Cover
Cover - shares | 9 Months Ended | |
Nov. 30, 2022 | Jan. 11, 2023 | |
Cover [Abstract] | ||
Entity Registrant Name | Loop Industries, Inc. | |
Entity Central Index Key | 0001504678 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-28 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Nov. 30, 2022 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 | |
Entity Common Stock Shares Outstanding | 47,469,224 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-54768 | |
Entity Incorporation State Country Code | NV | |
Entity Tax Identification Number | 27-2094706 | |
Entity Interactive Data Current | Yes | |
Entity Address Address Line 1 | 480 Fernand-Poitras | |
Entity Address Address Line 2 | Terrebonne | |
Entity Address City Or Town | Québec | |
Entity Address Country | CA | |
Entity Address Postal Zip Code | J6Y 1Y4 | |
City Area Code | 450 | |
Local Phone Number | 951-8555 | |
Security 12b Title | Common Stock | |
Trading Symbol | LOOP | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Nov. 30, 2022 | Feb. 28, 2022 |
Current assets | ||
Cash and cash equivalents | $ 21,524,993 | $ 44,061,427 |
Restricted cash (Note 21) | 4,100,000 | 0 |
Sales tax, tax credits and other receivables (Note 3) | 1,605,856 | 1,716,262 |
Inventories (Note 4) | 426,278 | 0 |
Prepaid expenses and deposits (Note 5) | 4,055,453 | 2,965,646 |
Assets held for sale (Note 6) | 3,758,314 | 3,389,279 |
Total current assets | 35,470,894 | 52,132,614 |
Investment in joint venture | 380,922 | 380,922 |
Property, plant and equipment, net (Note 7) | 2,677,982 | 5,692,862 |
Intangible assets, net (Note 8) | 1,110,932 | 1,013,801 |
Total assets | 39,640,730 | 59,220,199 |
Current liabilities | ||
Accounts payable and accrued liabilities (Note 10) | 6,968,219 | 9,846,815 |
Customer deposits (Note 11) | 1,000,000 | 0 |
Current portion of long-term debt (Note 12) | 46,891 | 0 |
Total current liabilities | 8,015,110 | 9,846,815 |
Long-term debt (Note 12) | 3,242,231 | 3,378,403 |
Total liabilities | 11,257,341 | 13,225,218 |
Stockholders' Equity | ||
Series A Preferred stock par value $0.0001; 25,000,000 shares authorized; one share issued and outstanding | 0 | 0 |
Common stock par value $0.0001; 250,000,000 shares authorized; 47,439,587 shares issued and outstanding (February 28, 2022 - 47,388,056) (Note 14) | 4,745 | 4,740 |
Additional paid-in capital | 170,174,884 | 150,396,704 |
Additional paid-in capital - Warrants (Note 19) | 20,463,464 | 30,272,496 |
Accumulated deficit | (161,307,104) | (134,582,926) |
Accumulated other comprehensive loss | (952,600) | (96,033) |
Total stockholders' equity | 28,383,389 | 45,994,981 |
Total liabilities and stockholders' equity | $ 39,640,730 | $ 59,220,199 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Nov. 30, 2022 | Feb. 28, 2022 |
Stockholders' Equity | ||
Series A preferred stock, par value | $ 0.0001 | $ 0.0001 |
Series A preferred stock, share authorized | 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 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 47,439,587 | 47,388,056 |
Common stock, shares outstanding | 47,439,587 | 47,388,056 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2022 | Nov. 30, 2021 | Nov. 30, 2022 | Nov. 30, 2021 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) | ||||
Revenue | $ 24,924 | $ 0 | $ 160,352 | $ 0 |
Expenses | ||||
Research and development (Note 15) | 4,581,552 | 6,835,304 | 15,133,191 | 20,757,937 |
General and administrative (Note 16) | 3,182,927 | 3,091,255 | 18,230,255 | 9,368,052 |
Gain on disposition of assets (Note 6) | (6,703,558) | 0 | (6,703,558) | 0 |
Depreciation and amortization (Notes 7 and 8) | 133,902 | 135,035 | 410,544 | 407,806 |
Interest and other financial expenses (Note 20) | 54,402 | 49,655 | 138,962 | 113,344 |
Interest income | (13,315) | (23,654) | (35,842) | (41,828) |
Foreign exchange loss (gain) | (197,913) | 10,648 | (289,022) | 42,712 |
Total expenses | 1,037,997 | 10,098,243 | 26,884,530 | 30,648,023 |
Net Loss | (1,013,073) | (10,098,243) | (26,724,178) | (30,648,023) |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment | (439,297) | (13,473) | (856,567) | (160,371) |
Comprehensive income (loss) | $ (1,452,370) | $ (10,111,716) | $ (27,580,745) | $ (30,808,394) |
Loss per share | ||||
Basic and Diluted | $ (0.02) | $ (0.21) | $ (0.56) | $ (0.69) |
Weighted average common shares outstanding | ||||
Basic and Diluted | 47,416,340 | 47,264,646 | 47,405,801 | 44,600,557 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders Equity (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Additional Paid-in Capital -Warrants [Member] | Retained Earnings (Accumulated Deficit) | Accumulated other comprehensive loss | Series A, Preferred Stocks |
Balance, shares at Feb. 28, 2021 | 42,413,691 | 1 | |||||
Balance, amount at Feb. 28, 2021 | $ 32,824,524 | $ 4,242 | $ 113,662,677 | $ 8,826,165 | $ (89,661,970) | $ (6,590) | $ 0 |
Issuance of common shares and warrants for cash, net of share issuance costs (Note 14), shares | 4,714,813 | ||||||
Issuance of common shares and warrants for cash, net of share issuance costs (Note 14), amount | 56,087,744 | $ 471 | 34,625,823 | 21,461,450 | 0 | 0 | 0 |
Issuance of warrants for financing facility (Note 19) | 69,323 | $ 0 | 0 | 69,323 | 0 | 0 | 0 |
Issuance of shares upon the vesting of restricted stock units (Note 17), shares | 231,660 | ||||||
Issuance of shares upon the vesting of restricted stock units (Note 17), amount | 0 | $ 24 | (24) | 0 | 0 | 0 | 0 |
Issuance of shares upon exercise of warrants (Note 17), shares | 11,666 | ||||||
Issuance of shares upon exercise of warrants (Note 17), amount | 0 | $ 1 | 84,441 | (84,442) | 0 | 0 | 0 |
Issuance of shares upon exercise of options (Note 17), shares | 16,226 | ||||||
Issuance of shares upon exercise of options (Note 17), amount | 0 | $ 2 | (2) | 0 | 0 | 0 | 0 |
Stock options issued for services (Note 17) | 1,203,975 | 0 | 1,203,975 | 0 | 0 | 0 | 0 |
Restricted stock units issued for services (Note 17) | 157,769 | 0 | 157,769 | 0 | 0 | 0 | 0 |
Foreign currency translation | (160,371) | 0 | 0 | 0 | 0 | (160,371) | 0 |
Net loss | (30,648,023) | $ 0 | 0 | 0 | (30,648,023) | 0 | $ 0 |
Balance, shares at Nov. 30, 2021 | 47,388,056 | 1 | |||||
Balance, amount at Nov. 30, 2021 | 59,534,941 | $ 4,740 | 149,734,659 | 30,272,496 | (120,309,993) | (166,961) | $ 0 |
Balance, shares at Aug. 31, 2021 | 47,160,164 | 1 | |||||
Balance, amount at Aug. 31, 2021 | 69,004,648 | $ 4,717 | 149,008,231 | 30,356,938 | (110,211,750) | (153,488) | $ 0 |
Issuance of shares upon the vesting of restricted stock units (Note 17), shares | 200,000 | ||||||
Issuance of shares upon the vesting of restricted stock units (Note 17), amount | 0 | $ 20 | (20) | 0 | 0 | 0 | 0 |
Issuance of shares upon exercise of options (Note 17), shares | 16,226 | ||||||
Issuance of shares upon exercise of options (Note 17), amount | 0 | $ 2 | (2) | 0 | 0 | 0 | 0 |
Stock options issued for services (Note 17) | 311,004 | 0 | 311,004 | 0 | 0 | 0 | 0 |
Restricted stock units issued for services (Note 17) | 331,005 | 0 | 331,005 | 0 | 0 | 0 | 0 |
Foreign currency translation | (13,473) | 0 | 0 | 0 | 0 | (13,473) | 0 |
Net loss | (10,098,243) | $ 0 | 0 | 0 | (10,098,243) | 0 | 0 |
Issuance of shares upon exercise of warrants (Note 19), shares | 11,666 | ||||||
Issuance of shares upon exercise of warrants (Note 19), amount | 0 | $ 1 | 84,441 | (84,442) | 0 | 0 | $ 0 |
Balance, shares at Nov. 30, 2021 | 47,388,056 | 1 | |||||
Balance, amount at Nov. 30, 2021 | 59,534,941 | $ 4,740 | 149,734,659 | 30,272,496 | (120,309,993) | (166,961) | $ 0 |
Balance, shares at Feb. 28, 2022 | 47,388,056 | 1 | |||||
Balance, amount at Feb. 28, 2022 | 45,994,981 | $ 4,740 | 150,396,704 | 30,272,496 | (134,582,926) | (96,033) | $ 0 |
Issuance of shares upon the vesting of restricted stock units (Note 17), shares | 51,531 | ||||||
Issuance of shares upon the vesting of restricted stock units (Note 17), amount | 0 | $ 5 | (5) | 0 | 0 | 0 | 0 |
Stock options issued for services (Note 17) | 1,180,963 | 0 | 1,180,963 | 0 | 0 | 0 | 0 |
Restricted stock units issued for services (Note 17) | 8,788,190 | 0 | 8,788,190 | 0 | 0 | 0 | 0 |
Foreign currency translation | (856,567) | 0 | 0 | 0 | 0 | (856,567) | 0 |
Net loss | (26,724,178) | 0 | 0 | 0 | (26,724,178) | 0 | 0 |
Expiration of warrants (Note 19) | 0 | $ 0 | 9,809,032 | (9,809,032) | 0 | 0 | $ 0 |
Balance, shares at Nov. 30, 2022 | 47,439,587 | 1 | |||||
Balance, amount at Nov. 30, 2022 | 28,383,389 | $ 4,745 | 170,174,884 | 20,463,464 | (161,307,104) | (952,600) | $ 0 |
Balance, shares at Aug. 31, 2022 | 47,400,709 | 1 | |||||
Balance, amount at Aug. 31, 2022 | 28,961,594 | $ 4,741 | 169,300,723 | 20,463,464 | (160,294,031) | (513,303) | $ 0 |
Issuance of shares upon the vesting of restricted stock units (Note 17), shares | 38,878 | ||||||
Issuance of shares upon the vesting of restricted stock units (Note 17), amount | 0 | $ 4 | (4) | 0 | 0 | 0 | 0 |
Stock options issued for services (Note 17) | 551,363 | 0 | 551,363 | 0 | 0 | 0 | 0 |
Restricted stock units issued for services (Note 17) | 322,802 | 0 | 322,802 | 0 | 0 | 0 | 0 |
Foreign currency translation | (439,297) | 0 | 0 | 0 | 0 | (439,297) | 0 |
Net loss | (1,013,073) | $ 0 | 0 | 0 | (1,013,073) | 0 | $ 0 |
Balance, shares at Nov. 30, 2022 | 47,439,587 | 1 | |||||
Balance, amount at Nov. 30, 2022 | $ 28,383,389 | $ 4,745 | $ 170,174,884 | $ 20,463,464 | $ (161,307,104) | $ (952,600) | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Nov. 30, 2022 | Nov. 30, 2021 | |
Cash Flows from Operating Activities | ||
Net loss | $ (26,724,178) | $ (30,648,023) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization (Notes 7 and 8) | 410,544 | 407,806 |
Stock-based compensation expense (Note 17) | 9,969,153 | 1,361,744 |
Gain on disposition of assets (Note 6) | (6,703,558) | 0 |
Accretion and accrued interest expenses (Note 20) | 117,504 | 82,393 |
Changes in operating assets and liabilities: | ||
Sales tax and tax credits receivable (Note 3) | 20,301 | 948,328 |
Inventory (Note 4) | (426,278) | 0 |
Prepaid expenses and deposits (Note 5) | (1,294,520) | (1,394,272) |
Accounts payable and accrued liabilities (Note 10) | (2,652,171) | (3,587,932) |
Customer deposits (Note 11) | 1,000,000 | 0 |
Net cash used in operating activities | (26,283,203) | (32,829,956) |
Cash Flows from Investing Activities | ||
Proceeds from disposition of assets (Note 6) | 8,559,490 | 0 |
Additions to property, plant and equipment (Notes 6 and 7) | (68,097) | (5,022,255) |
Additions to intangible assets (Note 8) | (225,047) | (348,017) |
Net cash used in investing activities | 8,266,346 | (5,370,272) |
Cash Flows from Financing Activities | ||
Proceeds from sale of common shares and warrants, net of share issuance costs (Note 14) | 0 | 56,087,746 |
Proceeds from issuance of long-term debt (Note 12) | 0 | 1,868,954 |
Repayment of long-term debt | 0 | (41,041) |
Net cash (used) provided by financing activities | 0 | 57,915,659 |
Effect of exchange rate changes | (419,577) | (77,336) |
Net increase (decrease) in cash | (18,436,434) | 19,638,095 |
Cash and restricted cash, beginning of period | 44,061,427 | 35,221,951 |
Cash and restricted cash, end of period | 25,624,993 | 54,860,046 |
Supplemental Disclosure of Cash Flow Information: | ||
Income tax paid | 0 | 0 |
Interest paid | 0 | 30,506 |
Interest received | $ 35,842 | $ 23,654 |
The Company Basis of Presentati
The Company Basis of Presentation | 9 Months Ended |
Nov. 30, 2022 | |
The Company Basis of Presentation | |
1. The Company, Basis Of Presentation | 1. The Company, Basis of Presentation The Company Loop Industries, Inc. (the “Company,” “Loop,” “we,” or “our”) is a technology company that 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 polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber. The Company is currently in the development stage with limited revenues. Basis of Presentation These unaudited interim condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures included in these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2022, filed with the SEC on May 27, 2022. The unaudited interim condensed consolidated financial statements 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, Indorama Loop Technologies, LLC, which is accounted for under the equity method. Intercompany balances and transactions are eliminated on consolidation. The condensed consolidated balance sheet as of February 28, 2022, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by US GAAP on an annual reporting basis. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods. The results for the three- and nine-month periods ended November 30, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter, for the fiscal year ending February 28, 2023, or for any other period. The consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the continuing of operations, the realization of assets and the settlement of liabilities in the normal course of business. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Nov. 30, 2022 | |
Summary of Significant Accounting Policies | |
2. Summary Of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Liquidity Risk Assessment Since its inception, the Company has been in the development stage with limited revenues from customers, and its ongoing operations and commercialization plans have been financed primarily by raising equity. The Company has incurred net losses and negative cash flow from operating activities since its inception and expects to incur additional net losses while it continues to develop and plan for commercialization. As at November 30, 2022, the Company’s available liquidity was $24.11 million, consisting of cash and cash equivalents of $21.52 million and an undrawn senior loan facility from a Canadian bank of $2.59 million. Additionally, the Company entered into an agreement on December 21, 2022 to sell its remaining land in Bécancour, Québec for $13.70 million (CDN $18.50 million) on or before February 24, 2023 as described in Note 22. Management actively monitors the Company’s cash resources against the Company’s short-term cash commitments to ensure the Company has sufficient liquidity to fund its costs for at least twelve months from the financial statement issuance date. Management evaluates the Company’s liquidity to determine if there is substantial doubt about the Company’s ability to continue as a going concern. In preparing this liquidity assessment, management applies significant judgment in estimating future cash flow requirements of the Company based on budgets and forecasts, which includes developing assumptions related to: (i) estimation of amount and timing of future cash outflows and cash inflows and (ii) determining what future expenditures are committed and what could be considered discretionary. Based on this assessment, management believes that the Company will be able to realize its assets and discharge its liabilities in the normal course of operations as they become due for a period of no less than twelve months from the date of issuance of these consolidated financial statements. The Company’s ability to move to the next stage of its strategic development and construct manufacturing plants is dependent on whether the Company can obtain the necessary financing through a combination of the issuance of debt, equity, and/or joint ventures and/or government incentive programs. The Company is working with its joint venture partners to put in place the financing plan for the rollout of large-scale manufacturing in Asia and Europe, including the planned first Asian manufacturing facility in Ulsan, South Korea.However, there is no assurance that the Company will be successful in attracting additional funding. Even if additional financing is available, it may not be available on terms favorable to the Company. Failure to secure additional financing on favorable terms when it becomes required would have an adverse effect on the Company’s current operation and on its ability to execute its business plan. The Company has committed a portion of its cash resources for certain long lead equipment and may enter into additional commitments to move commercial projects ahead within targeted construction timeframes. Revenue recognition The Company recognizes revenue with customers in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company enters into contracts with customers to sell Loop™ PET resin. These contracts include a single performance obligation, which is the delivery of Loop™ PET resin, and the transaction price is a fixed rate per delivered volume. Revenue is recognized when control of the product transfers to the customer, which is when product is delivered to the customer location. Shipping and handling costs are accounted for as a fulfillment cost. Use of estimates The preparation of financial statements in conformity with US GAAP requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include the going concern assessment, estimates for depreciable lives of property, plant and equipment, intangible assets, analysis of impairments of long-lived assets and intangible assets as well as the carrying value of our joint venture investment, assets held for sale, accruals for potential liabilities, assumptions made in calculating the fair value of stock-based compensation and other equity instruments, and the assessment of performance conditions for stock-based compensation awards. The COVID-19 pandemic, as well as supply chain and geo-political disruptions, inflation, and rising interest rates have affected business operations and planning for future commercial facilities to varying degrees for us and our customers, suppliers, vendors and other parties with whom we do business, and such disruptions are expected to continue for an indefinite period of time. The uncertain duration of these conditions has had and may continue to have an effect on our development and commercialization efforts. Stock‑based compensation The Company periodically issues stock options, warrants and restricted stock units to employees and non-employees in non-capital raising transactions for services and financing expenses. 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 recognized as compensation expense on the straight-line basis over the vesting period. When performance conditions exist, the Company recognizes compensation expense when it becomes probable that the performance condition will be met. Forfeitures on share-based payments are accounted for by recognizing forfeitures as they occur. The Company accounts for stock options and warrants 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 is 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 expenses recorded in the current and future periods. Restricted cash Cash held by the Company restricted as to withdrawal or use is presented as restricted cash in the consolidated balance sheet. As at November 30, 2022, restricted cash comprised of cash in escrow for a legal settlement and cash restricted in use for a commercial project. Inventories Inventories are stated at the lower of cost or net realizable value using the average cost method. Inventory cost includes direct labor, cost of raw materials and production overhead. The Company separates its inventories into three main categories: raw materials, work in process, and finished goods. The raw materials category includes goods used in the production process that have not yet entered the production process at the balance sheet date and mainly comprises chemicals and other process consumables. The work in process category includes goods that are in the production process at the balance sheet date and mainly comprises monomers that have not yet been polymerized into Loop™ branded PET resin. The finished goods category includes goods that have completed the production process and mainly comprises Loop™ branded PET resin. Research and development expenses Research and development costs are charged to expense as costs are incurred in performing research and development activities. Research and development expenses relate primarily to process development and design, producing initial volumes of product for customers, testing of pre-production samples, machinery and equipment expenditures for use in the small-scale production facility in Terrebonne, Québec (the “Terrebonne Facility”), compensation, and consulting and engineering fees. Research and development costs are presented net of related tax credits and government grants. Assets held for sale Assets are classified as held for sale when they met the criteria set out in ASC 360-10-45-9 Long-lived assets classified as held for sale · Management, having the authority to approve the action, commits to a plan to sell the asset; · The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; · An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; · The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year; · The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and · Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. When the criteria are met, the assets are presented at the lesser of fair market value, net of selling costs, and cost in current assets. Foreign currency translations and transactions The accompanying consolidated financial statements are presented in U.S. dollars, the reporting currency of the Company. Assets and liabilities of subsidiaries that have a functional currency other than that of the Company are translated to U.S. dollars at the exchange rate as at the balance sheet date. Income and expenses are translated at the average exchange rate of the period. The resulting translation adjustments are included in other comprehensive income (loss) (“OCI”). As a result, foreign currency exchange fluctuations may impact operating expenses. The Company currently is 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. Net earnings (loss) per share The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share For the nine-month periods ended November 30, 2022 and 2021, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at November 30, 2022, the potentially dilutive securities consisted of 2,542,000 outstanding stock options (2021 – 1,570,000), 4,036,803 outstanding restricted stock units (2021 – 4,014,928), and 7,104,553 outstanding warrants (2021 – 11,659,418). Recently adopted accounting pronouncements In November 2021, the FASB issued ASU 2021-10, “Disclosures by Business Entities about Government Assistance”. This ASU provided guidance to increase the transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. Under the new guidance, an entity is required to provide the following annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy: (1) information about the nature of the transactions and the related accounting policy used to account for the transactions, (2) the line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item and, (3) significant terms and conditions of the transactions, including commitments and contingencies. This update is effective for fiscal years beginning after December 15, 2021. The adoption of this accounting guidance did not impact the disclosures in our Consolidated Financial Statements. In September 2022, the FASB issued ASU 2022-04, “Disclosure of Supplier Finance Program Obligations”. This ASU provided guidance to increase the transparency of supplier finance programs. The amendments in this ASU require that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs. This update is effective for fiscal years beginning after December 15, 2022. We are currently evaluating this accounting guidance, which may have disclosure impact only. |
Sales Tax Tax Credits and Other
Sales Tax Tax Credits and Other Receivables | 9 Months Ended |
Nov. 30, 2022 | |
Sales Tax Tax Credits and Other Receivables | |
3. Sales Tax, Tax Credits And Other Receivables | 3. Sales Tax, Tax Credits and Other Receivables Sales tax, tax credits and other receivables as at November 30, 2022 and February 28, 2022 were as follows: November 30, 2022 February 28, 2022 Sales tax $ 413,293 $ 1,337,783 Investment tax credits 464,199 - Research and development tax credits 413,028 313,599 Insurance reimbursement related to legal settlement (Note 21) 279,261 - Other receivables 36,075 64,880 $ 1,605,856 $ 1,716,262 |
Inventories
Inventories | 9 Months Ended |
Nov. 30, 2022 | |
Inventories | |
4. Inventories | 4. Inventories Inventories as at November 30, 2022 and February 28, 2022 were as follows: November 30, 2022 February 28, 2022 Work in process $ 278,781 $ - Finished goods 112,731 - Raw materials 34,767 - $ 426,279 $ - |
Prepaid Expenses and Deposits
Prepaid Expenses and Deposits | 9 Months Ended |
Nov. 30, 2022 | |
Prepaid Expenses and Deposits | |
5. Prepaid Expenses And Deposits | 5. Prepaid Expenses and Deposits Prepaid expenses as at November 30, 2022 and February 28, 2022 were as follows: November 30, 2022 February 28, 2022 Deposits on machinery and equipment $ 3,429,245 $ 2,801,680 Insurance 545,000 - Other 81,208 163,966 $ 4,055,453 $ 2,965,646 As at November 30, 2022, the Company had $3,429,245 (February 28, 2022 – $2,801,680) of non-refundable cash deposits on machinery and equipment. $33,595 (February 28, 2022 – $672,713) of the prepayments are on machinery and equipment that will be used in connection with the research and development activities at the Terrebonne Facility and will be expensed, and classified as research and development expenses in the period the equipment is received. The remainder of non-refundable cash deposits on machinery and equipment of $3,395,650 (February 28, 2022 – $2,128,967) are non-refundable cash deposits on long-lead machinery and equipment that will be used in a planned Infinite Loop ™ The deposit for insurance represents a pre-payment of the final three months of the Company’s directors and officers’ insurance annual premium. |
Assets held for sale
Assets held for sale | 9 Months Ended |
Nov. 30, 2022 | |
Assets held for sale | |
6. Assets Held For Sale | 6. Assets held for sale On May 27, 2021, we acquired land in Bécancour, Québec for cash of $4.4 million (CDN $5.9 million). The Company sold approximately two thirds of the land held for sale on September 15, 2022 for cash proceeds of $8,559,490 and a gain on disposition of the asset of $6,703,558. The remaining land and cost of related land improvements have been classified as assets held for sale, with a carrying value at November 30, 2022 of $3,758,314, on the basis that management was committed to a plan to dispose of the excess land and at the balance sheet date, and considered the sale to be probable within one year. As disclosed in Note 22, the Company has entered into an agreement for the sale of the remaining land. |
Property Plant and Equipment
Property Plant and Equipment | 9 Months Ended |
Nov. 30, 2022 | |
Property Plant and Equipment | |
7. Property, Plant And Equipment | 7. Property, Plant and Equipment Property, plant and equipment as at November 30, 2022 and February 28, 2022 were as follows: As at November 30, 2022 Cost Accumulated depreciation, write-down and impairment Net book value Building $ 1,835,273 $ (296,320 ) $ 1,538,953 Land 226,859 - 226,859 Building and Land Improvements 1,852,894 (1,084,060 ) 768,834 Office equipment and furniture 278,906 (135,570 ) 143,336 $ 4,193,932 $ (1,515,950 ) $ 2,677,982 As at February 28, 2022 Cost Accumulated depreciation, write-down and impairment Net book value Building $ 1,952,345 $ (266,434 ) $ 1,685,911 Land 1,644,084 - 1,644,084 Building and Land Improvements 3,049,892 (858,342 ) 2,191,550 Office equipment and furniture 298,141 (126,824 ) 171,317 $ 6,944,462 $ (1,251,600 ) $ 5,692,862 Depreciation expense for the three- and nine-month periods ended November 30, 2022 amounted to $111,055 and $347,543, respectively (2021– $114,799 and $351,589, respectively), and is recorded as an operating expense in the consolidated statements of operations and comprehensive loss. During the three-month period ended May 31, 2021, the Company acquired a 19 million square foot parcel of land in Bécancour, Québec for $4.4 million (CDN $5.9 million). As detailed in Note 6, a portion of the land was sold in September 2022 and the remainder of the land as well as the related land improvements were classified as assets held for sale as at November 30, 2022. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Nov. 30, 2022 | |
Intangible Assets | |
8. Intangible Assets | 8. Intangible Assets Intangible assets as at November 30, 2022 and February 28, 2022 were $1,110,932 and $1,013,801, respectively. During the nine-months periods ended November 30, 2022 and 2021, we made additions to intangible assets of $225,047 and $348,017, respectively. Amortization expense for the three- and nine-month periods ended November 30, 2022 amounted to $22,848 and $63,001, respectively (2021 - $20,236 and $56,216, respectively), and is recorded as an operating expense in the unaudited condensed consolidated statements of operations and comprehensive loss. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Nov. 30, 2022 | |
Fair Value of Financial Instruments | |
9. Fair value of financial instruments | 9. Fair value of financial instruments The following tables present the fair value of the Company’s financial liabilities as at November 30, 2022 and February 28, 2022: Fair Value as at November 30, 2022 Carrying Amount Fair Value Level in the hierarchy Financial liabilities measured at amortized cost: Long-term debt $ 3,289,122 $ 3,247,635 Level 2 Fair Value as at February 28, 2022 Carrying Amount Fair Value Level in the hierarchy Financial liabilities measured at amortized cost: Long-term debt $ 3,378,403 $ 3,392,600 Level 2 The fair value of long-term debt is determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration and credit default expectations (Level 2). The fair value of cash and cash equivalents, restricted cash, other receivables, and trade accounts payable and certain accrued liabilities approximate their carrying values due to their short-term maturity. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 9 Months Ended |
Nov. 30, 2022 | |
Accounts Payable and Accrued Liabilities | |
10. Accounts Payable And Accrued Liabilities | 10. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities as at November 30, 2022 and February 28, 2022 were as follows: November 30, 2022 February 28, 2022 Trade accounts payable $ 2,185,396 $ 4,397,499 Accrued loss contingency for legal settlement (Note 21) 3,100,000 2,519,220 Accrued employee compensation 914,227 1,254,685 Accrued engineering fees 263,125 774,423 Accrued professional fees 302,582 526,685 Other accrued liabilities 202,889 374,303 $ 6,968,219 $ 9,846,815 |
Customer Deposits
Customer Deposits | 9 Months Ended |
Nov. 30, 2022 | |
Customer Deposits | |
11. Customer Deposits | 11. Customer Deposits In October 2022, the Company received a cash deposit from a customer of $1,000,000 in relation to an executed capacity reservation agreement. The deposit is to be credited against any future sales of Loop™ PET resin over a five-year period, commencing two years after the first delivery of Loop™ PET resin to the customer. The use of the deposit is designated for expenditures related to the Infinite Loop™ manufacturing facility in Bécancour Québec and is refundable in the event that the Infinite Loop™ manufacturing facility in Bécancour Québec is not constructed. As a result of the decision by management to no longer proceed with construction of the Infinite Loop manufacturing facility in Becancour Quebec as contemplated under the capacity reservation agreement with the customer, the cash deposit has been reflected as restricted cash as at November 30, 2022, with a corresponding financial liability of an equal amount. |
LongTerm Debt
LongTerm Debt | 9 Months Ended |
Nov. 30, 2022 | |
LongTerm Debt | |
12. Long-term Debt | 12. Long‑Term Debt Long-term debt as of November 30, 2022 and February 28, 2022, was comprised of the following: November 30, 2022 February 28, 2022 Investissement Québec financing facility: Principal amount $ 3,405,389 $ 3,622,618 Unamortized discount (280,473 ) (352,038 ) Accrued interest 164,206 107,823 Total Investissement Québec financing facility 3,289,122 3,378,403 Less: current portion of long-term debt (46,891 ) - Long-term debt, net of current portion $ 3,242,231 $ 3,378,403 Investissement Québec financing facility The Company recorded interest expense on the Investissement Québec loan for the three- and nine-month periods ended November 30, 2022 in the amount of $20,950 and $65,186 respectively (2021 – $21,704 and $44,098) and an accretion expense of $17,048 and $52,318 respectively (2021 – $16,723 and $38,295). On November 21, 2022, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “the Financing Facility Amendment”). As per the Financing Facility Amendment, $37,015 (CDN $50,000) of the principal amount is repayable in monthly installments in the fiscal year ending February 29, 2024 and the remainder of the principal amount is repayable in 72 monthly installments. Under the original terms of the Financing Facility, the principal amount was repayable in 84 monthly installments beginning in March of 2023. The Financing Facility Amendment does not modify the interest rates, the repayment terms of accrued interest or any other terms of the Financing Facility. The Amendment did not meet the criteria of ASC 470, Debt Principal repayments due on the Company’s indebtedness over the next five years are as follows: Years ending Amount February 28, 2023 $ - February 29, 2024 37,018 February 28, 2025 561,392 February 28, 2026 561,392 February 28, 2027 561,392 Thereafter 1,684,195 Total $ 3,405,389 Credit facility from a Canadian bank On July 26, 2022, Loop Canada, Inc., a wholly-owned subsidiary of the Company, entered into an Operating Credit Facility (the “Credit Facility”) with a Canadian bank. The Credit Facility allows for borrowings of up to $2,591,057 (CDN $3,500,000) in aggregate principal amount and provides for a two-year term. The Credit Facility is secured by the Company’s Terrebonne, Québec property and is subject to a minimum equity covenant, tested quarterly. All borrowings under the Credit Facility will bear interest at an annual rate equal to the bank’s Canadian prime rate plus 1.0%. The Company is subject to a guarantee of the liabilities of Loop Canada Inc. As at November 30, 2022 the $2,591,057 (CDN $3,500,000) Credit Facility was available and undrawn. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Nov. 30, 2022 | |
Related Party Transactions | |
13. Related Party Transactions | 13. Related Party Transactions 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 which 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 (“RSUs”) covering 4,000,000 shares of the Company’s common stock while the performance milestones remained the same. The grant of the restricted stock units became effective 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. Such approval was granted by the Company’s shareholders at the Company’s 2019 annual meeting. On April 30, 2020, the Company and Mr. Solomita entered into an amendment of Mr. Solomita’s employment agreement. The amendment clarified the milestones consistent with the shift in the Company’s business from the production of terephthalate to the production of dimethyl terephthalate, another proven monomer of PET plastic that is far simpler to purify. When a milestone becomes probable, the corresponding expense will be valued based on the grant date fair value on April 30, 2020, the date of the last modification of Mr. Solomita’s employment agreement. The closing price of the Company’s common stock on the Nasdaq on April 30, 2020 was $7.74 per share. During the three-month period ended May 31, 2022, Mr. Solomita met a performance milestone in relation to the signature of a supply agreement with a customer. Accordingly, 1,000,000 performance incentive RSUs with a fair value of $7,740,000 were earned and issuable to Mr. Solomita. This amount was reflected as stock-based compensation expense during the nine-month period ended November 30, 2022 based on the grant date fair value. The 1,000,000 vested RSUs are to be settled annually in shares of the Company’s common stock on October 15 of each year in five equal tranches of 200,000 units, unless Mr. Solomita and the Company elect to defer settlement before such date. On October 14, 2022, Mr. Solomita and the Company agreed to defer by one year the settlement of 400,000 RSUs that were set to settle on October 15, 2022. |
Stockholders Equity
Stockholders Equity | 9 Months Ended |
Nov. 30, 2022 | |
Stockholders' Equity | |
14. Stockholders' Equity | 14. Stockholders’ Equity Common Stock For the nine-month period ended November 30, 2022 Number of shares Amount Balance, February 28, 2022 47,388,056 $ 4,740 Issuance of shares upon settlement of restricted stock units 51,531 5 Balance, November 30, 2022 47,439,587 $ 4,745 For the nine-month period ended November 30, 2021 Number of shares Amount Balance, February 28, 2021 42,413,691 $ 4,242 Issuance of shares upon settlement of restricted stock units 231,660 24 Issuance of shares for cash 4,714,813 471 Issuance of shares upon exercise of warrants 11,666 1 Issuance of shares upon exercise of options 16,226 2 Balance, November 30, 2021 47,388,056 $ 4,740 During the nine-month period ended November 30, 2022, the Company recorded the following common stock transaction: (i) The Company issued 51,531 shares of the common stock to settle restricted stock units that vested in the period. During the nine-month period ended November 30, 2021, the Company recorded the following common stock transactions: (i) The Company issued 231,660 shares of the common stock to settle restricted stock units that vested in the period. (ii) The Company issued 4,714,813 shares of its common stock, with warrants, at an aggregate offering price of $12.00 per share for total gross proceeds of $56,577,756 and net proceeds of $56,084,304. (iii) The Company issued 11,666 shares of its common stock upon the exercise of a warrant. (iv) The Company issued 16,226 shares of its common stock upon the exercise of stock options. |
Research and Development Expens
Research and Development Expenses | 9 Months Ended |
Nov. 30, 2022 | |
Research and Development Expenses | |
15. Research And Development Expenses | 15. Research and Development Expenses Research and development expenses for the three-month periods ended November 30, 2022 and 2021 were as follows: November 30, 2022 November 30, 2021 Machinery and equipment expenditures $ 1,059,266 $ 2,599,758 Employee compensation 1,994,594 1,786,765 External engineering 707,113 1,585,512 Plant and laboratory operating expenses 915,951 665,893 Tax credits (299,793 ) 97,480 Other 204,421 99,896 $ 4,581,552 $ 6,835,304 Research and development expenses for the nine-month periods ended November 30, 2022 and 2021 were as follows: November 30, 2022 November 30, 2021 Machinery and equipment expenditures $ 4,132,575 $ 7,707,882 Employee compensation 6,349,659 5,365,581 External engineering 2,913,567 5,040,342 Plant and laboratory operating expenses 2,365,643 2,064,403 Tax credits (1,207,415 ) (54,911 ) Other 579,162 634,640 $ 15,133,191 $ 20,757,937 |
General and Administrative Expe
General and Administrative Expenses | 9 Months Ended |
Nov. 30, 2022 | |
General and Administrative Expenses | |
16. General And Administrative Expenses | 16. General and Administrative Expenses General and administrative expenses for the three-month periods ended November 30, 2022 and 2021 were as follows: November 30, 2022 November 30, 2021 Professional fees $ 1,278,478 $ 650,164 Employee compensation 911,331 1,028,242 Insurance 709,952 1,193,554 Other 283,166 219,295 $ 3,182,927 $ 3,091,255 General and administrative expenses for the nine-month periods ended November 30, 2022 and 2021 were as follows: November 30, 2022 November 30, 2021 Professional fees $ 3,840,844 $ 3,138,611 Employee compensation (1) 10,728,182 2,357,769 Insurance 2,883,333 3,121,353 Other 777,896 750,319 $ 18,230,255 $ 9,368,052 (1) Includes stock-based compensation expense. During the nine-month period ended November 30, 2022, the Company recorded a stock-based compensation expense of $7,740,000 related to the achievement of a performance milestone for 1,000,000 RSUs granted to the Company’s CEO (Note 13). During the nine-month period ended November 30, 2021, the Company recorded RSU forfeitures for an amount of $935,837 as a net reversal of stock-based compensation. |
ShareBased Payments
ShareBased Payments | 9 Months Ended |
Nov. 30, 2022 | |
ShareBased Payments | |
17. Share-based Payments | 17. Share-based Payments Stock Options During the three- and nine-month periods ended November 30, 2022, the Company granted 972,000 stock options with a weighted average exercise price of $2.68 (2021 – nil), no stock options were exercised (2021 – 17,081 with a weighted average exercise price of $0.80), no stock options were forfeited (2021 – nil), and no stock options expired (2021 – nil). 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. There were no new issuances of stock options for the three- and nine-month periods ended November 30, 2021. The principal components of the pricing model for the stock options granted in the three-month period ended November 30, 2022 were as follows: Exercise price $ 2.68 Risk-free interest rate 3.88 % Expected dividend yield 0 % Expected volatility 73 % Expected life 5 years The total number of stock options outstanding as at November 30, 2022 was 2,542,000 (2021 – 1,570,000) with a weighted average exercise price of $5.27 (2021 - $6.87), of which 1,670,000 were exercisable (2021 – 1,286,667) with a weighted average exercise price of $6.84 (2021 – $7.48). During the three-month periods ended November 30, 2022 and 2021, stock-based compensation expense attributable to stock options amounted to $551,363 and $311,004, respectively. During the nine-month periods ended November 30, 2022 and 2021, stock-based compensation expense attributable to stock options amounted to $1,180,963 and $1,203,975, respectively, and is included in operating expenses. Restricted Stock Units During the three-month period ended November 30, 2022, the Company granted no restricted stock units (“RSUs”) (2021 – 62,638 with a weighted average fair value of $13.64), settled 38,878 RSUs (2021 – 200,000) with a weighted average fair value of $13.08 (2021 – $0.80), and 53,037 RSUs were forfeited (2021 – 17,988) with a weighted average fair value of $13.40 (2021 – $8.73). During the nine-month period ended November 30, 2022, the Company granted 151,605 restricted stock units (“RSUs”) (2021 – 349,580) with a weighted average fair value of $5.14 (2021 – $10.16), settled 51,531 RSUs (2021 – 231,660) with a weighted average fair value of $13.07 (2021 – $1.90), and 81,838 RSUs were forfeited (2021 – 313,512) with a weighted average fair value of $11.74 (2021 – $7.97). 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 the closing share price at grant date multiplied by the number of restricted stock unit awards granted. The total number of RSUs outstanding as at November 30, 2022 was 4,036,803 (2021 – 4,014,928), of which 1,563,497 were vested (2021 – 525,313). During the three-month periods ended November 30, 2022 and 2021, stock-based compensation attributable to RSUs amounted to $322,802 and $331,005, respectively, and is included in expenses. During the nine-month periods ended November 30, 2022 and 2021, stock-based compensation attributable to RSUs amounted to $8,788,190 and $157,769, respectively, and is included in operating expenses. During the nine-month period ended November 30, 2022, the Company recorded a stock-based compensation expense of $7,740,000 related to the achievement of a performance milestone for 1,000,000 RSUs granted to the Company’s CEO (Note 13). During the nine-month period ended November 30, 2021, the Company recorded a reversal of expenses for forfeitures for a total of $963,022 Stock-Based Compensation Expenses During the three-month periods ended November 30, 2022 and 2021, stock-based compensation included in research and development expenses amounted to $455,013 and $362,435, respectively, and in general and administrative expenses amounted to $419,152 and $279,574, respectively. During the nine-month periods ended November 30, 2022 and 2021, stock-based compensation included in research and development expenses amounted to $1,170,554 and $1,152,506, respectively, and in general and administrative expenses amounted to $8,798,599 and $209,236, respectively. The amount recorded in general and administrative expenses for the nine-month period ended November 30, 2022 includes $7,740,000 related to the achievement of a performance milestone for 1,000,000 RSUs granted to the Company’s CEO (Note 13). Stock-based compensation included in general and administrative expenses in the nine-month period ended November 30, 2021 includes reversal of expenses for forfeitures for a total of $935,837. |
Equity Incentive Plan
Equity Incentive Plan | 9 Months Ended |
Nov. 30, 2022 | |
Equity Incentive Plan | |
18. Equity Incentive Plan | 18. 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. On March 1, 2022 and 2021, the Board of Directors opted to waive the annual share reserve increase. 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 nine-month periods ended November 30, 2022 and 2021: 2022 2021 Number of units Number of units Outstanding, beginning of period 1,043,705 1,083,412 Share reserve increase - - Units granted (1,123,605 ) (349,580 ) Units forfeited 81,838 313,512 Units expired - - Outstanding, end of period 1,938 1,047,344 |
Warrants
Warrants | 9 Months Ended |
Nov. 30, 2022 | |
Warrants | |
19. Warrants | 19. Warrants During the nine-month period ended November 30, 2022, warrants to purchase 4,554,865 shares of our common stock in aggregate with an exercise price of $11.00 expired. During the nine-month period ended November 30, 2021, the Company issued warrants to purchase 7,550,698 shares of our common stock in aggregate with a weighted average exercise price of $16.32. 25,000 warrants were exercised with a weighted average exercise price of $9.43 and no warrants were forfeited, nor expired in the nine-month period ended November 30, 2021. The table below summarizes the warrants granted during the nine-month period ended November 30, 2021: Number of warrants Exercise Price Expiration date 4,714,813 $ 15.00 July 29, 2024 2,357,407 20.00 (1) 461,298 11.00 June 14, 2022 17,180 $ 11.00 August 26, 2024 (1) Expiration date is the earlier of (A) the date that is the third anniversary of the start of construction of the JV’s first facility, (B) 18 months after the date both parties have approved the basic design package to be used for the JV facilities, provided that the agreements to form the JV have not been executed by that date, and (C) the third anniversary of the date that both parties approved the basic design package to be used for the JV facilities, provided that the start of construction of the JV’s first facility has not occurred as of such date. |
Interest and Other Finance Cost
Interest and Other Finance Costs | 9 Months Ended |
Nov. 30, 2022 | |
Interest and Other Finance Costs | |
20. Interest and Other Financial Expenses | 20. Interest and Other Financial Expenses Interest and other finance costs for the three-month periods ended November 30, 2022 and 2021 are as follows: 2022 2021 Interest on long-term debt $ 20,950 $ 32,718 Accretion expense 17,048 16,937 Other 16,404 - $ 54,402 $ 49,655 Interest and other finance costs for the nine-month periods ended November 30, 2022 and 2021 are as follows: 2022 2021 Interest on long-term debt $ 65,186 $ 74,832 Accretion expense 52,318 38,512 Other 21,458 - $ 138,962 $ 113,344 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Nov. 30, 2022 | |
Commitments and Contingencies | |
21. Commitments and Contingencies | 21. Commitments and Contingencies Agreement to purchase of machinery and equipment In December 2021, the Company entered into an agreement for the purchase of long lead machinery and equipment in connection with the construction of our first Infinite Loop ™ Contingencies On October 13, 2020, the Company and certain of its officers were named as defendants in a proposed class-action lawsuit filed in the United States District Court for the Southern District of New York, captioned Olivier Tremblay, Individually and on Behalf of All Others Similarly Situated v. Loop Industries, Inc., Daniel Solomita, and Nelson Gentiletti On October 28, 2020, the Company and certain of its officers were named as defendants in a second proposed class-action lawsuit filed in the United States District Court for the Southern District of New York, captioned Michelle Bazzini, Individually and on Behalf of All Others Similarly Situated v. Loop Industries, Inc., Daniel Solomita, and Nelson Gentiletti On January 4, 2021, the United States District Court for the Southern District of New York consolidated the two proposed class-action lawsuits as In re Loop Industries, Inc. Securities Litigation Plaintiffs served a consolidated amended complaint on February 18, 2021, which alleges that the defendants violated Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts about the Company’s business, operations, and prospects, which caused the Company’s securities to trade at artificially inflated prices. The consolidated amended complaint relies on the October 13, 2020 report published by a third party regarding the Company to support their allegations. Defendants served a motion to dismiss the consolidated amended complaint on April 27, 2021. Plaintiffs’ opposition to the motion to dismiss was served on May 27, 2021 and Defendants’ reply in support of the motion to dismiss was served on June 11, 2021. On March 1, 2022, the Company and the current and former officer defendants entered into an agreement for the settlement of In re Loop Industries, Inc. Securities Litigation, and, on March 4, 2022, advised the Court of the agreement to settle. The agreement, which is subject to certain conditions, including court approval, requires the Company to pay $3.1 million to the plaintiff class. As a result, the Company recorded a contingency loss of $2,519,220 which was included in accounts payable and accrued liabilities at February 28, 2022 and expected to be the Company’s approximate total cash contribution to the settlement and outstanding legal fees related to the lawsuit, net of the Company’s D&O insurance carriers’ contribution. On May 24, 2022, Lead Plaintiffs filed their motion for preliminary approval of the proposed class action settlement. On September 19, 2022, the Court entered an order preliminarily approving the settlement and providing for notice. The Court held a final settlement hearing on January 5, 2023 after which the Court entered an order and final judgment approving the class action settlement. In October 2022, the Company made a payment in escrow of $3,100,000 for the settlement which is included in restricted cash in the Company’s consolidated balance sheet as of November 30, 2022. The Company received $558,521 from its D&O insurance carriers and an additional $279,261 was recorded as a receivable from the D&O insurance carriers. As of November 30, 2022, the amount included in accounts payable and accrued liabilities related to the settlement was $3,100,000. The settlement agreement does not constitute an admission, concession, or finding of any fault, liability, or wrongdoing by the Company or any defendant. On October 13, 2020, the Company, Loop Canada Inc. and certain of their officers and directors were named as defendants in a proposed securities class action filed in the Superior Court of Québec (District of Terrebonne, Province of Québec, Canada), in file no. 700-06-000012-205. The Application for authorization of a class action and for authorization to bring an action pursuant to section 225.4 of the Québec Securities Act In a judgment dated July 29, 2022, the Superior Court of Québec dismissed the Application for authorization of a class action and for authorization to bring an action pursuant to section 225.4 of the Québec Securities Act. The period to appeal the judgment is now expired. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Nov. 30, 2022 | |
Subsequent Events | |
22. Subsequent Events | 22. Subsequent Events Entry into an agreement for the sale of an asset held for sale On December 21, 2022, the Company entered an agreement to sell all of its land in Bécancour, Québec for cash proceeds of $13,695,588 (CDN $18,500,000). The sale is expected to close on or before February 24, 2023 subject to final due diligence and fulfillment of certain customary closing conditions. The land as well as the related land improvements were classified as assets held for sale on the Company’s consolidated balance sheet as at November 30, 2022. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Nov. 30, 2022 | |
Summary of Significant Accounting Policies | |
