Aduro Clean Technologies : Management Discussion and Analysis for the three and nine months ended February 28 2022 -

ADURO CLEAN TECHNOLOGIES INC. (formerly Dimension Five Technologies Inc.)
Management Discussion & Analysis
For the three and nine months ended February 28, 2022 and 2021
(in Canadian Dollars)
Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three and nine months ended February 28, 2022
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) of Aduro Clean Technologies Inc. (formerly Dimension Five Technologies Inc.) (the “Company”) should be read in conjunction with the Company’s interim condensed consolidated financial statements and notes thereto for the three and nine months ended February 28, 2022 (the “Financial Statements”) and the audited financial statements for the year ended May 31, 2021 and the accompanying notes thereto, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The MD&A has been prepared as of April 27, 2022 pursuant to the disclosure requirements under National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51102″) of the Canadian Securities Administrators (“CSA”).
All dollar amounts are expressed in Canadian dollars. This MD&A contains forward-looking information within the meaning of Canadian securities laws, and the use of non-IFRS measures (the “Non-IFRS Measures”). Refer to “Cautionary Statement Regarding ForwardLooking Statements” and “Cautionary Statement Regarding Certain Non-IFRS Performance Measures” included within this MD&A. This MD&A and the Company’s annual audited financial statements and other disclosure documents required to be filed by applicable securities laws have been filed in Canada on SEDAR Additional information can also be found on the Company’s website at
This MD&A contains “forwardlooking statements” that reflect the Company’s current expectations and projections about its future results. Forward-looking statements are statements that are not historical facts, and include, but are not limited to: estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, capital raising initiatives, the impact of industry and macroeconomic factors on the Company’s operations, and market opportunities; and statements regarding future performance. Any statements contained herein that are not statements of historical fact may be deemed to be forward looking statements, including those identified by the expressions “considers”, “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”, or the negative of these terms or comparable terminology. In this document, certain forward-looking statements are identified by words including “may”, “future”, “expected”, “will”, “intends”, and “estimates”. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. The Company provides no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.
The global pandemic related to an outbreak of the novel coronavirus disease (“COVID19″) has cast uncertainty on each of the underlying assumptions. There can be no assurance that they continue to be valid. The situation is dynamic and the ultimate duration and magnitude of the impact of COVID-19 on the economy and the financial effect on the Company’s business remain unknown at this time. These impacts could include, amongst others, an impact on our ability to obtain debt or equity financing, increased credit risk on receivables, potential future decreases in revenue or profitability of the Company’s ongoing operations.
Forward-looking statements used in this MD&A are subject to various risks, uncertainties and other factors, most of which are difficult to predict and are generally beyond the control of the Company. These risks, uncertainties and other factors may include, but are not limited to, those set forth under “Risks and Uncertainties” below. Forward looking statements in this MD&A include, but are not limited to, the plans of the Company to implement a business model of licensing, royalties and research and development
(“R&D”); the intention of the Company to achieve monetization of its clean energy platform by implementation of its business model, thereby reducing its need for cash while enabling an expedient path to commercialization; the Company’s plan to develop commercial partnerships by means of demonstration projects; the Company’s plans to capitalize on significant growth potential in the clean energy technology sector through the advancement and commercialization of the Company’s proprietary technology; the Company’s plans to continue to raise equity financing in order to execute its business plan, maintain a strong capital base and safeguard the Company’s ability to continue as a going concern such that it can provide future returns for shareholders and benefits for other stakeholders; the Company’s plan to engage potential partners and customers through demonstration projects; the Company’s plan to develop, build and supply a pre-commercial pilot plant to convert waste agricultural polyethylene into high-value products; and the Company’s plan to partner with Brightlands Chemelot Campus.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this MD&A or as of the date otherwise specifically indicated herein. Due to risks, uncertainties and other factors, including the risks, uncertainties and other factors identified above and elsewhere in this MD&A, actual events may differ materially from current expectations and projections. In particular, risk that could change or prevent these statements from coming to fruition include, but are not limited to, that the Company may be unable to implement its business model as anticipated or at all due to a variety of reasons, including lack of future financing and capital, changes in technology or due to competition; the Company may be unable to achieve commercialization of its technology for various reasons; the Company may fail to develop significant commercial partnerships and competitors may offer more attractive products or alternatives; the Company may be unable to engage any potential partners or customers through demonstration projects; the Company may be unable to develop, build and supply a pre-commercial pilot plant to convert waste agricultural polyethylene into high-value products; the Company may not, for various reasons, end up partnering with Brightlands Chemelot Campus as anticipated or at all; the clean energy technology sector may not develop as anticipated or the Company’s technology may otherwise become obsolete; the Company may be unable to raise additional financing in order to advance its business or continue operations until it can generate significant revenues.
The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities law.
The forward-looking statements contained herein are based on information available as of April 27, 2022.
Cautionary Statement Regarding Non-IFRS Performance Measures
This MD&A makes reference to certain Non-IFRS financial measures that are used by management to evaluate the Company’s performance which are commonly used by financial analysts in evaluating the financial performance of companies, including companies in the medical and technology industry. Accordingly, we believe that the Non-IFRS Financial Measures may be useful metrics for evaluating the Company’s financial performance, as they are measures that we use internally to assess the Company’s performance, in addition to IFRS measures. Readers are cautioned that the Non-IFRS Financial Measures do not have a standardized meaning and should not be used in isolation or as a substitute for net (loss) income, cash flows from operating activities or other income or cash flow statement data prepared in accordance with IFRS.
On January 18, 2022, Aduro Energy Inc. (“Aduro”), the Company’s wholly owned subsidiary, achieved the first milestone defined in the securities exchange agreement dated October 22, 2021, as amended (the SEA“) (the “First Milestone“). It occurred upon receipt of a report covering Aduro’s patented chemical conversion technology, issued by Dr. Paul Charpentier, an expert in chemistry and alternative energy applications. Developed and already proven using small, lab-scale batch reactors, the objective of the First Milestone was to demonstrate that Aduro Hydrochemolytic™ technology (HCT) also works in a continuous-flow lab reactor operating as envisioned for commercial systems. In the demonstration, Albertabitumen with an “API gravity” (density) of 14.6 ºAPI was upgraded to lighter petroleum with a density of 19.5 ºAPI, the higher ºAPI corresponding to lower density and higher market value.
The successful operation of HCT in continuous-flow mode provides the foundation for current engineering activities directed toward process scaleup to larger pilot reactors, pre-commercial demonstration systems, and full-scale commercial operations. Results from the First Milestone effort and confirmation by Dr. Charpentier also are the basis for extending HCT to make higher-value products from post-consumer plastics, which also has been proven in lab batch reactors. Together, these advances further validate the Aduro strategy of engaging potential partners and customers through demonstration projects.
On March 29, 2022, the Company announced that it has entered a letter of intent with Switch Energy Corp. (“Switch“) with the purpose of developing, building and supplying a pre-commercial pilot plant to convert waste agricultural polyethylene into high-value products. Switch is a recycler and operator participating in Canada’s agricultural and industrial film recycling program by owning and operating the largest collection program for agricultural waste in the province of Ontario. The purpose is to build a pre-commercial pilot plant in Ontario demonstrating Hydrochemolytic™ Technology for chemical recycling of agricultural and post-consumer plastic waste. The project is a stage gated plan with three main phases. Phase one, which will commence immediately, includes the design and development of a pre-treatment process and unit to handle agricultural waste plastics, test runs, and process optimization, and the provision of the feedstock required. Phase two includes the design, building, and commissioning of the pilot plant. Phase three will detail the framework for expanding the pilot project into a post-pilot commercial phase.
Plans for the pilot are to start with waste polyethylene from agricultural waste followed by polypropylene and then to demonstrate the technological benefits of processing waste polystyrene. The small-scale design represents an opportunity to provide a cost-effective solution to the agricultural waste sector. Harvesting value from this waste resource while avoiding fuel, emissions, and other environmental costs associated with the processing and transporting to centralized facilities, incineration, or landfill. The pilot plant will be scaled at a tons-per-day capacity.
While for this project, the Company is concentrating on agricultural waste which is mainly polyethylene or a single type of waste plastics, the Company anticipate that in the future attention will shift to other chain-growth polymers such as polypropylene or polystyrene.
The Company is looking at a potential partnership with Brightlands Chemelot Campus (“Brightlands“), an international shared innovation community located in Limburg, The Netherlands. The objective of this partnership will be to initiate a project that will likely process a single type of waste polymers such as polyethylene but develop the path for an installation that applies Aduro Hydrochemolytic™ technology to demonstrate, on a tons-per-day scale, the conversion of a mixture of plastics. Brightlands have carried out a comprehensive review of the technology and the conclusion was that there seems to be distinct advantages for the process to operate on a mixture of polymers that otherwise would have been rejected by current traditional approaches such as pyrolysis. Work with Brightlands will focus on demonstrating that capability with the support of the eco systems that is already available on site.
The objective is to develop potential commercial partnerships and customers by means of demonstration projects.
On March 17, 2022, the Company announced a proposed private placement of units for up to $2,000,000. The unit price was $0.70 and each unit is comprised of one common share and one common share purchase warrant. Each warrant entitles the holder to acquire one share at a price of $1.00 for a period of two years from the issue date, subject to acceleration provisions in the event that the Company’s shares have a closing price of $1.25 or greater for a period of ten (10) consecutive trading days that is four months and one day after the issue date whereby the Company may provide notice that the warrants will expire 30 days from the date of providing such notice. The private placement was completed in two tranches on April 8, 2022,and April 27, 2022. The private placement was oversubscribed as 3,360,952 units were issued resulting in gross proceeds of $2,352,666. The Company paid cash finder’s fee of $109,784 resulting in net proceeds of $2,242,882 and issued 153,620 share purchase warrants valued at $47,656 to finders in connection with the closing of this private placement.
The Company was incorporated in the Province of British Columbia on January 10, 2018, under the Business Corporations Act (British Columbia). On February 12, 2019, the Company’s shares commenced trading on the Canadian Securities Exchange (“CSE”) under the symbol “DFT”. On April 27, 2021, in connection with the Transaction (as defined below), the Company’s shares were re-listed on the CSE under the symbol “ACT”. On July 20, 2021, the Company’s shares commenced trading on the OTCQB in the United States under the symbol “ACTHF” and on July 28, 2021, on the Frankfurt Exchange in Germany under the symbol “9D50. On April 23, 2021, the Company closed the transaction with Aduro and Aduro’s security holders whereby the Aduro’s security holders sold their shares to the Company such that all of the issued and outstanding common shares of Aduro are now wholly owned by the Company (the Transaction“). As part of the closing of the Transaction, the Company changed its name to “Aduro Clean Technologies Inc.” from Dimension Five Technologies Inc. and the Company’s shares were relisted under the symbol ACT. From April 23, 2021, the Company’s only activity was as a holding company and its only holding is the investment in Aduro. For additional information on the Transaction, please see the section of this MD&A entitled “Reverse Takeover” below.
Aduro is an early-stage, Ontario-based clean technology company that has developed a highly flexible chemical recycling platform featuring three water-based technologies: Hydrochemolytic Plastics UpcyclingTM (“HPU”), Hydrochemolytic Renewables UpgradingTM (“HRU”) and Hydrochemolytic Bitumen UpgradingTM (“HBU”). As at of today, the Company owns through acquisition and development, three granted and three pending patents.
Aduro’s future business model is based principally on licensing, royalties, and research and development.
However, the Company is still investigating different business models that may be a better fit to its operations. Monetization of the Aduro Clean Technologies platform through licensing model reduces the Company‘s need for cash while enabling a relatively pathway to commercialization that management of the Company believes is relatively straightforward and fast.
Aduro aims to develop commercial partnerships by means of demonstration projects. Management believes the effectiveness of this strategy has been demonstrated to be very effective for securing customer feedstock and funding commitments. Deliverables include reports that detail: the technology; its performance (including yields and mass balance); the key parameters and operational variables including chemical characterization of the feedstock and products; economic considerations covering product value and operational costs; operational considerations, and environmental considerations including GHG footprint and life cycle analysis. Among the intended business benefits are developing long term relations, evaluation of different business models and better understanding of geographical territories behaviors and characteristic.
For the founders of Aduro, Ofer Vicus, Chief Executive Officer (“CEO”), and Marcus Trygstad, Chief Technology Officer, the impetus for the formation of Aduro was the vision to develop hydrothermal upgrading technology (“HTU”) for upgrading heavy oils. But through R&D efforts of its scientists, management of Aduro found that HTU also could be applied beneficially in the seemingly unrelated fields of plastic and tire rubber upcycling and renewable oil upgrading. Moreover, discoveries made while pursuing those new applications provided management with deeper insights into fundamental chemistry, including operating in connection with the original work on heavy oil. From that developed the current, versatile Aduro Hydrochemolytic™ technology platform, which is protected by three patents and three patents pending (the “Intellectual Property”) and is anticipated to yield five academic research papers that are due now in 2023. With support from industry partners as early as 2015, Aduro‘s pre-pilot demonstration
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Aduro Clean Technologies Inc. published this content on 29 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2022 14:06:35 UTC.


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