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 for $445,050 allowing for the depolymerization of polyethylene terephthalate at ambient temperature and atmospheric pressure. The technology is being amortized using the straight-line method over estimated used life of 7 years.

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 of each of the milestones, based on the average production of 20, 30, 60 and 100 metric tons of terephthalic acid by the Company for 20, 30, 60 and 60 operating days, respectively.

As at February 28, 2018, 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$25.7 million, payable as follows: 10% of gross profits on the sale of all products derived by the Company from the technology assigned to the Company, 10% of any license fee paid to the Company in respect of any licensing or other right to use the technology assigned to the Company and granted to a third party by the Assignee 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 assigned to the Company has been granted by the Company or by the third party.;

As at February 28, 2018, the Company had not made any royalty payments under the Intellectual Property Assignment Agreement.

Amortization expense is recorded as an operating expense in the consolidated statements of operations and comprehensive loss and amounted to $63,579 for the years ended February 28, 2018 and 2017. Accumulated amortization amounted to $200,629 as at February 28, 2018 (2017 – $137,050).

Future estimated patent amortization costs are: