprehensive Loss	$ (3,581,798)	$ (1,513,114)
Loss per share- Basic and diluted	$ (0.11)	$ (0.05)
Weighted average common shares outstanding- Basic and diluted	33,140,148	31,442,283

Condensed Consolidated Stateme5

Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	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	$ 800,000	$ (7,237,803)	$ (151,211)	$ 2,137,522
Issuance of common shares for cash, net of share issuance costs, Shares	1,123,266
Issuance of common shares for cash, net of share issuance costs, Amount	$ 112		5,897,076				5,897,188
Warrants issued for services			222,504				222,504
Issuance of shares upon cashless exercise of warrants, Shares	20,000
Issuance of shares upon cashless exercise of warrants, Amount	$ 2		(2)
Foreign currency translation						9,976	9,976
Net Loss					(1,523,090)		(1,523,090)
Ending balance, Shares at May. 31, 2017	32,595,239	1
Ending Balance, Amount at May. 31, 2017	$ 3,260		14,842,968	800,000	(8,760,893)	(141,235)	6,744,100
Beginning Balance, Shares at Feb. 28, 2018	33,751,088	1
Beginning Balance, Amount at Feb. 28, 2018	$ 3,376		30,964,970	800,000	(21,275,181)	(169,100)	10,324,065
Warrants issued for services			978,025				978,025
Issuance of shares upon cashless exercise of warrants, Shares	18,821
Issuance of shares upon cashless exercise of warrants, Amount	$ 2		(2)
Foreign currency translation						(52,268)	(52,268)
Issuance of shares upon vesting of restricted stock units, Shares	35,797
Issuance of shares upon vesting of restricted stock units, Amount	$ 3		(3)
Restricted stock units issued for services			207,644				207,644
Net Loss					(3,529,530)		(3,529,530)
Ending balance, Shares at May. 31, 2018	33,805,706	1
Ending Balance, Amount at May. 31, 2018	$ 3,381		$ 32,150,634	$ 800,000	$ (24,804,711)	$ (221,368)	$ 7,927,936

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	May 31, 2018	May 31, 2017
Cash Flows from Operating Activities
Net loss	$ (3,529,530)	$ (1,523,090)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	101,069	90,487
Stock-based compensation expense	1,185,669	222,504
Changes in operating assets and liabilities:
Sales tax and tax credits receivable	53,699	82,892
Prepaid expenses	239,669
Accounts payable and accrued liabilities	(221,637)	468,282
Advances from majority stockholder		(324,844)
Net cash used in operating activities	(2,171,061)	(983,769)
Cash Flows from Investing Activities
Additions to property, plant and equipment	(585,958)	(55,453)
Additions to intangible assets	(6,358)
Net cash used in investing activities	(592,316)	(55,423)
Cash Flows from Financing Activities
Proceeds from sales of common shares, net of share issuance costs		5,897,188
Repayment of advances from majority stockholder		(278,472)
Repayment of long-term debt	(13,514)
Net cash (used) provided by financing activities	(13,514)	5,618,716
Effect of exchange rate changes	(17,807)	39,039
Net change in cash	(2,794,698)	4,618,533
Cash - beginning of period	8,149,713	916,487
Cash - end of period	5,355,015	5,535,020
Supplemental disclosure of cash flow information:
Income tax paid
Interest paid	$ 12,913

The Company, Basis of Presentat

The Company, Basis of Presentation and Going Concern	3 Months Ended
	May 31, 2018
Notes to Financial Statements
Note 1. The Company, Basis of Presentation and Going Concern	The Company Loop Industries, Inc. (“Loop Industries” or the “Company”) was originally incorporated in Nevada in March 2010 under the name Radikal Phones Inc., which was changed to First American Group Inc. in October 2010. On June 29, 2015, Loop Industries, Inc. (then known as First American Group) completed a reverse acquisition of Loop Holdings, Inc. (“Loop Holdings”), whereby the Company acquired all of its outstanding shares of common stock in a share exchange for approximately 78.1% of the capital of the Company at the time. The depolymerization business of Loop Holdings became its 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. Loop Holdings was originally incorporated in Nevada on October 23, 2014. The depolymerization technology underlying Loop Industries’ business was originally developed by Hatem Essaddam who sold the technology and related intellectual property rights to Loop Industries in October 2014, pursuant to an Intellectual Property Assignment Agreement dated October 27, 2014, by and among Hatem Essaddam, Loop Holdings and Daniel Solomita. On May 24, 2016, 9449507 Canada Inc. was organized under the federal laws of Canada and on November 11, 2016 became a wholly-owned subsidiary of Loop Industries, Inc. following the transfer of all of its issues and outstanding shares of common stock by Mr. Solomita of all of the issued and outstanding shares of common stock of 9449507 Canada Inc. to Loop Industries, Inc. On December 23, 2016, 9449507 Canada Inc. changed its legal name to Loop Canada Inc. On December 31, 2016, 8198381 Canada Inc. (“819 Canada”) entered into a purchase and sale agreement to transfer to Loop Canada Inc., all assets and liabilities it held pertaining to its business of depolymerizing plastics, including employees and operations. On March 9, 2017, Loop Holdings, a wholly-owned subsidiary of the Company, merged with and into Loop Industries, Inc., with Loop Industries, Inc. being the surviving entity as a result of the merger. On September 1, 2017, 9449710 Canada Inc. was incorporated to assist in the depolymerization business and is a wholly-owned subsidiary of Loop Canada Inc. On November 20, 2017, Loop Industries Inc. commenced trading on the NASDAQ Global Market under its new trading symbol, “LOOP.” From April 10, 2017 to November 19, 2017, the Company’s common stock was quoted on the OTCQX tier of the OTC Markets Group Inc. under the symbol “LLPP.” From October 29, 2015 through April 7, 2017, the Company’s common stock was 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 the OTCQB tier of the OTC Markets Group Inc. under the stock symbol “FAMG.” Basis of presentation The accompanying unaudited interim condensed consolidated financial statements of Loop Industries, Inc. and its wholly-owned subsidiaries (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) 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 US GAAP for complete financial statements. The balance sheet information as at February 28, 2018 is derived from the Company’s audited consolidated financial statements and related notes for the fiscal year ended February 28, 2018, which is included in Item 8 of the Company’s 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 14, 2018. These unaudited interim condensed consolidated financial statements should be read in conjunction with those 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 months ended May 31, 2018 are not necessarily indicative of the results that may be expected for the year ending February 28, 2019. Intercompany balances and transactions are eliminated on consolidation. Going Concern The accompanying unaudited condensed 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 unaudited condensed consolidated financial statements, the Company has not yet begun commercial operations and does not yet have a recurring source of revenue. Since inception, the Company has accumulated a deficit of $24.8 million and during the three months ended May 31, 2018, the Company incurred a net loss of $3.5 million and used cash in operations of $2.2 million, which raises substantial doubt about the Company’s ability to continue as a going concern. At the current stage of its development, Loop is a pre-revenue company, with its ongoing operations being financed by raising new equity capital. To date, the Company has been successful in raising capital to finance its ongoing operations. As at May 31, 2018, the Company had cash on hand of $5.4 million. Management is evaluating its plans to continue to raise financing, the proceeds from which would be used to finance the start-up of its commercial operations and fund the further development of its ongoing pre-revenue operations. 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 the Company. The accompanying unaudited condensed consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and discharge its liabilities as a going concern in the normal course of operations. Such adjustments could be material.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	May 31, 2018
Notes to Financial Statements
Note 2. Summary of Significant Accounting Policies	Use of estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as 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 intangible assets, accruals for potential liabilities and assumptions made in calculating the fair value of stock-based compensation and other stock instruments. Foreign currency translations and transactions The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars, the reporting currency of the Company. 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 at the balance sheet date. Income and expenses are translated at the average exchange rate of the period. The resulting translation adjustments are included in other comprehensive income (loss) (“OCI”). As a result, foreign currency exchange fluctuations may impact operating expenses. The Company currently has not engaged in any currency hedging activities. The following table summarizes the exchange rates used: Three Months Ended May 31, 2018 2017 Period-end Canadian $: US dollar exchange rate $ 0.77 $ 0.74 Average period Canadian $: US dollar exchange rate $ 0.78 $ 0.74 Expenditures are translated at the average exchange rate for the period presented. Sales tax and tax credits receivable The Company is registered for the Canadian federal and provincial goods and services taxes. As such, 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 May 31, 2018 and February 28, 2018, the computed net recoverable sale taxes amounted to $201,588 and $177,903, respectively. Research and development expenses 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 during the three months ended May 31, 2018 and 2017 amounted to $1.1 million and $0.5 million, respectively. Net earnings (loss) per share The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share For the three months ended May 31, 2018 and 2017, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. The potentially dilutive securities consisted of 2,395,248 and 1,860,455 outstanding warrants as at May 31, 2018 and May 31, 2017, respectively. Recently issued accounting pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers In January 2016, the FASB issued ASU 2016-01 , Financial Instruments – Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities 1. Equity investments that do not result in consolidation and are not accounted for under the equity method would be measured at fair value through net income, unless they qualify for the proposed practicability exception for investments that do not have readily determinable fair values. 2. Changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option would be recognized in other comprehensive income. 3. Entities would make the assessment of the realizability of a deferred tax asset (“DTA”) related to an available-for-sale (“AFS”) debt security in combination with the entity’s other DTAs. The guidance would eliminate one method that is currently acceptable for assessing the realizability of DTAs related to AFS debt securities. That is, an entity would no longer be able to consider its intent and ability to hold debt securities with unrealized losses until recovery. 4. Disclosure of the fair value of financial instruments measured at amortized cost would no longer be required for entities that are not public business entities. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Management is currently evaluating the impact of this Statement on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

