EX-99.1 2 pyrex99d1.htm EX-99.1 pyrex99d1
 
pyrex99d1p1i0
Exhibit 99.1
PYROGENESIS CANADA INC.
ANNUAL INFORMATION FORM
FOR THE YEAR ENDED DECEMBER 31, 2022
Dated March 30, 2023
 
 
 
 
 
 
 
 
 
3
TABLE OF CONTENTS
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Year Ended December 31, 2020
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5.2.
Year Ended December 31, 2021
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Year Ended December 31, 2022
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8.
Description of Capital Structure
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5
1.
 
Explanatory Notes
The
 
information
 
in
 
this
 
annual
 
information
 
form
 
(this
 
“
AIF
”)
 
of
 
PyroGenesis
 
is
 
stated
 
as
 
at
 
December
 
31,
 
2022,
unless otherwise indicated.
For an explanation
 
of the capitalized
 
terms and expressions and
 
certain defined terms, please
 
refer to the
 
“Glossary
of Terms”
 
at the end of this AIF.
In
 
this
 
AIF,
 
unless
 
the
 
context
 
otherwise
 
requires,
 
references
 
to
 
the
 
“Company”
 
or
 
“PyroGenesis”
 
refer
 
to
PyroGenesis Canada Inc. together with its subsidiaries.
In this AIF,
 
unless otherwise indicated,
 
all references to
 
“$” are to Canadian
 
dollars, all references to
 
“US$” are to
U.S. dollars, and all references to “€” are to euros. Amounts
 
are stated in Canadian dollars unless otherwise indicated.
This
 
AIF
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
the
 
information
 
contained
 
in
 
the
 
Company’s
 
consolidated
 
financial
statements
 
and
 
related
 
notes
 
for
 
the
 
year
 
ended
 
December
 
31,
 
2022,
 
and
 
the
 
management’s
 
discussion
 
and
 
analysis
thereon.
The Company has certain proprietary or
 
contractual rights to certain company names, product
 
names, trade names
and
 
trademarks
 
used
 
in
 
this
 
AIF
 
that
 
are
 
important
 
to
 
its
 
business,
 
including
 
PyroGenesis,
 
PYROGENESIS
 
(LOGO),
PYROGENESIS
 
ADDITIVE,
 
PYROGENESIS
 
ADDITIVE
 
(LOGO)
 
PYROGENESIS
 
ALUMINUM,
 
PYRO
 
GREEN-GAS,
PYRO
 
GREEN-GAS
 
(LOGO),
 
SPHEROGENESIS,
 
NEXGEN,
 
DROSRITE,
 
PUREVAP,
 
SPARC,
 
APT,
 
APT-HP,
 
RPT,
MINIGUN, SPT,
 
PPRS and,
 
PAGV.
 
The Company
 
has omitted
 
the registered
 
trademark (®)
 
and trademark
 
(™) symbols
and any other related symbols
 
for such trademarks and
 
all related trademarks, including
 
those related to specific
 
products
or services, when used in this AIF.
2.
 
Forward-Looking Statements
This
 
AIF
 
contains
 
forward-looking
 
statements
 
and
 
forward-looking
 
information
 
(collectively,
 
“
forward-looking
statements
”) within the meaning
 
of applicable securities
 
legislation. All statements
 
other than statements of
 
historical fact
contained in this AIF
 
are forward-looking statements,
 
including, without limitation,
 
the Company’s statements
 
regarding its
products and services; the execution of its growth strategy; relations with suppliers and
 
customers; future financial position;
business strategy; potential acquisitions; potential
 
business partnering; litigation; and plans
 
and objectives. In certain
 
cases,
forward-looking
 
statements
 
can
 
be
 
identified
 
by
 
the
 
use
 
of
 
words
 
such
 
as
 
“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 state that certain actions,
 
events or results “may”, “could”,
 
“would”, “might” or “will
be taken”, “occur” or “be achieved” and similar words or the negative
 
thereof. These forward-looking statements are based
on
 
management’s
 
current
 
expectations
 
and
 
are
 
subject
 
to
 
a
 
number
 
of
 
risks,
 
uncertainties,
 
and
 
assumptions,
 
including
market
 
and
 
economic
 
conditions,
 
business
 
prospects
 
or
 
opportunities,
 
future
 
plans
 
and
 
strategies,
 
projections
 
and
anticipated events
 
and trends
 
that affect
 
the Company
 
and its
 
industry.
 
Although management
 
of the
 
Company believes
that
 
the
 
expectations
 
reflected
 
in
 
such
 
forward-looking
 
statements
 
are
 
reasonable
 
and
 
are
 
based
 
on
 
reasonable
assumptions
 
and
 
estimates
 
as
 
of
 
the
 
date
 
hereof,
 
there
 
can
 
be
 
no
 
assurance
 
that
 
these
 
assumptions
 
or
 
estimates
 
are
accurate or that any of these expectations will prove accurate.
Actual
 
results
 
and
 
developments
 
are
 
likely
 
to
 
differ,
 
and
 
may
 
differ
 
materially,
 
from
 
those
 
anticipated
 
by
 
the
Company and expressed or implied by
 
the forward-looking statements contained in this AIF. Such statements are based on
a number of assumptions and risks which may prove to be incorrect.
 
Important assumptions relating to the forward-looking
statements contained in this AIF include, among other things,
 
assumptions concerning:
•
 
the Company’s business strategies, strategic objectives
 
and growth strategy;
•
 
the Company’s expected production volumes, rates
 
and costs;
•
 
the Company’s current and future capital resources
 
and the need for additional financing;
•
 
the Company’s ability to increase sales from new and existing customers, and the results of the successful
completion of the Company’s current projects;
•
 
management’s expectation that the Company will achieve
 
growth and profitability;
 
6
•
 
the Company’s overall financial performance;
•
 
the Company continuing to maintain sufficient
 
and effective production and research and development;
•
 
there being no significant reduction in the availability of
 
qualified and cost-effective human resources;
•
 
there will be adequate liquidity available to the Company
 
to carry out its operations;
•
 
the Company’s ability to obtain and retain key
 
personnel; and
•
 
the success of intellectual property applications.
By their nature, forward-looking statements require assumptions and are subject to inherent risks and
 
uncertainties
including
 
those
 
discussed
 
herein.
 
There
 
is
 
significant
 
risk
 
that
 
predictions
 
and
 
other
 
forward-looking
 
statements
 
will
 
not
prove
 
to
 
be
 
accurate.
 
Readers
 
are
 
cautioned
 
to
 
not
 
place
 
undue
 
reliance
 
on
 
forward-looking
 
statements
 
made
 
herein
because a
 
number
 
of factors
 
could cause
 
actual future
 
results, conditions,
 
actions
 
or events
 
to differ
 
materially from
 
the
targets, expectations, estimates or intentions expressed in the
 
forward-looking statements.
The future
 
outcomes that
 
relate to
 
forward-looking statements
 
may be
 
influenced by
 
many factors,
 
including, but
not limited to, the risk
 
factors described under
 
the heading “Risk Factors”.
 
The Company cautions that
 
the foregoing list of
factors
 
is
 
not
 
exhaustive,
 
and
 
that,
 
when
 
relying
 
on
 
forward-looking
 
statements
 
to
 
make
 
decisions
 
with
 
respect
 
to
 
the
Company, investors
 
and others should carefully consider these factors, as well as other uncertainties and potential events,
and the inherent uncertainty of forward-looking statements.
Although the forward-looking statements
 
contained in this AIF
 
are based upon
 
what management currently believes
to be reasonable assumptions, the Company cannot assure investors that actual results, performance or achievements will
be
 
consistent
 
with
 
these
 
forward-looking
 
statements
 
and
 
additional
 
risks
 
and
 
uncertainties
 
discussed
 
in
 
the
 
Company’s
materials filed with the
 
Canadian securities regulatory
 
authorities from time
 
to time, available
 
under the Company’s
 
profile
on SEDAR at
 
www.sedar.com and on EDGAR at www.sec.gov. There can be 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.
Accordingly,
 
readers
 
should
 
not
 
place
 
undue
 
reliance
 
on
 
forward-looking
 
statements.
 
Forward-looking
 
statements
 
are
provided
 
as
 
of
 
the
 
date
 
of
 
this
 
AIF,
 
and
 
the
 
Company
 
assumes
 
no
 
obligation
 
to
 
update
 
or
 
revise
 
such
 
forward-looking
statements to reflect new events or circumstances except as
 
required under applicable securities laws.
The
 
forward-looking
 
statements
 
contained
 
in
 
this
 
AIF
 
are
 
expressly
 
qualified
 
in
 
their
 
entirety
 
by
 
this
 
cautionary
statement and are made as of the date of this AIF or such
 
other date specified herein.
3.
 
Market and industry data
Unless otherwise indicated, information contained in
 
this AIF concerning the industry and the
 
markets in which the
Company operates, including
 
its general expectations, market
 
position and market
 
opportunity, is based on information
 
from
industry publications and
 
reports generated by
 
several third parties
 
and management estimates.
 
Unless otherwise indicated,
management estimates are derived from
 
publicly available information released by independent industry
 
analysts and third-
party sources, as well
 
as data from the
 
Company’s internal research, and are
 
based on assumptions made by
 
the Company
based on such data and its knowledge of
 
such industry and markets, which the Company believes to be
 
reasonable. These
industry
 
publications
 
and
 
reports
 
generally
 
indicate
 
that
 
the
 
information
 
contained
 
therein
 
was
 
obtained
 
from
 
sources
believed to
 
be reliable,
 
but do
 
not guarantee
 
the accuracy
 
and completeness
 
of such
 
information. The
 
Company has
 
not
independently verified the
 
data in such
 
publications, reports
 
or resources, and
 
such information is
 
inherently imprecise. In
addition, projections,
 
assumptions and estimates
 
of the Company’s
 
future performance
 
and the future
 
performance of the
industry in which the Company operates are necessarily subject
 
to a high degree of uncertainty and risk due to a variety of
factors, including those described under “Forward-Looking
 
Statements” and “Risk Factors”.
4.
 
Corporate Structure
4.1.
 
Name, Address and Incorporation
PyroGenesis is a corporation
 
governed by the provisions
 
of the Canada Business
 
Corporations Act (“
CBCA
”) and
results from an amalgamation
 
completed on July 11,
 
2011,
 
under the CBCA, of Industrial
 
Growth Income Corporation
 
and
PyroGenesis
 
Canada
 
Inc.,
 
a
 
predecessor
 
entity
 
incorporated
 
on
 
June
 
5,
 
2006,
 
to
 
form
 
the
 
Company.
 
Prior
 
to
 
the
 
7
amalgamation,
 
which
 
constituted
 
its
 
qualifying
 
transaction,
 
Industrial
 
Growth
 
Income
 
Corporation
 
was
 
a
 
capital
 
pool
company listed on the TSX-
V.
The Company’s head and registered
 
office is located at 1744
 
William Street, Suite 200,
 
Montréal, Québec, Canada,
H3J 1R4.
4.2.
 
Subsidiaries
On
 
August
 
11,
 
2021,
 
PyroGenesis
 
acquired
 
all
 
of
 
the
 
issued
 
and
 
outstanding
 
shares
 
of
 
Pyro
 
Green-Gas
 
Inc.
(formerly AirScience Technologies
 
Inc.) (“
Pyro Green-Gas
”), a private corporation incorporated under the laws of Canada.
Pyro Green-Gas has three subsidiaries: 1) AirScience
 
Technologies
 
Pvt. Ltd., a private corporation incorporated under the
laws of India;
 
2) AirScience Italia
 
S.r.l., a
 
private corporation incorporated
 
under the laws of
 
Italy; and 3)
 
Alga-Labs Inc., a
private corporation
 
incorporated under
 
the laws
 
of Canada.
 
Pyro Green-Gas
 
owns 99.99%
 
of the
 
issued and
 
outstanding
shares of
 
AirScience
 
Technologies
 
Pvt. Ltd.
 
and
 
90.00%
 
of the
 
issued
 
and outstanding
 
shares
 
of AirScience
 
Italia
 
S.r.l.
Alga-Labs Inc. is a wholly owned subsidiary of Pyro Green-Gas.
5.
 
General Development of the Business
The following is a summary of the significant events
 
that have influenced the general development
 
of the business
of the Company over the last three completed years.
5.1.
 
Year Ended December 31,
 
2020
Business Highlights and Milestones
On
 
March
 
4,
 
2020,
 
the
 
Company
 
announced
 
the
 
successful
 
completion
 
testing
 
of
 
a
 
900
 
kilowatts
 
plasma
 
torch
system valued
 
at more
 
than
 
$1,000,000
 
which had
 
been installed
 
pursuant
 
to an
 
agreement
 
entered
 
into
 
on January
 
7,
2019, between the Company and RISE Energy Technology
 
Center AB, a Swedish company.
On March 24,
 
2020, the Company announced it
 
had received the first
 
payment of approximately $1.44
 
million under
the
 
Drosrite
 
International
 
Exclusive
 
Agreement
 
dated
 
August
 
29,
 
2019,
 
between
 
Drosrite
 
International
 
LLC
 
(“
Drosrite
International
”), a US-based company,
 
and PyroGenesis (the “
Drosrite International Exclusive
 
Agreement
”). Under the
terms
 
of
 
this
 
agreement,
 
Drosrite
 
International
 
had
 
received
 
the
 
required
 
rights
 
from
 
PyroGenesis
 
to
 
perform
 
Drosrite
International’s obligations under a 2019 agreement it had entered into with
 
Radian Oil & Gas Services Company, an oil and
gas services company
 
operating in the
 
Middle East (the
 
“
Dross Processing Service
 
Agreement
”). For more
 
information
on the Drosrite
 
International Exclusive Agreement, the
 
Dross Processing Services Agreement,
 
and the relationship
 
between
Drosrite International and PyroGenesis, see “Directors
 
and Executive Officers - Conflicts of Interest”.
 
On April 30, 2020, PyroGenesis announced it
 
had successfully completed the first phase of
 
a multi-phase modeling
contract with a
 
client that
 
aimed at
 
evaluating the
 
performance of
 
PyroGenesis’ proprietary
 
torches in an
 
existing iron
 
ore
industrial furnace. On
 
September 1,
 
2020, the
 
Company announced the
 
completion and acceptance
 
of its
 
modeling contract,
which demonstrated that replacing fossil fuel burners with PyroGenesis’ proprietary
 
plasma torches could play a significant
role
 
in
 
reducing
 
the
 
client’s
 
greenhouse
 
gas
 
(“
GHG
”)
 
emissions
 
and
 
assist
 
the
 
client
 
in
 
attaining
 
its
 
GHG
 
reduction
objectives.
On June 11, 2020, the Company
 
announced it had signed a second multi-phase torch modeling contract, aimed
 
at
evaluating the
 
performance of
 
PyroGenesis’ proprietary
 
torches in
 
an existing
 
iron ore
 
industrial furnace
 
with the
 
goal of
replacing existing fossil fuel burners with PyroGenesis’ plasma
 
torches.
On August 18, 2020, the Company announced the realization of a development agreement with HPQ Nano Silicon
Powders Inc.
 
(“
HPQ Nano
”), a
 
wholly owned
 
subsidiary of
 
HPQ Silicon
 
Resources Inc.
 
(“
HPQ
”), which
 
aims to
 
transform
silicon
 
into
 
spherical
 
silicon
 
nano
 
powders
 
and
 
nanowires
 
for
 
use
 
in
 
lithium-ion
 
batteries.
 
The
 
agreement,
 
valued
 
at
approximately
 
$3,000,000,
 
includes
 
royalty
 
rights
 
on
 
the
 
future
 
sales
 
of
 
nano
 
silicon
 
powders
 
and
 
wires
 
by
 
HPQ
 
Nano,
royalty rights that can be converted by PyroGenesis into
 
a 50% ownership stake in HPQ Nano.
On September
 
4, 2020,
 
the Company
 
announced an
 
$11.5
 
million contract
 
to provide
 
waste destruction
 
systems
for two US Navy ships.
 
8
On
 
September
 
22,
 
2020,
 
the
 
Company
 
announced
 
a
 
business
 
initiative
 
to
 
increases
 
its
 
presence
 
as
 
an
 
on-site
processor of aluminum dross, with the aim to reduce landfill waste, reduce harmful GHG emissions, and recover aluminum
while minimizing the creations of potentially toxic minerals.
On November
 
24, 2020,
 
the Company
 
announced it
 
had signed
 
a plasma
 
torch contract
 
to provide
 
one high
 
powered
(approximately one
 
megawatt) plasma
 
torch with
 
ancillary equipment
 
to a
 
major iron
 
ore producer
 
in connection
 
with the
pelletization process.
On December 16,
 
2020, the Company
 
announced it had
 
signed an addition
 
al contract with
 
a US-based
 
tunneling
client to design, manufacture, test, and supply a plasma torch system
 
tailored for tunneling.
Corporate Developments and Financings
On March
 
18, 2020,
 
the Company
 
completed a
 
$903,000 non-brokered
 
secured convertible
 
loan with
 
Fiducie de
Crédit Mellon Trust (the “
Pascali Trust
”), a trust of which Company’s Chief Executive Officer, P.
 
Peter Pascali, is a trustee,
officer
 
and
 
beneficiary
 
(the
 
“
2020 Convertible
 
Loan
”).
 
The
 
2020
 
Convertible
 
Loan
 
bore
 
interest
 
at
 
the
 
rate
 
of
 
12%
 
per
annum, with interest
 
payable in cash
 
on a quarterly
 
basis, had a
 
September 17, 2021,
 
maturity date,
 
and was convertible
into common
 
shares of
 
the Company
 
at a
 
conversion price
 
of $0.28
 
per common
 
share. The
 
2020 Convertible
 
Loan was
secured
 
by
 
a
 
hypothec
 
on
 
the
 
universality
 
of
 
all
 
of
 
the
 
present
 
and
 
after
 
acquired
 
moveable
 
property
 
and
 
assets
 
of
 
the
Company.
 
The
 
2020
 
Convertible
 
Loan
 
was
 
subsequently
 
converted
 
in
 
common
 
shares
 
in
 
accordance
 
with
 
its
 
terms
 
on
September 30, 2020, resulting
 
in 3,225,000 common shares
 
being issued. As the
 
2020 Convertible Loan was
 
provided by
the Pascali Trust,
 
the 2020 Convertible Loan
 
constituted a “related party
 
transaction” as defined in
 
MI 61 101. The
 
related
party transaction was exempt from
 
the formal valuation and minority
 
approval requirements of MI 61-101,
 
as the transaction
had
 
a
 
value
 
of
 
less
 
than
 
25%
 
of
 
the
 
Company’s
 
market
 
capitalization
 
(calculated
 
in
 
accordance
 
with
 
MI
 
61-101).
 
The
transaction was unanimously
 
approved by the
 
board of directors
 
of the Company.
 
See “Directors and
 
Executive Officers -
Conflicts of Interest”.
On July 28,
 
2020, the Company
 
requested that
 
the Pascali Trust
 
convert the
 
2020 Convertible
 
Loan on or
 
before
September 30, 2020.
 
The Pascali Trust
 
agreed to such
 
request subject to
 
the prepayment of
 
5 years rent,
 
plus estimated
yearly municipal taxes, no
 
later than December 31,
 
2020, for a
 
total prepayment of $1,438,530.
 
As a result
 
of the conversion
of the 2020 Convertible Loan, the Company saved approximately $110,000 of interest payments that would otherwise have
been
 
required
 
to
 
be
 
paid
 
under
 
the
 
2020
 
Convertible
 
Loan.
 
The
 
agreement
 
with
 
the
 
Pascali
 
Trust
 
in
 
respect
 
of
 
the
prepayment
 
of
 
rent
 
constituted
 
a
 
“related
 
party
 
transaction”
 
as
 
defined
 
in
 
MI
 
61101.
 
The
 
related
 
party
 
transaction
 
was
exempt from the formal
 
valuation and minority
 
approval requirements of
 
MI 61-101, as
 
the transaction had
 
a value of less
than
 
25%
 
of
 
the
 
Company’s
 
market
 
capitalization
 
(calculated
 
in
 
accordance
 
with
 
MI
 
61-101).
 
The
 
transaction
 
was
unanimously
 
approved
 
by
 
the
 
board
 
of
 
directors
 
of
 
the
 
Company.
 
See
 
“Directors
 
and
 
Executive
 
Officers
 
-
 
Conflicts
 
of
Interest”.
On September 1,
 
2020, PyroGenesis announced that it
 
had acquired 4,000,000 units
 
of HPQ in
 
a private placement
at a
 
price of
 
$0.60 per
 
unit for
 
a total
 
investment $2.4
 
million. Each
 
unit consists
 
of one
 
common share
 
of HPQ
 
and one
common share of HPQ purchase warrant. Each warrant entitles the Company to purchase one common share of HPQ at a
price of $0.61 for a period of 36 months following the
 
issue date.
On September
 
22, 2020,
 
at the
 
Company’s
 
annual general
 
meeting, the
 
five then
 
current members
 
of the
 
Board
were
 
re-elected
 
and
 
two
 
additional
 
nominees,
 
Ms.
 
Rodayna
 
Kafal
 
and
 
Mr.
 
Rodney
 
Beveridge,
 
were
 
also
 
elected
 
to
 
the
Board.
On
 
November
 
10,
 
2020,
 
the
 
Company
 
closed
 
a
 
bought-deal
 
short
 
form
 
prospectus
 
offering
 
(the
 
“
2020
 
Public
Offering
”) pursuant to an underwriting agreement dated October 20, 2020, entered into between the
 
Company and Mackie
Research
 
Capital
 
Corporation,
 
as
 
sole
 
underwriter
 
and
 
sole
 
bookrunner.
 
Under
 
the
 
2020
 
Public
 
Offering,
 
the
 
Company
issued 3,354,550 units of the
 
Company (“
2020 Units
”) at a price of
 
$3.60 per unit for
 
aggregate proceeds of $12,076,380,
including the
 
full exercise
 
of the
 
over-allotment option
 
by the
 
underwriter.
 
Each unit
 
is comprised
 
of one
 
Common Share
and one-half of one Common Share
 
purchase warrant. Each whole warrant (a
 
“
2020 Public Offering Warrant
”) entitles the
holder thereof to purchase one additional Common Share at an exercise price of $4.50. The 2020 Public Offering Warrants
are governed by
 
a warrant indenture
 
dated November 10,
 
2020 (the “
2020 Warrant
 
Indenture
”). On March
 
15, 2021, the
Company announced
 
its exercise
 
of its
 
right under
 
the 2020
 
Warrant
 
Indenture to
 
accelerate the
 
expiry date
 
of the
 
2020
Public Offering
 
Warrants
 
to April
 
14, 2021.
 
The Company
 
paid the
 
underwriter
 
a
 
cash commission
 
equal to
 
6.5% of
 
the
gross proceeds of the 2020 Public
 
Offering and issued it an
 
aggregate of 191,414 non-transferable
 
compensation options,
which were
 
exercisable into
 
2020 Units
 
at a
 
price of
 
$3.60 per
 
unit at
 
any time
 
up to
 
24 months
 
from closing
 
of the
 
2020
Public Offering.
 
9
On November 20, 2020, the
 
Common Shares commenced trading
 
on the TSX under the
 
trading symbol “PYR”, at
which time the Common Shares were delisted from the
 
TSX-
V.
On December 22,
 
2020, PyroGenesis announced
 
it had submitted
 
a formal application
 
to list its
 
Common Shares
on the NASDAQ.
5.2.
 
Year Ended December 31,
 
2021
Business Highlights and Milestones
On March 17, 2021, PyroGenesis announced that it
 
had received a grant from the Quebec
 
Ministry of the Economy
and Innovation to fund a project aimed at developing
 
a solution to recover residues of spent pot lining,
 
which are produced
in the primary aluminum industry and are considered harmful.
On April 8, 2021, PyroGenesis announced the appointment of
 
Ms. Nannette Ramsey as an independent director.
On
 
April
 
19,
 
2021,
 
PyroGenesis
 
unveiled
 
that
 
its
 
additive
 
manufacturing
 
NEXGEN
 
powder
 
production
 
line
 
was
operational and
 
producing
 
powders. PyroGenesis’
 
NEXGEN
 
plasma
 
atomization
 
system has
 
recorded
 
a production
 
rate
exceeding 25 kg/h, surpassing all published plasma-atomized
 
production rates for titanium known to the Company.
On May 27, 2021, PyroGenesis announced that it had received a
 
grant from Sustainable Development Technology
Canada for
 
the financing
 
of the
 
development of
 
a novel
 
production
 
process to
 
transform
 
quartz into
 
fumed silica
 
using a
plasma
 
reactor,
 
reducing
 
hazardous
 
waste
 
and
 
GHG
 
emissions
 
attributed
 
to
 
the
 
established
 
fumed
 
silica
 
production
process.
 
On July 6, 2021, PyroGenesis
 
announced the signature of a
 
contract valued at approximately
 
$4 million with HPQ
Silica Polvere
 
Inc. (“
HPQ Polvere
”), a
 
wholly owned
 
subsidiary of
 
HPQ. Under
 
this contract,
 
PyroGenesis was
 
tasked to
design, develop and manufacture a
 
novel one-step plasma-based reactor and
 
process for the conversion
 
of quartz to fumed
silica.
 
The
 
contract
 
includes
 
annual
 
royalty
 
payments
 
by
 
HPQ
 
Polvere
 
to
 
PyroGenesis
 
on
 
future
 
sales
 
arising
 
from
 
the
project and PyroGenesis may,
 
at any time, convert said royalties into a 50% ownership stake
 
in HPQ Polvere.
On August 17,
 
2021, the Company
 
announced the signing
 
of a
 
$1.2 million contract
 
for two
 
air plasma torch
 
systems
with an existing Asian client. These torches are to be incorporated
 
into the client’s medical waste destruction
 
systems.
On
 
September
 
22,
 
2021,
 
PyroGenesis
 
announced
 
that
 
Pyro
 
Green-Gas
 
had
 
been
 
selected
 
to
 
supply
 
its
 
landfill
biogas purification system
 
to Carbonaxion Bioénergies Inc.,
 
the promoter of
 
the GNR Neuville
 
project, which is
 
being carried
out at the environmental complex of the Régie régionale
 
de gestion des matières résiduelles de Portneuf.
On October 19, 2021, PyroGenesis announced that
 
it had been awarded an Innovative Solutions Canada
 
phase 2
(prototype development) contract to develop a unique hybrid ceramic powder processing system for the National Research
Council Canada, Canada’s largest federal research
 
and development organization.
On
 
October
 
20,
 
2021,
 
PyroGenesis
 
announced
 
the
 
creation
 
PyroGenesis
 
Aluminum,
 
a
 
new
 
division
 
bringing
together PyroGenesis’
 
aluminum industry
 
offerings to
 
provide the
 
following primary
 
products and
 
services:
 
i) DROSRITE
sales and tolling services; ii) conversion
 
of dross residues into valuable chemicals; iii)
 
upstream applications where plasma-
based solutions
 
are expected
 
to reduce
 
GHG emissions;
 
iv) high
 
powered plasma
 
torches geared
 
to replacing
 
fossil fuel
burners; and v) conversion of spent pot lining residues
 
into a valuable end-product.
On October
 
28, 2021,
 
PyroGenesis announced that
 
it had
 
been selected
 
to provide
 
a $9.2
 
million land-based system
to destroy
 
perfluoroalkyl and
 
polyfluoroalkyl substances.
 
The Company
 
would provide
 
its plasma
 
based thermal
 
process
equipment in a two-phase
 
project geared toward providing
 
a land-based system
 
to destroy these substances.
 
On October
7, 2022, the Company announced that contract negotiations had
 
been suspended and discontinued.
On December
 
8, 2021,
 
PyroGenesis announced
 
the launch
 
of a
 
new zero-carbon
 
emission hydrogen
 
production
project
 
which
 
aims
 
to
 
compete
 
with
 
conventional
 
technologies
 
to
 
produce
 
an
 
environmentally
 
friendly
 
hydrogen.
 
If
successful,
 
PyroGenesis’
 
new
 
hydrogen
 
production
 
technology
 
would
 
convert
 
methane
 
to
 
hydrogen,
 
thereby
 
creating
 
a
zero-carbon emission hydrogen.
 
10
Corporate Developments and Financings
During the year, the Company repurchased and cancelled 840,094 common shares at a weighted average price of
$4.96 per share, for total cash considerations of $4,183,617,
 
including commissions of $16,678.
On January 12, 2021, PyroGenesis announced
 
that it intended to implement a normal
 
course issuer bid according
to which the Company could purchase
 
over a twelve-month period up
 
to 5,000,000 common shares (approximately
 
3.14%
of the then issued and outstanding).
On March 3, 2021, PyroGenesis announced the appointment
 
of Mr. Ben Naccarato
 
as an independent director.
On March 10,
 
2021, the Company
 
announced that
 
its application to
 
list its Common
 
Shares on the
 
NASDAQ had
been approved. Trading commenced on March 11, 2021, under the ticker symbol “PYR” and trading of its Common Shares
ceased to be traded on the OTCQB. In connection with the NASDAQ listing, the Company
 
announced that, to maintain the
overall
 
independence
 
of
 
the
 
Board
 
of
 
Directors,
 
Mr.
 
Michael
 
Blank
 
resigned
 
as
 
a
 
director
 
and
 
member
 
of
 
the
 
Audit
Committee but would continue to serve as the Company’s
 
acting Chief Financial Officer.
On August
 
11,
 
2021, PyroGenesis
 
finalized
 
its strategic
 
acquisition
 
of Pyro
 
Green-Gas
 
and its
 
subsidiaries
 
for a
total cash
 
consideration of approximately
 
$4.4 million. Montreal-based
 
Pyro Green-Gas designs
 
and builds
 
(i) gas upgrading
systems to convert
 
biogas into renewable
 
natural gas (“RNG”), (ii)
 
pyrolysis-gas purification systems, (iii)
 
biogas and landfill-
gas flares
 
and thermal
 
oxidizers, and
 
(iv) systems
 
for the
 
purification of
 
coke-oven gas
 
(a by-product
 
in the
 
primary steel
industry arising from
 
the conversion of coal
 
into coke) into high
 
purity hydrogen. Pyro
 
Green-Gas is also known
 
for its line
of landfill gas flares which reduce GHG emissions from
 
landfills.
On September 20, 2021, PyroGenesis announced that it had been added to the FTSE
 
Global Total
 
Cap Index and
FTSE Global
 
Micro Cap
 
Index. The
 
FTSE Global
 
Total
 
Cap Index
 
is a
 
market-capitalization
 
weighted index
 
representing
the performance of
 
large, mid and
 
small cap stocks,
 
across emerging and
 
developed companies.
 
The FTSE Global
 
Micro
Cap
 
Index
 
provides
 
deep
 
representation
 
of
 
micro
 
cap
 
stocks.
 
