What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-07-12 compared with 2023-01-12 · 163 added, 415 removed, 234 unchanged (71% of the section changed)

1 unchanged sentence

Loop Industries, Inc.

Three and Nine months ended November 30, 2022

Three months ended May 31, 2023

Index to the Unaudited Interim Condensed Consolidated Financial Statements

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)

Condensed consolidated balance sheets as at May 31, 2023 (Unaudited) and February 28, 2023

Condensed consolidated statements of operations and comprehensive loss for the three months ended May 31, 2023 and 2022 (Unaudited)

Condensed consolidated statements of changes in stockholders’ equity for the three months ended May 31, 2023 and 2022 (Unaudited)

Condensed consolidated statements of cash flows for the three months ended May 31, 2023 and 2022 (Unaudited)

Notes to the condensed consolidated financial statements (Unaudited)

1 unchanged sentence

Condensed Consolidated Balance Sheets

(in thousands of U.S.

dollars, except per share data)

February 28, 2023

Current assets

Cash and cash equivalents

Restricted cash (Note 21)

Restricted cash

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

Inventories (Note 4)

Prepaid expenses and deposits (Note 5)

Assets held for sale (Note 6)

Deposits on machinery and equipment (Note 5)

Prepaid expenses and other deposits (Note 5)

Total current assets

5 unchanged sentences

Accounts payable and accrued liabilities (Note 9)

Customer deposits (Note 11)

Customer deposits

Current portion of long-term debt (Note 10)

10 unchanged sentences

Additional paid-in capital

Additional paid-in capital – Warrants (Note 19)

Additional paid-in capital – Warrants

Accumulated deficit

( 161,307,104 )

( 134,582,926 )

Accumulated other comprehensive loss

1 unchanged sentence

Total liabilities and stockholders’ equity

Commitments (Note 17)

See accompanying notes to the condensed consolidated financial statements .

1 unchanged sentence

Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended November 30

Nine Months Ended November 30

(in thousands of U.S.

dollars, except per share data)

Three Months Ended

Revenue from contracts with customers

Research and development (Note 13)

General and administrative (Note 14)

Gain on disposition of assets (Note 6)

( 6,703,558 )

Depreciation and amortization (Notes 6 and 7)

Interest and other financial expenses (Note 20)

Interest income

Foreign exchange loss (gain)

Total expenses

( 1,013,073 )

( 10,098,243 )

( 26,724,178 )

( 30,648,023 )

Other comprehensive income (loss)

Other (income) loss :

Interest and other financial expenses

Interest income

Foreign exchange (gain) loss

Total other (income) loss

Other comprehensive loss -

Foreign currency translation adjustment

Comprehensive income (loss)

$ ( 1,452,370 )

$ ( 10,111,716 )

$ ( 27,580,745 )

$ ( 30,808,394 )

Loss per share

Comprehensive loss

Net loss per share

Basic and diluted

3 unchanged sentences

Loop Industries, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended November 30, 2021

Series A preferred stock

par value $0.0001

Number of Shares

Paid-in Capital

Paid-in Capital - Warrants

Accumulated Deficit

Accumulated Other Comprehensive (Loss)

Total Stockholders’ Equity

Balance, August 31, 2021

$ 149,008,231

$ ( 110,211,750 )

$ ( 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)

Restricted stock units issued for services (Note 17)

Foreign currency translation

( 10,098,243 )

Balance, November 30, 2021

$ 149,734,659

$ ( 120,309,993 )

$ ( 166,961 )

Three Months Ended November 30, 2022

Series A preferred stock

par value $0.0001

Number of Shares

Paid-in Capital

Paid-in Capital - Warrants

Accumulated Deficit

Accumulated Other Comprehensive (Loss)

Total Stockholders’ Equity

Balance, August 31, 2022

$ 169,300,723

$ ( 160,294,031 )

$ ( 513,303 )

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

Stock options issued for services (Note 17)

Restricted stock units issued for services (Note 17)

Foreign currency translation

( 1,013,073 )

Balance, November 30, 2022

$ 170,174,884

$ ( 161,307,104 )

$ ( 952,600 )

See accompanying notes to the condensed consolidated financial statements.

