What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-01-12 compared with 2022-10-12 · 167 added, 143 removed, 482 unchanged (39% of the section changed)

1 unchanged sentence

Loop Industries, Inc.

Three and Six months ended August 31, 2022

Three and Nine months ended November 30, 2022

Index to the Unaudited Interim Condensed Consolidated Financial Statements

Condensed consolidated balance sheets as at August 31, 2022 and February 28, 2022 (Unaudited)

Condensed consolidated statements of operations and comprehensive loss for the three and six months ended August 31, 2022 and 2021 (Unaudited)

Condensed consolidated statement of changes in stockholders’ equity for the three and six months ended August 31, 2022 and 2021 (Unaudited)

Condensed consolidated statement of cash flows for the six months ended August 31, 2022 and 2021 (Unaudited)

Condensed consolidated balance sheets as at November 30, 2022 and February 28, 2022 (Unaudited)

Condensed consolidated statements of operations and comprehensive loss for the three and nine months ended November 30, 2022 and 2021 (Unaudited)

Condensed consolidated statement of changes in stockholders’ equity for the three and nine months ended November 30, 2022 and 2021 (Unaudited)

Condensed consolidated statement of cash flows for the nine months ended November 30, 2022 and 2021 (Unaudited)

Notes to the condensed consolidated financial statements (Unaudited)

1 unchanged sentence

Condensed Consolidated Balance Sheets

August 31, 2022

February 28, 2022

Current assets

Cash and cash equivalents

Restricted cash (Note 21)

Sales tax, tax credits and other receivables (Note 3)

9 unchanged sentences

Accounts payable and accrued liabilities (Note 10)

Customer deposits (Note 11)

Current portion of long-term debt (Note 12)

20 unchanged sentences

Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended August 31

Six Months Ended August 31

Three Months Ended November 30

Nine Months Ended November 30

Research and development (Note 15)

General and administrative (Note 16)

Gain on disposition of assets (Note 6)

( 6,703,558 )

Depreciation and amortization (Notes 7 and 8)

21 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended August 31, 2021

Three Months Ended November 30, 2021

Series A preferred stock

8 unchanged sentences

Total Stockholders’ Equity

Balance, May 31, 2021

Balance, August 31, 2021

$ 149,008,231

$ ( 110,211,750 )

Issuance of common shares and warrants for cash, net of share issuance costs (Note 13)

Issuance of warrants for financing facility (Note 11)

$ ( 153,488 )

Issuance of shares upon the vesting of restricted stock units (Note 17)

Issuance of shares upon exercise of warrants (Note 19)

Issuance of shares upon exercise of options (Note 17)

Stock options issued for services (Note 17)

3 unchanged sentences

( 10,098,243 )

Balance, August 31, 2021

Balance, November 30, 2021

$ 149,734,659

1 unchanged sentence

$ ( 166,961 )

Three Months Ended August 31, 2022

Three Months Ended November 30, 2022

Series A preferred stock

8 unchanged sentences

Total Stockholders’ Equity

Balance, May 31, 2022

$ 158,863,011

Balance, August 31, 2022

$ 169,300,723

$ ( 160,294,031 )

Expiration of warrants (Note 18)

$ ( 513,303 )

Issuance of shares upon the vesting of restricted stock units (Note 17)

Stock options issued for services (Note 17)

3 unchanged sentences

( 1,013,073 )

Balance, August 31, 2022

Balance, November 30, 2022

$ 170,174,884

4 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Six Months Ended August 31, 2021

Nine Months Ended November 30, 2021

Series A preferred stock

12 unchanged sentences

Issuance of common shares and warrants for cash, net of share issuance costs (Note 14)

Issuance of warrants for financing facility (Notes 11)

Issuance of warrants for financing facility (Note 19)

Issuance of shares upon the vesting of restricted stock units (Note 17)

Issuance of shares upon exercise of warrants (Note 17)

Issuance of shares upon exercise of options (Note 17)

Stock options issued for services (Note 17)

3 unchanged sentences

( 30,648,023 )

Balance, August 31, 2021

Balance, November 30, 2021

$ 149,734,659

1 unchanged sentence

$ ( 166,961 )

Six Months Ended August 31, 2022

Nine Months Ended November 30, 2022

Series A preferred stock

19 unchanged sentences

( 26,724,178 )

Balance, August 31, 2022

Balance, November 30, 2022

$ 170,174,884

4 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended August 31,

Nine Months Ended November 30,

Cash Flows from Operating Activities

4 unchanged sentences

Stock-based compensation expense (Note 17)

Gain on disposition of assets (Note 6)

( 6,703,558 )

Accretion and accrued interest expenses (Note 20)

4 unchanged sentences

( 1,294,520 )

( 1,394,272 )

Accounts payable and accrued liabilities (Note 10)

1 unchanged sentence

( 3,587,932 )

Customer deposits (Note 11)

Net cash used in operating activities

2 unchanged sentences

Cash Flows from Investing Activities

Proceeds from disposition of assets (Note 6)

Additions to property, plant and equipment (Notes 6 and 7)

6 unchanged sentences

Proceeds from issuance of long-term debt (Note 12)

Repayment of long-term debt (Note 11)

Repayment of long-term debt

Net cash (used) provided by financing activities

2 unchanged sentences

( 18,436,434 )

Cash, beginning of period

Cash, end of period

Cash and restricted cash, beginning of period

Cash and restricted cash, end of period

Supplemental Disclosure of Cash Flow Information:

4 unchanged sentences

Loop Industries, Inc.

Three and Six Months Ended August 31, 2022 and 2021

Three and Nine Months Ended November 30, 2022 and 2021

Notes to the Condensed Consolidated Financial Statements

16 unchanged sentences

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 six-month periods ended August 31, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter, for the fiscal year ending February 28, 2023, or for any other period.

The results for the three- and nine-month periods ended November 30, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter, for the fiscal year ending February 28, 2023, or for any other period.

The consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the continuing of operations, the realization of assets and the settlement of liabilities in the normal course of business.

1 unchanged sentence

Liquidity Risk Assessment

From inception to August 31, 2022, the Company has been in the development stage with limited revenues, and with its ongoing operations and commercialization plans financed primarily by raising equity.

Since its inception, the Company has been in the development stage with limited revenues from customers, and its ongoing operations and commercialization plans have been financed primarily by raising equity.

The Company has incurred net losses and negative cash flow from operating activities since its inception and expects to incur additional net losses while it continues to develop and plan for commercialization.

As at August 31, 2022, the Company’s available liquidity was $ 25.67 million, consisting of cash and cash equivalents of $ 23 .00 million and an undrawn senior loan facility from a Canadian bank.

Additionally, the Company sold a portion of excess land on September 15, 2022 for net cash proceeds of $ 8.69 million as described in Note 21.

As at November 30, 2022, the Company’s available liquidity was $ 24.11 million, consisting of cash and cash equivalents of $ 21.52 million and an undrawn senior loan facility from a Canadian bank of $ 2.59 million.

Additionally, the Company entered into an agreement on December 21, 2022 to sell its remaining land in Bécancour, Québec for $ 13.70 million (CDN $18.50 million) on or before February 24, 2023 as described in Note 22.

Management actively monitors the Company’s cash resources against the Company’s short-term cash commitments to ensure the Company has sufficient liquidity to fund its costs for at least twelve months from the financial statement issuance date.

3 unchanged sentences

Based on this assessment, management believes that the Company will be able to realize its assets and discharge its liabilities in the normal course of operations as they become due for a period of no less than twelve months from the date of issuance of these consolidated financial statements.

The Company is currently evaluating financing options to move to the next stage of its strategic development and construct manufacturing plants in Canada, Europe and Asia.

The Company’s ability to successfully commercialize its business and generate future revenues depends on whether the Company can obtain the necessary financing through a combination of the issuance of debt, equity, and/or joint ventures and/or government incentive programs.

The Company has committed a portion of its cash resources for certain long lead equipment in connection with the Bécancour project.

The Company may enter into additional commitments to move the project ahead within its targeted construction timeframes.

However, there is no assurance that the Company will be successful in attracting additional funding.

The Company’s ability to move to the next stage of its strategic development and construct manufacturing plants is dependent on whether the Company can obtain the necessary financing through a combination of the issuance of debt, equity, and/or joint ventures and/or government incentive programs.

The Company is working with its joint venture partners to put in place the financing plan for the rollout of large-scale manufacturing in Asia and Europe, including the planned first Asian manufacturing facility in Ulsan, South Korea.However, there is no assurance that the Company will be successful in attracting additional funding.

Even if additional financing is available, it may not be available on terms favorable to the Company.

Failure to secure additional financing on favorable terms when it becomes required would have an adverse effect on the Company’s current operation and on its ability to execute its business plan.

The Company has committed a portion of its cash resources for certain long lead equipment and may enter into additional commitments to move commercial projects ahead within targeted construction timeframes.

Revenue recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).

The Company recognizes revenue with customers in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).

This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments.

17 unchanged sentences

Those estimates and assumptions include the going concern assessment, estimates for depreciable lives of property, plant and equipment, intangible assets, analysis of impairments of long-lived assets and intangible assets as well as the carrying value of our joint venture investment, assets held for sale, accruals for potential liabilities, assumptions made in calculating the fair value of stock-based compensation and other equity instruments, and the assessment of performance conditions for stock-based compensation awards.

The COVID-19 pandemic, as well as supply chain and geo-political disruptions, have affected business operations and planning for future commercial facilities to varying degrees for us and our customers, suppliers, vendors and other parties with whom we do business, and such disruptions are expected to continue for an indefinite period of time.

The COVID-19 pandemic, as well as supply chain and geo-political disruptions, inflation, and rising interest rates have affected business operations and planning for future commercial facilities to varying degrees for us and our customers, suppliers, vendors and other parties with whom we do business, and such disruptions are expected to continue for an indefinite period of time.

The uncertain duration of these conditions has had and may continue to have an effect on our development and commercialization efforts.