Property, Plant and Equipment,

Property, Plant and Equipment, Net	3 Months Ended
	May 31, 2018
Notes to Financial Statements
Note 3. Property, Plant and Equipment, Net	Estimated May 31, February 28, Useful Life 2018 2018 (years) Building 30 $ 1,914,599 $ 1,935,423 Land indefinite 236,665 239,239 Building improvements 5 330,813 377,253 Machinery and equipment 3 – 8 2,967,129 2,189,195 Office equipment and furniture 8 119,083 101,756 Property, plant and equipment, gross 5,568,289 4,842,866 Less: accumulated depreciation (743,156 ) (805,963 ) Property, plant and equipment, net $ 4,825,133 $ 4,036,903 Depreciation expense is recorded as an operating expense in the unaudited condensed consolidated statements of operations and comprehensive loss and amounted to $85 thousand and $75 thousands for the three months ended May 31, 2018 and 2017, respectively.

Intangible Assets, Net

Intangible Assets, Net	3 Months Ended
	May 31, 2018
Notes to Financial Statements
Note 4. Intangible Assets, Net	Estimated May 31, February 28, Useful Life 2018 2018 (years) Intellectual property 7 $ 545,970 $ 533,369 Less: accumulated amortization (217,104 ) (200,629 ) Intangible assets, net $ 328,866 $ 332,740 Amortization expense is recorded as an operating expense in the consolidated statements of operations and comprehensive loss and amounted to $16 thousand for the three months ended May 31, 2018 and 2017.

Credit Facility and Long-Term D

Credit Facility and Long-Term Debt	3 Months Ended
	May 31, 2018
Notes to Financial Statements
Note 5. Credit Facility and Long-Term Debt	May 31, 2018 February 28, 2018 Instalment loan $ 1,063,227 $ 1,088,426 Less current portion 54,062 54,649 Non-current portion $ 1,009,165 $ 1,033,777 Interest paid on the instalment loan during the three months ended May 31, 2018 amounted to $12,913 (2017 – nil). As at May 31, 2018, the Company was in compliance with its financial covenants.

Related Party Transactions

Related Party Transactions	3 Months Ended
	May 31, 2018
Notes to Financial Statements
Note 6. Related Party Transactions	Advances from majority stockholder Mr. Daniel Solomita, or companies controlled by him, previously made advances to the Company, which were unsecured, non-interest bearing with no formal terms of repayment. During the three months ended May 31, 2017, the Company repaid to Mr. Solomita or companies controlled by him, as applicable, an aggregate amount of $278,472. Additionally, accrued compensation due to Mr. Solomita of $324,844 was repaid during the three months ended May 31, 2017. Accrued compensation of $35,156 was due to Mr. Solomita as at May 31, 2017. Employment Agreement On June 29, 2015, the Company entered into an employment agreement with Mr. Daniel Solomita, the Company’s President and Chief Executive Officer for an indefinite term. For the three months ended May 31, 2018, compensation expense for the Company’s CEO amounted to $47 thousand (2017 – $45 thousand). In addition, pursuant to the employment agreement with Mr. Solomita, 4 million performance incentive shares of the Company’s common stock are issuable in tranches of one million shares each if certain milestones are met. During the three months ended May 31, 2018 and 2017, no additional milestone had been met and accordingly, the Company did not record any compensation expense in relation to the performance incentive shares.