Loop Industries, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Nine Months Ended November 30, 2021

Series A preferred stock

Condensed Consolidated Statement of Changes in Stockholders’ Equity

(in thousands of U.S.

dollars, except for share data)

Three months ended May 31, 2022

Preferred stock

par value $0.0001

2 unchanged sentences

Number of Shares

Paid-in Capital

Paid-in Capital - Warrants

Capital – Warrants

Accumulated Deficit

Accumulated Other Comprehensive (Loss)

Total Stockholders’ Equity

Comprehensive Income (Loss)

Stockholders’ Equity

Balance, February 28, 2022

$ ( 134,583 )

$ ( 89,661,970 )

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

Issuance of warrants for financing facility (Note 19)

Issuance of shares upon the vesting of restricted stock units (Note 15)

Issuance of shares upon exercise of warrants (Note 17)

Issuance of shares upon exercise of options (Note 17)

Stock options issued for services (Note 15)

1 unchanged sentence

Foreign currency translation

( 30,648,023 )

Balance, November 30, 2021

$ 149,734,659

$ ( 120,309,993 )

Balance, May 31, 2022

$ ( 152,589 )

Nine Months Ended November 30, 2022

Series A preferred stock

(in thousands of U.S.

dollars, except for share data)

Three months ended May 31, 2023

Preferred stock

par value $0.0001

2 unchanged sentences

Number of Shares

Paid-in Capital

Paid-in Capital - Warrants

Capital – Warrants

Accumulated Deficit

Accumulated Other Comprehensive (Loss)

Total Stockholders’ Equity

Comprehensive Income (Loss)

Stockholders’ Equity

Balance, February 28, 2023

$ ( 155,883 )

$ ( 134,582,926 )

Issuance of shares upon the vesting of restricted stock units (Note 15)

Expiration of warrants (Note 19)

( 9,809,032 )

Stock options issued for services (Note 15)

1 unchanged sentence

Foreign currency translation

( 26,724,178 )

Balance, November 30, 2022

$ 170,174,884

$ ( 161,307,104 )

Balance, May 31, 2023

$ ( 162,884 )

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Nine Months Ended November 30,

(in thousands of U.S.

Three Months Ended May 31,

Cash Flows from Operating Activities

$ ( 26,724,178 )

$ ( 30,648,023 )

Adjustments to reconcile net loss to net cash used in operating activities:

1 unchanged sentence

Stock-based compensation expense (Note 15)

Gain on disposition of assets (Note 6)

( 6,703,558 )

Accretion and accrued interest expenses (Note 10)

1 unchanged sentence

Sales tax and tax credits receivable (Note 3)

Inventory (Note 4)

Prepaid expenses and deposits (Note 5)

( 1,294,520 )

( 1,394,272 )

Inventories (Note 4)

Prepaid expenses (Note 5)

Accounts payable and accrued liabilities (Note 9)

( 2,652,171 )

( 3,587,932 )

Customer deposits (Note 11)

Customer deposits

Net cash used in operating activities

( 26,283,203 )

( 32,829,956 )

Cash Flows from Investing Activities

Proceeds from disposition of assets (Note 6)

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

( 5,022,255 )

Deposits on machinery and equipment (Note 5)

Additions to intangible assets (Note 7)

Net cash used in investing activities

( 5,370,272 )

Cash Flows from Financing Activities

Proceeds from sale of common shares and warrants, net of share issuance costs (Note 14)

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

Repayment of long-term debt

Repayment of long-term debt (Note 10)

Net cash (used) provided by financing activities

Effect of exchange rate changes

Net increase (decrease) in cash

( 18,436,434 )

Cash and restricted cash, beginning of period

Cash and restricted cash, end of period

Net decrease in cash

Cash, cash equivalents and restricted cash, beginning of period

Cash, cash equivalents and restricted cash, end of period

Supplemental Disclosure of Cash Flow Information:

4 unchanged sentences

Loop Industries, Inc.

Three and Nine Months Ended November 30, 2022 and 2021

Three Months Ended May 31, 2023 and 2022

Notes to the Condensed Consolidated Financial Statements

The Company, Basis of Presentation

The Company and Basis of Presentation

Loop Industries, Inc.