9 unchanged sentences

The assumptions used in the Black-Scholes model could materially affect stock-based compensation expenses recorded in the current and future periods.

Restricted cash

Cash held by the Company restricted as to withdrawal or use is presented as restricted cash in the consolidated balance sheet.

As at November 30, 2022, restricted cash comprised of cash in escrow for a legal settlement and cash restricted in use for a commercial project.

Inventories are stated at the lower of cost or net realizable value using the average cost method.

36 unchanged sentences

Potential common shares are excluded from the computation if their effect is antidilutive.

For the six-month periods ended August 31, 2022 and 2021, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect.

As at August 31, 2022, the potentially dilutive securities consisted of 1,570,000 outstanding stock options (2021 – 1,587,081 ), 4,128,718 outstanding restricted stock units (2021 – 4,170,278 ), and 7,104,553 outstanding warrants (2021 – 11,684,418 ).

For the nine-month periods ended November 30, 2022 and 2021, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect.

As at November 30, 2022, the potentially dilutive securities consisted of 2,542,000 outstanding stock options (2021 – 1,570,000 ), 4,036,803 outstanding restricted stock units (2021 – 4,014,928 ), and 7,104,553 outstanding warrants (2021 – 11,659,418 ).

Recently adopted accounting pronouncements

5 unchanged sentences

The adoption of this accounting guidance did not impact the disclosures in our Consolidated Financial Statements.

In September 2022, the FASB issued ASU 2022-04, “Disclosure of Supplier Finance Program Obligations”.

This ASU provided guidance to increase the transparency of supplier finance programs.

The amendments in this ASU require that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs.

This update is effective for fiscal years beginning after December 15, 2022.

We are currently evaluating this accounting guidance, which may have disclosure impact only.

Sales Tax, Tax Credits and Other Receivables

Sales tax, tax credits and other receivables as at August 31, 2022 and February 28, 2022 were as follows:

August 31, 2022

February 28, 2022

Sales tax, tax credits and other receivables as at November 30, 2022 and February 28, 2022 were as follows:

Investment tax credits

Research and development tax credits

Insurance reimbursement related to legal settlement (Note 21)

Other receivables

Inventories as at August 31, 2022 and February 28, 2022 were as follows:

August 31, 2022

February 28, 2022

Inventories as at November 30, 2022 and February 28, 2022 were as follows:

Work in process

2 unchanged sentences

Prepaid Expenses and Deposits

Prepaid expenses as at August 31, 2022 and February 28, 2022 were as follows:

August 31, 2022

February 28, 2022

Prepaid expenses as at November 30, 2022 and February 28, 2022 were as follows:

Deposits on machinery and equipment

As at August 31, 2022, the Company had $ 3,917,877 (February 28, 2022 – $ 2,801,680 ) of non-refundable cash deposits on machinery and equipment.

As at November 30, 2022, the Company had $ 3,429,245 (February 28, 2022 – $ 2,801,680 ) of non-refundable cash deposits on machinery and equipment.

$ 33,595 (February 28, 2022 – $ 672,713 ) of the prepayments are on machinery and equipment that will be used in connection with the research and development activities at the Terrebonne Facility and will be expensed, and classified as research and development expenses in the period the equipment is received.

The remainder of the prepayments of $ 3,407,150 (February 28, 2022 – $ 2,128,967 ) are non-refundable cash deposits on long-lead machinery and equipment that will be used in the planned Infinite Loop ™ manufacturing facility in Bécancour, Québec.

The remainder of non-refundable cash deposits on machinery and equipment of $ 3,395,650 (February 28, 2022 – $ 2,128,967 ) are non-refundable cash deposits on long-lead machinery and equipment that will be used in a planned Infinite Loop ™ manufacturing facility.

The deposit for insurance represents a pre-payment of the final three months of the Company’s directors and officers’ insurance annual premium.

Assets held for sale

On May 27, 2021, we acquired land in Bécancour, Québec for cash of $4.8 million (CDN $5.9 million) , for which a portion of the land is the site of our planned Infinite Loop ™ manufacturing facility.

The excess land has been classified as an asset held for sale, with a carrying value at August 31, 2022 of $ 3,282,515 , on the basis that management was committed to a plan to dispose of the excess land and at the balance sheet date, and considered the sale to be probable within one year.

As disclosed in Note 21, the Company sold approximately two thirds of the land held for sale on September 15, 2022 for cash proceeds of $ 8,694,989 .

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.

Balance sheet line item

Land held for sale

Asset held for sale

Infinite Loop ™ manufacturing facility

Property, plant and equipment, net

On May 27, 2021, we acquired land in Bécancour, Québec for cash of $4.4 million (CDN $5.9 million) .

The Company sold approximately two thirds of the land held for sale on September 15, 2022 for cash proceeds of $ 8,559,490 and a gain on disposition of the asset of $ 6,703,558 .

The remaining land and cost of related land improvements have been classified as assets held for sale, with a carrying value at November 30, 2022 of $ 3,758,314 , on the basis that management was committed to a plan to dispose of the excess land and at the balance sheet date, and considered the sale to be probable within one year.