Both
 
indexes
 
are
 
used
 
as
 
the
 
basis
 
for
 
performance
benchmarks and investment products, such as funds, derivatives, and
 
exchange-traded funds by investment professionals
globally.
On September 27,
 
2021, PyroGenesis announced the
 
appointment of Mr. Andre Mainella,
 
as Chief Financial
 
Officer
(CFO) of the Company.
5.3.
 
Year Ended December 31,
 
2022
Business Highlights and Milestones
On February 2, 2022,
 
PyroGenesis announced the
 
receipt of a US$3,000,000
 
purchase order for
 
the first of
 
three
10-tonne DROSRITE systems from an existing client.
On February 7,
 
2022, PyroGenesis
 
announced that
 
it had signed
 
an agreement
 
with a European
 
research center
for the
 
sale
 
of a
 
plasma
 
torch
 
system which
 
will
 
be used
 
to develop
 
a process
 
to convert
 
hydrocarbons,
 
including GHG
producing gases such as methane, into non-hazardous
 
chemicals.
On April
 
25, 2022,
 
PyroGenesis confirmed
 
that the
 
Company’s DROSRITE
 
dross recovery
 
technology (a
 
total of
seven DROSRITE systems) had been successfully commissioned
 
for Ma’aden Aluminum.
On May
 
19, 2022,
 
PyroGenesis announced
 
that it
 
had completed
 
a commercial
 
order for
 
titanium powders.
 
The
order
 
derived
 
from
 
the
 
Company’s
 
partnership
 
agreement
 
with
 
Aubert
 
&
 
Duval,
 
a
 
multinational
 
specializing
 
in
 
upscale
metallurgy,
 
and
 
the
 
powder
 
in
 
question
 
was
 
produced
 
at
 
PyroGenesis’
 
production
 
facility
 
using
 
its
 
NexGen
 
plasma
atomization system.
On
 
September
 
7,
 
2022,
 
the
 
Company
 
announced
 
that
 
it
 
had
 
been
 
selected
 
by
 
an
 
international
 
producer
 
of
magnesium metal, to
 
test PyroGenesis’
 
zero-emission plasma torches as
 
part of their
 
process for transforming mining
 
waste
and recycled minerals into high-value metal.
On October
 
6, 2022,
 
PyroGenesis
 
confirmed
 
that
 
its Gen3
 
PUREVAP
 
Quartz
 
Reduction
 
Reactor pilot
 
plant had
completed the
 
month-long power-up
 
process and
 
was initiating
 
the testing
 
phase of
 
its transformation
 
of quartz
 
into high
 
11
purity
 
silicon.
 
The
 
plant
 
is
 
designed
 
to
 
produce
 
multiple
 
systems
 
that
 
can
 
operate
 
under
 
harsh
 
conditions,
 
including
 
at
extremely high temperatures and under vacuum.
On November 2, 2022, PyroGenesis announced that it had passed its annual quality audit for two key international
standards: ISO 9001:2015, and AS9100D.
 
The audits encompassed all of
 
PyroGenesis’ facilities for the purpose
 
of meeting
compliance with the existing quality management designations.
On November 10, 2022, PyroGenesis
 
announced that it had successfully
 
produced hydrogen from methane
 
using
zero-carbon emission hydrogen production technology.
Corporate Developments and Financings
On October
 
19, 2022, PyroGenesis
 
announced the
 
completion of
 
a non-brokered
 
private placement
 
consisting of
the issuance and
 
sale of 1,014,600
 
units of the
 
Corporation at a
 
price of $1.30
 
per unit, for
 
gross proceeds of
 
$1,318,980
to the Company.
 
Each unit consisted
 
of one Common
 
Share and one
 
warrant entitling the
 
holder thereof to
 
purchase one
Common Share at a price of $1.75 until October 19, 2024.
On November 22,
 
2022, PyroGenesis received
 
a notice (“Notice”)
 
from the NASDAQ
 
stating that the
 
Company is
not in compliance
 
with the
 
minimum bid
 
price requirement
 
(“Minimum Bid
 
Requirement”) of
 
US$1.00 per
 
share under
 
the
NASDAQ Listing
 
Rule 5550(a)(2) based
 
upon the
 
closing bid
 
price of
 
the Company’s Common
 
Shares for
 
the 30
 
consecutive
business days prior
 
to the date
 
of the Notice.
 
The Notice has
 
no immediate effect
 
on the listing
 
or trading of
 
the Common
Shares on NASDAQ,
 
and the Company’s
 
operations are not
 
affected by the
 
receipt of the
 
Notice. Under NASDAQ
 
Listing
Rule
 
5810(c)(3)(A),
 
the
 
Company
 
had
 
180
 
calendar
 
days
 
from
 
the
 
date
 
of
 
the
 
Notice,
 
or
 
until
 
May
 
22,
 
2023,
 
to
 
regain
compliance with the Minimum Bid Requirement, during which time the Common Shares will continue to trade on NASDAQ.
If at
 
any time
 
before May 22,
 
2023, the bid
 
price of
 
the Common Shares
 
closes at
 
or above
 
US$1.00 per share
 
for a minimum
of 10 consecutive business days, the Company will regain compliance with the Minimum Bid Requirement.
 
If the Company
does
 
not
 
regain
 
compliance
 
with
 
the
 
Minimum
 
Bid
 
Requirement
 
by
 
May
 
22,
 
2023,
 
the
 
Company
 
may
 
be
 
eligible,
 
upon
satisfaction of certain NASDAQ listing
 
requirements, for an additional
 
period of 180 calendar days
 
to regain compliance or
the
 
Common
 
Shares
 
may
 
be
 
subject
 
to
 
delisting
 
from
 
NASDAQ.
 
The
 
Company
 
will
 
closely
 
monitor
 
the
 
situation
 
and
 
is
considering various strategies to regain compliance with the Minimum
 
Bid Requirement under the Nasdaq Listing Rules.
5.4.
 
Recent Developments
On January
 
10,
 
2023,
 
PyroGenesis
 
announced
 
a contract
 
to provide
 
its SPARC™
 
refrigerant
 
waste destruction
system to
 
a subsidiary
 
of The
 
Trust
 
for the
 
Destruction of
 
Synthetic Refrigerants,
 
a New
 
Zealand government
 
-mandated
organization. The project,
 
initially valued at $6
 
million, aims to assist
 
New Zealand in its
 
stated goals of reducing
 
synthetic
gas emissions by 25% no later than 2035.
 
On January 12, 2023, PyroGenesis announced
 
an initial contract with a
 
major European multinational chemical, oil,
and gas conglomerate to assess the
 
applicability of PyroGenesis’ plasma torches for use
 
in the client’s chemical production
process.
On
 
January
 
17,
 
2023,
 
PyroGenesis
 
announced
 
that
 
Pyro
 
Green-Gas
 
signed
 
a
 
contract
 
with
 
a
 
North
 
American
lithium-ion battery
 
recycler
 
for the
 
delivery of
 
a system
 
to decontaminate
 
the dust
 
generated during
 
the battery
 
recycling
process.
On February
 
8, 2023,
 
PyroGenesis announced
 
that Mr.
 
Alan Curleigh
 
is returning
 
to lead
 
PyroGenesis’ Board
 
of
Directors
 
as
 
Chair.
 
Mr.
 
P.
 
Peter
 
Pascali
 
stepped
 
down
 
as
 
Chair
 
and
 
will
 
continue
 
to
 
serve
 
as
 
Chief
 
Executive
 
Officer,
President and Director of PyroGenesis. The Board now
 
has eight directors, of whom six are independent.
On March 8, 2022,
 
PyroGenesis announced the
 
completion of a non-brokered
 
private placement consisting
 
of the
issuance and sale
 
of 5,000,000 units
 
of the Company
 
at a price of
 
$1.00 per unit, for
 
gross proceeds of $5,000,000
 
to the
Company. Mr. Pascali subscribed to 2,500,000
 
Units under the
 
private placement. Each
 
unit consists of
 
one Common Share
and one warrant entitling the holder to purchase one Common Share at a price of $1.25
 
until March 7, 2025. The Common
Shares
 
and
 
warrants
 
issued
 
in
 
connection
 
with
 
the
 
private
 
placement
 
as
 
well
 
as
 
the
 
Common
 
Shares
 
underlying
 
the
warrants are subject to a hold period of four months and one day
 
from the date of closing.
 
12
6.
 
Business of the Company
6.1.
 
General
 
PyroGenesis
 
is
 
a
 
high-tech
 
company
 
and
 
a
 
leader
 
in
 
the
 
design,
 
development,
 
manufacture,
 
and
commercialization
 
of
 
advanced
 
plasma
 
processes
 
and
 
sustainable
 
solutions
 
aimed
 
at
 
reducing
 
GHG
 
and
 
providing
economically
 
attractive
 
alternatives
 
to
 
conventional
 
“dirty”
 
processes.
 
PyroGenesis
 
has
 
created
 
proprietary,
 
patented,
advanced
 
plasma
 
technologies
 
that
 
are
 
being
 
vetted
 
and
 
adopted
 
by
 
industry
 
leaders
 
in
 
five
 
markets:
 
(i)
 
iron
 
ore
pelletization; (ii) aluminum; (iii) waste management; (iv)
 
steel making; and (v) additive manufacturing.
With a team of experienced engineers, scientists and technicians working at its Montreal head office and 3,800 m2
and 2,940 m2
 
manufacturing facilities, the
 
Company endeavours to
 
continuously innovate and provide
 
original and inventive
cleantech products to the marketplace. Its core competencies allow PyroGenesis to provide plasma torches, plasma waste
processes, high-temperature metallurgical
 
processes, and additive manufacturing
 
powders to the global
 
marketplace. The
operations of PyroGenesis are ISO 9001 and AS9100D
 
certified.
6.2.
 
Products and Services
The Company’s specialized products and
 
services are commercialized to
 
customers operating in a
 
wide range of industries,
including
 
the
 
defense,
 
metallurgical,
 
mining,
 
advanced
 
materials
 
(including
 
3D
 
printing),
 
oil
 
&
 
gas,
 
and
 
environmental
industries. The products and services of PyroGenesis
 
include:
•
 
Plasma torches systems, used for, among other things, replacing conventional burners in pelletizing of iron
ore furnaces (mining sector) and other industrial furnaces
 
(mainly metallurgy sector);
•
 
Waste destruction and waste-to-energy systems,
 
offered predominantly to customers in the environmental
and defense industries, and for the destruction of end-of-life
 
refrigerants;
•
 
Systems for
 
the recovery
 
of aluminum
 
and other
 
metal from
 
dross (a
 
residue
 
generated by
 
primary and
secondary metal producers), offered mainly to customers
 
in the mining and metallurgical industries;
•
 
Production
 
of
 
high
 
purity
 
spherical
 
metal
 
powders,
 
which
 
are
 
predominantly
 
offered
 
to
 
customers
 
in
 
the
additive manufacturing (also known sometimes as 3D printing)
 
industry;
•
 
Development
 
of
 
processes
 
to
 
produce
 
high
 
purity
 
silicon
 
metals,
 
nano
 
powders
 
and
 
nanowires,
 
offered
predominantly
 
to
 
customers
 
in
 
the
 
mining
 
and
 
metallurgical
 
industries
 
as
 
well
 
as
 
those
 
in
 
the
 
battery
manufacturing and/or disposal business;
•
 
Systems
 
for
 
upgrading
 
of
 
biogas
 
and
 
landfill
 
gas
 
into renewable
 
natural
 
gas,
 
used
 
in
 
the
 
environmental
industry;
•
 
Systems
 
used
 
in
 
the
 
petrochemical
 
and
 
metallurgical
 
industries
 
for
 
the
 
purification
 
of
 
industrial
 
gases,
including
 
the
 
extraction
 
of
 
hydrogen
 
from
 
coke
 
oven
 
gas,
 
the
 
purification
 
of
 
natural
 
gas
 
into
 
high
 
purity
methane, and the purification of pyrolytic gases;
•
 
Development of a process to produce fumed silica, used
 
in the polymer, cosmetics,
 
and paint industries;
•
 
Installation, commissioning, and start-up services; and
•
 
Internally and externally funded research and development
 
projects.
Plasma Torches for Iron Ore Pelletization
PyroGenesis
 
manufactures
 
and
 
commercializes
 
proprietary
 
plasma
 
torches
 
and
 
plasma
 
torch
 
systems
 
used
 
to
replace fossil
 
fuel burners
 
in industrial
 
iron ore
 
pelletization process.
 
The Company’s
 
plasma torches
 
can heat
 
gas up
 
to
10,000°F,
 
which is as hot as the surface of the sun.
Pelletization is the
 
process in which
 
iron ore fines
 
are agglomerated into
 
small balls with
 
some additives and
 
then
heated
 
at
 
high
 
temperatures
 
in
 
an
 
induration
 
furnace
 
to
 
make
 
them
 
more
 
resistant.
 
The
 
resulting
 
pellets
 
are
 
then
 
used
 
 
 
 
13
downstream and typically on a different site to make iron and steel in blast furnaces
 
and in direct reduction of iron (DRI). In
conventional technology,
 
the process
 
heat is
 
provided by
 
fuel oil or
 
natural gas
 
burners. The
 
combustion of
 
fossil fuels
 
in
these burners results in the production
 
of GHGs, notably carbon dioxide. Because plasma
 
torches use renewable electricity
to generate heat, they offer an environmentally
 
attractive alternative to fossil fuel burners.
The objective of
 
the Company is
 
to be
 
a significant player
 
in the
 
world-wide movement to
 
reduce the carbon
 
footprint
in mining and
 
manufacturing. PyroGenesis
 
offers a patented
 
process to replace
 
fossil fuel burners
 
with electrically heated
plasma torches, thereby reducing GHG emissions for
 
the iron ore pelletization industry. The Company believes its solutions
can be economically attractive
 
with greater environment
 
benefits than the traditional
 
alternatives. By using
 
the Company’s
solutions, companies
 
can convert
 
their existing
 
burners
 
and systems
 
often without
 
needing to
 
shut down
 
their facility
 
for
installation and with minimal changes to their processes.
Waste Destruction and Waste-to-Energy
 
Systems
PyroGenesis manufactures and
 
commercializes a broad
 
range of waste destruction
 
and waste-to-energy systems
to customers in the environmental and defense industries. At the core of these systems are the Company’s plasma torches
and
 
plasma
 
gasification
 
reactors.
 
The
 
Company
 
believes
 
it
 
offers
 
one
 
of
 
the
 
most
 
complete,
 
easy-to-operate,
 
high
temperature,
 
plasma-based
 
treatment
 
systems.
 
The
 
waste
 
destruction
 
and
 
waste-to-energy
 
systems
 
offered
 
by
 
the
Company include the following:
•
 
Plasma Arc Waste Destruction Systems
 
(“
PAWDS
”) for waste destruction onboard ships;
•
 
Steam
 
Plasma
 
Arc
 
Refrigerant
 
Cracking
 
(“
SPARC
”)
 
systems
 
for
 
the
 
destruction
 
of
 
certain
 
refrigerants,
including
 
chlorofluorocarbons
 
(“
CFCs
”),
 
hydrofluorocarbons
 
(“
HFCs
”)
 
and
 
hydrochlorofluorocarbons
(“
HCFCs
”);
•
 
Plasma Arc Chemical
 
Warfare Agent
 
Destruction Systems
 
(“
PACWADS
”), which
 
are mobile platforms
 
for
the onsite destruction of chemical warfare agents;
•
 
Plasma
 
Resource
 
Recovery
 
Systems
 
(“
PRRS
”)
 
for
 
land-based
 
waste
 
destruction
 
and
 
waste-to-energy
applications;
•
 
Plasma torches for waste gasification and combustion; and
•
 
Plasma Arc Gasification and Vitrification (“
PAGV
”).
Plasma Arc Waste Destruction System (PAWDS)
Originally
 
developed
 
by
 
the
 
Company
 
in
 
the
 
late
 
1990s
 
for
 
the
 
gasification
 
of
 
waste
 
onboard
 
US
 
Navy
 
aircraft
carriers, PAWDS
 
was the
 
first plasma
 
destruction system
 
for marine
 
use on
 
US Navy
 
aircraft carriers.
 
PAWDS
 
uses the
plasma eductor for the fast gasification
 
of milled waste. Navy waste
 
is comparable to the combustible
 
fraction of municipal
solid
 
waste,
 
comprised
 
of
 
paper,
 
cardboard,
 
plastics,
 
wood
 
and
 
rags.
 
Since
 
launching
 
PAWDS
 
in
 
1999,
 
the
 
Company
received orders
 
for four
 
PAWDS
 
for the
 
US Navy,
 
two of
 
which have
 
been delivered
 
and installed
 
on the
 
Gerald R.
 
Ford
(CVN-78) and the
 
John F.
 
Kennedy (CVN-79) aircraft
 
carriers, and two
 
of which are
 
to be installed
 
in two planned
 
aircraft
carriers during
 
the construction
 
of those
 
vessels. Developed
 
in collaboration
 
with the
 
US Navy,
 
at 1/5th
 
the size
 
and half
the weight of a
 
typical marine incinerator, the patented PAWDS has a capacity of 3.5
 
tons/day. PAWDS
 
is a highly compact,
inherently safe and efficient alternative to the shipboard
 
waste incinerators.
Steam Plasma Arc Refrigerant Cracking (SPARC)
The SPARC
 
process is
 
the Company’s
 
patented technology
 
for the
 
destruction of
 
old refrigerants
 
such as
 
CFCs,
HFC and HCFCs. The system is pre-assembled on skids
 
and has demonstrated high destruction and removal efficiency
 
of
more
 
than
 
99.9999%.
 
The
 
SPARC
 
system
 
uses
 
a
 
water
 
vapour
 
(steam)
 
torch
 
to
 
destroy
 
the
 
refrigerants
 
quickly
 
and
efficiently. The system is designed to handle wastes that have very high
 
chlorine and fluorine content. An integrated caustic
scrubber ensures that
 
hydrochloric acid (HCl)
 
and hydrofluoric acid (HF)
 
emissions are well
 
below accepted limits. The
 
base
system is designed for a destruction capacity of 50 kilograms
 
per hour based on the refrigerant R12.
Plasma Arc Chemical Warfare Agent
 
Destruction System (PACWADS)
PACWADS
 
was developed by the Company
 
for the US and UK
 
special forces to destroy
 
chemical warfare agents
on site. The system
 
is installed on
 
two trailers and
 
can be deployed
 
quickly in areas
 
where chemical warfare
 
agents must
 
 
 
 
14
be immediately destroyed. Performance tests
 
on simulants have demonstrated destruction
 
and removal efficiency
 
of more
than 99.99999%.
 
The system
 
is designed
 
to destroy
 
the equivalent
 
of two
 
barrels (or
 
approximately 318
 
litres) per
 
day of
sarin, a deadly nerve gas, and is also suitable for the destruction
 
of a variety of other chemical warfare agents.
Plasma Resource Recovery System (PRRS)
The PRRS is used to convert waste to syngas (synthesis
 
gas) and inert slag (a glass-like by-product left
 
over after
a desired
 
metal
 
has
 
been
 
separated
 
(i.e.,
 
smelted)
 
from
 
its
 
raw ore).
 
The
 
PRRS
 
combines
 
a direct
 
current
 
graphite
 
arc
furnace, where the
 
inorganic portion of
 
waste is vitrified,
 
and the organic
 
portion is gasified.
 
The produced
 
syngas is then
cleaned up in a
 
plasma-fired eductor, similar to the one used
 
in the PAWDS technology, where tars are converted into clean
syngas (i.e. carbon monoxide and hydrogen).
 
The resulting syngas is further cleaned
 
of contaminants (such as HCl, sulfur
compounds, particulates
 
and volatile heavy
 
metals) using filters
 
and scrubbers.
 
The resulting syngas
 
can be used
 
as fuel
in a gas engine. The inert slag can be used as construction
 
material.
Plasma Torches
 
for Waste Gasification Systems
PyroGenesis’
 
plasma
 
torch
 
systems
 
are
 
used
 
in
 
waste-to-energy
 
applications,
 
advanced
 
material
 
production,
metallurgical
 
processing,
 
thermal
 
treatment
 
and
 
nanotechnology
 
manufacturing.
 
As
 
a
 
cleantech
 
alternative
 
to
 
fossil
 
fuel
burning, PyroGenesis’ electricity-driven plasma torch systems are easy to operate and offer a high level of safety, reliability
and service life of wear components.
Plasma Arc Gasification and Vitrification (PAGV)
PAGV systems convert incinerator ash and other hazardous inorganic material to
 
an inert, non-toxic slag. Slag is a
glass like
 
material, composed
 
of several
 
oxides, typically
 
silica
 
based. Using
 
the Company’s
 
unique furnace
 
design, the
proprietary arc plasma technology uses graphite electrodes and an electrical current to create arcs between the electrodes
and the melt, generating a high
 
temperature environment (typically above 1500°C) and melting the mineral matter into
 
slag.
This slag can be
 
used in a wide
 
range of applications, namely as
 
a building material for construction (e.g.
 
aggregate asphalt
and flooring as
 
well as partial
 
replacement for
 
cement in
 
concrete). The
 
PAGV
 
systems minimize
 
future legacy
 
issues for
operators of
 
incinerators (notably
 
municipalities
 
as well
 
as managers
 
of incineration
 
operations
 
for industrial,
 
hazardous,
biomedical, and animal
 
(slaughterhouse) waste) with a
 
relatively simple melting
 
process for their
 
grate and fly
 
ash. Asbestos
waste from decommissioning operations is also an excellent use
 
for this technology.
Systems for the Recovery of Aluminum and Other
 
Metal from Dross
Dross, a by-product of the
 
smelting process for aluminum and other metals, presents
 
the metallurgical industry with
challenges
 
and
 
opportunities.
 
A
 
dross
 
is
 
normally
 
composed
 
of
 
roughly
 
60%
 
metal
 
and
 
40%
 
residue.
 
Traditional
 
dross
treatment techniques
 
typically contaminate
 
the residues
 
with salt.
 
Metallurgical companies
 
aim to
 
recover metal
 
found in
dross while properly disposing of the oft-contaminated
 
residue.
PyroGenesis produces
 
systems for
 
the recovery
 
of aluminum
 
and other
 
metal from
 
dross through
 
its DROSRITE
process. This
 
process is
 
a salt-free,
 
cost-effective, sustainable
 
process for
 
maximizing metal
 
recovery from
 
dross without
any hazardous by-products. By using the DROSRITE technology, the residues can be converted into high-margin chemical
and metallurgical
 
products, including ammonium
 
sulphate and
 
aluminum sulphate. DROSRITE
 
allows the
 
treatment of dross
at its
 
source of
 
generation in a
 
controlled atmosphere,
 
tilting rotary furnace,
 
and minimizes
 
costly loss
 
of metal
 
while reducing
a smelter’s carbon footprint and energy consumption.
 
pyrex99d1p15i1 pyrex99d1p15i0
15
The following images compare the traditional
 
process for the recovery and treatment
 
of dross with the DROSRITE
process:
These systems are predominantly offered to customers in the metallurgical industry, targeting mainly the aluminum
and zinc industries.
Production of High Purity Spherical Metal Powders
The Company
 
produces
 
high purity
 
spherical
 
metal
 
powders
 
through
 
its plasma
 
atomization
 
process,
 
which
 
are
predominantly offered to customers in the additive
 
manufacturing (also known as 3D printing) industry.
PyroGenesis’
 
plasma
 
atomization
 
process
 
(known
 
as
 
NEXGEN
 
plasma
 
atomization)
 
allows
 
the
 
Company
 
to
produce and
 
sell high purity
 
spherical metal powders,
 
including titanium alloy
 
powders. Many existing
 
reactive metals cannot
easily
 
be
 
transformed
 
into
 
high
 
purity
 
spherical
 
powders,
 
especially
 
not
 
in
 
finer
 
size
 
cuts
 
such
 
as
 
-45μm/+15μm.
PyroGenesis’ NEXGEN process
 
offers an
 
improved yield
 
in the
 
finer size
 
cuts along
 
with a
 
higher production
 
rate. In
 
addition,
PyroGenesis can
 
convert a
 
wider variety
 
of metals
 
and alloys
 
into high
 
purity spherical
 
powders since
 
its plasma
 
torches
use argon gas and the reactor is backfilled with argon. This ensures the powders produced are
 
not exposed to any oxygen
during the
 
production process
 
and, as
 
a result,
 
PyroGenesis is
 
able to
 
produce high
 
purity powder
 
such as
 
titanium alloy
powders (Ti 6Al-4V grade 23).
Development of Processes to Produce High Purity
 
Silicon Metals, Nano Powders and Nanowires
The Company
 
is developing
 
processes
 
to produce
 
high purity
 
silicon metals
 
through
 
its PUREVAP
 
process
 
and
nano powders and
 
nanowires through
 
its PUREVAP
 
NSiR process.
 
These applications are
 
expected to be
 
predominantly
offered to
 
customers in
 
the mining
 
and metallurgical
 
industries, including
 
those involved
 
in the
 
making and/or
 
disposal of
batteries.
PUREVAP is a patent pending, one-step proprietary process being developed by the Company that uses a plasma
arc within
 
a vacuum furnace
 
to produce
 
high purity metallurgical
 
grade silicon and
 
solar grade silicon
 
from quartz. PUREVAP
reduces the
 
quartz with
 
carbon using
 
a plasma
 
submerged
 
arc. Under
 
vacuum,
 
and at
 
very low
 
operating
 
pressure, the
silicon is
 
refined in
 
a one-step
 
process removing
 
impurities and
 
transforming
 
it to
 
a purer
 
form, resulting
 
in a
 
high purity
silicon.
 
The
 
Company
 
expects
 
that
 
the
 
silicon
 
grades
 
produced
 
by
 
PUREVAP
 
will,
 
when
 
commercialized,
 
be
 
used
 
for
different applications, including solar energy.
The PUREVAP
 
NSiR process
 
is designed to
 
transform silicon
 
into spherical
 
silicon nano
 
powders and
 
nanowires
for use
 
in lithium-ion
 
batteries. This proprietary
 
process is
 
designed to
 
be highly
 
scalable and
 
is hoped
 
to allow
 
the production
of silicon
 
nano
 
powders
 
in
 
large
 
quantities
 
at
 
a competitive
 
cost
 
with
 
other
 
materials
 
used
 
in
 
the
 
lithium-ion
 
space.
 
The
PUREVAP NSiR can
 
use different purities of silicon as feedstock.
HPQ
 
Nano
 
acquired
 
the
 
intellectual
 
property
 
rights
 
to
 
the
 
PUREVAP
 
NSiR
 
system
 
in
 
2020
 
and
 
PyroGenesis
 
is
entitled to a royalty of 10% on the future sales of nano silicon powders and wires by
 
HPQ Nano, subject to the terms of the
contract.
 
The
 
royalty
 
stream
 
can,
 
at
 
any
 
time,
 
be
 
converted
 
by
 
PyroGenesis
 
into
 
a
 
50%
 
ownership
 
of
 
HPQ
 
Nano.
PyroGenesis has retained
 
a royalty-free, exclusive,
 
irrevocable, worldwide
 
license to use
 
the new system
 
for all purposes
other than the manufacturing of nano silicon powders and wires.
 
 
16
Upgrading of Biogas and Landfill Gas Into Renewable
 
Natural Gas (RNG)
Through Pyro
 
Green-Gas, the
 
Company offers
 
equipment for
 
the upgrading
 
of biogas
 
and landfill
 
gas into
 
RNG.
Pyro
 
Green-Gas'
 
equipment
 
combines
 
different
 
technologies
 
and
 
effects
 
the
 
removal
 
of
 
contaminants
 
from
 
biogas
 
and
landfill gas,
 
such as
 
hydrogen sulfide,
 
oxygen nitrogen,
 
volatile organic
 
compounds,
 
and moisture.
 
Pyro Green
 
-Gas can
offer both individual equipment and fully integrated
 
turnkey systems to its customers.
Systems for the Purification of Industrial Gases
Through Pyro
 
Green-Gas, the Company
 
offers equipment for
 
gas purification and
 
air emission
 
controls. Pyro Green-
Gas can
 
offer
 
both individual
 
equipment
 
and fully
 
integrated
 
turnkey systems
 
to its
 
customers. The
 
technologies
 
can be
used,
 
for
 
example,
 
for
 
coke
 
oven
 
gas
 
purification,
 
natural
 
gas
 
purification
 
into
 
high
 
quality
 
methane,
 
and
 
purification
 
of
pyrolytic gas and syngas (similar to the substances produced
 
during the application of the Company’s PRRS).
Development of a Process to Produce Fumed Silica
 
From Quartz
This plasma-based process allows a direct quartz-to-fumed silica transformation, removing the
 
usage of hazardous
chemical in the conventional making of fumed silica
 
and eliminating the hydrogen chloride gas normally
 
associated with its
manufacturing.
 
Furthermore,
 
the
 
process
 
requires
 
15,000
 
kWh
 
to
 
produce
 
a
 
metric
 
ton
 
of
 
fumed
 
silica,
 
representing
 
a
significant reduction in the energy footprint normally associated
 
with manufacturing fumed silica. And because the process
uses quartz as
 
feedstock, it is
 
expected that capital
 
requirements to build
 
a plant using
 
this plasma-based
 
process will be
significantly less than the capital requirements required to
 
build a traditional fumed silica plant.
HPQ Polvere acquired the intellectual property
 
rights to the fuming silica
 
patent in 2021 and PyroGenesis is
 
entitled
to a royalty
 
of 10% on
 
the future
 
annual gross
 
sales of fumed
 
silica by HPQ
 
Polvere, subject
 
to the terms
 
of the contract.
The royalty stream can,
 
at any time, be
 
converted by PyroGenesis
 
into a 50% ownership
 
of HPQ Nano.
 
PyroGenesis has
retained
 
a
 
royalty-free,
 
exclusive,
 
irrevocable,
 
worldwide
 
license
 
to
 
use
 
the
 
new
 
system
 
for
 
all
 
purposes
 
other
 
than
 
the
manufacturing of nano fumed silica.
6.3.
 
Installation & Servicing
PyroGenesis
 
offers
 
to
 
its
 
client
 
installation,
 
commissioning,
 
and
 
start-up
 
services.
 
These
 
services
 
are
 
typically
quoted
 
as
 
an
 
option
 
in
 
equipment
 
sales
 
contracts.
 
Separately,
 
PyroGenesis
 
offers
 
aftersales
 
services
 
to
 
its
 
customers,
including the sale of spare and replacement parts, consumable
 
parts, and onsite or remote service on installed systems.
6.4.
 
Internally and Externally Funded Research and Development
 
Projects
The
 
Company
 
relies
 
on
 
a
 
combination
 
of
 
internally
 
funded
 
and
 
externally
 
funded
 
R&D
 
to
 
grow
 
its
 
intellectual
property portfolio.
 
For externally
 
funded R&D,
 
the company
 
typically retains
 
intellectual property
 
rights for
 
the developed
technology,
 
while providing
 
licensing rights
 
to the client
 
in the sector
 
of application
 
and the
 
geographic area
 
of interest
 
to
the client.
6.5.
 
Markets and Opportunities
Waste Destruction and Waste-to-Energy
 
Systems
Marine Waste Treatment
 
Market (PAWDS)
Marine waste has been
 
an issue for lawmakers
 
and corporations for decades.
 
The disposal of waste
 
overboard is
harmful
 
to
 
the
 
marine
 
environment.
 
National
 
governments
 
and
 
international
 
organizations
 
(such
 
as
 
the
 
International
Maritime Organization) have adopted
 
rules to minimize the discharge
 
of harmful waste and
 
effluents from commercial
 
and
non-commercial ships.
 
At the
 
same time,
 
onboard storage
 
of waste
 
takes up
 
valuable space
 
within the
 
hull of
 
a ship
 
and
the eventual disposal in port is
 
costly and, if not handled properly, harmful to the environment. To mitigate this, modern ship
builders have incorporated onboard marine incinerators
 
to treat waste. However, these incinerators
 
also occupy significant
space, sometimes ascending through several decks of
 
a ship.
 
 
 
 
17
PyroGenesis’ PAWDS
 
provides an innovative
 
solution to these
 
issues. The
 
entire system
 
can fit in
 
the headroom
of a single
 
deck. It
 
is also
 
capable of
 
being started
 
up or
 
shut down
 
in a matter
 
of minutes.
 
Finally,
 
it does
 
not create
 
the
same level of GHG and other harmful emissions associated
 
with traditional incinerators.
At present, the
 
most attractive target
 
market for the
 
PAWDS
 
is military navies.
 
PyroGenesis has and
 
continues to
do
 
business
 
with
 
the
 
US
 
Navy
 
and
 
its
 
contractors.
 
PyroGenesis
 
has
 
already
 
outfitted
 
US
 
Navy
 
aircraft
 
carriers
 
with
 
its
PAWDS
 
and will
 
continue
 
aggressively
 
exploring this
 
market. The
 
price of
 
each
 
PAWDS
 
built for
 
the US
 
Navy
 
currently
ranges between US$5 to 6 million and new US aircraft carriers
 
are built every five to seven years.
In addition to new navy vessels, PyroGenesis also sees a potential market in the retrofitting of existing ships. As of
March 2023,
 
the U.S.
 
Navy fleet
 
comprises approximately
 
240 active
 
in commission
 
ships, including
 
11
 
aircraft carriers.
1
 
The Company
 
believes some
 
or all
 
of these
 
existing aircraft
 
carriers may
 
be candidates
 
for retrofitting
 
their legacy
 
waste
management systems with a PAWDS.
Waste-to-Energy Market (PRRS)
Waste management is a large and
 
growing market on a global scale. The methods
 
of managing waste are shifting
from disposal towards recycling and
 
resource recovery.
 
Governments, industries, and society
 
in general are seeking more
sustainable waste management
 
practices that have
 
lower environmental impacts
 
than traditional solutions
 
such as landfill
or incineration.
Just as
 
responsible waste
 
treatment systems
 
are seen
 
as an environment
 
and societal
 
priority,
 
solutions that
 
are
capable of
 
transforming waste
 
into energy
 
has also
 
seen major
 
growth on
 
a global
 
scale. Recent
 
research identified
 
the
global waste to energy
 
market as valued in excess of
 
US$35 billion in 2019, with
 
projections that it will
 
exceed US$50 billion
by 2027.
2
 
PyroGenesis looks to continue to expand its business in this fast-growing area. The Company believes its PRRS is
already a viable and economic alternative for small capacity projects compared to conventional
 
incinerators.
 
The system is
well suited for the
 
decentralized treatment of industrial, hazardous, and
 
clinical waste. As such, in
 
the short to medium
 
term,
the
 
Company
 
is
 
targeting
 
markets
 
that
 
are
 
readily
 
accessible
 
for
 
plasma
 
waste-to-energy
 
conversion,
 
which
 
include
industrial, hazardous, non-hazardous remote communities, military bases, and
 
medical wastes. In the medium
 
to long term,
the Company also intends to target the municipal solid
 
waste market with larger system capacities of up to 100
 
tons/day.
PyroGenesis is currently engaged in pilot testing of its PRRS technology with two
 
Canadian clients. The aim of the
testing is to
 
establish the design
 
basis for larger
 
commercial systems
 
that will be
 
proposed to the
 
customers following
 
the
end of pilot
 
testing. PyroGenesis
 
is working with
 
one such client,
 
Aluminerie Alouette,
 
to create a
 
plasma solution to
 
treat
the
 
hazardous
 
solid
 
wastes
 
produced
 
by
 
this
 
industrial
 
client.
 
The
 
Aluminerie
 
Alouette
 
project
 
aims
 
to
 
not
 
only
 
produce
energy rich
 
syngas that
 
the client
 
will use
 
to reduce
 
its consumption
 
of purchased
 
fuels, but
 
also to
 
generate a
 
valuable,
safe material from the client’s waste.
End-of-Life Refrigerant Destruction (SPARC)
The
 
international
 
community
 
has
 
long
 
recognized
 
that
 
certain
 
substances
 
have
 
been
 
having
 
harmful
 
effects
 
of
ozone depleting substances (“ODS”) as well
 
as impacting climate change. These substances
 
often attack the ozone layer,
the protective shield
 
that covers
 
earth’s atmosphere
 
and protects its
 
ecologies and inhabitants
 
from harmful solar
 
UV and
UVC
 
radiation.
 
They
 
also
 
can
 
lead
 
the
 
emission
 
of
 
GHGs,
 
which
 
alters
 
the
 
global
 
climate.
 
Refrigerants
 
used
 
in
 
the
refrigeration
 
cycle
 
of air
 
conditioning
 
systems
 
and
 
heat
 
pumps
 
have
 
played
 
a significant
 
factor
 
in
 
both.
 
CFC
 
and HCFC
refrigerants are potent ODSs, while CFC, HCFC, and HFC
 
refrigerants all contribute to GHG emissions.
 
While emissions
 
from ODS
 
have started
 
to fall
 
and the
 
ozone layer
 
slowly heal,
 
there remains
 
an active
 
need for
safe
 
and
 
effective
 
means
 
of
 
controlling
 
and
 
disposing
 
of
 
these
 
harmful
 
refrigerants.
 
PyroGenesis’
 
SPARC
 
system
 
uses
plasma technology
 
to destroy
 
CFCs, HCFCs
 
and HFCs,
 
including from
 
end-of-life cooling
 
apparatus. These
 
gases must
typically be destroyed when they cannot be recycled.
1
 
https://www.nvr.navy.mil/NVRSHIPS/FLEETSIZE.HTML.
2
 
https://www.alliedmarketresearch.com/waste-to-energy-
market#:~:text=The%20global%20waste%20to%20energy,4.6%25%20from%202020%20to%202027.
 
 
 
18
PyroGenesis
 
continues
 
to
 
explore
 
potential
 
applications
 
for
 
the
 
SPARC
 
technology,
 
especially
 
in
 
markets
 
with
limited conventional incineration capacity.
 
An example is the project initiated with The Trust for the Destruction of Synthetic
Refrigerants,
 
a
 
New
 
Zealand
 
government-mandated
 
organization,
 
in
 
which
 
the
 
SPARC
 
system
 
will
 
be
 
used
 
to
 
destroy
refrigerants and assist New Zealand in its ambitious goals
 
to reduce synthetic gas emissions.
Plasma Torch Market
A plasma
 
torch
 
is a
 
device
 
for generating
 
a
 
directed
 
flow
 
of
 
plasma
 
and,
 
as indicated
 
in
 
numerous
 
parts
 
of
 
this
document,
 
can
 
be
 
used
 
in
 
several
 
applications.
 
PyroGenesis’
 
plasma
 
torches
 
are
 
used
 
in,
 
among
 
other
 
things,
 
waste
treatment systems
 
(waste gasification
 
and vitrification),
 
its PAWDS
 
and PRRS
 
systems,
 
thermal spray
 
(plasma spray)
 
in
advanced materials production, and metallurgical applications.
Plasma torches can
 
be effective
 
and relatively
 
safe replacements
 
to conventional
 
fuel or gas
 
burners in industrial
furnaces. For
 
example, customers
 
use PyroGenesis’
 
patented pelletizing
 
apparatus
 
to perform
 
the induration
 
of iron
 
ore
concentrate pellets in
 
a tunnel
 
furnace heated by
 
plasma torches. By
 
using PyroGenesis’ electricity powered
 
plasma torches
instead of
 
burning natural
 
gas, heavy
 
oil, or
 
pulverized
 
coal to
 
power burners,
 
the generation
 
of harmful
 
GHGs
 
(notably
carbon dioxide) is greatly reduced relative to conventional iron ore
 
pelletizing processes.
The Company
 
sees excellent
 
potential for growth
 
in the
 
sale of plasma
 
torch systems.
 
The global
 
iron ore
 
pellets
market alone
 
already exceeds
 
US$45 billion
 
and the
 
demand for
 
iron ore
 
pellets is
 
expected to
 
near 540,000
 
kilotons by
2027.
3
 
To date, PyroGenesis
 
occupies only a fraction of this market. But given the global appetite for more environmentally
sustainable and economically viable industrial solutions, the Company expects more new and existing customers to look to
refit existing burners with its plasma torch systems and
 
considers itself well placed to see growth in this area.
 
Systems for the Recovery of Aluminum and Other
 
Metal from Dross
Dross is a by-product of the smelting process for aluminum
 
and other metals. As described early in this document,
dross presents
 
both a challenge
 
and an opportunity
 
for those in
 
the metallurgical
 
industry.
 
Dross is typically
 
composed of
both metal
 
and residue
 
and companies
 
want to
 
recover the
 
valuable metal
 
while treating
 
and/or disposing
 
of the residue,
which is usually contaminated.
Aluminum is one of the most popular metals in
 
the world. Global annual production of aluminum exceeds 65 million
metric tons
 
and, from
 
that aluminum
 
production, nearly
 
5 metric tons
 
of dross
 
is generated
 
annually.
4
 
While this
 
presents
exciting opportunities
 
for PyroGenesis,
 
it is
 
important to
 
note that
 
more than
 
half of
 
all aluminium
 
is produced
 
in China,
 
a
market that the Company
 
does not do much
 
business in and which
 
is traditionally complicated
 
to enter (for reasons
 
which
include
 
a
 
relative
 
lack
 
of
 
intellectual
 
property
 
protection,
 
restricted
 
market
 
conditions,
 
and
 
a
 
sometimes
 
politicized
commercial environment).
Over the past several years,
 
PyroGenesis has shifted its
 
DROSRITE marketing strategy from
 
a model focused on
selling
 
equipment
 
to
 
one
 
in
 
which
 
DROSRITE
 
is
 
offered
 
as
 
a
 
service
 
via
 
a
 
tolling
 
agreement.
 
In
 
a
 
tolling
 
arrangement,
PyroGenesis would build, own and operate the DROSRITE system and associated equipment for the aluminum smelter on
the smelter plant location. Although tolling revenues can vary widely
 
depending on the sector and geographic location, this
tolling model offers PyroGenesis the opportunity to
 
create recurring revenues.
Because the DROSRITE technology not only
 
allows users to recover valuable metal
 
but also treat dross and
 
create
valuable residues, PyroGenesis has the
 
opportunity to become a leader
 
as an onsite dross processor
 
that delivers a zero-
landfill/reduced carbon solution.
Production of High Purity Silicon Metals, Nano Powders and
 
Nanowires
Solar Industry
Solar photovoltaic (PV) systems have grown at a
 
tremendous rate. The International Energy Agency estimates that
Solar PV generation increased by a
 
record 179 TWh (up 22%)
 
in 2021 to exceed 1
 
000 TWh and already accounts for
 
3.6%
3
 
Iron Ore Pellets Market Size, Share & Trends Analysis Report By Product (Blast Furnace, Direct Reduced), By Trade (Captive,
Seaborne), By Region, And Segment Forecasts, 2020 – 2027. See https://www.grandviewresearch.com/industry-analysis/iron-ore-
pellets-market.
4
 
On trending technologies of aluminium dross recycling: A review, by Ankur Srivastava and Arunabh Meshram (March 2023). See
https://www.sciencedirect.com/science/article/abs/pii/S0957582023000113
 
 
 
19
of global
 
electricity
 
generation5. Solar
 
grade silicon
 
metal (SOG
 
Si), used
 
in manufacturing
 
solar cells,
 
is a
 
key material
needed to meet the growing demand for solar energy. Each new gigawatt of solar energy capacity requires 5,000 tonnes of
solar grade silicon metal and strong demand is expected to fuel
 
growth.
Battery Industry
Battery manufacturing is another
 
high-growth industry. The lithium-ion battery market size
 
is estimated to grow
 
from
US$44.2
 
billion
 
in
 
2020 to
 
US$94.4
 
billion
 
by
 
2025,
 
equivalent
 
to
 
a
 
compound
 
annual
 
growth
 
rate
 
of
 
16.4%.
6
 
Research
indicates that
 
replacing graphite
 
with nano
 
silicon powders
 
could allow the
 
manufacturing of
 
high-performance lithium-ion
batteries with the capability of delivering an almost
 
tenfold (10x) increase in anode capacity,
 
inducing a 20-40% gain in the
energy density of
 
the next generation
 
of lithium-ion batteries
7
.
Manufacturing of silicon
 
nano powders is
 
not yet commercially
feasible with selling prices of US$30,000/kg.
8
Production of Fuming Silica
Fumed
 
silica
 
(pyrogenic
 
silica)
 
is
 
a
 
white
 
microscopic
 
powder
 
with
 
high
 
surface
 
area
 
and
 
low
 
bulk
 
density.
 
Its
commercial applications encompass various industries including personal care, pharmaceuticals,
 
agriculture (food & feed),
adhesives, sealants, construction, batteries and automotive to name a few. Demand for fumed silica is growing but present
manufacturing processes are hindering its growth potential
9
.
Production of High Purity Spherical Metal Powders
The
 
global
 
metal
 
additive
 
manufacturing
 
(also
 
known
 
as
 
the
 
3D
 
printing)
 
continues
 
to
 
see
 
strong
 
growth
 
and
 
is
expected to
 
continue to
 
expand. The
 
market size
 
reached US$
 
6.36 billion
 
in 2022
 
and is
 
expected to
 
reach US$
 
22.60
billion by 2030.
10
At present, PyroGenesis
 
focuses its additive
 
manufacturing sales and
 
marketing efforts on
 
titanium and its
 
alloys.
Titanium is a
 
highly sought-after material
 
in the aeronautical, biomedical,
 
and high-end automotive
 
industry due to its
 
high
strength, low density, high fracture toughness, excellent corrosion resistance and superior biocompatibility. Titanium
 
is also
a high margin
 
material (in part
 
because of its
 
attributes and desirability).
 
PyroGenesis will consider
 
additional high margin
materials to maximize the potential of its NEXGEN technology.
While plasma atomized powders can be of a higher
 
quality than gas atomized powders, their widespread
 
adoption
has so far been limited
 
by their higher price.
 
In addition to PyroGenesis,
 
some of the key
 
players in the making
 
of additive
manufacturing powders through plasma
 
atomization are 6K Additive,
 
Tekna
 
Advanced Materials, and AP&C,
 
which is part
of GE. With its
 
NEXGEN technology,
 
PyroGenesis aims to
 
gain a competitive advantage
 
in the market by
 
producing high-
quality powder by
 
plasma atomization
 
at rates comparable
 
to gas atomization,
 
all while maximizing
 
the yield of
 
powder in
the preferred size range for additive manufacturing.
PyroGenesis’ additive manufacturing sales
 
and marketing efforts are
 
done on an international footing.
 
Through an
exclusive
 
distribution
 
agreement,
 
Aubert
 
&
 
Duval
 
supports
 
PyroGenesis’
 
sales
 
in
 
the
 
European
 
market.
 
PyroGenesis
continues
 
its
 
own
 
sales
 
efforts
 
in
 
the
 
North
 
American
 
and
 
Asian
 
markets
 
and
 
is
 
in
 
frequent
 
discussions
 
with
 
potential
customers,
 
including
 
well-established
 
aerospace
 
companies.
 
PyroGenesis
 
draws
 
on
 
its
 
plasma
 
torch
 
and
 
powder
production expertise to design and develop its own torches
 
and equipment for additive manufacturing.
Renewable Natural Gas
The biogas industry
 
is well established
 
on a
 
global level and
 
remains strong in
 
North America. Investments
 
in biogas
production and purification represent approximately $20 billion.
 
There are many RNG plants in operation or in development
and the market for RNG purification remains highly competitive.
5
 
Solar PV Report, by Piotr Bojek (September 2022). See https://www.iea.org/reports/solar-pv
6
 
Markets and Markets: “Lithium-Ion Battery Market – Global Forecast to 2025”.
7
 
Chemical Engineering News: “In the Battery Materials World, the Anode’s Time Has Come”, Volume
 
97, Issue 14 (2019).
8
 
HPQ-Silicon Resources Inc.: Innovative Silicon Solutions, 2020.
9
 
https://hpqsilicon.com/press-release/hpq-silicon-and-pyrogenesis-sign-an-agreement-to-develop-a-new-environmentally-friendly-
process-to-manufacture-fumed-silica/
10
 
“Metal 3D Printing Market Size to Hit $22.60 Billion by 2030”, by Grand View Research, Inc. (September 13, 2022). See:
https://www.prnewswire.com/news-releases/metal-3d-printing-market-size-to-hit-22-60-billion-by-2030---grand-view-research-inc-
301623035.html
 
pyrex99d1p20i0
20
6.6.
 
Growth Strategy
As interest in the Company’s products and services
 
has increased and the variety of uses for its core technologies
has
 
expanded,
 
the
 
Company
 
has
 
evolved
 
its
 
strategy
 
to
 
concentrate
 
its
 
solution
 
set
 
under
 
three
 
categories.
 
These
categories represent economic drivers that are key to
 
global heavy industry:
Energy Transition & Emission Reduction:
•
 
fuel
 
switching,
 
utilizing
 
the
 
Company’s
 
electrically
 
powered
 
plasma
 
torches
 
and
 
biogas
 
upgrading
technology to help reduce fossil fuel use and greenhouse
 
gas emissions.
Commodity Security & Optimization:
•
 
recovery of viable metals, and optimization
 
of production to increase output, to
 
maximize raw materials and
improve availability of critical minerals.
Waste Remediation:
•
 
safe destruction of
 
hazardous materials, and
 
the recovery and
 
valorization of underlying
 
substances such
as chemicals and minerals.
Currently,
 
within
 
each
 
category
 
the
 
Company
 
offers
 
several
 
solutions
 
in
 
different
 
stages
 
leading
 
up
 
to
commercialization, including the partial list in the diagram
 
below:
Going forward,
 
the Company’s
 
efforts will
 
be focused
 
around helping
 
customers overcome
 
challenges within
 
this
spectrum. More
 
information
 
can be
 
found on
 
each of
 
these solutions
 
and the
 
markets in
 
which they
 
operate above
 
(see
“Products and Services” and “Markets and Opportunities”)
Levering off its expertise in ultra-high temperature industrial processes, the Company typically aims to introduce its
products to markets by selling to, or partnering with,
 
industry-leading companies. These industry leaders not
 
only bring the
credibility sought when introducing new
 
technology but also valuable insight into
 
the market and potential
 
customers as well
as important market
 
feedback. This corporate
 
strategy of
 
leveraging off
 
these strategic partnerships
 
seeks growth
 
geared
at (i) broadening the customer base and (ii)
 
increasing sales to existing customers. Each of the Company’s existing product
lines has been, or
 
is in the process
 
of being, vetted or
 
adopted by industry
 
leaders. The Company
 
also seeks eco-friendly
business, primarily targeting offerings that reduce GHGs as opposed
 
to those who do not. As
 
part of its growth strategy, the
Company
 
will
 
also
 
selectively
 
consider
 
opportunities
 
to
 
broaden
 
and
 
enhance
 
its
 
product
 
and
 
market
 
scope
 
through
acquisitions.
6.7.
 
Employees
The Company had, as of December
 
31, 2022, 107 part-time and
 
full-time employees. Pyro Green-Gas
 
has 9 part-
time and full-time employees.
 
21
The Company prides
 
itself in hiring
 
talented individuals
 
with a complementary
 
mix of professional
 
experience and
industry
 
knowledge.
 
The
 
Company
 
continues
 
to
 
develop
 
a
 
working
 
environment
 
wherein
 
everyone
 
is
 
valued
 
for
 
their
contribution
 
to
 
the
 
team
 
and
 
rewarded
 
for
 
their
 
accomplishments.
 
The
 
Company
 
believes
 
that
 
it
 
has
 
one
 
of
 
the
 
highest
concentrations of plasma expertise under one roof in the world. As of December 31, 2022, all of the Company’s employees
were non-unionized.
6.8.
 
Facilities
The headquarters of the Company
 
are located at 1744 William
 
Street, Suite 200, Montréal, Québec,
 
Canada, H3J
1R4
 
in
 
leased
 
premises,
 
which
 
are
 
leased
 
from
 
the
 
Pascali
 
Trust,
 
a
 
related
 
party
 
of
 
which
 
P.
 
Peter
 
Pascali,
 
the
 
Chief
Executive Officer of the
 
Company,
 
is a trustee, officer
 
and beneficiary.
 
See “Directors and Executive
 
Officers - Conflicts
 
of
Interest”.
The Company operates two manufacturing facilities, one facility which is 40,902 sq. ft. (3,800 m2) and is located at
5655 Philippe-Turcot,
 
Montréal, Québec,
 
Canada, H4C
 
3K8 (the “Turcot
 
Facility”) and
 
the second
 
facility which
 
is 31,632
sq.
 
ft.
 
(2,939
 
m2)
 
and
 
is
 
located
 
at
 
9371
 
Wanklyn
 
Street,
 
LaSalle,
 
Québec,
 
Canada,
 
H8R
 
1Z2
 
(the
 
“Wanklyn
 
Facility”).
These facilities are used
 
to manufacture systems, produce metal
 
powders, and host various
 
pilot systems for demonstration
and testing, as well as to provide spare parts to the Company’s
 
existing client base.
The
 
Company
 
leases
 
the
 
Wanklyn
 
Facility.
 
Although
 
the
 
Company
 
continues
 
to
 
pay
 
rent
 
pursuant
 
to
 
a
 
lease
agreement for the Turcot
 
Facility,
 
it exercised its contractual
 
option to purchase the
 
property in 2022. The
 
exercise of said
option
 
and
 
the
 
ownership
 
of
 
the
 
Turcot
 
Facility
 
are
 
the
 
subject
 
of
 
legal
 
proceedings
 
described
 
below
 
(see
 
“Legal
Proceedings”).
The Company’s subsidiaries Pyro Green-Gas, Air Science
 
Technologies
 
Private Limited and Air Science
 
Italia S.r.l.
lease office premises in Montreal (Québec, Canada),
 
India and Italy,
 
respectively.
6.9.
 
Distribution Methods
The
 
Company
 
sells
 
its
 
products
 
and
 
systems
 
primarily
 
through
 
direct
 
sales
 
by
 
its
 
own
 
internal
 
sales
 
team.
 
The
marketing of the Company’s products is provided
 
by its internal sales and marketing group located
 
in Montréal, Canada.
Under a mutual exclusive agreement with Aubert &
 
Duval, PyroGenesis supplies plasma atomized titanium powder
to Aubert & Duval for distribution to the additive
 
manufacturing market in Europe. In addition, Drosrite
 
International has the
right to
 
manufacture,
 
market,
 
sell
 
and
 
distribute
 
DROSRITE
 
systems
 
and
 
the
 
DROSRITE
 
technology
 
in
 
the
 
Kingdom
 
of
Saudi Arabia and certain other countries in the Middle
 
East, on an exclusive basis. See “Directors and
 
Executive Officers -
Conflicts of Interest”.
The business
 
of the
 
Company is
 
neither cyclical
 
nor seasonal.
 
The Company’s
 
products have
 
long sales
 
cycles,
which are generally unaffected by seasonal variations.
The Company’s agreements are
 
typically for the
 
sale of equipment. The
 
Company gets paid on
 
milestone payments
that reflect progress on the projects. Usually,
 
the Company tries to also obtain advance payments. For the sale of powders
and parts, the Company generally invoices and gets paid
 
upon delivery.
6.10.
 
Intellectual Property and Research and Development
The intellectual property and proprietary rights of
 
PyroGenesis as well as its research and development
 
efforts are
important
 
to
 
its
 
business.
 
Considering
 
the
 
time
 
and
 
investment
 
required
 
to
 
develop
 
new
 
products
 
and
 
obtain
 
marketing
authorization,
 
the
 
Company
 
places
 
considerable
 
importance
 
on
 
protecting
 
its
 
research
 
findings,
 
trade
 
secrets
 
and
technologies.
Intellectual Property
In
 
efforts
 
to
 
secure,
 
maintain,
 
and
 
protect
 
its
 
intellectual
 
property,
 
proprietary
 
rights
 
and
 
exclusive
 
technology,
PyroGenesis
 
relies
 
on
 
a
 
combination
 
of
 
patents,
 
trademarks,
 
trade
 
secrets,
 
and
 
other
 
rights
 
as
 
well
 
as
 
licenses,
 
non-
disclosure agreements, and various other contractual arrangements. Nothing, however,
 
can guarantee that the Company’s
protective measures are sufficient to prevent illicit or wrongful appropriation or misuse of its technology or the development
of the same or similar technology by a third part
y.
 
 
 
pyrex99d1p1i0 pyrex99d1p22i1 pyrex99d1p22i0
22
Tradenames and Trademarks
PyroGenesis uses
 
the following
 
tradenames and trademarks
 
in connection
 
with the
 
sale of
 
its services
 
and products,
some of which are registered:
●
 
PYROGENESIS
●
 
PYROGENESIS ADDITIVE
●
 
PYROGENESIS ALUMINUM
●
 
PYRO GREEN-GAS
●
 
AIRSCIENCE TECHNOLOGIES
●
 
NEXGEN
●
 
DROSRITE
●
 
PUREVAP
●
 
SPARC
●
 
APT
●
 
APT-HP
●
 
RPT
●
 
MINIGU
●
 
SPT
●
 
PAWDS
●
 
PACWADS
●
 
PPRS
●
 
PAGV
●
 
AVITA
The tradenames and logos are used
 
everywhere the Company does business and the
 
common law trademarks are or have
been used
 
in connection
 
to the
 
sale of
 
specific products.
 
In addition,
 
PyroGenesis has
 
registered trademarks
 
or filed
 
for
registered
 
trademark
 
protection
 
in
 
the
 
following
 
jurisdictions:
 
Australia,
 
Brazil,
 
Canada,
 
China,
 
European
 
Union,
 
United
Kingdom, Indonesia, Israel,
 
India, Japan,
 
Korea (Republic
 
of), Mexico, New
 
Zealand, Russian
 
Federation, Turkey,
 
United
States and Vietnam.
Patents
As of March 1, 2023, the
 
Company owned a total of
 
148 patents (32 granted,
 
116 pending)
 
relating to its products
and processes.
Research & Development
The
 
Company’s
 
competitive
 
strategy
 
includes
 
a
 
strong
 
innovation
 
culture
 
and
 
a
 
long-standing
 
commitment
 
to
performing research and development.
 
The Company’s research
 
and development projects in various
 
areas, including but
 
23
not limited
 
to, the
 
production
 
of metallic
 
powders and
 
the development
 
of plasma
 
torches, are
 
performed and
 
conducted
internally out of its Montréal facility.
As
 
of
 
February
 
27,
 
2023,
 
the
 
Company
 
employed
 
twelve
 
engineers,
 
scientists
 
and
 
technicians
 
who
 
are
 
fully
dedicated to research and development projects. Separately, the Engineering and Process Startup and Optimization teams
are also involved
 
in research
 
and development
 
projects. Most
 
research and
 
development projects
 
are funded
 
by external
customers or government
 
grants and are
 
initiated to respond
 
to a specific
 
customer need. Follow
 
-on work and
 
equipment
sales can often result from these initial
 
research and development projects. Research and development projects are mainly
focused on product extension.
 
Internal research and
 
development expenses vary
 
widely from year to
 
year and depend on
Company priorities.
6.11.
 
Environmental Protection
The Company currently has active permits, including from the City
 
of Montréal, to carry out manufacturing activities
at the Wanklyn Facility and conduct research
 
and development and operate production systems at the
 
Turcot Facility.
The Company usually needs to
 
apply for a new permit each time
 
a new project involving testing occurs.
 
There are
no costs to these permits except the time required to
 
prepare the documentation for the City of Montréal. The time to
 
obtain
a permit is usually between two and four months.
6.12.
 
Foreign Operations
The Company, through its subsidiaries Air
 
Science Technologies Private Limited and Air Science
 
Italia S.r.l., carries
out operations in
 
India and Italy, respectively. The Company is in
 
the process of developing
 
a European operational strategy
to produce titanium metal powders
 
on the European continent. The
 
Company continues to consider expanding its
 
corporate
footprint in other jurisdictions, including the United States.
6.13.
 
Competition
PyroGenesis competes with
 
a substantial number
 
of companies in
 
the industries in
 
which it operates,
 
some of which
have greater technical and financial resources.
 
There can be no assurance that such
 
competitors are not already devoting
(or will not
 
devote in the
 
future) substantially
 
more resources
 
to the development
 
and marketing
 
of products
 
and services
that compete
 
with
 
those
 
of
 
the Company
 
or that
 
new
 
or existing
 
competitors
 
will
 
not enter
 
the
 
various
 
markets
 
in which
PyroGenesis is
 
active. There
 
can be
 
no assurance
 
that competitors
 
will not
 
develop new
 
and unknown
 
technologies with
which
 
the
 
Company
 
may
 
have
 
difficulty
 
competing.
 
Furthermore,
 
failure
 
to
 
remain
 
cost
 
competitive
 
may
 
result
 
in
PyroGenesis losing business to its competitors.
For
 
example,
 
the
 
Company
 
faces
 
competition
 
from
 
Europlasma
 
in
 
the
 
waste
 
destruction
 
and
 
waste-to-energy
systems markets, the Company faces competition from Altek, a division of Harsco Corp., in the systems for the recovery of
aluminum and
 
other metal
 
from dross
 
market, and
 
the Company
 
faces competition
 
from AP&C,
 
a GE
 
Additive company,
and Tekna,
 
a portfolio company
 
of Arendals Fossekompani
 
ASA, in the
 
production of high
 
purity spherical
 
metal powders
market.
Several companies
 
in the
 
world develop
 
and promote
 
thermal plasma
 
torches, most
 
notably Europlasma
 
S.A. in
France, Scanarc Plasma
 
Technologies
 
AB in Sweden,
 
Tetronics
 
Technologies
 
Ltd. in the
 
UK, Phoenix Solution
 
Company
in the USA, and Plazarium in Russia and Germany.
7.
 
