• Filing Date: 2016-07-15
  • Form Type: 10-Q
  • Description: Quarterly report
v3.5.0.2
Document and Entity Information - shares
3 Months Ended
May 31, 2016
Jul. 15, 2016
Document And Entity Information    
Entity Registrant Name Loop Industries, Inc.  
Entity Central Index Key 0001504678  
Document Type 10-Q  
Document Period End Date May 31, 2016  
Amendment Flag false  
Current Fiscal Year End Date --02-28  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   31,209,141
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2017  
v3.5.0.2
Condensed Consolidated Balance Sheets - USD ($)
May 31, 2016
Feb. 29, 2016
Current Assets    
Cash $ 1,420,292 $ 422,586
Valued added tax and other receivables 289,845 253,041
Prepayments and other current assets 24,830 36,129
Total Current Assets 1,734,967 711,756
Property and Equipment, net of accumulated depreciation of $243,530 and $149,609, respectively 1,428,300 1,399,354
Intellectual Property, net of accumulated amortization of $95,728 and $73,471, respectively 349,322 371,579
Total Assets 3,512,589 2,482,689
Current Liabilities    
Accounts payable and accrued liabilities 285,078 363,083
Accrued Officers Compensation 255,000 210,000
Advances from majority stockholder 510,713 492,128
Total current liabilities 1,050,791 1,065,211
Commitments and Contingencies
Stockholders' Equity    
Series A Preferred stock par value $0.001; 25,000,000 shares authorized; one share issued and outstanding
Common stock par value $0.0001: 250,000,000 shares authorized; 30,778,135 and 29,910,800 shares issued and outstanding, respectively 3,079 2,992
Additional paid-in capital 6,561,632 3,918,356
Common stock issuable, 204,667 shares 614,001
Accumulated deficit (4,088,351) (3,123,802)
Accumulated other comprehensive gain (14,562) 5,931
Total stockholders' equity 2,461,798 1,417,478
Total liabilities and stockholders' equity $ 3,512,589 $ 2,482,689
v3.5.0.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
May 31, 2016
Feb. 29, 2016
Condensed Consolidated Balance Sheets Parenthetical    
Property and Equipment, net of accumulated depreciation $ 243,530 $ 149,609
Intellectual Property, net of accumulated amortization $ 95,728 $ 73,471
Stockholders' Equity (Deficit)    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, share authorised 25,000,000 25,000,000
Preferred stock, share issued 1 1
Preferred stock, share outstanding 1 1
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 250,000,000 250,000,000
Common stock, shares issued 30,778,135 29,910,800
Common stock, shares outstanding 30,778,135 29,910,800
Common stock issuable 204,667  
v3.5.0.2
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
3 Months Ended
May 31, 2016
May 31, 2015
Condensed Consolidated Statements Of Operations And Comprehensive Loss    
REVENUES
Operating Expenses    
General and administrative 439,746 320,003
Research and development 415,568 11,589
Depreciation of fixed assets and amortization of intangible assets 113,024 9,795
Foreign exchange loss (gain) (3,789) (3,279)
Total operating expenses 964,549 338,108
Net Loss (964,549) (338,108)
Other comprehensive income -    
Foreign currency translation adjustment (20,493) (25,104)
Comprehensive Loss $ (985,042) $ (313,004)
Loss per share - Basic and Diluted $ (0.03) $ (0.01)
Weighted average common shares outstanding - Basic and Diluted 30,442,256 23,022,699
v3.5.0.2
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 3 months ended May 31, 2016 - USD ($)
Common Stock par value $0.0001
Preferred Stock par value $0.001
Additional Paid-In Capital
Common Stock Issuable
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
Total
Beginning Balance, Shares at Feb. 29, 2016 29,910,800 1          
Beginning Balance, Amount at Feb. 29, 2016 $ 2,992 $ 3,918,356 $ 614,001 $ (3,123,802) $ 5,931 $ 1,417,478
Reclassification of common shares issuable to shares outstanding, Shares 204,667            
Reclassification of common shares issuable to shares outstanding, Amount $ 20   613,981 (614,001)    
Issuance of common shares for cash, Shares 662,668           662,668
Issuance of common shares for cash, Amount $ 66   1,987,937       $ 1,988,003
Fair value of Warrants issued for services     41,359       41,359
Foreign currency translation           (20,493) (20,493)
Net Loss         (964,549)   (964,549)
Ending balance, Shares at May. 31, 2016 30,778,135 1          
Ending Balance, Amount at May. 31, 2016 $ 3,079 $ 6,561,632 $ (4,088,351) $ (14,562) $ 2,461,798
v3.5.0.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
May 31, 2016
May 31, 2015
Cash Flows from Operating Activities    
Net loss $ (964,549) $ (338,108)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation expense 93,921 2,364
Amortization expense 22,257 7,419
Amortization of the fair value of common shares issued for services 178,000
Fair value of shares issued for services and settlement 20,000
Fair value of warrants issued for services 41,359
Changes in operating assets and liabilities:    
Valued added tax and other receivables (36,804) (33,426)
Prepayments and other current assets 11,298 (1,604)
Accounts payable and accrued liabilities (78,004) 16,010
Accrued officer compensation 45,000 45,000
Intellectual property obligation (212,880)
Advances from majority stockholder 18,586 (2,223)
Net Cash Used in Operating Activities (846,936) (319,448)
Cash Flows from Investing Activities    
Purchase of property and equipment (79,759) (13,543)
Net Cash Used in Investing Activities (79,759) (13,543)
Cash Flows from Financing Activities    
Proceeds from sale of common shares 1,988,003 2,207,000
Net Cash Provided by Financing Activities 1,988,003 2,207,000
Effect of exchange rate changes (63,602) (24,846)
Net Change in Cash 997,706 1,849,163
Cash - beginning of period 422,586 209,796
Cash - end of period 1,420,292 2,058,959
Supplemental disclosure of cash flow information:    
Income tax paid
Non-cash investing and financing activities:    
Fair value of common stock issued for services that was recorded as prepaid expense $ 356,000
v3.5.0.2
The Company and basis of Presentation
3 Months Ended
May 31, 2016
Notes to Financial Statements  
Note 1. The Company and basis of Presentation

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of Loop Industries, Inc. and Subsidiaries (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended May 31, 2016 are not necessarily indicative of the results that may be expected for the year ending February 28, 2017.

