loop_10q.htm

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended August 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ___________ to __________

Commission File No. 000-54768

Loop Industries, Inc.

(Exact name of Registrant as specified in its charter)

Nevada

27-2094706

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

480 Fernand-Poitras Terrebonne, Québec, Canada J6Y 1Y4

(Address of principal executive offices zip code)

Registrant’s telephone number, including area code (450) 951-8555

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	LOOP	Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As at October 13, 2021, there were 47,160,164 shares of the Registrant’s common stock, par value $0.0001 per share, outstanding.

LOOP INDUSTRIES, INC.

TABLE OF CONTENTS

		Page No.
PART I. Financial Information

Item 1.	Financial Statements		F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		17
Item 4.	Controls and Procedures		18

PART II. Other Information

Item 1.	Legal Proceedings		19
Item 1A.	Risk Factors		20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		20
Item 3.	Defaults Upon Senior Securities		20
Item 4.	Mine Safety Disclosures		20
Item 5.	Other Information		20
Item 6.	Exhibits		21

	Signatures		22

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Loop Industries, Inc.

Three and Six months ended August 31, 2021

Index to the Unaudited Interim Condensed Consolidated Financial Statements

Contents		Page(s)

Condensed consolidated balance sheets as at August 31, 2021 and February 28, 2021 (Unaudited)		F-2

Condensed consolidated statements of operations and comprehensive loss for the three and six months ended August 31, 2021 and 2020 (Unaudited)		F-3

Condensed consolidated statement of changes in stockholders’ equity for the three and six months ended August 31, 2021 and 2020 (Unaudited)		F-4

Condensed consolidated statement of cash flows for the six months ended August 31, 2021 and 2020 (Unaudited)		F-6

Notes to the condensed consolidated financial statements (Unaudited)		F-7

F-1

Table of Contents

Loop Industries, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	August 31, 2021			February 28, 2021

Assets
Current assets
Cash and cash equivalents	$	65,561,362		$	35,221,951
Sales tax, tax credits and other receivables (Note 3)		1,343,417			1,763,835
Prepaid expenses and deposits (Note 4)		972,149			609,782
Assets held for sale (Note 5)		3,411,037			-
Total current assets		71,287,965			37,595,568
Investment in joint venture (Note 10)		1,500,000			1,500,000
Property, plant and equipment, net (Note 6)		4,818,028			3,513,051
Intangible assets, net (Note 7)		871,050			794,894
Total assets	$	78,477,043		$	43,403,513

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities (Note 9)	$	5,234,367		$	8,124,865
Current portion of long-term debt (Note 11)		915,432			938,116
Total current liabilities		6,149,799			9,062,981
Long-term debt (Note 11)		3,322,596			1,516,008
Total liabilities		9,472,395			10,578,989

Stockholders' Equity
Series A Preferred stock par value $0.0001; 25,000,000 shares authorized; one share issued and outstanding		-			-
Common stock par value $0.0001: 250,000,000 shares authorized; 47,160,164 shares issued and outstanding (February 28, 2021 – 42,413,691) (Note 13)		4,717			4,242
Additional paid-in capital		149,008,231			113,662,677
Additional paid-in capital – Warrants (Note 18)		30,356,938			8,826,165
Accumulated deficit		(110,211,750	)		(89,661,970	)
Accumulated other comprehensive loss		(153,488	)		(6,590	)
Total stockholders' equity		69,004,648			32,824,524
Total liabilities and stockholders' equity	$	78,477,043		$	43,403,513

See accompanying notes to the condensed consolidated financial statements.

F-2

Table of Contents

Loop Industries, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

	Three Months Ended August 31						Six Months Ended August 31
	2021			2020			2021			2020

Revenue	$	-		$	-		$	-		$	-

Expenses
Research and development (Note 14)		5,284,797			2,749,222			13,922,632			4,229,810
General and administrative (Note 15)		3,116,226			2,049,241			6,276,797			4,002,323
Depreciation and amortization (Notes 6 and 7)		140,770			302,587			272,770			558,561
Interest and other financial expenses (Note 19)		33,102			(58,905	)		63,689			67,871
Interest income		(8,413	)		(18,039	)		(18,174	)		(58,386	)
Foreign exchange loss (gain)		(174,066	)		103,618			32,066			180,259
Total expenses		8,392,416			5,127,724			20,549,780			8,980,438

