4. Prepaid Expenses and Deposits

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

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.