Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
May 31, 2020 | Jul. 09, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Loop Industries, Inc. | |
Entity Central Index Key | 0001504678 | |
Document Type | 10-Q | |
Document Period End Date | May 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-28 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 39,935,210 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Interactive Data Current? | Yes | |
Entity Incorporation State Country Code | NV | |
Entity File Number | 000-54768 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Current assets | ||
Cash and cash equivalents | $ 27,508,755 | $ 33,717,671 |
Sales tax, tax credits and other receivables (Note 3) | 570,214 | 664,544 |
Prepaid expenses (Note 4) | 1,937,039 | 141,226 |
Total current assets | 30,016,008 | 34,523,441 |
Investment in joint venture (Note 9) | 1,500,000 | 850,000 |
Property, plant and equipment, net (Note 5) | 7,250,045 | 7,260,254 |
Intangible assets, net (Note 6) | 334,046 | 202,863 |
Total assets | 39,100,099 | 42,836,558 |
Current liabilities | ||
Accounts payable and accrued liabilities (Note 8) | 1,411,472 | 2,082,698 |
Current portion of long-term debt (Note 10) | 50,772 | 52,126 |
Total current liabilities | 1,462,244 | 2,134,824 |
Long-term debt (Note 10) | 2,185,449 | 2,238,026 |
Total liabilities | 3,647,693 | 4,372,850 |
Stockholders' Equity | ||
Series A Preferred stock par value $0.0001; 25,000,000 shares authorized; one share issued and outstanding (Note 12) | 0 | 0 |
Common stock par value $0.0001: 250,000,000 shares authorized; 39,916,905 shares issued and outstanding (February 29, 2020 - 39,910,774) (Note 12) | 3,993 | 3,992 |
Additional paid-in capital | 83,306,794 | 82,379,413 |
Additional paid-in capital - Warrants | 9,870,241 | 9,785,799 |
Accumulated deficit | (57,169,761) | (53,317,047) |
Accumulated other comprehensive loss | (558,861) | (388,449) |
Total stockholders' equity | 35,452,406 | 38,463,708 |
Total liabilities and stockholders' equity | $ 39,100,099 | $ 42,836,558 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | May 31, 2020 | Feb. 29, 2020 |
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 | $ .0001 | $ 0.0001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 39,916,905 | 39,910,774 |
Common stock, shares outstanding | 39,916,905 | 39,910,774 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 0 | $ 0 |
Expenses | ||
Research and development, net (Note 13) | 1,480,588 | 997,861 |
General and administrative (Note 13) | 1,953,081 | 1,902,630 |
Depreciation and amortization (Notes 5 and 6) | 255,974 | 164,336 |
Interest and other financial expenses (Note 16) | 126,776 | 501,849 |
Interest income | (40,346) | 0 |
Foreign exchange loss (gain) | 76,641 | (12,126) |
Total expenses | 3,852,714 | 3,554,550 |
Net loss | (3,852,714) | (3,554,550) |
Other comprehensive loss | ||
Foreign currency translation adjustment | (170,412) | (140,142) |
Comprehensive loss | $ (4,023,126) | $ (3,694,692) |
Loss per share | ||
Basic and diluted | $ (0.10) | $ (0.11) |
Weighted average common shares outstanding | ||
Basic and diluted | 39,916,838 | 34,714,510 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Changes in Stockholders Equity (Unaudited) - USD ($) | Common Stock | Preferred Stock | Additional Paid-in Capital | Additional Paid-in Capital - Warrants | Additional Paid-in Capital - Benificial Conversion Feature | Common Stock Issuable | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning balance, shares at Feb. 28, 2019 | 33,805,706 | 1 | |||||||
Beginning balance, amount at Feb. 28, 2019 | $ 3,381 | $ 0 | $ 38,966,208 | $ 757,704 | $ 1,200,915 | $ 800,000 | $ (38,811,592) | $ (290,224) | $ 2,626,392 |
Issuance of common shares for cash, net of share issuance expenses (Note 12), shares | 600,000 | ||||||||
Issuance of common shares for cash, net of share issuance expenses (Note 12), amount | $ 60 | 4,266,725 | 4,266,785 | ||||||
Issuance of shares for legal settlement, shares | 150,000 | ||||||||
Issuance of shares for legal settlement, amount | $ 15 | (15) | 0 | ||||||
Issuance of shares upon conversion of convertible notes, shares | 319,326 | ||||||||
Issuance of shares upon conversion of convertible notes, amount | $ 32 | 2,372,549 | 316,929 | 2,689,510 | |||||
Stock options issued for services (Note 13) | 575,513 | 575,513 | |||||||
Restricted stock units issued for services (Note 13) | 355,177 | 355,177 | |||||||
Foreign currency translation | (140,142) | (140,142) | |||||||
Net loss | (3,554,550) | (3,554,550) | |||||||
Ending balance, shares at May. 31, 2019 | 34,875,032 | 1 | |||||||
Ending balance, amount at May. 31, 2019 | $ 3,488 | $ 0 | 46,536,157 | 1,074,633 | 1,200,915 | 800,000 | (42,366,142) | (430,366) | 6,818,685 |
Beginning balance, shares at Feb. 29, 2020 | 39,910,774 | 1 | |||||||
Beginning balance, amount at Feb. 29, 2020 | $ 3,992 | $ 0 | 82,379,413 | 9,785,799 | 0 | 0 | (53,317,047) | (388,449) | 38,463,708 |
Issuance of shares upon vesting of restricted stock units (Note 13), shares | 6,131 | ||||||||
Issuance of shares upon vesting of restricted stock units (Note 13), amount | $ 1 | (1) | 0 | ||||||
Warrant issued for services (Note 15) | 84,442 | 84,442 | |||||||
Stock options issued for services (Note 13) | 556,895 | 556,895 | |||||||
Restricted stock units issued for services (Note 13) | 370,487 | 370,487 | |||||||
Foreign currency translation | (170,412) | (170,412) | |||||||
Net loss | (3,852,714) | (3,852,714) | |||||||
Ending balance, shares at May. 31, 2020 | 39,916,905 | 1 | |||||||
Ending balance, amount at May. 31, 2020 | $ 3,993 | $ 0 | $ 83,306,794 | $ 9,870,241 | $ 0 | $ 0 | $ (57,169,761) | $ (558,861) | $ 35,452,406 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Cash Flows from Operating Activities | ||
Net loss | $ (3,852,714) | $ (3,554,550) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization (Notes 5 and 6) | 256,090 | 164,336 |
Stock-based compensation expense (Note 13) | 1,011,824 | 930,690 |
Accrued interest expenses (Note 10) | 9,416 | 117,433 |
Loss on revaluation of warrants | 0 | 8,483 |
Debt accretion (Note 10) | 8,547 | 583,727 |
Deferred financing expenses | 0 | 46,442 |
Gain on conversion of convertible notes | 0 | (268,730) |
Loss on revaluation of foreign exchange contracts | 98,502 | 0 |
Changes in operating assets and liabilities: | ||
Sales tax and tax credits receivable (Note 3) | 76,410 | (158,954) |
Prepaid expenses (Note 4) | (1,865,216) | 49,136 |
Accounts payable and accrued liabilities (Note 8) | (720,759) | (5,366) |
