SUSTAINABLE
PROJECTS GROUP INC.
CONDENSED
CONSOLIDATED INTERIM BALANCE SHEETS
|
|
June
30, 2019
|
|
|
December
31, 2018
|
|
As
at
|
|
(Unaudited)
|
|
|
(Audited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
142,758
|
|
|
$
|
249,675
|
|
Other
receivables – related party - Note 4
|
|
|
420,960
|
|
|
|
596,535
|
|
Interest
receivables – Note 4
|
|
|
14,286
|
|
|
|
10,692
|
|
Inventory
|
|
|
60,593
|
|
|
|
-
|
|
Prepaid
expenses and deposits – Note 6
|
|
|
9,430
|
|
|
|
34,160
|
|
|
|
|
648,027
|
|
|
|
891,062
|
|
Long
Term Assets:
|
|
|
|
|
|
|
|
|
Note
Receivable – Note 4
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
ROU
Asset – lease – Note 7
|
|
|
105,194
|
|
|
|
137,819
|
|
Office
Equipment – Note 7
|
|
|
10,540
|
|
|
|
11,561
|
|
Leasehold
improvements – Note 7
|
|
|
4,113
|
|
|
|
5,288
|
|
Intangible
assets – Note 9
|
|
|
885,474
|
|
|
|
943,000
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
1,853,348
|
|
|
$
|
2,188,730
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities – Note 10
|
|
$
|
149,724
|
|
|
$
|
149,605
|
|
Amount
due to directors – Note 14
|
|
|
11,227
|
|
|
|
1,200
|
|
Amount
due to shareholders – Note 14
|
|
|
32,832
|
|
|
|
12,068
|
|
Lease
liability - Note 7
|
|
|
54,079
|
|
|
|
52,359
|
|
Deferred
revenue
|
|
|
7,999
|
|
|
|
-
|
|
Interest
payable – Note 11
|
|
|
585
|
|
|
|
-
|
|
TOTAL
CURRENT LIABILITIES
|
|
|
256,446
|
|
|
|
215,232
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Notes
payable, related party – Note 11
|
|
$
|
50,000
|
|
|
$
|
-
|
|
Obligations
under operating lease - Note 7
|
|
|
42,723
|
|
|
|
70,195
|
|
TOTAL
NON-CURRENT LIABILITIES
|
|
$
|
92,723
|
|
|
$
|
70,195
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
$
|
349,169
|
|
|
$
|
285,427
|
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
|
Common
Stock – Note 12 Par Value: $0.0001 Authorized 500,000,000 shares Common Stock Issued: 7,648,113 (Dec 31, 2018
– 7,647,388)
|
|
$
|
765
|
|
|
$
|
765
|
|
Additional
Paid in Capital
|
|
|
2,747,138
|
|
|
|
2,745,145
|
|
Accumulated
Deficit
|
|
|
(2,301,045
|
)
|
|
|
(2,108,371
|
)
|
Non-controlling
interest - Note 13
|
|
|
1,057,321
|
|
|
|
1,265,764
|
|
TOTAL
STOCKHOLDERS’ EQUITY
|
|
|
1,504,179
|
|
|
|
1,903,303
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
1,853,348
|
|
|
$
|
2,188,730
|
|
See
accompanying notes to the condensed consolidated interim financial statements
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-5
|
SUSTAINABLE
PROJECTS GROUP INC.
CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
|
|
For the three months ended
|
|
|
For the three months ended
|
|
|
For the six
months ended
|
|
|
For the six
months ended
|
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
986
|
|
|
$
|
20,000
|
|
|
$
|
95,986
|
|
|
$
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative and other operating expenses
|
|
$
|
26,295
|
|
|
$
|
41,918
|
|
|
$
|
71,619
|
|
|
$
|
10,493
|
|
Advertising and Promotion
|
|
|
2,660
|
|
|
|
1,499
|
|
|
|
6,181
|
|
|
|
1,998
|
|
Depreciation
|
|
|
30,805
|
|
|
|
1,229
|
|
|
|
61,590
|
|
|
|
2,104
|
|
Consulting fees
|
|
|
137,500
|
|
|
|
10,500
|
|
|
|
178,000
|
|
|
|
21,000
|
|
Management fees
|
|
|
22,500
|
|
|
|
1,579
|
|
|
|
45,000
|
|
|
|
25,279
|
|
Professional fees
|
|
|
28,178
|
|
|
|
44,500
|
|
|
|
52,124
|
|
|
|
42,332
|
|
Rent
|
|
|
8,069
|
|
|
|
750
|
|
|
|
18,961
|
|
|
|
1,250
|
|
Salaries and wages
|
|
|
45,945
|
|
|
|
11,659
|
|
|
|
103,054
|
|
|
|
11,639
|
|
Travel
|
|
|
23,863
|
|
|
|
1,572
|
|
|
|
30,969
|
|
|
|
1,572
|
|
Amortized right of use assets
|
|
|
16,312
|
|
|
|
-
|
|
|
|
32,625
|
|
|
|
-
|
|
Loss/Gain on disposition of assets
|
|
|
-
|
|
|
|
1,596
|
|
|
|
-
|
|
|
|
30,596
|
|
|
|
$
|
342,127
|
|
|
$
|
116,802
|
|
|
$
|
600,123
|
|
|
$
|
148,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income/loss before interest expense and impairment
|
|
|
(341,141
|
)
|
|
|
(96,802
|
)
|
|
|
(504,137
|
)
|
|
|
(113,263
|
)
|
Other interest income
|
|
|
1,819
|
|
|
|
2,341
|
|
|
|
3,605
|
|
|
|
4,067
|
|
Interest expense
|
|
|
(437
|
)
|
|
|
-
|
|
|
|
(585
|
)
|
|
|
-
|
|
Impairment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(307,318
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss before income taxes
|
|
|
(339,759
|
)
|
|
|
(94,461
|
)
|
|
|
(501,117
|
)
|
|
|
(416,514
|
)
|
Income Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net income/loss attributed to non-controlling interest
|
|
|
206,644
|
|
|
|
-
|
|
|
|
308,443
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and comprehensive loss
|
|
$
|
(133,115
|
)
|
|
$
|
(94,461
|
)
|
|
$
|
(192,674
|
)
|
|
$
|
(416,514
|
)
|
Loss per share of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Basic and diluted
|
|
$
|
(0.017
|
)
|
|
$
|
(0.010
|
)
|
|
$
|
(0.025
|
)
|
|
$
|
(0.046
|
)
|
Weighted average no. of shares of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Basic and diluted
|
|
|
7,648,113
|
|
|
|
9,005,699
|
|
|
|
7,647,913
|
|
|
|
8,983,012
|
|
See
accompanying notes to the condensed consolidated interim financial statements
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-6
|
SUSTAINABLE
PROJECTS GROUP INC.
CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF STOCKHOLDERS’ EQUITY
For
the Six Months Ended June 30, 2019 and 2018
(Unaudited)
|
|
|
|
|
par value
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
Common
|
|
|
at $0.0001
|
|
|
Paid-in
|
|
|
Shares
|
|
|
Accumulated
|
|
|
Controlling
|
|
|
|
|
For June 30, 2019
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Subscribed
|
|
|
Deficit
|
|
|
Interests
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2018
|
|
|
7,647,388
|
|
|
$
|
765
|
|
|
$
|
2,745,145
|
|
|
$
|
-
|
|
|
$
|
(2,108,371
|
)
|
|
$
|
1,265,764
|
|
|
$
|
1,903,303
|
|
Shares issued at $2.75
|
|
|
725
|
|
|
|
-
|
|
|
|
1,993
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
1,993
|
|
Non-controlling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
50,000
|
|
Net loss and comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(59,559
|
)
|
|
|
(101,799
|
)
|
|
|
(161,358
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2019
|
|
|
7,648,113
|
|
|
$
|
765
|
|
|
$
|
2,747,138
|
|
|
$
|
-
|
|
|
$
|
(2,167,930
|
)
|
|
$
|
1,213,965
|
|
|
$
|
1,793,938
|
|
Non-controlling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
50,000
|
|
Net loss and comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(133,115
|
)
|
|
|
(206,644
|
)
|
|
|
(339,759
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2019
|
|
|
7,648,113
|
|
|
$
|
765
|
|
|
$
|
2,747,138
|
|
|
$
|
-
|
|
|
$
|
(2,301,045
|
)
|
|
$
|
1,057,321
|
|
|
$
|
1,504,179
|
|
See
accompanying notes to the condensed consolidated interim financial statements
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-7
|
|
|
|
|
|
par value
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
Common
|
|
|
at $0.0001
|
|
|
Paid-in
|
|
|
Shares
|
|
|
Accumulated
|
|
|
Controlling
|
|
|
|
|
For June 30, 2018
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Subscribed
|
|
|
Deficit
|
|
|
Interests
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2017
|
|
|
8,953,518
|
|
|
$
|
895
|
|
|
$
|
6,249,696
|
|
|
$
|
100,000
|
|
|
$
|
(1,350,469
|
)
|
|
$
|
-
|
|
|
$
|
5,000,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares to be issued at $4.00 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,000
|
|
Shares issued at $4.20 per share for assets
|
|
|
10,000
|
|
|
|
1
|
|
|
|
41,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
42,000
|
|
Net loss and comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(322,053
|
)
|
|
|
-
|
|
|
|
(322,053
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2018
|
|
|
8,963,518
|
|
|
$
|
896
|
|
|
$
|
6,291,695
|
|
|
$
|
106,000
|
|
|
$
|
(1,672,522
|
)
|
|
$
|
-
|
|
|
$
|
4,726,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued at $4.00 per share
|
|
|
1,500
|
|
|
|
-
|
|
|
|
6,000
|
|
|
|
(6,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Shares issued at $4.00 per share for debts
|
|
|
25,000
|
|
|
|
3
|
|
|
|
99,997
|
|
|
|
(100,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Shares issued at $4.00 per share for assets
|
|
|
100,000
|
|
|
|
10
|
|
|
|
399,990
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
400,000
|
|
Net loss and comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(94,461
|
)
|
|
|
-
|
|
|
|
(94,461
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2018
|
|
|
9,090,018
|
|
|
$
|
909
|
|
|
$
|
6,797,682
|
|
|
$
|
-
|
|
|
$
|
(1,766,983
|
)
|
|
$
|
-
|
|
|
$
|
5,031,608
|
|
See
accompanying notes to the condensed consolidated interim financial statements
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-8
|
SUSTAINABLE
PROJECTS GROUP INC.
CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
For the six
months
ended
|
|
|
For the six
months ended
|
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
Cash Flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss and comprehensive loss
|
|
$
|
(501,117
|
)
|
|
$
|
(416,514
|
)
|
Adjustments to reconcile net income(loss) to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Loss on disposition of asset
|
|
|
-
|
|
|
|
29,750
|
|
Gain on disposition of asset
|
|
|
-
|
|
|
|
(750
|
)
|
Impairment on mineral properties
|
|
|
-
|
|
|
|
276,318
|
|
Impairment on investments
|
|
|
-
|
|
|
|
31,000
|
|
Depreciation
|
|
|
