Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | May 02, 2019 | Aug. 31, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Loop Industries, Inc. | ||
Entity Central Index Key | 0001504678 | ||
Document Type | 10-K | ||
Document Period End Date | Feb. 28, 2019 | ||
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 Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 149,232,154 | ||
Entity Common Stock, Shares Outstanding | 34,875,032 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Feb. 28, 2019 | Feb. 28, 2018 |
Current assets | ||
Cash | $ 5,833,390 | $ 8,149,713 |
Sales tax, tax credits and other receivables (Note 2) | 599,000 | 364,634 |
Prepaid expenses | 226,521 | 511,573 |
Total current assets | 6,658,911 | 9,025,920 |
Property, plant and equipment, net (Note 3) | 5,371,263 | 4,036,903 |
Intangible assets, net (Note 4) | 127,672 | 332,740 |
Total assets | 12,157,846 | 13,395,563 |
Current liabilities | ||
Accounts payable and accrued liabilities | 2,670,233 | 1,983,072 |
Convertible notes (Note 7) | 5,636,172 | 0 |
Warrants (Note 7) | 219,531 | 0 |
Current portion of long-term debt (Note 6) | 53,155 | 54,649 |
Total current liabilities | 8,579,091 | 2,037,721 |
Long-term debt (Note 6) | 952,363 | 1,033,777 |
Total liabilities | 9,531,454 | 3,071,498 |
Contingencies (Note 15) | ||
Stockholders' Equity | ||
Series A Preferred stock par value $0.0001; 25,000,000 shares authorized; one share issued and outstanding (Note 9) | 0 | 0 |
Common stock par value $0.0001; 250,000,000 shares authorized; 33,805,706 shares issued and outstanding (2018 - 33,751,088) (Note 9) | 3,381 | 3,376 |
Additional paid-in capital (Note 10) | 38,966,208 | 30,964,970 |
Additional paid-in capital - Warrants (Note 7) | 757,704 | 0 |
Additional paid-in capital - Beneficial conversion feature (Note 7) | 1,200,915 | 0 |
Common stock issuable, 1,000,000 shares (Note 8) | 800,000 | 800,000 |
Accumulated deficit | (38,811,592) | (21,275,181) |
Accumulated other comprehensive loss | (290,224) | (169,100) |
Total stockholders' equity | 2,626,392 | 10,324,065 |
Total liabilities and stockholders' equity | $ 12,157,846 | $ 13,395,563 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Feb. 28, 2019 | Feb. 28, 2018 |
Stockholders' Equity | ||
Series A Preferred stock, par value | $ .0001 | $ 0.0001 |
Series A Preferred stock, share authorised | 25,000,000 | 25,000,000 |
Series A Preferred stock, share issued | 1 | 1 |
Series A Preferred stock, share outstanding | 1 | 1 |
Common stock, par value | $ .0001 | $ 0.0001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 33,805,706 | 33,751,008 |
Common stock, shares outstanding | 33,805,706 | 33,751,008 |
Common stock issuable | 1,000,000 | 1,000,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Revenue | $ 0 | $ 0 | $ 0 |
Operating Expenses | |||
Research and development (Note 2) | 3,448,547 | 6,694,778 | 1,454,440 |
General and administrative | 8,811,237 | 6,860,623 | 2,280,281 |
Legal settlement (Note 15) | 4,041,627 | 0 | 0 |
Depreciation and amortization (Notes 3 and 4) | 502,997 | 367,176 | 397,445 |
Impairment of intangible assets (Note 4) | 298,694 | 0 | 0 |
Interest and other finance costs (Note 7) | 467,082 | 5,125 | 0 |
Foreign exchange loss (gain) | (33,773) | 109,676 | (18,165) |
Total operating expenses | 17,536,411 | 14,037,378 | 4,114,001 |
Net loss | (17,536,411) | (14,037,378) | (4,114,001) |
Other comprehensive loss - | |||
Foreign currency translation adjustment | (121,124) | (17,889) | (157,142) |
Comprehensive loss | $ (17,657,535) | $ (14,055,267) | $ (4,271,143) |
Loss per share - Basic and diluted | $ (0.52) | $ (0.43) | $ (0.13) |
Weighted average common shares outstanding - Basic and diluted | 33,795,600 | 32,642,741 | 31,102,004 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - USD ($) | Common Stock | Preferred Stock | Additional Paid-In Capital | Additional Paid-In Capital Warrants | Additional Paid-In Capital Beneficial Conversion Feature | Common Stock Issuable | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning balance, shares at Feb. 29, 2016 | 29,910,800 | 1 | |||||||
Beginning balance, amount at Feb. 29, 2016 | $ 2,992 | $ 0 | $ 3,918,356 | $ 0 | $ 0 | $ 614,001 | $ (3,123,802) | $ 5,931 | $ 1,417,478 |
Issuance of common shares for cash, shares | 1,275,340 | ||||||||
Issuance of common shares for cash, amount | $ 128 | 3,825,888 | 3,826,016 | ||||||
Reclassification of common shares issuable to shares outstanding, shares | 204,667 | ||||||||
Reclassification of common shares issuable to shares outstanding, amount | $ 20 | 613,981 | (614,001) | 0 | |||||
Warrants issued for services | 135,673 | 135,673 | |||||||
Restricted stock units issued for services | 0 | ||||||||
Cancellation of shares issued for services and as a settlement, shares | (200,000) | ||||||||
Cancellation of shares issued for services and as a settlement, amount | $ (20) | 20 | 0 | ||||||
Issuance of common shares upon exercise of warrants for cash, shares | 200,000 | ||||||||
Issuance of common shares upon exercise of warrants for cash, amount | $ 20 | 159,980 | 160,000 | ||||||
Issuance of shares for services, shares | 23,166 | ||||||||
Issuance of shares for services, amount | $ 2 | 69,496 | 69,468 | ||||||
Issuance of shares upon cashless exercise of warrants, shares | 38,000 | ||||||||
Issuance of shares upon cashless exercise of warrants, amount | $ 4 | (4) | 0 | ||||||
Fair value of common stock issuable for services - officer | 800,000 | 800,000 | |||||||
Legal settlement | 0 | ||||||||
Foreign currency translation | (157,142) | (157,142) | |||||||
Net loss | (4,114,001) | (4,114,001) | |||||||
Ending balance, shares at Feb. 28, 2017 | 31,451,973 | 1 | |||||||
Ending Balance, amount at Feb. 28, 2017 | $ 3,146 | $ 0 | 8,723,390 | 0 | 0 | 800,000 | (7,237,803) | (151,211) | 2,137,522 |
Issuance of common shares for cash, shares | 1,829,061 | ||||||||
Issuance of common shares for cash, amount | $ 183 | 14,052,298 | 14,052,481 | ||||||
Stock options issued for services | 6,281,319 | 6,281,319 | |||||||
Restricted stock units issued for services | 265,994 | 265,994 | |||||||
Issuance of common shares upon exercise of warrants for cash, shares | 355,020 | ||||||||
Issuance of common shares upon exercise of warrants for cash, amount | $ 35 | 1,641,981 | 1,642,016 | ||||||
Issuance of shares upon cashless exercise of warrants, shares | 115,034 | ||||||||
Issuance of shares upon cashless exercise of warrants, amount | $ 12 | (12) | 0 | ||||||
Legal settlement | 0 | ||||||||
Foreign currency translation | (17,889) | (17,889) | |||||||
Net loss | (14,037,378) | (14,037,378) | |||||||
Ending balance, shares at Feb. 28, 2018 | 33,751,088 | 1 | |||||||
Ending Balance, amount at Feb. 28, 2018 | $ 3,376 | $ 0 | 30,964,970 | 0 | 0 | 800,000 | (21,275,181) | (169,100) | 10,324,065 |
Stock options issued for services | 3,176,786 | 3,176,786 | |||||||
Restricted stock units issued for services | 808,374 | 808,374 | |||||||
Issuance of shares upon cashless exercise of warrants, shares | 18,821 | ||||||||
Issuance of shares upon cashless exercise of warrants, amount | $ 2 | (2) | 0 | ||||||
Issuance of shares upon vesting of restricted stock units, shares | 35,797 | ||||||||
Issuance of shares upon vesting of restricted stock units, amount | $ 3 | (3) | 0 | ||||||
Legal settlement | 4,041,627 | 4,041,627 | |||||||
Issuance of convertible notes | (25,544) | 757,704 | 1,200,915 | 1,933,075 | |||||
Foreign currency translation | (121,124) | (121,124) | |||||||
Net loss | (17,536,411) | (17,536,411) | |||||||
Ending balance, shares at Feb. 28, 2019 | 33,805,706 | 1 | |||||||
Ending Balance, amount at Feb. 28, 2019 | $ 3,381 | $ 0 | $ 38,966,208 | $ 757,704 | $ 1,200,915 | $ 800,000 | $ (38,811,592) | $ (290,224) | $ 2,626,392 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Cash Flows from Operating Activities | |||
Net loss | $ (17,536,411) | $ (14,037,378) | $ (4,114,001) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 502,997 | 367,176 | 397,445 |
Impairment of intangible assets | 298,694 | 0 | 0 |
Warrants issued for legal settlement | 2,271,627 | 0 | 0 |
Shares issued for legal settlement | 1,770,000 | 0 | 69,498 |
Stock options issued for services | 3,176,786 | 6,281,319 | 135,673 |
Restricted stock units issued for services | 808,374 | 265,994 | 0 |
Common stock issuable for services | 0 | 0 | 800,000 |
Accrued interest | 109,804 | 0 | 0 |
Loss on revaluation of warrants | 65,167 | 0 | 0 |
Convertible notes debt discount amortization | 185,505 | 0 | 0 |
Amortization of deferred financing costs | 47,123 | 0 | 0 |
Changes in operating assets and liabilities: | |||
Valued added tax and tax credits receivable | (234,366) | (218,560) | (94,336) |
Prepaid expenses | 285,052 | (511,573) | 36,129 |
Accounts payable and accrued liabilities | 687,161 | 1,821,536 | (201,544) |
Advances from majority stockholder | 0 | (360,000) | 137,646 |
Net cash used in operating activities | (7,562,487) | (6,391,486) | (2,833,490) |
Cash Flows from Investing Activities | |||
Additions to property, plant and equipment | (1,892,654) | (2,710,053) | (513,022) |
Additions to intangible assets | (153,465) | (88,319) | 0 |
Net cash used in investing activities | (2,046,119) | (2,798,372) | (513,022) |
Cash Flows from Financing Activities | |||
Proceeds from sales of common shares and exercise of warrants, net of share issuance costs | 0 | 15,694,497 | 3,986,016 |
Repayment of advances from majority stockholder | 0 | (278,472) | 0 |
Proceeds from issuance of long-term debt | 7,550,000 | 1,092,980 | 0 |
Share issue expenses | (25,544) | 0 | 0 |
Deferred financing costs | (143,277) | 0 | 0 |
Repayment of long-term debt | (53,155) | (4,554) | 0 |
Net cash provided by financing activities | 7,328,024 | 16,504,451 | 3,986,016 |
Effect of exchange rate changes | (35,741) | (81,367) | (145,603) |
Net change in cash | (2,316,323) | 7,233,226 | 493,901 |
Cash, beginning of year | 8,149,713 | 916,487 | 422,586 |
Cash, end of year | 5,833,390 | 8,149,713 | 916,487 |
Supplemental Disclosure of Cash Flow Information: | |||
Income tax paid | 0 | 0 | 0 |
Interest paid | $ 54,040 | $ 5,125 | $ 0 |
The Company, Basis of Presentat
The Company, Basis of Presentation and Going Concern | 12 Months Ended |
Feb. 28, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Note 1. The Company, Basis of Presentation and Going Concern | The Company Loop Industries, Inc. is a technology and licensing company who owns patented and proprietary technology that depolymerizes no and low value waste PET plastic and polyester fiber to its base building blocks (monomers). The monomers are filtered, purified and repolymerized to create virgin-quality Loop™ branded PET plastic resin and polyester fiber suitable for use in food-grade packaging to be sold to consumer goods companies. 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 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, our 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, our 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 These consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) and comprise the consolidated financial position and results of operations of Loop Industries, Inc. and its subsidiaries, Loop Innovations, LLC and Loop Canada Inc. All subsidiaries are, either directly or indirectly, wholly-owned subsidiaries of Loop Industries, Inc. (collectively, the “Company”). The Company also owns, through Loop Innovations, LLC, a 50% interest in a joint venture, Loop Indorama Technologies, LLC, which is accounted for under the equity method. Prior to December 31, 2016, 819 Canada was accounted for a variable interest entity requiring consolidation as Loop Industries, Inc. was the primary beneficiary of 819 Canada, having the power to direct its activities. On Intercompany balances and transactions are eliminated on consolidation. Going Concern 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, we are a development stage company, we have not yet begun commercial operations and we do not have any sources of revenue. During the year ended February 28, 2019, the Company incurred a net loss of $17.5 million (2018 - $14.0 million; 2017 - $4.1 million), used cash in operations of $7.6 million (2018 - $6.4 million; 2017- $2.8 million) and had an accumulated deficit as at February 28, 2019 of $38,811,592, all of these factors raise substantial doubt about the Company’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 and borrowings. To date, the Company has been successful in raising capital to finance its ongoing operations. As at February 28, 2019, the Company had cash on hand of $5.8 million. Subsequent to the year-end, on March 1, 2019, the Company raised net proceeds of $4.2 million from a single institutional investor from the sale of 600,000 shares in a registered direct offering (Note 16). Management is evaluating its plans to raise additional financing, the proceeds from which would be used to finance the start-up of its joint venture commercial operations, which is estimated to be between $8,000,000-$10,000,000 and further fund the development of its technology and new technologies. 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 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 | 12 Months Ended |
Feb. 28, 2019 | |
Accounting Policies [Abstract] | |
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 at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include 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 the fair value of convertible notes and related warrants. Fair value of financial instruments The Company applies Financial Accounting Standards Board (“FASB”) Codification (“ASC”) 820, Fair Value Measurement There are three levels within the hierarchy that may be used to measure fair value: Level 1 – A quoted price in an active market for identical assets or liabilities. Level 2 – Significant pricing inputs are observable inputs, which are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Level 3 – Significant pricing inputs are unobservable inputs, which are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value measurements level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used should maximize the use of observable inputs and minimize the use of unobservable inputs. The valuation methodologies described above may produce a fair value calculation that may not be indicative of future net realizable value or reflective of future fair values. The fair value of cash and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturity. Convertible notes Distinguishing Liabilities from Equity Instruments Issued The Company applies the guidance in ASC Topic 480 to determine the classification of financial instruments issued. The Company first determines if the instruments should be classified as liabilities under this guidance based on the redemption features, if mandatorily redeemable or not, and the method of redemption, if in cash, a variable number of shares or a fixed number of shares. If the terms proved that an instrument is mandatorily redeemable in cash, or the holder can compel a settlement in cash, or will be settled in a variable number of shares predominantly based on a fixed monetary amount, the instrument is generally classified as a liability. Instruments that are settled by issuing a fixed number of shares are generally classified as equity instruments. In some cases, the instruments issued contain settlement features that differ depending upon the prevailing price of the Company’s shares at the date of settlement. Depending on the share price, the instrument will be settled either in a manner consistent with ASC Topic 480 liability treatment, by issuing a variable number of shares based on a fixed monetary amount, or in a manner