Net cash used in operating activities | (4,977,900) | (2,087,353) |
Cash Flows from Investing Activities | ||
Investment in a joint venture (Note 9) | (650,000) | (500,000) |
Additions to property, plant and equipment (Note 5) | (394,403) | (470,545) |
Additions to intangible assets (Note 6) | (144,386) | (24,811) |
Net cash used in investing activities | (1,188,789) | (955,356) |
Cash Flows from Financing Activities | ||
Proceeds from sale of common shares | 0 | 5,130,000 |
Share issuance costs | 0 | (863,216) |
Repayment of long-term debt (Note 10) | (12,693) | (13,057) |
Net cash (used) provided by financing activities | (12,693) | 4,253,727 |
Effect of exchange rate changes | (29,534) | (32,796) |
Net decrease in cash | (6,208,916) | 1,138,222 |
Cash, beginning of period | 33,717,671 | 5,833,390 |
Cash, end of period | 27,508,755 | 6,971,612 |
Supplemental Disclosure of Cash Flow Information: | ||
Income tax paid | 0 | 0 |
Interest paid | 10,311 | 14,488 |
Interest received | $ 40,346 | $ 0 |
The Company, Basis of Presentat
The Company, Basis of Presentation and Going Concern | 3 Months Ended |
May 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company, Basis of Presentation and Going Concern | The Company Loop Industries, Inc. (the “Company,” “Loop Industries,” “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 for use in food-grade packaging and polyester fiber. On November 20, 2017, Loop Industries Inc. commenced trading on the NASDAQ Global Market under its new trading symbol, “LOOP.” From April 10, 2017 to November 19, 2017, our common stock was quoted on the OTCQX tier of the OTC Markets Group Inc. under the symbol “LLPP.” Basis of presentation The accompanying 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 29, 2020, filed with the SEC on May 5, 2020 and amended on May 6, 2020. 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 29, 2020, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by 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 months ended May 31, 2020 are not necessarily indicative of the results to be expected for any subsequent quarter, the fiscal year ending February 28, 2021, or any other period. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
May 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Use of estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for depreciable lives of property, plant and equipment, intangible assets, analysis of impairments of long-lived assets and intangible assets, accruals for potential liabilities and assumptions made in calculating the fair value of stock-based compensation and other equity instruments. The uncertainties around the COVID-19 pandemic required the use of estimates and assumptions that resulted in no significant impact to our unaudited condensed consolidated financial statements as of and for the three-month period ended May 31, 2020. Foreign currency translations and transactions The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars, the reporting currency of the Company. Assets and liabilities of subsidiaries that have a functional currency other than that of the Company are translated to U.S. dollars at the exchange rate as at the balance sheet date. Income and expenses are translated at the average exchange rate of the period. The resulting translation adjustments are included in other comprehensive income (loss) (“OCI”). As a result, foreign currency exchange fluctuations may impact operating expenses. The Company currently has not engaged in any currency hedging activities. 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. Stock-based compensation Loop Industries, Inc. 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 where there are no performance conditions, recognized as compensation expense on the straight-line basis over the vesting period and where performance conditions exist, recognize compensation expense when it becomes probable that the performance condition will 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 are estimated using the Black-Scholes-Merton Option Pricing (“Black-Scholes”) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options, and future dividends. Stock-based compensation expense is recorded based on the value derived from the Black-Scholes model and on actual experience. The assumptions used in the Black-Scholes model could materially affect stock-based compensation expense recorded in the current and future periods. Income taxes The Company calculates its provision for income tax on the basis of the tax laws enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income, in accordance with FASB ASC 740, Income Taxes Research and development expenses Research and development expenses relate primarily to the development, design, testing of preproduction samples, prototypes and models, compensation, and consulting fees, and are expensed as incurred. Total research and development expenses recorded during the three-month periods ended May 31, 2020 and 2019 amounted to $1,480,588 and $997,861, respectively, and are net of government research and development tax credits and government grants from the federal and provincial taxation authorities accrued and recorded based on qualifying expenditures incurred during the fiscal periods. Net earnings (loss) per share The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share For the three-month periods ended May 31, 2020 and 2019, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at May 31, 2020, the potentially dilutive securities consisted of 1,590,470 outstanding stock options (May 31, 2019 – 1,691,973), 4,302,527 outstanding restricted stock units (May 31, 2019 – 403,767), 5,084,331 outstanding warrants (May 31, 2019 – 962,132) and nil outstanding issuable common stock (May 31, 2019 – 1,000,000). Recently adopted accounting pronouncements In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that Is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of the standard had no impact on the consolidated financial statements of the Company. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2016, the FASB issued ASU 2016-02, “Leases,” amended in July by ASU 2018-10, “Codification Improvements to Topic 842, Leases,” ASU 2018-11, “Targeted Improvements,” and ASU 2018-20, “Narrow-Scope Improvements for Lessors,” which requires lessees to recognize leases on the balance sheet while continuing to recognize expenses in the income statement in a manner similar to current accounting standards. For lessors, the new standard modifies the classification criteria and the accounting for sales-type and direct financing leases. Enhanced disclosures will also be required to give financial statement users the ability to assess the amount, timing, and uncertainty of cash flows arising from leases. This ASU may either be adopted on a modified retrospective approach at the beginning of the earliest comparative period, or through a cumulative-effect adjustment at the adoption date. This update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company adopted these standards effective March 1, 2020. The adoption of the standard had no impact on the consolidated financial statements of the Company. The Company elected to apply the package of practical expedients that allows us not to reassess whether expired or existing contracts contain leases, the classification of these leases and whether previously capitalized initial direct costs would qualify for capitalization under Accounting Standards Codification (or “ ASC Recently issued accounting pronouncements not yet adopted In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which removes specific exceptions to the general principles in ASC 740, “Income Taxes,” and clarifies certain aspects of the existing guidance. This update is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, with early adoption being permitted as of the beginning of an interim or annual reporting period. All amendments to this ASU must be adopted in the same period on a prospective basis, with certain exceptions. We are still evaluating the impact of this accounting guidance on our results of operations and financial position. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses”. This ASU added a new impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes an allowance for its estimate of expected credit losses and applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. We are still evaluating the impact of this accounting guidance on our results of operations and financial position. |
Sales Tax, Tax Credits and Othe
Sales Tax, Tax Credits and Other Receivables | 3 Months Ended |
May 31, 2020 | |
Receivables [Abstract] | |
Sales Tax, Tax Credits and Other Receivables | Sales tax, research and development tax credits and other receivables as at May 31, 2020 and February 29, 2020 were as follows: May 31, 2020 February 29, 2020 Sales tax $ 122,419 $ 180 971 Research and development tax credits 216,458 447,843 Other receivables 231,337 35,730 $ 570,214 $ 664,544 |
Prepaid Expenses
Prepaid Expenses | 3 Months Ended |
May 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses | Prepaid expenses as at May 31, 2020 and February 29, 2020 were as follows: May 31, 2020 February 29, 2020 Insurance $ 1,144,500 $ 61,891 Machinery and equipment 644,000 - Other prepaid expenses 148,539 79,335 $ 1,937,039 $ 141,226 |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
May 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | As at May 31, 2020 Cost Accumulated depreciation Net book value Building $ 1,798,134 $ (140,542 ) $ 1,657,592 Land 222,268 - 222,268 Building and land improvements 900,479 (235,634 ) 664,845 Machinery and equipment 6,207,312 (1,598,626 ) 4,608,686 Office equipment and furniture 162,388 (65,734 ) 96,654 Balances, end of period $ 9,290,581 $ (2,040,536 ) $ 7,250,045 As at February 29, 2020 Cost Accumulated depreciation Net book value Building $ 1,846,070 $ (128,911 ) $ 1,717,159 Land 264,868 - 264,868 Building and land improvements 733,884 (214,068 ) 519,816 Machinery and equipment 6,085,195 (1,426,465 ) 4,658,730 Office equipment and furniture 162,466 (62,785 ) 99,681 Balances, end of period $ 9,092,483 $ (1,832,229 ) $ 7,260,254 Depreciation expense for the three-month periods ended May 31, 2020 and 2019 amounted to $248,199 and $161,321, respectively, and is recorded as an operating expense in the consolidated statements of operations and comprehensive loss. |
Intangible Assets
Intangible Assets | 3 Months Ended |
May 31, 2020 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Intangible Assets | As at May 31, As at February 29, 2020 2020 Intangible assets, at cost - beginning of period $ 225,174 $ 127,672 Intangible assets, accumulated depreciation – beginning of period (22,311 ) - 202,863 127,672 Add: Additions in the period 144,386 99,972 Deduct: Amortization of intangibles (7,891 ) (22,631 ) Deduct: Impairment of intangibles - - Add (deduct): Foreign exchange effect (5,312 ) (2,150 ) $ 334,046 $ 202,863 Amortization expense for the three-month periods ended May 31, 2020 and 2019 amounted to $7,891 and $3,015, 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 | 3 Months Ended |
May 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | The following tables presents the fair value of the Company’s financial liabilities as at May 31, 2020 and February 29, 2020: Fair Value Measurements as at May 31, 2020 Carrying Amount Fair Value Level in the hierarchy Instruments measured at fair value on a recurring basis: Foreign exchange contracts $ 125,951 $ 125,951 Level 1 Instruments measured at amortized cost: Long-term debt $ 2,236,221 $ 2,246,745 Level 2 Fair Value Measurements at February 29, 2020 Carrying Amount Fair Value Level in the hierarchy Instruments measured at fair value on a recurring basis: Foreign exchange contracts $ 26,840 $ 26,840 Level 1 Instruments measured at amortized cost: Long-term debt $ 2,290,152 $ 2,291,109 Level 2 |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 3 Months Ended |
May 31, 2020 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities as at May 31, 2020 and February 29, 2020 were as follows: May 31, February 29, Trade accounts payable $ 648,670 $ 814,081 Trade accrued liabilities 99,587 593,789 Accrued employee compensation 496,630 634,807 Foreign exchange contracts 125,951 26,840 Other accrued liabilities 40,634 13,181 $ 1,411,472 $ 2,082,698 |
Joint Venture
Joint Venture | 3 Months Ended |