(the “Company,” “Loop,” “we,” or “our”) is a technology company that owns patented and proprietary technology that depolymerizes no and low-value waste PET plastic and polyester fiber to its base building blocks (monomers).

(the “Company,” “Loop,” “we,” or “our”) is a technology company that owns patented and proprietary technology that depolymerizes no and low-value waste polyethylene terephthalate (“PET”) plastic and polyester fiber to its base building blocks (monomers).

The monomers are filtered, purified and polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber.

The Company is currently in the development stage with limited revenues.

The Company is currently in the pre-commercialization stage with limited revenues.

Basis of Presentation

10 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 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 results for the three months ended May 31, 2023 are not necessarily indicative of the results to be expected for any subsequent quarter, for the fiscal year ending February 29, 2024, 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.

All monetary amounts in these notes to the condensed consolidated financial statements are in thousands of U.S.

dollars unless otherwise specified, except for per share data.

Summary of Significant Accounting Policies

Liquidity Risk Assessment

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

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

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

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

Since its inception, the Company has been in the pre-commercialization 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 and investing activities since its inception and expects to incur additional net losses while it continues to develop and plan for commercialization.

As at May 31, 2023, the Company’s available liquidity was $ 24,543 , consisting of cash and cash equivalents of $ 21,970 and an undrawn senior loan facility from a Canadian bank of $ 2,573 .

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.

1 unchanged sentence

In preparing this liquidity assessment, management applies significant judgment in estimating future cash flow requirements of the Company based on budgets and forecasts, which includes developing assumptions related to:

(i) estimation of amount and timing of future cash outflows and cash inflows and (ii) determining what future expenditures are committed and what could be considered discretionary.

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

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

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

(i) estimation of amount and timing of future cash outflows and inflows and (ii) determining what future expenditures are committed and what could be considered discretionary.

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

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

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

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

Revenue recognition

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

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

Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company enters into contracts with customers to sell Loop™ PET resin.

These contracts include a single performance obligation, which is the delivery of Loop™ PET resin, and the transaction price is a fixed rate per delivered volume.

Revenue is recognized when control of the product transfers to the customer, which is when product is delivered to the customer location.

Shipping and handling costs are accounted for as a fulfillment cost.

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

The Company has committed $ 3,116 of its cash resources for certain long lead equipment during the current fiscal year and may enter into additional commitments to accelerate commercial projects within targeted construction timeframes.

Use of estimates

1 unchanged sentence

Actual results could differ from those estimates.

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

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

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

Stock‑based compensation

The Company periodically issues stock options, warrants and restricted stock units to employees and non-employees in non-capital raising transactions for services and financing expenses.

The Company accounts for stock options granted to employees based on the authoritative guidance provided by the FASB wherein the fair value of the award is measured on the grant date and recognized as compensation expense on the straight-line basis over the vesting period.

When performance conditions exist, the Company recognizes compensation expense when it becomes probable that the performance condition will be met.

Forfeitures on share-based payments are accounted for by recognizing forfeitures as they occur.

The Company accounts for stock options and warrants granted to non-employees in accordance with the authoritative guidance of the FASB wherein the fair value of the stock compensation is based upon the measurement date determined as the earlier of the date at which either a) a commitment is reached with the counterparty for performance or b) the counterparty completes its performance.

The Company estimates the fair value of restricted stock unit awards to employees and directors based on the closing market price of its common stock on the date of grant.

The fair value of the stock options granted is estimated using the Black-Scholes-Merton Option Pricing (“Black-Scholes”) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options, and future dividends.

Stock-based compensation expense is recorded based on the value derived from the Black-Scholes model and on actual experience.

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

Restricted cash

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

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

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

Inventory cost includes direct labor, cost of raw materials and production overhead.

The Company separates its inventories into three main categories:

raw materials, work in process, and finished goods.

The raw materials category includes goods used in the production process that have not yet entered the production process at the balance sheet date and mainly comprises chemicals and other process consumables.