Stockholders' Equity

Stockholders' Equity	3 Months Ended
	May 31, 2018
Notes to Financial Statements
Note 7. Stockholders' Equity	Common Stock For the three months ended May 31, 2018 Number of shares Amount Balance, February 28, 2018 33,751,088 $ 3,376 Cashless exercise of warrants 18,821 2 Issuance of shares upon vesting of restricted stock units 35,797 3 Balance, May 31, 2018 33,805,706 $ 3,381 During the three months ended May 31, 2018, the Company issued 18,821 shares of common stock upon the cashless exercise of 20,000 warrants and 35,797 shares of common stock upon issuance of restricted stock units. During the three months ended May 31, 2017, the Company sold 1,123,266 shares of its common stock at an offering price of $5.25, resulting in net proceeds to the Company of $5,897,188. 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.

Stock-based Compensation Plans

Stock-based Compensation Plans	3 Months Ended
	May 31, 2018
Notes to Financial Statements
Note 8. Stock-based Compensation Plans	Equity Incentive Plan On July 6, 2017, the Company adopted the 2017 Equity Incentive Plan (the “Plan”). A total of 3,000,000 shares of common stock was reserved for issuance under the Plan with an automatic share reserve increase, effective March 1, 2018. On March 1, 2018, in accordance with the provisions of the Plan, the number of shares available for issuance increased by 1,500,000 shares, resulting in 3,211,448 shares available for issuance. Warrants The following table summarizes the continuity of the Company’s warrants during the three months ended May 31: 2018 2017 Number of warrants Weighted average exercise price Number of warrants Weighted average exercise price Outstanding, beginning of period 2,515,248 $ 8.21 1,647,670 $ 2.91 Granted - - 550,000 5.25 Exercised (20,000 ) 0.80 (22,548 ) 0.80 Forfeited (100,000 ) 5.25 - - Expired - - (314,667 ) 6.00 Outstanding, end of period 2,395,248 $ 8.40 1,860,455 $ 3.11 Exercisable, end of period 1,066,916 $ 7.32 836,705 $ 2.82 The following table summarizes information concerning outstanding warrants as at May 31: 2018 2017 Exercise price Number of warrants outstanding Weighted average remaining life Number of warrants outstanding Weighted average remaining life $ 0.80 582,081 7.50 912,452 0.51 $ 3.00 12,500 - 75,000 1.02 $ 5.25 430,000 8.19 550,000 9.98 $ 6.00 - - 323,003 0.08 $ 12.00 840,667 7.84 - - $ 13.49 250,000 9.38 - - $ 13.89 280,000 9.44 - - Outstanding, end of period 2,395,248 8.13 1,860,455 3.26 Exercisable, end of period 1,066,916 6.98 836,705 0.35 Warrants were valued using the Black-Scholes pricing model. The following table shows key inputs into the valuation model for the three months ended May 31: 2018 2017 Exercise price $ - $ 5.25 Risk-free interest rate - 2.02 % Expected dividend yield - 0 % Expected volatility - 110.72 % Expected life - 6 years During the three months ended May 31, 2018, an expense of $1.0 million (2017 – $0.2 million) was recorded in the condensed consolidated statement of operations in relation to warrants. Restricted Stock Units The following table summarizes the continuity of the restricted stock units (“RSUs”) during the three months ended May 31: 2018 2017 Number of RSUs Number of RSUs Outstanding, beginning of period 34,102 - Granted 24,450 - Vested (35,797 ) - Outstanding, end of period 22,755 - Weighted average remaining life (in years) 3.02 - During the three months ended May 31, 2018, an expense of $0.2 million (2017 – $nil) was recorded in the condensed consolidated statement of operations in relation to RSUs.