May 31, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Joint Venture | On September 15, 2018, the Company, through its wholly-owned subsidiary Loop Innovations, LLC, a Delaware limited liability company, entered into a Joint Venture Agreement (the “Agreement”) with Indorama Ventures Holdings LP, USA, an indirect subsidiary of Indorama Ventures Public Company Limited, to manufacture and commercialize sustainable polyester resin. Each company has a 50/50 equity interest in Indorama Loop Technologies, LLC (“ILT”), which was specifically formed to operate and execute the joint venture. Under the Agreement, Indorama Venture is contributing manufacturing knowledge and Loop Industries is required to contribute its proprietary science and technology. Specifically, the Company is contributing an exclusive world-wide royalty-free license to ILT to use its proprietary technology to produce 100% sustainably produced PET resin and polyester fiber. ILT meets the accounting definition of a joint venture where neither party has control of the joint venture entity and both parties have joint control over the decision-making process in ILT. As such, the Company uses the equity method of accounting to account for its share of the investment in Indorama Loop Technologies, LLC. There were no operations in ILT from the date of inception of September 24, 2018 to May 31, 2020 and, as at May 31, 2020, the carrying value of the equity investment was $1,500,000, which is the total of the cash contributions we have made to ILT. During the three-month periods ended May 31, 2020 and May 31, 2019, we made contributions to ILT of $650,000 and $500,000, respectively. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
May 31, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
Long-Term Debt | Long-term debt as of May 31, 2020 and February 29, 2020, was comprised of the following: May 31, 2020 February 29, 2020 Investissement Québec financing facility: Principal amount $ 1,602,404 $ 1,645,122 Unamortized discount (273,652 ) (289,852 ) Accrued interest 10,489 958 Total Investissement Québec financing facility 1,339,241 1,356,228 Term loan Principal amount 896,980 933,924 Less: current portion (50,772 ) (52,126 ) Total term loan, net of current portion 846,208 881,798 Long-term debt, net of current portion $ 2,185,449 $ 2,238,026 Investissement Québec financing facility On February 21, 2020, the Company received $1,645,122 (CDN$2,209,234) from Investissement Québec as the first disbursement of our financing facility, out of a maximum of $3,425,423 (CDN$4,600,000) (the “Financing Facility”). The loan bears interest at 2.36% and there is a 36-month moratorium on both capital and interest repayments starting on the date of the first disbursement, after which capital and interest is repayable in 84 monthly installments. The Company established the fair value of the loan for the first disbursement at $1,354,408 based on a discount rate of 5.45%, which reflected a debt discount of $290,714. The discount rate used was based on the external financing from a Canadian bank. The Company, under the loan agreement, was required to pay fees representing 1% of the loan amount, $34,254 (CDN$46,000) to Investissment Québec which we deferred and recorded as a reduction of the Financing Facility. Debt discount and deferred financing expenses are amortized to “Interest and other financial expenses” in our Consolidated Statements of Operations and Comprehensive Loss. The Company recorded interest expense on the Investissement Québec loan for the three months ended May 31, 2020 in the amount of $9,416 (2019 – nil) and an accretion expense of $8,547 (2019 – nil). The Company has also agreed to issue to Investissement Québec warrants to purchase shares of common stock of the Company in an amount equal to 10% of each disbursement up to a maximum aggregate amount of $333,648 (CDN$460,000). The exercise price of the warrants is equal to the higher of (i) $11.00 per share and (ii) the ten-day weighted average closing price of Loop Industries shares of common stock on the Nasdaq stock market for the 10 days prior to the issue of the warrants. The warrants can be exercised immediately upon grant and will have a term of three years from the date of issuance. The loan can be repaid at any time by the Company without penalty. In connection the first disbursement of the Financing Facility, the Company issued a warrant (“First Disbursement Warrant”) to acquire 15,153 shares of common stock at a strike price of $11.00 per share to Investissement Québec. The Company determined the fair value of the warrants using the Black-Scholes pricing formula. The fair value of the First Disbursement Warrant was determined to be $77,954 and is included in “Additional paid-in capital – Warrants” in our Condensed Consolidated Balance Sheets. The First Disbursement Warrant remains outstanding as at May 31, 2020. The remaining amount available under the financing facility is $1,734,073 (CDN$2,390,766) to be received in a maximum of two additional disbursements. Term loan On January 24, 2018, the Company obtained a $1,015,449 (CDN$1,400,000) 20-year term instalment loan (the “Loan”), from a Canadian bank. The Loan bears interest at the bank’s Canadian prime rate plus 1.5%. By agreement, the Loan is repayable in monthly payments of $4,231 (CDN$5,833) plus interest, until January 2021, at which time it will be subject to renewal. It includes an option allowing for the prepayment of the Loan without penalty. During the three-month period ended May 31, 2020, we repaid $12,693 (2019 – 13,057) on the principal balance of the Loan. Interest paid amounted to $10,311 during the quarter ended May 31, 2020 (2019 - $13,070). The terms of the credit facility require the Company to comply with certain financial covenants. As at May 31, 2020 and 2019, the Company was in compliance with its financial covenants. Principal repayments due on the Company’s long-term debt over the next five years are as follows: Years ending Amount February 28, 2021 $ 38,079 February 28, 2022 50,772 February 28, 2023 50,772 February 29, 2024 279,684 February 28, 2025 279,684 Thereafter 1,787,700 Total $ 2,486,691 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
May 31, 2020 | |
Related Party Transactions [Abstract] | |
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 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. During the quarters ended May 31, 2020 and May 31, 2019, no outstanding milestones were probable of being met based on the authoritative guidance provided by the FASB and, accordingly, the Company did not record any additional compensation expense. 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. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
May 31, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | Common Stock For the period ended May 31, 2020 Number of shares Amount Balance, February 29, 2020 39,910,774 $ 3,992 Issuance of shares upon settlement of restricted stock units 6,131 1 Balance, May 31, 2020 39,916,905 $ 3,993 For the period ended May 31, 2019 Number of shares Amount Balance, February 29, 2019 33,805,706 $ 3,381 Issuance of shares for cash 600,000 60 Issuance of shares upon settlement of legal matter 150,000 15 Issuance of shares upon conversion of Convertible notes 319,326 32 Balance, May 31, 2019 34,875,032 $ 3,488 During the three months ended May 31, 2020, the Company recorded the following common stock transactions: (i) The Company issued 6,131 shares of the common stock to settle restricted stock units that vested in the period. During the three months ended May 31, 2019, the Company recorded the following common stock transactions: (i) On March 1, 2019, the Company sold 600,000 shares of its common stock at an offering price of $8.55 per share in a registered direct offering, for gross proceeds of $5,130,000; (ii) On March 8, 2019 and March 11, 2019, the Company issued 150,000 shares of its common stock in settlement of a legal matter; (iii) On April 9, 2019, the Company converted Convertible notes with a face value of $2,650,000 plus accrued interest of $80,241 at a conversion price of $8.55, into 319,326 common shares. |
Share-Based Payments
Share-Based Payments | 3 Months Ended |
May 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Payments | Stock Options During the three-month period ended May 31, 2020, the Company granted 3,389 stock options (2019 – nil) with a weighted average exercise price of $8.78 (2019 – nil), no stock options were forfeited (2019 – 10,010; weighted average exercise price: $8.75) or exercised (2019 – nil) and no stock options expired (2019 – 260,417; weighted average exercise price: $13.89). The Company applies the fair value method of accounting for stock-based compensation awards granted. Fair value is calculated based on a Black-Scholes option pricing model. The principal components of the pricing model were as follows: 2020 2019 Exercise price $ 8.78 $ - Risk-free interest rate 1.05 % - Expected dividend yield 0.00 % - Expected volatility 75.95 % - Expected life 7.5 years - During the three-month periods ended May 31, 2020 and 2019, stock-based compensation expense attributable to stock options amounted to $556,895 and $575,513, respectively, and is included in operating expenses. Restricted Stock Units During the three-month period ended May 31, 2020, the Company granted 83,725 restricted stock units (“RSUs”) (2019 – 25,145) with a weighted average fair value of $8.71 (2019 – 9.79), settled 6,131 RSUs (2019 – 7,043) with a weighted average fair value of $9.55 (2019 – 12.16) and 2,989 RSUs were forfeited (2019 – 17,203) with a weighted average fair value of $8.78 (2019 – $8.75). 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. During the three-month periods ended May 31, 2020 and 2019, stock-based compensation attributable to RSUs amounted to $370,487 and $355,178, respectively, and is included in operating expenses. During the three-month periods ended May 31, 2020 and 2019, stock-based compensation included in research and development expenses amounted to $352,007 and $312,435, respectively, and in general and administrative expenses amounted to $659,817 and $618,255, respectively. |
Equity Incentive Plan
Equity Incentive Plan | 3 Months Ended |
May 31, 2020 | |
Equity [Abstract] | |
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, 2020, 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 three-month periods ended May 31, 2020 and 2019: 2020 2019 Number of units Number of units Outstanding, beginning of period 1,300,518 3,223,516 Automatic share reserve increase - 1,500,000 Units granted (87,114 ) (25,145 ) Units forfeited 2,989 27,213 Units expired - 260,417 Outstanding, end of period 1,216,393 4,986,001 |
Warrants
Warrants | 3 Months Ended |
May 31, 2020 | |
Warrants Abstract | |
Warrants | During the three-month period ended May 31, 2020, the Company issued, in exchange for consulting services, a warrant to purchase 25,000 shares of our common stock at the price of $9.43 per share expiring May 12, 2022. No warrants were exercised or expired in the three-month period ended May 31, 2020. During the three-month period ended May 31, 2019, the Company issued a warrant to purchase 159,663 shares of our common stock at the price of $8.55 per share expiring October 5, 2020. No warrants were exercised or expired in the three-month period ended May 31, 2019. |
Interest and Other Financial Ex
Interest and Other Financial Expenses | 3 Months Ended |
May 31, 2020 | |
Interest And Other Financial Expenses | |
Interest and Other Financial Expenses | Interest and other financial expenses for the three-month periods ended May 31, 2020 and 2019 are as follows: 2020 2019 Interest on long-term debt $ 19,727 $ 13,070 Interest on convertible notes - 117,435 Accretion expense 8,547 547,562 Amortization of deferred finance expenses - 46,442 Revaluation of warrants - 8,483 Loss on revaluation of foreign exchange contracts 98,502 - Gain on conversion of November 2018 Notes - (232,565 ) Other - 1,422 $ 126,776 $ 501,849 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
May 31, 2020 | |
Accounting Policies [Abstract] | |
Use of estimates | The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for depreciable lives of property, plant and equipment, intangible assets, analysis of impairments of long-lived assets and intangible assets, accruals for potential liabilities and assumptions made in calculating the fair value of stock-based compensation and other equity instruments. The uncertainties around the COVID-19 pandemic required the use of estimates and assumptions that resulted in no significant impact to our unaudited condensed consolidated financial statements as of and for the three-month period ended May 31, 2020. |
Foreign currency translations and transactions | The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars, the reporting currency of the Company. Assets and liabilities of subsidiaries that have a functional currency other than that of the Company are translated to U.S. dollars at the exchange rate as at the balance sheet date. Income and expenses are translated at the average exchange rate of the period. The resulting translation adjustments are included in other comprehensive income (loss) (“OCI”). As a result, foreign currency exchange fluctuations may impact operating expenses. The Company currently has not engaged in any currency hedging activities. 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. |
Stock-based compensation | Loop Industries, Inc. 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 where there are no performance conditions, recognized as compensation expense on the straight-line basis over the vesting period and where performance conditions exist, recognize compensation expense when it becomes probable that the performance condition will 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 are estimated using the Black-Scholes-Merton Option Pricing (“Black-Scholes”) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options, and future dividends. Stock-based compensation expense is recorded based on the value derived from the Black-Scholes model and on actual experience. The assumptions used in the Black-Scholes model could materially affect stock-based compensation expense recorded in the current and future periods. |
Income taxes | The Company calculates its provision for income tax on the basis of the tax laws enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income, in accordance with FASB ASC 740, Income Taxes |
Research and development expenses | Research and development expenses relate primarily to the development, design, testing of preproduction samples, prototypes and models, compensation, and consulting fees, and are expensed as incurred. Total research and development expenses recorded during the three-month periods ended May 31, 2020 and 2019 amounted to $1,480,588 and $997,861, respectively, and are net of government research and development tax credits and government grants from the federal and provincial taxation authorities accrued and recorded based on qualifying expenditures incurred during the fiscal periods. |
Net earnings (loss) per share | The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share For the three-month periods ended May 31, 2020 and 2019, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at May 31, 2020, the potentially dilutive securities consisted of 1,590,470 outstanding stock options (May 31, 2019 – 1,691,973), 4,302,527 outstanding restricted stock units (May 31, 2019 – 403,767), 5,084,331 outstanding warrants (May 31, 2019 – 962,132) and nil outstanding issuable common stock (May 31, 2019 – 1,000,000). |
Recent accounting pronouncements | Recently adopted accounting pronouncements In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that Is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of the standard had no impact on the consolidated financial statements of the Company. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2016, the FASB issued ASU 2016-02, “Leases,” amended in July by ASU 2018-10, “Codification Improvements to Topic 842, Leases,” ASU 2018-11, “Targeted Improvements,” and ASU 2018-20, “Narrow-Scope Improvements for Lessors,” which requires lessees to recognize leases on the balance sheet while continuing to recognize expenses in the income statement in a manner similar to current accounting standards. For lessors, the new standard modifies the classification criteria and the accounting for sales-type and direct financing leases. Enhanced disclosures will also be required to give financial statement users the ability to assess the amount, timing, and uncertainty of cash flows arising from leases. This ASU may either be adopted on a modified retrospective approach at the beginning of the earliest comparative period, or through a cumulative-effect adjustment at the adoption date. This update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company adopted these standards effective March 1, 2020. The adoption of the standard had no impact on the consolidated financial statements of the Company. The Company elected to apply the package of practical expedients that allows us not to reassess whether expired or existing contracts contain leases, the classification of these leases and whether previously capitalized initial direct costs would qualify for capitalization under Accounting Standards Codification (or “ ASC Recently issued accounting pronouncements not yet adopted In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which removes specific exceptions to the general principles in ASC 740, “Income Taxes,” and clarifies certain aspects of the existing guidance. This update is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, with early adoption being permitted as of the beginning of an interim or annual reporting period. All amendments to this ASU must be adopted in the same period on a prospective basis, with certain exceptions. We are still evaluating the impact of this accounting guidance on our results of operations and financial position. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses”. This ASU added a new impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes an allowance for its estimate of expected credit losses and applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. We are still evaluating the impact of this accounting guidance on our results of operations and financial position. |
Sales Tax, Tax Credits and Ot_2
Sales Tax, Tax Credits and Other Receivables (Tables) | 3 Months Ended |
May 31, 2020 | |
Receivables [Abstract] | |
Sales tax, tax credits and other receivables | May 31, 2020 February 29, 2020 Sales tax $ 122,419 $ 180 971 Research and development tax credits 216,458 447,843 Other receivables 231,337 35,730 $ 570,214 $ 664,544 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 3 Months Ended |
May 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid expenses | May 31, 2020 February 29, 2020 Insurance $ 1,144,500 $ 61,891 Machinery and equipment 644,000 - Other prepaid expenses 148,539 79,335 $ 1,937,039 $ 141,226 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
May 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment | As at May 31, 2020 Cost Accumulated depreciation Net book value Building $ 1,798,134 $ (140,542 ) $ 1,657,592 Land 222,268 - 222,268 Building and land improvements 900,479 (235,634 ) 664,845 Machinery and equipment 6,207,312 (1,598,626 ) 4,608,686 Office equipment and furniture 162,388 (65,734 ) 96,654 Balances, end of period $ 9,290,581 $ (2,040,536 ) $ 7,250,045 As at February 29, 2020 Cost Accumulated depreciation Net book value Building $ 1,846,070 $ (128,911 ) $ 1,717,159 Land 264,868 - 264,868 Building and land improvements 733,884 (214,068 ) 519,816 Machinery and equipment 6,085,195 (1,426,465 ) 4,658,730 Office equipment and furniture 162,466 (62,785 ) 99,681 Balances, end of period $ 9,092,483 $ (1,832,229 ) $ 7,260,254 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
May 31, 2020 | |
Finite-Lived Intangible Assets, Net [Abstract] | |