61,590
|
|
|
|
2,104
|
|
Interest on receivables
|
|
|
(3,594
|
)
|
|
|
(4,067
|
)
|
Lease interest
|
|
|
1,959
|
|
|
|
-
|
|
Amortization of ROU asset - Vehicle
|
|
|
5,681
|
|
|
|
474
|
|
Amortization of ROU asset - Office lease
|
|
|
26,945
|
|
|
|
-
|
|
Changes in current assets and liabilities
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
24,730
|
|
|
|
(7,704
|
)
|
Inventory
|
|
|
(60,593
|
)
|
|
|
-
|
|
Other receivables
|
|
|
175,575
|
|
|
|
(122,860
|
)
|
Right of use asset - Vehicle
|
|
|
-
|
|
|
|
(22,724
|
)
|
Interest payable
|
|
|
585
|
|
|
|
-
|
|
Accounts payable and accrued expenses
|
|
|
119
|
|
|
|
11,713
|
|
Amount due to related parties
|
|
|
30,791
|
|
|
|
12,172
|
|
Deferred revenue
|
|
|
7,999
|
|
|
|
(5,000
|
)
|
Payment of lease liability
|
|
|
(27,711
|
)
|
|
|
-
|
|
Net cash used in operating activities
|
|
$
|
(257,041
|
)
|
|
$
|
(216,088
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from investing activities:
|
|
|
|
|
|
|
|
|
Proceeds from disposal of shares
|
|
$
|
-
|
|
|
$
|
6,000
|
|
Acquisition of assets
|
|
|
(1,869
|
)
|
|
|
(12,849
|
)
|
Note receivables
|
|
|
-
|
|
|
|
258,996
|
|
Net Cash provided by (used in) investing activities
|
|
$
|
(1,869
|
)
|
|
$
|
252,147
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
1,993
|
|
|
|
6,000
|
|
Proceeds from notes payable
|
|
|
50,000
|
|
|
|
-
|
|
Non-controlling interest
|
|
|
100,000
|
|
|
|
-
|
|
Net Cash generated from financing activities
|
|
$
|
151,993
|
|
|
$
|
6,000
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(106,917
|
)
|
|
|
42,059
|
|
Cash and cash equivalents at beginning of period
|
|
|
249,675
|
|
|
|
30,069
|
|
Cash and cash equivalents at end of period
|
|
$
|
142,758
|
|
|
$
|
72,128
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
Taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Non-cash Financing and Investing Activities
|
|
|
|
|
|
|
|
|
Common stock issued for assets
|
|
$
|
-
|
|
|
$
|
400,000
|
|
Common stock issued for investments
|
|
$
|
-
|
|
|
|
42,000
|
|
Common stock issued for debts
|
|
$
|
-
|
|
|
|
100,000
|
|
See
accompanying notes to the condensed consolidated interim financial statements
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-9
|
SUSTAINABLE
PROJECTS GROUP INC.
NOTES
TO THE CONDENSED CONSOLIDATED UNAUDITED
INTERIM
FINANCIAL STATEMENTS
June
30, 2019
1.
Organization and Nature of Operations
Sustainable
Projects Group Inc. (“the Company”) was incorporated in the State of Nevada, USA on September 4, 2009 as Blue Spa
Incorporated which was engaged in the development of an internet based retailer of a multi-channel concept combining a wholesale
distribution with a retail strategy relating to the quality personal care products, fitness apparel and related accessories. On
December 19, 2016, the Company amended its name from “Blue Spa Incorporated” to “Sustainable Petroleum Group
Inc.” On September 6, 2017, the Company obtained a majority vote from its shareholders to amend the Company’s name
from “Sustainable Petroleum Group Inc.” to “Sustainable Projects Group Inc.” to better reflect the business
it has undertaken. The name change was effective on October 20, 2017.
The
Company is a multinational business development company that pursues investments and partnerships with companies across
sustainable sectors. It is continually evaluating and acquiring assets for holding and/or for development. The Company is involved
in mineral exploration, consulting services and collaborative partnerships.
The
Company has changed its year end to December 31.
2.
Going Concern
These
condensed consolidated unaudited interim financial statements have been prepared in conformity with generally accepted accounting
principles in the United States or “GAAP”, which contemplate continuation of the Company as a going concern. However,
the Company has limited operations and has sustained operating losses resulting in a deficit. In view of these matters, realization
of a major portion of the assets in the accompanying balance sheet is dependent upon the continued operations of the Company,
which in turn is dependent upon the Company’s ability to meet its financing requirements, and the success of its future
operations.
