Loop Industries, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS Loop Industries, Inc. Three and Nine months ended November 30, 2021 Index to the Unaudited Interim Condensed Consolidated Financial Statements Contents Page(s) Condensed consolidated balance sheets as at November 30, 2021 and February 28, 2021 (Unaudited) F‑2 Condensed consolidated statements of operations and comprehensive loss for the three and nine months ended November 30, 2021 and 2020 (Unaudited) F‑3 Condensed consolidated statement of changes in stockholders’ equity for the three and nine months ended November 30, 2021 and 2020 (Unaudited) F‑4 Condensed consolidated statement of cash flows for the nine months ended November 30, 2021 and 2020 (Unaudited) F‑6 Notes to the condensed consolidated financial statements (Unaudited) F‑7 F-1 Table of Contents Loop Industries, Inc. Condensed Consolidated Balance Sheets (Unaudited) November 30, 2021 February 28, 2021 Assets Current assets Cash and cash equivalents $ 54,860,046 $ 35,221,951 Sales tax, tax credits and other receivables (Note 3) 825,384 1,763,835 Prepaid expenses and deposits (Note 4) 1,989,970 609,782 Assets held for sale (Note 5) 3,364,374 - Total current assets 61,039,774 37,595,568 Investment in joint venture (Note 10) 1,500,000 1,500,000 Property, plant and equipment, net (Note 6) 5,540,679 3,513,051 Intangible assets, net (Note 7) 1,081,447 794,894 Total assets $ 69,161,900 $ 43,403,513 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities (Note 9) $ 5,422,386 $ 8,124,865 Current portion of long-term debt (Note 11) 889,228 938,116 Total current liabilities 6,311,614 9,062,981 Long-term debt (Note 11) 3,315,345 1,516,008 Total liabilities 9,626,959 10,578,989 Stockholders' Equity Series A Preferred stock par value $ 0.0001 ; 25,000,000 shares authorized; one share issued and outstanding - - Common stock par value $ 0.0001 : 250,000,000 shares authorized; 47,388,056 shares issued and outstanding (February 28, 2021 – 42,413,691 ) (Note 13) 4,740 4,242 Additional paid-in capital 149,734,659 113,662,677 Additional paid-in capital – Warrants (Note 18) 30,272,496 8,826,165 Accumulated deficit ( 120,309,993 ) ( 89,661,970 ) Accumulated other comprehensive loss ( 166,961 ) ( 6,590 ) Total stockholders' equity 59,534,941 32,824,524 Total liabilities and stockholders' equity $ 69,161,900 $ 43,403,513 See accompanying notes to the condensed consolidated financial statements. F-2 Table of Contents Loop Industries, Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) Three Months Ended November 30 Nine Months Ended November 30 2021 2020 2021 2020 Revenue $ - $ - $ - $ - Expenses Research and development (Note 14) 6,835,304 6,274,283 20,757,937 10,504,093 General and administrative (Note 15) 3,091,255 2,724,016 9,368,052 6,726,339 Write-down and impairment of property, plant and equipment - 5,034,606 - 5,043,120 Depreciation and amortization (Notes 6 and 7) 135,035 104,307 407,806 654,354 Interest expense and other financial (income) expenses (Note 19) 49,655 ( 41,855 ) 113,344 26,016 Interest income ( 23,654 ) ( 20,008 ) ( 41,828 ) ( 78,394 ) Foreign exchange loss (gain) 10,648 95,644 42,712 275,903 Total expenses 10,098,243 14,170,993 30,648,023 23,151,431 Net Loss ( 10,098,243 ) ( 14,170,993 ) ( 30,648,023 ) ( 23,151,431 ) Other comprehensive income (loss) Foreign currency translation adjustment ( 13,473 ) 66,170 ( 160,371 ) 298,570 Comprehensive loss $ ( 10,111,716 ) $ ( 14,104,823 ) $ ( 30,808,394 ) $ ( 22,852,861 ) Loss per share Basic and Diluted $ ( 0.21 ) $ ( 0.34 ) $ ( 0.69 ) $ ( 0.57 ) Weighted average common shares outstanding Basic and Diluted 47,264,646 41,715,806 44,600,557 40,515,885 See accompanying notes to the condensed consolidated financial statements. F-3 Table of Contents Loop Industries, Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) Three Months Ended November 30, 2020 Common stock Series A preferred stock par value $0.0001 par value $0.0001 Number of Shares Amount Number of Shares Amount Additional Paid-in Capital Additional Paid-in Capital - Warrants Accumulated Deficit Accumulated Other Comprehensive (Loss) Total Stockholders' Equity Balance, August 31, 2020 39,935,210 $ 3,994 1 $ - $ 84,172,723 $ 9,870,241 $ ( 62,297,485 ) $ ( 156,049 ) $ 31,593,424 Issuance of common shares for cash, net of share issuance costs (Note 13) 2,087,000 209 - - 24,996,419 - - - 24,996,628 Issuance of shares upon exercise of warrants (Note 18) 190,529 19 - - 2,046,854 ( 394,245 ) - - 1,652,628 Issuance of shares upon the vesting of restricted stock units (Note 16) 200,000 20 - - ( 20 ) - - - - Stock options granted for services (Note 16) - - - - 551,720 - - - 551,720 Restricted stock units issued for services (Note 16) - - - - 345,274 - - - 345,274 Foreign currency translation - - - - - - - 66,170 66,170 Net loss - - - - - - ( 14,170,993 ) - ( 14,170,993 ) Balance, November 30, 2020 42,412,739 $ 4,242 1 $ - $ 112,112,970 $ 9,475,996 $ ( 76,468,478 ) $ ( 89,879 ) $ 45,034,851 Three Months Ended November 30, 2021 Common stock Series A preferred stock par value $0.0001 par value $0.0001 Number of Shares Amount Number of Shares Amount Additional Paid-in Capital Additional Paid-in Capital - Warrants Accumulated Deficit Accumulated Other Comprehensive (Loss) Total Stockholders' Equity