consistent with ASC Topic 480 treatment for an equity instrument, by issuing a fixed number of shares if the share price is above or below certain levels. In these cases, the Company assesses the likelihood of the various possible settlement outcomes at the inception of the instrument. The classification of the instrument is based on the outcome that is more likely than not to occur. Factors that the Company considers in evaluating the likelihood of the outcomes include: The terms of the instrument, including its maturity date and the formula for adjustments to the range. The volatility of the Company’s stock. The relationship between the price of the Company’s stock on the inception date and fixed prices or ranges the low and high end of the original range. Historical and expected dividend levels. When warrants or similar instruments are issued, the Company applies the guidance in ASC Topic 815 to determine if the warrants should be classified as equity instruments or as derivative instruments. Generally, warrants that are both indexed to the Company’s own stock and that would be classified as equity instruments are not classified as derivative instruments under this guidance. A key element to consider in determining if a warrant would be considered indexed to the Company’s own stock is if the warrants settlement amount is equal to the difference between the fair value of a fixed number of equity shares and a fixed monetary amount. This criterion is sometimes known as the “fixed-for fixed” criteria. In cases where the fixed for fixed criteria are not met, the warrants are classified as derivative instruments. Convertible liabilities are also assessed to determine if they contain a beneficial conversion feature. A beneficial conversion feature (“BCF”) of a convertible note is normally characterized as the convertible portion feature that provides a rate of conversion that is below market value or “in-the-money” when issued. A BCF related to the issuance of a convertible note is recorded at is intrinsic value at the issue date. Initial measurement Instruments are initially measured at fair value. If multiple instruments are issued together, the aggregate proceeds are allocated first to derivative instruments or any instrument that will be subsequently accounted for at fair value and the remainder is to the allocated to the various instruments based on their relative fair value. Subsequent measurement Instruments initially classified as liabilities are subsequently measured at the present value of the amount to be paid, either in cash or by issuing a variable number of shares based on a fixed monetary amount, and at settlement, accruing interest cost using the rate implicit at inception. Derivative instruments are recorded at fair value at each reporting period and the variations in fair value recorded in income. Deferred financing costs and other transaction costs Transaction costs associated with the equity portion of convertible notes are reflected as a charge to deficit or as a reduction of accumulated paid-in-capital. The cost of issuing equity is reflected as a reduction of accumulated paid-in-capital. Foreign currency translations and transactions The accompanying consolidated financial statements are presented in U.S. dollars, the functional 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 and loss (“OCI”). As a result, foreign currency exchange fluctuations may impact operating expenses. The Company currently has not engaged in any currency hedging activities. For transactions and balances, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency of the entity at the prevailing exchange rate at the reporting date. Non-monetary assets and liabilities, and revenue and expense items denominated in foreign currencies are translated into the functional currency using the exchange rate prevailing at the dates of the respective transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated statements of operations and comprehensive loss, except for gains or losses arising from the translation of intercompany balances denominated in foreign currencies that forms part in the net investment in the subsidiary which are included in OCI. Value added 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 February 28, 2019, the computed net recoverable sale taxes amounted to $82,992 (2018 – $177,903). In addition, Loop Canada is entitled to receive government assistance in the form of refundable and non-refundable research and development tax credits from the federal and provincial taxation authorities, based on qualifying expenditures incurred during the fiscal year. The refundable credits are from the provincial taxation authorities and are not dependent on its ongoing tax status or tax position and accordingly are not considered part of income taxes. The Company records refundable tax credits as a reduction of research and development expenses when the Company can reasonably estimate the amounts and it is more likely than not, they will be received. During the year ended February 28, 2019, the Company recorded $305,592 (2018 – $221,202; 2017 - $148,547) as a reduction of research and development expenses. During the year ended February 28, 2019, research and development tax credits received by the Company from taxation authorities amounted to nil (2018 – nil; 2017 - $88,080). As at February 28, 2019, research and development tax credits receivable from taxation authorities amounted to $410,997 (2018 - $109,298). Research and development expenses are also presented net of eligible government grants from the federal and provincial taxation authorities. Government grants received during the year ended February 28, 2019 were $73,581 and government grants receivable at February 28, 2019 amounted to nil (2018 – $4,000 and $73,581, respectively; 2017 - nil and nil, respectively). The Company is also eligible for non-refundable research and development tax credits from the federal taxation authorities which can be used as a reduction of income tax expense in any given year to the extent the Company has taxable income. The Company has not had taxable income since inception and has not been able to use these non-refundable federal research and development tax credits. During the year ended February 28, 2019, the Company was eligible for non-cash research and development tax credits in the amount of $255,975 (2018 - $248,690; 2017 – $25,227). Property, plant and equipment Property, plant and equipment are recorded at cost and are amortized over their estimated useful lives, unless the useful life is indefinite, using the straight-line method over the following periods: Building 30 years Land Indefinite Office equipment and furniture 8 years Machinery and equipment 3-8 years Building improvements 5 years Costs related to repairs and maintenance of property, plant and equipment are expensed in the period in which they are incurred. Upon sale or disposal, the Company writes off the cost of the asset and the related amount of accumulated depreciation. The resulting gain or loss is included in the consolidated statement of operations and comprehensive loss. Management assesses the carrying value of property, plant and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated recoverable value. As at February 28, 2019, 2018 and 2017, the Company determined that there were no indicators of impairment and did not recognize any impairment of its property, plant and equipment. Intangible assets Intangible assets are recorded at cost and are amortized over their estimated useful lives, unless the useful life is indefinite, using the straight-line method over 7 years. The Company reviews intangible assets subject to amortization at least annually to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. If the carrying value of an asset exceeds its undiscounted cash flows, the Company writes down the carrying value of the intangible asset to its fair value in the period identified. If the carrying value of assets is determined not to be recoverable, the Company records an impairment loss equal to the excess of the carrying value over the fair value of the assets. The Company’s estimate of fair value is based on the best information available, in the absence of quoted market prices. The Company generally calculates fair value as the present value of estimated future cash flows that the Company expects to generate from the asset using a discounted cash flow income approach as described above. If the estimate of an intangible asset’s remaining useful life is changed, the Company amortizes the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. Stock-based compensation Loop Industries periodically issues stock options to employees and non-employees in non-capital raising transactions for services and financing costs. The Company accounts for stock options granted to employees based on the authoritative guidance provided by the FASB wherein the fair value of the award is measured on the grant date and where there are no performance conditions, recognized as compensation expense on the straight-line basis over the vesting period and where performance conditions exist, recognize compensation expense when it becomes probable that the performance condition will been met. Forfeitures on share-based payments are accounted for by recognizing forfeitures as they occur. The Company accounts for stock options granted to non-employees in accordance with the authoritative guidance of the FASB wherein the fair value of the stock compensation is based upon the measurement date determined as the earlier of the date at which either a) a commitment is reached with the counterparty for performance or b) the counterparty completes its performance. The Company estimates the fair value of restricted stock unit awards to employees and directors based on the closing market price of its common stock on the date of grant. The fair value of the stock options granted are estimated using the Black-Scholes-Merton Option Pricing (“Black-Scholes”) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options, and future dividends. Stock-based compensation expense is recorded based on the value derived from the Black-Scholes model and on actual experience. The assumptions used in the Black-Scholes model could materially affect stock-based compensation expense recorded in the current and future periods. Income taxes The Company calculates its provision for income tax on the basis of the tax laws enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income, in accordance with FASB ASC 740, Income Taxes 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 years ended February 28, 2019, 2018 and 2017 amounted to $3.5 million,$6.7 million and $1.5 million, respectively, and are net of government research and development tax credits and government grants from the federal and provincial taxation authorities accrued and recorded during the year based on qualifying expenditures incurred during the fiscal year. Net earnings (loss) per share The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share For the years ended February 28, 2019 and 2018, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at February 28, 2019, the potentially dilutive securities consisted of 1,962,400 outstanding stock options (2018 – 2,374,581; 2017 – 1,010,000), 402,868 outstanding restricted stock units (2018 – 34,102; 2017 - nil) and 802,469 outstanding warrants (2018 – 140,667; 2017 – 637,670). Recently adopted accounting pronouncements In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting a. The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. b. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. c. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. For public business entities, the amendments in this Update are effective for fiscal years beginning after Recently issued accounting pronouncements In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Revenue from Contracts with Customers In July 2018, the FASB issued ASU 2018-09, Codification Improvements , Compensation – Stock Compensation – Income Taxes In February 2016, the FASB issued ASU 2016-02, “Leases,” amended in July by ASU 2018-10, “Codification Improvements to Topic 842, Leases,” ASU 2018-11, “Targeted Improvements,” and ASU 2018-20, “Narrow-Scope Improvements for Lessors,” which requires lessees to recognize leases on the balance sheet while continuing to recognize expenses in the income statement in a manner similar to current accounting standards. For lessors, the new standard modifies the classification criteria and the accounting for sales-type and direct financing leases. Enhanced disclosures will also be required to give financial statement users the ability to assess the amount, timing, and uncertainty of cash flows arising from leases. This ASU may either be adopted on a modified retrospective approach at the beginning of the earliest comparative period, or through a cumulative-effect adjustment at the adoption date. This update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is required to adopt these standards effective March 1, 2019, but it still in the process of determining the quantitative impact on the Company’s consolidated financial statements. The Company will elect to apply the package of practical expedients that allows us not to reassess whether expired or existing contracts contain leases, the classification of these leases and whether previously capitalized initial direct costs would qualify for capitalization under Accounting Standards Codification (or “ ASC |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Feb. 28, 2019 | |
Property, Plant and Equipment [Abstract] | |