Liquidity Risk Assessment | Since its inception, the Company has been in the development stage with limited revenues from customers, and its ongoing operations and commercialization plans have been financed primarily by raising equity. The Company has incurred net losses and negative cash flow from operating activities since its inception and expects to incur additional net losses while it continues to develop and plan for commercialization. As at November 30, 2022, the Company’s available liquidity was $24.11 million, consisting of cash and cash equivalents of $21.52 million and an undrawn senior loan facility from a Canadian bank of $2.59 million. Additionally, the Company entered into an agreement on December 21, 2022 to sell its remaining land in Bécancour, Québec for $13.70 million (CDN $18.50 million) on or before February 24, 2023 as described in Note 22. Management actively monitors the Company’s cash resources against the Company’s short-term cash commitments to ensure the Company has sufficient liquidity to fund its costs for at least twelve months from the financial statement issuance date. Management evaluates the Company’s liquidity to determine if there is substantial doubt about the Company’s ability to continue as a going concern. In preparing this liquidity assessment, management applies significant judgment in estimating future cash flow requirements of the Company based on budgets and forecasts, which includes developing assumptions related to: (i) estimation of amount and timing of future cash outflows and cash inflows and (ii) determining what future expenditures are committed and what could be considered discretionary. Based on this assessment, management believes that the Company will be able to realize its assets and discharge its liabilities in the normal course of operations as they become due for a period of no less than twelve months from the date of issuance of these consolidated financial statements. The Company’s ability to move to the next stage of its strategic development and construct manufacturing plants is dependent on whether the Company can obtain the necessary financing through a combination of the issuance of debt, equity, and/or joint ventures and/or government incentive programs. The Company is working with its joint venture partners to put in place the financing plan for the rollout of large-scale manufacturing in Asia and Europe, including the planned first Asian manufacturing facility in Ulsan, South Korea.However, there is no assurance that the Company will be successful in attracting additional funding. Even if additional financing is available, it may not be available on terms favorable to the Company. Failure to secure additional financing on favorable terms when it becomes required would have an adverse effect on the Company’s current operation and on its ability to execute its business plan. The Company has committed a portion of its cash resources for certain long lead equipment and may enter into additional commitments to move commercial projects ahead within targeted construction timeframes. |
Revenue recognition | The Company recognizes revenue with customers in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company enters into contracts with customers to sell Loop™ PET resin. These contracts include a single performance obligation, which is the delivery of Loop™ PET resin, and the transaction price is a fixed rate per delivered volume. Revenue is recognized when control of the product transfers to the customer, which is when product is delivered to the customer location. Shipping and handling costs are accounted for as a fulfillment cost. |
Use Of Estimates | The preparation of financial statements in conformity with US GAAP requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include the going concern assessment, estimates for depreciable lives of property, plant and equipment, intangible assets, analysis of impairments of long-lived assets and intangible assets as well as the carrying value of our joint venture investment, assets held for sale, accruals for potential liabilities, assumptions made in calculating the fair value of stock-based compensation and other equity instruments, and the assessment of performance conditions for stock-based compensation awards. The COVID-19 pandemic, as well as supply chain and geo-political disruptions, inflation, and rising interest rates have affected business operations and planning for future commercial facilities to varying degrees for us and our customers, suppliers, vendors and other parties with whom we do business, and such disruptions are expected to continue for an indefinite period of time. The uncertain duration of these conditions has had and may continue to have an effect on our development and commercialization efforts. |
Stock?based compensation | The Company periodically issues stock options, warrants and restricted stock units to employees and non-employees in non-capital raising transactions for services and financing expenses. 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 recognized as compensation expense on the straight-line basis over the vesting period. When performance conditions exist, the Company recognizes compensation expense when it becomes probable that the performance condition will be met. Forfeitures on share-based payments are accounted for by recognizing forfeitures as they occur. The Company accounts for stock options and warrants 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 is 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 expenses recorded in the current and future periods. |
Restricted cash | Cash held by the Company restricted as to withdrawal or use is presented as restricted cash in the consolidated balance sheet. As at November 30, 2022, restricted cash comprised of cash in escrow for a legal settlement and cash restricted in use for a commercial project. |
Inventories | Inventories are stated at the lower of cost or net realizable value using the average cost method. Inventory cost includes direct labor, cost of raw materials and production overhead. The Company separates its inventories into three main categories: raw materials, work in process, and finished goods. The raw materials category includes goods used in the production process that have not yet entered the production process at the balance sheet date and mainly comprises chemicals and other process consumables. The work in process category includes goods that are in the production process at the balance sheet date and mainly comprises monomers that have not yet been polymerized into Loop™ branded PET resin. The finished goods category includes goods that have completed the production process and mainly comprises Loop™ branded PET resin. |
Research and development expenses | Research and development costs are charged to expense as costs are incurred in performing research and development activities. Research and development expenses relate primarily to process development and design, producing initial volumes of product for customers, testing of pre-production samples, machinery and equipment expenditures for use in the small-scale production facility in Terrebonne, Québec (the “Terrebonne Facility”), compensation, and consulting and engineering fees. Research and development costs are presented net of related tax credits and government grants. |
Assets Held For Sale | Assets are classified as held for sale when they met the criteria set out in ASC 360-10-45-9 Long-lived assets classified as held for sale · Management, having the authority to approve the action, commits to a plan to sell the asset; · The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; · An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; · The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year; · The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and · Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. When the criteria are met, the assets are presented at the lesser of fair market value, net of selling costs, and cost in current assets. |
Foreign Currency Translations And Transactions | The accompanying consolidated financial statements are presented in U.S. dollars, the reporting currency of the Company. Assets and liabilities of subsidiaries that have a functional currency other than that of the Company are translated to U.S. dollars at the exchange rate as at the balance sheet date. Income and expenses are translated at the average exchange rate of the period. The resulting translation adjustments are included in other comprehensive income (loss) (“OCI”). As a result, foreign currency exchange fluctuations may impact operating expenses. The Company currently is 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. |
Net Earnings (loss) Per Share | The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share For the nine-month periods ended November 30, 2022 and 2021, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at November 30, 2022, the potentially dilutive securities consisted of 2,542,000 outstanding stock options (2021 – 1,570,000), 4,036,803 outstanding restricted stock units (2021 – 4,014,928), and 7,104,553 outstanding warrants (2021 – 11,659,418). |
Recently adopted accounting pronouncements | In November 2021, the FASB issued ASU 2021-10, “Disclosures by Business Entities about Government Assistance”. This ASU provided guidance to increase the transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. Under the new guidance, an entity is required to provide the following annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy: (1) information about the nature of the transactions and the related accounting policy used to account for the transactions, (2) the line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item and, (3) significant terms and conditions of the transactions, including commitments and contingencies. This update is effective for fiscal years beginning after December 15, 2021. The adoption of this accounting guidance did not impact the disclosures in our Consolidated Financial Statements. In September 2022, the FASB issued ASU 2022-04, “Disclosure of Supplier Finance Program Obligations”. This ASU provided guidance to increase the transparency of supplier finance programs. The amendments in this ASU require that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs. This update is effective for fiscal years beginning after December 15, 2022. We are currently evaluating this accounting guidance, which may have disclosure impact only. |
Sales Tax Tax Credits and Oth_2
Sales Tax Tax Credits and Other Receivables (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Sales Tax Tax Credits and Other Receivables | |
Sales tax, tax credits and other receivables | November 30, 2022 February 28, 2022 Sales tax $ 413,293 $ 1,337,783 Investment tax credits 464,199 - Research and development tax credits 413,028 313,599 Insurance reimbursement related to legal settlement (Note 21) 279,261 - Other receivables 36,075 64,880 $ 1,605,856 $ 1,716,262 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Inventories | |
Inventories | November 30, 2022 February 28, 2022 Work in process $ 278,781 $ - Finished goods 112,731 - Raw materials 34,767 - $ 426,279 $ - |
Prepaid Expenses and Deposits (
Prepaid Expenses and Deposits (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Prepaid Expenses and Deposits | |
Prepaid Expenses and Deposits | November 30, 2022 February 28, 2022 Deposits on machinery and equipment $ 3,429,245 $ 2,801,680 Insurance 545,000 - Other 81,208 163,966 $ 4,055,453 $ 2,965,646 |
Property Plant and Equipment (T
Property Plant and Equipment (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Property Plant and Equipment | |
Property, Plant And Equipment | As at November 30, 2022 Cost Accumulated depreciation, write-down and impairment Net book value Building $ 1,835,273 $ (296,320 ) $ 1,538,953 Land 226,859 - 226,859 Building and Land Improvements 1,852,894 (1,084,060 ) 768,834 Office equipment and furniture 278,906 (135,570 ) 143,336 $ 4,193,932 $ (1,515,950 ) $ 2,677,982 As at February 28, 2022 Cost Accumulated depreciation, write-down and impairment Net book value Building $ 1,952,345 $ (266,434 ) $ 1,685,911 Land 1,644,084 - 1,644,084 Building and Land Improvements 3,049,892 (858,342 ) 2,191,550 Office equipment and furniture 298,141 (126,824 ) 171,317 $ 6,944,462 $ (1,251,600 ) $ 5,692,862 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Fair Value of Financial Instruments (Tables) | |
Fair Value Of Financial Liabilities | Fair Value as at November 30, 2022 Carrying Amount Fair Value Level in the hierarchy Financial liabilities measured at amortized cost: Long-term debt $ 3,289,122 $ 3,247,635 Level 2 Fair Value as at February 28, 2022 Carrying Amount Fair Value Level in the hierarchy Financial liabilities measured at amortized cost: Long-term debt $ 3,378,403 $ 3,392,600 Level 2 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable And Accrued Liabilities | November 30, 2022 February 28, 2022 Trade accounts payable $ 2,185,396 $ 4,397,499 Accrued loss contingency for legal settlement (Note 21) 3,100,000 2,519,220 Accrued employee compensation 914,227 1,254,685 Accrued engineering fees 263,125 774,423 Accrued professional fees 302,582 526,685 Other accrued liabilities 202,889 374,303 $ 6,968,219 $ 9,846,815 |
LongTerm Debt (Tables)
LongTerm Debt (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Interest and Other Finance Costs | |
Long-term Debt | November 30, 2022 February 28, 2022 Investissement Québec financing facility: Principal amount $ 3,405,389 $ 3,622,618 Unamortized discount (280,473 ) (352,038 ) Accrued interest 164,206 107,823 Total Investissement Québec financing facility 3,289,122 3,378,403 Less: current portion of long-term debt (46,891 ) - Long-term debt, net of current portion $ 3,242,231 $ 3,378,403 |
Principal Repayments | Years ending Amount February 28, 2023 $ - February 29, 2024 37,018 February 28, 2025 561,392 February 28, 2026 561,392 February 28, 2027 561,392 Thereafter 1,684,195 Total $ 3,405,389 |
Stockholders Equity (Tables)
Stockholders Equity (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Stockholders' Equity | |
Common Stock | For the nine-month period ended November 30, 2022 Number of shares Amount Balance, February 28, 2022 47,388,056 $ 4,740 Issuance of shares upon settlement of restricted stock units 51,531 5 Balance, November 30, 2022 47,439,587 $ 4,745 For the nine-month period ended November 30, 2021 Number of shares Amount Balance, February 28, 2021 42,413,691 $ 4,242 Issuance of shares upon settlement of restricted stock units 231,660 24 Issuance of shares for cash 4,714,813 471 Issuance of shares upon exercise of warrants 11,666 1 Issuance of shares upon exercise of options 16,226 2 Balance, November 30, 2021 47,388,056 $ 4,740 |
Research and Development Expe_2
Research and Development Expenses (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Research and Development Expenses (Tables) | |
Research And Development Expenses | November 30, 2022 November 30, 2021 Machinery and equipment expenditures $ 1,059,266 $ 2,599,758 Employee compensation 1,994,594 1,786,765 External engineering 707,113 1,585,512 Plant and laboratory operating expenses 915,951 665,893 Tax credits (299,793 ) 97,480 Other 204,421 99,896 $ 4,581,552 $ 6,835,304 November 30, 2022 November 30, 2021 Machinery and equipment expenditures $ 4,132,575 $ 7,707,882 Employee compensation 6,349,659 5,365,581 External engineering 2,913,567 5,040,342 Plant and laboratory operating expenses 2,365,643 2,064,403 Tax credits (1,207,415 ) (54,911 ) Other 579,162 634,640 $ 15,133,191 $ 20,757,937 |
General and Administrative Ex_2
General and Administrative Expenses (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
General and Administrative Expenses | |
General And Administrative Expenses | November 30, 2022 November 30, 2021 Professional fees $ 1,278,478 $ 650,164 Employee compensation 911,331 1,028,242 Insurance 709,952 1,193,554 Other 283,166 219,295 $ 3,182,927 $ 3,091,255 November 30, 2022 November 30, 2021 Professional fees $ 3,840,844 $ 3,138,611 Employee compensation (1) 10,728,182 2,357,769 Insurance 2,883,333 3,121,353 Other 777,896 750,319 $ 18,230,255 $ 9,368,052 |
Share-based Payments (Tables)
Share-based Payments (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Share-based Payments (Tables) | |
Stock Options | Exercise price $ 2.68 Risk-free interest rate 3.88 % Expected dividend yield 0 % Expected volatility 73 % Expected life 5 years |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Equity Incentive Plan | |
Equity Incentive Plan | 2022 2021 Number of units Number of units Outstanding, beginning of period 1,043,705 1,083,412 Share reserve increase - - Units granted (1,123,605 ) (349,580 ) Units forfeited 81,838 313,512 Units expired - - Outstanding, end of period 1,938 1,047,344 |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Warrants | |
Warrants granted | Number of warrants Exercise Price Expiration date 4,714,813 $ 15.00 July 29, 2024 2,357,407 20.00 (1) 461,298 11.00 June 14, 2022 17,180 $ 11.00 August 26, 2024 |
Interest and Other Financial Ex
Interest and Other Financial Expenses (Tables) | 9 Months Ended |
Nov. 30, 2022 | |
Interest and Other Financial Expenses (Tables) | |
Interest And Other Finance Costs | 2022 2021 Interest on long-term debt $ 20,950 $ 32,718 Accretion expense 17,048 16,937 Other 16,404 - $ 54,402 $ 49,655 2022 2021 Interest on long-term debt $ 65,186 $ 74,832 Accretion expense 52,318 38,512 Other 21,458 - $ 138,962 $ 113,344 |
The Company Basis of Presenta_2
The Company Basis of Presentation (Details Narrative) | Nov. 30, 2022 |
Investment Common Stocks | |
Ownership, Percentage | 50% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | |
Nov. 30, 2022 | Nov. 30, 2021 | |
Available Liquidity | $ 24,110 | |
Cash and cash equivalents | 21,520 | |
Loan facility | 2,590 | |
Land [Member] | ||
Land sold | $ 13,700 | |
Note Warrant | ||
Dilutive Securities | 7,104,553 | 11,659,418 |
Stock Option | ||
Dilutive Securities | 2,542,000 | 1,570,000 |
Restricted Stock Units | ||
Dilutive Securities | 4,036,803 | 4,014,928 |
Sales Tax Tax Credits and Oth_3
Sales Tax Tax Credits and Other Receivables (Details) - USD ($) | Nov. 30, 2022 | Feb. 28, 2022 |
Sales Tax Tax Credits and Other Receivables | ||
Sales Tax | $ 413,293 | $ 1,337,783 |
Investment tax credits | 464,199 | 0 |
Research And Development Tax Credits | 413,028 | 313,599 |
Insurance reimbursement related to legal settlement | 279,261 | 0 |
Other Receivables | 36,075 | 64,880 |
Total | $ 1,605,856 | $ 1,716,262 |
Inventories (Details)
Inventories (Details) - USD ($) | Nov. 30, 2022 | Feb. 28, 2022 |
Inventories | ||
Work in process | $ 278,781 | $ 0 |
Finished goods | 112,731 | 0 |
Raw materials | 34,767 | 0 |
Inventory net | $ 426,279 | $ 0 |
Prepaid Expenses and Deposits_2
Prepaid Expenses and Deposits (Details) - USD ($) | Nov. 30, 2022 | Aug. 31, 2022 | Feb. 28, 2022 |
Prepaid Expenses and Deposits | |||
Deposits on machinery and equipment | $ 3,429,245 | $ 2,801,680 | |
Other | 81,208 | 163,966 | |
Insurance | 545,000 | 0 | |
Prepaid expenses | $ 4,055,453 | $ 4,055,453 | $ 2,965,646 |
Prepaid Expenses and Deposits_3
Prepaid Expenses and Deposits (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Nov. 30, 2022 | Feb. 28, 2022 | |
Prepaid Expenses and Deposits | ||
Non-refundable cash deposits on long-lead machinery and equipment | $ 3,395,650 | $ 2,128,967 |
Non Refundable Deposits On Machinery And Equipment | 3,429,245 | 2,801,680 |
Prepayments On Machinery And Equipment | $ 33,595 | $ 672,713 |
Assets held for sale (Details N
Assets held for sale (Details Narrative) - USD ($) | 1 Months Ended | ||
May 27, 2021 | Nov. 30, 2022 | Sep. 15, 2021 | |
Assets held for sale (Details Narrative) | |||
Land Acquired Descriprtion | On May 27, 2021, we acquired land in Bécancour, Québec for cash of $4.4 million (CDN $5.9 million) | ||
Assets held for sale | $ 3,758,314 | $ 8,559,490 | |
Disposition asset | $ 6,703,558 |
Property Plant and Equipment (D
Property Plant and Equipment (Details) - USD ($) | Nov. 30, 2022 | Feb. 28, 2022 |
Property, Plant And Equipment, Gross | $ 4,193,932 | $ 6,944,462 |
Less: Accumulated Depreciation, Write-down And Impairment | (1,515,950) | (1,251,600) |
Property, Plant And Equipment, Net | 2,677,982 | 5,692,862 |
Building | ||
Property, Plant And Equipment, Gross | 1,835,273 | 1,952,345 |
Less: Accumulated Depreciation, Write-down And Impairment | (296,320) | (266,434) |
Property, Plant And Equipment, Net | 1,538,953 | 1,685,911 |
Land | ||
Property, Plant And Equipment, Gross | 226,859 | 1,644,084 |
Less: Accumulated Depreciation, Write-down And Impairment | 0 | 0 |
Property, Plant And Equipment, Net | 226,859 | 1,644,084 |
Building And Land Improvements | ||
Property, Plant And Equipment, Gross | 1,852,894 | 3,049,892 |
Less: Accumulated Depreciation, Write-down And Impairment | (1,084,060) | (858,342) |
Property, Plant And Equipment, Net | 768,834 | 2,191,550 |
Office Equipment and Furniture | ||
Property, Plant And Equipment, Gross | 278,906 | 298,141 |
Less: Accumulated Depreciation, Write-down And Impairment | (135,570) | (126,824) |
Property, Plant And Equipment, Net | $ 143,336 | $ 171,317 |
Property Plant and Equipment _2
Property Plant and Equipment (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
May 31, 2021 | Nov. 30, 2022 | Aug. 31, 2021 | Aug. 31, 2021 | Nov. 30, 2022 | |
Property Plant and Equipment | |||||
Depreciation Expense | $ 111,055 | $ 114,799 | $ 351,589 | $ 347,543 | |
Land Acquired For Cash, Amount | $ 4,400,000 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Nov. 30, 2022 | Nov. 30, 2021 | Nov. 30, 2022 | Nov. 30, 2021 | Feb. 28, 2022 | |
Intangible Assets | |||||
Intangible assets | $ 1,110,932 | $ 1,110,932 | $ 1,013,801 | ||
Additions to intangible assets | $ 348,017 | 225,047 | |||
Amortization expense | $ 22,848 | $ 20,236 | $ 63,001 | $ 56,216 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - Long-term Debt - Level 2 - USD ($) | Nov. 30, 2022 | Feb. 28, 2022 |
Carrying Amount | $ 3,289,122 | $ 3,378,403 |
Fair Value | $ 3,247,635 | $ 3,392,600 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details) - USD ($) | Nov. 30, 2022 | Feb. 28, 2022 |
Accounts Payable and Accrued Liabilities | ||
Trade Accounts Payable | $ 2,185,396 | $ 4,397,499 |
Accrued loss contingency for legal settlement | 3,100,000 | 2,519,220 |
Accrued Employee Compensation | 914,227 | 1,254,685 |
Accrued Engineering Fees | 263,125 | 774,423 |
Accrued Professional Fees | 302,582 | 526,685 |
Other Accrued Liabilities | 202,889 | 374,303 |
Accounts Payable And Accrued Liabilities | $ 6,968,219 | $ 9,846,815 |
Customer Deposits (Details Narr
Customer Deposits (Details Narrative) | Oct. 31, 2022 USD ($) |
Executed Capacity Reservation [Member] | |
Cash Deposit | $ 1,000,000 |
LongTerm Debt (Details)
LongTerm Debt (Details) - USD ($) | Nov. 30, 2022 | Feb. 28, 2022 |
Long-term Debt, Net Of Current Portion | $ 3,242,231 | $ 3,378,403 |
Principal Amount | 3,405,389 | |
Less: Current Portion | (46,891) | 0 |
Investissement Quebec Financing Facility | ||
Long-term Debt, Net Of Current Portions | 3,289,122 | 3,378,403 |
Principal Amount | 3,405,389 | 3,622,618 |
Less: Current Portion | (46,891) | 0 |
Unamortized Discount | (280,473) | (352,038) |
Accrued Interest | $ 164,206 | $ 107,823 |
LongTerm Debt (Details 1)
LongTerm Debt (Details 1) | Nov. 30, 2022 USD ($) |
Interest and Other Finance Costs | |
February 28, 2023 | $ 0 |
February 29, 2024 | 37,018 |
February 28, 2025 | 561,392 |
February 28, 2026 | 561,392 |
February 28, 2027 | 561,392 |
Thereafter | 1,684,195 |
Total | $ 3,405,389 |
LongTerm Debt (Details Narrativ
LongTerm Debt (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Nov. 21, 2022 | Nov. 30, 2022 | Aug. 31, 2021 | Aug. 31, 2021 | Nov. 30, 2022 | Jul. 26, 2022 | |
Borrowings | $ 2,591,057 | |||||
Credit Facility | $ 2,591,057 | |||||
Annual interest rate | 1% | |||||
Investissement Quebec Financing Facility | ||||||
Interest Expense | $ 20,950 | $ 21,704 | $ 44,098 | $ 65,186 | ||
Accretion Expense | $ 17,048 | $ 16,723 | $ 38,295 | $ 52,318 | ||
Financing Facility Amendment | $ 37,015 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jul. 13, 2018 | May 31, 2022 | Nov. 30, 2022 | Apr. 30, 2020 | |
Vested Units Settled Annually In Tranches | 200,000 | |||
Unvested Restricted Stock Units Forfeited | 1,000,000 | |||
Common Stock With A Fair Value | $ 7,740,000 | |||
Performance Incentive Shares | 1,000,000 | |||
Long-term incentive grant shares | 4,000,000 | |||
Vested RSUs | 400,000 | |||
President and Chief Executive Officers | ||||
Shares Granted | 4,000,000 | |||
Closing Price Per Share | $ 7.74 | |||
Restricted Stock Units | President and Chief Executive Officer | ||||
Shares Granted | 4,000,000 |
Stockholders Equity (Details)
Stockholders Equity (Details) - USD ($) | 9 Months Ended | |
Nov. 30, 2022 | Nov. 30, 2021 | |
Balance Shares Beginning | 47,388,056 | 42,413,691 |
Balance Shares Ending | 47,439,587 | 47,388,056 |
Issuance Of Shares Upon Settlement Of Restricted Stock Units, Shares | 51,531 | 231,660 |
Issuance of shares upon exercise of warrant shares | 11,666 | |
Issuance of shares upon exercise of options shares | 16,226 | |
Common Stocks | ||
Balance, amount | $ 4,740 | $ 4,242 |
Issuance Of Shares Upon Settlement Of Restricted Stock Units, Shares | 51,531 | 231,660 |
Issuance Of Shares Upon Settlement Of Restricted Stock Units, Amount | $ 5 | $ 24 |
Issuance Of Shares For Cash, Shares | 4,714,813 | |
Issuance Of Shares For Cash, Amount | $ 471 | |
Issuance of shares upon exercise of warrants amount | $ 1 | |
Issuance of shares upon exercise of warrant shares | 11,666 | |
Issuance of shares upon exercise of options amount | $ 2 | |
Issuance of shares upon exercise of options shares | 16,226 | |
Stockholders equity Member | ||
Balance, amount ending | $ 4,745 | $ 4,740 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | 9 Months Ended | ||
Nov. 30, 2022 | Nov. 30, 2021 | Feb. 28, 2022 | |
Stockholders' Equity | |||
Issuance Of Shares Upon The Vesting Of Restricted Stock Units | 51,531 | 231,660 | |
Common stock shares issued | 47,439,587 | 4,714,813 | 47,388,056 |
Issuance of shares upon exercise of warrants shares | 11,666 | ||
Issuance of shares upon exercise of options shares | 16,226 | ||
Aggregate offering price | $ 12 | ||
Total gross proceeds | $ 56,577,756 | ||
Net proceeds | $ 56,084,304 |
Research and Development Expe_3
Research and Development Expenses (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2022 | Nov. 30, 2021 | Nov. 30, 2022 | Nov. 30, 2021 | |
Research and development expenses | $ 4,581,552 | $ 6,835,304 | $ 15,133,191 | $ 20,757,937 |
Machinery and Equipments [Member] | ||||
Research and development expenses | 1,059,266 | 2,599,758 | 4,132,575 | 7,707,882 |
Employee Compensation [Member] | ||||
Research and development expenses | 1,994,594 | 1,786,765 | 6,349,659 | 5,365,581 |
External Engineering [Member] | ||||
Research and development expenses | 707,113 | 1,585,512 | 2,913,567 | 5,040,342 |
Plant and Laboratory Operating Expenses [Member] | ||||
Research and development expenses | 915,951 | 665,893 | 2,365,643 | 2,064,403 |
Tax credit [Member] | ||||
Research and development expenses | 299,793 | 97,480 | 1,207,415 | 54,911 |
Other [Member] | ||||
Research and development expenses | $ 204,421 | $ 99,896 | $ 579,162 | $ 634,640 |
General and Administrative Ex_3
General and Administrative Expenses (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2022 | Nov. 30, 2021 | Nov. 30, 2022 | Nov. 30, 2021 | |
General And Administrative Expenses | $ 3,182,927 | $ 3,091,255 | $ 18,230,255 | $ 9,368,052 |
Employee Compensation [Member] | ||||
General And Administrative Expenses | 911,331 | 1,028,242 | 10,728,182 | 2,357,769 |
Professional Fees | ||||
General And Administrative Expenses | 1,278,478 | 650,164 | 3,840,844 | 3,138,611 |
Insurance [Member] | ||||
General And Administrative Expenses | 709,952 | 1,193,554 | 2,883,333 | 3,121,353 |
Other (Member) | ||||
General And Administrative Expenses | $ 283,166 | $ 219,295 | $ 777,896 | $ 750,319 |
General and Administrative Ex_4
General and Administrative Expenses (Details Narrative) - USD ($) | 6 Months Ended | 9 Months Ended | |
Aug. 31, 2021 | Nov. 30, 2022 | Nov. 30, 2021 | |
Net Reversal Of Stock-based Compensation | $ 9,969,153 | $ 1,361,744 | |
Restricted Stock Units | |||
Net Reversal Of Stock-based Compensation | $ 7,740,000 | ||
RSU Forteited | $ 935,837 | ||
RSU shares | 1,000,000 |
ShareBased Payments (Details)
ShareBased Payments (Details) | 3 Months Ended |
Nov. 30, 2022 USD ($) $ / shares | |
ShareBased Payments | |
Expected dividend yield | $ | $ 0 |
Exercise price | $ / shares | $ 2.68 |
Risk-free interest rate | 3.88% |
Expected life | 5 years |
Expected volatility | 73% |
ShareBased Payments (Details Na
ShareBased Payments (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2022 | Nov. 30, 2021 | Nov. 30, 2022 | Nov. 30, 2021 | |
Stock-based Compensation Expense Attributable To Stock Options | $ 7,740,000 | |||
General and administrative expenses | $ 963,002 | |||
Stock-based Compensation Attributable To Rsus | 8,788,190 | 157,769 | ||
Stock-based Compensation Expense | $ 322,802 | $ 331,005 | ||
Research and Development Expenses | ||||
Stock-based Compensation Expense | 455,013 | 362,435 | 1,170,554 | 1,152,506 |
General and Administrative Expenses | ||||
Stock-based Compensation Expense | 419,152 | 279,574 | 8,798,599 | 209,236 |
Stock Option | ||||
Stock-based Compensation Expense | $ 551,363 | $ 311,004 | $ 1,180,963 | $ 1,203,975 |
Weighted Average Exercise Price, Forfeited | $ 0 | $ 0 | ||
Number Of Options, Granted | 972,000 | 0 | 972,000 | 0 |
Number Of Options, Forfeited | 0 | 0 | 0 | 0 |
Number Of Options, Expired | 0 | 0 | 0 | 0 |
Number Of Options Outstanding, ending | $ 2,542,000 | $ 1,570,000 | ||
Exercisable, End Of Year | 1,670,000 | 1,286,667 | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 5.27 | $ 6.87 | ||
Weighted Average Exercise Price, Granted | $ 2.68 | $ 0 | 2.68 | $ 0 |
Number of share options exercised shares | 0 | 17,081 | 17,081 | |
Weighted Average Exercise Price, Exercised | $ 0.80 | 0 | $ 0.80 | |
Weighted Average Exercise Price, Expired | $ 0 | 0 | ||
Weighted Average Outstanding, End Of Year | $ 6.84 | $ 7.48 | ||
Stock-based Compensation Expense | ||||
General and administrative expenses | $ 935,837 | |||
Stock-based Compensation Expense | $ 7,740,000 | |||
Number Of Units, Granted | 1,000,000 | |||
Restricted Stock Units | ||||
Number Of Units, Granted | 38,878 | 200,000 | 51,531 | 231,660 |
Weighted Average Exercise Price, Forfeited | $ 13.08 | $ 0.80 | $ 13.07 | $ 1.90 |
Number Of Units, Forfeited | (53,037) | (17,988) | (81,838) | (313,512) |
Number Of Units Outstanding, Ending | 4,036,803 | 4,014,928 | 4,036,803 | 4,014,928 |
Number Of Units Outstanding Vested, Ending | 1,563,497 | 725,313 | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 13.64 | $ 5.14 | $ 10.16 | |
Weighted Average Exercise Price, Granted | $ 13.40 | $ 8.73 | $ 11.74 | $ 7.97 |
Equity Incentive Plan (Details)
Equity Incentive Plan (Details) - Equity Incentive Plan - shares | 9 Months Ended | |
Nov. 30, 2022 | Nov. 30, 2021 | |
Number Of Units Outstanding, Beginning | 1,043,705 | 1,083,412 |
Automatic share reserve increase | 0 | 0 |
Units Granted | (1,123,605) | (349,580) |
Units forfeited | 81,838 | 313,512 |
Units Expired | 0 | 0 |
Number Of Units Outstanding, Ending | 1,938 | 1,047,344 |
Equity Incentive Plan (Details
Equity Incentive Plan (Details Narrative) - 2017 Equity Incentive Plan - shares | 9 Months Ended | |
Jul. 06, 2017 | Nov. 30, 2022 | |
Common Stock Shares Reserved For Future Issuance | 3,000,000 | |
Common Stock Shares Reserved For Future Issuance Annual Increase | 1,500,000 | |
Expected Life | 10 years | |
Voting Power Percentage | 10 | |
Life Of Option | 5 years | |
Common Stock Outstanding Shares Percentage | 5% |
Warrants (Details)
Warrants (Details) | 9 Months Ended |
Nov. 30, 2022 $ / shares shares | |
Weighted Average Exercise Price | $ 9.43 |
Warrants 1 | |
Number Of Warrants Outstanding | shares | 4,714,813 |
Weighted Average Exercise Price | $ 15 |
Expiration Date | Jul. 29, 2024 |
Warrants 2 | |
Number Of Warrants Outstanding | shares | 2,357,407 |
Weighted Average Exercise Price | $ 20 |
Warrants 3 | |
Number Of Warrants Outstanding | shares | 461,298 |
Weighted Average Exercise Price | $ 11 |
Expiration Date | Jun. 14, 2022 |
Warrants 4 | |
Number Of Warrants Outstanding | shares | 17,180 |
Weighted Average Exercise Price | $ 11 |
Expiration Date | Aug. 26, 2024 |
Warrants (Details Narrative)
Warrants (Details Narrative) - $ / shares | Nov. 30, 2022 | Nov. 30, 2021 |
Exercised of Warrants | 25,000 | |
Exercise Price | $ 9.43 | |
Warrants | ||
Exercise Price | $ 11 | $ 16.32 |
Warrants To Issue Shares Of Common Stock | 7,550,698 | |
Warrant To Purchase Common Stock Shares For For Consulting Services | 4,554,865 |
Interest and Other Financial _2
Interest and Other Financial Expenses (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2022 | Nov. 30, 2021 | Nov. 30, 2022 | Nov. 30, 2021 | |
Interest and Other Financial Expenses (Details) | ||||
Interest On Long-term Debt | $ 20,950 | $ 32,718 | $ 65,186 | $ 74,832 |
Accretion Expense | 17,048 | 16,937 | 52,318 | 38,512 |
Other | 16,404 | 0 | 21,458 | 0 |
Interest and Other Financial Expenses | $ 54,402 | $ 49,655 | $ 138,962 | $ 113,344 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 04, 2022 | Nov. 30, 2022 | Feb. 28, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies | ||||
Purchase Of Long Lead Machinery | $ 8,546,000 | |||
Cash Deposit | $ 3,395,650 | |||
Payment to plaintiff class | $ 3,100,000 | |||
Contingency loss for legal settlement | $ (2,519,220) | |||
Escrow payment | $ 3,100,000 | |||
Proceed from Insurance carriers | 558,521 | |||
Additional | 279,261 | |||
Accounts payable and accrued liabilities related | $ 3,100,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Dec. 21, 2022 USD ($) |
Asset held for sale for cash proceeds | $ 18,500,000 |
Subsequent Event [Member] | |
Asset held for sale for cash proceeds | $ 13,695,588 |