The following information and any forward-looking statements should be read in
conjunction with "Risk Factors" discussed elsewhere in this Report. Please refer
to the Cautionary Note Regarding Forward-Looking Statements on page 4.

Introduction

Loop Industries is a technology company whose mission is to accelerate the
world's shift toward sustainable PET plastic and polyester fiber and away from
our dependence on fossil fuels. Loop Industries owns patented and proprietary
technology that depolymerizes no- and low-value waste PET plastic and polyester
fiber, including bottles, packaging, carpets, and other textiles of any color,
transparency or condition, including waste PET plastic recovered from the ocean
that has been degraded by the sun and salt, 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, thus enabling our customers to meet their sustainability
objectives. Loop Industries is contributing to the global movement towards a
circular economy by preventing plastic waste and recovering waste plastic for a
more sustainable future for all.

Plan of Operation



We plan to continue to allocate available capital to strengthen our intellectual
property portfolio, build a core competency in managing strategic relationships
and continue enhancing our Loop™ brand value. Our research and development
innovation hub in Terrebonne, Québec, Canada will continue to push forward the
development of our technology. We are investing in building a strong management
team to integrate best in class processes and practices while maintaining our
entrepreneurial culture.

During the year ended February 29, 2020, we continued executing our corporate
strategy where Loop Industries focused on developing distinct business models
for the commercialization of Loop™ PET resin and polyester fiber to customers:
1) from our joint venture with Indorama, and 2) from our Infinite Loop™
greenfield facilities. We are continuing to develop the engineering of the
Infinite Loop™ platform and we have increased our focus on the development of
Infinite Loop™ projects in Europe and in North America.

In September of 2018, in connection with one of our business models, we
announced a joint venture with Indorama to retrofit their existing PET
manufacturing facilities. The joint venture was formed to manufacture and
commercialize sustainable Loop™ PET resin and polyester fiber to meet the
growing global demand from beverage and consumer packaged goods companies. The
joint venture agreement details the establishment of an initial 20,700 metric
tons per year facility in Spartanburg, South Carolina.

Following the decision of the joint venture with Indorama to double the capacity
of the planned Spartanburg plant due to customer demand to 40,000 metric tons
per year as disclosed in our 10-Q for the period ended August 31, 2019, we
identified a number of enhancements to the plant design to improve the
operability and lower the total construction cost of the plant.  We have
currently contracted for the sale of the initial 20,700 metric tons expected
output of the Spartanburg facility and we continue discussions to contract the
additional volume up to its planned increased capacity of 40,000 metric tons.

As part of the joint venture agreement to establish the facility to produce 40,000 metric tons, we are committed to contribute its equity share for the costs under the joint venture agreement to construct the facility. As at April 30, 2020, we have contributed $1,500,000 to the joint venture.



On March 25, 2020, due to the COVID-19 pandemic, the Québec provincial
government issued an order that all non-essential business and commercial
activity in the province is required to shut down until April 13 and the order
provides exemptions that allow us to continue reduced operations at the pilot
plant and we have been continuing work with our joint venture partner, Indorama,
and our engineering partner, to oversee the engineering for the Spartanburg
joint venture facility and pursue our plans for the commercialization of our
technology. We have made arrangements for certain employees to work remotely to
support these engineering activities. The government has recently announced that
we can re-start complete operations on May 11.

The Québec provincial government order has not significantly impacted our
ability to work to advance this project to date and the commercialization plan
for commissioning of the planned Spartanburg facility is currently unchanged.
However, the planned timing may potentially be affected by the COVID-19
pandemic. We are monitoring the potential impact of the pandemic on the global
economy and capital markets, as well as on the operations of our partners who
are critical to achieving the anticipated commissioning date of the facility
scheduled for the third quarter of the calendar year 2021. Both Loop Industries
and our partners are fully committed to the joint venture and are working
diligently on the commercialization plan.


                                       2


We, through our wholly-owned subsidiary Loop Innovations, LLC, a Delaware
limited liability company, entered into a Joint Venture Agreement (the
"Agreement"), as stated above, with Indorama, to manufacture and commercialize
sustainable PET resin and polyester fiber to meet the growing global demand from
beverage and consumer packaged goods companies. Each company has 50/50 equity
interest in Indorama Loop Technologies, LLC ("ILT"), which was specifically
formed to operate and execute the joint venture.

This partnership brings together Indorama's manufacturing footprint and Loop
Industries' proprietary science and technology to become a supplier in the
'circular' economy for 100% sustainable and recycled PET resin and polyester
fiber.

We are contributing to the 50/50 joint venture an exclusive world-wide royalty-free license to use its proprietary technology to produce 100% sustainably produced PET resin and polyester fiber in addition to its equity cash contribution.


To drive our Infinite Loop™ business model, which is a key pillar of our
commercialization blueprint, we intend to partner with PET polymerization
technology providers and EPC companies (Engineering, Procurement, Construction).
As Loop Industries' technology is agnostic to PET polymerization technology, we
are also exploring other partners that provide PET polymerization technology to
help us commercialize our Infinite Loop™ solution-a fully integrated and
reimagined manufacturing facility for sustainable Loop™ PET resin and polyester
fiber.

We believe the Infinite Loop™ solution will result in a highly scalable model to
supply the global demand for 100% sustainable Loop™ PET resin and polyester
fiber, allowing us to rapidly penetrate and transform the plastic market and
fully capitalize on our disruptive potential to be the leader in the circular
economy for PET plastic. This also fundamentally changes where and how PET resin
production occurs-no longer does PET resin production need to be bound to fossil
fuels and fossil fuel infrastructure. Infinite Loop™ facilities could be located
near large urban centers where feedstock is located, and transportation and
logistics costs could be significantly reduced as the distance between
feedstock, manufacturing and customer use is collapsed.

We believe the proposition for those seeking a turnkey solution to manufacture
Loop™ PET resin and polyester fiber, such as chemical companies, waste managers,
existing recyclers and even consumer good companies around the world is
compelling. We further believe that once the first facilities are operational it
may create the possibility of licensing the technology to create a recurring
revenue stream for us while expanding the capacity of Loop™ PET resin and
polyester fiber in the marketplace to meet the substantial demand from consumer
goods companies.

Consumer brands are seeking a solution to their plastic challenge, and they are
taking bold action. In the past year, we have seen major brands make significant
commitments to close the loop on their plastic packaging in two ways, by
transitioning their packaging to recyclable materials and by incorporating more
recycled content into their packaging. We believe Loop™ PET resin and polyester
fiber provides the ideal solution for these brands because Loop™ PET resin and
polyester fiber contains 100% recycled PET and polyester fiber content. The
Loop™ PET resin and polyester fiber is virgin quality suitable for use in
food-grade packaging. That means consumer packaged goods companies can now
market packaging made from a 100% Loop™ branded PET resin and polyester fiber.

Loop Industries believes that due to the commitments by large global consumer
brands to incorporate more recycled content into their product packaging, the
regulatory requirements for minimum recycled content in packaging imposed by
governments, the virgin-like quality of Loop™ branded PET and the marketability
of Loop™ PET to extoll the sustainability credentials of consumer brands that
incorporate Loop™ PET, it will be able to sell its Loop™ branded PET at a
premium price relative to virgin and mechanically recycled PET.


                                       3


Results of Operations

Fourth Quarter Ended February 29, 2020

The following table summarizes our operating results for the three-month periods ended February 29, 2020 and February 28, 2019, in U.S. Dollars.




                                                    Three Months Ended


                                                                        February
                                                    February 29, 2020 28, 2019      $ Change

Revenues                                             $-                $             $-



Expenses


Research and development
  Stock-based compensation                           311,253           250,251       61,002
  Other research and development                     1,159,676         

273,815 885,861


    Total research and development                   1,470,929        

524,066       946,863





General and administrative
  Stock-based compensation                           547,327           575,240       (27,913)
  Legal settlement                                   -                 4,041,627     (4,041,627)
  Other general and administrative                   1,221,037         

1,514,203 (293,166)


    Total general and administrative                 1,768,364        

6,131,070     (4,362,706)



Depreciation and amortization                        245,065           136,285       108,780
Impairment of intangible assets                      -                 298,694       (298,694)
Interest and other finance costs                     406,215           425,964       (19,749)
Interest income                                      (136,913)         -             (136,913)

Foreign exchange loss (gain)
                                                     4,303             38,632        (34,329)
Total expenses                                       3,757,963         7,554,711     (3,796,748)
Net loss                                             $(3,757,963)      (7,554,711)   $3,796,748




The net loss for the three-month period ended February 29, 2020 decreased $3.80
million to $3.76 million, as compared to the net loss for the three-month period
ended February 28, 2019 which was $7.55 million.  The decrease is primarily due
to decreased general and administrative expenses of $4.36 million, a decrease in
impairment of intangible assets of $0.30 million, an increase in interest income
of $0.14 million, partially offset by higher research and development expenses
of $0.95 million and by higher depreciation and amortization of $0.11 million.

Research and development expenses for the three-month period ended February 29,
2020 amounted to $1.47 million compared to $0.52 million for the three-month
period ended February 28, 2019, representing an increase of $0.95 million, or
$0.89 million excluding stock-based compensation. The increase of $0.89 million
was primarily attributable to higher employee related expenses of $0.63 million,
higher spending for purchases and consumables of $0.15 million and higher
professional fees of $0.06 million. The increase in non-cash stock-based
compensation expense of $0.06 million is mainly attributable to the timing of
certain stock awards provided to employees.


                                       4


General and administrative expenses for the three-month period ended February
29, 2020 amounted to $1.77 million compared to $6.13 million for the three-month
period ended February 28, 2019, representing a decrease of $4.36 million, or
$0.29 million excluding stock-based compensation and the legal settlement. The
decrease of $4.36 million was primarily due to a legal settlement expense which
amounted to $4.04 million for the three-month period ended February 28, 2019
compared to nil for the three-month period ended February 29, 2020. Other
variances were attributable to lower employee related expenses of $0.23 million,
lower legal, accounting and other professional fees of $0.41 million offset by
higher Directors' and Officers' insurance expenses of $0.24 million. Stock-based
compensation expense for the three-month period ended February 29, 2020 amounted
to $0.55 million compared to $0.58 million for the three-month period ended
February 28, 2019, representing a decrease of $0.03 million. The decrease was
mainly attributable to lower stock awards provided to executives.

Depreciation and amortization for the three-month period ended February 29, 2020
totaled $0.25 million compared to $0.14 million for the three-month period ended
February 28, 2019, representing an increase of $0.11 million. The increase is
mainly attributable to an increase in the amount of fixed assets held at our
pilot plant and corporate offices. Impairment of intangible assets for the
three-month period ended February 29, 2020 was nil compared to $0.30 million for
the three-month period ended February 28, 2019, representing a decrease of $0.30
million. The increase is entirely attributable to the write-off of the remaining
intangible asset balance of the GEN I technology of $0.30 million in the
three-month period ended February 28, 2019.

Interest and other finance costs for the three-month period ended February 29,
2020 totaled $0.41 million compared to $0.43 for the three-month period ended
February 28, 2019, representing a decrease of $0.02 million. The decrease is
mainly attributable to a decrease in interest expense relating to the
convertible notes converted during the year in the amount of $0.06 million
offset by an increase in accretion expense also relating to the convertible
notes converted during the year in the amount of $0.04 million.

Fiscal Year Ended February 29, 2020

The following table summarizes our operating results for the years ended February 29, 2020 and February 28, 2019, in U.S. Dollars.



                                                                         Years Ended

                                                    February 29, 2020 February 28, 2019 $ Change

Revenues                                             $-                $-                $-



Expenses


Research and development
  Stock-based compensation                           1,252,394         1,160,254         92,140
  Other research and development                     3,464,781         

2,288,293 1,176,488


    Total research and development                   4,717,175        

3,448,547         1,268,628





General and administrative
  Stock-based compensation                           2,216,997         2,824,902         (607,905)
  Legal settlement                                   -                 4,041,627         (4,041,627)
  Other general and administrative                   4,998,423         

5,986,336 (987,913)


    Total general and administrative                 7,215,420        

12,852,865        (5,637,445)



Depreciation and amortization                        830,432           502,996           327,436
Impairment of intangible assets                      -                 298,694           (298,694)
Interest and other finance costs                     2,223,304         467,082           1,756,222
Interest income                                      (500,478)         -                 (500,478)

Foreign exchange loss (gain)
                                                     19,602            (33,773)          53,375
Total expenses                                       14,505,455        17,536,411        (3,030,956)
Net loss                                             $(14,505,455)     (17,536,411)      3,030,956





                                       5


The net loss for the year ended February 29, 2020 decreased by $3.03 million, to
$14.51 million, as compared to the net loss for the year ended February 28, 2019
which was $17.54 million. The decrease is primarily explained by lower general
and administrative expenses of $5.64 million, an increase in interest income of
$0.50 million and a decrease of impairment of intangible assets of $0.30 million
offset by an increase in research and development expenses of $1.27 million, an
increase in interest and other finance costs of $1.76 million, an increase in
depreciation and amortization of $0.33 million and an increase in foreign
exchange of $0.05 million.

Research and development expenses for year ended February 29, 2020 amounted to
$4.72 million compared to $3.45 million for the year ended February 28, 2019,
representing an increase of $1.27 million, or $1.18 million excluding
stock-based compensation. The increase of $1.18 million was primarily
attributable to higher employee related expenses of $1.01 million, increased
purchases and consumables of $0.21 million, higher travel costs of $0.06 and
higher facilities costs of $0.05 offset by lower professional fees of $0.30
million. The increase in non-cash stock-based compensation expense of $0.09
million was attributable to the timing of certain stock awards provided to
employees.

General and administrative expenses for the year ended February 29, 2020 totaled
$7.22 million compared to $12.85 million for the year ended February 28, 2019,
representing a decrease of $5.64 million, or $0.99 million excluding stock-based
compensation and the legal settlement. The decrease of $5.64 million was
primarily attributable to a legal settlement expense which amounted to nil for
the year ended February 29, 2020 compared to $4.04 million for the year ended
February 28, 2019. Other variances were attributable to lower legal fees of
$2.04 million offset by higher Directors' and Officers' insurance expenses of
$0.4 million, higher employee related expenses of $0.27 million as well as
higher accounting and other professional fees of $0.27 million. Stock-based
compensation expense for the year ended February 29, 2020 amounted to $2.22
million compared to $2.82 million for the year ended February 28, 2019,
representing a decrease of $0.61 million. The decrease was mainly attributable
to lower stock awards provided to executives.

Depreciation and amortization for the year ended February 29, 2020 totaled $0.83
million compared to $0.50 million for the year ended February 28, 2019,
representing an increase of $0.33 million. The increase is mainly attributable
to an increase in the amount of fixed assets held at our pilot plant and
corporate offices. Impairment of intangible assets for the year ended February
29, 2020 was nil compared to $0.30 million for the year ended February 28, 2019,
representing a decrease of $0.3 million. The decrease is mainly attributable to
the write-off of the remaining intangible asset balance of the GEN I technology
of $0.3 in the year ended February 28, 2019.

Interest and other finance costs for the year ended February 29, 2020 totaled
$2.22 million compared to $0.47 million for the year ended February 28, 2019,
representing an increase of $1.76 million. The increase is mainly attributable
to an increase in accretion expense related to convertible notes of $1.76
million and increased interest expense also relating to the convertible notes
issued during the year of $0.26 million offset by a gain on conversion related
to the convertible notes of $0.23 million and a decreased expense for
revaluation of financial instruments of $0.03 million.

LIQUIDITY AND CAPITAL RESOURCES



We are a development stage company with no revenues, and our ongoing operations
and commercialization plans are being financed by raising new equity and debt
capital. To date, we have been successful in raising capital to finance our
ongoing operations, reflecting the potential for commercializing our branded
resin and the progress made to date in implementing our business plans. As at
February 29, 2020, we had cash and cash equivalents on hand of $33.72 million.

Although we continue to be in a good liquidity position with cash and cash
equivalents on hand of $33.72 million, in light of the current global COVID-19
pandemic, our liquidity position may change, including the inability to raise
new equity and debt, disruption in completing repayments or disbursements to our
creditors. Management continues to be positive about our growth strategy and is
evaluating our financing plans to continue to raise capital to finance the
start-up of commercial operations and continue to fund the further development
of our ongoing operations.

As reflected in the accompanying consolidated financial statements, we are a
development stage company, we have not yet begun commercial operations and we do
not have any sources of revenue. Management believes that the Company has
sufficient financial resources to fund planned operating and capital
expenditures and other working capital needs for at least, but not limited to,
the 12-month period from the date of issuance of the February 29, 2020
consolidated financial statements. There can be no assurance that any future
financing will be available or, if available, that it will be on terms that are
satisfactory to us.

As at February 29, 2020, we have a long-term debt obligation to a Canadian bank
in connection with the purchase, in the year ended February 28, 2018, of the
land and building where our pilot plant and corporate offices are located at 480
Fernand-Poitras, Terrebonne, Québec, Canada J6Y 1Y4. On January 24, 2018, the
Company obtained a $1,042,520 (CDN$1,400,000) 20-year term instalment loan (the
"Loan"), from a Canadian bank. The Loan bears interest at the bank's Canadian
prime rate plus 1.5%. By agreement, the Loan is repayable in monthly payments of
$4,344 (CDN$5,833) plus interest, until January 2021, at which time it will be
subject to renewal. It includes an option allowing for the prepayment of the
Loan without penalty.

We also have a long-term debt obligation to Investissement Québec in connection
with a financing facility equal to 63.45% of all eligible expenses incurred for
the expansion of its Pilot Plant up to a maximum of $3,425,423 (CDN$4,600,000).
We received the first disbursement in the amount of $ 1,645,122 (CDN$2,209,234)
on February 21, 2020. There is a 36-month moratorium on both capital and
interest repayments as of the first disbursement date. At the end of the
36-month moratorium, capital and interest will be repayable in 84 monthly
installments. The loan bears interest at 2.36%. We have also agreed to issue to
Investissement Québec warrants to purchase shares of our common stock in an
amount equal to 10% of each disbursement up to a maximum aggregate amount of
$342,542 (CDN$460,000). The warrants will be issued at a price per share equal
to the higher of (i) $11.00 per share and (ii) the ten-day weighted average
closing price of Loop Industries shares of common stock on the Nasdaq stock
market for the 10 days prior to the issue of the warrants. The warrants can be
exercised immediately upon grant and will have a term of three years from the
date of issuance. The loan can be repaid at any time by us without penalty. On
February 21, 2020, upon the receipt of the first disbursement under this
facility, we issued a warrant to purchase 15,153 shares of common stock at a
price of $11.00 to Investissement Québec.


                                       6


Flow of Funds

Summary of Cash Flows

A summary of cash flows for the years ended February 29, 2020, and February 28, 2019 and 2018 was as follows:




                                                    Years Ended


                                                    February 29, 2020

February 28, 2019 February 28, 2018



Net cash used in operating activities                $(9,092,549)      $(7,562,487)      $(6,391,486)
Net cash used in investing activities                (3,388,985)       (2,046,119)       (2,798,372)
Net cash provided by financing activities            40,463,141        7,328,024         16,504,451
Effect of exchange rate changes on cash              (97,326)          (35,741)          (81,367)
Net change in cash                                   $27,884,281       $(2,316,323)      $7,233,226

Net Cash Used in Operating Activities



During the year ended February 29, 2020, we used $9.10 million in operations
compared to $7.56 million during the year ended February 28, 2019 and $6.39
million during the year ended February 28, 2018. The increase over each year is
mainly due to increased operating expenses as we move to the next phase of
commercialization.

Net Cash Used in Investing Activities


During the year ended February 29, 2020, we used $3.39 million in investing
activities. We made capital asset investments of $2.54 million of which $2.44
million was mainly attributable to the expansion and additions to our pilot
plant and executive offices in Terrebonne, Canada. We also invested $0.1 million
in our intellectual property as we developed, during the year ended February 29,
2020, our next generation GEN II technology and filed various patents in various
jurisdictions around the world which await approval. During the year ended
February 29, 2020 we made capital contributions to our joint venture with
Indorama for a total of $0.85 million.

Net Cash Provided by Financing Activities



During the year ended February 29, 2020, we raised $40.46 million mainly through
two separate registered direct offerings of common stock, in the net amounts of
$34.60 million and $4.20 million, respectively. We also made payments totaling
$0.05 million against our long-term debt, representing the loan agreement we
entered into during the year ended February 28, 2018 to purchase the land and
building of our pilot plant and executive offices. During the year ended
February 28, 2019, we raised $7.38 million through the issuance of convertible
debt and $15.69 million through the sale of additional common stock and the
exercise of warrants in the year ended February 28, 2018.

During the year ended February 29, 2020, we paid a total of $312,000 in interest in connection with convertible notes (2019 - nil; 2018 - nil) that were converted during the year.


On February 21, 2020, we received $1,645,122 (CDN$2,209,234) in connection with
the credit facility from Investissement Québec to finance capital expenses
incurred for the expansion of our pilot plant. There is a 36-month moratorium on
both capital and interest repayments beginning on the date of receipt of the
funds.

On January 24, 2018, in connection with the purchase of land and the building,
we obtained a credit facility from a Canadian bank in the amount of $1,042,520
(CDN$1,400,000). The Loan bears interest at the bank's Canadian prime rate plus
1.5%. By agreement, the Loan is repayable in monthly payments of $4,344 (CDN
$5,833) plus interest, until January 2021, at which time it will be subject be
renewal. It includes an option allowing for the prepayment of the Loan without
penalty. Interest paid amounted to $56,482 during the year ended February 29,
2020 (2019 - $50,040; 2018 - 5,125). The credit facility is secured by a first
ranking hypothec of Loop Canada Inc.'s bank accounts, receivables, inventory,
incorporeal rights and property, plant and equipment. In addition, Loop
Industries, Inc., Loop Canada Inc.'s parent company, has guaranteed the credit
facility and has provided a postponement of any payments that may be made on
intercompany loan amounts owed by Loop Canada Inc. to Loop Industries, Inc. The
terms of the credit facility require that we comply with certain financial
covenants. As at February 29, 2020 and February 28, 2019, we were in compliance
with its financial covenants.


                                       7


OFF-BALANCE SHEET ARRANGEMENTS

As at February 29, 2020, we did not have any off-balance sheet arrangements as defined in the rules and regulations of the SEC.

As at February 29, 2020, we did not have any significant lease obligations to third parties.



OUTLOOK

In connection with the upcoming fiscal year ending February 28, 2021, we will
continue to monitor the potential impacts of COVID-19 on our business. We intend
to continue to execute our corporate strategy. We believe we must execute on
several areas of our operational strategic plan, namely:

?

Protecting our intellectual property;



?

Continuing to upgrade our pilot plant to ensure the highest quality of sustainable Loop™ PET resin and polyester fiber is produced at the facility;



?

Identifying and securing feedstock to ensure our facilities can operate continuously and efficiently;



?

With our joint venture with Indorama, complete the engineering work associated with the Spartanburg facility and proceed with construction;



?

Continuing to execute brand and other partnerships and/or commercial agreements with customers; and



?

Continuing to drive the development of our Infinite Loop™ solution, which we believe is a key pillar of our ambition to sell our technology to potential commercial partners.

Risks that may affect our ability to execute on this strategy include, but are not limited to, those listed under "Risk Factors" elsewhere in this Annual Report.



CRITICAL 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 as
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 intangibles, accruals for potential liabilities and
assumptions made in calculating the fair value of stock-based compensation and
the fair value of convertible notes and related warrants.


                                       8


Intangible assets

Intangible assets are recorded at cost and are amortized over their estimated useful lives, unless the useful life is indefinite, using the straight-line method over 7 years.



The Company reviews the carrying value of intangible assets subject to
amortization whenever events or changes in circumstances indicate that the
carrying amount of an intangible asset might not be recoverable, or a change in
the remaining useful life of an intangible asset. 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. 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.

Stock-Based Compensation

We periodically issue stock options and restricted stock units to employees and
directors as part of their compensation. We account for stock options and
restricted stock units granted to employees and directors based on the
authoritative guidance provided by the Financial Accounting Standards Board
("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 has been met.

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 our stock option grants is determined using the
Black-Scholes-Merton Option Pricing model, which uses certain assumptions
related to risk-free interest rates, expected volatility, expected life of the
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.

Convertible notes

Distinguishing Liabilities from Equity Instruments Issued
The Company applies the guidance in ASC Topic 480 to determine the
classification of financial instruments issued. The Company first determines if
the instruments should be classified as liabilities under this guidance based on
the redemption features, if mandatorily redeemable or not, and the method of
redemption, if in cash, a variable number of shares or a fixed number of shares.

If the terms proved that an instrument is mandatorily redeemable in cash, or the
holder can compel a settlement in cash, or will be settled in a variable number
of shares predominantly based on a fixed monetary amount, the instrument is
generally classified as a liability. Instruments that are settled by issuing a
fixed number of shares are generally classified as equity instruments.

In some cases, the instruments issued contain settlement features that differ
depending upon the prevailing price of the Company's shares at the date of
settlement. Depending on the share price, the instrument will be settled either
in a manner consistent with ASC Topic 480 liability treatment, by issuing a
variable number of shares based on a fixed monetary amount, or in a manner
consistent with ASC Topic 480 treatment for an equity instrument, by issuing a
fixed number of shares if the share price is above or below certain levels. In
these cases, the Company assesses the likelihood of the various possible
settlement outcomes at the inception of the instrument. The classification of
the instrument is based on the outcome that is more likely than not to occur.
Factors that the Company considers in evaluating the likelihood of the outcomes
include:

?

The terms of the instrument, including its maturity date and the formula for adjustments to the range;



?

The volatility of the Company's stock;



?

The relationship between the price of the Company's stock on the inception date and fixed prices or ranges the low and high end of the original range; and



?

Historical and expected dividend levels.




                                       9


When warrants or similar instruments are issued, the Company applies the
guidance in ASC Topic 815 to determine if the warrants should be classified as
equity instruments or as derivative instruments. Generally, warrants that are
both indexed to the Company's own stock and that would be classified as equity
instruments are not classified as derivative instruments under this guidance. A
key element to consider in determining if a warrant would be considered indexed
to the Company's own stock is if the warrants settlement amount is equal to the
difference between the fair value of a fixed number of equity shares and a fixed
monetary amount. This criterion is sometimes known as the "fixed-for fixed"
criteria. In cases where the fixed for fixed criteria are not met, the warrants
are classified as derivative instruments.

Convertible liabilities are also assessed to determine if they contain a
beneficial conversion feature. A beneficial conversion feature ("BCF") of a
convertible note is normally characterized as the convertible portion feature
that provides a rate of conversion that is below market value or "in-the-money"
when issued. A BCF related to the issuance of a convertible note is recorded as
equity at its intrinsic value at the issue date.

Initial measurement
Instruments are initially measured at fair value. If multiple instruments are
issued together, the aggregate proceeds are allocated first to derivative
instruments or any instrument that will be subsequently accounted for at fair
value and the remainder is allocated to the various instruments based on their
relative fair value.

Subsequent measurement
Instruments initially classified as liabilities are subsequently measured at the
present value of the amount to be paid, either in cash or by issuing a variable
number of shares based on a fixed monetary amount, and at settlement, accruing
interest cost using the rate implicit at inception.

Derivative instruments are recorded at fair value at each reporting period and the variations in fair value are recorded in the consolidated statements of operations and comprehensive loss.

Deferred financing costs and other transaction costs



Deferred financing costs represent commitment fees, legal fees and other costs
associated with obtaining commitments for financing. These fees are amortized as
a component of interest expense over the terms of the respective financing
agreements, including convertible notes, on a straight-line basis. Unamortized
deferred financing fees are expensed in full when the associated debt is
refinanced or repaid before maturity. Costs incurred in seeking financial
transactions that do not close are expensed in the period in which it is
determined that the financing will not be successful. Deferred financing fees
are deducted from their related liabilities on the balance sheet.

Transaction costs associated with the equity portion of convertible notes are reflected as a charge to deficit or as a reduction of accumulated paid-in-capital. The cost of issuing equity is reflected as a reduction of accumulated paid-in-capital.

Foreign Currency Translations and Transactions



The accompanying consolidated financial statements are presented in U.S.
dollars, the functional 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
and loss ("OCI"). As a result, foreign currency exchange fluctuations may impact
operating expenses.

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.


                                       10


From time to time, we may engage in exchange rate hedging activities in an
effort to mitigate the impact of exchange rate fluctuations. As part of our risk
management program, we may enter into foreign exchange forward contracts to lock
in the exchange rates for future foreign currency transactions, which is
intended to reduce the variability of our operating costs and future cash flows
denominated in currencies that differs from our functional currencies. We do not
enter into these contracts for trading purposes or speculation, and our
management believes all such contracts are entered into as hedges of underlying
transactions.

The following table summarizes the exchange rates used:




                                                    Years Ended


                                                    February 29, February 28, February 28,
                                                    2020         2019         2018

Period end Canadian $: US Dollar exchange rate $0.74 $0.76

$0.78

Average period Canadian $: US Dollar exchange rate $0.75 $0.76

$0.78

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

See Notes to the consolidated financial statements included elsewhere in this Form 10-K for management's discussion of recently issued accounting pronouncements.











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