Note 3. Property, Plant and Equipment, Net | As at February 28, 2019 Cost Accumulated depreciation Net book value Building $ 1,882,665 $ (68,596 ) $ 1,814,069 Land 232,699 — 232,699 Building Improvements 383,985 (119,889 ) 264,096 Machinery and equipment 3,834,338 (841,236 ) 2,993,102 Office equipment and furniture 117,088 (49,791 ) 67,297 Outstanding, end of period $ 6,450,775 $ (1,079,512 ) $ 5,371,263 As at February 28, 2018 Cost Accumulated depreciation Net book value Building $ 1,935,423 $ (6,009 ) $ 1,929,414 Land 239,239 — 239,239 Building Improvements 377,253 (225,298 ) 151,955 Machinery and equipment 2,189,195 (536,222 ) 1,652,973 Office equipment and furniture 101,756 (38,434 ) 63,322 Outstanding, end of period $ 4,842,866 $ (805,963 ) $ 4,036,903 Depreciation expense is recorded as an operating expense in the consolidated statements of operations and comprehensive loss and amounted to $443,146 for the year ended February 28, 2019 (2018 - $303,597; 2017 - $333,866). In conjunction with the purchase of the building during the year ended February 28, 2017 in which the Company previously was a tenant, the Company performed a review of the useful lives of its property, plant and equipment. Building improvements, previously classified as leasehold improvements, have had their useful lives adjusted to 5 years from 3 years. During the year ended February 28, 2018, the Company recorded an adjustment of $8,000 to reflect the deceleration of the depreciation. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Feb. 28, 2019 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Note 4. Intangible Assets, Net | On October 27, 2014, the Company entered into an Intellectual Property Assignment Agreement with Mr. Hatem Essaddam wherein the Company purchased a certain technique and method, which was used to develop the Generation I (“GEN I”) technology, for $445,050 allowing for the depolymerization of polyethylene terephthalate at ambient temperature and atmospheric pressure. The GEN I technology patent portfolio has two issued U.S. patents and a pending U.S. application expected to expire on or around July 2035. Internationally, we also have an issued patent in Taiwan, an allowed application in the members of the Gulf Cooperation Council, and pending patent applications in Argentina, Australia, Brazil, Canada, China, Eurasia, Europe, Israel, India, Japan, Korea, Mexico, the Philippines, and South Africa, all expected to expire on or around July 2036 if granted. At the date of acquisition, the acquired intangible asset has an estimated useful life of 7 years and was being amortized on a straight-line basis In addition to the $445,050 paid by the Company under the Intellectual Property Assignment Agreement, the Company is required to make four additional payments of CDN$200,000, totaling CDN$800,000, to Mr. Essaddam within sixty (60) days of attaining each of the following milestones: · the average production of 20 metric tonnes of terephthalic acid by the Company, as a result of the GEN I technology, for 20 operating days; · the average production of 30 metric tonnes of terephthalic acid by the Company, as a result of the GEN I technology, for 30 operating days; · the average production of 60 metric tonnes of terephthalic acid by the Company, as a result of the GEN I technology, for 60 operating days; · the average production of 100 metric tonnes of terephthalic acid by the Company, as a result of the GEN I technology, for 100 operating days. As at February 28, 2019, none of the milestones had been met, and accordingly no additional payments have been made. Additionally, the Company is obligated to make royalty payments of up to CDN$25,700,000, based on the GEN I technology, payable as follows: · 10% of gross profits on the sale of all products derived by the Company from the technology; · 10% of any license fee paid to the Company in respect of any licensing or other right to use the technology that was granted to a third party by the Company; and · 5% of any royalty or other similar payment made to the Company by a third party to whom a license or sub-license or other right to use the technology has been granted by the Company or by the third party. As at February 28, 2019, the Company had not made any royalty payments under the Intellectual Property Assignment Agreement, referred to as the GEN I technology. The Company has determined that it have no intent of commercializing the GEN I technology. During the year ended February 28, 2019, the Company finalized the development of its next Generation II (“GEN II”) technology and has filed various patents in jurisdictions around the world. On April 9, 2019, the GEN II U.S. patent was formally approved and issued. The GEN II technology patent portfolio has an issued U.S. patent and a pending U.S. application expected to expire on or around September 2037; as well as a PCT application and non-PCT applications in Argentina, Bangladesh, Bolivia, Bhutan, members of the Gulf Cooperation Council, Iraq, Pakistan, Taiwan, Uruguay, and Venezuela, all expected to expire on or around September 2037 if granted. Additionally, we have three pending provisional applications directed to additional aspects of the GEN II technology. Any patents that would ultimately grant from these provisional applications would be expected to expire no earlier than 2039 if granted. Concurrent with the GEN II development, in June 2018, the Company transitioned to its newly constructed GEN II industrial pilot plant. The GEN II technology forms the basis for the commercialization of the Company into the future. As a result of the strategic shift away from the GEN I technology, and the development of the GEN II technology during the year ended February 28, 2019, the Company considered the carrying value of its GEN I intangible asset to be impaired and wrote off the remaining balance of its GEN I intangible asset, which amounted to $298,694. Amortization expense is recorded as an operating expense in the consolidated statements of operations and comprehensive loss and amounted to $59,851 for the year ended February 28, 2019 (2018 - $63,579; 2017 - $63,579). As at February 28, As at February 28, 2019 2018 Intangible assets, as cost - beginning of period $ 533,369 $ 445,050 Intangible assets, accumulated depreciation - beginning of period (200,629 ) (137,050 ) 332,740 308,000 Add: Additions in the year 153,477 88,319 Deduct: Amortization of intangibles (59,851 ) (63,579 ) Deduct: Impairment of intangibles (298,694 ) — $ 127,672 $ 332,740 |
Joint Venture
Joint Venture | 12 Months Ended |
Feb. 28, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Note 5. Joint Venture | On September 15, 2018, the Company, through its wholly-owned subsidiary Loop Innovations, LLC, a Delaware limited liability company, entered into a Joint Venture Agreement (the “Agreement”) with Indorama Ventures Holdings LP, USA, an indirect subsidiary of Indorama Ventures Public Company Limited, to manufacture and commercialize sustainable polyester resin. Each company has a 50/50 equity interest in Loop Indorama Technologies, LLC (“ILT”), which was specifically formed to operate and execute the joint venture. Under the Agreement, Indorama Venture is required to contribute manufacturing knowledge and Loop is required to contribute its proprietary science and technology. Specifically, the Company will contribute an exclusive world-wide royalty-free license for ITL to use its proprietary technology to produce 100% sustainably produced PET resin and polyester fiber. ITL meets the accounting definition of a joint venture where neither party has control of the joint venture entity and both parties have joint control over the decision-making process in IVL. As such, the Company uses the equity method of accounting to account for its share of the investment in Loop Indorama Technologies, LLC. As there has been no activity in ILT from the date of inception of September 24, 2018 to February 28, 2019 and, as at February 28, 2019, no transactions have been recorded in the joint venture entity, the carrying value of the equity investment is nil. During the year ended February 28, 2019, the Company entered into multi-year supply agreements with PepsiCo, Coca-Cola’s Cross Entreprise Procurement Group and Danone SA that will enable them to purchase production capacity from the Company’s joint venture facility with IVL in the United States, and incorporate Loop™ PET resin into its product packaging starting in 2020.Also during the year ended February 28, 2019, the Company entered into a multi-year supply agreement with L’Occitane that will enable them to purchase production capacity from the Company’s first European production facility. On April 18, 2019, Loop Innovations, LLC, a wholly-owned subsidiary of Loop Industries, Inc. contributed $500,000 to Loop Indorama Technologies, LLC, the joint venture with Indorama Ventures Holdings LP, USA. |
Credit Facility and Long-Term D
Credit Facility and Long-Term Debt | 12 Months Ended |
Feb. 28, 2019 | |
Debt Disclosure [Abstract] | |
Note 6. Credit Facility and Long-Term Debt | On January 24, 2018, the Company obtained a credit facility, consisting of a CDN$50,000 credit card facility and a CDN$1,400,000 20-year term instalment loan (the “Loan”), from a Canadian bank. The Loan bears interest at the bank’s Canadian prime rate plus 1.5%. By agreement, the Loan is repayable in monthly payments of CDN $5,833 plus interest, until January 2021, at which time it will be subject to renewal. It includes an option allowing for the prepayment of the Loan without penalty. Interest paid amounted to $54,040 during the year ended February 28, 2019 (2018 - $5,125; 2017 - nil). The credit facility is secured by a first ranking hypothec of Loop Canada Inc.’s bank accounts, receivables, inventory, incorporeal rights and property, plant and equipment. In addition, Loop Industries, Inc., Loop Canada Inc.’s parent company, has guaranteed the credit facility and has provided a postponement of any payments that may be made on intercompany loan amounts owed by Loop Canada Inc. to Loop Industries, Inc. The terms of the credit facility require the Company to comply with certain financial covenants. As at February 28, 2019 and 2018, the Company was in compliance with its financial covenants. February 28, February 28, Installment loan $ 1,005,518 $ 1,088,426 Less current portion 53,155 54,649 Non-current portion $ 952,363 $ 1,033,777 Principal repayments due on the Loan over the next five years are as follows: Years ending February 28, Amount 2020 $ 53,155 2021 53,155 2022 53,155 2023 53,155 2024 53,155 Thereafter 739,743 Total $ 1,005,518 |
Convertible Notes
Convertible Notes | 12 Months Ended |
Feb. 28, 2019 | |
Debt Disclosure [Abstract] | |
Note 7. Convertible Notes | First Issuance On November 13, 2018, the Company issued convertible promissory notes (the “November 2018 Notes”), together with related warrants to acquire an additional 50% of the shares issued upon the conversion of the November 2018 Notes (the “November 2018 Warrants”), for an aggregate purchase price of $2,450,000 (the “November 2018 Private Placement”). On January 3, 2019, the Company issued additional convertible promissory notes from this issuance (the “November 2018 Notes”), together with related warrants to acquire an additional 50% of the shares issued upon the conversion of the November 2018 Notes (the “November 2018 Warrants”), for an aggregate purchase price of $200,000 (the “November 2018 Private Placement”). The Company expects to use the net proceeds of the November 2018 Private Placement for general corporate and working capital purposes. The November 2018 Notes carry an interest rate of 8.00% per annum and mature on May 13, 2019 and July 3, 2019 (the “November 2018 Maturity Date”), respectively, upon which date the outstanding principal amount of the November 2018 Notes and all accrued and unpaid interest shall automatically convert into shares of the common stock of the Company at the price per share equal to the lesser of (i) $13.00 and (ii) the average closing price of the Company’s Common Stock on the Nasdaq stock market for the ten days preceding the day to the conversion of the November 2018 Notes (the “November 2018 Conversion Price”). The total number of shares of Common Stock to be issued upon automatic conversion shall equal the outstanding principal amount of the November 2018 Notes and all accrued and unpaid interest on the November 2018 Notes, divided by the November 2018 Conversion Price. The November 2018 Warrants are exercisable for an additional fifty percent (50%) of the shares of Common Stock issued upon the conversion of the November 2018 Notes (the “November 2018 Warrant Shares”). The per share purchase price (the “November 2018 Exercise Price”) for each of the November 2018 Warrant Shares purchasable under the November 2018 Warrants shall be equal to the lesser of (i) $15.00 and (ii) the average closing price of the Company’s Common Stock on the Nasdaq stock market for the ten days preceding the day of the conversion of the November 2018 Notes. The November 2018 Warrants will be issued upon conversion of the November 2018 Notes. The November 2018 Warrants expire eighteen (18) months from the date of the conversion of the November 2018 Notes (the “November 2018 Expiration Date”). The Investors may exercise the November 2018 Warrants at any time prior to the November 2018 Expiration Date. Due to the variable conversion price, the November 2018 Notes contain characteristics of a variable share-forward sales contracts (“VSF”) under the guidance of ASC 480-10. Management has determined that for the purpose of the accounting for the November 2018 Notes, it is more likely than not that the November 2018 Conversion Price will be below $13.00, resulting in the issuance of a variable number of shares, the November 2018 Notes are classified as a liability, and accounted for at amortized cost. Due to the variable number of warrants to be issued and the variable strike price of the November 2018 Warrants, these do not meet the “fixed-for-fixed” criteria under ASC 815-40. Accordingly, the November 2018 Warrants are classified as a derivative liability, initially measured at fair value and subsequently revalued at fair value through the income statement. The fair value was calculated using a Monte Carlo simulation. The aggregate value of the November 2018 Notes and November 2018 Warrants as shown on the consolidated balance sheet are broken down as follows: February 28, 2019 Issue Date November 2018 Convertible Notes - Liability $ 2,495,636 $ 2,495,636 Accrued interest – Liability 60,793 — Deferred financing costs (26,557 ) (63,738 ) Total 2,529,872 2,431,898 November 2018 Warrants - Liability $ 219,531 $ 154,364 The Company recorded an expense upon revaluation of the warrants between the issue date and February 28, 2019 of $65,167 (2018 – nil; 2017 - nil) and is included in operating expenses. The Company recorded interest expense on the November 2018 Notes from the issue date to February 28, 2019 in the amount of $60,793 (2018 – nil; 2017 – nil). The transaction costs relating to this issuance were split pro-rata between the November 2018 Notes and the November 2018 Warrants. The portion relating to the November 2018 Notes were deferred and are being amortized over the life of the convertible notes. The portion relating to the November 2018 Warrants was immediately expensed. Second Issuance On January 15, 2019, the Company issued convertible promissory notes (the “January 2019 Notes”), together with related warrants to acquire an additional 50% of the shares issuable upon the conversion of the January 2019 Notes (the “January 2019 Warrants”), for an aggregate purchase price of $4,500,000 (the “January 2019 Private Placement”). On January 21, 2019, the Company issued additional convertible promissory notes from this issuance (the “January 2019 Notes”), together with related warrants to acquire an additional 50% of the shares issuable upon the conversion of the January 2019 Notes (the “January 2019 Warrants”), for an aggregate purchase price of $400,000 (the “January 2019 Private Placement”). The Company expects to use the net proceeds of the January 2019 Private Placement for general corporate and working capital purposes. The January 2019 Notes carry an interest rate of 8.00% per annum and mature on January 15, 2020 and January 21, 2020 (the “January 2020 Maturity Date”), respectively. At the January 2020 Maturity Date, the outstanding principal amount of the January 2019 Notes shall automatically convert into shares of the common stock of the Company at the price per share equal to $8.10 (the “January 2020 Conversion Price”). The January 2020 Conversion Price may be adjusted in the event that the Company issues common shares in a private sale or offering at a lower price per share than $8.10 within 180 days of the closing date. The lower price would become the new conversion price of the January 2019 Notes, which would impact the number of shares that would be issued. The total number of shares of Common Stock to be issued upon automatic conversion shall equal the outstanding principal amount of the January 2019 Notes divided by the January 2020 Conversion Price. With respect to accrued and unpaid interest at the January 2020 Maturity Date, the Investors have the option of receiving cash or common stock of the Company at that date. Upon the January 2020 Maturity Date, where the Investor elect’s payment of accrued and unpaid interest on the January 2019 Notes in common stock, the price per share shall be equal to the trading price of the common stock at the close of the market on the date immediately preceding the January 2020 Maturity Date. The January 2019 Warrants are exercisable for an additional fifty percent (50%) of the shares of