 

The Company

 

Loop Holdings, Inc. was incorporated on March 11, 2010 under the laws of the State of Nevada, under the name "Radikal Phones Inc." We changed our name to "First American Group Inc." on October 7, 2010, and then we changed our name to our current name, "Loop Industries, Inc.", effective July 21, 2015.

 

On June 29, 2015, Loop Industries, Inc. entered into a Share Exchange Agreement (the "Share Exchange Agreement"), by and among the Company, and the holders of common stock of Loop Holdings, Inc. Under the terms and conditions of the Share Exchange Agreement, the Company offered, sold and issued 23,257,500 shares of common stock in consideration for all the issued and outstanding shares in Loop Holdings. The effect of the issuance was that Loop Holdings shareholders held approximately 78.1% of the issued and outstanding shares of common stock of the Company upon consummation of the Share Exchange Agreement.

 

Pursuant to a Stock Redemption Agreement dated June 29, 2015 entered into commensurate with the share exchange, the Company redeemed 25,000,000 shares of First American Group common stock from two stockholders' for an aggregate redemption price of $16,000.

 

As the former owners and management of Loop industries have voting and operating control of the Company after the share exchange, the transaction has been accounted for as a recapitalization with the Loop deemed the acquiring company for accounting purposes, and the Company deemed the legal acquirer. No step-up in basis or intangible assets or goodwill was recorded and the aggregate cost of $60,571 representing the net liabilities assumed of $35,243, $16,000 cost of the redeemed shares and closing costs of $9,328 was reflected as a cost of the transaction in June 2015. The consolidated financial statements reflect the historical results of Loop Industries prior to the Share Exchange, and that of the combined company following the Share Exchange.

 

The Company engages in the designing, prototyping and building a closed loop plastics recycling business that leverages a proprietary de-polymerization technology.

 

All references to shares of common stock in this Report on Form 10-Q give retroactive effect to a one-for-four (1:4) reverse split of the Company's issued and outstanding shares of common stock, which reverse split took effect on the OTCQB on September 21, 2015.

 

Basis of Consolidation

 

These consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America ("US GAAP") and comprise the consolidated financial position and results of operations of Loop Industries Inc. and an operating division of 8198381 Canada Inc., (Loop Canada) a Canadian Company that is owned 100% by the majority shareholder of Loop Industries Inc. 

 

The Company determined due to the close association between the Company and the division of Loop Canada, the ongoing management of Loop Canada by the Company's majority stockholder, that the activities of Loop Canada are principally related to the Loop Industries, Inc., and the Company's right to receive the outputs from the activities of Loop Canada which could potentially be significant to the Company, Loop Canada is a variable interest entity (VIE) requiring consolidation with the Company. The Company determined that it is both the Primary beneficiary and provider of financial support to these Loop Canada operations.

 

Intercompany balances and transactions have been eliminated in consolidation.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has no recurring source of revenue and during the three months ended May 31, 2016, the Company incurred a net loss of $1.0 Million and used cash in operations of $0.8 Million. These factors raise substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company's ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Management estimates that the current funds on hand will not be sufficient to continue operations through the next twelve months or for us to achieve our business plan to finalize the transition to our facilities from pilot scale to a full scale commercial manufacturing facility. Management is currently seeking additional funds, primarily through the issuance of debt and equity securities for cash to operate our business, and estimates that a significant amount of capital will be necessary to advance the development of our projects to the point at which they will become commercially viable.

 

No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case of equity financing. The ability of the Company to continue as a going concern is dependent on management's plans, which include further implementation of its business plan and continuing to raise funds through debt and/or equity raises.

v3.5.0.2
Summary of Significant Accounting Policies
3 Months Ended
May 31, 2016
Notes to Financial Statements  
Note 2. Summary of Significant Accounting Policies

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for depreciable lives of property and equipment, analysis of impairments of recorded intangibles, accruals for potential liabilities and assumptions made in calculating the fair value of certain stock instruments.

 

Fair value of financial instruments

 

The Company applies FASB ASC 820, Fair Value Measurement, which defines fair value and establishes a framework for measuring fair value and making disclosures about fair value measurements. FASB ASC 820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is impacted by a number of factors, including the type of financial instruments and the characteristics specific to them. Financial instruments with readily available quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

 

There are three levels within the hierarchy that may be used to measure fair value:

 

Level 1 A quoted price in an active market for identical assets or liabilities.
     
Level 2 Significant pricing inputs are observable inputs, which are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources.
     
Level 3 Significant pricing inputs are unobservable inputs, which are inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

 

The fair value measurements level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used should maximize the use of observable inputs and minimize the use of unobservable inputs.

 

The valuation methodologies described above may produce a fair value calculation that may not be indicative of future net realizable value or reflective of future fair values.

 

The carrying amounts of the Company's financial assets and liabilities, such as cash, prepayments, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

 

Foreign Currency Translations and Transactions

 

The accompanying consolidated financial statements are presented in United States dollars, the functional currency of the Company. Capital accounts of foreign subsidiaries are translated into US Dollars from foreign currency at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rate as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the period. As a result, currency exchange fluctuations may impact our revenue and the costs of our operations. We currently do not engage in any currency hedging activities.

 

The following table summarizes the exchange rates used:

 

    Three Months Ended May 31,  
    2016     2015  
Period end Canadian $: US Dollar exchange rate   $ 0.76     $ 0.80  
Average period Canadian $: US Dollar exchange rate   $ 0.78     $ 0.81  

 

Expenditures are translated at the average exchange rate for the period presented.

 

Value added tax and other receivables

 

The Company is registered for the Canadian Federal and Provincial Goods and Services Taxes. As a registrant, the Company is obligated to collect, and is entitled to claim sale taxes paid on its expenses and capital expenditures incurred in Canada. As at the Balance Sheet date of May 31, and February 29, 2016, the computed net recoverable sale taxes amount to $289,845 and $253,041, respectively, for which the Company expects to receive full reimbursement. The Company has filed all necessary returns to recover this tax.

 

Intangible Assets

 

Management performs impairment tests of indefinite-lived intangible assets at least annually, or whenever an event occurs or circumstances change that indicate impairment has more likely than not occurred.

 

The Company reviews intangible assets subject to amortization at least annually to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. If the carrying value of an asset exceeds its undiscounted cash flows, the Company writes down the carrying value of the intangible asset to its fair value in the period identified. If the carrying value of assets is determined not to be recoverable, the Company records an impairment loss equal to the excess of the carrying value over the fair value of the assets. The Company's estimate of fair value is based on the best information available, in the absence of quoted market prices. The Company generally calculates fair value as the present value of estimated future cash flows that the Company expects to generate from the asset using a discounted cash flow income approach as described above. If the estimate of an intangible asset's remaining useful life is changed, the Company amortizes the remaining carrying value of the intangible asset prospectively over the revised remaining useful life.

 

As of May 31, and February 29, 2016 the Company determined that there were no indicators of impairment of its recorded intangible assets.

 

Stock Based Compensation

 

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

 

The fair value of the Company's stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.

 

Income Taxes

 

The Company calculates its income tax charge on the basis of the tax laws enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income, in accordance with FASB ASC 740, Income Taxes. The Company uses an asset and liability approach for financial accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company's policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

 

Net Loss per Share

 

The Company computes net loss per share in accordance with FASB ASC 260 Earnings per share. Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive.

 

For the three months ended May 31, 2016 and 2015, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The potentially dilutive securities consisted of 1,653,668 outstanding warrants as of May 31, 2016. There were no warrants outstanding as of May 31, 2015.

 

Recently Issued Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. On August 12, 2015, FASB delayed the required implementation to fiscal years ending after December 15, 2017 but now permitted organizations such the Company to adopt earlier. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management has determined to adopt ASU 2014-09 in Fiscal 2017 and has not determined the effect of the standard on our ongoing financial reporting.

 

In June 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation – Stock Compensation. The pronouncement was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The pronouncement is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 will not have a significant impact on the Company's consolidated financial position or results of operations.

 

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company's financial statements and disclosures.

 

In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Presentation of Financial Statements - Going Concern (Subtopic 205-10). ASU 2014-15 provides guidance as to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management's evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will adopt ASU 2014-15 on the Company's financial statement presentation and disclosures beginning in 2016.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

v3.5.0.2
Property and Equipment, net
3 Months Ended
May 31, 2016
Notes to Financial Statements  
Note 3. Property and Equipment, net

                   
    Estimated Useful     May 31,     February 29,  
    Life     2016     2016  
    (years)              
                   
Machinery and Equipment   5 - 7     $ 1,230,973     $ 1,126,147  
Office equipment and furniture   5 - 8       115,933       108,030  
Leasehold improvements   3       324,924       314,786  
            1,671,830       1,548,963  
Less: accumulated depreciation           (243,530 )     (149,609 )
Property and equipment, net         $ 1,428,300     $ 1,399,354  

 

Depreciation expense is recorded as an operating expense in the consolidated statements of operations and comprehensive loss and amounted to $90,767 and $2,376 for the three months ended May 31, 2016 and 2015, respectively.

v3.5.0.2
Intellectual Property, net
3 Months Ended
May 31, 2016
Notes to Financial Statements  
Note 4. Intellectual Property, net

                   
    Estimated Useful     May 31,     February 29,  
    Life     2016     2016  
    (years)              
                   
In-process research & development   7     $ 445,050     $ 445,050  
Less: accumulated amortization           (95,728 )     (73,471 )
Intellectual Property, net         $ 349,322     $ 371,579  

 

On October 27, 2014, the Company entered into an intellectual property agreement with Mr. Hatem Essaddam wherein the Company purchased a certain technique and method (In-process research and development) for $445,050 allowing for the depolymerization of polyethylene terephthalate at ambient temperature and atmospheric pressure. The Company will use such technique in its processing plant. The technology is being amortized using the straight-line method over the estimated used life of the patents.

 

In addition to the $445,050 paid by the Company under the Intellectual Property Assignment Agreement, the Company is required to make additional payments totaling CDN$800,000 Mr. Essaddam within sixty (60) days of each of the following milestones (the "Milestones") having been met, as follows:

 

  (i) CDN$200,000 when an average of twenty (20) metric tons per day of terephthalic acid meeting the is produced by the Company for twenty (20) operating days;
     
  (ii) CDN$200,000 when an average of thirty (30) metric tons per day of terephthalic acid is produced by the Company for thirty (30) operating days;
     
  (iii) CDN$200,000 when an average of sixty (60) metric tons per day of terephthalic acid is produced by the Company for sixty (60) operating days; and
     
  (iv) CDN$200,000 when an average of one hundred (100) metric tons per day of terephthalic acid is produced by the Company for sixty (60) operating days.

 

As of May 31, 2016 the Company is still in its test pilot program, none of the Milestones have been met, and accordingly no additional CDN$200,000 payment has been made.

 

Additionally, the Company is obligated to make royalty payments of up to CDN$27,000,000, payable as follows:

 

 

  (a) 10% of gross profits on the sale of all products derived by the Company from the technology assigned to the Company under the agreement;
     
  (b) 10% of any license fee paid to the Company in respect of any licensing or other right to use the technology assigned to the Company and granted to a third party by the Assignee;
     
  (c) 5% of any royalty or other similar payment made to the Company by a third party to whom a license or other right to use the technology assigned to the Company has been granted by the Company; and
     
  (d) 5% of any royalty or other similar payment made to the Company by a third party in respect of a sub-license or other right to use the technology assigned to the Company granted by the third party.

 

As of May 31, 2016, the Company did not make any royalty payments under the Intellectual Property Assignment Agreement.

 

Amortization expense is recorded as an operating expense in the consolidated statements of operations and comprehensive loss and amounted to $22,257 and $7,419 for the three months ended May 31, 2016 and 2015, respectively. 

v3.5.0.2
Related Party Transactions
3 Months Ended
May 31, 2016
Notes to Financial Statements  
Note 5. Related Party Transactions

Advances from Major Shareholder

 

During the three months ended May 31, 2016 Mr. Daniel Solomita, the Company's major stockholder and CEO, or companies controlled by him, made advances to the Company of $18,586. The amounts due to these entities as of May 31, 2016 and February 29, 2016 were $510,773 and $492,128, respectively. The advances are unsecured, non-interest bearing with no formal terms of repayment.

 

Employment Agreement and Accrued Compensation due Major Shareholder

 

The Company entered into employment agreement with Daniel Solomita, the Company's President and Chief Executive Officer for an indefinite term. During the term, officer shall receive monthly salary of $15,000. Compensation expense under this agreement amounted to $45,000 during the three months ended May 31, 2016 and 2015, respectively. As of May 31, 2016 and 2015, accrued compensation of $255,000 and $75,000, respectively, was due to Mr. Solomita.

 

In addition, the Company agreed to issue the officer 4 million shares of the Company's common stock, in tranches of one million shares each, if certain milestones were met. The bonus of 4,000,000 shares of common stock is payable to Mr. Solomita as follows:

 

  (i) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's securities are listed on an exchange or the OTCQX tier of the OTC Markets;
     
  (ii) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company executes a contract for a minimum quantity of 25,000 M/T of PTA/EG or a PET;
     
  (iii) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's first fill-scale production facility is in commercial operation; and
     
  (iv) 1,000,000 shares of common stock shall be issued to Mr. Solomita when the Company's second full-scale production facility is in commercial operation.

 

The milestones had not been met as of May 31, 2016.

 

On February 15, 2016, the Company and Mr. Solomita entered into an Amendment No. 1 to Employment Agreement (the "Amendment No. 1"), which amends the Employment Agreement. Amendment No. 1 provides that the Company shall issue Mr. Solomita one share of the Company's Series A Preferred Stock for consideration of Mr. Solomita agreeing not to terminate his employment with the Company for a period of five years from the date of Amendment No. 1.

v3.5.0.2
Stockholders' Equity
3 Months Ended
May 31, 2016
Notes to Financial Statements  
Note 6. Stockholders' Equity

Common Stock

 

During the three months ended May 31, 2016, the company sold 662,668 shares of its common stock, and 331,334 warrants to acquire shares of common stock at $3.00 per share resulting in proceeds to the Company of $1,988,003. In addition, 204,667 shares of common stock sold in the previous year were issued and reclassified to shares outstanding.

 

Warrants

 

The Company has not adopted a formal stock option plan, however, it has made periodic non-plan grants of warrants for services and financing.

 

During the year ended February 29, 2016, the Company issued warrants to purchase 2,220,000 shares of the Company's common stock at an exercise price of $.80 per share for services. The fair value of the warrants granted was determined to be $1,210,788. During the three months ended May 31, 2016, the Company amortized $41,359 of these costs which are included in operating expense. As of May 31, 2016 the unamortized balance of these costs was $301,335 which will be amortized over the next three years. The aggregate intrinsic value of the warrants outstanding as of May 31, 2016 was $4,148,000 calculated as the difference between the closing market price of $4.20 and the exercise price of the Company's warrants as of May 31, 2016.

 

During the three months ended May 31, 2016, the Company issued 331,334 warrants to purchase 662,668 shares of the Company's common stock at an exercise price of $3.00 per share to certain investors upon the sale of its equity securities.

 

The table below summarizes the Company's warrants activities:

 

   

Number of

Warrant Shares

    Exercise Price Range Per Share     Weighted Average Exercise Price  
                   
Balance, February 29, 2016     2,322,334     $ 0.80 to $6.00     $ 1.03  
                         
Granted     331,334     $ 6.00       6.00  
                         
Forfeited     (1,000,000 )     0.80       0.80  
                         
Exercised     -       -       -  
                         
Expired     -       -       -  
                         
Balance, May 31, 2016     1,653,668     $ 0.80 to $6.00     $ 2.16  
                         
Earned and exercisable, May 31, 2016     1,038,668     $ 0.80 to $6.00     $ 2.97  
                         
Unvested, May 31, 2016     615,000     $ 0.80     $ 0.80  

 

The following table summarizes information concerning outstanding and exercisable warrants as of May 31, 2016:

 

      Warrants Outstanding     Warrants Exercisable  

Range of

Exercise Prices

   

Number

Outstanding

    Average Remaining Contractual Life
(in years)
    Weighted Average Exercise Price    

Number

Exercisable

    Average Remaining Contractual Life
(in years)
    Weighted Average Exercise Price  
                                       
$ 0.80       1,220,000       1.73     $ 0.80       680,000       1.73     $ 0.80  
$ 6.00       433,668       0.97     $ 6.00       102,334       .97     $ 6.00  
v3.5.0.2
Deferred Tax Assets and Income Tax Provision
3 Months Ended
May 31, 2016
Notes to Financial Statements  
Note 7. Deferred Tax Assets and Income Tax Provision

Based on the Company's evaluation at May 31, 2016, management has concluded that there has been no change to the recorded tax positions requiring adjustments to deferred tax assets and related valuation allowance. For the three months ended May 31, 2016, the Company recorded additional valuation allowances on deferred tax assets relating to current year losses and temporary differences.

v3.5.0.2
Geographic Information
3 Months Ended
May 31, 2016
Notes to Financial Statements  
Note 8. Geographic Information

As of May 31, 2016 and 2015, the Company had two reportable diverse geographical concentrations, the United States and Canada. Information related to these operating segments, net of eliminations, consists of the following for the periods below:

 

    Three months ended
May 31, 2016
       
    United States     Canada     Total  
                   
Revenue   $ -     $ -     $ -  
Cost of revenue     -       -       -  
General and administrative     231,797       207,949       439,746  
Research and development     149,674       265,894       415,568  
Depreciation and amortization     33,924       79,100       113,024  
Foreign exchange loss (gain)     -       (3,789 )     (3,789 )
Loss from operations   $ 415,395     $ 549,154     $ 964,549  

 

    As at
May 31, 2016
       
    United States     Canada      Total  
                   
Current assets   $ 1,374,929     $ 360,038     $ 1,734,967  
Property and equipment, net     146,746       1,281,554       1,428,300  
Intangible assets, net     349,322       -       349,322  
Total assets   $ 1,870,997     $ 1,641,592     $ 3,512,589  
                         
Current liabilities   $ 335,483     $ 715,308     $ 1,050,791  
Equity     4,185,534       (1,723,736 )     2,461,798  
Total liabilities and equity   $ 4,521,017     $ (1,008,428 )   $ 3,512,589  

 

    Three months ended
May 31, 2015
       
    United States     Canada     Total  
                   
Revenue   $ -     $ -     $ -  
Cost of revenue     -       -       -  
General and administrative     233,093       86,910       320,003  
Research and development     -       11,589       11,589  
Depreciation and amortization     7,419       2,376       9,795  
Foreign exchange loss (gain)     2,120       (5,399 )     (3,279 )
Loss from operations   $ 242,632     $ 95,476     $ 338,108  

 

    As at
May 31, 2015
       
    United States     Canada      Total  
                   
Current assets   $ 2,406,212     $ 82,842     $ 2,489,054  
Property and equipment, net     -       22,403       22,403  
Intangible assets, net     427,739       -       427,739  
Total assets   $ 2,833,951     $ 105,245     $ 2,939,196  
                         
Current liabilities   $ 5,992     157,413     $ 163,405  
Equity     2,977,959       (202,168 )     2,775,791  
Total liabilities and equity   $ 2,983,951     $ (44,755 )   $ 2,939,196  
v3.5.0.2
Subsequent Events
3 Months Ended
May 31, 2016
Notes to Financial Statements  
Note 9. Subsequent Events

Issuance of common shares and warrants

 

In June 1, 2016, the Board of Directors approved the issuance and sale of 500,000 Units, at an offering price of $6.00 per Unit consisting of two shares of the Corporation's common stock, par value $.0001 per share and one warrant to purchase one share at an exercise price of $6.00 per share for aggregate proceeds of $5,000,000. As of the filing date, the Company has sold 1,298,341 shares and received total proceeds of $3,895,026, including 867,335 shares for which the Company had received proceeds of $2,602,004 as of May 31, 2016.

 

Transfer of Assets and Liabilities

 

On May 24, 2016, 9449507 Canada Inc. was incorporated in order to absorb all of the assets and liabilities pertaining to the pilot plant commissioned by Loop Industries Inc. to 8198381 Canada Inc. The transfer of the assets and liabilities will be executed following a letter of intent signed to that effect on June 13, 2016. It is intended that, concurrently to such transaction, the shares of 9449507 Canada Inc., which are wholly owned by Mr. Solomita, will be transferred to Loop Industries Inc. As at May 31, 2016, the Canadian Company is considered a VIE of Loop Industries and accordingly, it is consolidated in its financial statements.

v3.5.0.2
Summary of Significant Accounting Policies (Policies)
3 Months Ended
May 31, 2016
Significant Accounting Policies Policies  
Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for depreciable lives of property and equipment, analysis of impairments of recorded intangibles, accruals for potential liabilities and assumptions made in calculating the fair value of certain stock instruments.

Fair Value of Financial Instruments

The Company applies FASB ASC 820, Fair Value Measurement, which defines fair value and establishes a framework for measuring fair value and making disclosures about fair value measurements. FASB ASC 820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is impacted by a number of factors, including the type of financial instruments and the characteristics specific to them. Financial instruments with readily available quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

 

There are three levels within the hierarchy that may be used to measure fair value:

 

Level 1 A quoted price in an active market for identical assets or liabilities.
     
Level 2 Significant pricing inputs are observable inputs, which are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources.
     
Level 3 Significant pricing inputs are unobservable inputs, which are inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

 

The fair value measurements level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used should maximize the use of observable inputs and minimize the use of unobservable inputs.

 

The valuation methodologies described above may produce a fair value calculation that may not be indicative of future net realizable value or reflective of future fair values.

 

The carrying amounts of the Company's financial assets and liabilities, such as cash, prepayments, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

Foreign Currency Translations and Transactions

The accompanying consolidated financial statements are presented in United States dollars, the functional currency of the Company. Capital accounts of foreign subsidiaries are translated into US Dollars from foreign currency at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rate as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the period. As a result, currency exchange fluctuations may impact our revenue and the costs of our operations. We currently do not engage in any currency hedging activities.

 

The following table summarizes the exchange rates used:

 

    Three Months Ended May 31,  
    2016     2015  
Period end Canadian $: US Dollar exchange rate   $ 0.76     $ 0.80  
Average period Canadian $: US Dollar exchange rate   $ 0.78     $ 0.81  

 

Expenditures are translated at the average exchange rate for the period presented.

Value added tax and other receivables

The Company is registered for the Canadian Federal and Provincial Goods and Services Taxes. As a registrant, the Company is obligated to collect, and is entitled to claim sale taxes paid on its expenses and capital expenditures incurred in Canada. As at the Balance Sheet date of May 31, and February 29, 2016, the computed net recoverable sale taxes amount to $289,845 and $253,041, respectively, for which the Company expects to receive full reimbursement. The Company has filed all necessary returns to recover this tax.

Intangible Assets

Management performs impairment tests of indefinite-lived intangible assets at least annually, or whenever an event occurs or circumstances change that indicate impairment has more likely than not occurred.

 

The Company reviews intangible assets subject to amortization at least annually to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. If the carrying value of an asset exceeds its undiscounted cash flows, the Company writes down the carrying value of the intangible asset to its fair value in the period identified. If the carrying value of assets is determined not to be recoverable, the Company records an impairment loss equal to the excess of the carrying value over the fair value of the assets. The Company's estimate of fair value is based on the best information available, in the absence of quoted market prices. The Company generally calculates fair value as the present value of estimated future cash flows that the Company expects to generate from the asset using a discounted cash flow income approach as described above. If the estimate of an intangible asset's remaining useful life is changed, the Company amortizes the remaining carrying value of the intangible asset prospectively over the revised remaining useful life.

 

As of May 31, and February 29, 2016 the Company determined that there were no indicators of impairment of its recorded intangible assets.

Stock Based Compensation

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

 

The fair value of the Company's stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.

Income Taxes

The Company calculates its income tax charge on the basis of the tax laws enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income, in accordance with FASB ASC 740, Income Taxes. The Company uses an asset and liability approach for financial accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company's policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

Net Loss per Share

The Company computes net loss per share in accordance with FASB ASC 260 Earnings per share. Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive.

 

For the three months ended May 31, 2016 and 2015, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The potentially dilutive securities consisted of 1,653,668 outstanding warrants as of May 31, 2016. There were no warrants outstanding as of May 31, 2015.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. On August 12, 2015, FASB delayed the required implementation to fiscal years ending after December 15, 2017 but now permitted organizations such the Company to adopt earlier. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management has determined to adopt ASU 2014-09 in Fiscal 2017 and has not determined the effect of the standard on our ongoing financial reporting.

 

In June 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation – Stock Compensation. The pronouncement was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The pronouncement is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 will not have a significant impact on the Company's consolidated financial position or results of operations.

 

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company's financial statements and disclosures.

 

In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Presentation of Financial Statements - Going Concern (Subtopic 205-10). ASU 2014-15 provides guidance as to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management's evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will adopt ASU 2014-15 on the Company's financial statement presentation and disclosures beginning in 2016.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

v3.5.0.2
Summary of Significant Accounting Policies (Tables)
3 Months Ended
May 31, 2016
Summary Of Significant Accounting Policies Tables  
Foreign Currency Translations and Transactions
    Three Months Ended May 31,  
    2016     2015  
Period end Canadian $: US Dollar exchange rate   $ 0.76     $ 0.80  
Average period Canadian $: US Dollar exchange rate   $ 0.78     $ 0.81  
v3.5.0.2
Property and Equipment, net (Tables)
3 Months Ended
May 31, 2016
Property And Equipment Net Tables  
Property and Equipment, net

                   
    Estimated Useful     May 31,     February 29,  
    Life     2016     2016  
    (years)              
                   
Machinery and Equipment   5 - 7     $ 1,230,973     $ 1,126,147  
Office equipment and furniture   5 - 8       115,933       108,030  
Leasehold improvements   3       324,924       314,786  
            1,671,830       1,548,963  
Less: accumulated depreciation           (243,530 )     (149,609 )
Property and equipment, net         $ 1,428,300     $ 1,399,354  

v3.5.0.2
Intellectual Property, net (Tables)
3 Months Ended
May 31, 2016
Intellectual Property Net Tables  
Intellectual Property, net

                   
    Estimated Useful     May 31,     February 29,  
    Life     2016     2016  
    (years)              
                   
In-process research & development   7     $ 445,050     $ 445,050  
Less: accumulated amortization           (95,728 )     (73,471 )
Intellectual Property, net         $ 349,322     $ 371,579  

v3.5.0.2
Stockholders' Equity (Tables)
3 Months Ended
May 31, 2016
Stockholders Equity Tables  
Company's warrants activities:
   

Number of

Warrant Shares

    Exercise Price Range Per Share     Weighted Average Exercise Price  
                   
Balance, February 29, 2016     2,322,334     $ 0.80 to $6.00     $ 1.03  
                         
Granted     331,334     $ 6.00       6.00  
                         
Forfeited     (1,000,000 )     0.80       0.80  
                         
Exercised     -       -       -  
                         
Expired     -       -       -  
                         
Balance, May 31, 2016     1,653,668     $ 0.80 to $6.00     $ 2.16  
                         
Earned and exercisable, May 31, 2016     1,038,668     $ 0.80 to $6.00     $ 2.97  
                         
Unvested, May 31, 2016     615,000     $ 0.80     $ 0.80  
Concerning outstanding and exercisable warrants
      Warrants Outstanding     Warrants Exercisable  

Range of

Exercise Prices

   

Number

Outstanding

    Average Remaining Contractual Life
(in years)
    Weighted Average Exercise Price    

Number

Exercisable

    Average Remaining Contractual Life
(in years)
    Weighted Average Exercise Price  
                                       
$ 0.80       1,220,000       1.73     $ 0.80       680,000       1.73     $ 0.80  
$ 6.00       433,668       0.97     $ 6.00       102,334       .97     $ 6.00  
v3.5.0.2
Geographic Information (Tables)
3 Months Ended
May 31, 2016
Geographic Information Tables  
Operating segments, net of eliminations
    Three months ended
May 31, 2016
       
    United States     Canada     Total  
                   
Revenue   $ -     $ -     $ -  
Cost of revenue     -       -       -  
General and administrative     231,797       207,949       439,746  
Research and development     149,674       265,894       415,568  
Depreciation and amortization     33,924       79,100       113,024  
Foreign exchange loss (gain)     -       (3,789 )     (3,789 )
Loss from operations   $ 415,395     $ 549,154     $ 964,549  

 

    As at
May 31, 2016
       
    United States     Canada      Total  
                   
Current assets   $ 1,374,929     $ 360,038     $ 1,734,967  
Property and equipment, net     146,746       1,281,554       1,428,300  
Intangible assets, net     349,322       -       349,322  
Total assets   $ 1,870,997     $ 1,641,592     $ 3,512,589  
                         
Current liabilities   $ 335,483     $ 715,308     $ 1,050,791  
Equity     4,185,534       (1,723,736 )     2,461,798  
Total liabilities and equity   $ 4,521,017     $ (1,008,428 )   $ 3,512,589  

 

    Three months ended
May 31, 2015
       
    United States     Canada     Total  
                   
Revenue   $ -     $ -     $ -  
Cost of revenue     -       -       -  
General and administrative     233,093       86,910       320,003  
Research and development     -       11,589       11,589  
Depreciation and amortization     7,419       2,376       9,795  
Foreign exchange loss (gain)     2,120       (5,399 )     (3,279 )
Loss from operations   $ 242,632     $ 95,476     $ 338,108  

 

    As at
May 31, 2015
       
    United States     Canada      Total  
                   
Current assets   $ 2,406,212     $ 82,842     $ 2,489,054  
Property and equipment, net     -       22,403       22,403  
Intangible assets, net     427,739       -       427,739  
Total assets   $ 2,833,951     $ 105,245     $ 2,939,196  
                         