Contingencies

Contingencies	3 Months Ended
	May 31, 2018
Notes to Financial Statements
Note 9. Contingencies	In April 2018, depositions were held in connection with a claim filed against the Company by two individuals, in the Los Angeles Superior Court, seeking damages for breach of implied covenant of good faith and fair dealing, and promissory fraud, asserting entitlement to two million shares of our common stock. The Company filed a motion for summary judgement on May 30, 2018 to dismiss all claims, which motion will be heard on August 13, 2018. The case is currently set for trial on September 12, 2018 in the Los Angeles Superior Court. Management believes that this case lacks merit and intends to continue to defend it vigorously. No amounts have been provided for in the consolidated financial statements with respect to this claim. Management has not yet determined what effect this lawsuit will have on its financial position or results of operations.

Summary of Significant Accoun16

Summary of Significant Accounting Policies and Restatement of Previously Issued Financial Statements (Policies)	3 Months Ended
	May 31, 2018
Significant Accounting Policies Policies
Use of Estimates	The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as 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 intangible assets, accruals for potential liabilities and assumptions made in calculating the fair value of stock-based compensation and other stock instruments.
Foreign currency translations and transactions	The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars, the reporting currency of the Company. 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 at the balance sheet date. Income and expenses are translated at the average exchange rate of the period. The resulting translation adjustments are included in other comprehensive income (loss) (“OCI”). As a result, foreign currency exchange fluctuations may impact operating expenses. The Company currently has not engaged in any currency hedging activities. The following table summarizes the exchange rates used: Three Months Ended May 31, 2018 2017 Period-end Canadian $: US dollar exchange rate $ 0.77 $ 0.74 Average period Canadian $: US dollar exchange rate $ 0.78 $ 0.74 Expenditures are translated at the average exchange rate for the period presented.
Sales tax and tax credits receivable	The Company is registered for the Canadian federal and provincial goods and services taxes. As such, 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 May 31, 2018 and February 28, 2018, the computed net recoverable sale taxes amounted to $201,588 and $177,903, respectively.
Research and development expenses	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 during the three months ended May 31, 2018 and 2017 amounted to $1.1 million and $0.5 million, respectively.
Net earnings (loss) per share	The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share For the three months ended May 31, 2018 and 2017, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. The potentially dilutive securities consisted of 2,395,248 and 1,860,455 outstanding warrants as at May 31, 2018 and May 31, 2017, respectively.
Recently issued accounting pronouncements	In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers In January 2016, the FASB issued ASU 2016-01 , Financial Instruments – Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities 1. Equity investments that do not result in consolidation and are not accounted for under the equity method would be measured at fair value through net income, unless they qualify for the proposed practicability exception for investments that do not have readily determinable fair values. 2. Changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option would be recognized in other comprehensive income. 3. Entities would make the assessment of the realizability of a deferred tax asset (“DTA”) related to an available-for-sale (“AFS”) debt security in combination with the entity’s other DTAs. The guidance would eliminate one method that is currently acceptable for assessing the realizability of DTAs related to AFS debt securities. That is, an entity would no longer be able to consider its intent and ability to hold debt securities with unrealized losses until recovery. 4. Disclosure of the fair value of financial instruments measured at amortized cost would no longer be required for entities that are not public business entities. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Management is currently evaluating the impact of this Statement on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

Summary of Significant Accoun17

Summary of Significant Accounting Policies and Restatement of Previously Issued Financial Statements (Tables)	3 Months Ended
	May 31, 2018
Summary Of Significant Accounting Policies And Restatement Of Previously Issued Financial Statements
Foreign Currency Translations and Transactions	Three Months Ended May 31, 2018 2017 Period-end Canadian $: US dollar exchange rate $ 0.77 $ 0.74 Average period Canadian $: US dollar exchange rate $ 0.78 $ 0.74

Property, Plant and Equipment18

Property, Plant and Equipment, Net (Tables)	3 Months Ended
	May 31, 2018
Property Plant And Equipment Net
Property and Equipment	Estimated May 31, February 28, Useful Life 2018 2018 (years) Building 30 $ 1,914,599 $ 1,935,423 Land indefinite 236,665 239,239 Building improvements 5 330,813 377,253 Machinery and equipment 3 – 8 2,967,129 2,189,195 Office equipment and furniture 8 119,083 101,756 Property, plant and equipment, gross 5,568,289 4,842,866 Less: accumulated depreciation (743,156 ) (805,963 ) Property, plant and equipment, net $ 4,825,133 $ 4,036,903

Intangible Assets, Net (Tables)