Balance, August 31, 2021 47,160,164 $ 4,717 1 $ - $ 149,008,231 $ 30,356,938 $ ( 110,211,750 ) $ ( 153,488 ) $ 69,004,648 Issuance of shares upon the vesting of restricted stock units (Note 16) 200,000 20 - - ( 20 ) - - - - Issuance of shares upon exercise of warrants (Note 18) 11,666 1 - - 84,441 ( 84,442 ) - - - Issuance of shares upon exercise of options (Note 16) 16,226 2 - - ( 2 ) - - - - Stock options issued for services (Note 16) - - - - 311,004 - - - 311,004 Restricted stock units issued for services (Note 16) - - - - 331,005 - - - 331,005 Foreign currency translation - - - - - - - ( 13,473 ) ( 13,473 ) Net loss - - - - - - ( 10,098,243 ) - ( 10,098,243 ) Balance, November 30, 2021 47,388,056 $ 4,740 1 $ - $ 149,734,659 $ 30,272,496 $ ( 120,309,993 ) $ ( 166,961 ) $ 59,534,941 See accompanying notes to the condensed consolidated financial statements. F-4 Table of Contents Loop Industries, Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) Nine Months Ended November 30, 2020 Common stock Series A preferred stock par value $0.0001 par value $0.0001 Number of Shares Amount Number of Shares Amount Additional Paid-in Capital Additional Paid-in Capital - Warrants Accumulated Deficit Accumulated Other Comprehensive (Loss) Total Stockholders' Equity Balance, February 29, 2020 39,910,774 $ 3,992 1 $ - $ 82,379,413 $ 9,785,799 $ ( 53,317,047 ) $ ( 388,449 ) $ 38,463,708 Issuance of common shares for cash, net of share issuance costs (Note 13) 2,087,000 209 - - 24,996,419 - - - 24,996,628 Issuance of shares upon exercise of warrants (Note 16) 190,529 19 - - 2,046,853 ( 394,245 ) - - 1,652,627 Warrant issued for services (Note 18) - - - - - 84,442 - - 84,442 Issuance of shares upon the vesting of restricted stock units (Note 16) 224,436 22 - - ( 22 ) - - - - Stock options issued for services (Note 16) - - - - 1,662,155 - - - 1,662,155 Restricted stock units issued for services (Note 16) - - - - 1,028,152 - - - 1,028,152 Foreign currency translation - - - - - - - 298,570 298,570 Net loss - - - - - - ( 23,151,431 ) - ( 23,151,431 ) Balance, November 30, 2020 42,412,739 $ 4,242 1 $ - $ 112,112,970 $ 9,475,996 $ ( 76,468,478 ) $ ( 89,879 ) $ 45,034,851 Nine Months Ended November 30, 2021 Common stock Series A preferred stock par value $0.0001 par value $0.0001 Number of Shares Amount Number of Shares Amount Additional Paid-in Capital Additional Paid-in Capital - Warrants Accumulated Deficit Accumulated Other Comprehensive (Loss) Total Stockholders' Equity Balance, February 28, 2021 42,413,691 $ 4,242 1 $ - $ 113,662,677 $ 8,826,165 $ ( 89,661,970 ) $ ( 6,590 ) $ 32,824,524 Issuance of common shares and warrants for cash, net of share issuance costs (Note 13) 4,714,813 471 - - 34,625,823 21,461,450 - - 56,087,744 Issuance of warrants for financing facility (Notes 11 and 18) - - - - - 69,323 - - 69,323 Issuance of shares upon the vesting of restricted stock units (Note 16) 231,660 24 - - ( 24 ) - - - - Issuance of shares upon exercise of warrants (Note 16) 11,666 1 - - 84,441 ( 84,442 ) - - - Issuance of shares upon exercise of options (Note 16) 16,226 2 - - ( 2 ) - - - - Stock options issued for services (Note 16) - - - - 1,203,975 - - - 1,203,975 Restricted stock units issued for services (Note 16) - - - - 157,769 - - - 157,769 Foreign currency translation - - - - - - - ( 160,371 ) ( 160,371 ) Net loss - - - - - - ( 30,648,023 ) - ( 30,648,023 ) Balance, November 30, 2021 47,388,056 $ 4,740 1 $ - $ 149,734,659 $ 30,272,496 $ ( 120,309,993 ) $ ( 166,961 ) $ 59,534,941 See accompanying notes to the condensed consolidated financial statements. F-5 Table of Contents Loop Industries, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended November 30, 2021 2020 Cash Flows from Operating Activities Net loss $ ( 30,648,023 ) $ ( 23,151,431 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization (Notes 6 and 7) 407,806 654,354 Stock-based compensation expense (Note 16) 1,361,744 2,774,749 Write-down and impairment of property, plant and equipment - 5,043,120 Accretion and accrued interest expenses (Note 19) 82,393 56,259 Loss (gain) on revaluation of foreign exchange contracts (Note 19) - ( 58,945 ) Changes in operating assets and liabilities: Sales tax and tax credits receivable (Note 3) 948,328 ( 477,855 ) Prepaid expenses (Note 4) ( 1,394,272 ) ( 1,075,291 ) Accounts payable and accrued liabilities (Note 9) ( 3,587,932 ) 1,690,789 Net cash used in operating activities ( 32,829,956 ) ( 14,544,251 ) Cash Flows from Investing Activities Investment in joint venture (Note 10) - ( 650,000 ) Additions to property, plant and equipment (Notes 5 and 6) ( 5,022,255 ) ( 1,580,795 ) Additions to intangible assets (Note 7) ( 348,017 ) ( 155,798 ) Net cash used in investing activities ( 5,370,272 ) ( 2,386,593 ) Cash Flows from Financing Activities Proceeds from sale of common shares and warrants, and exercise of warrants, net of share issuance costs (Note 13) 56,087,746 26,649,253 Proceeds from issuance of long-term debt (Note 11) 1,868,954 - Repayment of long-term debt (Note 11) ( 41,041 ) ( 32,781 ) Net cash (used) provided by financing activities 57,915,659 26,616,472 Effect of exchange rate changes ( 77,336 ) 210,516 Net increase (decrease) in cash 19,638,095 9,896,144 Cash, beginning of period 35,221,951 33,717,671 Cash, end of period $ 54,860,046 $ 43,613,815 Supplemental Disclosure of Cash Flow Information: Income tax paid $ - $ - Interest paid $ 30,506 $ 28,613 Interest received $ 23,654 $ 78,394 See accompanying notes to the condensed consolidated financial statements. F-6 Table of Contents Loop Industries, Inc. Three and Nine Months Ended November 30, 2021 and 2020 Notes to the Condensed Consolidated Financial Statements (Unaudited) 1. The Company, Basis of Presentation 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 suitable for use in food-grade packaging and polyester fiber. The Company is currently in the development stage with no revenues. The Company is in the process of pursuing the construction of Infinite Loop™ commercial scale facilities in Québec, Canada, and with strategic partners in Europe and South Korea. Additionally, the company has a joint venture to pursue the retrofitting of existing fossil fuel PET polymerization facilities with its recycling technology. Risks and uncertainties Our ability to implement our business plan and generate future operating revenues depends in part on whether we can obtain the necessary financing through a combination of the issuance of debt, equity, and/or joint ventures and/or government incentive programs. We have committed a portion of our cash on hand for certain long lead equipment in connection with the Bécancour project. We expect to enter into additional commitments to move the project ahead within our targeted construction timeframes. However, there is a risk that we may not be able to attract additional financing through debt or equity markets. Even if additional financing is available, it may not be available on terms favorable to us. Our failure to secure additional financing on favorable terms when it becomes required would have an adverse effect on our ability to execute our business plan. 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 28, 2021, filed with the SEC on June 1, 2021. 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, 2021, 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- and nine-month periods ended November 30, 2021 are not necessarily indicative of the results to be expected for any subsequent quarter, for the fiscal year ending February 28, 2022, or for any other period. 2. Summary of Significant Accounting Policies Use of estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for depreciable lives of property, plant and equipment, intangible assets, analysis of impairments of 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 and the judgment in the assessment. The COVID-19 pandemic has disrupted business operations 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 measures has had and may continue to have an effect on our development and commercialization efforts. Although the Company continues to monitor the situation and may adjust the Company’s current policies as more information and public health guidance continues to evolve, the COVID-19 pandemic is ongoing, and its dynamic nature, including uncertainties relating to the ultimate spread of the virus, the severity of the disease, the duration of the outbreak and actions that may be taken by governmental authorities to contain the outbreak or to treat its impact, makes it difficult to assess whether there will be further impact on the development and commercialization of the Company’s technology which could have a material adverse effect on the Company’s results of operations and cash flows. F-7 Table of Contents 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 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 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. Research and development expenses Research and development expenses relate primarily to process development and design, testing of preproduction samples, purchases of machinery and equipment for the small-scale Terrebonne production facility (the “Terrebonne Facility”), compensation, and consulting fees, and are expensed as incurred. Total research and development expenses recorded during the nine-month periods ended November 30, 2021 and 2020 amounted to $ 20,757,937 and $ 10,504,093 , 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. 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. F-8 Table of Contents 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 . Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the year. The Company includes common stock issuable in its calculation. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive. For the nine-month periods ended November 30, 2021 and 2020, 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, 2021, the potentially dilutive securities consisted of 1,570,000 outstanding stock options (2020 – 1,587,081 ), 4,014,928 outstanding restricted stock units (2020 – 4,171,609 ), and 11,659,418 outstanding warrants (2020 – 4,693,802 ). Recently issued accounting pronouncements not yet adopted 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. We do not expect this accounting guidance to materially impact our results of operations or financial position. 3. Sales Tax, Tax Credits and Other Receivables Sales tax, research and development tax credits and other receivables as at November 30, 2021 and February 28, 2021 were as follows: November 30, 2021 February 28, 2021 Sales tax $ 502,180 $ 1,155,504 Research and development tax credits 208,256 435,467 Other receivables 114,948 172,864 $ 825,384 $ 1,763,835 In the nine-month period ended November 30, 2021, the Company received 327,429 (2021 – nil) reimbursable research and development tax credits in cash. F-9 Table of Contents 4. Prepaid Expenses and Deposits Prepaid expenses and deposits as at November 30, 2021 and February 28, 2021 were as follows: November 30, 2021 February 28, 2021 Cash deposits on machinery and equipment $ 739,863 $ 379,395 Insurance 1,073,650 - Other 176,457 230,387 $ 1,989,970 $ 609,782 The Company has paid $ 739,863 of non-refundable cash deposits on machinery and equipment, $638,273 of which will be used in connection with the Terrebonne Facility in research and development activities will be expensed, and classified as research and development expenses, in the period the equipment is received. The Company also made $ 101,590 of non-refundable cash deposits on machinery and equipment that will be used in connection with the construction of our Infinite Loop ™ manufacturing facility in Bécancour, Québec which will be expensed in the period the equipment is received. 5. Asset held for sale On May 27, 2021, we acquired land in Bécancour, Québec for cash of $ 4.8 million (CDN $5.9 million). The site is part of our planning for an Infinite Loop ™ manufacturing facility. We are using a portion of the land in connection with the construction of our Infinite Loop ™ manufacturing facility and selling the excess land. The portion of the land we are committed to selling meets all criteria under ASC 360 Property, plant and equipment to be classified as an asset held for sale. The total purchase cost of the land has been allocated between the portion of land held for sale and the land being used for the Infinite Loop ™ manufacturing facility based on surface area. Description Balance sheet line item Cost Land held for sale Assets held for sale $ 3,364,373 Infinite Loop ™ manufacturing facility Property, plant and equipment, net 1,391,556 $ 4,755,929 6. Property, Plant and Equipment Property, plant and equipment as at November 30, 2021 and February 28, 2021 were as follows: As at November 30, 2021 Cost Accumulated depreciation, write-down and impairment Net book value Building $ 1,939,801 $ ( 248,333 ) $ 1,691,468 Land 1,632,003 - 1,632,003 Building and Land Improvements 2,797,984 ( 754,713 ) 2,043,271 Machinery and equipment 6,514,252 ( 6,514,252 ) - Office equipment and furniture 294,146 ( 120,209 ) 173,937 $ 13,178,186 $ ( 7,637,507 ) $ 5,540,679 F-10 Table of Contents As at February 28, 2021 Cost Accumulated depreciation, write-down and impairment Net book value Building $ 1,954,345 $ ( 201,589 ) $ 1,752,756 Land 241,578 - 241,578 Building and Land Improvements 1,804,872 ( 474,114 ) 1,330,758 Machinery and equipment 6,514,252 ( 6,514,252 ) - Office equipment and furniture 292,946 ( 104,987 ) 187,959 $ 10,807,993 $ ( 7,294,942 ) $ 3,513,051 On May 27, 2021, the Company acquired a parcel of land in Bécancour, Québec for $ 4.8 million (CDN $5.9 million). The Company is using a portion of the property for the construction of a commercial facility to manufacture Loop™ branded PET resin using its Infinite Loop™ technology. The excess land is classified as asset held for sale, as described in Note 5. During the three-month period ended November 30, 2021, the Company incurred civil construction costs of $ 902,325 for site preparation on the Bécancour land for the planned commercial facility. Depreciation expense for the three- and nine-month periods ended November 30, 2021 amounted to $ 114,799 and $ 351,589 , respectively (2020– $ 93,006 and $ 624,189 , respectively), and is recorded as an operating expense in the consolidated statements of operations and comprehensive loss. 7. Intangible Assets Intangible assets as at November 30, 2021 and February 28, 2021 were $ 1,081,447 and $ 794,894 , respectively. During the nine-months periods ended November 30, 2021 and 2020, we made additions to intangible assets of $ 348,017 and $ 452,758 , respectively. Amortization expense for the three- and nine-month periods ended November 30, 2021 amounted to $ 20,236 and $ 56,216 , respectively (2020 - $ 11,301 and $ 30,165 , respectively), and is recorded as an operating expense in the unaudited condensed consolidated statements of operations and comprehensive loss. 8. Fair value of financial instruments The following tables present the fair value of the Company’s financial liabilitiy, being long-term debt as at November 30, 2021 and February 28, 2021: Fair Value as at November 30, 2021 Carrying Amount Fair Value Level in the hierarchy Instruments carried at amortized cost: Long-term debt $ 4,204,573 $ 4,219,305 Level 2 Fair Value at February 28, 2021 Carrying Amount Fair Value Level in the hierarchy Instruments carried at amortized cost: Long-term debt $ 2,454,123 $ 2,464,540 Level 2 F-11 Table of Contents 9. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities as at November 30, 2021 and February 28, 2021 were as follows: November 30, 2021 February 28, 2021 Trade accounts payable $ 2,513,404 $ 5,082,736 Accrued construction costs 902,325 - Accrued employee compensation 1,187,977 970,154 Accrued engineering fees 312,155 535,359 Accrued professional fees 288,966 1,270,628 Other accrued liabilities 217,559 265,988 $ 5,422,386 $ 8,124,865 10. 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 “Joint Venture 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 Joint Venture Agreement, Indorama Ventures is contributing manufacturing knowledge and Loop Industries is required to contribute its proprietary technology. Specifically, the Company is contributing an exclusive worldwide 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 ILT. There were no operations in ILT from the date of inception of September 24, 2018 to November 30, 2021 and, as at November 30, 2021, 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 nine-month period ended November 30, 2021, we made no contributions to ILT (2020 – $ 650,000 ). These contributions to ILT, which have been matched by Indorama Ventures, were used to fund engineering design costs which have been capitalized in ILT. In conjunction with the SK strategic partnership described in Note 13, on June 18, 2021, the Company, Loop Innovations, LLC, a wholly-owned subsidiary of the Company (“Loop Innovations”), Indorama Ventures Holdings LP (“Indorama”) and Indorama Loop Technologies, LLC (the “Indorama Joint Venture Company”) amended (i) the Limited Liability Company Agreement between Loop Innovations, LLC and Indorama Ventures Holdings LP (the “LLC Agreement”), (ii) the Marketing Agreement between the Company and Indorama Loop Technologies, LLC (the “Marketing Agreement”) and (iii) the License Agreement between the Company and the Indorama Joint Venture Company (the “License Agreement”), each dated September 24, 2018 (collectively such amendments, the “Indorama Joint Venture Amendments”). Under the Indorama Joint Venture Amendments, the Company, Indorama and the Indorama Joint Venture Company agreed to: · terminate Indorama’s right of first refusal under the LLC Agreement over any facility to produce products utilizing any waste-to-resin technology applying the PET depolymerization process of the Company; · amend the non-compete obligations under the LLC Agreement to solely apply to the Company; · limit the scope of the Company’s grant of intellectual property rights and the scope of the exclusivity rights of the Indorama Joint Venture Company for the retrofit of existing facilities under the License Agreement to North America and Europe; and · limit the scope of the Indorama Joint Venture Company’s permitted marketing rights under the Marketing Agreement to North America and Europe. F-12 Table of Contents 11. Long‑Term Debt November 30, 2021 February 28, 2021 Investissement Québec financing facility : Principal amount $ 3,595,998 $ 1,741,612 Unamortized discount ( 366,219 ) ( 268,192 ) Accrued interest 85,566 42,588 Total Investissement Québec financing facility 3,315,345 1,516,008 Term loan Principal amount 889,228 938,116 Less: current portion ( 889,228 ) ( 938,116 ) Total term loan, net of current portion - - Long-term debt, net of current portion $ 3,315,345 $ 1,516,008 Investissement Québec financing facility On February 21, 2020, the Company received $ 1,727,043 (CDN$2,209,234) from Investissement Québec as the first disbursement of our financing facility, out of a maximum of $ 3,595,998 (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, $ 35,960 (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. On August 26, 2021, the Company received $ 1,868,954 (CDN$2,390,766) from Investissement Québec as the second disbursement of the Financing Facility, the balance of the total amount available under the Financing Facility. The second disbursement bears the same interest rate and repayment terms as the first disbursement. The Company established the fair value of the loan for the first disbursement at $ 1,750,395 based on a discount rate of 3.95 %, which reflected a debt discount of $ 139,390 . The discount rate used was based on the external financing from a Canadian bank. There were no fees associated with the second disbursement. 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- and nine-month periods ended November 30, 2021 in the amount of $ 21,704 and $ 44,098 respectively (2020 – $ 10,003 and $ 28,816 ) and an accretion expense of $ 16,723 and $ 38,295 respectively (2020 – $ 9,387 and $ 27,045 ). The Company 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 $ 359,600 (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 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 with 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. In connection with the second disbursement of the Financing Facility, the Company issued a warrant (“Second Disbursement Warrant”) to acquire 17,180 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 $ 69,323 and is included in “Additional paid-in capital – Warrants” in our Condensed Consolidated Balance Sheets. The First and Second Disbursement Warrants remain outstanding as at November 30, 2021. F-13 Table of Contents Term loan On January 24, 2018, the Company obtained a $ 1,109,614 (CDN$1,400,000) 20 -year term installment 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 $ 4,560 (CDN$5,833) plus interest, maturing in January 2022. It includes an option allowing for the prepayment of the Loan without penalty. During the three- and nine-month periods ended November 30, 2021, we repaid $ 13,680 and $ 41,041 respectively (2020 – $ 13,497 and $ 32,781 ) on the principal balance of the Loan and interest paid amounted to $ 11,010 and $ 30,506 and (2020 – $ 9,172 and $ 29,102 ). The terms of the credit facility require the Company to comply with certain financial covenants. As at November 30, 2021 and 2020, 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, 2022 $ 889,228 February 28, 2023 - February 29, 2024 513,705 February 28, 2025 513,705 February 28, 2026 513,705 Thereafter 2,054,881 Total $ 4,485,224 12. 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 November 30, 2021 and 2020, 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. F-14 Table of Contents 13. Stockholders’ Equity Common Stock For the nine months 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 For the nine months ended November 30, 2020 Number of shares Amount Balance, February 29, 2020 39,910,774 $ 3,992 Issuance of shares for cash 2,087,000 209 Issuance of shares upon the exercise of warrants 190,529 19 Issuance of shares upon settlement of restricted stock units 224,436 22 Balance, November 30, 2020 42,412,739 $ 4,242 During the nine months 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. During the nine months ended November 30, 2020, the Company recorded the following common stock transaction: (i) On September 23, 2020 and October 1, 2020, the Company sold 1,880,000 and 207,000 shares, respectively of its common stock at an offering price of $ 12.75 per share in a registered direct offering, for total gross proceeds of $ 26,609,250 . (ii) The company issued 192,529 shares of its common stock upon the exercise of warrants. (iii) On October 15, 2020, the Company issued 200,000 shares of common stock to settle restricted stock units related to the President and Chief Executive Officer. (iv) The Company issued 24,436 shares of its common stock to settle restricted stock units that vested in the period. On June 22, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) by and between the Company and SK global chemical Co., Ltd, an accredited investor (the “Purchaser”). Pursuant to the Purchase Agreement, the Company sold to the Purchaser the following securities on July 29, 2021 for an aggregate purchase price of $ 56.5 million (collectively, the “SKGC Investment”): · an aggregate of 4,714,813 shares (the “Shares”) of the Company’s common stock (the “Common Stock”); · warrants to purchase 4,714,813 shares of Common Stock for an exercise price of $ 15.00 (the “First Tranche Warrants”), with an expiration date of the third anniversary of the issue date; · warrants to purchase 2,357,407 shares of Common Stock for an exercise price of $ 20.00 (the “Second Tranche Warrants”), with an expiration date of the earlier of (A) the date that is the third anniversary of the First Plant Milestone (as defined in the Second Tranche Warrants), (B) the expiration of the JV Negotiation Period (as defined in the Second Tranche Warrants), provided that the Joint Venture Transaction Agreements (as defined in the Second Tranche Warrants) have not been executed by the expiration of the JV Negotiation Period and (C) the third anniversary of the BDP Date (as defined in the Second Tranche Warrants), provided that the First Plant Milestone has not occurred as of such date; and · warrants to purchase 461,298 shares of Common Stock for an exercise price of $ 11.00 , with an expiration date of June 14, 2022 (the “Third Tranche Warrants,” and together with First Tranche Warrants and the Second Tranche Warrants, the “Warrants”). The Purchaser may exercise the First Tranche Warrant at any time beginning on January 29, 2022 and the Second Tranche Warrant at any time on or after the later to occur of (i) January 29, 2022 and (ii) the first business day following the First Plant Milestone (as defined in the Second Tranche Warrant) prior to its expiration date. The Purchaser may exercise the Third Tranche Warrant at any time prior to June 14, 2022. F-15 Table of Contents The table below summarizes the allocation of the aggregate purchase price, net of issuance costs, based on the relative fair-value of the components at the grant date: Common stock $ 34,622,854 First Tranche Warrants 13,158,981 Second Tranche Warrants 7,167,195 Third Tranche Warrants 1,135,274 $ 56,084,304 The fair value of the warrants was determined using the Black-Scholes model. After the closing of the SKGC Investment, the Purchaser owns approximately 10.0 % of the issued and outstanding Common Stock as of that date. 14. Research and Development Expenses Research and development expenses for the three-month periods ended November 30, 2021 and 2020 were as follows: November 30, 2021 November 30, 2020 Machinery and equipment expenditures $ 2,599,758 $ 2,325,540 Employee compensation 1,786,765 1,214,434 External engineering 1,585,512 2,224,910 Plant and laboratory operating expenses 665,893 515,395 Other 197,376 ( 5,996 ) $ 6,835,304 $ 6,274,283 Research and development expenses for the nine-month periods ended November 30, 2021 and 2020 were as follows: November 30, 2021 November 30, 2020 Machinery and equipment expenditures $ 7,707,882 $ 2,325,540 Employee compensation 5,365,581 3,094,151 External engineering 5,040,342 3,241,959 Plant and laboratory operating expenses 2,064,403 1,385,892 Other 579,729 456,551 $ 20,757,937 $ 10,504,093 During the nine-month period ended November 30, 2021, we recorded reimbursable research and development tax credits of $ 54,911 as a reduction of research and development expenses and an expense of $ 151,379 in the nine-month period ended November 30, 2020. The expense in the nine-month period ended November 30, 2020 was due to a revision of research and development tax credits by Canadian tax authorities. During the nine-month period ended November 30, 2021, we recorded no government grants as a reduction of research and development expenses (2020 – $ 200,738 ). 15. General and Administrative Expenses General and administrative expenses for the three-month periods ended November 30, 2021 and 2020 were as follows: November 30, 2021 November 30, 2020 Professional fees $ 650,164 $ 1,164,004 Employee compensation 1,028,242 945,889 Insurance 1,193,554 480,013 Other 219,295 134,110 $ 3,091,255 $ 2,724,016 F-16 Table of Contents General and administrative expenses for the nine-month periods ended November 30, 2021 and 2020 were as follows: November 30, 2021 November 30, 2020 Professional fees $ 3,138,611 $ 1,806,134 Employee compensation (1) 2,357,769 3,091,214 Insurance 3,121,353 1,455,954 Other 750,319 373,037 $ 9,368,052 $ 6,726,339 (1) Includes stock-based compensation expense. In the nine-month period ended November 30, 2021, the Company recorded RSU forfeitures for an amount of $ 935,837 (2020 – $ 4,005 ) as a net reversal of stock-based compensation. 16. Share-based Payments Stock Options During the three-month period ended November 30, 2021, the Company granted no stock options (2020 – nil), 17,081 options were exercised with a weighted average exercise price of $ 0.80 (2020 – nil), no stock options were forfeited (2020 – nil) and no stock options expired (2020 – nil). During the nine-month period ended November 30, 2021, the Company granted no stock options (2020 – nil), 17,081 options were exercised with a weighted average exercise price of $ 0.80 (2020 – nil), no stock options were forfeited (2020 – nil) and no stock options expired (2020 – 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 and 2020. The total number of stock options outstanding as at November 30, 2021 was 1,570,000 (2020 – 1,587,081 ) with a weighted average exercise price of $ 6.87 (2020 - $ 6.81 ), of which 1,286,667 were exercisable (2020 – 986,248 ) with a weighted average exercise price of $7.48 (2020 – $8.18). During the three-month periods ended November 30, 2021 and 2020, stock-based compensation expense attributable to stock options amounted to $ 311,004 and $ 551,720 , respectively, and is included in operating expenses. During the nine-month periods ended November 30, 2021 and 2020, stock-based compensation expense attributable to stock options amounted to $ 1,203,975 and $ 1,662,155 , respectively, and is included in operating expenses. Restricted Stock Units During the three-month period ended November 30, 2021, the Company granted 62,638 restricted stock units (“RSUs”) (2020 – 57,859 ) with a weighted average fair value of $ 13.64 (2020 – $ 12.96 ), settled 200,000 RSUs (2020 – 200,000 ) with a weighted average fair value of $ 0.80 (2020 – $ 0.80 ) and 17,988 RSUs were forfeited (2020 – nil) with a weighted average fair value of $ 8.73 (2020 – nil). During the nine-month period ended November 30, 2021, the Company granted 349,580 restricted stock units (“RSUs”) (2020 – 180,232 ) with a weighted average fair value of $ 10.16 (2020 – $ 10.18 ), settled 231,660 RSUs (2020 – 224,436 ) with a weighted average fair value of $ 1.90 (2020 – $ 1.78 ) and 313,512 RSUs were forfeited (2020 – 2,989 ) with a weighted average fair value of $ 7.97 (2020 – $ 8.78 ). 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. F-17 Table of Contents The total number of RSUs outstanding as at November 30, 2021 was 4,014,928 (2020 – 4,171,609 ), of which 525,313 were vested (2020 – 691,327 ). During the three-month periods ended November 30, 2021 and 2020, stock-based compensation attributable to RSUs amounted to $ 331,005 and $ 345,274 , respectively, and is included in operating expenses. During the nine-month periods ended November 30, 2021 and 2020, stock-based compensation attributable to RSUs amounted to $ 157,769 and $ 1,028,152 , respectively, and is included in operating expenses. During the nine-month period ended November 30, 2021, the Company recorded a reversal of expenses for forfeitures for a total of $ 963,022 (2020 – $ 4,005 ). Stock-Based Compensation Expenses During the three-month periods ended November 30, 2021 and 2020, stock-based compensation included in research and development expenses amounted to $ 362,435 and $ 350,393 , respectively, and in general and administrative expenses amounted to $ 279,574 and $ 546,601 , respectively. During the nine-month periods ended November 30, 2021 and 2020, stock-based compensation included in research and development expenses amounted to $ 1,152,506 and $ 1,054,682 , respectively, and in general and administrative expenses amounted to $ 209,236 and $ 1,720,067 , respectively. 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 (2020 – $ 4,005 ). 17. 