The work in process category includes goods that are in the production process at the balance sheet date and mainly comprises monomers that have not yet been polymerized into Loop™ branded PET resin.

The finished goods category includes goods that have completed the production process and mainly comprises Loop™ branded PET resin.

Research and development expenses

Research and development costs are charged to expense as costs are incurred in performing research and development activities.

Research and development expenses relate primarily to process development and design, producing initial volumes of product for customers, testing of pre-production samples, machinery and equipment expenditures for use in the small-scale production facility in Terrebonne, Québec (the “Terrebonne Facility”), compensation, and consulting and engineering fees.

Research and development costs are presented net of related tax credits and government grants.

Assets held for sale

Assets are classified as held for sale when they met the criteria set out in ASC 360-10-45-9 Long-lived assets classified as held for sale :

Management, having the authority to approve the action, commits to a plan to sell the asset;

The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets;

An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated;

The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year;

The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value;

Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

When the criteria are met, the assets are presented at the lesser of fair market value, net of selling costs, and cost in current assets.

Foreign currency translations and transactions

The accompanying consolidated financial statements are presented in U.S.

dollars, the reporting currency of the Company.

Assets and liabilities of subsidiaries that have a functional currency other than that of the Company are translated to U.S.

dollars at the exchange rate as at the balance sheet date.

Income and expenses are translated at the average exchange rate of the period.

The resulting translation adjustments are included in other comprehensive income (loss) (“OCI”).

As a result, foreign currency exchange fluctuations may impact operating expenses.

The Company currently is not engaged in any currency hedging activities.

For transactions and balances, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency of the entity at the prevailing exchange rate at the reporting date.

Non-monetary assets and liabilities, and revenue and expense items denominated in foreign currencies are translated into the functional currency using the exchange rate prevailing at the dates of the respective transactions.

Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated statements of operations and comprehensive loss, except for gains or losses arising from the translation of intercompany balances denominated in foreign currencies that forms part in the net investment in the subsidiary which are included in OCI.

Those estimates and assumptions include the going concern assessment, estimates for depreciable lives of property, plant and equipment and intangible assets, recoverability of tax credits receivable, 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.

Net earnings (loss) per share

4 unchanged sentences

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

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

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

Recently adopted accounting pronouncements

In November 2021, the FASB issued ASU 2021-10, “Disclosures by Business Entities about Government Assistance”.

This ASU provided guidance to increase the transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements.

Under the new guidance, an entity is required to provide the following annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy:

(1) information about the nature of the transactions and the related accounting policy used to account for the transactions, (2) the line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item and, (3) significant terms and conditions of the transactions, including commitments and contingencies.

This update is effective for fiscal years beginning after December 15, 2021.

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

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

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

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

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

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

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

For the three-month periods ended May 31, 2023 and 2022, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect.

As at May 31, 2023, the potentially dilutive securities consisted of 2,782,000 outstanding stock options (2022 – 1,570,000 ), 4,306,655 outstanding restricted stock units (2022 – 4,090,775 ), and 7,089,400 outstanding warrants (2022 – 11,659,418 ).

Sales Tax, Tax Credits and Other Receivables

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

Sales tax, research and development tax credits and other receivables as at May 31, 2023 and February 28, 2023 were as follows:

February 28, 2023

Investment tax credits

Research and development tax credits

Insurance reimbursement related to legal settlement (Note 21)

Other receivables

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

Work in process

Inventories as at May 31, 2023 and February 28, 2023 were as follows:

February 28, 2023

Finished goods

Work in process

Raw materials

Prepaid Expenses and Deposits

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

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 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.

As at May 31 and February 28, 2023, inventories included finished goods, work in process and raw materials.

Finished goods inventories consist of bottle grade and fiber grade Loop ™ PET resin which is intended to be sold to customers.

Work in process inventories consist of monomers (dimethyl terephthalate and monoethylene glycol), either purified or yet to be purified, resulting from the depolymerization of PET feedstock.

These monomers shall be polymerized into Loop ™ PET resin in the future.

Raw materials inventories consist of chemicals which are used as inputs in the PET depolymerization process.