Intangible Assets, Net (Tables)	3 Months Ended
	May 31, 2018
Intangible Assets Net
Schedule of intangible assets	Estimated May 31, February 28, Useful Life 2018 2018 (years) Intellectual property 7 $ 545,970 $ 533,369 Less: accumulated amortization (217,104 ) (200,629 ) Intangible assets, net $ 328,866 $ 332,740

Credit Facility and Long-Term20

Credit Facility and Long-Term Debt (Tables)	3 Months Ended
	May 31, 2018
Credit Facility And Long-term Debt
Schedule of Installment loan	May 31, 2018 February 28, 2018 Instalment loan $ 1,063,227 $ 1,088,426 Less current portion 54,062 54,649 Non-current portion $ 1,009,165 $ 1,033,777

Stockholders_ Equity (Tables)

Stockholders’ Equity (Tables)	3 Months Ended
	May 31, 2018
Stockholders Equity
Schedule of common stock	For the three months ended May 31, 2018 Number of shares Amount Balance, February 28, 2018 33,751,088 $ 3,376 Cashless exercise of warrants 18,821 2 Issuance of shares upon vesting of restricted stock units 35,797 3 Balance, May 31, 2018 33,805,706 $ 3,381

Stock-based Compensation Plans

Stock-based Compensation Plans (Tables)	3 Months Ended
	May 31, 2018
Stockholders Equity
Warrants activities	2018 2017 Number of warrants Weighted average exercise price Number of warrants Weighted average exercise price Outstanding, beginning of period 2,515,248 $ 8.21 1,647,670 $ 2.91 Granted - - 550,000 5.25 Exercised (20,000 ) 0.80 (22,548 ) 0.80 Forfeited (100,000 ) 5.25 - - Expired - - (314,667 ) 6.00 Outstanding, end of period 2,395,248 $ 8.40 1,860,455 $ 3.11 Exercisable, end of period 1,066,916 $ 7.32 836,705 $ 2.82
Outstanding and exercisable warrants	2018 2017 Exercise price Number of warrants outstanding Weighted average remaining life Number of warrants outstanding Weighted average remaining life $ 0.80 582,081 7.50 912,452 0.51 $ 3.00 12,500 - 75,000 1.02 $ 5.25 430,000 8.19 550,000 9.98 $ 6.00 - - 323,003 0.08 $ 12.00 840,667 7.84 - - $ 13.49 250,000 9.38 - - $ 13.89 280,000 9.44 - - Outstanding, end of period 2,395,248 8.13 1,860,455 3.26 Exercisable, end of period 1,066,916 6.98 836,705 0.35
Estimated fair value of warrants on grant date	2018 2017 Exercise price $ - $ 5.25 Risk-free interest rate - 2.02 % Expected dividend yield - 0 % Expected volatility - 110.72 % Expected life - 6 years
Summarizes of restricted stock units	2018 2017 Number of RSUs Number of RSUs Outstanding, beginning of period 34,102 - Granted 24,450 - Vested (35,797 ) - Outstanding, end of period 22,755 - Weighted average remaining life (in years) 3.02 -

The Company, Basis of Present23

The Company, Basis of Presentation and Going Concern (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended
	Jun. 29, 2015	May 31, 2018	May 31, 2017	Feb. 28, 2018
Company Basis Of Presentation And Going Concern
Entity incorporation date		Mar. 31, 2010
Entity incorporation state name		Nevada
Percentage of share exchange agreement	78.10%
Net Loss		$ (3,529,530)	$ (1,523,090)
Cash		5,355,015		$ 8,149,713
Net Cash Used in Operating Activities		(2,171,061)	$ (983,769)
Accumulated deficit		$ (24,804,711)		$ (21,275,181)

Summary of Significant Accoun24

Summary of Significant Accounting Policies (Details)	3 Months Ended
	May 31, 2018	May 31, 2017
Summary Of Significant Accounting Policies Details
Period-end Canadian $: US dollar exchange rate	0.77	0.74
Average period Canadian $: US dollar exchange rate	0.78	0.74

Summary of Significant Accoun25

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended
	May 31, 2018	May 31, 2017	Feb. 28, 2018	Feb. 28, 2017
Summary Of Significant Accounting Policies
Sales tax receivables	$ 201,588		$ 177,903
Research and development expenses	$ 1,066,079	$ 496,538
Warrants outstanding	2,395,248	1,860,455	2,515,248	1,647,670