As disclosed in Note 22, the Company has entered into an agreement for the sale of the remaining land.

Property, Plant and Equipment

Property, plant and equipment as at August 31, 2022 and February 28, 2022 were as follows:

As at August 31, 2022

Property, plant and equipment as at November 30, 2022 and February 28, 2022 were as follows:

As at November 30, 2022

Accumulated depreciation, write-down and impairment

Net book value

$ ( 296,320 )

5 unchanged sentences

Accumulated depreciation, write-down and impairment

Net book value

$ ( 266,434 )

2 unchanged sentences

$ ( 1,251,600 )

Depreciation expense for the three- and six-month periods ended August 31, 2022 amounted to $ 117,486 and $ 236,488 , respectively (2021– $ 121,733 and $ 236,790 , respectively), and is recorded as an operating expense in the consolidated statements of operations and comprehensive loss.

Depreciation expense for the three- and nine-month periods ended November 30, 2022 amounted to $ 111,055 and $ 347,543 , respectively (2021– $ 114,799 and $ 351,589 , respectively), and is recorded as an operating expense in the consolidated statements of operations and comprehensive loss.

During the three-month period ended May 31, 2021, the Company acquired a 19 million square foot parcel of land in Bécancour, Québec for $ 4.4 million (CDN $5.9 million).

The Company intends to use a portion of the site to construct a commercial facility to manufacture Loop™ branded PET resin using its Infinite Loop™ technology.

As detailed in Note 6, a portion of the land was sold in September 2022 and the remainder of the land as well as the related land improvements were classified as assets held for sale as at November 30, 2022.

Intangible Assets

Intangible assets as at August 31, 2022 and February 28, 2022 were $ 1,081,704 and $ 1,013,801 , respectively.

During the six-months periods ended August 31, 2022 and 2021, we made additions to intangible assets of $ 141,404 and $ 90,591 , respectively.

Amortization expense for the three- and six-month periods ended August 31, 2022 amounted to $ 20,615 and $ 40,153 , respectively (2021 - $ 19,036 and $ 358,904 , respectively), and is recorded as an operating expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

Intangible assets as at November 30, 2022 and February 28, 2022 were $ 1,110,932 and $ 1,013,801 , respectively.

During the nine-months periods ended November 30, 2022 and 2021, we made additions to intangible assets of $ 225,047 and $ 348,017 , respectively.

Amortization expense for the three- and nine-month periods ended November 30, 2022 amounted to $ 22,848 and $ 63,001 , respectively (2021 - $ 20,236 and $ 56,216 , respectively), and is recorded as an operating expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

Fair value of financial instruments

The following tables present the fair value of the Company’s financial liabilities as at August 31, 2022 and February 28, 2022:

Fair Value as at August 31, 2022

The following tables present the fair value of the Company’s financial liabilities as at November 30, 2022 and February 28, 2022:

Fair Value as at November 30, 2022

Carrying Amount

8 unchanged sentences

The fair value of long-term debt is determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration and credit default expectations (Level 2).

The fair value of cash and cash equivalents, other receivables, and trade accounts payable and certain accrued liabilities approximate their carrying values due to their short-term maturity.

The fair value of cash and cash equivalents, restricted cash, other receivables, and trade accounts payable and certain accrued liabilities approximate their carrying values due to their short-term maturity.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities as at August 31, 2022 and February 28, 2022 were as follows:

August 31, 2022

February 28, 2022

Accounts payable and accrued liabilities as at November 30, 2022 and February 28, 2022 were as follows:

Trade accounts payable

4 unchanged sentences

Other accrued liabilities

Customer Deposits

In October 2022, the Company received a cash deposit from a customer of $ 1,000,000 in relation to an executed capacity reservation agreement.

The deposit is to be credited against any future sales of Loop™ PET resin over a five-year period, commencing two years after the first delivery of Loop™ PET resin to the customer.

The use of the deposit is designated for expenditures related to the Infinite Loop™ manufacturing facility in Bécancour Québec and is refundable in the event that the Infinite Loop™ manufacturing facility in Bécancour Québec is not constructed.

As a result of the decision by management to no longer proceed with construction of the Infinite Loop manufacturing facility in Becancour Quebec as contemplated under the capacity reservation agreement with the customer, the cash deposit has been reflected as restricted cash as at November 30, 2022, with a corresponding financial liability of an equal amount.

Long‑Term Debt

Long-term debt as of August 31, 2022 and February 28, 2022, was comprised of the following:

August 31, 2022

February 28, 2022

Long-term debt as of November 30, 2022 and February 28, 2022, was comprised of the following:

Investissement Québec financing facility:

6 unchanged sentences

Investissement Québec financing facility

The Company recorded interest expense on the Investissement Québec loan for the three- and six-month periods ended August 31, 2022 in the amount of $ 22,028 and $ 44,237 respectively (2021 – $ 11,512 and $ 22,394 ) and an accretion expense of $ 17,684 and $ 35,270 respectively (2021 – $ 11,046 and $ 21,573 ).