The
Company has accumulated a deficit of $2,301,045 since inception and has yet to achieve profitable operations and further losses
are anticipated in the development of its business. The Company’s ability to continue as a going concern is in substantial
doubt and is dependent upon obtaining additional financing and/or achieving a sustainable profitable level of operations. The
consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The
Company has $142,758 cash on hand as at June 30, 2019. Cash used in operations was $257,041 for the six months ended June 30,
2019. The Company will need to raise additional cash in order to fund ongoing operations over the next 12 months period. The Company
may seek additional equity as necessary and it expects to raise funds through private or public equity investment in order to
support existing operations and expand the range of its business. There is no assurance that such additional funds will be available
for the Company on acceptable terms, if at all.
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-10
|
3.
Summary of principal accounting policies
Basis
of presentation
While
the information presented is unaudited, it includes all adjustments, which are, in our opinion of management, necessary to present
fairly the financial position, result of operations and cashflows for the interim period presented in accordance with accounting
principles generally accepted in the United States of America. All adjustments are of a normal recurring nature. These consolidated
interim financial statements should be read in conjunction with the Company’s December 31, 2018 annual financial statements.
Operating results for the six months ended June 30, 2019 are not necessarily indicative of the results that can be expected for
the period ended December 31, 2019. The Company has changed its year end from May 31 to December 31.
The
accompanying condensed consolidated unaudited interim financial statements include the accounts of the Company and its joint ventures,
Hero Wellness Systems Inc. (formerly Vitalizer Americas Inc.) and Cormo USA Inc. The Company controls 55% of Hero Wellness Systems
Inc. and 35% of Cormo USA Inc. Pursuant to Accounting Standards Codification Topic 810, both of these companies are considered
variable interest entities that requires the Company to consolidate. All intercompany balances and transactions have been eliminated
in the consolidation. The operating results of the joint ventures have been included in the Company’s consolidated financial
statements commencing September 01, 2018. The non-controlling interest that were not attributable to the Company have been reported
separately. (See Note 13, Note 14).
Certain
prior year amounts have been re-conformed to current year presentation due to the change in fiscal year end and quarterly reporting
periods.
Significant
Accounting Policies
There
have been no material changes in the Company’s significant accounting policies to those previously disclosed in the December
31, 2018 annual report, except the addition of inventory as noted below.
Use
of estimates
The
preparation of the consolidated interim financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting
period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information
available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules
for the estimate, which is typically in the period when new information becomes available to management. Actual results could
differ from those estimates.
Foreign
currency translations
The
Company maintains an office in Naples, Florida. The functional currency of the Company is the U.S. Dollar. At the transaction
date, each asset, liability, revenue and expense is translated into U.S. dollars by the use of the exchange rate in effect at
that date. At the period end, monetary assets and liabilities are re-measured by using the exchange rate in effect at that date.
Deferred
revenue
Deferred
revenue is a short-term liability that represents revenues received but not earned. When the Company recognizes its revenue, the
deferred revenue liability will be eliminated. As at June 30, 2019, the Company’s joint venture received $7,999 in deferred
revenue (December 31, 2018 - $Nil).
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-11
|
Revenue
Recognition
In
May 2014, the FASB issued guidance on the recognition of Revenue from Contracts with Customers. The core principle of the guidance
is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration which the company expects to receive in exchange for those goods or services. To achieve this core
principle, the guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance
addresses several areas including transfer of control, contracts with multiple performance obligations, and costs to obtain and
fulfill contracts. The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue
and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized
from costs incurred to obtain or fulfill a contract.
