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 and nine months ended November 30, 2016 are not necessarily indicative of the results that may be expected for the year ending February 28, 2017.
The Company
Loop Industries, 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 Loop Holdings 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 Holdings 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 Loop Canada, the ongoing management of Loop Canada by the Company's majority stockholder, that the activities of Loop Canada are principally related to 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.
On May 24, 2016, 9449507 Canada Inc. was incorporated to absorb all the assets and liabilities pertaining to the pilot plant commissioned by Loop Industries Inc. to 8198381 Canada Inc. On November 11, 2016, the shares of 9449507 Canada Inc., which was wholly owned by Mr. Solomita, were transferred to Loop Industries Inc. In December 23, 2016, 9449507 Canada Inc., changed its legal name to Loop 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 and it is expected to be completed during the fourth quarter of this fiscal year.
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 nine months ended November 30, 2016, the Company incurred a net loss of $2.5 Million and used cash in operations of $2.0 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. Our auditors report regarding our February, 29, 2016 Financial Statements express an opinion that substantial doubt exists as to whether we can continue as a going concern. 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 and to finalize the transition 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 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 could 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.
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 liabilities 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:
|
|
Nine Months Ended November 30,
|
|
|
|
2016
|
|
|
2015
|
|
Period end Canadian $: US Dollar exchange rate
|
|
$
|
0.74
|
|
|
$
|
0.75
|
|
Average period Canadian $: US Dollar exchange rate
|
|
$
|
0.77
|
|
|
$
|
0.78
|
|
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 November 30, and February 29, 2016, the computed net recoverable sale taxes amount to $163,614 and $253,041, respectively for which the Company expects full reimbursement. The Company is the process of filing the required returns to claim the remaining recoverable balance.
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 November 30, 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 and nine months ended November 30, 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 2,035,004 outstanding warrants as of November 30, 2016. There were no warrants outstanding as of November 30, 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 The Company is in the process of evaluating the impact of ASU 2014-09 on the Company's financial statements and disclosures.
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.
Note 3 – Property and Equipment, net
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
Useful
|
|
|
November 30,
|
|
|
February 29,
|
|
|
|
Life
|
|
|
2016
|
|
|
2016
|
|
|
|
(years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Machinery and Equipment
|
|
5 - 7
|
|
|
$
|
1,496,320
|
|
|
$
|
1,126,147
|
|
Office equipment and furniture
|
|
5 - 8
|
|
|
|
126,625
|
|
|
|
108,030
|
|
Leasehold improvements
|
|
3
|
|
|
|
338,645
|
|
|
|
314,786
|
|
|
|
|
|
|
|
1,961,590
|
|
|
|
1,548,963
|
|
Less: accumulated depreciation
|
|
|
|
|
|
(408,566
|
)
|
|
|
(149,609
|
)
|
Property and equipment, net
|
|
|
|
|
$
|
1,553,024
|
|
|
$
|
1,399,354
|
|
Depreciation expense is recorded as an operating expense in the consolidated statements of operations and comprehensive loss and amounted to $86,349 and $71,194 for the three months ended November 30, 2016 and 2015, respectively, and to $242,712 and $82,565 for the nine months ended November 30, 2016 and 2015, respectively.
Note 4 – Intellectual Property, net
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
Useful
|
|
|
November 30,
|
|
|
February 29,
|
|
|
|
Life
|
|
|
2016
|
|
|
2016
|
|
|
|
(years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-process research & development
|
|
7
|
|
|
$
|
445,050
|
|
|
$
|
445,050
|
|
Less: accumulated amortization
|
|
|
|
|
|
(121,155
|
)
|
|
|
(73,471
|
)
|
Intellectual Property, net
|
|
|
|
|
$
|
323,895
|
|
|
$
|
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 November 30, 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 November 30, 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 $15,895 and $7,419 for the three months ended November 30, 2016 and 2015, respectively, and to $47,684 and $22,257 for the nine months ended November 30, 2016 and 2015, respectively.
Note 5 – Related Party Transactions
Advances from Major Shareholder
Mr. Daniel Solomita, the Company's major stockholder and CEO, or companies controlled by him, has made advances to the Company to finance its operations. The amounts due to these entities as of November 30, 2016 and February 29, 2016 were $360,084 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 November 30, 2016 and 2015, and to $135,000 during the nine months ended November 30, 2016 and 2015. As of November 30, 2016, and February 29, 2016, accrued compensation of $345,000 and $210,000, 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 full-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 November 30, 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.
Note 6 – Stockholders' Equity
Common Stock
During the nine months ended November 30, 2016, the Company sold 1,275,340 shares of its common stock, and 637,670 warrants to acquire shares of common stock at $3.00 per share resulting in proceeds to the Company of $3,826,016. 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. During the nine months ended November 30, 2016, the Company issued warrants to purchase 75,000 shares of the Company's common stock at an exercise price of $3.00 per share for services. The total fair value of the warrants granted was determined to be $1,398,288.
During the three and nine months ended November 30, 2016, the Company amortized $32,348, and $106,053, respectively, of these costs which are included in operating expenses. As of November 30, 2016, the unamortized balance of these costs was $424,142 which will be amortized over the next two years. The aggregate intrinsic value of the warrants outstanding as of November 30, 2016, was $4,238,000 calculated as the difference between the closing market price of $4.20 and the exercise price of the Company's warrants as of November 30, 2016.