The Company recorded interest expense on the Investissement Québec loan for the three- and nine-month periods ended November 30, 2022 in the amount of $ 20,950 and $ 65,186 respectively (2021 – $ 21,704 and $ 44,098 ) and an accretion expense of $ 17,048 and $ 52,318 respectively (2021 – $ 16,723 and $ 38,295 ).

On November 21, 2022, the Company and Investissement Québec entered into an agreement to amend the existing Financing Facility which modifies the repayments of the principal amount (the “the Financing Facility Amendment”).

As per the Financing Facility Amendment, $ 37,015 (CDN $50,000) of the principal amount is repayable in monthly installments in the fiscal year ending February 29, 2024 and the remainder of the principal amount is repayable in 72 monthly installments.

Under the original terms of the Financing Facility, the principal amount was repayable in 84 monthly installments beginning in March of 2023.

The Financing Facility Amendment does not modify the interest rates, the repayment terms of accrued interest or any other terms of the Financing Facility.

The Amendment did not meet the criteria of ASC 470, Debt for an extinguishment of debt as the Amendment did substantially modify the terms of the Financing Facility.

The Company therefore applied modification accounting and no immediate gain or loss was recognized related to the Amendment.

Principal repayments due on the Company’s indebtedness over the next five years are as follows:

10 unchanged sentences

The Company is subject to a guarantee of the liabilities of Loop Canada Inc.

As at August 31, 2022 the Credit Facility was undrawn.

As at November 30, 2022 the $ 2,591,057 (CDN $3,500,000) Credit Facility was available and undrawn.

Related Party Transactions

18 unchanged sentences

Accordingly, 1,000,000 performance incentive RSUs with a fair value of $ 7,740,000 were earned and issuable to Mr.

This amount was reflected as stock-based compensation expense during the six-month period ended August 31, 2022 based on the grant date fair value.

The 1,000,000 vested RSU’s are to be settled annually on October 15 of each year in five equal tranches of 200,000 units.

This amount was reflected as stock-based compensation expense during the nine-month period ended November 30, 2022 based on the grant date fair value.

The 1,000,000 vested RSUs are to be settled annually in shares of the Company’s common stock on October 15 of each year in five equal tranches of 200,000 units, unless Mr.

Solomita and the Company elect to defer settlement before such date.

On October 14, 2022, Mr.

Solomita and the Company agreed to defer by one year the settlement of 400,000 RSUs that were set to settle on October 15, 2022.

Stockholders’ Equity

For the period ended August 31, 2022

For the nine-month period ended November 30, 2022

Number of shares

1 unchanged sentence

Issuance of shares upon settlement of restricted stock units

Balance, August 31, 2022

For the period ended August 31, 2021

Balance, November 30, 2022

For the nine-month period ended November 30, 2021

Number of shares

2 unchanged sentences

Issuance of shares for cash

Balance, August 31, 2021

During the six-month period ended August 31, 2022, the Company recorded the following common stock transaction:

Issuance of shares upon exercise of warrants

Issuance of shares upon exercise of options

Balance, November 30, 2021

During the nine-month period ended November 30, 2022, the Company recorded the following common stock transaction:

The Company issued 51,531 shares of the common stock to settle restricted stock units that vested in the period.

During the six-month period ended August 31, 2021, the Company recorded the following common stock transactions:

During the nine-month period ended November 30, 2021, the Company recorded the following common stock transactions:

The Company issued 231,660 shares of the common stock to settle restricted stock units that vested in the period.

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 .

The Company issued 11,666 shares of its common stock upon the exercise of a warrant.

The Company issued 16,226 shares of its common stock upon the exercise of stock options.

Research and Development Expenses

Research and development expenses for the three-month periods ended August 31, 2022 and 2021 were as follows:

August 31, 2022

August 31, 2021

Research and development expenses for the three-month periods ended November 30, 2022 and 2021 were as follows:

November 30, 2021

Machinery and equipment expenditures

2 unchanged sentences

Plant and laboratory operating expenses

Research and development expenses for the six-month periods ended August 31, 2022 and 2021 were as follows:

August 31, 2022

August 31, 2021

Research and development expenses for the nine-month periods ended November 30, 2022 and 2021 were as follows:

November 30, 2021

Machinery and equipment expenditures

2 unchanged sentences

Plant and laboratory operating expenses

( 1,207,415 )

General and Administrative Expenses

General and administrative expenses for the three-month periods ended August 31, 2022 and 2021 were as follows:

August 31, 2022

August 31, 2021

General and administrative expenses for the three-month periods ended November 30, 2022 and 2021 were as follows:

November 30, 2021

Professional fees

Employee compensation

General and administrative expenses for the six-month periods ended August 31, 2022 and 2021 were as follows:

August 31, 2022

August 31, 2021

General and administrative expenses for the nine-month periods ended November 30, 2022 and 2021 were as follows:

November 30, 2021

Professional fees

1 unchanged sentence

Includes stock-based compensation expense.

During the six-month period ended August 31, 2022, the Company recorded a stock-based compensation expense of $ 7,740,000 related to the achievement of a performance milestone for 1,000,000 RSUs granted to the Company’s CEO (Note 12).

During the six-month period ended August 31, 2021, the Company recorded RSU forfeitures for an amount of $ 935,837 as a net reversal of stock-based compensation.

During the nine-month period ended November 30, 2022, the Company recorded a stock-based compensation expense of $ 7,740,000 related to the achievement of a performance milestone for 1,000,000 RSUs granted to the Company’s CEO (Note 13).

During the nine-month period ended November 30, 2021, the Company recorded RSU forfeitures for an amount of $ 935,837 as a net reversal of stock-based compensation.

Share-based Payments

Stock Options

During the three-month period ended August 31, 2022, the Company granted no stock options (2021 – nil), no stock options were forfeited (2021 – nil) or exercised (2021 – nil), and no stock options expired (2021 – nil).

During the six-month period ended August 31, 2022, the Company granted no stock options (2021 – nil), no stock options were forfeited (2021 – nil) or exercised (2021 – nil), and no stock options expired (2021 – nil).

During the three- and nine-month periods ended November 30, 2022, the Company granted 972,000 stock options with a weighted average exercise price of $ 2.68 (2021 – nil), no stock options were exercised (2021 – 17,081 with a weighted average exercise price of $ 0.80 ), no stock options were forfeited (2021 – nil), and no stock options expired (2021 – nil).

The Company applies the fair value method of accounting for stock-based compensation awards granted.

Fair value is calculated based on a Black-Scholes option pricing model.

There were no new issuances of stock options for the three- and six-month periods ended August 31, 2022 and 2021.

The total number of stock options outstanding as at August 31, 2022 was 1,570,000 (2021 – 1,587,081 ) with a weighted average exercise price of $ 6.87 (2021 - $ 6.81 ), of which 1,361,667 were exercisable (2021 – 1,278,748 ) with a weighted average exercise price of $ 7.73 (2021 – $ 7.30 ).

During the three-month periods ended August 31, 2022 and 2021, stock-based compensation expense attributable to stock options amounted to $ 312,460 and $ 343,653 , respectively, and is included in operating expenses.

During the six-month periods ended August 31, 2022 and 2021, stock-based compensation expense attributable to stock options amounted to $ 629,600 and $ 892,971 , respectively, and is included in operating expenses.

There were no new issuances of stock options for the three- and nine-month periods ended November 30, 2021.

The principal components of the pricing model for the stock options granted in the three-month period ended November 30, 2022 were as follows:

Exercise price

Risk-free interest rate

Expected dividend yield

Expected volatility

Expected life

The total number of stock options outstanding as at November 30, 2022 was 2,542,000 (2021 – 1,570,000 ) with a weighted average exercise price of $ 5.27 (2021 - $ 6.87 ), of which 1,670,000 were exercisable (2021 – 1,286,667 ) with a weighted average exercise price of $ 6.84 (2021 – $ 7.48 ).

During the three-month periods ended November 30, 2022 and 2021, stock-based compensation expense attributable to stock options amounted to $ 551,363 and $ 311,004 , respectively.

During the nine-month periods ended November 30, 2022 and 2021, stock-based compensation expense attributable to stock options amounted to $ 1,180,963 and $ 1,203,975 , respectively, and is included in operating expenses.

Restricted Stock Units

During the three-month period ended August 31, 2022, the Company granted 66,744 restricted stock units (“RSUs”) (2021 – 33,184 ) with a weighted average fair value of $ 4.05 (2021 – $ 13.05 ), settled no RSUs (2021 – 12,031 , weighted average fair value of $ 8.48 ), and 28,801 RSUs were forfeited (2021 – nil) with a weighted average fair value of $ 8.68 (2021 – nil).

During the six-month period ended August 31, 2022, the Company granted 151,605 restricted stock units (“RSUs”) (2021 – 286,942 ) with a weighted average fair value of $ 5.14 (2021 – $ 9.41 ), settled 12,653 RSUs (2021 – 31,660 ) with a weighted average fair value of $ 13.04 (2021 – $ 8.82 ), and 28,801 RSUs were forfeited (2021 – 295,524 ) with a weighted average fair value of $ 8.68 (2021 – $ 7.93 ).

During the three-month period ended November 30, 2022, the Company granted no restricted stock units (“RSUs”) (2021 – 62,638 with a weighted average fair value of $ 13.64 ), settled 38,878 RSUs (2021 – 200,000 ) with a weighted average fair value of $ 13.08 (2021 – $ 0.80 ), and 53,037 RSUs were forfeited (2021 – 17,988 ) with a weighted average fair value of $ 13.40 (2021 – $ 8.73 ).

During the nine-month period ended November 30, 2022, the Company granted 151,605 restricted stock units (“RSUs”) (2021 – 349,580) with a weighted average fair value of $ 5.14 (2021 – $ 10.16 ), settled 51,531 RSUs (2021 – 231,660 ) with a weighted average fair value of $ 13.07 (2021 – $ 1.90 ), and 81,838 RSUs were forfeited (2021 – 313,512 ) with a weighted average fair value of $ 11.74 (2021 – $ 7.97 ).