Deposits and Prepaid Expenses

As at May 31, 2023, the Company had $ 5,430 (February 28, 2023 – $ 3,395 ) of non-refundable cash deposits on long-lead machinery and equipment that are intended to be used in the first planned Infinite Loop ™ manufacturing facility.

Prepaid expenses and other deposits as at May 31, 2023 and February 28, 2023 were as follows:

February 28, 2023

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 $4.4 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 November 30, 2022 and February 28, 2022 were as follows:

As at November 30, 2022

Accumulated depreciation, write-down and impairment

$ ( 296,320 )

As at May 31, 2023

Accumulated depreciation,

write-down and impairment

Building and Land Improvements

( 1,084,060 )

Office equipment and furniture

$ ( 1,515,950 )

As at February 28, 2023

Accumulated depreciation, write-down and impairment

$ ( 266,434 )

Accumulated depreciation,

write-down and impairment

Building and Land Improvements

Office equipment and furniture

$ ( 1,251,600 )

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

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

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

Depreciation expense amounted to $ 101 for the three-month period ended May 31, 2023 (2022 – $ 119 ).

Intangible Assets

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

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

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

Intangible assets as at May 31, 2023 and February 28, 2023 were $ 1,278 and $ 1,210 , respectively.

During the three-month periods ended May 31, 2023 and 2022, we made additions relating to patent application costs to intangible assets of $ 99 and $ 69 , respectively.

Amortization expense for the three-month period ended May 31, 2023 amounted to $ 32 (2022 – $ 20 ).

Fair Value of Financial Instruments

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

Fair Value as at November 30, 2022

The following tables presents the fair value of the Company’s financial liabilities as at May 31, 2023 and February 28, 2023:

Fair Value as at May 31, 2023

Carrying Amount

7 unchanged sentences

Long-term debt

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

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

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

Accounts Payable and Accrued Liabilities

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

Accounts payable and accrued liabilities as at May 31, 2023 and February 28, 2023 were as follows:

February 28, 2023

Trade accounts payable

Accrued loss contingency for legal settlement (Note 21)

Accrued machinery and equipment expenses

Accrued employee compensation

Accrued engineering fees

Accrued professional fees

Accrued engineering fees

Accrued director compensation

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.

The accrued machinery and equipment expenses as at May 31, 2023 are related to machinery and equipment to be used at the Company’s Terrebonne Facility.

Long‑Term Debt

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

Long-term debt as of May 31, 2023 and February 28, 2023, was comprised of the following:

February 28, 2023

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 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:

The Company recorded interest expense on the Investissement Québec loan for the three-month period ended May 31, 2023 in the amount of $ 21 (2022 – $ 22 ) and an accretion expense of $ 17 (2022 – $ 18 ).

During the three-month period ended May 31, 2023, the Company made repayments of $ 16 (2022 – nil) on the Investissement Québec loan.

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

February 29, 2024

5 unchanged sentences

On July 26, 2022, Loop Canada, Inc., a wholly-owned subsidiary of the Company, entered into an Operating Credit Facility (the “Credit Facility”) with a Canadian bank.

The Credit Facility allows for borrowings of up to $ 2,591,057 (CDN $3,500,000) in aggregate principal amount and provides for a two-year term.

The Credit Facility is secured by the Company’s Terrebonne, Québec property and is subject to a minimum equity covenant, tested quarterly.

The Credit Facility allows for borrowings of up to $ 2,573 in aggregate principal amount and provides for a two-year term.

The Credit Facility is secured by the Company’s Terrebonne, Québec property and is subject to a minimum equity covenant, tested quarterly with which the Company was in compliance as at May 31, 2023.

All borrowings under the Credit Facility will bear interest at an annual rate equal to the bank’s Canadian prime rate plus 1.0 %.

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

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

As at May 31, 2023, the $ 2,573 Credit Facility was available and undrawn.

Related Party Transactions

11 unchanged sentences

Solomita’s employment agreement.

The amendment clarified the milestones consistent with the shift in the Company’s business from the production of terephthalate to the production of dimethyl terephthalate, another proven monomer of PET plastic that is far simpler to purify.

When a milestone becomes probable, the corresponding expense will be valued based on the grant date fair value on April 30, 2020, the date of the last modification of Mr.

4 unchanged sentences

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

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.

This amount was reflected as stock-based compensation expense during the three-month period ended May 31, 2022.

During the three-month period ended May 31, 2023, no outstanding performance milestones were probable of being achieved and, accordingly, the Company did not record any additional stock-based compensation expense.

Stockholders’ Equity

For the nine-month period ended November 30, 2022

For the period ended May 31, 2023

Number of shares

1 unchanged sentence

Issuance of shares upon settlement of restricted stock units

Balance, November 30, 2022

For the nine-month period ended November 30, 2021

Balance, May 31, 2023

For the period ended May 31, 2022

Number of shares

1 unchanged sentence

Issuance of shares upon settlement of restricted stock units

Issuance of shares for cash

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:

Balance, May 31, 2022

During the three months ended May 31, 2023, the Company recorded the following common stock transaction:

The Company issued 51,963 shares of the common stock to settle restricted stock units that vested in the period.

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

During the three months ended May 31, 2022, the Company recorded the following common stock transaction:

The Company issued 12,653 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 November 30, 2022 and 2021 were as follows:

November 30, 2021

Machinery and equipment expenditures

Research and development expenses for the three-month periods ended May 31, 2023 and 2022 were as follows:

Employee compensation

External engineering

Plant and laboratory operating expenses

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

Employee compensation

External engineering

Plant and laboratory operating expenses

( 1,207,415 )

General and Administrative Expenses

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

November 30, 2021

Professional fees

General and administrative expenses for the three-month periods ended May 31, 2023 and 2022 were as follows:

Employee compensation (1)

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

November 30, 2021

Professional fees

Employee compensation (1)

Includes stock-based compensation expense.

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

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

During the three-month period ended May 31, 2022, the Company recorded a stock-based compensation expense of $ 7,740 related to the achievement of a performance milestone for 1,000,000 RSUs (Note 11).

Share-based Payments

Stock Options

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

The following tables summarizes the continuity of the Company’s stock options during the three-month periods ended May 31, 2023 and 2022:

Number of stock options

Weighted average exercise price

Number of stock options

Weighted average exercise price

Outstanding, beginning of period

Outstanding, end of period

Exercisable, end of period

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

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

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

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

There were no new issuances of stock options for the three-month period ended May 31, 2022.

The principal components of the pricing model for the stock options granted in the three-month period ended May 31, 2023 were as follows:

Exercise price

3 unchanged sentences

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.

During the three-month periods ended May 31, 2023 and 2022, stock-based compensation expense attributable to stock options amounted to $ 162 and $ 317 , respectively.

Restricted Stock Units

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

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

The following table summarizes the continuity of the restricted stock units during the three-month periods ended May 31, 2023 and 2022:

Number of units

Weighted average fair value price

Number of units

Weighted average fair value price

Outstanding, beginning of period

Outstanding, end of period

Outstanding vested, end of period

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

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

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

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

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

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

Stock-Based Compensation Expenses

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

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

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

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

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

During the three-month periods ended May 31, 2023 and 2022, stock-based compensation attributable to RSUs amounted to $ 193 and $ 8,149 , respectively.

Stock-Based Compensation Expense

During the three-month periods ended May 31, 2023 and 2022, stock-based compensation included in research and development expenses amounted to $ 159 and $ 396 , respectively, and in general and administrative expenses amounted to $ 196 and $ 8,070 , respectively.

The amount recorded in general and administrative expenses for the three-month period ended May 31, 2022 includes $ 7,740 related to the achievement of a performance milestone for 1,000,000 RSUs (Note 11).

Equity Incentive Plan

2 unchanged sentences

A total of 3,000,000 shares of common stock were initially reserved for issuance under the Plan at July 6, 2017, with annual automatic share reserve increases, as defined in the Plan, amounting to the lessor of (i) 1,500,000 shares, (ii) 5 % of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) or such number of shares determined by the Administrator of the Plan, effective March 1, 2018.

On March 1, 2022 and 2021, the Board of Directors opted to waive the annual share reserve increase.

On March 1, 2023, the share reserve was increased by 1,500,000 shares.