Common Stock issuable upon the conversion of the January 2019 Notes (the “January 2019 Warrant Shares”). The per share purchase price (the “January 2019 Exercise Price”) for each of the January 2019 Warrant Shares purchasable under the January 2019 Warrants shall be equal to 115% of the January 2020 Conversion Price. The January 2019 Warrants will be calculated and issued upon the closing date of the January 2019 Notes, based upon the initial $8.10 conversion price. As such, the Company issued 302,469 warrants at the closing dates of the January 2019 Notes. If the Investor elects to take accrued and unpaid interest on the January 2019 Notes in common stock, additional warrants will be issued to acquire 50% of the shares issued in connection with the accrued and unpaid interest (also referred to as the “January 2019 Warrants”). The January 2019 Warrants expire twenty-four (24) months from the date of their issuance (the “January 2019 Expiration Date”). The Investors may exercise the January 2019 Warrants at any time prior to the January 2019 Expiration Date. A beneficial conversion feature (“BCF”) of a convertible note is normally characterized as the convertible portion feature that provides a rate of conversion that is below market value or “in-the-money” when issued. A BCF related to the issuance of a convertible note is recorded at the issue date. With the conversion feature on the January 2019 Notes being “in the money”, the beneficial conversion feature is measured using the intrinsic value method and is shown as a discount on the carrying amount of the convertible note and is credited to additional paid-in capital. The intrinsic value of the beneficial conversion feature at the issue date of the January 2019 Notes was determined to be $1,200,915. In connection with the January 2019 Warrants issued along with the January 2019 Notes, they meet the requirements of the scope exemptions in ASC 815-10-15-74 and are thus classified as equity upon issuance. The Company determined the fair value of the warrants using the Black-Scholes pricing formula and is shown as a discount on the carrying amount of the convertible note and is credited to additional paid-in capital. The fair value of the warrants at the issue date was determined to be $757,704. The allocated fair values of the beneficial conversion feature and the warrants is recorded in the financial statements as a debt discount from the face amount of the convertible note and such discount is amortized over the expected term of the convertible note and is charged to interest expense. The aggregate values of the beneficial conversion feature, the January 2019 Warrants and the January 2019 Notes are broken down as follows: February 28, 2019 Issue Date January 2019 Convertible Notes – Liability $ 3,126,886 $ 2,941,381 Accrued interest - Liability 49,011 — Deferred financing costs (69,597 ) (79,539 ) 3,106,300 2,861,842 January 2019 Beneficial Conversion Option – Equity 1,200,915 1,200,915 January 2019 Warrants – Equity $ 757,704 $ 757,704 The Company recorded accretion expense between the issue date and February 28, 2019 of $185,505 (2018 – nil; 2017 - nil) and is included in operating expenses. The Company recorded interest expense on the January 2019 Notes from the issue date to February 28, 2019 in the amount of $49,011 (2018 – nil; 2017 – nil). The transaction costs relating to this issuance were split pro-rata between the January 2019 Notes, the beneficial conversion feature and the January 2019 Warrants. The portion relating to the January 2019 Notes were deferred and are being amortized over the life of the convertible notes. The portion relating to the beneficial conversion feature and January 2019 Warrants were recorded as share issuance expenses and offset against paid-in capital. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Feb. 28, 2019 | |
Related Party Transactions [Abstract] | |
Note 8. Related Party Transactions | Advances from majority stockholder Mr. Daniel Solomita, the Company’s majority stockholder and CEO, and companies controlled by him, previously made advances to the Company totaling $278,472 as at February 28, 2017. The advances were unsecured, non-interest bearing with no formal terms of repayment. Also, as at February 28, 2017, accrued compensation totaling $360,000 was owed to Mr. Solomita. During the year ended February 28, 2018, the Company paid to Mr. Solomita or companies controlled by him, as applicable, an aggregate amount of $638,472. As at February 28, 2019, no amounts were owed to Mr. Solomita or to companies controlled by him. 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 (“CEO”). The employment agreement is for an indefinite term. On July 13, 2018, the Company and Mr. Solomita entered into an amendment and restatement of the employment agreement. The amended and restated employment agreement provides for an increase in Mr. Solomita’s base salary and eligibility to participate in an annual cash bonus subject to performance measures. Mr. Solomita’s base salary and bonus opportunity are retroactive effective to March 1, 2018. For the year ended February 28, 2019, compensation expense for the Company’s CEO amounted to $798,791 (2018 -$189,540; 2017 - $210,618), inclusive of the retroactive adjustment in accordance with the employment agreement as amended and restated on July 13, 2018. In addition, the employment agreement provided for a long-term incentive grant of 4,000,000 shares of the Company’s common stock, in tranches of one million shares each, upon the achievement of four performance milestones. This was modified to provide a grant of 4,000,000 restricted stock units covering 4,000,000 shares of the Company’s common stock while the performance milestones remained the same. The Company’s board of directors approved the grant of the restricted stock units, effective and contingent upon approval by the Company’s shareholders at the Company’s 2019 annual meeting, of an increase in the number of shares available for grant under the Plan. The restricted stock units vest upon the achievement of applicable performance milestones, as follows: i) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company’s securities are listed on an exchange or the OTCQX tier of the OTC Markets; ii) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company executes a contract for a minimum quantity of 25,000 M/T of PTA/EG or a PET; iii) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company’s first full-scale production facility is in commercial operation; and iv) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company’s second full-scale production facility is in commercial operation. During the year ended February 28, 2017, it became probable that Mr. Solomita would meet his first milestone. Accordingly, 1,000,000 performance incentive shares of common stock with a fair value of $800,000 were earned and are issuable to Mr. Solomita. This amount was reflected as stock-based compensation expense during the year ended February 28, 2017 based on the grant date fair value. During the years ended February 28, 2019 and 2018, no other milestones became probable of being met and, accordingly, the Company did not record any additional compensation expense. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Feb. 28, 2019 | |
Stockholders' Equity | |
Note 9. Stockholders' Equity | Series A Preferred Stock On February 15, 2016, the Company and Mr. Solomita agreed to amend his employment. The amendment provides that the Company shall issue to Mr. Solomita one share of the Company’s Series A Preferred Stock in exchange for Mr. Solomita agreeing not to terminate his employment with the Company for a period of five years from the date of the amendment. The amendment effectively provides Mr. Solomita with a “change of control” provision over the Company in the event that his currently-held 55.0% of the issued and outstanding shares of common stock of the Company is diluted to less than a majority. In order to issue Mr. Solomita his one share of Series A Preferred Stock under the amendment, the Company created a “blank check” preferred stock. Subsequently, the board of directors of the Company approved a Certificate of Designation creating the Series A Preferred Stock. Subsequently, the Company issued one share of Series A Preferred Stock to Mr. Solomita. The one share of Series A Preferred Stock issued to Mr. Solomita holds a majority of the total voting power so long as Mr. Solomita holds not less than 7.5% of the issued and outstanding shares of common stock of the Company, assuring Mr. Solomita of control of the Company in the event that his currently-held 55.0% of the issued and outstanding shares of common stock of the Company is diluted to a level below a majority. Additionally, the one share of Series A Preferred Stock issued to Mr. Solomita contains protective provisions, which precludes the Company from taking certain actions without Mr. Solomita’s (or that of any person to whom the one share of Series A Preferred Stock is transferred) approval. More specifically, so long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock, voting as a separate class: (a) amend the Articles of Incorporation or, unless approved by the Board of Directors, including by the Series A Director, amend the Company’s Bylaws; (b) change or modify the rights, preferences or other terms of the Series A Preferred Stock, or increase or decrease the number of authorized shares of Series A Preferred Stock; (c) reclassify or recapitalize any outstanding equity securities, or, unless approved by the Board of Directors, including by the Series A Director, authorize or issue, or undertake an obligation to authorize or issue, any equity securities or any debt securities convertible into or exercisable for any equity securities (other than the issuance of stock-options or securities under any employee option or benefit plan); (d) authorize or effect any transaction constituting a Deemed Liquidation (as defined in this subparagraph) under the Articles, or any other merger or consolidation of the Company; (e) increase or decrease the size of the Board of Directors as provided in the Bylaws of the Company or remove the Series A Director (unless approved by the Board of Directors, including the Series A Director); (f) declare or pay any dividends or make any other distribution with respect to any class or series of capital stock (unless approved by the Board of Directors, including the Series A Director); (g) redeem, repurchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any outstanding shares of capital stock (other than the repurchase of shares of common stock from employees, consultants or other service providers pursuant to agreements approved by the Board of Directors under which the Company has the option to repurchase such shares at no greater than original cost upon the occurrence of certain events, such as the termination of employment) (unless approved by the Board of Directors, including the Series A Director); (h) create or amend any stock option plan of the Company, if any (other than amendments that do not require approval of the stockholders under the terms of the plan or applicable law) or approve any new equity incentive plan; (i) replace the President and/or Chief Executive Officer of the Company (unless approved by the Board of Directors, including the Series A Director); (j) transfer assets to any subsidiary or other affiliated entity (unless approved by the Board of Directors, including the Series A Director); (k) issue, or cause any subsidiary of the Company to issue, any indebtedness or debt security, other than trade accounts payable and/or letters of credit, performance bonds or other similar credit support incurred in the ordinary course of business, or amend, renew, increase or otherwise alter in any material respect the terms of any indebtedness previously approved or required to be approved by the holders of the Series A Preferred Stock (unless approved by the Board of Directors, including the Series A Director); (l) modify or change the nature of the Company’s business; (m) acquire, or cause a Subsidiary of the Company to acquire, in any transaction or series of related transactions, the stock or any material assets of another person, or enter into any joint venture with any other person (unless approved by the Board of Directors, including the Series A Director); or (n) sell, transfer, license, lease or otherwise dispose of, in any transaction or series of related transactions, any material assets of the Company or any Subsidiary outside the ordinary course of business (unless approved by the Board of Directors, including the Series A Director). Common Stock For the year ended February 28, 2019 Number of shares Amount Balance, February 28, 2018 33,751,088 $ 3,376 Cashless exercise of stock options 18,821 2 Issuance of shares upon vesting of restricted stock units 35,797 3 Balance, February 28, 2019 33,805,706 $ 3,381 For the year ended February 28, 2018 Number of shares Amount Balance, February 28, 2017 31,451,973 $ 3,146 Issuance of shares for cash 1,829,061 183 Cashless exercise of stock options 115,034 12 Issuance of shares upon exercise of warrants 355,020 35 Balance, February 28, 2018 33,751,088 $ 3,376 During the year ended February 28, 2019: (i) the Company issued 18,821 shares of common stock upon the cashless exercise of 20,000 warrants. (ii) the Company issued 35,797 shares of common stock upon the vesting of restricted stock units. During the year ended February 28, 2018: (i) the Company sold 1,123,266 shares of its common stock at an offering price of $5.25 per share, for gross proceeds of $5,897,188; (ii) the Company sold units consisting of 705,795 shares of its common stock and 171,917 warrants to acquire common stock at an offering price of $12.00 per share, for gross proceeds of $8,469,536; (iii) the Company issued 355,020 shares of common stock ranging from $0.80 to $12.00 per share upon the exercise of warrants, resulting in proceeds to the Company of $1,642,016; and (iv) the Company issued 115,034 shares upon cashless exercises of 122,919 warrants. Share issuance costs for the private placements amounted to $314,243, in aggregate, and were recorded as a reduction of the gross proceeds received. January 2018 Private Placement (the “Private Placement”) On January 9, 2018, the Company commenced a Private Placement Offering whereby the Company would issue units for $12.00 per unit, with each unit consisting of one share of common stock and one warrant to purchase 0.25 shares of common stock at $12.00 per share exercisable sixty days from the date of closing of the private placement round in the event that the Company does not file the Resale Registration Statement or, prior to that date, if the holder elects to forego its registration rights. The warrant expires one year from the date of issuance. The Purchase Agreement provides the unit holder with certain registration rights, including resale registration rights, with respect to the common stock issued in connection with the Private Placement, as well as shares issuable upon the exercise of the warrants, and standard anti-dilution protection for a period of ninety days, following the date of closing of the private placement round, which in the event the Company issues common stock for consideration of less than $12.00 per share, allows for an adjustment to the conversion ratio. At the closing of round one of the Private Placement on January 11, 2018, the Company issued for an aggregate 617,667 common shares and warrants to purchase up to 154,416 shares of common stock, resulting in gross proceeds of $7,412,000. On January 22, 2018, warrants were exercised for 31,250 common shares for total proceeds of $375,000. At the closing of round two of the Private Placement on January 30, 2018, the Company issued for an aggregate 70,000 common shares and warrants to purchase up to 17,500 shares of common stock, resulting in gross proceeds of $840,000. No warrants have been exercised. In April 2018, as the Company did not file the Resale Registration Statements, the aforementioned warrants to purchase 140,666 common shares, with an exercise price of $12.00 per share and an expiration date of no later than January 30, 2019, became exercisable. |