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, 2021 and 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 nine-month periods ended November 30, 2021 and 2020: 2021 2020 Number of units Number of units Outstanding, beginning of period 1,083,412 1,300,518 Share reserve increase - - Units granted ( 349,580 ) ( 183,621 ) Units forfeited 313,512 2,989 Units expired - - Outstanding, end of period 1,047,344 1,119,886 F-18 Table of Contents 18. Warrants During the nine-month period ended November 30, 2021, the Company issued warrants to purchase 7,550,698 shares of our common stock. 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 First Plant Milestone (as defined in the Second Tranche Warrants), (B) the expiration of the JV Negotiation Period (as defined in the Second Tranche Warrants), provided that the Joint Venture Transaction Agreements (as defined in the Second Tranche Warrants) have not been executed by the expiration of the JV Negotiation Period and (C) the third anniversary of the BDP Date (as defined in the Second Tranche Warrants), provided that the First Plant Milestone has not occurred as of such date. During the nine-month period ended November 30, 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 and warrants to issue 200,000 shares of our common stock with an exercise price of $ 11 .00 expired. During the nine-month periods ended November 30, 2020, 159,664 warrants were exercised at the price of $ 8.55 per share and 30,864 warrants were exercised at the price of $ 9.32 per share. No warrants were forfeited in the nine-month period ended November 30, 2020. 19. Interest and Other Finance Costs Interest and other finance costs for the three-month periods ended November 30, 2021 and 2020 are as follows: 2021 2020 Interest on long-term debt $ 32,718 $ 19,185 Accretion expense 16,937 9,387 Loss (gain) on revaluation of foreign exchange contracts - ( 70,427 ) $ 49,655 $ ( 41,855 ) Interest and other finance costs for the nine-month periods ended November 30, 2021 and 2020 are as follows: 2021 2020 Interest on long-term debt $ 74,832 $ 57,917 Accretion expense 38,512 27,044 Loss (gain) on revaluation of foreign exchange contracts - ( 58,945 ) $ 113,344 $ 26,016 There were no foreign exchange contracts outstanding as of November 30, 2021. 20. Commitments and Contingencies 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 Other Similarly Situated v. Loop Industries, Inc., Daniel Solomita, and Nelson Gentiletti , Case No. 7:20-cv-0838 (“Tremblay Class Action”). The allegations in the complaint claim that the defendants allegedly 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. Plaintiff seeks unspecified damages on behalf of a class of purchasers of Loop’s securities between September 24, 2018 and October 12, 2020. 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 Other Similarly Situated v. Loop Industries, Inc., Daniel Solomita, and Nelson Gentiletti , Case No. 7:20-cv-09031-UA. The allegations in this complaint are similar in nature to those made in the Tremblay Class Action. F-19 Table of Contents On January 4, 2021, the United States District Court for the Southern District of New York rendered a stipulation and order granting the consolidation of the two class-action lawsuits filed in New York as In re Loop Industries, Inc. Securities Litigation , Master File No. 7:20-cv-08538. Sakari Johansson and John Jay Cappa have been appointed as Co-Lead Plaintiffs and Glancy Prongay & Murray LLP and Pomerantz LLP have been appointed as Co-Lead Counsel for the class. Plaintiffs served a consolidated amended complaint on February 18, 2021 which alleges defendants violated Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 by 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 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 (“the Application”) was filed by an individual shareholder on behalf of himself and a class of buyers who purchased our securities during the “Class Period” (not defined). Plaintiff alleges that throughout the Class Period, the defendants allegedly made false and/or misleading statements and allegedly failed to disclose material adverse facts concerning the Company’s technology, business model, operations and prospects, thus causing the Company’s stock price to be artificially inflated and thereby causing plaintiff to suffer damages. Plaintiff seeks unspecified damages stemming from losses he claims to have suffered as a result of the foregoing. On December 13, 2020, the Application was amended in order to add allegations regarding specific misrepresentations. The authorization hearing is scheduled on February 24, 2022. Management believes that these cases lack merit and intends to defend them vigorously. No amounts have been provided for in the consolidated financial statements with respect to these claims. Management has not yet determined what effect these lawsuits may have on its financial position or results of operations as they are still in the preliminary stages. 21. Subsequent event Commitment 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 Infinite Loop™ manufacturing facility in Bécancour, Québec for up to $8,546,000 over the next 13 months , subject to various terms and conditions. Pursuant to the agreement, the Company has paid a cash deposit of $ 2,136,500 . F-20 Table of Contents