On March 1, 2022, 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.

1 unchanged sentence

However, where a participant, at the time of the grant, owns stock representing more than 10 % of the voting power of the Company, the life of the options shall not exceed 5 years.

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

The following table summarizes the continuity of the Company’s Equity Incentive Plan units that were authorized for issuance as at and during the three-month periods ended May 31, 2023 and 2022:

Number of units*

Outstanding, beginning of period

Share reserve increase

Authorized, beginning of period

Automatic share reserve increase

Units granted

( 1,123,605 )

Units forfeited

Units expired

Outstanding, end of period

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

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

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

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

Number of warrants

Exercise Price

Expiration date

July 29, 2024

June 14, 2022

August 26, 2024

Expiration date is the earlier of (A) the date that is the third anniversary of the start of construction of the JV’s first facility, (B) 18 months after the date both parties have approved the basic design package to be used for the JV facilities, provided that the agreements to form the JV have not been executed by that date, and (C) the third anniversary of the date that both parties approved the basic design package to be used for the JV facilities, provided that the start of construction of the JV’s first facility has not occurred as of such date.

Interest and Other Financial Expenses

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 nine-month periods ended November 30, 2022 and 2021 are as follows:

Interest on long-term debt

Accretion expense

Commitments and Contingencies

Authorized, end of period

*The use of the term “units” in the table above describes a combination of stock options and RSUs.

Agreement to purchase of machinery and equipment

In December 2021, the Company entered into an agreement for the purchase of long lead machinery and equipment in connection with the construction of our first Infinite Loop ™ manufacturing facility for up to $ 8,546 , 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 Others Similarly Situated v.

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

7:20-cv-08538-NSR (“Tremblay Class Action”).

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, inclusive.

On October 28, 2020, the Company and certain of its officers were named as defendants in a second proposed class-action lawsuit filed in the United States District Court for the Southern District of New York, captioned Michelle Bazzini, Individually and on Behalf of All Others Similarly Situated v.

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

7:20-cv-09031-NSR.

The complaint allegations are similar in nature to those in the Tremblay Class Action.

On January 4, 2021, the United States District Court for the Southern District of New York consolidated the two proposed class-action lawsuits as In re Loop Industries, Inc.

Securities Litigation , Master File No.

7:20-cv-08538-NSR.

Sakari Johansson and John Jay Cappa were appointed as Co-Lead Plaintiffs and Glancy Prongay & Murray LLP and Pomerantz LLP were appointed as Co-Lead Counsel for the class.

Plaintiffs served a consolidated amended complaint on February 18, 2021, which alleges that the defendants violated Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts about the Company’s business, operations, and prospects, which caused the Company’s securities to trade at artificially inflated prices.

The consolidated amended complaint relies on the October 13, 2020 report published by a third party regarding the Company to support their allegations.

Defendants served a motion to dismiss the consolidated amended complaint on April 27, 2021.

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

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

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

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

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

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

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

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

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

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

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

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

On October 13, 2020, the Company, Loop Canada Inc.

and certain of their officers and directors were named as defendants in a proposed securities class action filed in the Superior Court of Québec (District of Terrebonne, Province of Québec, Canada), in file no.

700-06-000012-205.

The Application for authorization of a class action and for authorization to bring an action pursuant to section 225.4 of the Québec Securities Act (“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 alleged 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 sought unspecified damages stemming from losses he claimed 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 was held on February 24, 2022.

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

The period to appeal the judgment is now expired.

Subsequent Events

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.

Pursuant to the agreement, the Company has paid cash deposits of $ 5,430 (Note 5).

The balance is expected to be paid by the end of this fiscal year.

Agreement with SK Geo Centric Co.

On April 27, 2023, the Company and SKGC entered into an agreement to build Infinite Loop manufacturing facilities in Asia.

Pursuant to the agreement, the Company and SKGC agreed to form a new entity, which will be headquartered in Singapore.

SKGC will contribute 51 % and Loop will contribute the remaining 49 % of the initial equity capital of the new entity.

The Company’s investment in the new entity will be accounted for under the equity method and initially recognized at cost.

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