Intangible assets | As at May 31, As at February 29, 2020 2020 Intangible assets, at cost - beginning of period $ 225,174 $ 127,672 Intangible assets, accumulated depreciation – beginning of period (22,311 ) - 202,863 127,672 Add: Additions in the period 144,386 99,972 Deduct: Amortization of intangibles (7,891 ) (22,631 ) Deduct: Impairment of intangibles - - Add (deduct): Foreign exchange effect (5,312 ) (2,150 ) $ 334,046 $ 202,863 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
May 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial instruments | Fair Value Measurements as at May 31, 2020 Carrying Amount Fair Value Level in the hierarchy Instruments measured at fair value on a recurring basis: Foreign exchange contracts $ 125,951 $ 125,951 Level 1 Instruments measured at amortized cost: Long-term debt $ 2,236,221 $ 2,246,745 Level 2 Fair Value Measurements at February 29, 2020 Carrying Amount Fair Value Level in the hierarchy Instruments measured at fair value on a recurring basis: Foreign exchange contracts $ 26,840 $ 26,840 Level 1 Instruments measured at amortized cost: Long-term debt $ 2,290,152 $ 2,291,109 Level 2 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 3 Months Ended |
May 31, 2020 | |
Payables and Accruals [Abstract] | |
Accounts payable and accrued liabilities | May 31, February 29, Trade accounts payable $ 648,670 $ 814,081 Trade accrued liabilities 99,587 593,789 Accrued employee compensation 496,630 634,807 Foreign exchange contracts 125,951 26,840 Other accrued liabilities 40,634 13,181 $ 1,411,472 $ 2,082,698 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
May 31, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
Long-term debt | May 31, 2020 February 29, 2020 Investissement Québec financing facility: Principal amount $ 1,602,404 $ 1,645,122 Unamortized discount (273,652 ) (289,852 ) Accrued interest 10,489 958 Total Investissement Québec financing facility 1,339,241 1,356,228 Term loan Principal amount 896,980 933,924 Less: current portion (50,772 ) (52,126 ) Total term loan, net of current portion 846,208 881,798 Long-term debt, net of current portion $ 2,185,449 $ 2,238,026 |
Principal repayments | Years ending Amount February 28, 2021 $ 38,079 February 28, 2022 50,772 February 28, 2023 50,772 February 29, 2024 279,684 February 28, 2025 279,684 Thereafter 1,787,700 Total $ 2,486,691 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
May 31, 2020 | |
Stockholders' Equity | |
Common stock | For the period ended May 31, 2020 Number of shares Amount Balance, February 29, 2020 39,910,774 $ 3,992 Issuance of shares upon settlement of restricted stock units 6,131 1 Balance, May 31, 2020 39,916,905 $ 3,993 For the period ended May 31, 2019 Number of shares Amount Balance, February 29, 2019 33,805,706 $ 3,381 Issuance of shares for cash 600,000 60 Issuance of shares upon settlement of legal matter 150,000 15 Issuance of shares upon conversion of Convertible notes 319,326 32 Balance, May 31, 2019 34,875,032 $ 3,488 |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 3 Months Ended |
May 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Key inputs into the valuation model | 2020 2019 Exercise price $ 8.78 $ - Risk-free interest rate 1.05 % - Expected dividend yield 0.00 % - Expected volatility 75.95 % - Expected life 7.5 years - |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 3 Months Ended |
May 31, 2020 | |
Equity [Abstract] | |
Equity incentive plan | 2020 2019 Number of units Number of units Outstanding, beginning of period 1,300,518 3,223,516 Automatic share reserve increase - 1,500,000 Units granted (87,114 ) (25,145 ) Units forfeited 2,989 27,213 Units expired - 260,417 Outstanding, end of period 1,216,393 4,986,001 |
Interest and Other Financial _2
Interest and Other Financial Expenses (Tables) | 3 Months Ended |
May 31, 2020 | |
Interest And Other Financial Expenses | |
Interest and other financial expenses | 2020 2019 Interest on long-term debt $ 19,727 $ 13,070 Interest on convertible notes - 117,435 Accretion expense 8,547 547,562 Amortization of deferred finance expenses - 46,442 Revaluation of warrants - 8,483 Loss on revaluation of foreign exchange contracts 98,502 - Gain on conversion of November 2018 Notes - (232,565 ) Other - 1,422 $ 126,776 $ 501,849 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Research and development expenses | $ 1,480,588 | $ 997,861 |
Stock Options | ||
Antidilutive securities | 1,590,470 | 1,691,973 |
Restricted Stock Units | ||
Antidilutive securities | 4,302,527 | 403,767 |
Warrants | ||
Antidilutive securities | 5,084,331 | 962,132 |
Common Stock | ||
Antidilutive securities | 0 | 1,000,000 |
Sales Tax, Tax Credits and Ot_3
Sales Tax, Tax Credits and Other Receivables (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Receivables [Abstract] | ||
Sales tax | $ 122,419 | $ 180,971 |
Research and development tax credits | 216,458 | 447,843 |
Other receivables | 231,337 | 35,730 |
Sales tax, research and development tax credits and other receivables | $ 570,214 | $ 664,544 |
Prepaid Expenses (Details)
Prepaid Expenses (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Insurance | $ 1,144,500 | $ 61,891 |
Machinery and equipment | 644,000 | 0 |
Other prepaid expenses | 148,539 | 79,335 |
Prepaid expenses | $ 1,937,039 | $ 141,226 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Property, plant and equipment, gross | $ 9,290,581 | $ 9,092,483 |
Less: accumulated depreciation | (2,040,536) | (1,832,229) |
Property, plant and equipment, net | 7,250,045 | 7,260,254 |
Building | ||
Property, plant and equipment, gross | 1,798,134 | 1,846,070 |
Less: accumulated depreciation | (140,542) | (128,911) |
Property, plant and equipment, net | 1,657,592 | 1,717,159 |
Land | ||
Property, plant and equipment, gross | 222,268 | 264,868 |
Less: accumulated depreciation | 0 | 0 |
Property, plant and equipment, net | 222,268 | 264,868 |
Building and Land Improvements | ||
Property, plant and equipment, gross | 900,479 | 733,884 |
Less: accumulated depreciation | (235,634) | (214,068) |
Property, plant and equipment, net | 664,845 | 519,816 |
Machinery and Equipment | ||
Property, plant and equipment, gross | 6,207,312 | 6,085,195 |
Less: accumulated depreciation | (1,598,626) | (1,426,465) |
Property, plant and equipment, net | 4,608,686 | 4,658,730 |
Office Equipment and Furniture | ||
Property, plant and equipment, gross | 162,388 | 162,466 |
Less: accumulated depreciation | (65,734) | (62,785) |
Property, plant and equipment, net | $ 96,654 | $ 99,681 |
Property, Plant and Equipment_3
Property, Plant and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 248,199 | $ 161,321 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
May 31, 2020 | May 31, 2019 | Feb. 29, 2020 | |
Finite-Lived Intangible Assets, Net [Abstract] | |||
Intangible assets, at cost - beginning of period | $ 225,174 | $ 127,672 | |
Intangible assets, accumulated depreciation | (22,311) | 0 | |
Total | 202,863 | 127,672 | |
Add: Additions in the year | 144,386 | 99,972 | |
Deduct: Amortization of intangibles | (7,891) | $ (3,015) | (22,631) |
Deduct: Impairment of intangibles | 0 | 0 | |
Deduct: Foreign exchange effect | (5,312) | (2,150) | |
Total | $ 334,046 | $ 202,863 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
May 31, 2020 | May 31, 2019 | Feb. 29, 2020 | |
Finite-Lived Intangible Assets, Net [Abstract] | |||
Amortization expense | $ 7,891 | $ 3,015 | $ 22,631 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Carrying amount | $ 3,647,693 | $ 4,372,850 |
Foreign Exchange Contracts | Level 1 | ||
Carrying amount | 125,951 | 26,840 |
Fair value | 125,951 | 26,840 |
Long-Term Debt | Level 2 | ||
Carrying amount | 2,236,221 | 2,290,152 |
Fair value | $ 2,246,745 | $ 2,291,109 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Payables and Accruals [Abstract] | ||
Trade accounts payable | $ 648,670 | $ 814,081 |
Trade accrued liabilities | 99,587 | 593,789 |
Accrued employee compensation | 496,630 | 634,807 |
Foreign exchange contracts | 125,951 | 26,840 |
Other accrued liabilities | 40,634 | 13,181 |
Accounts payable and accrued liabilities | $ 1,411,472 | $ 2,082,698 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 |
Principal amount | $ 2,486,691 | |
Less: current portion | (50,772) | $ (52,126) |
Long-term debt, net of current portion | 2,185,449 | 2,238,026 |
Investissement Québec Financing Facility | ||
Principal amount | 1,602,404 | 1,645,122 |
Unamortized discount | (273,652) | (289,852) |
Accrued interest | 10,489 | 958 |
Long-term debt, net of current portion | 133,941 | 1,356,228 |
Term Loan | ||
Principal amount | 896,980 | 933,924 |
Less: current portion | (50,772) | (52,126) |
Long-term debt, net of current portion | $ 846,208 | $ 881,798 |
Long-Term Debt (Details 1)
Long-Term Debt (Details 1) | May 31, 2020USD ($) |
Long-term Debt, Unclassified [Abstract] | |
February 28, 2021 | $ 38,079 |
February 28, 2022 | 50,772 |
February 28, 2023 | 50,772 |
February 29, 2024 | 279,684 |
February 28, 2025 | 279,684 |
Thereafter | 1,787,700 |
Total | $ 2,486,691 |
Long-Term Debt (Details Narrati
Long-Term Debt (Details Narrative) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Investissement Québec Financing Facility | ||
Interest expense | $ 9,416 | $ 0 |
Accretion expense | 8,547 | 0 |
Term Loan | ||
Interest paid | $ 10,311 | $ 13,070 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Beginning balance, amount | $ 38,463,708 | $ 2,626,392 |
Issuance of common shares for cash, net of share issuance expenses (Note 12), amount | 4,266,785 | |
Issuance of shares for legal settlement, amount | 0 | |
Issuance of shares upon conversion of convertible notes, amount | 2,689,510 | |
Issuance of shares upon vesting of restricted stock units (Note 13), amount | 0 | |
Ending balance, amount | $ 35,452,406 | $ 6,818,685 |
Common Stock | ||
Beginning balance, shares | 39,910,774 | 33,805,706 |
Beginning balance, amount | $ 3,992 | $ 3,381 |
Issuance of common shares for cash, net of share issuance expenses (Note 12), shares | 600,000 | |
Issuance of common shares for cash, net of share issuance expenses (Note 12), amount | $ 60 | |
Issuance of shares for legal settlement, shares | 150,000 | |
Issuance of shares for legal settlement, amount | $ 15 | |
Issuance of shares upon conversion of convertible notes, shares | 319,326 | |
Issuance of shares upon conversion of convertible notes, amount | $ 32 | |
Issuance of shares upon vesting of restricted stock units (Note 13), shares | 6,131 | |
Issuance of shares upon vesting of restricted stock units (Note 13), amount | $ 1 | |
Ending balance, shares | 39,916,905 | 34,875,032 |
Ending balance, amount | $ 3,993 | $ 3,488 |
Share-Based Payments (Details)
Share-Based Payments (Details) - $ / shares | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Exercise price | $ 8.78 | $ .00 |
Risk-free interest rate | 1.05% | 0.00% |
Expected dividend yield | 0.00% | 0.00% |
Expected volatility | 75.95% | 0.00% |
Expected life | 7 years 6 months | 0 years |
Share-Based Payments (Details N
Share-Based Payments (Details Narrative) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Stock options granted | 3,389 | 0 |
Stock options granted, weighted average exercise price | $ 8.78 | $ .00 |
Stock options forfeited | 0 | 10,010 |
Stock options forfeited, weighted average exercise price | $ .00 | $ 8.75 |
Stock options exercised | 0 | 0 |
Stock options expired | 0 | 260,417 |
Stock options expired, weighted average exercise price | $ 0 | $ 13.89 |
Stock option expense | $ 556,895 | $ 575,513 |
Restricted stock unit expense | $ 370,487 | $ 355,178 |
Restricted Stock Units | ||
Restricted stock units granted | 83,725 | 25,145 |
Restricted stock units granted, weighted average exercise price | $ 8.71 | $ 9.79 |
Restricted stock units settled | 6,131 | 7,043 |
Restricted stock units settled, weighted average exercise price | $ 9.55 | $ 12.16 |
Restricted stock units forfeited | 2,989 | 17,203 |
Restricted stock units forfeited, weighted average exercise price | $ 8.78 | $ 8.75 |
Equity Incentive Plan (Details)
Equity Incentive Plan (Details) - Equity Incentive Plan - shares | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Number of units outstanding, beginning | 1,300,518 | 3,223,516 |
Automatic share reserve increase | 0 | 1,500,000 |
Number of units, granted | (87,114) | (25,145) |
Number of units, forfeited | 2,989 | 27,213 |
Number of units, expired | 0 | 260,417 |
Number of units outstanding, ending | 1,216,393 | 4,986,001 |
Warrants (Details Narrative)
Warrants (Details Narrative) - Warrants - $ / shares | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Warrants issued | 25,000 | 159,663 |
Warrants issued, weighted average exercise price | $ 9.43 | $ 8.55 |
Interest and Other Financial _3
Interest and Other Financial Expenses (Details) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Interest And Other Financial Expenses | ||
Interest on long-term debt | $ 19,727 | $ 13,070 |
Interest on convertible notes | 0 | 117,435 |
Accretion expense | 8,547 | 547,562 |
Amortization of deferred finance costs | 0 | 46,442 |
Revaluation of warrants | 0 | 8,483 |
Loss on revaluation of foreign exchange contracts | 98,502 | 0 |
Gain on conversion of November 2018 Notes | 0 | (232,565) |
Other | 0 | 1,422 |
Interest and other finance costs | $ 126,776 | $ 501,849 |