The Company applies the fair value method of accounting for awards granted through the issuance of restricted stock units.

Fair value is calculated based on the closing share price at grant date multiplied by the number of restricted stock unit awards granted.

The total number of RSUs outstanding as at August 31, 2022 was 4,128,718 (2021 – 4,170,278 ), of which 1,563,497 were vested (2021 – 725,313 ).

During the three-month periods ended August 31, 2022 and 2021, stock-based compensation attributable to RSUs amounted to $ 316,220 and $ 379,165 , respectively, and is included in expenses.

During the six-month periods ended August 31, 2022 and 2021, stock-based compensation attributable to RSUs amounted to $ 8,465,388 and ($ 173,238 ), respectively, and is included in operating expenses.

The net reversal in expenses attributable to RSUs in the six-month period ended August 31, 2021 is due to forfeitures recorded in the period for a total of $ 935,837 .

The total number of RSUs outstanding as at November 30, 2022 was 4,036,803 (2021 – 4,014,928 ), of which 1,563,497 were vested (2021 – 525,313).

During the three-month periods ended November 30, 2022 and 2021, stock-based compensation attributable to RSUs amounted to $ 322,802 and $ 331,005 , respectively, and is included in expenses.

During the nine-month periods ended November 30, 2022 and 2021, stock-based compensation attributable to RSUs amounted to $ 8,788,190 and $ 157,769 , respectively, and is included in operating expenses.

During the nine-month period ended November 30, 2021, the Company recorded a reversal of expenses for forfeitures for a total of $963,022

Stock-Based Compensation Expenses

During the three-month periods ended August 31, 2022 and 2021, stock-based compensation included in research and development expenses amounted to $ 319,046 and $ 394,527 , respectively, and in general and administrative expenses amounted to $ 309,633 and $ 313,282 , respectively.

During the six-month periods ended August 31, 2022 and 2021, stock-based compensation included in research and development expenses amounted to $ 715,541 and $ 790,072 , respectively, and in general and administrative expenses amounted to $ 8,379,448 and ($ 70,338 ), respectively.

The amount recorded in general and administrative expenses for the six-month period ended August 31, 2022 includes $ 7,740,000 related to the achievement of a performance milestone for 1,000,000 RSUs granted to the Company’s CEO (Note 12).

The net reversal in stock-based compensation included in general and administrative expenses in the six-month period ended August 31, 2021 is due to forfeitures recorded in the period for a total of $ 935,837 .

During the three-month periods ended November 30, 2022 and 2021, stock-based compensation included in research and development expenses amounted to $ 455,013 and $ 362,435 , respectively, and in general and administrative expenses amounted to $ 419,152 and $ 279,574 , respectively.

During the nine-month periods ended November 30, 2022 and 2021, stock-based compensation included in research and development expenses amounted to $ 1,170,554 and $ 1,152,506 , respectively, and in general and administrative expenses amounted to $ 8,798,599 and $ 209,236 , respectively.

The amount recorded in general and administrative expenses for the nine-month period ended November 30, 2022 includes $ 7,740,000 related to the achievement of a performance milestone for 1,000,000 RSUs granted to the Company’s CEO (Note 13).

Stock-based compensation included in general and administrative expenses in the nine-month period ended November 30, 2021 includes reversal of expenses for forfeitures for a total of $ 935,837 .

Equity Incentive Plan

6 unchanged sentences

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 six-month periods ended August 31, 2022 and 2021:

The following table summarizes the continuity of the Company’s Equity Incentive Plan units during the nine-month periods ended November 30, 2022 and 2021:

Number of units

3 unchanged sentences

Units granted

( 1,123,605 )

Units forfeited

1 unchanged sentence

Outstanding, end of period

During the six-month period ended August 31, 2022, warrants to purchase 4,554,865 shares of our common stock in aggregate with an exercise price of $ 11 .00 expired.

During the six-month period ended August 31, 2021, the Company issued warrants to purchase 7,550,698 shares of our common stock in aggregate with a weighted average exercise price of $ 16.32 .

During the six-month period ended August 31, 2021, the Company issued warrants to purchase 7,550,698 shares of our common stock.

No warrants were exercised, were forfeited, nor expired in the six-month period ended August 31, 2021.

The table below summarizes the warrants granted during the six-month period ended August 31, 2021:

During the nine-month period ended November 30, 2022, warrants to purchase 4,554,865 shares of our common stock in aggregate with an exercise price of $ 11 .00 expired.

During the nine-month period ended November 30, 2021, the Company issued warrants to purchase 7,550,698 shares of our common stock in aggregate with a weighted average exercise price of $ 16.32 .

25,000 warrants were exercised with a weighted average exercise price of $ 9.43 and no warrants were forfeited, nor expired in the nine-month period ended November 30, 2021.