Dividends and Distributions
The Company has
 
not paid any
 
dividends, has no
 
policy on paying
 
dividends or distributions,
 
and has no
 
present
intention to pay dividends. The Company currently intends
 
to reinvest any earnings to fund the development
 
and growth of
its
 
business.
 
Any
 
future
 
payments
 
of
 
dividends
 
will
 
be
 
at
 
the
 
discretion
 
of
 
the
 
Board
 
and
 
will
 
depend
 
on
 
many
 
factors,
including, among other things, the Company’s
 
financial condition, current and anticipated capital
 
requirements, contractual
requirements, solvency tests imposed by applicable corporate
 
law and other factors it may deem relevant.
8.
 
Description of Capital Structure
 
 
 
 
 
 
 
 
 
 
 
 
24
8.1.
 
Share Capital and Issued and Outstanding Shares
The sections
 
below describe some
 
of the
 
material terms of
 
the Common Shares
 
and the
 
number of
 
Common Shares
issued and outstanding. These descriptions are not
 
meant to be exhaustive and are
 
subject to, and qualified in their
 
entirety
by reference to, the terms and provisions of the Company’s
 
articles of incorporation (the “
Articles
”).
Description of Common Shares
The Company
 
is authorized
 
to
 
issue
 
an
 
unlimited
 
number
 
of
 
Common
 
Shares
 
without
 
par
 
value.
 
Subject
 
to the
rights,
 
privileges,
 
restrictions
 
and
 
conditions
 
attaching
 
to
 
any
 
preferred
 
shares
 
authorized
 
in
 
the
 
future,
 
the
 
rights
 
of
 
the
holders of Common Shares, as a class, are equal in all respects
 
and include the following rights:
•
 
Voting: The right to vote at
 
any meeting of shareholders;
•
 
Dividends:
 
The
 
right
 
to
 
receive,
 
as
 
and
 
when
 
declared
 
by
 
the
 
directors
 
of
 
the
 
Company,
 
any
 
dividends
payable on such dates, for
 
such amounts and at such
 
place or places as the
 
Board may from time to
 
time
determine; and
•
 
Liquidation
 
or
 
Dissolution:
 
The
 
right
 
to
 
receive
 
the
 
remaining
 
property
 
of
 
the
 
Company
 
on
 
liquidation
 
or
dissolution.
Outstanding Common Shares
As at the date of this AIF,
 
there were 178,580,395 Common Shares issued and
 
outstanding.
8.2.
 
Stock Options and Warrants
The following table sets forth, as of the
 
date of this AIF,
 
the aggregate number of exchangeable securities
 
that are
outstanding.
Number of exchangeable
Number of listed
Description of Security
securities
 
securities
Stock Options
(1)
9,815,500
9,815,500
Warrants
(2)
6,014,600
6,014,600
Notes:
(1)
 
Details
 
of stock
 
options outstanding:
 
(i) 300,000
 
stock options
 
exercisable at
 
a price
 
of
 
$0.51 until
 
July 3,
 
2023, (ii)
 
100,000 stock
 
options
exercisable at a price
 
of $0.51 until September
 
29, 2024, (iii) 100,000
 
stock options exercisable at
 
a price of
 
$0.45 until January 2,
 
2025, (iv)
2,195,500 stock options exercisable at a price of
 
$4.41 until July 16, 2025 (v) 50,000 stock options
 
exercisable at a price of $4.00 until October
26, 2025, (vi) 550,000 stock options exercisable
 
at a price of $8.47 until April
 
6, 2026, (vii) 200,000 stock options
 
exercisable at a price of $6.59
until June 1, 2026,
 
(viii) 100,000 stock options
 
exercisable at a price of
 
$6.70 until June 14,
 
2026, (ix) 100,000 stock
 
options exercisable at a
price of $5.04 until
 
October 14, 2026, (x) 1,920,000
 
stock options exercisable at a
 
price of $3.13 until December
 
17, 2026, (xi) 100,000 stock
options exercisable at a price
 
of $3.61 until December 30,
 
2026, (xi) 450,000 stock
 
options exercisable at a
 
price of $3.33 until January
 
3, 2027,
(xii) 400,000 stock options exercisable at a
 
price of $2.96 until April 5,
 
2027, (xiii) 1,500,000 stock options exercisable at
 
a price of $3.88 until
June 2, 2027, (xiv) 125,000 stock options exercisable
 
at a price of $2.14 until July 20, 2027, (xv)
 
1,625,000 stock options exercisable at a price
of $1.03 until January 2, 2028.
(2)
 
For more
 
details on
 
the share
 
purchase warrants
 
outstanding, please
 
refer to
 
the Company’s
 
audited consolidated
 
financial statements
 
and
related notes thereto for the year ended December
 
31, 2022.
9.
 
Market for Securities
9.1.
 
Trading Price and Volume
The Common Shares are listed on the
 
TSX under the symbol “PYR”. The
 
following table sets forth, for the periods
indicated, the reported
 
high and low
 
prices and the
 
aggregate volume
 
of trading
 
of the Common
 
Shares on
 
the TSX. The
Common Shares are also
 
listed on the
 
NASDAQ since March 11, 2021, under the symbol
 
“PYR” and on
 
the Frankfurt (FRA)
exchange under the symbol “8PY”.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25
Period
High ($)
Low ($)
Average Daily
Trading Volume
January 2022
3.89
2.19
424,821
February 2022
3.90
2.20
402,998
March 2022
3.23
2.02
199,866
April 2022
3.13
2.30
219,418
May 2022
3.35
2.16
250,945
June 2022
3.89
2.30
284,496
July 2022
2.61
1.54
267,611
August 2022
2.42
1.74
194,559
September 2022
2.08
1.51
167,318
October 2022
1.68
0.94
324,916
November 2022
1.39
0.97
268,102
December 2022
1.14
0.84
221,204
9.2.
 
Prior Sales
The following table summarizes
 
the issuances of
 
unlisted securities of the
 
Company during the financial year ended
December 31, 2022.
Number of
Price
Securities
 
Per
Total
Date of Grant
Type of Security
 
Issued
Issued
Security
 
Consideration
January 3, 2022
Stock Options
450,000
$
3.36
n/a
April 5, 2022
Stock Options
400,000
$
2.96
n/a
June 2, 2022
Stock Options
1,500,000
$
3.88
n/a
July 13, 2022
Stock Options
125,000
$
2.14
n/a
October 19, 2022
Warrants
1,014,600
$
1.75
n/a
 
10.
 
Directors and Executive Officers
The Articles of the
 
Company provide for a minimum
 
of three directors and a
 
maximum of 15 directors. Each
 
director
holds office until the close of
 
the next annual general meeting of
 
the Company,
 
or until his or her successor
 
is duly elected
or appointed, unless his or her office is earlier vacated.
10.1.
 
Name and Occupation
The following table lists the names of the directors and executive officers of the Company as of the date of this AIF
and
 
their
 
province/state
 
and
 
country
 
of
 
residence,
 
their
 
positions
 
and
 
offices
 
held
 
with
 
the
 
Company,
 
their
 
principal
occupations during
 
the past
 
five years,
 
the date
 
on which
 
they first
 
became officers
 
or directors
 
of the Company,
 
and the
number
 
and
 
percentage
 
of
 
Common
 
Shares
 
which
 
is
 
beneficially
 
owned,
 
directly
 
or
 
indirectly,
 
or
 
over
 
which
 
control
 
or
direction is exercised, by each of them.
 
 
 
 
 
 
 
 
 
26
Name,
Positions
Committee
Director or
Principal
Number (and
Province/State
and Offices
(s) of the
Officer of
Occupation for the
Percentage) of
and Country
Held with
Board of
the
Previous Five Years
Common
the
Directors
Company
Shares Owned
Company
Since/Until
or Controlled
P.
 
Peter Pascali
President
None
2006
President and Chief
Executive Officer of the
Company since 2006.
 
80,925,698
(1)
Chief Executive Officer
Chair of the Board of
Directors
 
(45.32)%
Québec, Canada
Pierre Carabin
Chief Technology
Officer & Chief
Strategist
None
2006
Chief Technology
Officer & Chief Strategist
of the Company since
2018. Previously, Chief
Technology officer from
2016 to 2018.
 
506,500
 
(0.28)%
Québec, Canada
Alan Curleigh
Independent Director –
Board of Directors
Chair of the Board of
Directors
2023 (Also a
Director and
Chair from
2010 until 2019
Corporate director (was
Chair of the Board of
Directors of the Company
from 2010 until 2019)
 
60,000
 
(0.03)%
Québec, Canada
Robert M. Radin
Lead Independent
Director – Board of
Directors
Member of the Audit
Committee
2012
President of Radin &
Associates Consulting,
LLC since 2011.
 
673,500
Chair of the
Compensation
Committee
Member of the
Nominating and
Corporate Governance
Committee
Member of the
Strategic Initiatives
Committee
 
(0.38)%
South Carolina, USA
Andrew Abdalla, CPA, CA
Independent Director –
Board of Directors
Chair of the Audit
Committee
2018
Senior Partner at
chartered accountancy
and business advisory
firm MNP LLP.
 
107,800
Member of the
Compensation
Committee
Member of the
Nominating and
Corporate Governance
Committee
 
(0.06)%
Québec, Canada
Dr. Virendra Jha
Independent Director –
Board of Directors
Chair of the
Nominating and
Corporate Governance
Committee
2019
Corporate director
 
100,000
 
 
 
 
 
 
 
 
 
27
Member of the
Compensation
Committee
 
(0.06)%
Québec, Canada
Rodayna Kafal
Vice President,
Investor Relations and
Strategic Business
Development
Officer since
2016
Vice President, Investor
Relations and Strategic
Business Development of
the Company.
 
17,407
Director – Board of
Directors
Director since
2020
 
(0.01)%
Québec, Canada
Nannette Ramsey
Independent Director -
Board of Directors
Member of the
Compensation
Committee
2021
Corporate director
 
1,000
Member of the
Nominating and
Corporate Governance
Committee
Chair of the Strategic
Initiatives Committee
 
(0.001)%
Florida, USA
Ben Naccarato
Independent Director –
Board of Directors
Member of the Audit
Committee
2021
Executive Vice President
and Chief Financial
Officer at Perma-Fix
Environmental
Services Inc.
 
350
Member of the
Compensation
Committee
Member of the
Strategic Initiatives
Committee
 
(0.0002)%
Georgia, USA
Andre Mainella
Chief Financial Officer
None
2021
Chief Financial Officer
since 2021
7500
Director of Consolidation
and Corporate
accounting, Cogeco
Communications Inc. until
2021
 
(0.004)%
Québec, Canada
Mark Paterson
General Counsel
None
2023
General Counsel since
2023
0
General Counsel of Tanet
Fintech Group Inc. from
2021-2022
Director - Legal Affairs of
Future Electronics Inc.
from 2010-2021
 
(0.00)%
Québec, Canada
Notes:
●
 
Mr.
 
Pascali
 
holds
 
66,642,941
 
Common
 
Shares
 
directly,
 
and
 
indirectly
 
holds
 
or
 
controls
 
(i)
 
7,251,000
 
Common
Shares
 
through
 
a
 
holding
 
company,
 
8339856
 
Canada
 
Inc.,
 
of
 
which
 
he
 
is
 
the
 
sole
 
shareholder,
 
(ii)
 
4,000,000
Common
 
Shares through
 
a foundation,
 
The
 
2 Percent
 
Solution
 
Foundation,
 
and
 
(ii)
 
3,031,757
 
Common
 
Shares
 
28
through the
 
Pascali Trust,
 
a family
 
trust of
 
which he
 
is a
 
trustee, officer
 
and a
 
beneficiary.
 
“Description of
 
Capital
Structure - Stock Options ”.
All
 
executive
 
officers
 
of
 
the
 
Company
 
are
 
full
 
time
 
employees
 
of
 
the
 
Company
 
and
 
none
 
are
 
independent
contractors.
As of the date of
 
this AIF, the directors and executive officers of the Company, as a group, beneficially own, directly
or indirectly, or exercise control or direction over,
 
an aggregate of 82,399,755 Common Shares representing 46.14% of the
issued and outstanding Common Shares.
10.2.
 
Biographies
The following
 
biographies provide certain
 
selected information in
 
respect of
 
the persons who
 
are serving
 
as directors
and executive officers of the Company:
P.
 
Peter Pascali – President and, Chief Executive Officer
 
and Director
Mr. P.
 
Peter Pascali, after
 
graduating with an
 
MBA from McGill
 
University in 1983,
 
became an investment
 
banker
specializing in
 
mergers and
 
acquisitions and
 
public offerings.
 
He initially
 
worked for
 
the Bank of
 
Nova Scotia
 
and then,
 
in
1987,
 
joined
 
Westpac
 
Banking
 
Company.
 
In
 
1989,
 
he
 
joined
 
DeGeorge
 
Financial
 
Company
 
as
 
a
 
strategic
 
advisor.
 
Mr.
Pascali
 
has
 
been
 
with
 
the
 
Company
 
since
 
its
 
incorporation
 
in
 
2006
 
where
 
he
 
has
 
been
 
responsible
 
for
 
developing
 
the
business
 
strategy
 
and
 
marketing
 
focus
 
for
 
commercializing
 
the
 
Company’s
 
technologies
 
and
 
running
 
the
 
business.
 
Mr.
Pascali continues to develop the Company’s strategy and oversee the operational management as the President and Chief
Executive Officer.
 
In his leadership role, Mr.
 
Pascali spearheads the Strategic Management
 
Team
 
which is responsible for
the strategic planning and execution of the Company’s
 
business plans.
Alan Curleigh – Director and Chair of the Board of Directors
Alan Curleigh
 
has a
 
wealth
 
of experience
 
in
 
international
 
business,
 
capital
 
projects,
 
and board
 
governance.
 
For
many years
 
he was
 
a senior
 
executive and
 
Board member
 
of a
 
leading Canadian
 
engineering contracting
 
company.
 
Mr.
Curleigh subsequently served
 
as a
 
representative on multiple
 
corporate boards and
 
associations. Most notably, Mr. Curleigh
was
 
federally
 
appointed
 
by
 
Canada’s
 
International
 
Trade
 
Minister
 
to
 
Chair
 
the
 
Board
 
of
 
Directors
 
of
 
the
 
Canadian
Commercial Corporation,
 
a crown
 
corporation mandated
 
to support
 
the growth
 
of international
 
trade by helping
 
Canadian
exporters
 
gain
 
access
 
to,
 
and
 
negotiate
 
with,
 
foreign
 
government
 
procurement
 
markets
 
–
 
a
 
role
 
he
 
held
 
for
 
7
 
years.
Additionally, Mr.
 
Curleigh was Chair of the Audit Committee for Veterans
 
Affairs Canada, was the Chair of the Board of the
Canadian Manufacturers
 
and Exporters, Canada’s
 
largest industry
 
association, was a
 
board member and
 
treasurer of the
Canadian Exporters Association;
 
and a
 
Board Member for
 
NorthStar Trade Finance. Mr. Curleigh
 
has been a
 
visiting Faculty
Member at
 
the Directors
 
College, a
 
joint initiative
 
between The
 
Conference
 
Board of
 
Canada and
 
McMaster
 
University’s
DeGroote School
 
of Business
 
and Canada’s
 
premier school
 
of governance,
 
where he
 
has lectured
 
extensively on
 
Board
governance issues since
 
the school’s
 
inauguration. For his
 
many contributions to
 
leadership and business
 
in Canada, Mr.
Curleigh is the
 
recipient of numerous awards,
 
including the Queen Elizabeth
 
II Diamond Jubilee Medal
 
for dedicated service
to peers and country in building a stronger export sector
 
for Canada.
Robert M. Radin – Director,
 
Member of the Audit
 
Committee, Member of the
 
Nominating and Corporate Governance
Committee,
 
Chair of the Compensation Committee, and Member
 
of the Strategic Initiatives Committee
Robert M. Radin retired from
 
the U.S. Army in 2011
 
after serving for over 35
 
years and attaining the rank
 
of Major
General.
 
His
 
last
 
assignment
 
was
 
as
 
the
 
U.S.
 
Army
 
Assistant
 
Deputy
 
Chief
 
of
 
Staff,
 
G-4,
 
(Logistics),
 
the
 
Pentagon,
Washington,
 
DC. In
 
this position
 
he was
 
responsible for
 
policy development,
 
strategic planning
 
and budget
 
programming
for distribution,
 
logistics force structure,
 
readiness reporting, Army
 
pre-positions stocks, contingency
 
contracting and
 
support
of U.S. Army worldwide operations. Prior to
 
joining the Army Staff, he served as
 
the Commanding General of the U.S. Army
Sustainment Command
 
at Rock
 
Island, Illinois.
 
Other key
 
assignments include:
 
Deputy Chief
 
of Staff
 
for Operations
 
and
Logistics for the U.S. Army Materiel Command
 
from 2005 to 2007; Commanding
 
General of the Joint Munitions Command
from
 
2004
 
to
 
2005;
 
and
 
from
 
2003
 
to
 
2004
 
was
 
deployed
 
to
 
Kuwait
 
as
 
the
 
Commanding
 
General,
 
U.S.
 
Army
 
Materiel
Command-SWA and was responsible for support of U.S. land forces in Kuwait, Iraq, Afghanistan and Djibouti. After retiring
from the Army in
 
June 2011,
 
he founded Radin
 
& Associates Consulting,
 
LLC, a firm that
 
assists clients with
 
supply chain
related issues.
 
Mr.
 
Radin has
 
graduated from
 
the U.S.
 
Military Academy
 
at West
 
Point and
 
holds postgraduate
 
degrees
from the Florida Institute of Technology
 
and the National Defense University.
 
29
Dr. Virendra
 
Jha – Director,
 
Member of the Compensation
 
Committee,
 
and Chair of the Nominating
 
and Corporate
Governance Committee
Dr. Virendra Jha, member of the order
 
of Canada, has over 42
 
years of experience in the
 
Canadian Space Program
ranging from in-depth engineering work
 
to senior management positions in both
 
the private and the public
 
sectors. Dr. Jha
began his
 
space career
 
in 1972 when
 
he joined
 
the aerospace
 
group of
 
RCA Limited
 
Montréal, which
 
later became
 
Spar
Aerospace Limited. In 1988, he became the
 
Director of Engineering at Spar Aerospace
 
Limited. In 1991 Dr.
 
Jha joined the
Canadian Space Agency as
 
Director of the Space Mechanics
 
Group. In 1996, he
 
was promoted to the
 
position of Director
General, Space Technologies
 
Branch of the CSA. From 2003 till 2008, he was the
 
Vice-President responsible for Science,
Technology
 
and Programs
 
at the Canadian
 
Space Agency.
 
As Vice
 
President, Dr.
 
Jha provided strategic
 
direction, vision
and leadership to all
 
core technical sectors of
 
the Agency.
 
From November 2005 until
 
February 2006, Dr.
 
Jha also served
as the Acting President of the Canadian Space Agency.
 
He was Chief Engineering Adviser at the Canadian Space Agency
until his retirement in 2014.
Dr. Jha received his B. Tech. degree in Mechanical Engineering from the Indian Institute of Technology Delhi India,
his
 
Master’s
 
degree
 
in
 
Mechanical
 
engineering
 
from
 
McMaster
 
University,
 
Hamilton,
 
Canada,
 
and
 
his
 
Ph.D.
 
degree
 
in
Mechanical
 
Engineering
 
from
 
Concordia
 
University,
 
Montréal,
 
Canada
 
and
 
the
 
C.Dir.
 
(Chartered
 
Director)
 
Degree
 
from
McMaster
 
University,
 
Hamilton,
 
Canada.
 
Dr.
 
Jha’s
 
technical
 
contributions
 
in
 
Canadian
 
Space
 
Program
 
as
 
well
 
as
 
in
International
 
Space activities
 
have been
 
significant.
 
His leadership
 
and commitment
 
to the
 
profession
 
is reflected
 
by his
recognition and active participation in many groups, committees
 
and advisory boards.
Dr.
 
Jha currently
 
serves as
 
a director
 
on the
 
Board of
 
the Atomic
 
Energy of
 
Canada Limited,
 
a Canadian
 
federal
Crown corporation and Canada’s largest nuclear science
 
and technology laboratory.
Andrew Abdalla
 
– Director
 
,
 
Member of
 
the Compensation
 
Committee,
 
Member of
 
the Nominating
 
and Corporate
Governance Committee and Chair of the Audit Committee
Andrew Abdalla,
 
CPA,
 
CA, is
 
a partner
 
at MNP
 
LLP,
 
a leading
 
national accounting,
 
tax and
 
business
 
consulting
firm in Canada. Mr.
 
Abdalla brings to the Board
 
of Directors more than 20
 
years of strategic planning,
 
and tax advice, with
a specific focus on sales and income tax, acquisitions and divestitures, business valuations,
 
corporate reorganizations and
spinoffs. Mr. Abdalla
 
received his Chartered Professional Accountant
 
(CPA, CA)
 
designation in 1987. He holds a Bachelor
of Commerce and a graduate diploma in public accounting
 
from Concordia University in Montréal.
Rodayna Kafal – Director and Vice
 
President, Investor Relations and Strategic Business Development
Upon graduating
 
from McGill
 
University in
 
2009 (Bachelor’s
 
degree in
 
Chemical Engineering),
 
Ms. Kafal
 
took on
lead roles in process engineering at
 
the Natural Gas Technologies Centre in Montréal, Québec, where she was responsible
for
 
managing
 
a
 
number
 
of
 
high-level
 
projects.
 
Thereafter,
 
she
 
enrolled
 
in
 
a
 
two-year
 
graduate
 
program
 
in
 
Industrial
Engineering
 
and
 
Project
 
Management
 
at
 
École
 
Polytechnique
 
de
 
Montréal.
 
Ms.
 
Kafal
 
joined
 
PyroGenesis
 
with
 
a
 
strong
background
 
in
 
process
 
engineering,
 
combined
 
with
 
practical
 
experience
 
in
 
sales,
 
promotional
 
activities
 
and
 
business
relations. Ms.
 
Kafal has
 
been a
 
member of
 
PyroGenesis’ Strategic
 
Management
 
Group since
 
2016 where
 
she has
 
been
instrumental in providing input
 
into all aspects
 
of PyroGenesis’ growth and
 
represented the views of
 
the investor community.
As Vice President,
 
Investor Relations and
 
Strategic Business Development,
 
Ms. Kafal continues
 
to oversee PyroGenesis’
complete investor relations program, while managing the Company’s
 
marketing team.
Ben Naccarato – Director,
 
Member of the Compensation Committee, Member of the Audit Committee,
 
and Member
of the Strategic Initiatives Committee
Mr. Naccarato, CPA, CMA, is the Executive Vice-President and Chief Financial Officer at Perma-Fix Environmental
Services Inc., a NASDAQ-listed environmental
 
services company,
 
providing unique radioactive mixed and
 
industrial waste
management services. Mr.
 
Naccarato brings to the Board more
 
than 30 years of experience
 
in senior financial positions in
the environmental industry.
 
Mr. Naccarato
 
is a graduate
 
from the University
 
of Toronto
 
with a Bachelor
 
of Commerce and
Finance Degree as well
 
as being a Chartered Professional
 
Accountant and Certified Management Accountant (CPA, CMA).
Nannette
 
Ramsey –
 
Director,
 
Member
 
of
 
the
 
Compensation
 
Committee,
 
and
 
Chair
 
of
 
the
 
Strategic
 
Initiatives
Committee
Ms.
 
Ramsey
 
holds
 
undergraduate
 
degrees
 
in
 
Economics,
 
Engineering
 
and
 
an
 
MBA.
 
She
 
brings
 
process
engineering and machining and
 
materials expertise from Caterpillar
 
Tractor Company,
 
J.I. Case and more recently
 
served
as the
 
Site Manager
 
and Associate
 
Director
 
of Engineering
 
for Edgewood
 
Chemical
 
Biological Center’s
 
site at
 
the Rock
 
30
Island Arsenal
 
in Illinois.
 
She was
 
responsible for
 
strategic planning,
 
budgeting, industrial
 
base analysis,
 
engineering and
testing, quality assurance and information technology solutions
 
to a variety of customers.
Pierre Carabin – Chief Technology
 
Officer and Chief Strategist
Mr.
 
Pierre
 
Carabin,
 
P.
 
Eng.,
 
has
 
over
 
thirty
 
years
 
of
 
experience
 
in
 
process
 
engineering
 
and
 
environmental
technologies. Throughout
 
his 23
 
years at
 
PyroGenesis,
 
he has
 
been instrumental
 
in the
 
development
 
of the
 
Company’s
various
 
technology
 
platforms.
 
He
 
is
 
the
 
inventor
 
or
 
co-inventor
 
of
 
more
 
than
 
one
 
hundred
 
pending
 
and
 
issued
 
patents
relating to high temperature chemical processes.
 
As Chief Technology
 
Officer,
 
he leads PyroGenesis’ engineering team in
the design and development of plasma systems and is also member of the Company’s Strategic Management Team
 
which
is responsible for the strategic planning and execution
 
of the Company’s business plan.
Prior
 
to
 
joining
 
PyroGenesis
 
in
 
1998,
 
Mr.
 
Carabin
 
worked
 
in
 
the
 
pulp
 
and
 
paper
 
industry
 
for
 
8
 
years,
 
notably
developing
 
paper
 
recycling
 
machinery.
 
Mr.
 
Carabin
 
holds
 
a
 
Master’s
 
degree
 
in
 
Chemical
 
Engineering
 
with
 
honors
 
from
McGill University,
 
and, to
 
date, he
 
has contributed
 
to more
 
than 50
 
technical communications
 
for various
 
journals and
 
at
technical conferences. Mr.
 
Carabin also volunteers
 
for the Air
 
and Waste
 
Management Association
 
(AWMA)
 
and Ecotech
Québec, the cleantech cluster in Québec.
Andre Mainella – Chief Financial Officer
Upon graduating from Concordia University,
 
Mr. Mainella has since then accumulated
 
over 20 years of experience
in accounting.
 
Andre began his
 
career at Raymond
 
Chabot Grant Thornton.
 
As a senior
 
audit manager,
 
he worked on
 
a
diverse
 
list
 
of
 
audit
 
and
 
non-audit
 
related
 
mandates
 
for
 
private
 
and
 
publicly-traded
 
companies.
 
His
 
broad
 
experience
includes clients in various business sectors such as
 
manufacturing, distribution, retail, real estate and airlines.
 
Mr. Mainella
had
 
the
 
opportunity
 
to
 
assist
 
in
 
the
 
implementation
 
of
 
accounting
 
standards,
 
initial
 
public
 
offerings
 
as
 
well
 
as
 
business
acquisitions and divestitures.
From 2013
 
to
 
2015,
 
Mr.
 
Mainella
 
occupied
 
the
 
role
 
of
 
finance manager
 
for the
 
Canadian
 
operations
 
of
 
Orica,
 
a
provider of
 
commercial explosives
 
and blasting
 
systems for
 
the mining
 
and construction
 
sectors.
 
Andre was
 
responsible
for the
 
financial information,
 
budgeting &
 
forecasting, in
 
addition to
 
advising on
 
new sales
 
contracts and
 
capital projects,
among others.
Subsequently,
 
Mr.
 
Mainella
 
joined
 
Cogeco,
 
a
 
telecommunications
 
and
 
media
 
company,
 
as
 
their
 
director
 
of
consolidation
 
and
 
corporate
 
accounting.
 
He
 
managed
 
the
 
activities
 
of
 
corporate
 
accounting,
 
shared
 
services,
 
and
 
the
consolidation of
 
the Canadian
 
and American
 
financial results.
 
Mr.
 
Mainella was
 
part of
 
the Cogeco
 
corporate team
 
for 6
years
 
and
 
contributed
 
in
 
various
 
manners
 
to
 
the
 
implementation
 
of
 
the
 
company’s
 
numerous
 
acquisitions,
 
enterprise
resource planning implementation, new accounting standards,
 
and involvement in the corporate insurance policies.
Mr.
 
Mainella
 
received
 
his
 
Chartered
 
Professional
 
Accountant
 
designation
 
in
 
2001.
 
He
 
holds
 
a
 
Bachelor
 
of
Commerce and a graduate diploma in public accounting
 
from Concordia University in Montreal.
Mark Paterson – General Counsel
Mark Paterson is a senior business lawyer with comprehensive corporate
 
and commercial experience, including in
senior in-house roles as
 
well as private practice.
 
He has an
 
extensive legal understanding in
 
a wide array of
 
areas, including
in contract negotiations,
 
M&A management, conflict
 
resolution, human resources,
 
and corporate and
 
regulatory compliance.
Prior
 
to
 
joining
 
PyroGenesis,
 
Mr.
 
Paterson
 
was
 
General
 
Counsel
 
for
 
Tenet
 
Fintech
 
Group,
 
a
 
publicly
 
traded
 
company
specialized in
 
innovative fintech
 
and AI
 
applications. From
 
2010 to
 
2021, he
 
served as
 
Director –
 
Legal Affairs
 
for Future
Electronics, a large, multinational distributor of electronic components. Before joining
 
Future Electronics, Mr. Paterson was
General
 
Counsel
 
and
 
Vice-President
 
of
 
Strategic
 
Alliances
 
for
 
Luxury
 
Retreats,
 
a
 
provider
 
of
 
high-end
 
vacation
accommodations.
 
He began
 
his
 
legal career
 
at Fasken,
 
one
 
of the
 
leading business
 
law firms
 
in Canada,
 
working in
 
its
corporate
 
law
 
department.
 
Mr.
 
Paterson
 
is
 
a
 
member
 
of
 
the
 
Quebec
 
bar
 
and
 
holds
 
BCL
 
and
 
LLB
 
degrees
 
from
 
McGill
University. He also
 
holds a B.A. from Bishop’s University.
10.3.
 
Cease Trade Orders, Bankruptcies,
 
Penalties or Sanctions
Except as
 
indicated below,
 
to the knowledge
 
of the Company,
 
no director
 
or executive
 
officer of
 
the Company
 
is,
as
 
at
 
the
 
date
 
of
 
this
 
AIF,
 
or
 
was
 
within
 
10
 
years
 
before
 
the
 
date
 
of
 
this
 
AIF,
 
a
 
director,
 
chief
 
executive
 
officer
 
or
 
chief
financial officer of any company (including the Company), that: (a) was subject
 
to a cease trade order, an order
 
similar to a
cease trade
 
order,
 
or an
 
order that
 
denied such
 
company access
 
to any
 
exemption under
 
securities legislation
 
(each an
 
31
“
Order
”) that was issued while the director or executive officer was acting in the capacity as director, chief executive officer
or chief financial officer, or (b) was subject to an Order that was issued after the director or executive officer ceased to be a
trustee, director,
 
chief executive
 
officer or
 
chief financial
 
officer and
 
which resulted
 
from an
 
event that
 
occurred while
 
that
person was
 
acting in
 
the capacity
 
as director,
 
chief executive
 
officer or
 
chief financial
 
officer.
 