Net Loss		(8,392,416	)		(5,127,724	)		(20,549,780	)		(8,980,438	)

Other comprehensive income (loss)
Foreign currency translation adjustment		(353,713	)		402,812			(146,898	)		232,400
Comprehensive income (loss)	$	(8,746,129	)	$	(4,724,912	)	$	(20,696,678	)	$	(8,748,038	)

Loss per share
Basic and Diluted	$	(0.19	)	$	(0.13	)	$	(0.47	)	$	(0.22	)

Weighted average common shares outstanding
Basic and Diluted		44,132,872			39,928,047			43,282,989			39,922,443

See accompanying notes to the condensed consolidated financial statements.

F-3

Table of Contents

Loop Industries, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

	Three Months Ended August 31, 2020
	Common stock par value $0.0001				Series A preferred stock par value $0.0001				Additional			Additional Paid-in					Accumulated Other			Total
	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital			Capital - Warrants		Accumulated Deficit			Comprehensive (Loss)			Stockholders' Equity
Balance, May 31, 2020		39,916,905	$	3,993		1	$	-	$	83,306,794		$	9,870,241	$	(57,169,761	)	$	(558,861	)	$	35,452,406
Issuance of shares upon the vesting of restricted stock units (Note 16)		18,305		1		-		-		(1	)		-		-			-			-
Stock options issued for services (Note 16)		-		-		-		-		553,540			-		-			-			553,540
Restricted stock units issued for services (Note 16)		-		-		-		-		312,390			-		-			-			312,390
Foreign currency translation		-		-		-		-		-			-		-			402,812			402,812
Net loss		-		-		-		-		-			-		(5,127,724	)		-			(5,127,724	)
Balance, August 31, 2020		39,935,210	$	3,994		1	$	-	$	84,172,723		$	9,870,241	$	(62,297,485	)	$	(156,049	)	$	31,593,424

	Three Months Ended August 31, 2021
	Common stock par value $0.0001				Series A preferred stock par value $0.0001				Additional			Additional Paid-in					Accumulated Other			Total
	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital			Capital - Warrants		Accumulated Deficit			Comprehensive (Loss)			Stockholders' Equity
Balance, May 31, 2021		42,433,320	$	4,244		1	$	-	$	113,663,032		$	8,826,165	$	(101,819,334	)	$	200,225		$	20,874,332
Issuance of common shares and warrants for cash, net of share issuance costs (Note 13)		4,714,813		471		-		-		34,622,383			21,461,450		-			-			56,084,304
Issuance of warrants for financing facility (Notes 11 and 18)		-		-		-		-		-			69,323		-			-			69,323
Issuance of shares upon the vesting of restricted stock units (Note 16)		12,031		2		-		-		(2	)		-		-			-			-
Stock options issued for services (Note 16)		-		-		-		-		343,653			-		-			-			343,653
Restricted stock units issued for services (Note 16)		-		-		-		-		379,165			-		-			-			379,165
Foreign currency translation		-		-		-		-		-			-		-			(353,713	)		(353,713	)
Net loss		-		-		-		-		-			-		(8,392,416	)		-			(8,392,416	)
Balance, August 31, 2021		47,160,164	$	4,717		1	$	-	$	149,008,231		$	30,356,938	$	(110,211,750	)	$	(153,488	)	$	69,004,648

See accompanying notes to the condensed consolidated financial statements.

F-4

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Loop Industries, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

	Six Months Ended August 31, 2020
	Common stock par value $0.0001				Series A preferred stock par value $0.0001				Additional			Additional Paid-in					Accumulated Other			Total
	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital			Capital - Warrants		Accumulated Deficit			Comprehensive (Loss)			Stockholders' Equity
Balance, February 29, 2020		39,910,774	$	3,992		1	$	-	$	82,379,413		$	9,785,799	$	(53,317,047	)	$	(388,449	)	$	38,463,708
Warrant issued for services (Note 18)		-		-		-		-		-			84,442		-			-			84,442
Issuance of shares upon the vesting of restricted stock units (Note 16)		24,436		2		-		-		(2	)		-		-			-			-
Stock options issued for services (Note 16)		-		-		-		-		1,110,435			-		-			-			1,110,435
Restricted stock units issued for services (Note 16)		-		-		-		-		682,877			-		-			-			682,877
Foreign currency translation		-		-		-		-		-			-		-			232,400			232,400
Net loss		-		-		-		-		-			-		(8,980,438	)		-			(8,980,438	)
Balance, August 31, 2020		39,935,210	$	3,994		1	$	-	$	84,172,723		$	9,870,241	$	(62,297,485	)	$	(156,049	)	$	31,593,424

