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Intangible Assets, Net

12 Months Ended

Feb. 28, 2019

Finite-Lived Intangible Assets, Net [Abstract]

On October 27, 2014, the Company entered into an Intellectual Property Assignment Agreement with Mr. Hatem Essaddam wherein the Company purchased a certain technique and method, which was used to develop the Generation I (“GEN I”) technology, for $445,050 allowing for the depolymerization of polyethylene terephthalate at ambient temperature and atmospheric pressure. The GEN I technology patent portfolio has two issued U.S. patents and a pending U.S. application expected to expire on or around July 2035. Internationally, we also have an issued patent in Taiwan, an allowed application in the members of the Gulf Cooperation Council, and pending patent applications in Argentina, Australia, Brazil, Canada, China, Eurasia, Europe, Israel, India, Japan, Korea, Mexico, the Philippines, and South Africa, all expected to expire on or around July 2036 if granted. At the date of acquisition, the acquired intangible asset has an estimated useful life of 7 years and was being amortized on a straight-line basis

In addition to the $445,050 paid by the Company under the Intellectual Property Assignment Agreement, the Company is required to make four additional payments of CDN$200,000, totaling CDN$800,000, to Mr. Essaddam within sixty (60) days of attaining each of the following milestones:

the average production of 20 metric tonnes of terephthalic acid by the Company, as a result of the GEN I technology, for 20 operating days;

the average production of 30 metric tonnes of terephthalic acid by the Company, as a result of the GEN I technology, for 30 operating days;

the average production of 60 metric tonnes of terephthalic acid by the Company, as a result of the GEN I technology, for 60 operating days;

the average production of 100 metric tonnes of terephthalic acid by the Company, as a result of the GEN I technology, for 100 operating days.

As at February 28, 2019, none of the milestones had been met, and accordingly no additional payments have been made.

Additionally, the Company is obligated to make royalty payments of up to CDN$25,700,000, based on the GEN I technology, payable as follows:

10% of gross profits on the sale of all products derived by the Company from the technology;

10% of any license fee paid to the Company in respect of any licensing or other right to use the technology that was granted to a third party by the Company; and

5% of any royalty or other similar payment made to the Company by a third party to whom a license or sub-license or other right to use the technology has been granted by the Company or by the third party.

As at February 28, 2019, the Company had not made any royalty payments under the Intellectual Property Assignment Agreement, referred to as the GEN I technology. The Company has determined that it have no intent of commercializing the GEN I technology.

During the year ended February 28, 2019, the Company finalized the development of its next Generation II (“GEN II”) technology and has filed various patents in jurisdictions around the world. On April 9, 2019, the GEN II U.S. patent was formally approved and issued. The GEN II technology patent portfolio has an issued U.S. patent and a pending U.S. application expected to expire on or around September 2037; as well as a PCT application and non-PCT applications in Argentina, Bangladesh, Bolivia, Bhutan, members of the Gulf Cooperation Council, Iraq, Pakistan, Taiwan, Uruguay, and Venezuela, all expected to expire on or around September 2037 if granted. Additionally, we have three pending provisional applications directed to additional aspects of the GEN II technology. Any patents that would ultimately grant from these provisional applications would be expected to expire no earlier than 2039 if granted.

Concurrent with the GEN II development, in June 2018, the Company transitioned to its newly constructed GEN II industrial pilot plant. The GEN II technology forms the basis for the commercialization of the Company into the future.

As a result of the strategic shift away from the GEN I technology, and the development of the GEN II technology during the year ended February 28, 2019, the Company considered the carrying value of its GEN I intangible asset to be impaired and wrote off the remaining balance of its GEN I intangible asset, which amounted to $298,694.

Amortization expense is recorded as an operating expense in the consolidated statements of operations and comprehensive loss and amounted to $59,851 for the year ended February 28, 2019 (2018 - $63,579; 2017 - $63,579).

	As at February 28,			As at February 28,
	2019			2018
Intangible assets, as cost -
beginning of period	$	533,369		$	445,050
Intangible assets, accumulated depreciation -
beginning of period		(200,629	)		(137,050	)
		332,740			308,000

Add: Additions in the year		153,477			88,319
Deduct: Amortization of intangibles		(59,851	)		(63,579	)
Deduct: Impairment of intangibles		(298,694	)		—
	$	127,672		$	332,740