As announced
 
on February
23, 2023
 
by the
 
Company,
 
the AMF
 
issued an
 
order suspending
 
a private
 
placement of
 
units of
 
the Company.
 
The AMF
alleged in the order that the Company did not satisfy all of the requirements
 
necessary to complete the financing under the
listed issuer financing exemption under Part 5A of National
 
Instrument 45-106 – Prospectus Exemptions.
To
 
the knowledge
 
of the
 
Company,
 
no
 
director
 
or executive
 
officer
 
of the
 
Company,
 
or a
 
shareholder
 
holding
 
a
sufficient number of securities
 
of the Company to
 
affect materially the
 
control of the Company,
 
(a) is, as at
 
the date of this
AIF,
 
or has been
 
within the
 
10 years
 
before the date
 
of this
 
AIF,
 
a director or
 
executive officer
 
of any company
 
(including
the
 
Company)
 
that,
 
while
 
that
 
person
 
was
 
acting
 
in
 
that
 
capacity,
 
or
 
within
 
a
 
year
 
of
 
that
 
person
 
ceasing
 
to
 
act
 
in
 
that
capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or
instituted
 
any
 
proceedings,
 
arrangement
 
or
 
compromise
 
with
 
creditors
 
or
 
had
 
a
 
receiver,
 
receiver
 
manager
 
or
 
trustee
appointed to hold its assets; or (b) has, within
 
the 10 years before the date of this
 
AIF,
 
become bankrupt, made a proposal
under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement
or compromise
 
with creditors,
 
or had a
 
receiver,
 
receiver manager
 
or trustee
 
appointed to
 
hold the
 
assets of
 
the director,
executive officer or shareholder.
To
 
the knowledge
 
of the
 
Company,
 
no
 
director
 
or executive
 
officer
 
of the
 
Company,
 
or a
 
shareholder
 
holding
 
a
sufficient
 
number
 
of
 
securities
 
of
 
the
 
Company
 
to
 
affect
 
materially
 
the
 
control
 
of
 
the
 
Company
 
has
 
been
 
subject
 
to
 
any
penalties
 
or
 
sanctions
 
imposed
 
by
 
a
 
court
 
relating
 
to
 
securities
 
legislation
 
or
 
by
 
a
 
securities
 
regulatory
 
authority
 
or
 
has
entered into
 
a settlement
 
agreement with
 
a securities
 
regulatory authority,
 
or has
 
been subject
 
to any
 
other
 
penalties or
sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable
 
investor making
an investment decision.
10.4.
 
Conflicts of Interest
There are
 
potential
 
conflicts
 
of interest
 
to
 
which
 
the
 
directors
 
and officers
 
of the
 
Company
 
may be
 
subject
 
to
 
in
connection
 
with
 
the
 
operations
 
of
 
the
 
Company.
 
In
 
particular,
 
the
 
Pascali
 
Trust,
 
of
 
which
 
P.
 
Peter
 
Pascali,
 
the
 
Chief
Executive
 
Officer
 
of
 
the
 
Company,
 
is
 
a
 
trustee,
 
officer
 
and
 
beneficiary
 
is
 
the
 
landlord
 
under
 
the
 
lease
 
regarding
 
the
Company’s corporate headquarters. See “Business of the
 
Company - Facilities” and “General
 
Development of the Business
-
 
Year
 
Ended
 
December
 
31,
 
2020
 
-
 
Corporate
 
Developments
 
and
 
Financings”.
 
Over
 
the
 
past
 
three
 
completed
 
financial
years, P.
 
Peter Pascali has also participated in financings of the Company, and he may continue to do so in the future. See
“General Development
 
of the
 
Business -
 
Year
 
Ended December
 
31, 2020
 
- Corporate
 
Developments and
 
Financings”. In
addition
 
to
 
being
 
the
 
Chief
 
Executive
 
Officer
 
of
 
the
 
Company,
 
P.
 
Peter
 
Pascali
 
is
 
also
 
a
 
controlling
 
shareholder
 
of
 
the
Company. See “Risk
 
Factors - Influence of the Significant Shareholders”.
On October 9,
 
2019, Drosrite International, a
 
US-based private company owned
 
by Alex Pascali,
 
the son of
 
P. Peter
Pascali, entered
 
into the
 
Dross Processing
 
Service Agreement
 
with Radian
 
Oil &
 
Gas Services
 
Company,
 
an oil
 
and gas
services company operating in
 
the Middle East (the
 
“Dross Processing Service Agreement”). The
 
Dross Processing Service
Agreement
 
was
 
structured
 
as a
 
“BOOT”
 
agreement
 
(build,
 
own,
 
operate
 
and
 
transfer)
 
having
 
a
 
20-year
 
term
 
and
 
using
PyroGenesis’
 
DROSRITE
 
technology.
 
The Dross
 
Processing
 
Service Agreement
 
provides that
 
Drosrite
 
International
 
will
manufacture and
 
deliver to
 
Radian Oil
 
& Gas
 
DROSRITE TPY
 
systems which
 
will be
 
installed at
 
the aluminium
 
smelting
facility
 
of
 
Ma’aden
 
Aluminum
 
Company
 
located
 
at
 
Ras
 
Al-Khair,
 
in
 
Saudi
 
Arabia.
 
In
 
addition,
 
Drosrite
 
International
 
will
oversee the
 
installation of
 
the systems
 
at the
 
Ras Al-Khair
 
facility.
 
Drosrite International
 
will also
 
supply spare
 
parts over
the 20-year
 
duration of
 
the
 
Dross Processing
 
Service Agreement
 
and be
 
entitled to
 
receive
 
an annual
 
royalty.
 
The
 
total
value of
 
the
 
project
 
exceeds
 
US$17 million.
 
The amount
 
remaining
 
to be
 
collected
 
is approximately
 
US$9
 
million of
 
the
initial US$17 million purchase order with remaining billings of roughly US$1 million to be issued. There is also an additional
approximately
 
US$450,000
 
to
 
be
 
collected
 
for
 
transportation,
 
storage,
 
and
 
insurance
 
fees.
 
See
 
also
 
the
 
Company’s
consolidated
 
financial
 
statements
 
and
 
related
 
notes
 
for
 
the
 
year
 
ended
 
December
 
31,
 
2022,
 
and
 
the
 
management’s
discussion and analysis thereon.
In connection with the Dross Processing Service Agreement between
 
Drosrite International and Radian Oil & Gas,
the Drosrite International Exclusive
 
Agreement was entered into
 
between PyroGenesis and Drosrite
 
International on August
29, 2019, under which Drosrite International received the required rights from PyroGenesis
 
to perform its obligations under
its
 
agreement
 
with
 
Radian
 
Oil
 
&
 
Gas.
 
Under
 
the
 
Drosrite
 
International
 
Exclusive
 
Agreement,
 
PyroGenesis
 
will
 
receive
payments
 
equal
 
to
 
the
 
payments
 
received
 
by
 
Drosrite
 
International
 
under
 
its
 
Dross
 
Processing
 
Service
 
Agreement
 
with
Radian Oil & Gas.
 
32
The sole
 
director,
 
officer,
 
and shareholder
 
of Drosrite
 
International is
 
Alex Pascali,
 
an employee
 
of the
 
Company
and
 
the
 
son
 
of
 
P.
 
Peter
 
Pascali,
 
Chief
 
Executive
 
Officer
 
of
 
the
 
Company.
 
Drosrite
 
International
 
does
 
not
 
receive
 
any
management, administration or other fee from the Company.
 
Drosrite International is, on an accounting basis, a subsidiary
of the Company and
 
not a client, as
 
under applicable accounting standards the
 
Company is considered to effectively control
Drosrite
 
International.
 
The
 
Company
 
has
 
to
 
indemnify
 
Drosrite
 
International
 
for
 
any
 
claims
 
and
 
liabilities
 
incurred
 
in
connection with
 
the Drosrite
 
systems. The
 
Company’s
 
Drosrite technology
 
was protected
 
by patents
 
until 2017
 
and new
patent applications pertaining to the technology have been
 
filed before 2017, which patent applications are pending.
 
To the best of
 
the Company’s knowledge,
 
other than
 
as disclosed
 
in this
 
AIF, there are no
 
known existing
 
or potential
conflicts of interest among the Company, the directors and officers of the Company or other members of management or of
any proposed
 
promoter,
 
director,
 
officer
 
or other
 
member
 
of
 
management
 
as a
 
result of
 
their
 
outside
 
business
 
interests
except that
 
certain of the
 
directors and officers
 
serve as directors
 
and officers of
 
other companies, and
 
therefore it is
 
possible
that
 
a
 
conflict
 
may
 
arise
 
between
 
their
 
duties
 
to
 
the
 
Company
 
and
 
their
 
duties
 
as
 
a
 
director
 
or
 
officer
 
of
 
such
 
other
companies.
A director who has a
 
material interest in a matter
 
before the Board or any
 
committee on which he
 
or she serves is
required to disclose such interest as soon as the director becomes aware of it. In situations where a director has a material
interest
 
in
 
a
 
matter
 
to
 
be
 
considered
 
by
 
the
 
Board
 
or
 
any
 
committee
 
on
 
which
 
he
 
or
 
she
 
serves,
 
such
 
director
 
may
 
be
required to
 
absent himself
 
or herself
 
from the
 
meeting while
 
discussions and
 
voting with
 
respect to
 
the matter
 
are taking
place. Directors are also required
 
to comply with the relevant
 
provisions of applicable corporate
 
laws regarding conflicts of
interest. Under the CBCA, directors who have a
 
material interest in any person or entity that is a party
 
to a material contract
or a proposed material contract
 
with the Company are required under
 
the CBCA, subject to certain
 
exceptions, to disclose
that
 
interest
 
and
 
generally
 
abstain
 
from
 
voting
 
on
 
any
 
resolution
 
to
 
approve
 
such
 
a
 
contract.
 
In
 
addition,
 
directors
 
and
executive officers are required to act honestly
 
and in good faith with a view to the best interests of the
 
Company.
10.5.
 
Board Independence
The Board believes that sound
 
corporate governance practices
 
are essential to the effective,
 
efficient and prudent
operation of the Company and to the enhancement of
 
shareholder value.
Under National Instrument
 
58-101 - Disclosure
 
of Corporate Governance
 
Practices, a director
 
is considered to
 
be
independent if the director is independent
 
within the meaning of section 1.4
 
of
NI 52-110
. Pursuant to section 1.4 of NI
 
52-
110, an independent
 
director is a director who is free
 
from any direct or indirect relationship
 
which could, in the view of
 
the
board, be reasonably expected to interfere with a director’s independent judgment. Based on information provided by each
director concerning their background, employment
 
and affiliations, the Board has
 
determined that, of the eight directors on
the Company’s
 
Board, P.
 
Peter Pascali
 
and Rodayna
 
Kafal are
 
not independent
 
under section
 
1.4 of
 
NI 52-110
 
because
they are executive officers of the Company.
11.
 
Audit Committee and Other Committees
11.1.
 
Audit Committee
The
 
Company’s
 
Audit
 
Committee
 
is
 
responsible
 
for
 
assisting
 
the
 
Board
 
in
 
monitoring
 
the
 
performance
 
of
management in ensuring that
 
the Company is operating
 
in an ethical
 
manner and encouraging management
 
to demonstrate
a strong commitment to integrity.
The Audit Committee is also responsible for providing assistance to the Board in fulfilling
 
its financial reporting and
control
 
responsibilities
 
to
 
the
 
shareholders
 
of
 
the
 
Company
 
and
 
to
 
the
 
investment
 
community.
 
The
 
Audit
 
Committee’s
primary responsibilities in this regard are to: (i) oversee the accounting and financial reporting process of the Company and
the audit of its financial statements; (ii) monitor the Company’s financial reporting process and internal control systems; (iii)
review and
 
appraise
 
the audit
 
activities of
 
the Company’s
 
independent
 
auditors;
 
(iv) meet
 
periodically
 
with
 
management
and with the independent auditors; and (v) assess the relevance and reliability of the Company’s financial reports to ensure
they accurately portray the underlying economic circumstances
 
and financial performance of the Company.
Audit Committee Charter
The
 
Audit
 
Committee’s
 
mandate
 
is
 
to
 
promote
 
and
 
ensure
 
that
 
the
 
Company
 
complies
 
with
 
high
 
standards
 
of
financial reporting,
 
risk management
 
and ethical
 
behavior.
 
The Audit
 
Committee Charter
 
is attached
 
hereto as
 
Schedule
“A”.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33
Composition of the Audit Committee
The Audit Committee
 
is comprised of
 
three directors,
 
Messrs. Abdalla (Chair
 
of the Audit
 
Committee), Naccarato,
and Radin.
 
Each of
 
the three
 
members meets the
 
independence requirements for
 
members of
 
the Audit
 
Committee pursuant
to NI 52-110,
 
NASDAQ Rule
 
5605 and Rule
 
10A-3 under the
 
Securities Exchange
 
Act of 1934,
 
as amended.
 
Each of the
three members is financially literate within the meaning of NI 52-
11
0 and NASDAQ Rule 5605, has an understanding of the
accounting
 
principles
 
used
 
to
 
prepare
 
financial
 
statements
 
and
 
varied
 
experience
 
as
 
to
 
the
 
general
 
application
 
of
 
such
accounting principles, and
 
has an understanding
 
of the internal
 
controls and procedures
 
necessary for financial
 
reporting.
For additional details regarding the
 
education and experience of each
 
member of the Audit Committee,
 
see “Directors and
Executive Officers”.
Pre-Approval Policies and Procedures
The
 
Audit
 
Committee
 
must
 
pre-approve
 
all
 
non-audit
 
services
 
to
 
be
 
provided
 
to
 
the
 
Company
 
by
 
its
 
external
auditors.
External Fees by Audit Category
Fees incurred with the
 
auditors for audit and
 
non-audit services in the
 
last two fiscal years
 
for audit fees are
 
outlined
in the following table.
Fees paid to RCGT LLP in Fiscal
Fees paid to RCGT LLP in Fiscal
Year ended December 31,
 
2022
Year ended December 31,
 
2021
Audit Fees
(1)
$
531,818
$
325,500
Audit-Related Fees
(2)
$
13,000
$
—
Tax
 
-Related Fees
(3)
$
—
$
9,975
All Other Fees
$
57,725
$
21,000
Total
 
Fees
$
602,543
$
356,475
Notes:
(1) “Audit
 
Fees” include
 
fees necessary
 
to perform
 
the annual
 
audit of
 
the Company’s
 
consolidated financial
 
statements,
and for services that are normally
 
provided in connection with statutory
 
and regulatory filings or engagement
 
related to the
annual consolidated financial statements.
(2)
 
“Audit-Related
 
Fees”
 
include
 
translation
 
services
 
and
 
fees
 
for
 
accounting
 
consultations
 
on
 
matters
 
reflected
 
in
 
the
financial statements.
(3) “Tax
 
-Related Fees” includes fees for tax compliance, tax planning and tax advice. Tax planning and tax advice includes
assistance with tax audits and Research and Development
 
tax credits.
11.2.
 
Other Committees
In
 
addition
 
to
 
the
 
Audit
 
Committee,
 
the
 
Board
 
has
 
established
 
three
 
other
 
standing
 
committees,
 
namely
 
the
Nominating and Governance Committee, the Compensation
 
Committee, and the Strategic Initiatives Committee.
Nominating and Corporate Governance Committee
The Company’s
 
Nominating and
 
Corporate Governance
 
Committee consists
 
of four
 
directors, each
 
of whom
 
is a
person determined by
 
the Board to
 
be an independent
 
director, and
 
is charged with
 
reviewing, overseeing and
 
evaluating
the
 
Company’s
 
corporate
 
governance
 
and
 
nominating
 
policies.
 
The
 
Nominating
 
and
 
Corporate
 
Governance
 
Committee
comprises Dr.
 
Virendra Jha
 
(Chair), Andrew
 
Abdalla, Robert
 
M. Radin,
 
and Nannette
 
Ramsey.
 
The Board
 
has adopted
 
a
written
 
charter
 
setting
 
forth
 
the
 
purpose,
 
composition,
 
authority
 
and
 
responsibility
 
of
 
the
 
Nominating
 
and
 
Corporate
Governance Committee.
 
34
Compensation Committee
The Company’s Compensation
 
Committee consists of
 
five directors, each
 
of whom is a
 
person determined by
 
the
Board
 
to
 
be
 
an
 
independent
 
director,
 
and
 
is
 
charged
 
with
 
reviewing,
 
overseeing
 
and
 
evaluating
 
the
 
Company’s
compensation policies.
 
The Compensation
 
Committee comprises
 
Robert M.
 
Radin (Chair),
 
Andrew Abdalla,
 
Dr.
 
Virendra
Jha, Ben Naccarato and
 
Nannette Ramsey. The Board has adopted
 
a written charter setting
 
forth the purpose, composition,
authority and responsibility of the Compensation Committee.
Strategic Initiatives Committee
The Company’s
 
Strategic Initiatives
 
Committee consists
 
of three
 
directors, each
 
of whom
 
is a person
 
determined
by the Board to be an independent director and is charged with
 
assisting the Board by providing input to strategic decisions
and
 
their
 
implementation.
 
The
 
Strategic
 
Initiatives
 
Committee
 
comprises
 
Nannette
 
Ramsey
 
(Chair),
 
Ben
 
Naccarato
 
and
Robert M.
 
Radin. The
 
Board has
 
adopted a
 
written charter setting
 
forth the
 
purpose, composition, authority
 
and responsibility
of the Strategic Initiatives Committee.
12.
 
Risk Factors
The Company has identified below
 
certain significant risks relating to
 
the business of the
 
Company and the industry
in which
 
it operates.
 
The following
 
information
 
is only
 
a summary
 
of certain
 
risk
 
factors and
 
is qualified
 
in its
 
entirety by
reference to,
 
and must
 
be read
 
in conjunction
 
with, the
 
detailed information
 
appearing elsewhere
 
in this
 
AIF.
 
These risks
and uncertainties
 
are not the
 
only ones facing
 
the Company.
 
Additional risks
 
and uncertainties
 
not currently
 
known to the
Company, or that the Company currently considers immaterial, may also impair the operations of the Company. If any such
risks
 
materialize
 
into
 
actual
 
events
 
or
 
circumstances,
 
the
 
Company’s
 
assets,
 
liabilities,
 
financial
 
condition,
 
results
 
of
operations (including future
 
results of
 
operations), business and
 
business prospects, are
 
likely to
 
be materially
 
and adversely
affected. There is no assurance
 
that risk management steps
 
taken will avoid future loss due
 
to the uncertainties described
below
 
or
 
other
 
unforeseen
 
risks.
 
An
 
investment
 
in
 
the
 
Common
 
Shares
 
or
 
other
 
securities
 
of
 
the
 
Company
 
is
 
highly
speculative
 
and
 
involves
 
a
 
high
 
degree
 
of
 
risk.
 
Before
 
making
 
any
 
investment
 
decision,
 
prospective
 
investors
 
should
carefully consider all the information contained in this document
 
including, in particular,
 
the risk factors described below.
12.1.
 
Risks Related to the Company’s Business
 
and Industry
Operating Income (Loss) and Negative Operating Cash
 
Flow
The Company
 
has a
 
history
 
of
 
losses
 
and
 
negative
 
cash
 
flows.
 
The
 
Company’s
 
operations
 
have
 
not
 
generated
sufficient
 
earnings
 
and
 
cash
 
flows
 
to
 
date
 
to
 
result
 
in
 
consistent
 
profitability
 
or
 
positive
 
cash
 
flows.
 
For
 
the
 
year
 
ended
December 31,
 
2022, the
 
Company had
 
net losses
 
of $32,167.027,
 
cash flows
 
used in operations
 
of $11,128,885,
 
and an
accumulated deficit
 
of $93,384,858.
 
To
 
the extent
 
that the
 
Company has
 
net losses
 
and negative
 
operating cash
 
flows in
future periods, it may
 
need to allocate
 
a portion of its
 
cash reserves to
 
fund such negative
 
cash flows. The
 
Company may
also be required
 
to raise additional
 
funds through the
 
issuance of equity
 
or debt securities,
 
or otherwise. There
 
can be no
assurance that the Company will be able to generate positive cash flows from its operations, that additional capital or other
types of financing will be available when needed or that
 
these financings will be on terms favourable to the Company.
The Company’s ability to continue as a going
 
concern is dependent upon its ability in
 
the future to grow its revenue,
achieve
 
profitable
 
operations,
 
successfully
 
develop
 
and
 
introduce
 
new
 
products
 
and,
 
in
 
the
 
meantime,
 
to
 
obtain
 
the
necessary financing
 
to meet
 
its obligations
 
and repay
 
its liabilities
 
when they
 
become due.
 
While the
 
Company has
 
been
successful
 
in
 
securing
 
financing
 
in
 
the
 
past,
 
raising
 
additional
 
funds
 
is
 
dependent
 
on
 
a
 
number
 
of
 
factors
 
outside
 
the
Company’s control, and as such there is no assurance that it will be able to do so in the future. If the Company
 
is unable to
obtain sufficient additional financing,
 
it may have to curtail operations
 
and development activities, any of which
 
could harm
the business,
 
financial
 
condition and
 
results of
 
operations. In
 
addition, the
 
Company may
 
not generate
 
significant
 
gains,
and may suffer losses, from the value of its strategic
 
investments in the future.
Actual Financial Position and Results of Operations May Differ Materially from
 
the Expectations of the Company’s
Management
The
 
Company’s
 
actual
 
financial
 
position
 
and
 
results
 
of
 
operations
 
may
 
differ
 
materially
 
from
 
management’s
expectations. The
 
Company has
 
from time to
 
time experienced
 
changes in
 
its operating
 
plans and delays
 
in the timing
 
of
its plans. As
 
a result, the Company’s revenue,
 
net income and cash
 
flow may differ materially from
 
the Company’s projected
revenue, net income and cash flow. The process for estimating the Company’s revenue, net income and cash flow requires
the use of judgment in determining the appropriate assumptions
 
and estimates. These estimates and assumptions may be
 
35
revised as additional information becomes available
 
and as additional analyses are
 
performed. In addition, the assumptions
used in planning may not prove to be accurate, and other factors may affect the Company’s financial condition
 
or results of
operations.
Revenue Risks
PyroGenesis
 
may
 
experience
 
delays
 
in
 
achieving
 
revenues,
 
particularly
 
with
 
plasma
 
gasification
 
projects
 
which
have a long
 
sales cycle. Revenues
 
may be delayed
 
or negatively
 
impacted by issues
 
encountered by the
 
Company or its
clients including:
●
 
unforeseen engineering and/or environmental problems;
●
 
delays or inability to obtain required financing, licenses, permits
 
and/or regulatory approvals;
●
 
supply interruptions and/or labour disputes;
●
 
foreign exchange fluctuations and/or collection risk; and
●
 
competition from other suppliers and/or alternative energy
 
solutions that are less capital intensive.
There is no assurance that the business of the
 
Company will perform as expected or that returns from the
 
business
will support the expenditures needed to develop it.
Concentration Risk
To
 
date, a
 
small number
 
of customers
 
have accounted
 
for a
 
majority of
 
PyroGenesis’ revenues.
 
As its
 
business
expands, the Company
 
expects that revenue
 
distribution will be
 
over a larger
 
number of different
 
customers. For
 
the year
ended December 31, 2022, sales
 
of PyroGenesis to its
 
two principal customers accounted for approximately
 
52% of its total
revenue. For
 
the year
 
ended December
 
31, 2021,
 
sales to
 
two principal
 
customers
 
accounted for
 
approximately 79%
 
of
PyroGenesis’
 
total
 
revenue.
 
The
 
loss
 
of,
 
or
 
a
 
reduction
 
in,
 
purchase
 
orders
 
or
 
anticipated
 
purchase
 
orders
 
from
PyroGenesis’ principal
 
customers could
 
have a
 
material adverse
 
effect
 
on its
 
business, financial
 
condition and
 
results of
operations.
 
Additionally,
 
if
 
one
 
of
 
PyroGenesis’
 
customers
 
is
 
unable
 
to
 
meet
 
its
 
commitments
 
to
 
PyroGenesis,
 
the
Company’s business, financial condition and results
 
of operations could be adversely affected.
As
 
a
 
result
 
of
 
the
 
Drosrite
 
International
 
Exclusive
 
Agreement
 
and
 
the
 
Dross
 
Processing
 
Service
 
Agreement,
significant
 
revenues
 
may
 
be
 
generated
 
by the
 
Company
 
from payments
 
made to
 
Drosrite
 
International
 
under
 
the Dross
Processing
 
Service
 
Agreement.
 
The
 
Company
 
will
 
no
 
longer
 
receive
 
payments
 
under
 
such
 
arrangement
 
if
 
the
 
Dross
Processing
 
Service
 
Agreement,
 
which
 
involves
 
a
 
third
 
party
 
in
 
a
 
foreign
 
jurisdiction,
 
is
 
terminated,
 
which
 
could
 
have
 
a
material adverse effect on the business, financial
 
condition and results of operations of the Company.
Technology Development and Manufacturing
 
Capability Risks
PyroGenesis recently expanded into new
 
areas of business and, as a result,
 
many of the Company’s products
 
are
at various
 
stages of
 
the development
 
cycle. The
 
Company may
 
be unable
 
to commercialize
 
such products,
 
or it
 
may be
unable
 
to
 
manufacture
 
such
 
products
 
in
 
a
 
commercially
 
viable
 
manner.
 
Whilst
 
management
 
is
 
confident
 
in
 
both
 
the
Company’s technology and in
 
its team of
 
experienced engineers, scientists and
 
technicians, management cannot know with
certainty
 
which
 
of
 
the
 
Company’s
 
products
 
will
 
be
 
commercialized,
 
when
 
any
 
such
 
products
 
will
 
be
 
commercialized,
 
or
whether any such products will be manufactured and distributed
 
profitably.
Additional financing and dilution
PyroGenesis may require additional financing. There
 
can be no assurance
 
that additional financing will be
 
available
to the Company when needed, or on terms acceptable to the Company.
 
PyroGenesis’ inability to raise financing to support
ongoing operations or
 
to fund capital
 
expenditures could limit
 
the Company’s growth and
 
may have a
 
material adverse effect
upon the Company.
 
The Company
 
does not
 
exclude raising
 
additional funds
 
by equity
 
financing. In
 
addition,
 
as of
 
the date
 
of this
AIF,
 
9,815,500 stock
 
options and 6,014,600
 
warrants are
 
currently issued
 
and outstanding.
 
The exercise
 
of stock
 
options
and/or warrants, as well as any new equity financings,
 
represents dilution factors for present and future shareholders.
 
36
Reliance on Third Party Suppliers, Service Providers
 
,
 
Distributors and Manufacturers
The Company’s
 
direct and
 
indirect suppliers,
 
service providers,
 
distributors and
 
manufacturers
 
may elect,
 
at any
time,
 
to
 
breach
 
or
 
otherwise
 
cease
 
to
 
participate
 
in
 
supply,
 
service,
 
distribution
 
or
 
manufacturing
 
agreements,
 
or
 
other
relationships,
 
on
 
which
 
the
 
Company’s
 
operations
 
rely.
 
Loss
 
of
 
its
 
suppliers,
 
service
 
providers,
 
distributors
 
and
manufacturers
 
could
 
have
 
a
 
material
 
adverse
 
effect
 
on
 
the
 
Company’s
 
business
 
and
 
operational
 
results.
 
Further,
 
any
disruption
 
in
 
the
 
manufacturing
 
process
 
done
 
by
 
third
 
party
 
manufacturers
 
could
 
have
 
a
 
material
 
adverse
 
effect
 
on
 
the
business,
 
financial
 
condition
 
and
 
results
 
of
 
operations
 
of
 
the
 
Company.
 
The
 
Company
 
cannot
 
ensure
 
that
 
alternative
production capacity would
 
be available in
 
the event
 
of a disruption,
 
or if it
 
would be available,
 
that it could
 
be obtained on
favorable terms.
Manufacturing Facilities
The
 
vast
 
majority
 
of
 
the
 
Company’s
 
products
 
are
 
manufactured
 
in
 
its
 
two
 
manufacturing
 
facilities
 
located
 
in
Montréal,
 
Québec.
 
Accordingly,
 
the
 
Company
 
is
 
highly
 
dependent
 
on
 
the
 
uninterrupted
 
and
 
efficient
 
operation
 
of
 
its
manufacturing facility.
 
If for
 
any reason
 
the Company
 
is required
 
to discontinue
 
production at
 
its facility,
 
it could
 
result in
significant delays in
 
production of the
 
Company’s products
 
and interruption of
 
the Company’s
 
sales as it
 
seeks to resume
production. The
 
Company
 
may be
 
unable to
 
resume production
 
on a
 
timely basis.
 
If operations
 
at the
 
facility
 
were to
 
be
disrupted
 
as
 
a
 
result
 
of
 
equipment
 
failures,
 
natural
 
disasters,
 
fires,
 
accidents,
 
work
 
stoppages,
 
power
 
outages
 
or
 
other
reasons, the Company’s business, financial condition
 
and/or results of operations could be materially adversely
 
affected.
Sales Cycle and Fixed Price Contracts
PyroGenesis sales cycle is long and the signing of
 
new contracts is subject to delay,
 
over which the Company has
little control. The Company also enters
 
into sales contracts with fixed pricing,
 
which may be impacted by changes
 
over the
period of implementation. There is no assurance that delays or problems in fulfilling contracts with clients will not adversely
affect the Company’s activities, operating
 
results or financial position.
Reliance on Technology
PyroGenesis
 
depends
 
upon
 
continuous
 
improvements
 
in
 
technology
 
to
 
meet
 
client
 
demands
 
with
 
respect
 
to
performance and cost, and to explore additional
 
business opportunities. There can be no assurance
 
that the Company will
be successful in its
 
efforts in this regard or
 
that it will have
 
the resources available to
 
meet this demand. Whilst
 
management
anticipates that
 
its research
 
and development
 
efforts will
 
allow the
 
Company to
 
explore additional
 
business opportunities,
there
 
is
 
no
 
guarantee
 
that
 
such
 
business
 
opportunities
 
will
 
be
 
presented
 
or
 
realized.
 
The
 
commercial
 
advantage
 
of
 
the
Company will depend to a significant extent on the intellectual property and proprietary
 
technology of PyroGenesis and the
ability
 
of
 
the
 
Company
 
to
 
prevent
 
others
 
from
 
copying
 
such
 
proprietary
 
technologies.
 
PyroGenesis
 
currently
 
relies
 
on
intellectual property rights and
 
other contractual or proprietary
 
rights, including (without limitation)
 
copyright, trade secrets,
confidential
 
procedures,
 
contractual
 
provisions,
 
licenses
 
and
 
patents,
 
to
 
protect
 
its
 
proprietary
 
technology.
 
PyroGenesis
may have to engage in
 
litigation in order to protect
 
its patents or other
 
intellectual property rights, or to
 
determine the validity
or
 
scope
 
of
 
the
 
proprietary
 
rights
 
of
 
others.
 
This
 
type
 
of
 
litigation
 
can
 
be
 
expensive
 
and
 
time
 
consuming,
 
regardless
 
of
whether or
 
not the
 
Company is successful.
 
PyroGenesis may seek
 
patents or
 
other similar
 
protections in
 
respect of
 
particular
technology; however, there can be no assurance that any future patent applications
 
will actually result in issued patents, or
that,
 
even
 
if
 
patents
 
are
 
issued,
 
they
 
will
 
be
 
of
 
sufficient
 
scope
 
or
 
strength
 
to
 
provide
 
meaningful
 
protection
 
or
 
any
commercial
 
advantage
 
to
 
the
 
Company.
 
Moreover,
 
the
 
process
 
of
 
seeking
 
patent
 
protection
 
can
 
itself
 
be
 
long
 
and
expensive. In the meantime, competitors may develop technologies that are similar or superior to PyroGenesis’ technology
or design around the patents owned by the Company, thereby adversely affecting the Company’s competitive advantage in
one or more of its areas of business. Despite the efforts
 
of the Company, its intellectual
 
property rights may be invalidated,
circumvented, challenged, infringed or
 
required to be licensed to others.
 
It cannot be assured that
 
any steps the Company
may take
 
to protect
 
its intellectual
 
property rights
 
and other
 
rights to
 
such proprietary
 
technologies that
 
are central
 
to the
Company’s operations will prevent misappropriation
 
or infringement of its technology.
Changes to Contracts
PyroGenesis
 
is
 
dependent
 
upon
 
its
 
ability
 
to
 
establish
 
and
 
develop
 
new
 
relationships
 
and
 
to
 
build
 
on
 
existing
relationships
 
with
 
current
 
clients.
 
The
 
Company
 
cannot
 
provide
 
assurance
 
that
 
it
 
will
 
be
 
successful
 
in
 
maintaining
 
or
advancing
 
its
 
relationships
 
with
 
current
 
clients
 
or
 
procure
 
additional
 
clients.
 
In
 
addition,
 
PyroGenesis
 
cannot
 
provide
assurance that its customers and the
 
end users of its products will
 
continue to provide the Company
 
with business, or that
existing customers
 
and end
 
users will
 
not seek
 
to renegotiate
 
or terminate
 
existing contracts
 
providing for
 
the sale
 
of the
Company’s products and
 
technology based on
 
circumstances on which
 
the Company is
 
not currently
 
aware. Any termination
 
37
or amendment of
 
a contract under
 
which the Company
 
derives an important
 
portion of its
 
revenues, including
 
the Drosrite
International
 
Exclusive
 
Agreement
 
and
 
the
 
Dross
 
Processing
 
Service
 
Agreement,
 
and
 
any
 
adverse
 
change
 
in
 
the
relationship
 
of the
 
Company
 
with its
 
customers
 
and end
 
users, will
 
have an
 
adverse
 
effect
 
on the
 
Company’s
 
business,
financial condition and results of operations.
Sales to governments and governmental
 
entities are subject to specific
 
additional risks, such as delays
 
in funding,
termination of
 
contracts
 
or sub-contracts
 
at the
 
convenience
 
of the
 
government,
 
termination, reduction
 
or modification
 
of
contracts or sub-contracts in
 
the event of changes
 
in the government’s policies
 
or as a result of budgetary
 
constraints and
increased or unexpected costs resulting in losses or reduced
 
profits under fixed price contracts.
Foreign Exchange Exposure
PyroGenesis’ products
 
and services
 
are increasingly
 
being sold
 
in markets
 
outside of
 
Canada, whilst
 
most of
 
its
operating expenses
 
and capital
 
expenditures are
 
denominated in
 
Canadian dollars.
 
As a result,
 
the Company
 
is exposed
to
 
fluctuations
 
in
 
the
 
foreign
 
exchange
 
rates
 
between
 
Canadian
 
dollar
 
and
 
the
 
currency
 
in
 
which
 
a
 
particular
 
sale
 
is
transacted,
 
which
 
may
 
result
 
in
 
foreign
 
exchange
 
losses
 
that
 
could
 
affect
 
earnings.
 
Foreign
 
sales
 
are
 
predominantly
denominated in U.S. dollars. The Company has not to date sought to hedge the risks associated with fluctuations in
 
foreign
exchange rates.
Competition
The industry in which the Company
 
operates is competitive and PyroGenesis
 
competes with a substantial number
of companies which have
 
greater technical and
 
financial resources. There can
 
be no assurance that
 
such competitors will
not substantially increase the resources devoted to the development
 
and marketing of products and services
 
that compete
with those of
 
the Company
 
or that new
 
or existing
 
competitors will
 
not enter
 
the various
 
markets in which
 
PyroGenesis is
active. There
 
can be
 
no assurance
 
that competitors
 
will not
 
develop new
 
and unknown
 
technologies with which
 
the Company
may have difficulty
 
competing. Furthermore,
 
failure to
 
remain cost competitive
 
may result in
 
PyroGenesis losing
 
business
to its competitors.
The plasma
 
technology
 
of
 
PyroGenesis
 
competes
 
against
 
other
 
plasma
 
and
 
conventional
 
technologies.
 
Without
limitation,
 
the
 
demand
 
for
 
the
 
plasma
 
technology
 
of
 
PyroGenesis,
 
particularly
 
in
 
waste
 
destruction
 
and
 
waste-to-energy
systems, can be impacted by the commodity prices of the energy source used for the process and the price at which waste
is accepted by
 
landfills and
 
traditional waste
 
processing plants.
 
While the Company
 
believes that
 
demand for sustainable
waste management practices
 
that have
 
lower environmental impacts
 
than traditional solutions
 
such as landfill
 
or incineration
is
 
increasing,
 
the
 
high
 
flows
 
of
 
electricity
 
necessary
 
to
 
operate
 
the
 
waste
 
destruction
 
and
 
waste-to-energy
 
systems
 
of
PyroGenesis have an
 
impact on the
 
operational costs
 
of the Company’s
 
systems, and traditional
 
solutions may
 
constitute
lower-cost solutions, particularly if commodity prices (including
 
of oil and natural gas) are low or experience a decline.
Management and Key Personnel
PyroGenesis
 
depends
 
on
 
the
 
skills
 
and
 
experience
 
of
 
its
 
executive
 
and
 
management
 
team
 
and
 
other
 
key
employees.
 
The
 
Company
 
relies
 
heavily
 
on
 
its
 
ability
 
to
 
attract
 
and
 
retain
 
highly
 
skilled
 
personnel
 
in
 
a
 
competitive
environment. PyroGenesis may be
 
unable to recruit, retain, and
 
motivate highly skilled executives
 
and employees in order
to assist the Company’s
 
business, especially activities
 
that are essential to
 
the success of
 
the Company.
 
Failure to recruit
and retain
 
highly skilled
 
executives
 
and
 
employees
 
may adversely
 
affect
 
PyroGenesis’
 
business, financial
 
condition
 
and
results of operations.
Implementation of a Strategic Plan
PyroGenesis’ commercial strategy aims to leverage its products, consumables, and services whilst focusing on the
resolution of problems
 
within niche markets within
 
the industries served by
 
the Company.
 
There can be no
 
assurances as
to the
 
success
 
of the
 
Company’s
 
strategic
 
plan,
 
which
 
should
 
be considered
 
under
 
the risks
 
perspective
 
and
 
difficulties
frequently encountered by a developing business.
Adverse Decisions of Sovereign Governments
PyroGenesis
 
conducts
 
an
 
increasing
 
portion
 
of
 
its
 
business
 
internationally.
 
There
 
is
 
no
 
assurance
 
that
 
any
sovereign government, including Canada’s, will not establish laws or regulations that may be detrimental to the Company’s
interests or
 
that PyroGenesis
 
will continue
 
to have
 
access to
 
the regulatory
 
agencies in
 
the countries
 
in which
 
it sells
 
or
seeks
 
to
 
sell,
 
directly
 
or
 
indirectly,
 
its
 
products
 
and
 
services.
 
Governments
 
have,
 
from
 
time
 
to
 
time,
 
established
 
foreign
 
38
exchange controls, which could
 
have a material adverse effect
 
on the Company’s business,
 
financial condition and results
of operations.
Risks Related to International Operations
A substantial
 
portion of the
 
Company’s sales
 
are made to
 
customers and
 
end users
 
outside Canada,
 
including in
the United States, the European Union and
 
the Middle East. The Company conducts
 
its international operations directly or
through distributors
 
or other
 
agents or
 
intermediaries, including
 
Drosrite International.
 
The Company
 
plans to
 
continue to
expand its international sales and marketing
 
efforts. International operations are subject
 
to a number of inherent risks, and
the Company’s future results could be adversely affected
 
by a number of factors, including:
•
 
unfavorable political or economic environments;
•
 
requirements
 
or
 
preferences
 
for
 
domestic
 
products
 
or
 
solutions,
 
which
 
could
 
reduce
 
demand
 
for
 
the
Company’s products;
•
 
differing existing or future regulatory and certification
 
requirements;
•
 
unexpected legal or regulatory changes;
•
 
greater difficulty in collecting accounts receivable
 
and longer collection periods;
•
 
difficulties in enforcing contracts;
•
 
any inability to effectively protect intellectual property;
•
 
tariffs
 
and
 
trade
 
barriers,
 
export
 
regulations
 
and
 
other
 
regulatory
 
and
 
contractual
 
limitations
 
on
 
the
Company’s ability to sell its products; and
•
 
potentially adverse tax consequences, including multiple and
 
possibly overlapping tax structures.
Fluctuations
 
in currency
 
exchange rates
 
could materially
 
adversely
 
affect
 
sales denominated
 
in currencies
 
other
than the Canadian dollar
 
and cause a reduction
 
in revenues derived from
 
sales in a particular country.
 
Financial instability
in
 
foreign
 
markets
 
could
 
also
 
affect
 
the
 
sale
 
of
 
the
 
Company’s
 
products
 
in
 
international
 
jurisdictions.
 
In
 
addition,
 
the
Company may be denied
 
access to its end
 
customers as a result
 
of a closing of
 
the borders of the
 
countries in which it
 
its
products are sold due to economic, legislative, political, military
 
and other conditions in such countries.
There can be
 
no assurance
 
that such factors
 
will not materially
 
adversely affect
 
the operations,
 
growth prospects
and sales of
 
the Company
 
and, consequently,
 
its results
 
of operations. In
 
addition, revenues
 
the Company earns
 
in other
jurisdictions may be
 
subject to taxation by
 
more than one
 
jurisdiction, which could materially
 
adversely affect the Company’s
earnings. Each of these factors could have an adverse effect on the Company’s business, financial condition and results of
operations.
Governmental Regulation
PyroGenesis is subject to a variety of federal, provincial, state, local and international laws and regulations relating
namely to
 
the environment,
 
health and
 
safety,
 
export controls,
 
currency exchange,
 
labour and
 
employment and
 
taxation.
These laws and regulations
 
are complex, change frequently
 
and have tended to become
 
more stringent over time. Failure
to comply with these
 
laws and regulations may
 
result in a variety
 
of administrative, civil and
 
criminal enforcement measures,
including assessment
 
of monetary
 
penalties, imposition
 
of remedial
 
requirements and
 
issuance of
 
injunctions as
 
to future
compliance. The Company
 
may be subject to
 
compliance audits by regulatory
 
authorities in the various countries
 
in which
it operates.
Government-funded Defense and Security Programs
Like most
 
companies that
 
supply products
 
and services
 
to governments,
 
the Company
 
is subject
 
to routine
 
audit
and investigation procedures
 
of government agencies.
 
These agencies may
 
review the Company’s
 
performance under its
contracts,
 
business
 
processes,
 
cost
 
structure,
 
and
 
compliance
 
with
 
applicable
 
laws,
 
regulations
 
and
 
standards.
 
The
Company’s incurred costs for
 
each year are
 
subject to audit
 
by government agencies, which
 
can result in
 
payment demands
related to costs
 
they believe
 
should be
 
disallowed. The
 
Company works
 
with governments
 
to assess
 
the merits
 
of claims
and
 
where
 
appropriate
 
reserve
 
for
 
amounts
 
disputed.
 
The
 
Company
 
could
 
be
 
required
 
to
 
provide
 
repayments
 
to
 
39
governments, which may have a negative effect on its results of operations. Contrary to cost-reimbursable contracts, some
costs may not
 
be reimbursed or
 
allowed under fixed-price
 
contracts, which may
 
have a negative
 
effect on the
 
Company’s
results of operations if it experiences costs overruns.
Environmental Liability
PyroGenesis
 
is
 
subject
 
to
 
various
 
environmental
 
laws
 
and
 
regulations
 
enacted
 
in
 
the
 
jurisdictions
 
in
 
which
 
it
operates,
 
which
 
govern
 
the
 
manufacturing,
 
processing,
 
importation,
 
transportation,
 
handling
 
and
 
disposal
 
of
 
certain
materials used
 
in the
 
Company’s
 
operations. Management
 
believes that
 
it has
 
adequate procedures
 
in place
 
to address
compliance with current environmental laws and regulations. Furthermore, management monitors the Company’s practices
concerning the handling of environmentally hazardous materials. However,
 
there can be no assurance that the Company’s
procedures
 
will
 
prevent
 
environmental
 
damage
 
occurring
 
from
 
spills
 
of
 
materials
 
handled
 
by
 
the
 
Company
 
or
 
that
 
such
damage has not
 
already occurred.
 
On occasion, substantial
 
liabilities to third
 
parties may be
 
incurred. The Company
 
may
have
 
the
 
benefit
 
of
 
insurance
 
maintained
 
by
 
it
 
or
 
the
 
operator,
 
however
 
the
 
Company
 
may
 
become
 
liable
 
for
 
damages
against which it cannot adequately
 
insure or against which it
 
may elect not to
 
insure because of high costs
 
or other reasons.
The Company’s
 
clients are
 
subject to similar
 
environmental laws
 
and regulations,
 
as well as
 
limits on emissions
 
to the air
and discharges
 
into surface
 
and sub-surface
 
waters. While
 
regulatory developments
 
that may
 
follow in subsequent
 
years
could have
 
the effect
 
of reducing
 
industry activity,
 
the Company
 
cannot predict
 
the nature
 
of the
 
restrictions that
 
may be
imposed. The
 
Company may
 
be required
 
to increase
 
operating expenses
 
or capital
 
expenditures in
 
order to
 
comply with
any new restrictions or regulations.
Product Liability and Other Lawsuits
PyroGenesis is
 
subject to
 
a variety
 
of potential
 
product liabilities claims
 
and other
 
lawsuits related with
 
its operations,
including
 
liabilities
 
and
 
expenses
 
associated
 
with
 
product
 
defects.
 
The
 
Company
 
maintains
 
product
 
liability
 
and
 
other
insurance coverage that management believes is generally
 
in accordance with the market practice in its industry,
 
but there
can be no assurance that the Company will always be
 
adequately insured against all potential liabilities.
A
 
malfunction
 
or
 
the
 
inadequate
 
design
 
of
 
the
 
Company’s
 
products
 
could
 
result
 
in
 
product
 
liability
 
or
 
other
 
tort
claims.
 
Accidents
 
involving
 
the
 
Company’s
 
products
 
could
 
lead
 
to
 
personal
 
injury
 
or
 
physical
 
damage.
 
Any
 
liability
 
for
damages resulting
 
from malfunctions
 
could be
 
substantial and
 
could materially
 
adversely affect
 
the Company’s
 
business
and
 
results
 
of
 
operations.
 
In
 
addition,
 
a
 
well-publicized
 
actual
 
or
 
perceived
 
problem
 
could
 
adversely
 
affect
 
the
 
market’s
perception of the Company’s products and affect
 
its reputation. This could result in a decline in demand for the
 
Company’s
products, which would materially adversely affect
 
the Company’s financial condition and results
 
of operations.
The sale
 
and use
 
of products
 
and processes
 
developed or
 
sold by
 
the Company
 
may entail
 
potential liability
 
and
possible
 
warranty
 
claims.
 
The Company
 
is also
 
required
 
to
 
indemnify
 
Drosrite
 
International
 
for any
 
claims
 
and
 
liabilities
incurred in
 
connection with the
 
Drosrite systems. The
 
Company may be
 
subject to personal
 
injury claims for
 
injuries resulting
from use of its products. Although the
 
Company maintains product liability insurance,
 
there can be no assurance that such
insurance will
 
continue to
 
be available
 
on commercially
 
reasonable terms
 
or that
 
the risks
 
covered or
 
coverage amounts
will be sufficient to cover all claims.
Information Systems Disruptions
The Company
 
relies
 
on various
 
information
 
technology
 
systems
 
to manage
 
its operations.
 
Over
 
the last
 
several
years,
 
the
 
Company
 
has
 
implemented,
 
and
 
it
 
continues
 
to
 
implement,
 
modifications
 
and
 
upgrades
 
to
 
such
 
systems,
including changes
 
to legacy
 
systems, replacing
 
legacy systems
 
with successor
 
systems with
 
new functionality, and acquiring
new systems with
 
new functionality.
 
These types
 
of activities subject
 
the Company
 
to inherent costs
 
and risks
 
associated
with replacing and
 
changing these systems,
 
including impairment of
 
the Company’s ability
 
to fulfill
 
customer orders, potential
disruption of
 
its internal
 
control structure, substantial
 
capital expenditures, additional
 
administration and operating
 
expenses,
retention of
 
sufficiently skilled
 
personnel to
 
implement and
 
operate the
 
new systems,
 
demands on management
 
time and
other
 
risks
 
and
 
costs
 
of
 
delays
 
or
 
difficulties
 
in
 
transitioning
 
to
 
or
 
integrating
 
new
 
systems
 
into
 
the
 
Company’s
 
current
systems. These
 
implementations, modifications,
 
and upgrades
 
may not result
 
in productivity
 
improvements at
 
a level that
outweighs the costs of implementation, or at all. In addition, the difficulties with implementing new technology systems may
cause
 
disruptions
 
in
 
the
 
Company’s
 
business
 
operations
 
and
 
have
 
a
 
material
 
adverse
 
effect
 
on
 
its
 
business,
 
financial
condition, or results of operations.
 
40
Security Breaches
As part
 
of its
 
day-to-day business,
 
the Company
 
stores its
 
data and
 
certain data
 
about its customers
 
in its global
information technology system.
 
Unauthorized access to
 
the Company’s data,
 
including any regarding
 
its customers, could
expose the Company to a risk of
 
loss of this information, loss of
 
business, litigation and possible liability. Security measures
may
 
be
 
breached
 
by
 
intentional
 
misconduct
 
by
 
computer
 
hackers,
 
as
 
a
 
result
 
of
 
third-party
 
action,
 
employee
 
errors,
malfeasance
 
or
 
otherwise.
 
Additionally,
 
third
 
parties
 
may
 
attempt
 
to
 
fraudulently
 
induce
 
employees
 
or
 
customers
 
into
disclosing sensitive information
 
such as usernames,
 
passwords or other
 
information in order
 
to gain access
 
to the data
 
of
the
 
Company’s
 
customers
 
or
 
the
 
Company’s
 
data,
 
including
 
the
 
Company’s
 
intellectual
 
property
 
and
 
other
 
confidential
business
 
information,
 
or
 
the
 
Company’s
 
information
 
technology
 
systems.
 
Because
 
the
 
techniques
 
used
 
to
 
obtain
unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a
target, the Company may
 
be unable to anticipate
 
these techniques or
 
to implement adequate preventative
 
measures. Any
security breach could
 
result in a
 
loss of
 
confidence by the
 
Company’s customers, damage its
 
reputation, disrupt its
 
business,
lead to legal liability and negatively impact its future sales,
 
business, operations and financial results.
Public Health Crises
Public
 
health
 
crises,
 
including
 
local,
 
regional,
 
national
 
or
 
international
 
outbreak
 
of
 
a
 
contagious
 
disease,
 
could
 
have
 
an
adverse effect on
 
local economies, the
 
global economy,
 
and the markets
 
in which the
 
Company operates
 
and markets its
products, and may
 
adversely impact the
 
price and demand
 
for the Company’s
 
products and the
 
ability of the
 
Company to
operate and market
 
its products. Any
 
such alterations or
 
modifications could cause
 
substantial interruption to
 
the Company’s
business, any
 
of which
 
could have
 
a material
 
adverse effect
 
on the
 
Company’s operations
 
or financial
 
results, and
 
could
include temporary closures of
 
one or more
 
of the Company’s or
 
its partner’s offices or
 
facilities; temporary or long-term
 
labor
shortages; temporary or long-term adverse impacts on the Company’s supply chain and distribution channels; the potential
of increased network vulnerability and
 
risk of data loss resulting
 
from increased use of remote
 
access and removal of data
from the Company’s facilities.
2020
 
and
 
2021
 
saw
 
The
 
global
 
outbreak
 
of
 
COVID-19
 
have
 
devasting
 
effects
 
on
 
populations
 
and
 
led
 
to
 
governments
worldwide enacting emergency
 
measures to protect
 
against the spread of
 
the virus. In 2022,
 
the detrimental effects
 
of the
COVID-19 pandemic
 
on economies
 
and businesses
 
lessened with
 
the lifting
 
of most
 
public health
 
restrictions
 
during the
year. Like most businesses, PyroGenesis was affected
 
by the pandemic. However, the Company took measures to protect
its
 
employees
 
and
 
the
 
company
 
in
 
general
 
and
 
continued
 
its
 
operations
 
throughout
 
the
 
pandemic.
 
Notwithstanding
 
the
foregoing, there
 
is no
 
guarantee that
 
the global
 
effects of the
 
pandemic will
 
continue to improve
 
and if
 
new strains, outbreaks,
or other adverse
 
effects arise,
 
the Company and
 
its vendors and
 
suppliers may
 
be unable to
 
continue operations
 
or keep
up with increasing
 
demands as
 
a result
 
of COVID-19
 
and customers
 
may experience
 
delays or interruptions
 
in service
 
or
the delivery
 
of products, which
 
may be detrimental
 
to the
 
Company’s reputation, business, results
 
of operations and
 
financial
position.
 
The
 
Company
 
cautions
 
that
 
it
 
is
 
impossible
 
to
 
fully
 
anticipate
 
or
 
quantify
 
the
 
effect
 
and
 
ultimate
 
impact
 
of
 
the
COVID-19 pandemic as the situation still continues to evolve.
Litigation
The Company may from time
 
to time become party
 
to litigation, including in the
 
ordinary course of business
 
which
could adversely
 
affect its
 
business. Should
 
any litigation
 
in which
 
the Company
 
becomes involved
 
be determined
 
against
the Company,
 
such a decision could
 
adversely affect the
 
Company’s ability to
 
continue operating and
 
the market price for
the Common Shares
 
and could use
 
significant resources.
 
Even if the
 
Company is
 
involved in litigation
 
and wins, litigation
can redirect significant Company resources. Litigation may also create a negative perception of the Company’s
 
brand. See
“Legal Proceedings”.
Trade Secrets May Be Difficult to Protect
The
 
Company’s
 
success
 
depends
 
upon
 
the
 
skills,
 
knowledge
 
and
 
experience
 
of
 
its
 
scientific
 
and
 
technical
personnel,
 
consultants
 
and
 
advisors,
 
as
 
well
 
as
 
contractors.
 
Because
 
the
 
Company
 
operates
 
in
 
a
 
highly
 
competitive
industry,
 
it
 
relies
 
in
 
part
 
on
 
trade
 
secrets
 
to
 
protect
 
its
 
proprietary
 
products
 
and
 
processes.
 
However,
 
trade
 
secrets
 
are
difficult
 
to
 
protect.
 
The
 
Company
 
generally
 
enters
 
into
 
confidentiality
 
or
 
non-disclosure
 
agreements
 
with
 
its
 
corporate
partners,
 
employees,
 
consultants,
 
outside
 
scientific
 
collaborators,
 
developers
 
and
 
other
 
advisors.
 
These
 
agreements
generally
 
require
 
that
 
the
 
receiving
 
party
 
keep
 
confidential,
 
and
 
not
 
disclose
 
to
 
third
 
parties,
 
confidential
 
information
developed by the receiving
 
party or made known to
 
the receiving party by
 
the Company during the course
 
of the receiving
party’s relationship with the Company. These agreements also generally provide that inventions conceived by the receiving
party
 
in
 
the
 
course
 
of
 
rendering
 
services
 
to
 
the
 
Company
 
will
 
be
 
its
 
exclusive
 
property,
 
and
 
the
 
Company
 
enters
 
into
assignment agreements to perfect its rights.
 
41
These
 
confidentiality,
 
inventions
 
and
 
assignment
 
agreements,
 
where
 
in
 
place,
 
may
 
be
 
breached
 
and
 
may
 
not
effectively
 
assign intellectual
 
property rights
 
to the
 
Company.
 
The Company’s
 
trade secrets
 
also could
 
be independently
discovered by
 
competitors, in
 
which case
 
the Company
 
would not
 
be able
 
to prevent
 
the use
 
of such
 
trade secrets
 
by its
competitors. The enforcement of a claim alleging that a party illegally obtained and was using the Company’s trade secrets
could be difficult, expensive and time consuming and the outcome could be unpredictable. The failure to obtain or maintain
meaningful trade secret protection could adversely affect
 
the Company’s competitive position.
Risks Related to Acquiring Companies
The Company
 
has in
 
the past
 
and may
 
in the
 
future acquire
 
other companies
 
and there
 
are risks
 
inherent in
 
any
such acquisition.
 
Specifically,
 
there could
 
be unknown
 
or undisclosed
 
risks or
 
liabilities of
 
such companies
 
for which
 
the
Company is not sufficiently indemnified. Any such unknown or undisclosed risks or liabilities could materially and adversely
affect the Company’s financial performance and results of
 
operations. The Company could encounter additional transaction
and integration
 
related costs
 
or other factors
 
such as
 
the failure to
 
realize all
 
of the
 
benefits from
 
such acquisitions.
 
All of
these factors could cause dilution
 
to the Company’s earnings per
 
share or decrease or
 
delay the anticipated accretive effect
of the acquisition and cause a decrease in the market price of the Company’s
 
securities. The Company may not be able to
successfully integrate and combine the operations, personnel and technology infrastructure of any such acquired company
with its existing operations.
 
If integration is not
 
managed successfully by
 
the Company’s
 
management, the Company
 
may
experience interruptions in its business activities, deterioration in its employee and customer relationships, increased costs
of
 
integration
 
and
 
harm
 
to
 
its reputation,
 
all
 
of which
 
could
 
have
 
a
 
material
 
adverse
 
effect
 
on
 
the
 
Company’s
 
business,
financial
 
condition
 
and
 
results
 
of
 
operations.
 
The
 
Company
 
may
 
experience
 
difficulties
 
in
 
combining
 
corporate
 
cultures,
maintaining
 
employee
 
morale
 
and
 
retaining
 
key
 
employees.
 
The
 
integration
 
of
 
any
 
such
 
acquired
 
companies
 
may
 
also
impose substantial demands on
 
the management. There is no
 
assurance that any acquisition will
 
be successfully integrated
in a timely manner or at all.
Global Economic Uncertainty
Demand
 
for
 
the
 
Company’s
 
products
 
and
 
services
 
are
 
influenced
 
by
 
general
 
economic
 
and
 
consumer
 
trends
beyond
 
the
 
Company’s
 
control.
 
There
 
can
 
be
 
no
 
assurance
 
that
 
the
 
Company’s
 
business
 
and
 
corresponding
 
financial
performance
 
will
 
not
 
be
 
adversely
 
affected
 
by
 
general
 
economic
 
or
 
consumer
 
trends.
 
In
 
particular,
 
global
 
economic
conditions are still tight, and if such conditions continue, recur or worsen, there can be no assurance that they will not have
a material adverse effect on the Company’s
 
business, financial condition and results of operations.
Furthermore, economic conditions may produce downward pressure on
 
stock prices and on the availability
 
of credit
for financial
 
institutions and
 
corporations. If
 
any market
 
disruption and
 
volatility continue,
 
the Company
 
might experience
reductions
 
in
 
business
 
activity,
 
increased
 
funding
 
costs
 
and
 
funding
 
pressures,
 
as applicable,
 
a decrease
 
in
 
the
 
market
price
 
of
 
the
 
Common
 
Shares,
 
a
 
decrease
 
in
 
asset
 
values,
 
additional
 
write-downs
 
and
 
impairment
 
charges
 
and
 
lower
profitability.
Inability to Renew Leases
The
 
Company
 
may
 
be
 
unable
 
to
 
renew
 
or
 
maintain
 
its
 
leases
 
(commercial
 
or
 
real
 
property)
 
on
 
commercially
acceptable
 
terms
 
or
 
at
 
all.
 
Any
 
inability
 
to
 
renew
 
a
 
lease,
 
or
 
any
 
renewal
 
of
 
a
 
lease
 
with
 
a
 
rental
 
rate
 
higher
 
than
 
the
prevailing rate
 
under the
 
applicable lease
 
prior to
 
expiration, may
 
have an
 
adverse impact
 
on the
 
Company’s operations,
including disruption of its operations
 
or an increase in its cost
 
of operations. In addition, in the
 
event of non-renewal of any
of the Company’s
 
leases, the Company
 
may be unable
 
to locate suitable
 
replacement properties
 
for its facilities
 
or it may
experience delays in relocation that could lead to a disruption in its operations. Any disruption in the Company’s operations
could have an adverse effect on its financial condition
 
and results of operations.
Financial Reporting and Other Public Issuer Requirements
As
 
a
 
public
 
company,
 
the
 
Company
 
is
 
subject
 
to
 
the
 
reporting
 
requirements
 
of
 
the
 
Canadian
 
Securities
Administrators, or the
 
CSA, and
 
the U.S. Securities
 
Exchange Act
 
of 1934, as
 
amended, and the
 
rules and regulations
 
of
the listing standards of the TSX
 
and NASDAQ and the U.S. Sarbanes-Oxley Act.
 
The requirements of these laws, rules and
regulations have increased and will continue
 
to increase the Company’s legal,
 
accounting, and financial compliance costs,
make some activities
 
more difficult,
 
time-consuming, and
 
costly,
 
and place significant
 
strain on the
 
Company’s personnel,
systems, and resources. The Company is continuing to
 
develop and refine its disclosure controls and other
 
procedures that
are designed to ensure that information required to
 
be disclosed by the Company in the reports
 
that it will file with the CSA
is
 
recorded,
 
processed,
 
summarized,
 
and
 
reported
 
within
 
the
 
time
 
periods
 
specified
 
in
 
CSA
 
rules
 
and
 
forms
 
and
 
that
 
42
information required
 
to be
 
disclosed in
 
reports under
 
applicable securities
 
laws is
 
accumulated and
 
communicated to
 
the
Company’s principal
 
executive and
 
financial officers.
 
The Company
 
is also
 
continuing to
 
improve its
 
internal control
 
over
financial reporting. In order to
 
improve the effectiveness
 
of its disclosure controls and
 
procedures and internal control over
financial reporting, the
 
Company has expended,
 
and anticipate
 
that it
 
will continue to
 
expend, significant
 
resources, including
accounting-related costs and significant management oversight.
The
 
Company
 
has
 
identified
 
certain
 
material
 
weaknesses
 
in
 
its
 
internal
 
controls,
 
as
 
more
 
fully
 
explained
 
in
 
its
management’s
 
discussion
 
and
 
analysis
 
for
 
the
 
year
 
ended
 
December
 
31,
 
2022,
 
under
 
“Disclosure
 
Controls
 
and
Procedures”. Additional weaknesses in the Company’s disclosure
 
controls and internal control over financial reporting may
also be discovered in the future. Any failure
 
to develop or maintain effective controls
 
or any difficulties encountered in their
implementation or improvement
 
could harm
 
the Company’s
 
results of operations
 
or cause the
 
Company to fail
 
to meet its
reporting obligations and may result in a restatement of the Company’s financial statements for prior periods. Any failure to
improve and
 
maintain
 
effective
 
internal
 
control over
 
financial
 
reporting
 
also could
 
adversely
 
affect
 
the results
 
of periodic
management
 
evaluations
 
and
 
annual
 
independent
 
registered
 
public
 
accounting
 
firm
 
attestation
 
reports
 
regarding
 
the
effectiveness
 
of
 
the
 
Company’s
 
internal
 
control
 
over
 
financial
 
reporting
 
that
 
the
 
Company
 
will
 
eventually
 
be
 
required
 
to
include
 
in
 
its periodic
 
reports
 
that will
 
be
 
filed
 
with
 
the
 
CSA.
 
Ineffective
 
disclosure
 
controls
 
and
 
procedures
 
and
 
internal
control over financial reporting could also cause investors to lose confidence in the Company’s reported financial and other
information, which could have
 
a negative effect
 
on the trading price
 
of the Common Shares.
 
In addition, if the
 
Company is
unable to continue to meet these requirements, it may not be able
 
to remain listed on the TSX and/or NASDAQ.
Influence of the Significant Shareholders
To
 
the Company’s
 
knowledge, no
 
shareholder beneficially
 
owns, or controls
 
or directs,
 
directly or indirectly,
 
more
than
 
10%
 
of
 
the
 
voting
 
rights
 
attached
 
to
 
the
 
Company’s
 
outstanding
 
voting
 
securities,
 
except
 
for
 
Mr.
 
P.
 
Peter
 
Pascali,
President and
 
Chief Executive
 
Officer of
 
the Company,
 
who holds
 
or controls,
 
directly or
 
indirectly,
 
80,925,698 Common
Shares,
 
representing
 
in
 
aggregate
 
45.32%
 
of
 
the
 
total
 
voting
 
rights
 
attached
 
to
 
the
 
outstanding
 
Common
 
Shares,
 
and
2,500,000 share
 
purchase warrants
 
and options
 
to acquire
 
an additional
 
4,270,000 Common
 
Shares (increasing
 
the total
number of Common
 
Shares held or
 
controlled, directly
 
or indirectly,
 
by him to
 
87,695,698 Common
 
Shares, or 47.31%
 
or
the Common
 
Shares, on
 
a fully
 
diluted basis).
 
In addition,
 
from time
 
to time,
 
the Company
 
may have
 
other shareholders
who
 
have
 
the
 
ability
 
to
 
exercise
 
significant
 
influence
 
over
 
matters
 
submitted
 
to
 
the
 
shareholders
 
of
 
the
 
Company
 
for
approval, whether subject to approval by a
 
majority of the shareholders of the
 
Company or subject to a class
 
vote or special
resolution. See “Directors and Executive Officers
 
- Conflicts of Interest”.
Joint Venture/Partnership Arrangements
The Company
 
may participate
 
in joint
 
ventures and
 
partnerships
 
with third
 
parties. A
 
joint venture
 
or partnership
arrangement involves
 
certain additional
 
risks including:
 
(i) the possibility
 
that a partner
 
may at any
 
time have economic
 
or
business interests
 
or goals
 
that are
 
inconsistent with
 
those of
 
the Company
 
or take
 
actions contrary
 
to the instructions
 
or
requests of
 
the Company
 
or contrary
 
to the
 
Company’s objectives;
 
(ii) the
 
risk that
 
the partner
 
could experience
 
financial
difficulties or seek the protection of bankruptcy, insolvency or other laws, which could result in additional financial demands
on the Company;
 
and (iii) the
 
need to obtain
 
the partner’s consent
 
with respect to
 
certain major decisions.
 
In addition, the
sale or transfer of an interest in joint ventures and partnerships will generally
 
be subject to rights of first refusal or first offer
and certain other joint
 
venture or partnership agreements may provide
 
for buy-sell or similar
 
arrangements. Such rights may
be triggered at a time
 
when the Company may not desire the
 
sale but may be forced to
 
do so because it does not
 
then have
the financial
 
resources
 
with
 
which
 
to purchase
 
the other
 
parties’
 
interests. The
 
terms
 
of any
 
joint venture
 
or partnership
arrangement
 
may
 
not
 
allow
 
the
 
Company
 
to
 
realize
 
anticipated
 
benefits
 
and
 
may
 
adversely
 
affect
 
the
 
Company
 
and
 
its
business.
Limited Control Over the Company’s Operations
Holders of the Common Shares have limited
 
control over changes in the Company’s policies and operations, which
increases
 
the
 
uncertainty
 
and
 
risks
 
of
 
an
 
investment
 
in
 
the
 
Company.
 
The
 
Board
 
determines
 
major
 
policies,
 
including
policies regarding
 
financing, growth,
 
debt capitalization and
 
any future
 
dividends to
 
shareholders of
 
the Company. Generally,
the Board may amend or revise these and other policies without a vote of the holders
 
of the Common Shares. The Board’s
broad
 
discretion
 
in
 
setting
 
policies
 
and
 
the
 
limited
 
ability
 
of
 
holders
 
of
 
the
 
Common
 
Shares
 
to
 
exert
 
control
 
over
 
those
policies increases the uncertainty and risks of an investment
 
in the Company.
 
43
Change in Tax Laws
New income, sales, use
 
or other tax laws,
 
statutes, rules, regulations or
 
ordinances could be enacted
 
at any time.
Further,
 
existing
 
tax
 
laws,
 
statutes,
 
rules,
 
regulations
 
or
 
ordinances
 
could
 
be
 
interpreted,
 
changed,
 
modified
 
or
 
applied
adversely to the
 
Company.
 
These enactments and
 
events could require
 
the Company to
 
pay additional tax
 
amounts on a
prospective or
 
retroactive basis,
 
thereby substantially
 
increasing the
 
amount of
 
taxes the
 
Company is
 
liable to
 
pay in
 
the
relevant tax jurisdictions.
 
Accordingly,
 
these events could
 
decrease the capital
 
that the Company
 
has available to
 
operate
its business. Any or all of these events could harm the
 
business and financial performance of the Company.
Forward-Looking Information
The forward-looking information
 
included in this AIF relating
 
to, among other things,
 
the Company’s future
 
results,
performance, achievements, prospects, targets, intentions or opportunities or the markets in which it operates (including, in
particular, the information contained under “Business of the Company”, and
 
the other statements listed in
 
“Forward-Looking
Statements”)
 
is
 
based
 
on
 
opinions,
 
assumptions
 
and
 
estimates
 
made
 
by
 
the
 
Company’s
 
management
 
in
 
light
 
of
 
its
experience and
 
perception of
 
historical trends,
 
current conditions and
 
expected future developments,
 
as well
 
as other
 
factors
that the Company believes are appropriate and reasonable in the circumstances. However, there can be no assurance that
such estimates and assumptions will
 
prove to be correct. The Company’s
 
actual results in the future may
 
vary significantly
from the historical and estimated results and those variations may
 
be material. The Company makes no representation that
its actual
 
results
 
in the
 
future
 
will be
 
the same,
 
in whole
 
or in
 
part, as
 
those
 
included in
 
this AIF.
 
See “Forward
 
-Looking
Statements”.
Credit Facilities
The Company’s credit facilities and
 
financing agreements mature on
 
various dates. There can
 
be no assurance that
such credit facilities or financing agreements will be renewed or refinanced, or if renewed or refinanced, that the renewal or
refinancing will
 
occur on
 
equally favourable
 
terms to
 
the Company.
 
The Company’s
 
ability to
 
continue operating
 
may be
adversely
 
affected
 
if
 
the
 
Company
 
is
 
not
 
able
 
to
 
renew
 
its
 
credit
 
facilities
 
or
 
arrange
 
refinancing,
 
or
 
if
 
such
 
renewal
 
or
refinancing, as the case may
 
be, occurs on terms
 
materially less favorable to the
 
Company than at present. The
 
Company’s
current credit
 
facilities and
 
financing agreements
 
impose covenants
 
and obligations
 
on the
 
Company.
 
There is
 
a risk
 
that
such loans may go into
 
default if there is a
 
breach in complying with such
 
covenants and obligations, which
 
could result in
the lenders realizing on their security and causing the
 
Company’s shareholders to lose some or all of
 
their investment.
12.2.
 
Risks Related to the Company’s
 
Securities
Potential Volatility of Common Share
 
Price
The market price of the
 
Common Shares could be
 
subject to significant fluctuations.
 
Some of the factors
 
that may
cause the market price of the Common Shares to fluctuate
 
include:
•
 
the
 
public’s
 
reaction
 
to
 
the
 
Company’s
 
press
 
releases,
 
announcements
 
and
 
filings
 
with
 
regulatory
authorities and those of its competitors;
•
 
fluctuations in broader stock market prices and volumes;
•
 
changes in market valuations of similar companies;
•
 
investor perception of the Company,
 
its prospects or the industry in general;
•
 
additions or departures of key personnel;
•
 
commencement of or involvement in litigation;
•
 
announcements
 
by
 
the
 
Company
 
or
 
its
 
competitors
 
of
 
strategic
 
alliances,
 
significant
 
contracts,
 
new
technologies, acquisitions, commercial relationships, joint
 
ventures or capital commitments;
•
 
variations
 
in
 
the
 
Company’s
 
quarterly
 
results
 
of
 
operations
 
or
 
cash
 
flows
 
or
 
those
 
of
 
other
 
comparable
companies;
•
 
revenues
 
and
 
operating
 
results
 
failing
 
to
 
meet
 
the
 
expectations
 
of
 
securities
 
analysts
 
or
 
investors
 
in
particular quarter;
 
44
•
 
changes in the Company’s pricing policies or the pricing
 
policies of its competitors;
•
 
future issuances and sales of Common Shares;
•
 
sales of Common Shares by insiders of the Company;
•
 
third party disclosure of significant short positions;
•
 
demand for and trading volume of Common Shares;
•
 
changes
 
in
 
securities
 
analysts’
 
recommendations
 
and
 
their
 
estimates
 
of
 
the
 
Company’s
 
financial
performance;
•
 
short-term fluctuation in
 
stock price caused
 
by changes in
 
general conditions in
 
the domestic and
 
worldwide
economies or financial markets; and
•
 
the other risk factors described under this heading of the AIF.
The realization of any of these risks and other factors
 
beyond the Company’s control could cause
 
the market price
of the Common Shares to decline significantly.
In addition, broad market and industry factors may harm the market price of the Common Shares. Hence, the price
of the
 
Common Shares
 
could fluctuate
 
based upon
 
factors that
 
have little
 
or nothing
 
to do
 
with the
 
Company,
 
and these
fluctuations could materially reduce the
 
price of the Common Shares regardless
 
of the Company’s operating performance.
In
 
the
 
past,
 
following
 
a
 
significant
 
decline
 
in
 
the
 
market
 
price
 
of
 
a
 
company’s
 
securities,
 
there
 
have
 
been
 
instances
 
of
securities class action
 
litigation having
 
been instituted
 
against that company.
 
If the Company
 
were involved
 
in any similar
litigation, it
 
could incur
 
substantial costs,
 
management’s
 
attention and
 
resources could
 
be diverted
 
and it
 
could harm
 
the
Company’s business, operating results and financial
 
condition.
In addition, the Company
 
may face the risk
 
of being delisted from
 
the TSX and/or NASDAQ
 
if decreases in the
 
price
of the Common Shares do not allow the Company to
 
meet certain conditions of the listing exchange(s).
Market Liquidity
The market price for the Common
 
Shares could be subject to wide
 
fluctuations. Factors such as the announcement
of significant
 
contracts,
 
technological
 
innovations,
 
new
 
commercial
 
products,
 
patents,
 
a change
 
in
 
regulations,
 
quarterly
financial results,
 
future sales
 
of Common
 
Shares by
 
the Company
 
or current
 
shareholders, and
 
many other
 
factors could
have considerable
 
repercussions on
 
the price
 
of the
 
Common Shares.
 
In addition,
 
the financial
 
markets may
 
experience
significant price
 
and value
 
fluctuations that
 
affect the
 
market prices
 
of equity
 
securities of
 
companies that
 
sometimes are
unrelated
 
to
 
the
 
operating
 
performance
 
of
 
these
 
companies.
 
Broad
 
market
 
fluctuations,
 
as
 
well
 
as
 
economic
 
conditions
generally may adversely affect the market price of
 
the Common Shares.
Dividends to Shareholders
The Company
 
does not
 
anticipate paying
 
cash dividends
 
on the
 
Common Shares
 
in the
 
foreseeable future.
 
The
Company currently intends to retain all future earnings to fund the development and growth
 
of its business. Any payment of
future dividends will be at
 
the discretion of the
 
directors and will depend
 
on, among other things, the
 
Company’s earnings,
financial
 
condition,
 
capital
 
requirements,
 
level
 
of
 
indebtedness,
 
statutory
 
and
 
contractual
 
restrictions
 
applying
 
to
 
the
payment of dividends, and other considerations that the directors
 
deem relevant.
Impact of Future Sales by Existing Shareholders
If the
 
Company’s
 
shareholders sell
 
substantial amounts
 
of the
 
Common Shares
 
in the
 
public market,
 
the market
price of the
 
Common Shares could
 
decrease. The perception
 
among investors that
 
these sales will
 
occur could also
 
produce
this effect.
 
All currently
 
outstanding Common
 
Shares other
 
than those subject
 
to lock-up
 
agreements, if
 
any,
 
executed by
certain
 
existing
 
shareholders
 
are, subject
 
to
 
applicable
 
securities
 
laws,
 
generally
 
immediately
 
available
 
for
 
resale
 
in
 
the
public markets.
 
45
Subject to compliance with applicable securities laws, the Company’s officers, directors and their affiliates may sell
some or all
 
of their Common
 
Shares in the
 
future. No
 
prediction can be
 
made as
 
to the effect,
 
if any,
 
such future sales
 
of
Common Shares will have on
 
the market price of
 
the Common Shares prevailing from
 
time to time. However, the future sale
of a substantial number
 
of Common Shares
 
by the Company’s
 
officers, directors
 
and their affiliates,
 
or the perception
 
that
such sales could occur, could
 
materially adversely affect prevailing market prices
 
for the Common Shares.
Additional Common Shares issuable upon
 
the exercise of stock options
 
or warrants may also be available
 
for sale
in
 
the
 
public
 
market,
 
which
 
may
 
also
 
cause
 
the
 
market
 
price
 
of
 
the
 
Common
 
Shares
 
to
 
fall.
 
Accordingly,
 
if
 
substantial
amounts of Common Shares are sold in the public market,
 
the market price could fall.
Working Capital and Future Issuances
The Company may issue additional Common Shares in the future which may dilute
 
a shareholder’s holdings in the
Company. The Articles
 
permit the issuance of an unlimited number of Common Shares,
 
and shareholders of the Company
will have no pre-emptive rights in connection
 
with any further issuances. The directors
 
of the Company have the discretion
to
 
determine
 
the
 
provisions
 
attaching
 
to
 
the
 
Common
 
Shares
 
and
 
the
 
price
 
and
 
the
 
terms
 
of
 
issue
 
of
 
further
 
Common
Shares.
Additional equity
 
financing may
 
be dilutive to
 
holders of
 
Common Shares.
 
Debt financing
 
may involve
 
restrictions
on the Company’s financing
 
and operating activities. Debt
 
financing may be
 
convertible into other securities
 
of the Company
which may result in immediate or
 
resulting dilution. In either case, additional financing may
 
not be available to the Company
on acceptable terms
 
or at all.
 
If the Company
 
is unable to
 
raise additional funds
 
as needed, the
 
scope of its
 
operations or
growth may
 
be reduced
 
and, as
 
a result,
 
the Company
 
may be
 
unable to
 
fulfil its
 
long-term goals.
 
In this
 
case, investors
may lose
 
all or part
 
of their
 
investment. Any
 
default under
 
such debt
 
instruments could
 
have a
 
material adverse
 
effect on
the Company,
 
its business or the results of operations.
Securities or Industry Analysts
The
 
trading
 
market
 
for
 
Common
 
Shares
 
could
 
be
 
influenced
 
by
 
the
 
research
 
and
 
reports
 
that
 
industry
 
and/or
securities analysts, or
 
others, may publish
 
about the Company, its business,
 
the market or
 
competitors. If any
 
of the analysts
who may
 
cover the
 
Company’s business change their
 
recommendation regarding the
 
Common Shares adversely, or
 
provide
more favourable
 
relative recommendations
 
about its
 
competitors, the
 
share price
 
would likely
 
decline. If
 
any analyst
 
who
may cover
 
the Company’s
 
business were
 
to cease
 
coverage or
 
fail to
 
regularly publish
 
reports on
 
the Company,
 
it could
lose visibility in the financial markets, which in turn could
 
cause the share price or trading volume to decline.
12
.3.
Risks Related to the Company’s
 
Status as a Foreign Private Issuer
Information Publicly Available to the Company’s U.S.
 
Shareholders
The Company
 
is a
 
foreign private
 
issuer under
 
applicable U.S.
 
federal securities
 
laws. As
 
a result,
 
the Company
does not
 
file the
 
same reports
 
that a
 
U.S. domestic
 
issuer would
 
file with
 
the U.S.
 
Securities and
 
Exchange Commission
(the “
SEC
”), although the Company
 
is required to file
 
with or furnish to
 
the SEC the continuous
 
disclosure documents that
the Company is required to file in
 
Canada under Canadian Securities Laws, in certain respects the reporting obligations are
less
 
detailed
 
and
 
less
 
frequent
 
than
 
those
 
of
 
U.S.
 
domestic
 
reporting
 
companies.
 
In
 
addition,
 
the
 
Company’s
 
officers,
directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16
of the U.S. Exchange Act. Therefore, the
 
Company’s shareholders may not know on as timely a
 
basis when the Company’s
officers,
 
directors
 
and
 
principal
 
shareholders
 
purchase
 
or
 
sell
 
Common
 
Shares
 
as
 
the
 
reporting
 
periods
 
under
 
the
corresponding Canadian insider reporting requirements
 
are longer.
As a foreign private issuer, the Company
 
is exempt from the rules and regulations under the Exchange
 
Act related
to the furnishing and
 
content of proxy statements.
 
The Company is also
 
exempt from Regulation FD,
 
which prohibits issuers
from making selective disclosures of
 
material non-public information. While
 
the Company complies with the
 
corresponding
requirements
 
relating
 
to
 
proxy
 
statements
 
and
 
disclosure
 
of
 
material
 
non-public
 
information
 
under
 
Canadian
 
Securities
Laws, these requirements differ from
 
those under the Exchange Act
 
and Regulation FD and
 
shareholders should not expect
to receive the same information at the same time as such information is provided
 
by U.S. domestic companies. In addition,
the Company may not be required under the Exchange Act to file
 
annual and quarterly reports with the SEC as promptly as
U.S. domestic companies whose securities are registered
 
under the Exchange Act.
In addition,
 
as a
 
foreign private
 
issuer, the Company has
 
the option
 
to follow
 
certain Canadian corporate
 
governance
practices, except
 
to the
 
extent that
 
such laws
 
would be
 
contrary to
 
U.S. securities
 
laws, and
 
provided that
 
the Company
 
46
discloses the requirements it is not following and describe the Canadian practices it follows instead. The Company plans to
rely
 
on
 
this
 
exemption.
 
As
 
a
 
result,
 
the
 
Company’s
 
shareholders
 
may
 
not
 
have
 
the
 
same
 
protections
 
afforded
 
to
shareholders of U.S. domestic companies that are subject
 
to all U.S. corporate governance requirements.
Loss of Foreign Private Issuer Status in the Future
In order
 
to maintain
 
its status
 
as a
 
foreign private
 
issuer,
 
a majority
 
of the
 
Company's
 
Common Shares
 
must be
either
 
directly
 
or
 
indirectly
 
owned
 
by
 
non-residents
 
of
 
the
 
U.S.
 
unless
 
the
 
Company
 
also
 
satisfies
 
one
 
of
 
the
 
additional
requirements necessary
 
to preserve
 
this status.
 
The Company
 
may in
 
the future
 
lose its
 
foreign private
 
issuer status
 
if a
majority of the
 
Common Shares
 
are held
 
in the United
 
States and
 
the Company
 
fails to
 
meet the
 
additional requirements
necessary to avoid
 
loss of foreign
 
private issuer
 
status. The
 
regulatory and compliance
 
costs to the
 
Company under
 
U.S.
federal
 
securities
 
laws
 
as
 
a
 
U.S.
 
domestic
 
issuer
 
may
 
be
 
significantly
 
more
 
than
 
the
 
costs
 
the
 
Company
 
incurs
 
as
 
a
Canadian foreign private
 
issuer eligible to use
 
the multi-jurisdictional disclosure
 
system ("
MJDS
"). If the Company
 
is not a
foreign private
 
issuer,
 
it would
 
not be eligible
 
to use
 
the MJDS
 
or other
 
foreign issuer
 
forms and
 
would be
 
required to
 
file
periodic
 
and
 
current
 
reports
 
and
 
registration
 
statements
 
on
 
U.S.
 
domestic
 
issuer
 
forms
 
with
 
the
 
SEC,
 
which
 
are
 
more
detailed and extensive than the forms available
 
to a foreign private issuer.
 
In addition, the Company may lose the
 
ability to
rely upon exemptions from Nasdaq corporate governance
 
requirements that are available to foreign private issuers.
Inability for U.S. Investors to Enforce Certain Judgments
The Company is a corporation existing under the Canada
 
Business Corporations Act. A number of the Company’s
directors and officers are residents of Canada, and substantially all of the Company’s assets are located outside the United
States. As a result, it may be difficult
 
to effect service within the United
 
States upon the Company or upon its
 
directors and
officers.
 
Execution
 
by
 
United
 
States
 
courts
 
of
 
any
 
judgment
 
obtained
 
against
 
the
 
Company
 
or
 
any
 
of
 
the
 
Company’s
directors or officers
 
in United
 
States courts may
 
be limited to
 
the assets
 
of such companies
 
or such persons,
 
as the case
may be,
 
located in
 
the United
 
States. It
 
may also
 
be
 
difficult
 
for holders
 
of securities
 
who reside
 
in the
 
United
 
States to
realize in the United States upon judgments of courts of the United
 
States predicated upon civil liability and the civil liability
of the Company’s directors and executive officers
 
under the United States federal securities laws. The
 
Company has been
advised that
 
a judgment
 
of a
 
U.S. court
 
predicated solely upon
 
civil liability
 
under U.S.
 
federal securities
 
laws or
 
the securities
or “blue sky” laws of any
 
state within the United States,
 
would likely be enforceable
 
in Canada if the United
 
States court in
which the judgment was obtained has a basis
 
for jurisdiction in the matter that would be recognized
 
by a Canadian court for
the same purposes. However, there may be doubt
 
as to the enforceability in Canada
 
against these non-U.S. entities or their
controlling persons,
 
directors
 
and officers
 
who are
 
not residents
 
of the
 
United States,
 
in original
 
actions or
 
in actions
 
for
enforcement of judgments of courts of the United States, of liabilities predicated solely upon U.S. federal or state securities
laws.
Risks Relating to the Company’s Status as
 
an "Emerging Growth Company" Under U.S. Securities
 
Laws
The Company
 
is an
 
“emerging growth
 
company” as
 
defined in
 
section 3(a)
 
of the
 
Exchange Act
 
(as amended
 
by
the JOBS
 
Act, enacted
 
on April
 
5, 2012),
 
and the Company
 
will continue
 
to qualify
 
as an emerging
 
growth company
 
until
the earliest
 
to occur
 
of: (a)
 
the last
 
day of
 
the fiscal
 
year during
 
which the
 
Company
 
has total
 
annual gross
 
revenues of
US$1,070,000,000 (as
 
such amount
 
is indexed
 
for inflation
 
every five
 
years by
 
the SEC)
 
or more;
 
(b) the
 
last day
 
of the
fiscal year
 
of the
 
Company
 
following the
 
fifth anniversary
 
of the
 
date of
 
the first
 
sale of
 
common
 
equity securities
 
of the
Company pursuant to
 
an effective
 
registration statement
 
under the United
 
States Securities
 
Act of 1933,
 
as amended; (c)
the date
 
on which
 
the Company
 
has, during
 
the previous
 
three year
 
period, issued
 
more than
 
US$1,000,000,000 in
 
non-
convertible debt; and (d) the
 
date on which the
 
Company is deemed to be
 
a "large accelerated filer", as
 
defined in Rule 12b-
2 under the
 
Exchange Act. The
 
Company will qualify as
 
a large accelerated filer
 
(and would cease to
 
be an emerging growth
company) at
 
such time
 
when on
 
the last
 
business
 
day of
 
its second
 
fiscal quarter
 
of such
 
year the
 
aggregate worldwide
market value of its common equity held by non-affiliates
 
will be US$700,000,000 or more.
For
 
so
 
long
 
as
 
the
 
Company
 
remains
 
an
 
emerging
 
growth
 
company,
 
it
 
is
 
permitted
 
to
 
and
 
intends
 
to
 
rely
 
upon
exemptions from certain
 
disclosure requirements that are
 
applicable to other
 
public companies that are
 
not emerging growth
companies. These exemptions include
 
not being required to
 
comply with the auditor attestation
 
requirements of Section 404
of the
 
JOBS Act.
 
The Company
 
takes advantage
 
of some,
 
but not
 
all, of
 
the available
 
exemptions available
 
to emerging
growth companies.
 
The Company
 
cannot predict
 
whether investors
 
will find
 
the Common
 
Shares less
 
attractive because
the Company relies upon certain
 
of these exemptions. If some
 
investors find the Common Shares less
 
attractive as a result,
there may be a less active trading market
 
for the Common Shares and the Common
 
Share price may be more volatile. On
the other
 
hand, if
 
the Company
 
no longer
 
qualifies as
 
an emerging
 
growth company,
 
the Company
 
would be
 
required to
divert additional management time
 
and attention from the
 
Company's development and
 
other business activities and
 
incur
 
47
increased legal and financial costs to comply with the additional associated
 
reporting requirements, which could negatively
impact the Company's business, financial condition and
 
results of operations.
13.
 
Legal Proceedings
The Company may,
 
from time to
 
time be involved
 
in legal proceedings.
 
The Company
 
is not involved
 
in any legal
proceedings which, individually or in the aggregate, would be material to the Company’s consolidated financial condition or
results of operations, except as follows:
The Company filed
 
an originating
 
application on
 
August 11,
 
2022, petitioning
 
the Quebec
 
Superior Court to
 
order
P. Riopel (1993) Inc. to convey title
 
of the property
 
bearing civic address
 
5655 Philippe-Turcot, Montreal, Quebec, H4C
 
3K8.
The
 
property
 
is
 
the
 
location
 
of
 
one
 
of
 
the
 
Company’s
 
two
 
manufacturing
 
facilities.
 
The
 
petition
 
followed
 
the
 
Company’s
exercise of
 
its contractual
 
option to
 
purchase the
 
property for
 
$2,750,000. On
 
December 23,
 
2022, P.
 
Riopel (1993)
 
Inc.
filed a counterclaim in which it
 
sought damages in the
 
amount of $415,425, alleging that
 
the Company breached the lease
agreement between the parties.
On July 28, 2021,
 
an application for a
 
safeguard order and permanent
 
injunction was filed by
 
AirScience Systems
Inc. (“
ASSI
”) before the
 
Quebec Superior
 
Court against
 
Gas RNG Systems
 
Inc. (“
RNG Canada
”), RNG Investments
 
Inc.,
Glauber Equipment
 
Corporation, Mr.
 
Peter Glauber
 
and Mr.
 
Shivaji Ramalingam
 
(collectively,
 
the “Defendants”).
 
ASSI is
seeking
 
an
 
oppression
 
remedy,
 
alleging
 
the
 
wrongful
 
expulsion
 
of
 
ASSI
 
as
 
a
 
shareholder
 
and
 
Mr.
 
Gérard
 
Magnin
 
as
 
a
director from RNG Canada. On April 29,
 
2022, the Defendants filed a defence and a
 
counterclaim against ASSI, AirScience
Technologies
 
Inc.
 
(“
AST
”)
 
(now
 
Pyro
 
Green-Gas
 
Inc.,
 
a
 
wholly-owned
 
subsidiary
 
of
 
the
 
Company)
 
and
 
Mr.
 
Magnin
 
for
allegedly breaching their
 
obligations with respect
 
to a unanimous
 
shareholder agreement
 
governing RNG Canada
 
as well
as an operating agreement governing another entity, Gas RNG Systems LLC (“
RNG US
”). The Defendants, by way of their
counterclaim, seek damages in the amount of $4.9 million. PyroGenesis has maintained that AST was never a shareholder
of either RNG Canada or RNG US nor was it a party to
 
the disputed shareholders and operating agreements.
On October
 
6, 2021,
 
AST filed
 
an action
 
for damages
 
and unpaid
 
invoices against
 
RNG Canada,
 
RNG
 
US, Mr.
Shivaji Ramalingam, Mr. Peter Glauber, Mr. Paul-Louis Crouzat and Mr. Tarlok Nandhra before the Quebec Superior Court.
On February 13, 2022, a defence and
 
counterclaim was filed against AST and two former shareholders of
 
AST (Mr. Magnin
and Mr. Paul
 
D. Singh), seeking approximately
 
$712,000 in alleged compensatory
 
damages. The counterclaim also
 
seeks
a condemnation for legal fees, moral damages and punitive
 
damages for approximately $771,333.
On February 17,
 
2023, the
 
Company received
 
a motion from
 
the securities regulatory
 
authority in the
 
Province of
Québec,
 
filed
 
with
 
the
 
Superior
 
Court
 
of
 
Québec,
 
pursuant
 
to
 
which
 
the
 
AMF
 
is
 
asking
 
the
 
Court
 
to
 
determine
 
whether
certain documents previously requested
 
by the AMF from the
 
Company are subject to
 
solicitor-client privilege. The
 
motion
was filed by the
 
AMF in connection
 
with an investigation
 
being conducted in
 
the context of
 
applicable securities laws.
 
The
Company understands
 
the AMF
 
is investigating
 
certain actions
 
taken by
 
the President
 
and Chief
 
Executive Officer
 
of the
Company,
 
Mr.
 
P.
 
Peter
 
Pascali, in
 
connection
 
with
 
a
 
settlement
 
agreement
 
entered
 
into on
 
April
 
30, 2018,
 
between the
Company and Phoenix Haute Technology
 
Inc. (“
Phoenix
”), a company controlled by the father of Mr. P.
 
Peter Pascali, and
ancillary transactions.
 
Pursuant
 
to the
 
terms
 
of a
 
board-approved
 
settlement
 
agreement,
 
and
 
as further
 
disclosed
 
in the
annual information form of the Company for the year
 
ended December 31, 2020, available under the Company’s
 
profile on
SEDAR at www.sedar.com, under “Interest of Management and Others in Material Transactions – Settlement of Claim”,
 
the
Company issued $3.7 million of units
 
comprised of common shares and warrants to Phoenix in
 
2018, to settle a $5.5 million
claim
 
of
 
Phoenix
 
with
 
respect
 
to
 
the
 
unpaid
 
portion
 
of
 
the
 
consideration
 
payable
 
by
 
the
 
Company
 
to
 
Phoenix
 
for
 
an
acquisition of
 
intellectual
 
property
 
rights completed
 
in
 
2011.
 
To
 
the
 
Company’s
 
knowledge, the
 
investigation
 
of the
 
AMF
does not
 
involve any
 
allegations of
 
wrongdoing by
 
the Company.
 
The AMF
 
has neither
 
announced any
 
proceedings
 
nor
filed
 
any
 
charges.
 
The
 
Company
 
believes
 
that
 
no
 
corporate
 
or
 
securities
 
laws
 
have
 
been
 
breached
 
but
 
cannot
 
predict
whether any enforcement action will result from the investigation.
14.
 
Interest of Management and Others in Material Transactions
Other than
 
as described
 
elsewhere in
 
this AIF
 
and as
 
described below, there is
 
no material interest,
 
direct or indirect,
of: (i)
 
any director
 
or executive
 
officer
 
of the
 
Company;
 
(ii) any
 
person or
 
company
 
that beneficially
 
owns, or
 
controls or
directs,
 
directly
 
or indirectly,
 
more than
 
10% of
 
the
 
Company’s
 
outstanding
 
voting
 
securities;
 
or (iii)
 
an associate
 
or any
affiliate of any persons or companies referred to above in (i) or (ii), in any transaction within the three years before the date
of
 
this
 
AIF
 
that
 
has
 
materially
 
affected
 
or
 
is
 
reasonably
 
expected
 
to
 
materially
 
affect
 
the
 
Company.
 
See
 
“Directors
 
and
Executive Officers - Conflicts of Interest”.
 
48
15.
 
Transfer Agent and Registrar
The transfer
 
agent and
 
registrar
 
of the
 
Company’s
 
Common Shares
 
is TSX
 
Trust
 
Company (Canada)
 
having an
office at
 
2001, Robert-Bourassa
 
Boulevard, Suite
 
1600, Montréal,
 
Québec, H3A
 
2A6. The
 
transfer agent
 
and registrar
 
of
the Company’s Common Shares
 
in the United States
 
is American Stock Transfer
 
& Trust Company,
 
LLC, having an office
at
 
6201 15th Ave, Brooklyn, NY 11219,
 
United States.
16.
 
Auditors
The auditors
 
of the
 
Company
 
are RCGT
 
at its
 
office
 
located at
 
600
 
de
 
la Gauchetiere
 
Street
 
West,
 
Suite
 
2000,
Montréal, Québec. RCGT has informed
 
the Company that it
 
is independent with respect to
 
the Company within the
 
meaning
of the relevant rules and related interpretations prescribed
 
by the relevant professional bodies in Canada.
17.
 
Material Contracts
This
 
AIF
 
includes
 
a
 
summary
 
description
 
of
 
certain
 
material
 
contracts.
 
Each
 
summary
 
description
 
discloses
 
all
material attributes
 
of the
 
applicable contract
 
but is
 
not complete
 
and is
 
qualified by
 
reference to
 
the terms
 
of the
 
material
contracts, which
 
are available
 
under the
 
Company’s SEDAR
 
profile at
 
www.sedar.com.
 
The following
 
are the
 
Company’s
only material contracts, other than
 
those contracts entered into in
 
the ordinary course of business,
 
which have been entered
into since the beginning of its last financial year, or entered into prior to such date, but which
 
are still in effect and which are
required to be filed with Canadian securities regulatory
 
authorities:
•
 
contract
 
between
 
PyroGenesis
 
and
 
HPQ
 
Silica
 
Polvere
 
Inc.,
 
a
 
wholly
 
owned
 
subsidiary
 
of
 
HPQ
 
Silicon
Resources
 
Inc.,
 
dated
 
June
 
30,
 
2021
 
whereby
 
HPQ
 
Silica
 
Polvere
 
Inc.
 
purchased
 
certain
 
intellectual
property and the Company contracted to advance the development of a green reactor and process used to
produce fumed silica directly from quartz in consideration for
 
$3,300,000, as described under “Business of
the Company - Development of a Process to Produce Fuming
 
Silica from Quartz”; and
•
 
contract between PyroGenesis and HPQ Silicon
 
Resources dated July 29, 2016 whereby HPQ
 
purchased
certain intellectual
 
property
 
and the
 
Company
 
contracted
 
to build
 
a PUREVAP
 
system
 
for C$7,070,000,
which
 
contract
 
refers
 
to
 
certain
 
terms
 
in
 
a
 
development
 
contract
 
between
 
HPQ
 
(f/k/a
 
Uragold
 
Bay
Resources Inc.) dated February 26,
 
2015, as amended from
 
time to time, as
 
described under the “Business
of
 
the
 
Company
 
-
 
Development
 
of
 
Processes
 
for
 
the
 
Production
 
of
 
High
 
Purity
 
Silicon
 
Metals,
 
Nano
Powders and Nanowires”;
18.
 
Additional Information
Additional information,
 
including with respect
 
to directors’ and
 
executive officers’
 
remuneration and
 
indebtedness,
principal holders
 
of the Company’s
 
securities, and
 
securities authorized
 
for issuance
 
under equity
 
compensation plans,
 
is
contained
 
in
 
the
 
Company’s
 
management
 
information
 
circular
 
for
 
its
 
most
 
recent
 
annual
 
meeting
 
of
 
shareholders
 
that
involved
 
the
 
election
 
of
 
directors
 
which
 
is
 
available
 
under
 
the
 
Company’s
 
SEDAR
 
profile
 
at
 
www.sedar.com.
 
Additional
financial information
 
is contained
 
in the
 
Company’s consolidated
 
financial statements
 
and management’s
 
discussion and
analysis for
 
the year
 
ended December
 
31,
 
2022. Further
 
information
 
about the
 
Company,
 
filed with
 
Canadian
 
securities
regulators,
 
is
 
available
 
online
 
under
 
the
 
Company’s
 
SEDAR
 
profile
 
at
 
www.sedar.com
 
or
 
filed
 
with
 
the
 
Securities
 
and
Exchange Commission at www.sec.gov.
19.
 
Glossary of Terms
“
2020 Convertible Loan
” has the meaning given to such term under “General Development of the Business – Year
 
Ended
December 31, 2022 – Corporate Developments and Financings”.
“
2020 Public
 
Offering
” has
 
the meaning
 
given to
 
such term
 
under “General
 
Development of
 
the Business
 
– Year
 
Ended
December 31, 2022 – Corporate Developments and Financings”.
“
2020 Public Offering Warrant
” has the meaning given to such term under “General Development
 
of the Business – Year
Ended December 31, 2022 – Corporate Developments
 
and Financings”.
“
2020 Units
” has the
 
meaning given to
 
such term
 
under “General Development
 
of the Business
 
– Year
 
Ended December
31, 2022 – Corporate Developments and Financings”.
 
49
“
AIF
” means this annual information form.
“
AMF
” means Autorité des marchés financiers.
“
Articles
” has the meaning given to such term under
 
“Description of Capital Structure”.
“
ASSI
” means AirScience Systems Inc.
“
AST
” means AirScience Technologies
 
Inc., now Pyro Green-Gas Inc., a wholly-owned subsidiary
 
of the Company.
“
Audit Committee
” means the Company’s audit committee.
“
Board
” or “
Board of Directors
” means the board of directors of the Company.
“
business day
” means
 
a day
 
other than
 
a Saturday,
 
Sunday or
 
a day
 
on which
 
the principal
 
chartered banks
 
located at
Toronto
 
are not open for business.
“
Canadian Securities Laws
” means the securities legislation or ordinance and
 
regulations thereunder of each province of
Canada and the rules, instruments, policies and orders
 
of each Canadian securities regulator made thereunder.
“
CBCA
” means the Canada Business Corporations Act.
“
CFC
” means chlorofluorocarbons.
“
Common
 
Share
”
 
means
 
a
 
common
 
share
 
in
 
the
 
capital
 
of
 
the
 
Company,
 
as
 
described
 
under
 
“Description
 
of
 
Capital
Structure - Share Capital and Issued and Outstanding
 
Shares”.
“
Company
” has the meaning given to such term under “Explanatory
 
Notes”.
“
diluted basis
” means the
 
number of Common
 
Shares outstanding
 
assuming the exercise
 
of all outstanding
 
Options and
other rights to acquire Common Shares.
“
Drosrite International
” means Drosrite International LLC, a US-based
 
private company.
“
Drosrite International
 
Exclusive Agreement
” has
 
the meaning
 
given to
 
such term
 
under “Directors and
 
Executive Officers
- Conflicts of Interest”.
“
Dross Processing
 
Service Agreement
” has
 
the meaning
 
given to
 
such term
 
under “Directors
 
and
 
Executive Officers
 
-
Conflicts of Interest”.
“
forward-looking statements
” has the meaning given to such term under “Forward
 
-Looking Statements”.
“
GHG
” means greenhouse gas.
“
HCFC
” means hydrochlorofluorocarbons.
“
HFC
” means hydrofluorocarbons.
“
HPQ
” means HPQ Silicon Resources Inc., a corporation listed
 
for trading on the TSX-
V.
“
HPQ Nano
” means HPQ Nano Silicon Powders Inc., a wholly
 
owned subsidiary of HPQ.
“
ISO
” means International Organization for Standardization.
“
MI 61-101
” means Multilateral Instrument 61-101 – Protection of
 
Minority Security Holders in Special Transactions.
“
NASDAQ
” means the NASDAQ Capital Market.
“
NI 52-110
” means National Instrument 52-110
 
— Audit Committees.
 
50
“
ODS
” means ozone depleting substances.
“
Option
” means an option to acquire a Common Share granted pursuant
 
to the Company’s option plan.
“
PACWADS
” means the Company’s Plasma Arc Chemical
 
Warfare Agent Destruction System.
“
PAGV
” means plasma arc gasification and vitrification.
“
Pascali Trust
” means Fiducie de
 
Crédit Mellon Trust, a trust
 
of which Company’s Chief
 
Executive Officer, P.
 
Peter Pascali,
is a trustee, officer and beneficiary.
“
PAWDS
” means the Company’s Plasma Arc Waste
 
Destruction System.
“
Phoenix
” has the meaning given to such term under “Legal
 
Proceedings”.
“
RCGT
” means Raymond Chabot Grant Thornton LLP,
 
the Company’s external auditors.
“
RGN
” means renewable natural gas.
“
RNG Canada
” means Gas RNG Systems Inc.
“
RNG US
” means Gas RNG Systems LLC.
“
PRRS
” means the Company’s Plasma Resource Recovery
 
System.
“
R&D
” means research and development.
“
SEC
” means the U.S. Securities Exchange Commission.
“
SEDAR
” means the System for Electronic Document
 
Analysis and Retrieval.
“
SPARC
” means Steam Plasma Arc Refrigerant Cracking.
“
TSX
” means the Toronto
 
Stock Exchange.
“
TSX-V
” means the TSX Venture
 
Exchange.
“
Turcot Facility
” means the facility located at 5655 Philippe-Turcot,
 
Montréal, Québec, Canada, H4C 3K8, as described in
“Business of the Company - Facilities”.
“
Wanklyn Facility
” means the
 
facility located at
 
9371 Wanklyn
 
Street, LaSalle, Québec,
 
Canada, H8R 1Z2,
 
as described
in “Business of the Company - Facilities”.
 
51
SCHEDULE “A” CHARTER OF THE AUDIT COMMITTEE
PYROGENESIS CANADA INC.
AUDIT COMMITTEE CHARTER
Approved by the Board of Directors
and effective as of October 25th, 2011
PREAMBLE
The
 
Audit
 
Committee’s
 
(the
 
“Committee”)
 
Charter
 
clarifies
 
its
 
responsibilities
 
delegated
 
by
 
the
 
Board
 
of
 
Directors
 
(the
“Board”). The
 
Charter is
 
used by
 
the Committee
 
to guide
 
the planning
 
and the
 
performance of
 
its work.
 
The Charter
 
also
clarifies the understanding the Committee has with the Company’s auditors and with management about the nature of their
involvement with the Committee and its work.
OVERALL MANDATE
Generally,
 
the
 
Committee
 
promotes
 
and
 
ensures
 
a
 
high
 
standard
 
of
 
financial
 
reporting,
 
risk
 
management
 
and
 
ethical
behavior for the Company and in doing so shall carry out the duties
 
and responsibilities as set out in this Charter.
COMPOSITION
The Committee shall consist
 
of at least three Directors
 
appointed by the Board who will
 
serve at the pleasure of
 
the Board
and, in any event, only so
 
long as he/she shall be a Board
 
member. The Committee will have an appropriate representation
of independent directors as required by law.
 
The composition of the Committee shall comply
 
with the rules and regulations
of the
 
stock exchange
 
on which
 
the shares
 
of the
 
Company are
 
listed as
 
well as
 
the Canadian
 
Securities Administrators
“Instruments”.
 
The
 
Board
 
may
 
fill
 
vacancies
 
in
 
the
 
Committee
 
by
 
election
 
from
 
their
 
number.
 
The
 
Board
 
shall
 
elect
 
the
Chairperson of the Committee.
 
In the absence
 
of the Chairperson, the
 
members of the Committee
 
shall appoint an
 
Acting
Chairperson. The
 
President of
 
the Company
 
shall not
 
be an
 
ex-officio
 
member of
 
the Committee,
 
but the
 
Chairperson of
the Board may,
 
at his/her discretion,
 
attend meetings
 
as an ex-officio
 
member.
 
An ex-officio
 
member shall be
 
vested with
all the rights and powers of appointed members.
To
 
ensure
 
the
 
Committee’s
 
effectiveness,
 
each
 
member
 
will
 
be
 
financially
 
literate
 
and
 
be
 
prepared
 
to
 
spend
 
the
 
time
necessary to address complex issues and to challenge
 
both management and the auditors, where necessary.
A quorum of
 
the Committee shall
 
consist of at
 
least two members
 
of the Committee
 
(for this purpose
 
the Committee shall
be deemed to consist of at
 
least three members, two being appointed by
 
the Board as aforesaid and one
 
being an ex-officio
member
 
as
 
aforesaid).
 
Notwithstanding
 
any
 
vacancy
 
on
 
the
 
Committee,
 
a
 
quorum
 
may
 
exercise
 
all
 
the
 
powers
 
of
 
the
Committee.
The Secretary
 
shall be
 
selected from
 
its members
 
or shall
 
be the
 
Corporate
 
Secretary.
 
The Secretary
 
of the
 
Committee
shall ensure that minutes of meetings are prepared for
 
distribution to Committee members.
DUTIES AND RESPONSIBILITIES
The Committee shall have the following duties and responsibilities:
OVERSEEING STANDARDS
 
OF INTEGRITY AND BEHAVIOUR
Management
 
is
 
responsible
 
for
 
the
 
Company’s
 
standards
 
of
 
behavior.
 
The
 
Committee
 
assists
 
the
 
Board
 
in
 
obtaining
assurances that management is
 
operating the Company in
 
an ethical manner and
 
encourages management to demonstrate
a strong commitment to integrity.
The
 
Committee
 
requests
 
that
 
management
 
report
 
periodically
 
on
 
how
 
the
 
Company’s
 
systems,
 
practices
 
and
 
controls
encourage, monitor and provide assurance of compliance with
 
laws, regulations and standards of ethical conduct, including
the control of expenses such as perquisites, expense
 
accounts and out-of-pocket expenses for officers
 
and directors.
 
52
The Committee seeks the views
 
of the auditors about the
 
Company’s standards of
 
behavior. It discusses
 
with the auditors
the adequacy of the
 
systems and controls, and
 
the details of any
 
practices or transactions identified by
 
the auditors as being
in
 
potential
 
violation
 
of
 
the
 
legal
 
authorities,
 
as
 
well
 
as
 
the
 
details
 
of
 
any
 
“other
 
matters”
 
they
 
consider
 
bringing
 
to
 
the
attention
 
of
 
the
 
Board.
 
The
 
committee
 
seeks
 
the
 
views
 
of
 
auditors
 
on
 
remedies
 
to
 
curtail
 
inappropriate
 
practices
 
and
behaviors, as well as alternative remedies to rectify those
 
matters that are not in the Company’s best interest.
The Committee values financial integrity
 
and credibility.
 
It actively promotes an overall corporate
 
“tone” for quality financial
reporting, sound business risk practices, and ethical behavior.
OVERSEEING FINANCIAL REPORTING
Management is responsible for the Company’s financial
 
reporting. This includes preparation of accurate,
 
fair and complete
financial
 
reports,
 
the
 
selection
 
of
 
the
 
most
 
appropriate
 
accounting
 
principles
 
and
 
practices,
 
formulation
 
of
 
accounting
judgments and estimates,
 
and preparation of
 
the annual report
 
including its management’s
 
discussion and analysis
 
(MD&A),
budgets and other such reports.
The Committee
 
shall
 
provide
 
assistance
 
to
 
the
 
Board
 
in fulfilling
 
its financial
 
reporting
 
and control
 
responsibilities
 
to the
shareholders of the Company and to the
 
investment community. The Committee’s primary duties and responsibilities in this
regard are to:
(a)
 
oversee the accounting and financial
 
reporting processes of the Company
 
and the audit of its financial
 
statements
including:
i.
 
the integrity of the Company’s financial statements;
ii.
 
the compliance with legal and regulatory requirements;
 
and,
iii.
 
the independent auditor’s qualifications and independence;
(b)
 
serve
 
as
 
an
 
independent
 
and
 
objective
 
party
 
to
 
monitor
 
the
 
Company’s
 
financial
 
reporting
 
process
 
and
 
internal
control systems;
(c)
 
review and appraise the audit activities of the Company’s
 
independent auditors;
(d)
 
provide open
 
lines of
 
communication among
 
the independent
 
auditors, financial
 
and senior
 
management and
 
the
Board for financial reporting and control matters and meet periodically with management
 
and with the independent
auditors.
The Committee assesses the relevance and the reliability of the financial reports to ensure that they portray, in the clearest
light possible, the underlying economic circumstances and financial
 
performance of the Company.
The Committee promotes accuracy,
 
truthfulness, integrity and credibility in financial reporting.
The Committee
 
discusses
 
with management
 
and auditors
 
the inherent
 
fairness,
 
accuracy
 
and completeness
 
of financial
disclosures as
 
well as
 
the Company’s
 
compliance with
 
legal and
 
regulatory requirements
 
and may
 
request attestation
 
to
this effect from them.
The Committee reviews
 
the key accounting
 
principles and the
 
significant judgments
 
and estimates with
 
management and
auditors. It seeks
 
their views with
 
respect to the
 
appropriateness and consistency of
 
the accounting principles and
 
practices,
not just their acceptability,
 
and the degree of aggressiveness or conservatism in
 
determining estimates.
As integral
 
components
 
of its
 
financial
 
review
 
processes,
 
the Committee
 
reviews
 
the operating
 
and
 
capital
 
budgets,
 
the
borrowing plan, summaries of the corporate
 
plan and budgets, the annual and
 
quarterly financial statements, including
 
the
MD&A
 
sections,
 
and
 
any
 
other
 
financial
 
information
 
which
 
will
 
be
 
distributed
 
to
 
the
 
public
 
and
 
requiring
 
approval
 
of
 
the
Board.
The Committee
 
assesses
 
how
 
well
 
the
 
Company’s
 
financial
 
information
 
reporting
 
package
 
meets
 
the
 
Board’s
 
needs
 
by
reviewing its form, content and level of details.
 
53
OVERSEEING MANAGEMENT CONTROL PRACTICES
Management is responsible for
 
maintaining records and financial
 
management and control systems
 
that provide reasonable
assurance that assets
 
are safeguarded and maintained,
 
that Intellectual Property
 
(IP) is identified, protected
 
and secured,
that transactions
 
are in accordance
 
with regulations
 
and any
 
government directives
 
issued and
 
that financial,
 
human and
physical resources are managed economically and efficiently
 
and that operations are carried out effectively.
Management is responsible for identifying the principal
 
business risks facing the Company and formulating
 
the Company’s
risk tolerance levels and risk management policies for consideration and approval by
 
the Board. The Committee assists the
Board in this function, focusing on the financial risks.
The Committee holds management
 
accountable for the design
 
and functioning of the
 
Company’s control framework in order
to
 
monitor,
 
assess
 
and
 
mitigate
 
the
 
Company’s
 
business
 
risks
 
and
 
uncertainty,
 
as
 
well
 
as
 
legal,
 
environmental,
 
social
responsibility
 
and
 
ethical
 
compliance.
 
Periodically,
 
the
 
Committee
 
requests
 
that
 
management
 
provides
 
it
 
with
 
an
assessment of the effectiveness of the internal control structure and procedures, and, if warranted, with plans for improving
its effectiveness.
The Committee reviews
 
with the auditors
 
(internal, external and
 
special examiners
 
when applicable) their
 
assessments of
the
 
design
 
and
 
functioning
 
of
 
the
 
control
 
framework
 
and
 
the
 
systems
 
in
 
place
 
for
 
ensuring
 
that
 
the
 
business
 
risks
 
are
identified, monitored,
 
controlled and
 
within the
 
Company’s
 
limit of
 
tolerance, and
 
their views
 
on management’s
 
plans for
improvements.
OVERSEEING WORK OF AUDITORS
The Committee
 
recognizes
 
that the
 
Company’s
 
auditors
 
possess
 
substantial expertise
 
and
 
have significant
 
professional
responsibilities. It holds the auditors accountable for fulfilling
 
their respective responsibilities.
The Internal auditor (when established) will be accountable
 
to the Committee, in its capacity as a committee
 
of the Board.
The Committee demands independent and objective assessments of the Company’s standards of behavior,
 
its compliance
with authorities, its financial reporting, and its business risks
 
systems, practices and controls from the auditors.
The Committee oversees audit activities with respect to the
 
following two (2) types of audits:
(a)
 
the
 
annual
 
audit
 
deals
 
with
 
the
 
fairness
 
of
 
the
 
statements,
 
compliance
 
of
 
transactions
 
with
 
specified
 
legal
 
authorities, and any other matter identified by the external
 
auditor as important,
(b)
 
the internal audit
 
(when established), which is
 
a part of
 
management’s system of internal
 
control, deals with
 
matters
similar to those of the annual audit.
The Committee reviews and follows the five (5) generic
 
phases of each of the two (2) types of audits:
1.
 
establishing the purpose and terms of reference for the audit;
2.
 
selection and organization of a team of experienced professionals
 
to plan and conduct the audit;
3.
 
conduct of the audit; and
4.
 
reviews all the audit results and findings, and reports to the
 
Board.
The Committee
 
shall review
 
management’s
 
plans to
 
correct any
 
significant
 
problems raised
 
by the
 
internal
 
and external
auditors. It shall monitor and review management’s
 
progress in implementing its response plan.
The Committee ensures that management has not placed any inappropriate restrictions on the audits and confirms that the
external auditor is independent and able to maintain
 
its objectivity.
The Committee approves the mandate of the internal audit function, monitors the long term internal
 
audit plan and ensures
that the internal auditor has adequate resources to perform its responsibilities and has direct and open communication with
the Committee. It
 
reviews the reporting
 
relationship of the
 
internal auditor to
 
ensure that an
 
appropriate segregation of
 
duties
is maintained and
 
that the internal
 
auditor has an
 
obligation to report
 
directly to the
 
Committee on matters
 
affecting its duties,
irrespective of his or her reporting relationships.
The Committee
 
evaluates the
 
work of
 
each of
 
the auditors
 
with a
 
view to
 
determining the
 
level of
 
assurance that
 
can be
derived from their work.
 
54
Periodically, the Committee
 
evaluates the performance of each auditor.
The Committee shall establish effective communication processes with management and the Company’s auditors, to
 
assist
it in monitoring objectively the quality and
 
effectiveness of the relationship among
 
the auditors, management and the Audit
Committee. It shall be responsible for the resolution of
 
disagreements between management and auditors.
OPERATIONAL RESPONSIBILITIES
Each
 
new
 
member
 
will
 
receive
 
an
 
orientation
 
about
 
the
 
Committee’s
 
work
 
and
 
responsibilities
 
and
 
all
 
members
 
are
encouraged to keep current about
 
accounting, auditing and financial reporting standards
 
and practices. In recognition of
 
the
importance of the
 
financial literacy skills
 
of its members,
 
the Committee relies
 
on the full support
 
of the Board
 
in acquiring
and in developing an approach to improve the necessary
 
skills, when required.
Annually,
 
the Committee
 
reviews the
 
Charter setting
 
out the
 
scope of
 
its responsibilities,
 
and, where
 
in the
 
opinion of
 
the
Committee, amendments
 
to the Charter
 
are required,
 
may propose such
 
amendments to
 
the Board for
 
consideration and
approval.
Annually, the Committee
 
will consider the appropriateness of preparing a report
 
to the Board describing its work.
OTHER RESPONSIBILITIES
Periodically,
 
in consultation
 
with the Chief
 
Financial Officer
 
and the auditors,
 
the Committee seeks
 
reasonable assurance
of the quality and sufficiency of the Company’s
 
accounting and financial personnel and other resources.
The Committee shall discuss or review in advance the
 
appointment of the Chief Financial Officer.
The Committee shall review procedures established by management for dealing with complaints from employees related to
financial reporting, controls and corporate conduct.
The Committee may investigate any matters that, at the
 
Committee’s discretion, fall within its duties.
The Committee shall perform such other functions as are
 
assigned to it by law or by the Board.
The Committee shall review with the general
 
counsel, legal and regulatory matters that, in the
 
opinion of management, may
have
 
a
 
material
 
impact
 
on
 
the
 
financial
 
statements,
 
related
 
organization
 
compliance
 
policies,
 
and
 
program
 
and
 
reports
received from regulators.
OPERATING PROCEDURES
The Committee shall meet quarterly, or more frequently as appropriate, in advance of regularly scheduled Board meetings.
Committee meetings shall be
 
called by the Committee
 
Chair or requested
 
by any Committee member
 
or by the Board
 
Chair.
Notice of each meeting of the
 
Committee shall be given to each member of
 
the Committee (including the Chair of the Board
as an ex-officio member of the Committee), and except in the case of an in-camera meeting, also to the Auditors, the Chief
Executive Officer
 
and the
 
Chief Financial
 
Officer of
 
the Company.
 
Notice of
 
the meeting
 
shall be
 
given either
 
orally or
 
by
electronic mail, not less than 48 hours before the time fixed for
 
the meeting. Members may waive notice of a meeting.
Meeting discussions may take place face to face, by teleconference
 
or through a reciprocal interchange of emails.
The agenda for each meeting will be established by the Chair
 
of the Committee.
Any decision made by
 
the Committee shall be
 
determined by a majority
 
vote of the members
 
of the Committee present.
 
A
member will be deemed to have consented
 
to any resolution passed or action
 
taken at a meeting of the Committee
 
unless
the member dissents.
The Chief Executive Officer and the Chief Financial Officer of the Company shall attend all Audit Committee meetings, with
the exception of in-camera meetings.
A matter put to vote
 
at a meeting of the
 
Committee shall be decided
 
by a majority of
 
the votes cast, and in
 
the event of an
equality of votes, the Chair has a deciding vote.
 
55
The Secretary of the Committee
 
shall ensure that minutes of meetings
 
are prepared for distribution to Committee members,
and,
 
except
 
for
 
in-camera
 
meetings,
 
to
 
the
 
Auditors,
 
the
 
Chief
 
Executive
 
Officer
 
and
 
the
 
Chief
 
Financial
 
Officer
 
of
 
the
Company.
The Chair of the
 
Committee will report
 
to the Board
 
on proceedings and
 
deliberations of the
 
Committee, either orally
 
or in
writing, at the first subsequent meeting of the Board
 
or at such earlier time as the Committee in its discretion
 
may consider
advisable.
The Committee may retain at the
 
Company’s expense, with prior
 
Board approval, independent consultants
 
and such other
persons as the Committee shall determine necessary
 
to fulfill its duties and responsibilities.
LIMITATION
 
ON THE COMMITTEE’S DUTIES
In contributing
 
to
 
the
 
Committee’s
 
discharging
 
of
 
its
 
duties
 
under
 
this
 
Charter,
 
each
 
member
 
of
 
the
 
Committee
 
shall
 
be
obliged
 
only
 
to
 
exercise
 
the
 
care,
 
diligence
 
and
 
skill
 
that
 
a
 
reasonably
 
prudent
 
person
 
would
 
exercise
 
in
 
comparable
circumstances. Nothing
 
in this
 
mandate is
 
intended, or
 
may be
 
construed, to
 
impose on
 
any member
 
of the
 
Committee a
standard of care
 
or diligence that
 
is in any
 
way more onerous
 
or extensive than
 
the standard to
 
which all Board
 
members
are subject. The essence of the
 
Committee’s purpose is
 
to monitor, review
 
and when appropriate, recommend
 
changes to
financial
 
and
 
corporate
 
operating
 
standards
 
as
 
they
 
are
 
practiced
 
by
 
the
 
Company’s
 
management
 
to
 
gain
 
reasonable
assurance (but not to ensure) about fundamental activities
 
of the Company.