Share-Based Payments
Share-Based Payments | 12 Months Ended |
Feb. 28, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Note 10. Share-Based Payments | Stock Options The following tables summarizes the continuity of the Company’s stock options during the years ended February 28, 2019 and 2018: 2019 2018 Number of stock options Weighted average exercise price Number of stock options Weighted average exercise price Outstanding, beginning of period 2,374,581 $ 7.99 1,010,000 $ 0.96 Granted 39,902 9.67 2,310,000 9.23 Exercised (20,000 ) 0.80 (245,034 ) 0.80 Forfeited (369,583 ) 11.49 (620,385 ) 4.97 Expired (62,500 ) 4.80 (80,000 ) 0.80 Outstanding, end of period 1,962,400 $ 7.53 2,374,581 $ 7.99 Exercisable, end of period 1,126,664 $ 7.72 841,249 $ 6.32 2019 2018 Exercise price Number of stock options outstanding Weighted average remaining life Number of stock options outstanding Weighted average remaining life $ 0.80 582,081 6.76 602,081 7.75 $ 3.00 — — 12,500 0.25 $ 5.25 380,000 8.50 530,000 9.49 $ 8.75 26,693 10.0 — — $ 11.52 13,209 9.36 — — $ 12.00 700,000 8.54 700,000 9.54 $ 13.49 193,750 0.17 250,000 9.63 $ 13.89 66,667 0.01 280,000 9.69 Outstanding, end of period 1,962,400 6.91 2,374,581 9.05 Exercisable, end of period 1,126,664 5.99 841,249 7.67 The Company applies the fair value method of accounting for stock-based compensation awards granted. Fair value is calculated based on a Black-Scholes option pricing model. The principal components of the pricing model were as follows: 2019 2018 2017 Exercise price $ 8.75 to 11.52 $ 5.25 to 13.89 $ 3.00 Risk-free interest rate 2.70% to 2.82% 1.46 to 2.15% 0.91 % Expected dividend yield 0 % 0 % 0 % Expected volatility 78 % 80% to 94% 122 % Expected life 6.5 to 7 years 3 to 6 years 2 years During the year ended February 28, 2019, stock-based compensation expense attributable to stock options amounted to $3,176,786 (2018 - $6,281,319; 2017 - $135,673) and is included in operating expenses. Restricted Stock Units The following table summarizes the continuity of the restricted stock units (“RSUs”) during the years ended February 28, 2019 and 2018: 2019 2018 Number of units Weighted average fair value price Number of units Weighted average fair value price Outstanding, beginning of period 34,102 $ 13.00 — $ — Granted 406,188 8.80 34,102 13.00 Vested (35,797 ) 13.06 — — Forfeited (1,625 ) 12.31 — — Outstanding, end of period 402,868 $ 8.77 34,102 $ 13.00 The Company applies the fair value method of accounting for awards granted through the issuance of restricted stock units. Fair value is calculated based on closing share price at grant date multiplied by the number of restricted stock unit awards granted. During the year ended February 28, 2019, stock-based compensation attributable to RSUs amounted to $808,374 (2018 - $265,994; 2017 – nil) and is included in operating expenses. |
Equity Incentive Plan
Equity Incentive Plan | 12 Months Ended |
Feb. 28, 2019 | |
Equity [Abstract] | |
Note 11. Equity Incentive Plan | On July 6, 2017, the Company adopted the 2017 Equity Incentive Plan (the “Plan”). The Plan permits the granting of warrants, stock options, stock appreciation rights and restricted stock units to employees, directors and consultants of the Company. A total of 3,000,000 shares of common stock were initially reserved for issuance under the Plan at July 6, 2017, with annual automatic share reserve increases, as defined in the Plan, amounting to the lessor of (i) 1,500,000 shares, (ii) 5% of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) or such number of shares determined by the Administrator of the Plan, effective 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 awards granted, the share price pursuant to the awards and the vesting conditions and period. The awards, 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 options shall not exceed 5 years. The following table summarizes the continuity of the Company’s Equity Incentive Plan units during the years ended February 28, 2019 and 2018: 2019 2018 Number of units Number of units Outstanding, beginning of period 1,735,898 — Issuance upon registration — 3,000,000 Automatic share reserve increase 1,500,000 — Units granted (446,090 ) (1,264,102 ) Units forfeited 371,208 — Units expired 62,500 — Outstanding, end of period 3,223,516 1,735,898 |
Warrants
Warrants | 12 Months Ended |
Feb. 28, 2019 | |
Equity [Abstract] | |
Note 12. Warrants | 2019 2018 Number of warrants Weighted average exercise price Number of warrants Weighted average exercise price Outstanding, beginning of period 140,667 $ 12.00 637,670 $ 6.00 Issued 802,469 10.74 171,917 12.00 Exercised — — (225,020 ) 6.83 Expired (140,667 ) 12.00 (443,900 ) 6.00 Outstanding, end of period 802,469 $ 10.74 140,667 $ 12.00 The expiration dates of the warrants outstanding as at February 28, 2019 are as follows: 2019 Number of warrants Weighted average exercise price January 15, 2020 277,778 $ 9.32 January 21, 2020 24,691 9.32 February 25, 2021 200,000 11.00 February 25, 2021 300,000 12.00 Outstanding, end of period 802,469 $ 10.74 |
Income Taxes
Income Taxes | 12 Months Ended |
Feb. 28, 2019 | |
Income Tax Disclosure [Abstract] | |
Note 13. Income Taxes | The components of the Company’s loss before taxes are summarized below: Years ended February 28, 2019 2018 2017 U.S. operations $ (8,948,305 ) $ (8,509,651 ) $ (2,155,934 ) Foreign operations (8,588,106 ) (5,527,727 ) (1,958,067 ) Loss before taxes $ (17,536,411 ) $ (14,037,378 ) $ (4,114,001 ) A reconciliation from the statutory U.S. income tax rate and the Company’s effective income tax rate, as computed on loss before taxes, is as follows: Years ended February 28, 2019 2018 2017 Statutory Federal rate (21.0% in 2019; 32.7% in 2018; 35.0% in 2017) Federal income tax at statutory rate $ (3,682,646 ) $ (4,585,497 ) $ (1,439,900 ) Effect of foreign jurisdiction (308,046 ) 320,769 40,018 Non-deductible expenses 888,749 2,169,384 (48,326 ) Tax credits related to research and development expenditures (387,326 ) (146,757 ) — Impact of Tax Cuts and Jobs Act Enactment — 876,812 — Unrecognized tax benefit of net operating losses and other available deductions 3,489,269 1,365,289 1,448,208 Effective income tax expense $ — $ — $ — Current $ — $ — $ — Deferred $ — $ — $ — On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (“U.S. tax reform”) that lowers the statutory tax rate on U.S. earnings to 21%, taxes historic foreign earnings at a reduced rate of tax, establishes a territorial tax system and enacts new taxes associated with global operations. The impact of enactment of U.S. tax reform was recorded on a provisional basis as the legislation provides for additional guidance to be issued by the U.S. Treasury Department on several provisions including the computation of the transition tax. The Company’s Controlled Foreign Corporations (“CFCs”), being Loop Canada Inc. and 9449710 Canada Inc., were deficit E&T corporations, and as such no income was recognized by Loop Industries during the year ended February 28, 2019 (2018 – nil; 2017 – nil). No further inclusions were made during the year ended February 28, 2019 based on guidance issued during the year. Additional guidance may be issued after February 28, 2019 and any resulting effects will be recorded at that time. Additionally, as part of tax reform, the U.S. has enacted a minimum tax on foreign earnings (“global intangible low-taxed income”). The Company has not made an accrual for the deferred tax aspects of this provision as Loop Industries’ CFCs have suffered net tested losses. The enactment of U.S. tax reform reduced the corporate tax rate to 21%, effective January 1, 2018, for all corporations. US GAAP requires the effect of a change in tax laws or rates to be recognized as of the date of enactment, therefore the Company revalued its deferred tax assets and liabilities as at December 22, 2017. As a result of the revaluation, the Company recorded a tax expense of $876,812 during the year ended February 28, 2018, to reflect the revaluation of deferred taxes. However, as in prior years, a valuation allowance was provided against the deferred tax asset. The Company has accumulated the following losses for income tax purposes which may be carried forward to reduce U.S. Federal and Canadian Federal and provincial taxable income in future years, and will expire as follows: U.S. Canada Federal Federal Québec 2035 $ 56,699 $ — $ — 2036 521,398 — — 2037 4,419,150 278,623 278,623 2038 1,560,483 3,096,139 3,096,139 2039 — 4,268,317 4,281,955 Indefinite 8,038,528 — — $ 14,596,258 $ 7,643,079 $ 7,656,717 In addition, the Company has approximately CDN$4,679,187 of research and development expenditures for Canadian Federal tax purposes and CDN$4,670,034 for Québec tax purposes that are available to reduce taxable income in future years and have an unlimited carry forward period, the benefit of which has not been reflected in these financial statements. Research and development expenditures are subject to audit by the taxation authorities and accordingly, these amounts may vary. The tax effect of temporary differences between US GAAP accounting and federal income tax accounting creating deferred income tax assets and liabilities were as follows: As at February 28, 2019 2018 Deferred tax assets Canada net operating loss carry forward $ 2,026,984 $ 1,127,381 U.S. net operating loss carry forward 3,165,937 1,377,008 Accrual and reserves 118,309 — Property, plant and equipment — 136,200 Research and development expenditures and credits 1,058,010 472,608 Unrealized foreign exchange — 9,462 Other 38,418 — Deferred tax assets 6,407,658 3,122,659 Deferred tax liabilities Property, plant and equipment (41,636 ) (2,367 ) Intangibles (34,785 ) (1,489 ) Accrual and reserves — (49,236 ) Investment tax credits — — Unrealized foreign exchange — (8,697 ) Deferred tax liabilities (76,421 ) (61,789 ) Deferred tax assets, net 6,331,239 3,060,870 Valuation allowance (6,331,239 ) (3,060,870 ) Deferred tax assets, net $ — $ — Assessment of the amount of value assigned to the Company's deferred tax assets under the applicable accounting rules is judgmental. The Company is required to consider all available positive and negative evidence in evaluating the likelihood that the Company will be able to realize the benefit of its deferred tax assets in the future. Such evidence includes scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and the results of recent operations. Since this evaluation requires consideration of events that may occur some years into the future, there is an element of judgment involved. The realization of the Company's deferred tax assets, including those related to income tax loss carryforwards, is dependent on generating sufficient taxable income in future periods. Management does not believe that it is more likely than not that future taxable income will be sufficient to allow it to recover substantially all of the value assigned to its deferred tax assets. Accordingly, the Company has provided for a valuation allowance of the Company's deferred tax asset. For the years ended February 28, 2019, 2018 and 2017, the valuation allowance increased by $3,270,369, $1,446,422 and $1,247,252, respectively. The tax years subject to examination by major tax jurisdiction include the years 2016 and forward by the U.S. Internal Revenue Service and most state jurisdictions, and the years 2016 and forward for the Canadian jurisdiction. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Feb. 28, 2019 | |
Fair Value Disclosures [Abstract] | |
Note 14. Fair Value of Financial Instruments | The following table presents the fair value of the Company’s financial liabilities and warrants at February 28, 2019: Fair Value Measurements at February 28, 2019 Carrying Amount Fair Value Level in the hierarchy Instruments measured at fair value: Warrants (First Issuance) $ 219,531 $ 219,531 Level 3 Instruments measured at amortized cost: Long-term debt 1,005,518 1,005,518 Level 2 Convertible notes (First Issuance) 2,495,636 2,650,00 Level 2 Convertible notes (Second Issuance) $ 3,126,886 $ 3,150,000 Level 2 The Warrants under the First Issuance of Convertible Notes represent a Level 3 in the fair value hierarchy. The Warrants were valued using a Monte Carlo simulation using a volatility of 71.5%. The Company recorded a loss on revaluation from the date of issuance to February 28, 2019 of $65,167 and has been included in operating expenses. |
Contingencies
Contingencies | 12 Months Ended |
Feb. 28, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Note 15. Contingencies | On January 27, 2017, two individuals (“Plaintiffs”), filed a claim against the Company in the Los Angeles Superior Court (“Court”), seeking damages for breach of implied covenant of good faith and fair dealing, breach of contract, and promissory fraud, asserting entitlement to shares of the Company’s common stock. On February 25, 2019, the Company and the Plaintiffs entered into a settlement agreement and release (“Settlement Agreement”), which sets forth the parties’ agreement in principle for settlement. Through the Settlement Agreement, Plaintiffs, the Company and certain other parties to the Settlement Agreement agreed to mutual releases of any and all claims. Pursuant to the terms of the Settlement Agreement, without agreeing that any of the Plaintiffs’ claims have merit, the Company agreed to issue to the Plaintiffs 150,000 shares of the Company’s common stock (“Plaintiff Common Shares”) and 500,000 warrants exercisable for shares of the Company’s common stock (“Plaintiff Warrants”). The Plaintiff Common Shares will be restricted upon issuance, but within 180 days following the date of the Settlement Agreement, the Company has agreed to file and use its reasonable best efforts to have declared effective a registration statement to register the Plaintiff Common Shares and the shares of the Company’s common stock underlying the Plaintiff Warrants. The Company also agreed to maintain such registration statement for 2 years from the date of effectiveness unless the Plaintiffs sell or otherwise transfer the shares covered by such registration statement prior to the two-year anniversary. 300,000 of the Plaintiff Warrants are exercisable for shares of the Company’s common stock at an exercise price of $12.00 per share for a period of 24 months following the date of the Settlement Agreement. The remaining 200,000 Plaintiff Warrants are exercisable for shares of the Company’s common stock at an exercise price of $11.00 per share for a period of 24 months, but in the event the Company’s 5-day average trading price during any period in the first 18 months following the date of the Settlement Agreement is above $11 per share, then the exercise term of such warrants shall automatically be reduced to 18 months instead of 24 months. In connection with the legal settlement, the Company recorded an expense in the amount of $4,041,627, based on the fair value of the Plaintiff Common Shares and Plaintiff Warrants that were issued on February 25, 2019, under the terms of the Settlement Agreement. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Feb. 28, 2019 | |
Subsequent Events [Abstract] | |
