Loop Industries, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and the Chief Financial Officer, we are responsible for conducting an evaluation of the effectiveness of the design and operation of our internal controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as at the end of the fiscal year covered by this report. Disclosure controls and procedures means that the material information required to be included in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared. Based on this assessment, management determined that the Company’s disclosure controls and procedures over financial reporting as of February 28, 2022 were effective. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act, as amended, as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States of America and includes those policies and procedures that: · Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; · Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and · Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Management, under the supervision of our Chief Executive Officer and Chief Financial Officer have performed an evaluation of our internal control over financial reporting under the framework in Internal Control-Integrated Framework (2013) , issued by the Committee of Sponsoring Organizations of the Treadway Commission. The objective of this assessment was to determine whether our internal control over financial reporting was effective at February 28, 2022. Based on this assessment, management determined that the Company’s internal control over financial reporting as of February 28, 2022 was effective. Attestation Report of the Registered Public Accounting Firm This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal controls over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to law, rules and regulations that permit us to provide only management’s report in this Annual Report. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during our most recent fiscal year that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitation on the Effectiveness of Internal Controls The effectiveness of any system of internal controls over financial reporting is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting can only provide reasonable, not absolute, assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure that such improvements will be sufficient to provide us with effective internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. 35 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item concerning our directors is incorporated by reference to the information set forth in the section titled “Election of Directors” in our Proxy Statement. Information required by this item concerning our executive officers is incorporated by reference to the information set forth in the section entitled “Executive Officers” in our Proxy Statement. Information required by this item concerning our audit committee and our security holder director nomination procedures is incorporated by reference to the information set forth in the section entitled “Corporate Governance” in our Proxy Statement. Information regarding Section 16 reporting compliance is incorporated by reference to the information set forth in the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” in our Proxy Statement. Our Board of Directors adopted a Code of Ethics for all of our directors, officers and employees on January 25, 2017. A copy of our Code of Ethics is available under Corporate Governance Documents in the Investors section of our website, and via the following hyperlink: http://www.loopindustries.com/cms/documents/ . To date, there have been no waivers under our Code of Ethics. We will post waivers, if and when granted, of our Code of Ethics on our website at www.loopindustries.com . The information contained on, or that can be accessed through, our website is not a part of this Annual Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information required by this item regarding director’s compensation table and compensation risk management disclosures are incorporated by reference to the information set forth in the section titled “Corporate Governance” in our Proxy Statement. All other information required by this item regarding executive compensation is incorporated by reference to the information set forth in the section titled “Executive Compensation” in our Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item regarding security ownership of certain beneficial owners and management and related stockholder matters is incorporated by reference to the information set forth in the sections titled “Security Ownership of Certain Beneficial Owners and Management” and “Executive Compensation” in our Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE It is the policy of the Board that all transactions required to be reported pursuant to Item 404 of Regulation S-K be subject to approval by the Audit Committee of the Board. In furtherance of relevant Nasdaq rules and our commitment to corporate governance, the charter of the Audit Committee provides that the Audit Committee shall review and approve any proposed related party transactions including, transactions required to be reported pursuant to Item 404 of Regulation S-K for potential conflict of interest situations. The Audit Committee reviews the material facts of all transactions that require the committee’s approval and either approves or disapproves of the transaction. In determining whether to approve a transaction, the Audit Committee will take into account, among other factors it deems appropriate, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances. The additional information required by this item regarding director independence, certain relationships and related party transactions is incorporated by reference to the information set forth in the sections titled “Transactions with Related Persons” and “Corporate Governance” in our Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this section is incorporated by reference from the information in the section entitled “Ratification of Appointment of Independent Registered Public Accounting Firm” in our Proxy Statement. 36 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE (1) Financial Statements The response to this portion of Item 15 is set forth under Item 8 above. (2) Financial Statement Schedules. All schedules have been omitted because they are not required or because the required information is given in the Consolidated Financial Statements or Notes thereto set forth under Item 8 above. (3) Exhibits. The following Exhibits, as required by Item 601 of Regulation SK, are attached or incorporated by reference, as stated below. Exhibit Index Incorporated by Reference Number Description Form File No. Filing Date Exhibit No. 2.1 Share Exchange Agreement, dated June 29, 2015, by and among First American Group Inc., Loop Holdings, Inc., and the stockholders of Loop Holdings, Inc. 8-K 000-54768 June 30, 2015 2.1 3.1 Articles of Incorporation, as amended to date 10-K 000-54768 May 30, 2017 3.1 3.2 By-laws, as amended to date 8-K 000-54768 April 10, 2018 3.1 4.1 Description of Securities 10-K 001-38301 May 8, 2019 4.1 4.2 Form of Amendment No. 1 to the January 15, 2019 Note Purchase Agreement, dated April 4, 2019. 8-K 001-38301 April 10, 2019 4.1 4.3 Form of Amendment to 2019 Warrant, dated April 4, 2019. 8-K 001-38301 April 10, 2019 4.2 4.4 Form of Amendment and Conversion Agreement, dated April 5, 2019. 8-K 001-38301 April 10, 2019 4.3 4.5 Form of Amendment to November 2018 Warrant, dated April 8, 2019. 8-K 001-38301 April 10, 2019 4.4 4.6 Form of Convertible Promissory Note, dated January 15, 2019 (under Note and Warrant Purchase Agreement). 8-K 001-38301 January 16, 2019 4.1 4.7 Form of Warrant, dated January 15, 2019 (under Note and Warrant Purchase Agreement). 8-K 001-38301 January 16, 2019 4.2 4.8 Form of Note and Warrant Purchase Agreement, dated November 13, 2018. 8-K 001-38301 November 13, 2018 4.1 4.9 Form of Note, dated November 13, 2018 (under Note and Warrant Purchase Agreement). 8-K 001-38301 November 13, 2018 4.2 4.10 Form of Warrant, dated January 11, 2018 8-K 001-38301 January 18, 2018 4.1 4.11 Investors Rights Agreement, by and between SK Global Chemical Co., LTD, Loop Industries, Inc., and Daniel Solomita S-3 333-258982 August 20, 2021 4.1 4.12 Form of Indenture S-3 333-258982 August 20, 2021 4.2 4.13 2017 Equity Incentive Plan 10-Q 000-54768 October 11, 2017 4.2 4.14 Form of Stock Option Agreement 10-Q 000-54768 October 11, 2017 4.3 4.15 Form of Restricted Stock Unit Agreement 10-Q 000-54768 October 11, 2017 4.4 37 Table of Contents 10.1 Intellectual Property Assignment Agreement dated October 27, 2014, as supplemented April 10, 2015, by and among Hatem Essaddam, Loop Holdings, Inc. and Daniel Solomita. 10-K 000-54768 May 30, 2017 10.1 10.2 Subscription Agreement, dated May 22, 2015, by and between 9121820 Canada Inc. and Loop Holdings, Inc. 10-K 000-54768 May 30, 2017 10.2 10.3 Technology Transfer Agreement, dated June 22, 2015 by and between 8198381 Canada Inc. and Loop Holdings, Inc. 8-K 000-54768 June 30, 2015 10.7 10.4 Amended and Restated Employment Agreement, dated July 13, 2018, by and between Loop Industries, Inc. and Daniel Solomita. 8-K 001-38301 July 13, 2018 10.12 10.5 Master Services Agreement, dated September 1, 2015, by and between 8198381 Canada Inc. and Loop Holdings, Inc. 10-K 000-54768 May 30, 2017 10.5 10.6 Purchase and Sale Agreement, by and between 8198381 Canada Inc. and Loop Canada Inc. (formerly 9449507 Canada Inc.) 10-K 000-54786 May 30, 2017 10.7 10.7† Agreement for Services, dated February 28, 2017, by and between Loop Industries, Inc. and Drinkfinity USA, Inc. 10-K 000-54768 May 30, 2017 10.8 10.8 Articles of Merger of Loop Holdings, Inc. into Loop Industries, Inc. 10-K 000-54768 May 30, 2017 10.9 10.9 Form of Indemnification Agreement 10-K 000-54768 May 30, 2017 10.10 10.10 Securities Purchase Agreement, dated February 27, 2019, by and between Loop Industries, Inc. and the purchaser identified therein. 8-K 001-8301 February 28, 2019 10.1 10.11 Form of Note and Warrant Purchase Agreement, dated January 15, 2019. 8-K 001-8301 January 16, 2019 10.1 10.12 Form of Warrant, dated November 13, 2018 (under Note and Warrant Purchase Agreement). 8-K 001-8301 November 13, 2018 10.1 10.13 Terms and Conditions Agreement, dated October 9, 2018, by and between Loop Industries, Inc. and Pepsi-Cola Advertising and Marketing, Inc. 8-K 001-8301 October 15, 2018 10.1 10.14 Limited Liability Company Agreement, dated September 24, 2018, by and between Loop Industries, Inc. and Indorama Loop Technologies, LLC. 8-K 001-8301 September 28, 2018 10.1 10.15 License Agreement, dated September 24, 2018 by and between Loop Industries, Inc. and Indorama Loop Technologies, LLC. 8-K 001-8301 September 28, 2018 10.2 10.16 Marketing Agreement, dated September 24, 2018, by and between Loop Industries, Inc. and Indorama Loop Technologies, LLC. 8-K 001-8301 September 28, 2018 10.3 10.17 Form of Common Stock Subscription Agreement 8-K 001-8301 January 18, 2018 10.1 38 Table of Contents 10.18 Employment Agreement, dated December 19, 2018, by and between Loop Canada Inc. and Nelson Gentiletti. 10-K 000-54768 May 8, 2019 10.35 10.19 Employment Agreement May 28, 2019 by and between Loop Canada Inc. and Michel Megelas. 10-K 000-54768 May 5, 2020 10.21 10.20 Amendment No. 1, dated April 30, 2020, to the Amended and Restated Employment Agreement by and between Loop Industries, Inc. and Daniel Solomita, dated July 13, 2018. 10-K 000-54768 May 5, 2020 10.22 10.21 Employment Agreement, dated February 23, 2021, by and between Loop Canada Inc. and Thomas Andrew (Drew) Hickey. 10-K 000-54768 June 1, 2021 10.21 10.22 Deed of sale of 7000 boulevard Raoul-Duchesne, Bécancour, Québec, dated May 27, 2021 10-K 000-54768 June 1, 2021 10.22 10.23 Amendment to Joint Venture Agreements dated June 18, 2021 by and between the Company, Indorama Ventures Holdings LP and other parties thereto 10-Q 000-54768 July 15, 2021 10.1 10.24 Securities Purchase Agreement dated June 22, 2021 by and between SK Global Chemical Co. LTD. 10-Q 000-54768 July 15, 2021 10.2 14 Code of Ethics 8-K 000-54768 Jan 31, 2017 14.1 21.1 Subsidiaries of Registrant 10-K 000-54768 May 30, 2017 21.1 23.1 Consent of PricewaterhouseCoopers LLP Filed herewith 24.1 Power of Attorney (contained on signature page to the previously filed Annual Report on Form 10-K) 10-K 000-54768 May 30, 2017 24.1 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith 32.1 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith 32.2 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 . Furnished herewith 101.INS XBRL Instance Document Filed herewith 101.SCH XBRL Taxonomy Extension Schema Document Filed herewith 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith 101.DEF XBRL Taxonomy Extension Definition Linkbase Document Filed herewith 101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed herewith 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) ______________________ † Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and this exhibit has been submitted separately to the SEC. 39 Table of Contents ITEM 16. FORM 10-K SUMMARY None. 40 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LOOP INDUSTRIES, INC. Date: May 26, 2022 By: /s/ Daniel Solomita Name: Daniel Solomita Title: Chief Executive Officer, President, and Director KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Daniel Solomita and Drew Hickey, and each of them, as his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. Date: May 26, 2022 By: /s/ Daniel Solomita Name: Daniel Solomita Title: Chief Executive Officer, President, and Director (principal executive officer) Date: May 26, 2022 By: /s/ Drew Hickey Name: Drew Hickey Title: Chief Financial Officer (principal accounting officer and principal financial officer) Date: May 26, 2022 By: /s/ Laurence Sellyn Name: Laurence Sellyn Title: Lead Director Date: May 26, 2022 By: /s/ Andrew Lapham Name: Andrew Lapham Title: Director Date: May 26, 2022 By: /s/ Jonghyuk Lee Name: Jonghyuk Lee Title: Director Date: May 26, 2022 By: /s/ Louise Sams Name: Louise Sams Title: Director Date: May 26, 2022 By: /s/ Jay Stubina Name: Jay Stubina Title: Director 41