During the nine months ended November 30, 2016, the Company issued warrants to purchase 637,670 shares of the Company's common stock at an exercise price of $6.00 per share to certain investors upon the sale of 1,275,340 common shares.
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
|
|
|
712,670
|
|
|
$
|
3.00 to $6.00
|
|
|
|
5.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(1,000,000
|
)
|
|
$
|
0.80
|
|
|
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, November 30, 2016
|
|
|
2,035,004
|
|
|
$
|
0.80 to $6.00
|
|
|
$
|
2.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned and exercisable, November 30, 2016
|
|
|
1,437,087
|
|
|
$
|
0.80 to $6.00
|
|
|
$
|
3.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested, November 30, 2016
|
|
|
597,917
|
|
|
$
|
0.80 to $3.00
|
|
|
$
|
1.14
|
|
The following table summarizes information concerning outstanding and exercisable warrants as of November 30, 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
|
|
|
|
1.02
|
|
|
$
|
0.80
|
|
|
|
695,000
|
|
|
|
1.02
|
|
|
$
|
0.80
|
|
$
|
6.00
|
|
|
|
740,004
|
|
|
|
0.93
|
|
|
$
|
6.00
|
|
|
|
740,004
|
|
|
|
0.93
|
|
|
$
|
6.00
|
|
$
|
3.00
|
|
|
|
75,000
|
|
|
|
1.52
|
|
|
$
|
3.00
|
|
|
|
2,083
|
|
|
|
1.52
|
|
|
$
|
3.00
|
|
Note 7 – Geographic Information
As of November 30, 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:
|
|
Nine months ended
November 30, 2016
|
|
|
|
|
|
|
United States
|
|
|
Canada
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Cost of revenue
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
General and administrative
|
|
|
561,545
|
|
|
|
472,462
|
|
|
|
1,034,007
|
|
Research and development
|
|
|
472,986
|
|
|
|
744,614
|
|
|
|
1,217,600
|
|
Depreciation and amortization
|
|
|
72,978
|
|
|
|
217,418
|
|
|
|
290,396
|
|
Foreign exchange loss (gain)
|
|
|
-
|
|
|
|
(2,880
|
)
|
|
|
(2,880
|
)
|
Loss from operations
|
|
$
|
1,107,509
|
|
|
$
|
1,431,614
|
|
|
$
|
2,539,123
|
|
|
|
As at
November 30, 2016
|
|
|
|
|
|
|
United States
|
|
|
Canada
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
1,268,193
|
|
|
$
|
493,820
|
|
|
$
|
1,762,013
|
|
Property and equipment, net
|
|
|
133,119
|
|
|
|
1,419,905
|
|
|
|
1,553,024
|
|
Intangible assets, net
|
|
|
323,895
|
|
|
|
-
|
|
|
|
323,895
|
|
Total assets
|
|
$
|
1,725,207
|
|
|
$
|
1,913,725
|
|
|
$
|
3,638,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
375,473
|
|
|
$
|
495,882
|
|
|
$
|
871,354
|
|
Equity
|
|
|
5,396,127
|
|
|
|
(2,628,550
|
)
|
|
|
2,767,577
|
|
Total liabilities and equity
|
|
$
|
5,771,600
|
|
|
$
|
(2,132,668
|
)
|
|
$
|
3,638,932
|
|
|
|
Nine months ended
November 30, 2015
|
|
|
|
|
|
|
United States
|
|
|
Canada
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Cost of revenue
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
General and administrative
|
|
|
829,080
|
|
|
|
305,906
|
|
|
|
1,134,986
|
|
Research and development
|
|
|
153,753
|
|
|
|
346,171
|
|
|
|
499,924
|
|
Depreciation and amortization
|
|
|
26,472
|
|
|
|
78,350
|
|
|
|
104,822
|
|
Cost of reverse merger
|
|
|
60,571
|
|
|
|
-
|
|
|
|
60,571
|
|
Foreign exchange loss (gain)
|
|
|
2,120
|
|
|
|
7,333
|
|
|
|
9,453
|
|
Loss from operations
|
|
$
|
1,071,996
|
|
|
$
|
737,760
|
|
|
$
|
1,809,756
|
|
|
|
As at
November 30, 2015
|
|
|
|
|
|
|
United States
|
|
|
Canada
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
847,415
|
|
|
$
|
177,001
|
|
|
$
|
1,024,416
|
|
Property and equipment, net
|
|
|
153,033
|
|
|
|
825,891
|
|
|
|
978,924
|
|
Intangible assets, net
|
|
|
412,900
|
|
|
|
-
|
|
|
|
412,900
|
|
Total assets
|
|
$
|
1,413,348
|
|
|
$
|
1,002,892
|
|
|
$
|
2,416,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
204,102
|
|
|
$
|
832,545
|
|
|
$
|
1,036,647
|
|
Equity
|
|
|
2,159,246
|
|
|
|
(779,653
|
)
|
|
|
1,379,593
|
|
Total liabilities and equity
|
|
$
|
2,363,348
|
|
|
$
|
52,892
|
|
|
$
|
2,416,240
|
|