Property, Plant and Equipment26

Property, Plant and Equipment, Net (Details) - USD ($)	3 Months Ended
	May 31, 2018	Feb. 28, 2018
Property, plant and equipment, gross	$ 5,568,289	$ 4,842,866
Less: accumulated depreciation	(743,156)	(805,963)
Property, plant and equipment, net	$ 4,825,133	4,036,903
Building [Member]
Estimated Useful Life (Years)	30 years
Property, plant and equipment, gross	$ 1,914,599	1,935,423
Land [Member]
Estimated Useful Life (Years)	0 years
Property, plant and equipment, gross	$ 236,665	239,239
Building Improvements [Member]
Estimated Useful Life (Years)	5 years
Property, plant and equipment, gross	$ 330,813	377,253
Machinery and equipment [Member]
Property, plant and equipment, gross	$ 2,967,129	2,189,195
Machinery and equipment [Member] | Minimum [Member]
Estimated Useful Life (Years)	3 years
Machinery and equipment [Member] | Maximum [Member]
Estimated Useful Life (Years)	8 years
Office equipment and furniture [Member]
Estimated Useful Life (Years)	8 years
Property, plant and equipment, gross	$ 119,083	$ 101,756

Property, Plant and Equipment27

Property, Plant and Equipment, Net (Details Narrative) - USD ($)	3 Months Ended
	May 31, 2018	May 31, 2017
Property And Equipment Details Narrative Abstract
Depreciation expense	$ 85,000	$ 75,000

Intangible Assets, Net (Details

Intangible Assets, Net (Details) - USD ($)	3 Months Ended
	May 31, 2018	Feb. 28, 2018
Intellectual property	$ 545,970	$ 533,369
Less: accumulated amortization	(217,104)	(200,629)
Intangible assets, net	$ 328,866	$ 332,740
Intellectual Property [Member]
Estimated Useful Life (Years)	7 years

Intangible Assets, Net (Detai29

Intangible Assets, Net (Details Narrative) - USD ($)	3 Months Ended
	May 31, 2018	May 31, 2017
Intellectual Property Details Narrative Abstract
Amortization expense	$ 16,000	$ 16,000

Credit Facility and Long-Term30

Credit Facility and Long-Term Debt (Details) - USD ($)	May 31, 2018	Feb. 28, 2018
Credit Facility And Longterm Debt Details Narrative Abstract
Installment loan	$ 1,063,227	$ 1,088,426
Less current portion	54,062	54,649
Non-current portion	$ 1,009,165	$ 1,033,777

Credit Facility and Long-Term31

Credit Facility and Long-Term Debt (Details Narrative) - USD ($)	3 Months Ended
	May 31, 2018	May 31, 2017
Credit Facility Details Narrative Abstract
Interest paid	$ 12,913

Related Party Transactions (Det

Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended
	May 31, 2018	May 31, 2017	Jun. 29, 2015
Repayment of related party debt		$ 278,472
Employment Agreement [Member]
Common stock shares reserved for future issuance under agreement			4,000,000
Common stock shares issuable in each tranche			1,000,000
Chief Executive Officer [Member]
Compensation expense	$ 47,000	45,000
Mr. Solomita [Member]
Repayment of related party debt		278,472
Repayment of accrued compensation		324,844
Accrued compensation		$ 35,156

Stockholders_ Equity (Details)

Stockholders’ Equity (Details)	3 Months Ended
	May 31, 2018USD ($)shares
Beginning Balance, Amount	$ 10,324,065
Issuance of shares upon vesting of restricted stock units, Amount
Ending Balance, Amount	$ 7,927,936
Common Stock [Member]
Beginning Balance, Shares | shares	33,751,088
Beginning Balance, Amount	$ 3,376
Cashless exercise of warrants, Shares | shares	18,821
Cashless exercise of warrants, Amount	$ 2
Issuance of shares upon vesting of restricted stock units, Shares | shares	35,797
Issuance of shares upon vesting of restricted stock units, Amount	$ 3
Ending balance, Shares | shares	33,805,706
Ending Balance, Amount	$ 3,381

Stockholders_ Equity (Details N

Stockholders’ Equity (Details Narrative) - Common Stock [Member] - USD ($)	3 Months Ended
	May 31, 2018	May 31, 2017
Issuance of shares upon cashless exercise of warrants, Shares	18,821	20,000
Issuance of shares upon vesting of restricted stock units, Shares	35,797
Sale of common stock		1,123,266
Common stock offering price per share		$ 5.25
Proceeds from issuance of common stock		$ 5,897,188

Stock-based Compensation Plan35

Stock-based Compensation Plans (Details) - $ / shares	3 Months Ended
	May 31, 2018	May 31, 2017
Number of Warrant Shares
Outstanding, beginning of period	2,515,248	1,647,670
Granted		550,000
Exercised	(20,000)	(22,548)
Forfeited	(100,000)
Expired		(314,667)
Outstanding, end of period	2,395,248	1,860,455
Exercisable, end of period	1,066,916	836,705
Weighted Average Exercise Price
Outstanding, beginning of period	$ 8.21	$ 2.91
Granted		5.25
Exercised	0.80	0.80
Forfeited	5.25
Expired		6
Outstanding, end of period	8.40	3.11
Exercisable, end of period	$ 7.32	$ 2.82

Stock-based Compensation Plan36

Stock-based Compensation Plans (Details 1) - shares	3 Months Ended
	May 31, 2018	May 31, 2017	Feb. 28, 2018	Feb. 28, 2017
Number of warrants outstanding	2,395,248	1,860,455	2,515,248	1,647,670
Warrants exercisable	1,066,916	836,705
Warrants outstanding, weighted average remaining life	8 years 1 month 16 days	3 years 3 months 4 days
Warrant exercisable, weighted average remaining life	6 years 11 months 23 days	4 months 6 days
Exercise Prices 0.80 [Member]
Number of warrants outstanding	582,081	912,452
Warrants outstanding, weighted average remaining life	7 years 6 months	6 months 3 days
Exercise Prices 3.00 [Member]
Number of warrants outstanding	12,500	75,000
Warrants outstanding, weighted average remaining life	0 years	1 year 7 days
Exercise Prices 5.25 [Member]
Number of warrants outstanding	430,000	550,000
Warrants outstanding, weighted average remaining life	8 years 2 months 8 days	9 years 11 months 23 days
Exercise Prices 6.00 [Member]
Number of warrants outstanding		323,003
Warrants outstanding, weighted average remaining life	0 years	29 days
Exercise Prices 12.00 [Member]
Number of warrants outstanding	840,667
Warrants outstanding, weighted average remaining life	7 years 10 months 3 days	0 years
Exercise Prices 13.49 [Member]
Number of warrants outstanding	250,000
Warrants outstanding, weighted average remaining life	9 years 4 months 17 days	0 years
Exercise Prices 13.89 [Member]
Number of warrants outstanding	280,000
Warrants outstanding, weighted average remaining life	9 years 5 months 9 days	0 years

Stock-based Compensation Plan37

Stock-based Compensation Plans (Details 2) - $ / shares	3 Months Ended
	May 31, 2018	May 31, 2017
Stock-based Compensation Plans
Exercise price		$ 5.25
Risk-free interest rate		2.02%
Expected dividend yield		0.00%
Expected volatility		110.72%
Expected life years		6 years

Stock-based Compensation Plan38

Stock-based Compensation Plans (Details 3) - shares	3 Months Ended
	May 31, 2018	May 31, 2017
Number of RSUs
Granted		550,000
Restricted Stock Units (RSUs) [Member]
Number of RSUs
Outstanding, beginning of period	34,102
Granted	24,450
Vested	(35,797)
Outstanding, end of period	22,755
Weighted average remaining life (in years)	3 years 7 days

Stock-based Compensation Plan39

Stock-based Compensation Plans (Details Narrative) - USD ($)	Jul. 06, 2017	May 31, 2018	May 31, 2017	Jun. 06, 2017
Share-based compensation expense		$ 1,000,000	$ 200,000
Restricted Stock Units (RSUs) [Member]
Share-based compensation expense		$ 200,000
Equity Incentive plan [Member]
Common stock shares reserved for future issuance				3,000,000
Description of provision for plan	On March 1, 2018, in accordance with the provisions of the Plan, the number of shares available for issuance increased by 1,500,000 shares, resulting in 3,211,448 shares available for issuance.