	Six Months Ended August 31, 2021
	Common stock par value $0.0001				Series A preferred stock par value $0.0001				Additional			Additional Paid-in					Accumulated Other			Total
	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital			Capital - Warrants		Accumulated Deficit			Comprehensive (Loss)			Stockholders' Equity
Balance, February 28, 2021		42,413,691	$	4,242		1	$	-	$	113,662,677		$	8,826,165	$	(89,661,970	)	$	(6,590	)	$	32,824,524
Issuance of common shares and warrants for cash, net of share issuance costs (Note 13)		4,714,813		471		-		-		34,625,825			21,461,450		-			-			56,087,746
Issuance of warrants for financing facility (Notes 11 and 18)		-		-		-		-		-			69,323		-			-			69,323
Issuance of shares upon the vesting of restricted stock units (Note 16)		31,660		4		-		-		(4	)		-		-			-			-
Stock options issued for services (Note 16)		-		-		-		-		892,971			-		-			-			892,971
Restricted stock units issued for services (Note 16)		-		-		-		-		(173,238	)		-		-			-			(173,238	)
Foreign currency translation		-		-		-		-		-			-		-			(146,898	)		(146,898	)
Net loss		-		-		-		-		-			-		(20,549,780	)		-			(20,549,780	)
Balance, August 31, 2021		47,160,164	$	4,717		1	$	-	$	149,008,231		$	30,356,938	$	(110,211,750	)	$	(153,488	)	$	69,004,648

See accompanying notes to the condensed consolidated financial statements.

F-5

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Loop Industries, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended August 31,
	2021			2020
Cash Flows from Operating Activities
Net loss	$	(20,549,780	)	$	(8,980,438	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization (Notes 6 and 7)		272,770			558,561
Stock-based compensation expense (Note 16)		719,733			1,877,754
Accretion and accrued interest expenses (Note 19)		43,967			36,949
Loss on revaluation of foreign exchange contracts (Note 19)		-			11,482
Changes in operating assets and liabilities:
Sales tax and tax credits receivable (Note 3)		436,236			169,018
Prepaid expenses (Note 4)		(365,769	)		(824,675	)
Accounts payable and accrued liabilities (Note 9)		(2,957,577	)		(304,438	)
Net cash used in operating activities		(22,400,420	)		(7,455,787	)

Cash Flows from Investing Activities
Investment in joint venture (Note 10)		-			(650,000	)
Deposits on machinery and equipment (Note 4)		-			(1,305,010	)
Additions to property, plant and equipment (Notes 5 and 6)		(5,010,982	)		(1,116,744	))
Additions to intangible assets (Note 7)		(90,591	)		(160,484	)
Net cash used in investing activities		(5,101,573	)		(3,232,238	)

Cash Flows from Financing Activities
Proceeds from sale of common shares and warrants, net of share issuance costs (Note 13)		56,087,746			-
Proceeds from issuance of long-term debt (Note 11)		1,894,877			-
Repayment of long-term debt (Note 11)		(27,740	)		(26,836	)
Net cash (used) provided by financing activities		57,954,883			(26,836	)

Effect of exchange rate changes		(113,479	)		125,433
Net increase (decrease) in cash		30,339,411			(10,589,428	)
Cash, beginning of period		35,221,951			33,717,671
Cash, end of period	$	65,561,362		$	23,128,243

Supplemental Disclosure of Cash Flow Information:
Income tax paid	$	-		$	-
Interest paid	$	19,720		$	19,441
Interest received	$	18,174		$	30,497

See accompanying notes to the condensed consolidated financial statements.

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Loop Industries, Inc.