Note 16. Subsequent Events | On February 27, 2019, Loop Industries, Inc. entered into a Securities Purchase Agreement with a single institutional investor, pursuant to which the Company has agreed to issue and sell to the Purchaser, in a registered direct offering (“Offering”), an aggregate of 600,000 shares (“Shares”) of the Company’s common stock at a per share purchase price of $8.55 per share, for aggregate net proceeds of approximately $4.2 million, after deducting placement agent fees and estimated offering expenses payable by the Company of approximately $0.9 million. The Offering closed on March 1, 2019. The Company intends to use the net proceeds from the Offering for general corporate purposes and working capital. On April 5, 2019, the Company and certain investors (the "Investors") that purchased convertible notes (the "November 2018 Notes") from the Company pursuant to the Note and Warrant Purchase Agreement dated as of November 13, 2018 or January 3, 2019 (the "2018 Note Purchase Agreement"), signed an Amendment, Surrender and Conversion Agreement (“Conversion Agreement”) whereby the parties agreed to convert the November 2018 Notes, and all accrued and unpaid interest, into shares of the common stock of the Company at a newly agreed conversion price per share equal to $8.55 (the “New Conversion Price”), replacing the previous formula which converted the November 2018 Notes and accrued and unpaid interest into shares of the common stock of the Company at the price per share equal to the lesser of (i) $13.00 and (ii) the average closing price of the Company’s Common Stock on the Nasdaq stock market for the ten days preceding the day to the conversion of the November 2018 Notes. The Conversion Agreement stipulates that the interest on the November 2018 Notes would be paid up to and including April 3, 2019. Pursuant to the 2018 Note Purchase Agreement, the Investors also received related warrants (the “November 2018 Warrants”) to acquire an additional 50% of the shares issued upon the conversion of the November 2018 Notes. As part of the Conversion Agreement, the exercise price of the November 2018 Warrants will also be the New Conversion Price, replacing the previous formula which established the conversion price for the November 2018 Warrants as the lesser of (i) $15.00 and (ii) the average closing price of the Company’s Common Stock on the Nasdaq stock market for the ten days preceding the day of the conversion of the November 2018 Notes. As a result of the Conversion Agreement, the Company issued 319,326 shares of common stock of the Company and issued 159,663 warrants. The November 2018 Warrants expire eighteen (18) months from the date of the conversion of the November 2018 Notes. On April 18, 2019, Loop Innovations, LLC, a wholly-owned subsidiary of Loop Industries, Inc. contributed $500,000 to Loop Indorama Technologies, LLC, the joint venture with Indorama Ventures Holdings LP, USA. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Feb. 28, 2019 | |
Accounting Policies [Abstract] | |
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 at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include 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 the fair value of convertible notes and related warrants. |
Fair value of financial instruments | The Company applies Financial Accounting Standards Board (“FASB”) Codification (“ASC”) 820, Fair Value Measurement There are three levels within the hierarchy that may be used to measure fair value: Level 1 – A quoted price in an active market for identical assets or liabilities. Level 2 – Significant pricing inputs are observable inputs, which are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Level 3 – Significant pricing inputs are unobservable inputs, which are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value measurements level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used should maximize the use of observable inputs and minimize the use of unobservable inputs. The valuation methodologies described above may produce a fair value calculation that may not be indicative of future net realizable value or reflective of future fair values. The fair value of cash and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturity. |
Convertible notes | Distinguishing Liabilities from Equity Instruments Issued The Company applies the guidance in ASC Topic 480 to determine the classification of financial instruments issued. The Company first determines if the instruments should be classified as liabilities under this guidance based on the redemption features, if mandatorily redeemable or not, and the method of redemption, if in cash, a variable number of shares or a fixed number of shares. If the terms proved that an instrument is mandatorily redeemable in cash, or the holder can compel a settlement in cash, or will be settled in a variable number of shares predominantly based on a fixed monetary amount, the instrument is generally classified as a liability. Instruments that are settled by issuing a fixed number of shares are generally classified as equity instruments. In some cases, the instruments issued contain settlement features that differ depending upon the prevailing price of the Company’s shares at the date of settlement. Depending on the share price, the instrument will be settled either in a manner consistent with ASC Topic 480 liability treatment, by issuing a variable number of shares based on a fixed monetary amount, or in a manner consistent with ASC Topic 480 treatment for an equity instrument, by issuing a fixed number of shares if the share price is above or below certain levels. In these cases, the Company assesses the likelihood of the various possible settlement outcomes at the inception of the instrument. The classification of the instrument is based on the outcome that is more likely than not to occur. Factors that the Company considers in evaluating the likelihood of the outcomes include: The terms of the instrument, including its maturity date and the formula for adjustments to the range. The volatility of the Company’s stock. The relationship between the price of the Company’s stock on the inception date and fixed prices or ranges the low and high end of the original range. Historical and expected dividend levels. When warrants or similar instruments are issued, the Company applies the guidance in ASC Topic 815 to determine if the warrants should be classified as equity instruments or as derivative instruments. Generally, warrants that are both indexed to the Company’s own stock and that would be classified as equity instruments are not classified as derivative instruments under this guidance. A key element to consider in determining if a warrant would be considered indexed to the Company’s own stock is if the warrants settlement amount is equal to the difference between the fair value of a fixed number of equity shares and a fixed monetary amount. This criterion is sometimes known as the “fixed-for fixed” criteria. In cases where the fixed for fixed criteria are not met, the warrants are classified as derivative instruments. Convertible liabilities are also assessed to determine if they contain a beneficial conversion feature. A beneficial conversion feature (“BCF”) of a convertible note is normally characterized as the convertible portion feature that provides a rate of conversion that is below market value or “in-the-money” when issued. A BCF related to the issuance of a convertible note is recorded at is intrinsic value at the issue date. Initial measurement Instruments are initially measured at fair value. If multiple instruments are issued together, the aggregate proceeds are allocated first to derivative instruments or any instrument that will be subsequently accounted for at fair value and the remainder is to the allocated to the various instruments based on their relative fair value. Subsequent measurement Instruments initially classified as liabilities are subsequently measured at the present value of the amount to be paid, either in cash or by issuing a variable number of shares based on a fixed monetary amount, and at settlement, accruing interest cost using the rate implicit at inception. Derivative instruments are recorded at fair value at each reporting period and the variations in fair value recorded in income. |
Deferred financing costs and other transaction costs | Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining commitments for financing. These fees are amortized as a component of interest expense over the terms of the respective financing agreements, including convertible notes, on a straight-line basis. Unamortized deferred financing fees are expensed in full when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not be successful. Deferred financing fees related to the liability portion of Convertible Notes are deducted from their related liabilities on the balance sheet. Transaction costs associated with the equity portion of convertible notes are reflected as a charge to deficit or as a reduction of accumulated paid-in-capital. The cost of issuing equity is reflected as a reduction of accumulated paid-in-capital. |
Foreign currency translations and transactions | The accompanying consolidated financial statements are presented in U.S. dollars, the functional 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 and loss (“OCI”). As a result, foreign currency exchange fluctuations may impact operating expenses. The Company currently has not engaged in any currency hedging activities. For transactions and balances, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency of the entity at the prevailing exchange rate at the reporting date. Non-monetary assets and liabilities, and revenue and expense items denominated in foreign currencies are translated into the functional currency using the exchange rate prevailing at the dates of the respective transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated statements of operations and comprehensive loss, except for gains or losses arising from the translation of intercompany balances denominated in foreign currencies that forms part in the net investment in the subsidiary which are included in OCI. |
Value added 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 February 28, 2019, the computed net recoverable sale taxes amounted to $82,992 (2018 – $177,903). In addition, Loop Canada is entitled to receive government assistance in the form of refundable and non-refundable research and development tax credits from the federal and provincial taxation authorities, based on qualifying expenditures incurred during the fiscal year. The refundable credits are from the provincial taxation authorities and are not dependent on its ongoing tax status or tax position and accordingly are not considered part of income taxes. The Company records refundable tax credits as a reduction of research and development expenses when the Company can reasonably estimate the amounts and it is more likely than not, they will be received. During the year ended February 28, 2019, the Company recorded $305,592 (2018 – $221,202; 2017 - $148,547) as a reduction of research and development expenses. During the year ended February 28, 2019, research and development tax credits received by the Company from taxation authorities amounted to nil (2018 – nil; 2017 - $88,080). As at February 28, 2019, research and development tax credits receivable from taxation authorities amounted to $410,997 (2018 - $109,298). Research and development expenses are also presented net of eligible government grants from the federal and provincial taxation authorities. Government grants received during the year ended February 28, 2019 were $73,581 and government grants receivable at February 28, 2019 amounted to nil (2018 – $4,000 and $73,581, respectively; 2017 - nil and nil, respectively). The Company is also eligible for non-refundable research and development tax credits from the federal taxation authorities which can be used as a reduction of income tax expense in any given year to the extent the Company has taxable income. The Company has not had taxable income since inception and has not been able to use these non-refundable federal research and development tax credits. During the year ended February 28, 2019, the Company was eligible for non-cash research and development tax credits in the amount of $255,975 (2018 - $248,690; 2017 – $25,227). |
Property, plant and equipment | Property, plant and equipment are recorded at cost and are amortized over their estimated useful lives, unless the useful life is indefinite, using the straight-line method over the following periods: Building 30 years Land Indefinite Office equipment and furniture 8 years Machinery and equipment 3-8 years Building improvements 5 years Costs related to repairs and maintenance of property, plant and equipment are expensed in the period in which they are incurred. Upon sale or disposal, the Company writes off the cost of the asset and the related amount of accumulated depreciation. The resulting gain or loss is included in the consolidated statement of operations and comprehensive loss. Management assesses the carrying value of property, plant and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated recoverable value. As at February 28, 2019, 2018 and 2017, the Company determined that there were no indicators of impairment and did not recognize any impairment of its property, plant and equipment. |
Intangible assets | Intangible assets are recorded at cost and are amortized over their estimated useful lives, unless the useful life is indefinite, using the straight-line method over 7 years. The Company reviews intangible assets subject to amortization at least annually to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. If the carrying value of an asset exceeds its undiscounted cash flows, the Company writes down the carrying value of the intangible asset to its fair value in the period identified. If the carrying value of assets is determined not to be recoverable, the Company records an impairment loss equal to the excess of the carrying value over the fair value of the assets. The Company’s estimate of fair value is based on the best information available, in the absence of quoted market prices. The Company generally calculates fair value as the present value of estimated future cash flows that the Company expects to generate from the asset using a discounted cash flow income approach as described above. If the estimate of an intangible asset’s remaining useful life is changed, the Company amortizes the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. |
Stock-based compensation | Loop Industries periodically issues stock options to employees and non-employees in non-capital raising transactions for services and financing costs. The Company accounts for stock options granted to employees based on the authoritative guidance provided by the FASB wherein the fair value of the award is measured on the grant date and where there are no performance conditions, recognized as compensation expense on the straight-line basis over the vesting period and where performance conditions exist, recognize compensation expense when it becomes probable that the performance condition will been met. Forfeitures on share-based payments are accounted for by recognizing forfeitures as they occur. The Company accounts for stock options granted to non-employees in accordance with the authoritative guidance of the FASB wherein the fair value of the stock compensation is based upon the measurement date determined as the earlier of the date at which either a) a commitment is reached with the counterparty for performance or b) the counterparty completes its performance. The Company estimates the fair value of restricted stock unit awards to employees and directors based on the closing market price of its common stock on the date of grant. The fair value of the stock options granted are estimated using the Black-Scholes-Merton Option Pricing (“Black-Scholes”) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options, and future dividends. Stock-based compensation expense is recorded based on the value derived from the Black-Scholes model and on actual experience. The assumptions used in the Black-Scholes model could materially affect stock-based compensation expense recorded in the current and future periods. |