Current liabilities   $ 5,992     157,413     $ 163,405  
Equity     2,977,959       (202,168 )     2,775,791  
Total liabilities and equity   $ 2,983,951     $ (44,755 )   $ 2,939,196  
v3.5.0.2
Summary of Significant Accounting Policies (Details)
3 Months Ended
May 31, 2016
May 31, 2015
Summary Of Significant Accounting Policies Details    
Period end Canadian $: US Dollar exchange rate 0.76 0.80
Average period Canadian $: US Dollar exchange rate 0.78 0.81
v3.5.0.2
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
3 Months Ended
May 31, 2016
May 31, 2015
Feb. 29, 2016
Summary Of Significant Accounting Policies Details Narrative      
Valued added tax and other receivables $ 289,845   $ 253,041
Potentially dilutive securities 1,653,668 0  
v3.5.0.2
Property and Equipment, net (Details) - USD ($)
3 Months Ended
May 31, 2016
Feb. 29, 2016
May 31, 2015
Property and Equipment, Gross $ 1,671,830 $ 1,548,963  
Less: accumulated depreciation (243,530) (149,609)  
Property and Equipment, Net 1,428,300 1,399,354 $ 22,403
Machinery and equipment [Member]      
Property and Equipment, Gross $ 1,230,973 1,126,147  
Machinery and equipment [Member] | Minimum [Member]      
Estimated Useful Life (Years) 5 years    
Machinery and equipment [Member] | Maximum [Member]      
Estimated Useful Life (Years) 7 years    
Office equipment and furniture [Member]      
Property and Equipment, Gross $ 115,933 108,030  
Office equipment and furniture [Member] | Minimum [Member]      
Estimated Useful Life (Years) 5 years    
Office equipment and furniture [Member] | Maximum [Member]      
Estimated Useful Life (Years) 8 years    
Leasehold improvements [Member]      
Estimated Useful Life (Years) 3 years    
Property and Equipment, Gross $ 324,924 $ 314,786  
v3.5.0.2
Property and Equipment, net (Details Narrative) - USD ($)
3 Months Ended
May 31, 2016
May 31, 2015
Property And Equipment Net Details Narrative    
Depreciation expense $ 90,767 $ 2,376
v3.5.0.2
Intellectual Property, net (Details) - USD ($)
3 Months Ended
May 31, 2016
Feb. 29, 2016
May 31, 2015
Intellectual Property Net Details      
Estimated Useful Life (Years) 7 years    
In-process research & development $ 445,050 $ 445,050  
Less: accumulated amortization (95,728) (73,471)  
Intellectual Property, net $ 349,322 $ 371,579 $ 427,739
v3.5.0.2
Intellectual Property, net (Details Narrative) - USD ($)
3 Months Ended
May 31, 2016
May 31, 2015
Intellectual Property Net Details Narrative    
Amortization expense $ 22,257 $ 7,419
v3.5.0.2
Related Party Transactions (Details Narrative) - USD ($)
3 Months Ended
May 31, 2016
May 31, 2015
Feb. 29, 2016
Notes to Financial Statements      
Advances from majority stockholder $ 18,586 $ (2,223)  
Advances from majority stockholder 510,713   $ 492,128
Accrued officer compensation 45,000 45,000  
Accrued Officers Compensation $ 255,000 $ 75,000 $ 210,000
v3.5.0.2
Stockholders' Equity (Details)
3 Months Ended
May 31, 2016
$ / shares
shares
Number of Warrant Shares  
Balance, beginning | shares 2,322,334
Granted | shares 331,334
Forfeited | shares (1,000,000)
Exercised | shares
Expired | shares
Balance, ending | shares 1,653,668
Earned and exercisable, May 31, 2016 | shares 1,038,668
Unvested, May 31, 2016 | shares 615,000
Exercise Price Range Per Share  
Balance, beginning Range Lower Limit $ 0.80
Balance, beginning Range Upper Limit 6.00
Granted 6.00
Forfeited 0.80
Balance, ending Lower Range Limit 0.80
Balance, ending Upper Range Limit 6.00
Earned and exercisable, Lower Range Limit May 31, 2016 0.80
Earned and exercisable, Upper Range Limit May 31, 2016 6.00
Unvested, Lower Range Limit May 31, 2016 0.80
Unvested, Upper Range Limit May 31, 2016
Weighted Average Exercise Price  
Balance, beginning 1.03
Granted 6.00
Forfeited 0.80
Balance, ending 2.16
Earned and exercisable, May 31, 2016 2.97
Unvested, May 31, 2016 $ 0.80
v3.5.0.2
Stockholders' Equity (Details 1) - $ / shares
12 Months Ended
Feb. 29, 2016
May 31, 2016
Number Outstanding 2,322,334 1,653,668
Weighted Average Exercise Price $ 1.03 $ 2.16
Number Exercisable   1,038,668
Exercise Prices 0.80 [Member]    
Number Outstanding 1,220,000  
Average Remaining Contractual Life (in years) 1 year 8 months 23 days  
Weighted Average Exercise Price $ 0.80  
Number Exercisable 680,000  
Average Remaining Contractual Life (in years) 1 year 8 months 23 days  
Weighted Average Exercise Price $ 0.80  
Exercise Prices 6.00 [Member]    
Number Outstanding 433,668  
Average Remaining Contractual Life (in years) 11 months 19 days  
Weighted Average Exercise Price $ 6.00  
Number Exercisable 102,334  
Average Remaining Contractual Life (in years) 11 months 19 days  
Weighted Average Exercise Price $ 6.00  
v3.5.0.2
Stockholders' Equity (Details Narrative)
3 Months Ended
May 31, 2016
USD ($)
$ / shares
shares
Stockholders Equity Details Narrative  
Issuance of warrants to purchase | shares 2,220,000
Issuance of warrants to purchase, per share | $ / shares $ 0.80
Fair value of the warrants granted $ 1,210,788
Amortized costs included in operating expense 41,359
Unamortized balance of costs 301,335
Intrinsic value of warrants $ 4,148,000
Issuance of warrants to purchase to certain investors upon the sale of its equity securities, per share | $ / shares $ 4.20
Issuance of common shares for cash, Shares | shares 662,668
Warrant acquire to common stock, shares | shares 331,334
Warrant acquire to common stock per share price | $ / shares $ 3.00
Warrant acquire to common stock, amount $ 1,988,003
v3.5.0.2
Geographic Information (Details) - USD ($)
3 Months Ended
May 31, 2016
May 31, 2015
Feb. 29, 2016
Revenue  
Cost of revenue  
General and administrative 439,746 320,003  
Research and development 415,568 11,589  
Depreciation and amortization 113,024 9,795  
Foreign exchange loss (gain) (3,789) (3,279)  
Loss from operations 964,549 338,108  
Current assets 1,734,967 2,489,054 $ 711,756
Property and equipment, net 1,428,300 22,403 1,399,354
Intangible assets, net 349,322 427,739 371,579
Total assets 3,512,589 2,939,196 2,482,689
Current liabilities 1,050,791 163,405 1,065,211
Equity 2,461,798 2,775,791 1,417,478
Total liabilities and equity 3,512,589 2,939,196 $ 2,482,689
United States [Member]      
Revenue  
Cost of revenue  
General and administrative 231,797 233,093  
Research and development 149,674  
Depreciation and amortization 33,924 7,419  
Foreign exchange loss (gain) 2,120  
Loss from operations 415,395 242,632  
Current assets 1,374,929 2,406,212  
Property and equipment, net 146,746  
Intangible assets, net 349,322 427,739  
Total assets 1,870,997 2,833,951  
Current liabilities 335,483 5,992  
Equity 4,185,534 2,977,959  
Total liabilities and equity 4,521,017 2,983,951  
Canada [Member]      
Revenue  
Cost of revenue  
General and administrative 207,949 86,910  
Research and development 265,894 11,589  
Depreciation and amortization 79,100 2,376  
Foreign exchange loss (gain) (3,789) (5,399)  
Loss from operations 549,154 95,476  
Current assets 360,038 82,842  
Property and equipment, net 1,281,554 22,403  
Intangible assets, net  
Total assets 1,641,592 105,245  
Current liabilities 715,308 157,413  
Equity (1,723,736) (202,168)  
Total liabilities and equity $ (1,008,428) $ (44,755)