Three and Six Months Ended August 31, 2021 and 2020

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. The Company, Basis of Presentation

The Company

Loop Industries, Inc. (the “Company,” “Loop Industries,” “we,” or “our”) is a technology company that owns patented and proprietary technology that depolymerizes no and low-value waste PET plastic and polyester fiber to its base building blocks (monomers). The monomers are filtered, purified and polymerized to create virgin-quality Loop™ branded PET resin suitable for use in food-grade packaging and polyester fiber.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures included in these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2021, filed with the SEC on June 1, 2021. The unaudited interim condensed consolidated financial statements comprise the consolidated financial position and results of operations of Loop Industries, Inc. and its subsidiaries, Loop Innovations, LLC and Loop Canada Inc. All subsidiaries are, either directly or indirectly, wholly owned subsidiaries of Loop Industries, Inc. (collectively, the “Company”). The Company also owns, through Loop Innovations, LLC, a 50% interest in a joint venture, Indorama Loop Technologies, LLC, which is accounted for under the equity method.

Intercompany balances and transactions are eliminated on consolidation. The condensed consolidated balance sheet as of February 28, 2021, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by GAAP on an annual reporting basis. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods. The results for the three- and six-month periods ended August 31, 2021 are not necessarily indicative of the results to be expected for any subsequent quarter, for the fiscal year ending February 28, 2022, or for any other period.

2. Summary of Significant Accounting Policies

Use of estimates

The preparation of financial statements in conformity with US GAAP 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 expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for depreciable lives of property, plant and equipment, intangible assets, analysis of impairments of long-lived assets and intangible assets as well as the carrying value of our joint venture investment, assets held for sale, accruals for potential liabilities, assumptions made in calculating the fair value of stock-based compensation and other equity instruments, and the assessment of performance conditions for stock-based compensation awards and the judgment in the assessment.

The COVID-19 pandemic has disrupted business operations for us and our customers, suppliers, vendors and other parties with whom we do business, and such disruptions are expected to continue for an indefinite period of time. The uncertain duration of these measures has had and may continue to have an effect on our development and commercialization efforts. In particular, as previously disclosed, the situation in the United States and the continued travel restrictions and quarantine requirements between Canada and the United States have caused disruptions in our timetable of our joint venture with Indorama in the development of our Spartanburg facility and commercialization of our technology.

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Although the Company continues to monitor the situation and may adjust the Company’s current policies as more information and public health guidance become available, the COVID-19 pandemic is ongoing, and its dynamic nature, including uncertainties relating to the ultimate spread of the virus, the severity of the disease, the duration of the outbreak and actions that may be taken by governmental authorities to contain the outbreak or to treat its impact, makes it difficult to assess whether there will be further impact on the development and commercialization of the Company’s technology which could have a material adverse effect on the Company’s results of operations and cash flows.

Stock-based compensation

The Company periodically issues stock options, warrants and restricted stock units to employees and non-employees in non-capital raising transactions for services and financing expenses. The Company accounts for stock options granted to employees based on the authoritative guidance provided by the FASB wherein the fair value of the award is measured on the grant date and where there are no performance conditions, recognized as compensation expense on the straight-line basis over the vesting period and where performance conditions exist, recognize compensation expense when it becomes probable that the performance condition will be met. Forfeitures on share-based payments are accounted for by recognizing forfeitures as they occur.

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

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

The fair value of the stock options granted is estimated using the Black-Scholes-Merton Option Pricing (“Black-Scholes”) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options, and future dividends. Stock-based compensation expense is recorded based on the value derived from the Black-Scholes model and on actual experience. The assumptions used in the Black-Scholes model could materially affect stock-based compensation expenses recorded in the current and future periods.

Research and development expenses

Research and development expenses relate primarily to process development and design, testing of preproduction samples, purchases of machinery and equipment for the small-scale production facility, compensation, and consulting fees, and are expensed as incurred. Total research and development expenses recorded during the six-month periods ended August 31, 2021 and 2020 amounted to $13,922,632 and $4,229,810, respectively, and are net of government research and development tax credits and government grants from the federal and provincial taxation authorities accrued and recorded based on qualifying expenditures incurred during the fiscal periods.

Assets held for sale

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

	·	Management, having the authority to approve the action, commits to a plan to sell the asset;
	·	The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets;
	·	An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated;
	·	The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year;
	·	The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and
	·	Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

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

F-8

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Foreign currency translations and transactions

The accompanying consolidated financial statements are presented in U.S. dollars, the reporting currency of the Company. Assets and liabilities of subsidiaries that have a functional currency other than that of the Company are translated to U.S. dollars at the exchange rate as at the balance sheet date. Income and expenses are translated at the average exchange rate of the period. The resulting translation adjustments are included in other comprehensive income (loss) (“OCI”). As a result, foreign currency exchange fluctuations may impact operating expenses. The Company currently is not engaged in any currency hedging activities.

For transactions and balances, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency of the entity at the prevailing exchange rate at the reporting date. Non-monetary assets and liabilities, and revenue and expense items denominated in foreign currencies are translated into the functional currency using the exchange rate prevailing at the dates of the respective transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated statements of operations and comprehensive loss, except for gains or losses arising from the translation of intercompany balances denominated in foreign currencies that forms part in the net investment in the subsidiary which are included in OCI.

Net earnings (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. The Company includes common stock issuable in its calculation. 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 six-month periods ended August 31, 2021 and 2020, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an antidilutive effect. As at August 31, 2021, the potentially dilutive securities consisted of 1,587,081 outstanding stock options (2020 – 1,587,081), 4,170,278 outstanding restricted stock units (2020 – 4,313,750), and 11,684,418 outstanding warrants (2020 – 4,884,331).

3. Sales Tax, Tax Credits and Other Receivables

Sales tax, research and development tax credits and other receivables as at August 31, 2021 and February 28, 2021 were as follows:

	August 31, 2021		February 28, 2021
Sales tax	$	599,706	$	1,155,504
Research and development tax credits		588,843		435,467
Other receivables		154,868		172,864
	$	1,343,417	$	1,763,835

4. Prepaid Expenses and Deposits

Prepaid expenses as at August 31, 2021 and February 28, 2021 were as follows:

	August 31, 2021		February 28, 2021
Deposits on machinery and equipment	$	733,586	$	379,395
Other		238,563		230,387
	$	972,149	$	609,782

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Non-refundable cash deposits on machinery and equipment that will be used in research and development activities will be expensed, and classified as research and development expenses, in the period the equipment is received.

During the six-month period ended August 31, 2020, the Company made non-refundable cash deposits on machinery and equipment of $1,305,010 which were classified as a cashflow from investing activities in the statement of cash flows as costs of machinery and equipment were previously capitalized. Starting in the third quarter of fiscal 2021, the Company treats costs of machinery and equipment as research and development expenses in the period they are incurred.

5. Assets held for sale

On May 27, 2021, we acquired land in Bécancour, Québec for cash of $4.8 million (CDN $5.9 million). The site is part of our planning for an Infinite Loop™ manufacturing facility. We plan on using a portion of the land in connection with the construction of our Infinite Loop ^TM manufacturing facility and selling the excess land. The portion of the land we are committed to selling meets all criteria under ASC 360 Property, plant and equipment to be classified as an asset held for sale.

The total purchase cost of the land has been allocated between the portion of land held for sale and the land to be used for the planned Infinite Loop™ manufacturing facility based on surface area.

Description	Balance sheet line item	Cost
Land held for sale	Assets held for sale	$	3,411,037
Infinite Loop™ manufacturing facility	Property, plant and equipment, net		1,410,858
		$	4,821,895

6. Property, Plant and Equipment

Property, plant and equipment as at August 31, 2021 and February 28, 2021 were as follows:

	As at August 31, 2021
	Cost		Accumulated depreciation, write-down and impairment			Net book value
Building	$	1,964,878	$	(235,410	)	$	1,729,468
Land		1,653,737		-			1,653,737
Building and Land Improvements		1,921,952		(666,509	)		1,255,443
Machinery and equipment		6,514,252		(6,514,252	)		-
Office equipment and furniture		295,474		(116,094	)		179,380
	$	12,350,293	$	(7,532,265	)	$	4,818,028

	As at February 28, 2021
	Cost		Accumulated depreciation, write-down and impairment			Net book value
Building	$	1,954,345	$	(201,589	)	$	1,752,756
Land		241,578		-			241,578
Building and Land Improvements

SEC Form 10-Q filed by Loop Industries, Inc.