Income taxes | The Company calculates its provision for income tax on the basis of the tax laws enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income, in accordance with FASB ASC 740, Income Taxes |
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 years ended February 28, 2019, 2018 and 2017 amounted to $3.5 million,$6.7 million and $1.5 million, respectively, and are net of government research and development tax credits and government grants from the federal and provincial taxation authorities accrued and recorded during the year based on qualifying expenditures incurred during the fiscal year. |
Net earnings (loss) per share | The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share For the years ended February 28, 2019 and 2018, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at February 28, 2019, the potentially dilutive securities consisted of 1,962,400 outstanding stock options (2018 – 2,374,581; 2017 – 1,010,000), 402,868 outstanding restricted stock units (2018 – 34,102; 2017 - nil) and 802,469 outstanding warrants (2018 – 140,667; 2017 – 637,670). |
Recently accounting pronouncements | Recently adopted accounting pronouncements In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting a. The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. b. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. c. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. For public business entities, the amendments in this Update are effective for fiscal years beginning after Recently issued accounting pronouncements In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Revenue from Contracts with Customers In July 2018, the FASB issued ASU 2018-09, Codification Improvements , Compensation – Stock Compensation – Income Taxes In February 2016, the FASB issued ASU 2016-02, “Leases,” amended in July by ASU 2018-10, “Codification Improvements to Topic 842, Leases,” ASU 2018-11, “Targeted Improvements,” and ASU 2018-20, “Narrow-Scope Improvements for Lessors,” which requires lessees to recognize leases on the balance sheet while continuing to recognize expenses in the income statement in a manner similar to current accounting standards. For lessors, the new standard modifies the classification criteria and the accounting for sales-type and direct financing leases. Enhanced disclosures will also be required to give financial statement users the ability to assess the amount, timing, and uncertainty of cash flows arising from leases. This ASU may either be adopted on a modified retrospective approach at the beginning of the earliest comparative period, or through a cumulative-effect adjustment at the adoption date. This update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is required to adopt these standards effective March 1, 2019, but it still in the process of determining the quantitative impact on the Company’s consolidated financial statements. The Company will elect to apply the package of practical expedients that allows us not to reassess whether expired or existing contracts contain leases, the classification of these leases and whether previously capitalized initial direct costs would qualify for capitalization under Accounting Standards Codification (or “ ASC |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Feb. 28, 2019 | |
Accounting Policies [Abstract] | |
Property and equipment estimated useful lives | Building 30 years Land Indefinite Office equipment and furniture 8 years Machinery and equipment 3-8 years Building improvements 5 years |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Feb. 28, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment, net | As at February 28, 2019 Cost Accumulated depreciation Net book value Building $ 1,882,665 $ (68,596 ) $ 1,814,069 Land 232,699 — 232,699 Building Improvements 383,985 (119,889 ) 264,096 Machinery and equipment 3,834,338 (841,236 ) 2,993,102 Office equipment and furniture 117,088 (49,791 ) 67,297 Outstanding, end of period $ 6,450,775 $ (1,079,512 ) $ 5,371,263 As at February 28, 2018 Cost Accumulated depreciation Net book value Building $ 1,935,423 $ (6,009 ) $ 1,929,414 Land 239,239 — 239,239 Building Improvements 377,253 (225,298 ) 151,955 Machinery and equipment 2,189,195 (536,222 ) 1,652,973 Office equipment and furniture 101,756 (38,434 ) 63,322 Outstanding, end of period $ 4,842,866 $ (805,963 ) $ 4,036,903 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Feb. 28, 2019 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Intangible assets, net | As at February 28, As at February 28, 2019 2018 Intangible assets, as cost - beginning of period $ 533,369 $ 445,050 Intangible assets, accumulated depreciation - beginning of period (200,629 ) (137,050 ) 332,740 308,000 Add: Additions in the year 153,477 88,319 Deduct: Amortization of intangibles (59,851 ) (63,579 ) Deduct: Impairment of intangibles (298,694 ) — $ 127,672 $ 332,740 |
Credit Facility and Long-Term_2
Credit Facility and Long-Term Debt (Tables) | 12 Months Ended |
Feb. 28, 2019 | |
Debt Disclosure [Abstract] | |
Credit facility and long-term debt | February 28, February 28, Installment loan $ 1,005,518 $ 1,088,426 Less current portion 53,155 54,649 Non-current portion $ 952,363 $ 1,033,777 |
Principal repayments due on the loan | Years ending February 28, Amount 2020 $ 53,155 2021 53,155 2022 53,155 2023 53,155 2024 53,155 Thereafter 739,743 Total $ 1,005,518 |
Convertible Notes (Tables)
Convertible Notes (Tables) | 12 Months Ended |
Feb. 28, 2019 | |
Debt Disclosure [Abstract] | |
Convertible notes | February 28, 2019 Issue Date November 2018 Convertible Notes - Liability $ 2,495,636 $ 2,495,636 Accrued interest – Liability 60,793 — Deferred financing costs (26,557 ) (63,738 ) Total 2,529,872 2,431,898 November 2018 Warrants - Liability $ 219,531 $ 154,364 February 28, 2019 Issue Date January 2019 Convertible Notes – Liability $ 3,126,886 $ 2,941,381 Accrued interest - Liability 49,011 — Deferred financing costs (69,597 ) (79,539 ) 3,106,300 2,861,842 January 2019 Beneficial Conversion Option – Equity 1,200,915 1,200,915 January 2019 Warrants – Equity $ 757,704 $ 757,704 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Feb. 28, 2019 | |
Stockholders' Equity | |
Stock issued during the period | For the year ended February 28, 2019 Number of shares Amount Balance, February 28, 2018 33,751,088 $ 3,376 Cashless exercise of stock options 18,821 2 Issuance of shares upon vesting of restricted stock units 35,797 3 Balance, February 28, 2019 33,805,706 $ 3,381 For the year ended February 28, 2018 Number of shares Amount Balance, February 28, 2017 31,451,973 $ 3,146 Issuance of shares for cash 1,829,061 183 Cashless exercise of stock options 115,034 12 Issuance of shares upon exercise of warrants 355,020 35 Balance, February 28, 2018 33,751,088 $ 3,376 |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 12 Months Ended |
Feb. 28, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock option activity | 2019 2018 Number of stock options Weighted average exercise price Number of stock options Weighted average exercise price Outstanding, beginning of period 2,374,581 $ 7.99 1,010,000 $ 0.96 Granted 39,902 9.67 2,310,000 9.23 Exercised (20,000 ) 0.80 (245,034 ) 0.80 Forfeited (369,583 ) 11.49 (620,385 ) 4.97 Expired (62,500 ) 4.80 (80,000 ) 0.80 Outstanding, end of period 1,962,400 $ 7.53 2,374,581 $ 7.99 Exercisable, end of period 1,126,664 $ 7.72 841,249 $ 6.32 |
Stock options outstanding | 2019 2018 Exercise price Number of stock options outstanding Weighted average remaining life Number of stock options outstanding Weighted average remaining life $ 0.80 582,081 6.76 602,081 7.75 $ 3.00 — — 12,500 0.25 $ 5.25 380,000 8.50 530,000 9.49 $ 8.75 26,693 10.0 — — $ 11.52 13,209 9.36 — — $ 12.00 700,000 8.54 700,000 9.54 $ 13.49 193,750 0.17 250,000 9.63 $ 13.89 66,667 0.01 280,000 9.69 Outstanding, end of period 1,962,400 6.91 2,374,581 9.05 Exercisable, end of period 1,126,664 5.99 841,249 7.67 |
Valuation assumptions | 2019 2018 2017 Exercise price $ 8.75 to 11.52 $ 5.25 to 13.89 $ 3.00 Risk-free interest rate 2.70% to 2.82% 1.46 to 2.15% 0.91 % Expected dividend yield 0 % 0 % 0 % Expected volatility 78 % 80% to 94% 122 % Expected life 6.5 to 7 years 3 to 6 years 2 years |
RSU activity | 2019 2018 Number of units Weighted average fair value price Number of units Weighted average fair value price Outstanding, beginning of period 34,102 $ 13.00 — $ — Granted 406,188 8.80 34,102 13.00 Vested (35,797 ) 13.06 — — Forfeited (1,625 ) 12.31 — — Outstanding, end of period 402,868 $ 8.77 34,102 $ 13.00 |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 12 Months Ended |
Feb. 28, 2019 | |
Equity [Abstract] | |
Equity incentive plan | 2019 2018 Number of units Number of units Outstanding, beginning of period 1,735,898 — Issuance upon registration — 3,000,000 Automatic share reserve increase 1,500,000 — Units granted (446,090 ) (1,264,102 ) Units forfeited 371,208 — Units expired 62,500 — Outstanding, end of period 3,223,516 1,735,898 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Feb. 28, 2019 | |
Equity [Abstract] | |
Warrant activity | 2019 2018 Number of warrants Weighted average exercise price Number of warrants Weighted average exercise price Outstanding, beginning of period 140,667 $ 12.00 637,670 $ 6.00 Issued 802,469 10.74 171,917 12.00 Exercised — — (225,020 ) 6.83 Expired (140,667 ) 12.00 (443,900 ) 6.00 Outstanding, end of period 802,469 $ 10.74 140,667 $ 12.00 |
Warrants outstanding | 2019 Number of warrants Weighted average exercise price January 15, 2020 277,778 $ 9.32 January 21, 2020 24,691 9.32 February 25, 2021 200,000 11.00 February 25, 2021 300,000 12.00 Outstanding, end of period 802,469 $ 10.74 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Feb. 28, 2019 | |
Income Tax Disclosure [Abstract] | |
Components of loss before taxes | Years ended February 28, 2019 2018 2017 U.S. operations $ (8,948,305 ) $ (8,509,651 ) $ (2,155,934 ) Foreign operations (8,588,106 ) (5,527,727 ) (1,958,067 ) Loss before taxes $ (17,536,411 ) $ (14,037,378 ) $ (4,114,001 ) |
Income tax rate reconciliation | Years ended February 28, 2019 2018 2017 Statutory Federal rate (21.0% in 2019; 32.7% in 2018; 35.0% in 2017) Federal income tax at statutory rate $ (3,682,646 ) $ (4,585,497 ) $ (1,439,900 ) Effect of foreign jurisdiction (308,046 ) 320,769 40,018 Non-deductible expenses 888,749 2,169,384 (48,326 ) Tax credits related to research and development expenditures (387,326 ) (146,757 ) — Impact of Tax Cuts and Jobs Act Enactment — 876,812 — Unrecognized tax benefit of net operating losses and other available deductions 3,489,269 1,365,289 1,448,208 Effective income tax expense $ — $ — $ — Current $ — $ — $ — Deferred $ — $ — $ — |
Loss carryforwards | U.S. Canada Federal Federal Québec 2035 $ 56,699 $ — $ — 2036 521,398 — — 2037 4,419,150 278,623 278,623 2038 1,560,483 3,096,139 3,096,139 2039 — 4,268,317 4,281,955 Indefinite 8,038,528 — — $ 14,596,258 $ 7,643,079 $ 7,656,717 |
Deferred income tax assets and liabilities | As at February 28, 2019 2018 Deferred tax assets Canada net operating loss carry forward $ 2,026,984 $ 1,127,381 U.S. net operating loss carry forward 3,165,937 1,377,008 Accrual and reserves 118,309 — Property, plant and equipment — 136,200 Research and development expenditures and credits 1,058,010 472,608 Unrealized foreign exchange — 9,462 Other 38,418 — Deferred tax assets 6,407,658 3,122,659 Deferred tax liabilities Property, plant and equipment (41,636 ) (2,367 ) Intangibles (34,785 ) (1,489 ) Accrual and reserves — (49,236 ) Investment tax credits — — Unrealized foreign exchange — (8,697 ) Deferred tax liabilities (76,421 ) (61,789 ) Deferred tax assets, net 6,331,239 3,060,870 Valuation allowance (6,331,239 ) (3,060,870 ) Deferred tax assets, net $ — $ — |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Feb. 28, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial liabilities and warrants | Fair Value Measurements at February 28, 2019 Carrying Amount Fair Value Level in the hierarchy Instruments measured at fair value: Warrants (First Issuance) $ 219,531 $ 219,531 Level 3 Instruments measured at amortized cost: Long-term debt 1,005,518 1,005,518 Level 2 Convertible notes (First Issuance) 2,495,636 2,650,00 Level 2 Convertible notes (Second Issuance) $ 3,126,886 $ 3,150,000 Level 2 |
The Company, Basis of Present_2
The Company, Basis of Presentation and Going Concern (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
State of incorporation | Nevada | ||
Date of incorporation | Mar. 1, 2010 | ||
Net loss | $ (17,536,411) | $ (14,037,378) | $ (4,114,001) |
Net cash used in operating activities | (7,562,487) | (6,391,486) | $ (2,833,490) |
Accumulated deficit | $ (38,811,592) | $ (21,275,181) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Feb. 28, 2019 | |
Building | |
Estimated useful life | 30 years |
Land | |
Estimated useful life | Indefinitie |
Office equipment and furniture | |
Estimated useful life | 8 years |
Machinery and equipment | |
Estimated useful life | 3-8 years |
Building Improvements | |
Estimated useful life | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Sales tax receivables | $ 82,992 | $ 177,903 | |
Reduction of research and development expenses | 305,592 | 221,202 | $ 148,547 |
Research and development tax credits received | 0 | 0 | 88,080 |
Research and development tax credits receivable | 410,997 | 109,298 | |
Government grants received | 73,581 | 4,000 | 0 |
Government grants receivable | 0 | 73,581 | 0 |
Non-cash research and development tax credits | 255,975 | 248,690 | 25,227 |
Research and development expense | $ 3,448,547 | $ 6,694,778 | $ 1,454,440 |
Stock Options | |||
Dilutive securities | 1,962,400 | 2,374,581 | 1,010,000 |
Restricted Stock Units | |||
Dilutive securities | 402,868 | 34,102 | 0 |
Warrants | |||
Dilutive securities | 802,469 | 140,667 | 637,670 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) | Feb. 28, 2019 | Feb. 28, 2018 |
Property, plant and equipment, gross | $ 6,450,775 | $ 4,842,866 |
Less: accumulated depreciation | (1,079,512) | (805,963) |
Property, plant and equipment, net | 5,371,263 | 4,036,903 |
Building | ||
Property, plant and equipment, gross | 1,882,665 | 1,935,423 |
Less: accumulated depreciation | (68,596) | (6,009) |
Property, plant and equipment, net | 1,814,069 | 1,929,414 |
Land | ||
Property, plant and equipment, gross | 232,699 | 239,239 |
Less: accumulated depreciation | 0 | 0 |
Property, plant and equipment, net | 232,699 | 239,239 |
Building Improvements | ||
Property, plant and equipment, gross | 383,985 | 377,253 |
Less: accumulated depreciation | (119,889) | (225,298) |
Property, plant and equipment, net | 264,096 | 151,955 |
Machinery and equipment | ||
Property, plant and equipment, gross | 3,834,338 | 2,189,195 |
Less: accumulated depreciation | (841,236) | (536,222) |
Property, plant and equipment, net | 2,993,102 | 1,652,973 |
Office equipment and furniture | ||
Property, plant and equipment, gross | 117,088 | 101,756 |
Less: accumulated depreciation | (49,791) | (38,434) |
Property, plant and equipment, net | $ 67,297 | $ 63,322 |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 443,146 | $ 303,597 | $ 333,866 |
Deceleration of depreciation | $ 8,000 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Finite-Lived Intangible Assets, Net [Abstract] | |||
Intangible assets, cost | $ 533,369 | $ 445,050 | |
Intangible assets, accumulated depreciation | (200,629) | (137,050) | |
Total | 332,740 | 308,000 | |
Add: Additions in the year | 153,465 | 88,319 | $ 0 |
Deduct: Amortization of intangibles | (59,851) | (63,579) | (63,579) |
Deduct: Impairment of intangibles | (298,694) | 0 | $ 0 |
Total | $ 127,672 | $ 332,740 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Finite-Lived Intangible Assets, Net [Abstract] | |||
Impairment of intangibles | $ 298,694 | $ 0 | $ 0 |
Amotization expense | $ 59,851 | $ 63,579 | $ 63,579 |
Credit Facility and Long-Term_3
Credit Facility and Long-Term Debt (Details) - USD ($) | Feb. 28, 2019 | Feb. 28, 2018 |
Debt Disclosure [Abstract] | ||
Instalment loan | $ 1,005,518 | $ 1,088,426 |
Less current portion | 53,155 | 54,649 |
Non-current portion | $ 952,363 | $ 1,033,777 |
Credit Facility and Long-Term_4
Credit Facility and Long-Term Debt (Details 1) | Feb. 28, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 53,155 |
2021 | 53,155 |
2022 | 53,155 |
2023 | 53,155 |
2024 | 53,155 |
Thereafter | 739,743 |
Total | $ 1,005,518 |
Credit Facility and Long-Term_5
Credit Facility and Long-Term Debt (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Debt Disclosure [Abstract] | |||
Interest paid | $ 54,040 | $ 5,125 | $ 0 |
Convertible Notes (Details)
Convertible Notes (Details) - USD ($) | Feb. 28, 2019 | Feb. 28, 2018 |
Warrants - liability | $ 219,531 | $ 0 |
Beneficial conversion option - equity | 1,200,915 | 0 |
Warrants - equity | 757,704 | $ 0 |
November 2018 | ||
Convertible notes - liability | 2,495,636 | |
Accrued interest - liability | 60,793 | |
Deferred financing costs | (26,557) | |
Total | 2,529,872 | |
Warrants - liability | 219,531 | |
November 2018 | Issue Date | ||
Convertible notes - liability | 2,495,636 | |
Accrued interest - liability | 0 | |
Deferred financing costs | (63,738) | |
Total | 2,431,898 | |
Warrants - liability | 154,364 | |
January 2019 | ||
Convertible notes - liability | 3,126,886 | |
Accrued interest - liability | 49,011 | |
Deferred financing costs | (69,597) | |
Total | 3,106,300 | |
Beneficial conversion option - equity | 1,200,915 | |
Warrants - equity | 757,704 | |
January 2019 | Issue Date | ||
Convertible notes - liability | 2,941,381 | |
Accrued interest - liability | 0 | |
Deferred financing costs | (79,539) | |
Total | 2,861,842 | |
Beneficial conversion option - equity | 1,200,915 | |
Warrants - equity | $ 757,704 |
Convertible Notes (Details Narr
Convertible Notes (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Loss on revaluation of warrants | $ 65,167 | $ 0 | $ 0 |
November 2018 | |||
Loss on revaluation of warrants | 65,167 | 0 | 0 |
Interest expense | 60,793 | 0 | 0 |
January 2019 | |||
Accretion expense | 185,505 | 0 | 0 |
Interest expense | $ 49,011 | $ 0 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Repayment of advances from majority stockholder | $ 0 | $ (278,472) | $ 0 |
Chief Executive Officer | |||
Compensation expense | $ 798,791 | 189,540 | $ 210,618 |
Mr. Solomita | |||
Repayment of related party advances | $ 638,472 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Beginning balance, amount | $ 10,324,065 | $ 2,137,522 | $ 1,417,478 |
Issuance of common shares for cash, amount | 14,052,481 | 3,826,016 | |
Issuance of shares upon cashless exercise of warrants, amount | 0 | 0 | 0 |
Issuance of shares upon vesting of restricted stock units, amount | 0 | ||
Issuance of common shares upon exercise of warrants for cash, amount | 1,642,016 | 160,000 | |
Ending Balance, amount | $ 2,626,392 | $ 10,324,065 | $ 2,137,522 |
Common Stock | |||
Beginning balance, shares | 33,751,088 | 31,451,973 | 29,910,800 |
Beginning balance, amount | $ 3,376 | $ 3,146 | $ 2,992 |
Issuance of common shares for cash, shares | 1,829,061 | 1,275,340 | |
Issuance of common shares for cash, amount | $ 183 | $ 128 | |
Issuance of shares upon cashless exercise of warrants, shares | 18,821 | 115,034 | 38,000 |
Issuance of shares upon cashless exercise of warrants, amount | $ 2 | $ 12 | $ 4 |
Issuance of shares upon vesting of restricted stock units, shares | 35,797 | ||
Issuance of shares upon vesting of restricted stock units, amount | $ 3 | ||
Issuance of common shares upon exercise of warrants for cash, shares | 355,020 | 200,000 | |
Issuance of common shares upon exercise of warrants for cash, amount | $ 35 | $ 20 | |
Ending balance, shares | 33,805,706 | 33,751,088 | 31,451,973 |
Ending Balance, amount | $ 3,381 | $ 3,376 | $ 3,146 |
Share-Based Payments (Details)
Share-Based Payments (Details) - $ / shares | 12 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Number of options outstanding, beginning | 2,374,581 | 1,010,000 |
Number of options, granted | 39,902 | 2,310,000 |
Number of options, exercised | (20,000) | (245,034) |
Number of options, forfeited | (369,583) | (620,385) |
Number of options, expired | (62,500) | (80,000) |
Number of options outstanding, ending | 1,962,400 | 2,374,581 |
Number of options outstanding, exercisable | 1,126,664 | 841,249 |
Weighted average exercise price outstanding, beginning | $ 7.99 | $ 0.96 |
Weighted average exercise price, granted | 9.67 | 9.23 |
Weighted average exercise price, exercised | .80 | .80 |
Weighted average exercise price, forfeited | 11.49 | 4.97 |
Weighted average exercise price, expired | 4.80 | 0.8 |
Weighted average exercise price outstanding, ending | 7.53 | 7.99 |
Weighted average exercise price outstanding, exercisable | $ 7.72 | $ 6.32 |
Share-Based Payments (Details 1
Share-Based Payments (Details 1) - $ / shares | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Exercise price | $ 7.53 | $ 7.99 | $ 0.96 |
Number of stock options, outstanding | 1,962,400 | 2,374,581 | 1,010,000 |
Number of stock options, exercisable | 1,126,664 | 841,249 | |
Weighted average remaining life, outstanding | 6 years 10 months 28 days | 9 years 18 days | |
Weighted average remaining life, exercisable | 5 years 11 months 26 days | 7 years 8 months 1 day | |
Stock Option 1 | |||
Exercise price | $ .80 | $ 0.80 | |
Number of stock options, outstanding | 582,081 | 602,081 | |
Weighted average remaining life, outstanding | 6 years 9 months 4 days | 7 years 9 months | |
Stock Option 2 | |||
Exercise price | $ 3 | $ 3 | |
Number of stock options, outstanding | 0 | 12,500 | |
Weighted average remaining life, outstanding | 0 years | 3 months | |
Stock Option 3 | |||
Exercise price | $ 5.25 | $ 5.25 | |
Number of stock options, outstanding | 380,000 | 530,000 | |
Weighted average remaining life, outstanding | 8 years 6 months | 9 years 5 months 26 days | |
Stock Option 4 | |||
Exercise price | $ 8.75 | $ 8.75 | |
Number of stock options, outstanding | 26,693 | 0 | |
Weighted average remaining life, outstanding | 10 years | 0 years | |
Stock Option 5 | |||
Exercise price | $ 11.52 | $ 11.52 | |
Number of stock options, outstanding | 13,209 | 0 | |
Weighted average remaining life, outstanding | 9 years 4 months 10 days | 0 years | |
Stock Option 6 | |||
Exercise price | $ 12 | $ 12 | |
Number of stock options, outstanding | 700,000 | 700,000 | |
Weighted average remaining life, outstanding | 8 years 6 months 14 days | 9 years 6 months 14 days | |
Stock Option 7 | |||
Exercise price | $ 13.49 | $ 13.49 | |
Number of stock options, outstanding | 193,750 | 250,000 | |
Weighted average remaining life, outstanding | 2 months 1 day | 9 years 7 months 17 days | |
Stock Option 8 | |||
Exercise price | $ 13.89 | $ 13.89 | |
Number of stock options, outstanding | 66,667 | 280,000 | |
Weighted average remaining life, outstanding | 4 days | 9 years 8 months 8 days |
Share-Based Payments (Details 2
Share-Based Payments (Details 2) - $ / shares | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Exercise price | $ 3 | ||
Risk-free interest rate | 0.91% | ||
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility | 78.00% | 122.00% | |
Expected life | 2 years | ||
Minimum | |||
Exercise price | $ 8.75 | $ 5.25 | |
Risk-free interest rate | 2.70% | 1.46% | |
Expected volatility | 80.00% | ||
Expected life | 6 years 6 months | 3 years | |
Maximum | |||
Exercise price | $ 11.52 | $ 13.89 | |
Risk-free interest rate | 2.82% | 2.15% | |
Expected volatility | 94.00% | ||
Expected life | 7 years | 6 years |
Share-Based Payments (Details 3
Share-Based Payments (Details 3) - Restricted Stock Units - $ / shares | 12 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Number of units outstanding, beginning | 34,102 | 0 |
Number of units, granted | 406,188 | 34,102 |
Number of units, vested | (35,797) | 0 |
Number of units, forfeited | (1,625) | 0 |
Number of units outstanding, ending | 402,868 | 34,102 |
Weighted average exercise price outstanding, beginning | $ 13 | $ .00 |
Weighted average exercise price, granted | 8.80 | 13 |
Weighted average exercise price, vested | 13.06 | 0 |
Weighted average exercise price, forfeited | 12.31 | .00 |
Weighted average exercise price outstanding, ending | $ 8.77 | $ 13 |
Share-Based Payments (Details N
Share-Based Payments (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Share-based Payment Arrangement [Abstract] | |||
Stock-based compensation expense attributable to stock options | $ 3,176,786 | $ 6,281,319 | $ 135,673 |
Stock-based compensation attributable to RSUs | $ 808,374 | $ 265,994 | $ 0 |
Equity Incentive Plan (Details)
Equity Incentive Plan (Details) - Equity Incentive Plan - shares | 12 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Number of units outstanding, beginning | 1,735,898 | 0 |
Issuance upon registration | 0 | 3,000,000 |
Automatic share reserve increase | 1,500,000 | 0 |
Number of units, granted | (446,090) | (1,264,102) |
Number of units, forfeited | 371,208 | 0 |
Number of units, expired | 62,500 | 0 |
Number of units outstanding, ending | 3,223,516 | 1,735,898 |
Warrants (Details)
Warrants (Details) - Warrants [Member] - $ / shares | 12 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Number of units outstanding, beginning | 140,667 | 637,670 |
Number of units, issued | 802,469 | 171,917 |
Number of units, exercised | 0 | (225,020) |
Number of units, expired | (140,667) | (443,900) |
Number of units outstanding, ending | 802,469 | 140,667 |
Weighted average exercise price outstanding, beginning | $ 12 | $ 6 |
Weighted average exercise price, issued | 10.74 | 12 |
Weighted average exercise price, exercised | .00 | 6.83 |
Weighted average exercise price, expired | 12 | 6 |
Weighted average exercise price outstanding, ending | $ 10.74 | $ 12 |
Warrants (Details 1)
Warrants (Details 1) | 12 Months Ended |
Feb. 28, 2019$ / sharesshares | |
Number of warrants outstanding | shares | 802,469 |
Weighted average exercise price | $ / shares | $ 10.74 |
Warrants 1 | |
Expiration date | Jan. 15, 2020 |
Number of warrants outstanding | shares | 277,778 |
Weighted average exercise price | $ / shares | $ 9.32 |
Warrants 2 | |
Expiration date | Jan. 21, 2020 |
Number of warrants outstanding | shares | 24,691 |
Weighted average exercise price | $ / shares | $ 9.32 |
Warrants 3 | |
Expiration date | Feb. 25, 2021 |
Number of warrants outstanding | shares | 200,000 |
Weighted average exercise price | $ / shares | $ 11 |
Warrants 4 | |
Expiration date | Feb. 25, 2021 |
Number of warrants outstanding | shares | 300,000 |
Weighted average exercise price | $ / shares | $ 12 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Income Tax Disclosure [Abstract] | |||
U.S. operations | $ (8,948,305) | $ (8,509,651) | $ (2,155,934) |
Foreign operations | (8,588,106) | (5,527,727) | (1,958,067) |
Loss before taxes | $ (17,536,411) | $ (14,037,378) | $ (4,114,001) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Income Tax Disclosure [Abstract] | |||
Federal income tax at statutory rate | $ (3,682,646) | $ (4,585,497) | $ (1,439,900) |
Effect of foreign jurisdiction | (308,046) | 320,769 | 40,018 |
Non-deductible expenses | 888,749 | 2,169,384 | (48,326) |
Tax credits related to research and development expenditures | (387,326) | (146,757) | 0 |
Impact of Tax Cuts and Jobs Act Enactment | 0 | 876,812 | 0 |
Unrecognized tax benefit of net operating losses and other available deductions | 3,489,269 | 1,365,289 | 1,448,208 |
Effective income tax expense | 0 | 0 | 0 |
Current | 0 | 0 | 0 |
Deferred | $ 0 | $ 0 | $ 0 |
Income Taxes (Details 2)
Income Taxes (Details 2) | Feb. 28, 2019USD ($) |
United States | Federal | |
Operating loss carryforward | $ 14,596,258 |
United States | Federal | 2035 | |
Operating loss carryforward | 56,699 |
United States | Federal | 2036 | |
Operating loss carryforward | 521,398 |
United States | Federal | 2037 | |
Operating loss carryforward | 4,419,150 |
United States | Federal | 2038 | |
Operating loss carryforward | 1,560,483 |
United States | Federal | 2039 | |
Operating loss carryforward | 0 |
United States | Federal | Indefinite | |
Operating loss carryforward | 8,038,528 |
Canada | Federal | |
Operating loss carryforward | 7,643,079 |
Canada | Federal | 2035 | |
Operating loss carryforward | 0 |
Canada | Federal | 2036 | |
Operating loss carryforward | 0 |
Canada | Federal | 2037 | |
Operating loss carryforward | 278,623 |
Canada | Federal | 2038 | |
Operating loss carryforward | 3,096,139 |
Canada | Federal | 2039 | |
Operating loss carryforward | 4,268,317 |
Canada | Federal | Indefinite | |
Operating loss carryforward | 0 |
Canada | Québec | |
Operating loss carryforward | 7,656,717 |
Canada | Québec | 2035 | |
Operating loss carryforward | 0 |
Canada | Québec | 2036 | |
Operating loss carryforward | 0 |
Canada | Québec | 2037 | |
Operating loss carryforward | 278,623 |
Canada | Québec | 2038 | |
Operating loss carryforward | 3,096,139 |
Canada | Québec | 2039 | |
Operating loss carryforward | 4,281,955 |
Canada | Québec | Indefinite | |
Operating loss carryforward | $ 0 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | Feb. 28, 2019 | Feb. 28, 2018 |
Deferred tax assets | ||
Canada net operating loss carry forward | $ 2,026,984 | $ 1,127,381 |
U.S. net operating loss carry forward | 3,165,937 | 1,377,008 |
Accrual and reserves | 118,309 | 0 |
Property, plant and equipment | 0 | 136,200 |
Research and development expenditures and credits | 1,058,010 | 472,608 |
Unrealized foreign exchange | 0 | 9,462 |
Other | 38,418 | 0 |
Deferred tax assets | 6,407,658 | 3,122,659 |
Deferred tax liabilities | ||
Property, plant and equipment | (41,636) | (2,367) |
Intangibles | (34,785) | (1,489) |
Accrual and reserves | 0 | (49,236) |
Investment tax credits | 0 | 0 |
Unrealized foreign exchange | 0 | (8,697) |
Deferred tax liabilities | (76,421) | (61,789) |
Deferred tax asset | 6,331,239 | 3,060,870 |
Valuation allowance | (6,331,239) | (3,060,870) |
Deferred tax asset, net | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 28, 2019 | Feb. 28, 2018 | Feb. 28, 2017 | |
Income Tax Disclosure [Abstract] | |||
Impact of Tax Cuts and Jobs Act Enactment | $ 0 | $ 876,812 | $ 0 |
Increase in valuation allowance | $ 3,270,369 | $ 1,446,422 | $ 1,247,252 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) | Feb. 28, 2019 | Feb. 28, 2018 |
Carrying amount | $ 9,531,454 | $ 3,071,498 |
Warrants (First Issuance) | Level 3 | ||
Carrying amount | 219,531 | |
Fair value | 219,531 | |
Long-term Debt | Level 2 | ||
Carrying amount | 1,005,518 | |
Fair value | 1,005,518 | |
Convertible Notes (First Issuance) | Level 2 | ||
Carrying amount | 2,495,636 | |
Fair value | 2,650,000 | |
Convertible Notes (Second Issuance) | Level 2 | ||
Carrying amount | 3,126,886 | |
Fair value | $ 3,150,000 |