The table below summarizes the warrants granted during the nine-month period ended November 30, 2021:

Number of warrants

6 unchanged sentences

Interest and Other Financial Expenses

Interest and other finance costs for the three-month periods ended August 31, 2022 and 2021 are as follows:

Interest and other finance costs for the three-month periods ended November 30, 2022 and 2021 are as follows:

Interest on long-term debt

Accretion expense

Interest and other finance costs for the six-month periods ended August 31, 2022 and 2021 are as follows:

Interest and other finance costs for the nine-month periods ended November 30, 2022 and 2021 are as follows:

Interest on long-term debt

2 unchanged sentences

Agreement to purchase of machinery and equipment

In December 2021, the Company entered into an agreement for the purchase of long lead machinery and equipment in connection with the construction of our Infinite Loop ™ manufacturing facility in Bécancour, Québec for up to $ 8,546,000 , subject to various terms and conditions, including fabrication timelines and equipment inspection.

In December 2021, the Company entered into an agreement for the purchase of long lead machinery and equipment in connection with the construction of our first Infinite Loop ™ manufacturing facility for up to $ 8,546,000 , subject to various terms and conditions, including fabrication timelines and equipment inspection.

Pursuant to the agreement, the Company has paid cash deposits of $ 3,395,650 .

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.

1 unchanged sentence

The complaint alleges that the defendants violated Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts about the Company’s business, operations, and prospects, which caused the Company’s securities to trade at artificially inflated prices.

The complaint 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.

The complaint seeks unspecified damages on behalf of a class of purchasers of Loop’s securities between September 24, 2018 and October 12, 2020, inclusive.

Loop Industries, Inc., Daniel Solomita, and Nelson Gentiletti , Case No.

9 unchanged sentences

Plaintiffs’ opposition to the motion to dismiss was served on May 27, 2021 and Defendants’ reply in support of the motion to dismiss was served on June 11, 2021.

On March 1, 2022, the Company and the current and former officer defendants entered into an agreement for the settlement of the Tremblay Class Action, and, on March 4, 2022, advised the Court of the agreement to settle.

On March 1, 2022, the Company and the current and former officer defendants entered into an agreement for the settlement of In re Loop Industries, Inc.

Securities Litigation, and, on March 4, 2022, advised the Court of the agreement to settle.

The agreement, which is subject to certain conditions, including court approval, requires the Company to pay $ 3.1 million to the plaintiff class.

The Company’s total cash contribution to the settlement and outstanding legal fees related to the lawsuit, combined, will be approximately $ 2.52 million.

The remainder of the settlement will be paid by the Company’s D&O insurance carriers.

As a result, the Company recorded a contingency loss of $ 2,519,220 which was included in accounts payable and accrued liabilities at February 28, 2022.

As at August 31, 2022, the amount included in accounts payable and accrued liabilities related to the settlement was $ 2,231,606 .

The accrued loss contingency for legal settlement was reduced by legal costs incurred in the six-month period ended August 31, 2022 of $ 287,614 .

As a result, the Company recorded a contingency loss of $ 2,519,220 which was included in accounts payable and accrued liabilities at February 28, 2022 and expected to be the Company’s approximate total cash contribution to the settlement and outstanding legal fees related to the lawsuit, net of the Company’s D&O insurance carriers’ contribution.

On May 24, 2022, Lead Plaintiffs filed their motion for preliminary approval of the proposed class action settlement.

On September 19, 2022, the Court entered an order preliminarily approving the settlement and providing for notice.

The Court scheduled the settlement hearing for January 5, 2023.

The Court held a final settlement hearing on January 5, 2023 after which the Court entered an order and final judgment approving the class action settlement.

In October 2022, the Company made a payment in escrow of $ 3,100,000 for the settlement which is included in restricted cash in the Company’s consolidated balance sheet as of November 30, 2022.

The Company received $ 558,521 from its D&O insurance carriers and an additional $ 279,261 was recorded as a receivable from the D&O insurance carriers.

As of November 30, 2022, the amount included in accounts payable and accrued liabilities related to the settlement was $ 3,100,000 .

The settlement agreement does not constitute an admission, concession, or finding of any fault, liability, or wrongdoing by the Company or any defendant.

8 unchanged sentences

In a judgment dated July 29, 2022, the Superior Court of Québec dismissed the Application for authorization of a class action and for authorization to bring an action pursuant to section 225.4 of the Québec Securities Act.

The period to appeal the judgment ends on October 26, 2022.

The period to appeal the judgment is now expired.

Subsequent Events

Sale of asset held for sale

On September 15, 2022, the Company sold approximately two thirds of the land classified as an asset held for sale for cash proceeds of $ 8,694,989 (CDN $ 11,400,000 ).

Entry into an agreement for the sale of an asset held for sale

On December 21, 2022, the Company entered an agreement to sell all of its land in Bécancour, Québec for cash proceeds of $ 13,695,588 (CDN $ 18,500,000 ).

The sale is expected to close on or before February 24, 2023 subject to final due diligence and fulfillment of certain customary closing conditions.

The land as well as the related land improvements were classified as assets held for sale on the Company’s consolidated balance sheet as at November 30, 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements