☒
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
|
|
|
|
For the
quarterly period ended May 31, 2020
|
☐ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
|
|
For the
transition period from ___________ to __________
|
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.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common
Stock
|
LOOP
|
Nasdaq
Global Market
|
Large accelerated
filer
|
☐
|
Accelerated
filer
|
☐
|
Non-accelerated
filer
|
☐
|
Smaller reporting
company
|
☒
|
|
|
Emerging growth
company
|
☐
|
|
|
Page No.
|
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3
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4
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11
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12
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13
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13
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13
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||
13
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||
13
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13
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14
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|
15
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Contents
|
Page(s)
|
|
|
F-1
|
|
|
|
F-2
|
|
|
|
F-3
|
|
|
|
F-5
|
|
|
|
F-6
|
|
May
31,
2020
|
February
29,
2020
|
|
|
|
Assets
|
|
|
Current
assets
|
|
|
Cash
and cash equivalents
|
$27,508,755
|
$33,717,671
|
Sales
tax, tax credits and other receivables (Note 3)
|
570,214
|
664,544
|
Prepaid
expenses (Note 4)
|
1,937,039
|
141,226
|
Total
current assets
|
30,016,008
|
34,523,441
|
Investment
in joint venture (Note 9)
|
1,500,000
|
850,000
|
Property,
plant and equipment, net (Note 5)
|
7,250,045
|
7,260,254
|
Intangible assets,
net (Note 6)
|
334,046
|
202,863
|
Total
assets
|
$39,100,099
|
$42,836,558
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
Current
liabilities
|
|
|
Accounts
payable and accrued liabilities (Note 8)
|
$1,411,472
|
$2,082,698
|
Current
portion of long-term debt (Note 10)
|
50,772
|
52,126
|
Total
current liabilities
|
1,462,244
|
2,134,824
|
Long-term
debt (Note 10)
|
2,185,449
|
2,238,026
|
Total
liabilities
|
3,647,693
|
4,372,850
|
|
|
|
Stockholders' Equity
|
|
|
Series
A Preferred stock par value $0.0001; 25,000,000 shares authorized;
one share issued and outstanding (Note 12)
|
-
|
-
|
Common stock par value $0.0001: 250,000,000 shares
authorized; 39,916,905 shares issued and outstanding
(February 28, 2019 – 39,910,774) (Note 12)
|
3,993
|
3,992
|
Additional
paid-in capital
|
83,306,794
|
82,379,413
|
Additional paid-in
capital – Warrants
|
9,870,241
|
9,785,799
|
Accumulated
deficit
|
(57,169,761)
|
(53,317,047)
|
Accumulated
other comprehensive loss
|
(558,861)
|
(388,449)
|
Total
stockholders' equity
|
35,452,406
|
38,463,708
|
Total
liabilities and stockholders' equity
|
$39,100,099
|
$42,836,558
|
|
|
|
|
|
|
|
Three
Months Ended May 31,
|
|
|
2020
|
2019
|
Revenue
|
$-
|
$-
|
|
|
|
Expenses
|
|
|
Research
and development (Note 13)
|
1,480,588
|
997,861
|
General
and administrative (Note 13)
|
1,953,081
|
1,902,630
|
Depreciation
and amortization (Notes 5 and 6)
|
255,974
|
164,336
|
Interest
and other financial expenses (Note 16)
|
126,776
|
501,849
|
Interest
income
|
(40,346)
|
-
|
Foreign
exchange loss (gain)
|
76,641
|
(12,126)
|
Total
expenses
|
3,852,714
|
3,554,550
|
|
|
|
Net
loss
|
(3,852,714)
|
(3,554,550)
|
|
|
|
Other
comprehensive loss
|
|
|
Foreign
currency translation adjustment
|
(170,412)
|
(140,142)
|
Comprehensive
loss
|
$(4,023,126)
|
$(3,694,692)
|
Loss
per share
|
|
|
Basic
and diluted
|
$(0.10)
|
$(0.11)
|
Weighted
average common shares outstanding
|
|
|
Basic
and diluted
|
39,916,838
|
34,714,510
|
|
Three
Months Ended May 31, 2019
|
||||||||||
|
Common
stock
par value $0.0001
|
Preferred
stock
par value $0.0001
|
|
|
|
|
|
|
|
||
|
Number of Shares
|
Amount
|
Number of Shares
|
Amount
|
Additional
Paid-in Capital
|
Additional
Paid-in Capital - Warrants
|
Additional
Paid-in Capital – Beneficial conversion
Feature
|
Common
Stock Issuable
|
Accumulated
Deficit
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
Stockholders' Equity
|
Balance,
February 28, 2019
|
33,805,706
|
$3,381
|
1
|
$-
|
$38,966,208
|
$757,704
|
$1,200,915
|
$800,000
|
$(38,811,592)
|
$(290,224)
|
$2,626,392
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
common shares for cash, net of share issuance expenses (Note
12)
|
600,000
|
60
|
-
|
-
|
4,266,725
|
-
|
-
|
-
|
-
|
-
|
4,266,785
|
Issuance of
shares for legal settlement
|
150,000
|
15
|
-
|
-
|
(15)
|
-
|
-
|
-
|
-
|
-
|
-
|
Issuance of
shares upon conversion of convertible notes
|
319,326
|
32
|
-
|
-
|
2,372,549
|
316,929
|
-
|
-
|
-
|
-
|
2,689,510
|
Stock options
issued for services (Note 13)
|
-
|
-
|
-
|
-
|
575,513
|
-
|
-
|
-
|
-
|
-
|
575,513
|
Restricted
stock units issued for services (Note 13)
|
-
|
-
|
-
|
-
|
355,177
|
-
|
-
|
-
|
-
|
-
|
355,177
|
Foreign
currency translation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(140,142)
|
(140,142)
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,554,550)
|
-
|
(3,554,550)
|
Balance, May
31, 2019
|
34,875,032
|
$3,488
|
1
|
$-
|
$46,536,157
|
$1,074,633
|
$1,200,915
|
$800,000
|
$(42,366,142)
|
$(430,366)
|
$6,818,685
|
|
Three
Months Ended May 31, 2020
|
||||||||||
|
Common
stock
par value $0.0001
|
Preferred
stock par value $0.0001
|
|
|
|
|
|
|
|
||
|
Number
of Shares
|
Amount
|
Number
of Shares
|
Amount
|
Additional
Paid-in Capital
|
Additional
Paid-in Capital – Warrants
|
Additional
Paid-in Capital – Beneficial conversion
Feature
|
Common
Stock Issuable
|
Accumulated
Deficit
|
Accumulated
Other Comprehensive (Loss)
|
Total
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
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
shares upon the vesting of restricted stock units (Note
13)
|
6,131
|
1
|
-
|
-
|
(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
Warrant issued
for services (Note 15)
|
-
|
-
|
-
|
-
|
-
|
84,442
|
-
|
-
|
-
|
-
|
84,442
|
Stock options
issued for services (Note 13)
|
-
|
-
|
-
|
-
|
556,895
|
-
|
-
|
-
|
-
|
-
|
556,895
|
Restricted
stock units issued for services (Note 13)
|
-
|
-
|
-
|
-
|
370,487
|
-
|
-
|
-
|
-
|
-
|
370,487
|
Foreign
currency translation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(170,412)
|
(170,412)
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,852,714)
|
-
|
(3,852,714)
|
Balance, May
31, 2020
|
39,916,905
|
$3,993
|
1
|
$-
|
$83,306,794
|
$9,870,241
|
$-
|
$-
|
$(57,169,761)
|
$(558,861)
|
$35,452,406
|
|
Three
Months Ended May 31,
|
|
|
2020
|
2019
|
Cash Flows from Operating Activities
|
|
|
Net
loss
|
$(3,852,714)
|
$(3,554,550)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation
and amortization (Notes 5 and 6)
|
256,090
|
164,336
|
Stock-based
compensation expense (Note 13)
|
1,011,824
|
930,690
|
Accrued
interest expenses (Note 10)
|
9,416
|
117,433
|
Loss
on revaluation of warrants
|
-
|
8,483
|
Debt
accretion (Note 10)
|
8,547
|
583,727
|
Deferred
financing expenses
|
-
|
46,442
|
Gain
on conversion of convertible notes
|
-
|
(268,730)
|
Loss
on revaluation of foreign exchange contracts
|
98,502
|
-
|
Changes
in operating assets and liabilities:
|
|
|
Sales
tax and tax credits receivable (Note 3)
|
76,410
|
(158,954)
|
Prepaid
expenses (Note 4)
|
(1,865,216)
|
49,136
|
Accounts
payable and accrued liabilities (Note 8)
|
(720,759)
|
(5,366)
|
Net
cash used in operating activities
|
(4,977,900)
|
(2,087,353)
|
|
|
|
Cash Flows from Investing Activities
|
|
|
Investment
in joint venture (Note 9)
|
(650,000)
|
(500,000)
|
Additions
to property, plant and equipment (Note 5)
|
(394,403)
|
(470,545)
|
Additions
to intangible assets (Note 6)
|
(144,386)
|
(24,811)
|
Net
cash used in investing activities
|
(1,188,789)
|
(955,356)
|
|
|
|
Cash Flows from Financing Activities
|
|
|
Proceeds
from sale of common shares
|
-
|
5,130,000
|
Share
issuance costs
|
-
|
(863,216)
|
Repayment
of long-term debt (Note 10)
|
(12,693)
|
(13,057)
|
Net
cash (used) provided by financing activities
|
(12,693)
|
(4,253,727)
|
|
|
|
Effect
of exchange rate changes
|
(29,534)
|
(32,796)
|
Net
decrease in cash
|
(6,208,916)
|
1,138,222
|
Cash,
beginning of period
|
33,717,671
|
5,833,390
|
Cash,
end of period
|
$27,508,755
|
$6,971,612
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
Income
tax paid
|
$-
|
$-
|
Interest
paid
|
$10,311
|
$14,488
|
Interest
received
|
$40,346
|
$-
|
|
May
31,
2020
|
February 29,
2020
|
Sales
tax
|
$122,419
|
$180 971
|
Research and
development tax credits
|
216,458
|
447,843
|
Other
receivables
|
231,337
|
35,730
|
|
$570,214
|
$664,544
|
|
May
31,
2020
|
February 29,
2020
|
Insurance
|
$1,144,500
|
$61,891
|
Machinery and
equipment
|
644,000
|
-
|
Other prepaid
expenses
|
148,539
|
79,335
|
|
$1,937,039
|
$141,226
|
|
As at February 29,
2020
|
||
|
Cost
|
Accumulated
depreciation
|
Net book
value
|
Building
|
$1,846,070
|
$(128,911)
|
$1,717,159
|
Land
|
264,868
|
-
|
264,868
|
Building and land
improvements
|
733,884
|
(214,068)
|
519,816
|
Machinery and
equipment
|
6,085,195
|
(1,426,465)
|
4,658,730
|
Office equipment
and furniture
|
162,466
|
(62,785)
|
99,681
|
Balances, end of
period
|
$9,092,483
|
$(1,832,229)
|
$7,260,254
|
|
May
31,
2020
|
February 29,
2020
|
Trade accounts
payable
|
$648,670
|
$814,081
|
Trade accrued
liabilities
|
99,587
|
593,789
|
Accrued employee
compensation
|
496,630
|
634,807
|
Foreign exchange
contracts
|
125,951
|
26,840
|
Other accrued
liabilities
|
40,634
|
13,181
|
|
$1,411,472
|
$2,082,698
|
|
May
31,
2020
|
February 29,
2020
|
Investissement
Québec financing facility:
|
|
|
Principal
amount
|
$1,602,404
|
$1,645,122
|
Unamortized
discount
|
(273,652)
|
(289,852)
|
Accrued
interest
|
10,489
|
958
|
Total
Investissement Québec financing facility
|
1,339,241
|
1,356,228
|
Term
loan
|
|
|
Principal
amount
|
896,980
|
933,924
|
Less: current
portion
|
(50,772)
|
(52,126)
|
Total term loan,
net of current portion
|
846,208
|
881,798
|
Long-term debt, net
of current portion
|
$2,185,449
|
$2,238,026
|
Years
ending
|
Amount
|
February 28,
2021
|
$38,079
|
February 28,
2022
|
50,772
|
February 28,
2023
|
50,772
|
February 29,
2024
|
279,684
|
February 28,
2025
|
279,684
|
Thereafter
|
1,787,700
|
Total
|
$2,486,691
|
For
the period ended May 31, 2020
|
Number of
shares
|
Amount
|
Balance, February
29, 2020
|
39,910,774
|
$3,992
|
Issuance of shares
upon settlement of restricted stock units
|
6,131
|
1
|
Balance, May 31,
2020
|
39,916,905
|
$3,993
|
For
the period ended May 31, 2019
|
Number of
shares
|
Amount
|
Balance, February
29, 2019
|
33,805,706
|
$3,381
|
Issuance of shares
for cash
|
600,000
|
60
|
Issuance of shares
upon settlement of legal matter
|
150,000
|
15
|
Issuance of shares
upon conversion of Convertible notes
|
319,326
|
32
|
Balance, May 31,
2019
|
34,875,032
|
$3,488
|
|
2020
|
2019
|
Exercise
price
|
$8.78
|
$-
|
Risk-free interest
rate
|
1.05%
|
-
|
Expected dividend
yield
|
0.00%
|
-
|
Expected
volatility
|
75.95%
|
-
|
Expected
life
|
7.5 years
|
-
|
|
2020
|
2019
|
Interest on
long-term debt
|
$19,727
|
$13,070
|
Interest on
convertible notes
|
-
|
117,435
|
Accretion
expense
|
8,547
|
547,562
|
Amortization of
deferred finance expenses
|
-
|
46,442
|
Revaluation of
warrants
|
-
|
8,483
|
Loss on
revaluation of foreign exchange contracts
|
98,502
|
-
|
Gain on conversion
of November 2018 Notes
|
-
|
(232,565)
|
Other
|
-
|
1,422
|
|
$126,776
|
$501,849
|
|
Three Months
Ended May 31,
|
||
|
2020
|
2019
|
$
Change
|
Revenues
|
$-
|
$-
|
$-
|
|
|
|
|
Operating
expenses
|
|
|
|
Research and
development
|
|
|
|
Stock-based
compensation
|
352,007
|
312,435
|
39,572
|
Other
research and development
|
1,128,581
|
685,426
|
443,155
|
Total
research and development
|
1,480,588
|
997,861
|
482,727
|
|
|
|
|
General and
administrative
|
|
|
|
Stock-based
compensation
|
659,817
|
618,255
|
41,562
|
Other
general and administrative
|
1,293,264
|
1,284,375
|
8,889
|
Total
general and administrative
|
1,953,081
|
1,902,630
|
50,451
|
|
|
|
|
Depreciation and
amortization
|
255,974
|
164,336
|
91,638
|
Interest and other
financial expenses
|
126,776
|
501,849
|
(375,073)
|
Interest
income
|
(40,346)
|
-
|
(40,346)
|
Foreign
exchange (gain) loss
|
76,641
|
(12,126)
|
88,767
|
Total
operating expenses
|
3,852,714
|
3,554,550
|
298,164
|
Net
loss
|
$(3,852,714)
|
$(3,554,550)
|
$(298,164)
|
|
|
|
|
|
Three Months Ended
May 31,
|
|
|
2020
|
2019
|
Net cash used in
operating activities
|
$(4,977,900)
|
$(2,087,353)
|
Net cash used in
investing activities
|
(1,188,789)
|
(995,356)
|
Net cash (used)
provided by financing activities
|
(12,693)
|
4,253,727
|
Effect of exchange
rate changes on cash
|
(29,534)
|
(32,796)
|
Net (decrease)
increase in cash
|
$(6,208,916)
|
$1,138,222
|
|
|
|
|
Incorporated by Reference
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Number
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Description
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Form
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File No.
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Filing Date
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Exhibit No.
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Articles
of Incorporation, as amended to date
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10-K
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000-54768
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May
30, 2017
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3.1
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By-laws,
as amended to date
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8-K
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000-54768
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April
10, 2018
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3.1
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Employment Agreement, dated January 30, 2020, by and between
Loop Canada Inc. and Stephen Champagne
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Filed
herewith
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Power
of Attorney (contained on signature page to the previously filed
Annual Report on Form 10-K)
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10-K
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000-54768
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08-May-19
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24.1
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Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
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Filed
herewith
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Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
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Filed
herewith
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Certification
of Principal Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
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Furnished
herewith
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Certification
of Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
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Furnished
herewith
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101.INS
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XBRL
Instance Document
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Filed
herewith
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101.SCH
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XBRL
Taxonomy Extension Schema Document
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Filed
herewith
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101.CAL
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XBRL
Taxonomy Extension Calculation Linkbase Document
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Filed
herewith
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101.DEF
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XBRL
Taxonomy Extension Definition Linkbase Document
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Filed
herewith
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101.LAB
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XBRL
Taxonomy Extension Label Linkbase Document
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Filed
herewith
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101.PRE
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XBRL
Taxonomy Extension Presentation Linkbase Document
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Filed
herewith
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Date:
July 14, 2020
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By:
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/s/ Daniel Solomita
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Name:
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Daniel
Solomita
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Title:
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President
and Chief Executive Officer, and Director (Principal Executive
Officer)
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Date:
July 14, 2020
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By:
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/s/ Nelson Gentiletti
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Name:
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Nelson
Gentiletti
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Title:
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Chief
Financial Officer and Treasurer (Principal Accounting Officer and
Principal Financial Officer)
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Date:
July 14, 2020
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/s/ Daniel Solomita
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Daniel
Solomita
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President
and Chief Executive Officer (principal executive
officer)
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1.
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I have
reviewed this quarterly report on Form 10-Q of Loop Industries,
Inc.;
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2.
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Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
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3.
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Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
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4.
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The
registrant’s other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a–15(e)
and 15d–15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a–15(f) and
15d–15(f)) for the registrant and have:
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(a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
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(b)
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Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
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(c)
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Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
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(d)
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Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
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5.
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The
registrant’s other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and
the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
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(a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
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(b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
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Date:
July 14, 2020
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/s/Nelson Gentiletti
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Nelson
Gentiletti
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Chief
Financial Officer and Treasurer (principal financial officer and
principal accounting officer)
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Date:
July 14, 2020
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/s/ Daniel Solomita
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Daniel
Solomita
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President
and Chief Executive Officer (principal executive
officer)
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Date:
July 14, 2020
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/s/ Nelson Gentiletti
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Nelson
Gentiletti
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Chief
Financial Officer and Treasurer (principal financial officer and
principal accounting officer)
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