The
Company adopted the ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), from June 01, 2018 using the
modified retrospective method. Revenues for the year ended December 31, 2018 were not adjusted. The adoption of Topic 606 did
not have a material impact to the Company’s financial statements. The Company recognizes revenue when the Company transfers
promised services to the customer. The performance obligation is the monthly services rendered. The Company has one main revenue
source which is providing consulting services. Accordingly, the Company recognizes revenue from consulting services when the Company’s
performance obligation is complete. Where there is a contract for services, the Company performs the obligations and
bills monthly for its services as rendered. Where there is no contract, the Company performs the obligation and/or service and
recognize revenues as provided. Even though the Company entered into contract with the customer, the contract could be terminated
at any time with notice. The Company may receive payments from customers in advance of the satisfaction of performance obligations
for services. These advance payments are recognized as deferred revenue until the performance obligations are completed and then,
recognized as revenues. The Company has one contract with one related party customer with a time period required for notice
of termination. Termination penalties are non-substantive and can be performed by either party. As at June 30, 2019, all of the
revenues were from related parties.
Accounts
receivables
Trade
accounts receivable are stated at the amount the Company expects to collect. Management considers the following factors when determining
the collectability of specific customer accounts: customer credit worthiness, past transaction history, current economic industry
trends and changes in customer payment terms. Past due balances over 90 days and other higher risk amounts are reviewed individually
for collectability. Based on the management’s assessment, the Company provides for estimated uncollectible amounts through
a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable
collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. There are
no receivables considered uncollectible as of June 30, 2019.
Segment
Reporting
The
Company reports segment information based on the “management” approach. The management approach designates the internal
reporting used by management for making decisions and assessing performance of its corporation wide basis in comparison to its
various businesses. The Company has three reportable segments. The business operating ventures consist of Hero Wellness Systems,
Cormo USA and Sustainable Projects Group. The segments are determined based on several factors including the nature of products
and services, nature of production processes and delivery channels and consultancy services. The operating segment’s performance
is evaluated based on its segment income. Segment income is defined as the net sales less cost of sales, general and administrative
expenses and does not include amortization of any sorts, stock-based compensation or any other charges (income), and interest.
As at June 30, 2019, the Company only has revenue to report for the consultancy work it performed. There were no revenues from
Hero Wellness Systems or Cormo USA.
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-12
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
|
Dec 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Sustainable Projects Group
|
|
$
|
95,986
|
|
|
$
|
35,000
|
|
|
$
|
278,500
|
|
Hero Wellness Systems
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cormo USA
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total Sales
|
|
$
|
95,986
|
|
|
$
|
35,000
|
|
|
$
|
278,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Sustainable Projects Group
|
|
$
|
856,398
|
|
|
$
|
5,148,951
|
|
|
$
|
912,570
|
|
Hero Wellness Systems
|
|
|
155,381
|
|
|
|
-
|
|
|
|
188,660
|
|
Cormo USA
|
|
|
841,569
|
|
|
|
-
|
|
|
|
1,087,500
|
|
Total Assets
|
|
$
|
1,853,348
|
|
|
$
|
5,148,951
|
|
|
$
|
2,188,730
|
|
Inventory
Inventories
are stated at the lower of cost or net realizable value using the first-in, first out (FIFO) cost method of accounting. Cost is
determined using the first in, first out (FIFO) cost method. Costs include the cost of purchase and transportation costs that
are directly incurred to bring the inventories to their present location, and duty. Net realizable value is the estimated selling
price of the inventory in the ordinary course of business, less any estimated selling costs. As at June 30, 2019, the inventory
consists of 3-D massage chairs from Hero Wellness Systems Inc. of $60,593.
Recently
issued accounting pronouncements
In
June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”. The ASU sets forth a “current
expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments
held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces
the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized
cost and applies to some off-balance sheet credit exposures. This ASU is effective for fiscal years beginning after December 15,
2019, including interim periods within those fiscal years, with early adoption permitted. Recently, the FASB issued the final
ASU to delay adoption for smaller reporting companies to calendar year 2023. The Company is currently assessing the impact of
the adoption of this ASU on its financial statements.
In
June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718)”, Improvements to
Nonemployee Share-Based Payment Accounting”, which is intended to improve the usefulness of the information provided to
the users of financial statements while reducing cost and complexity in financial reporting. Under the new standard, nonemployee
share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that
an entity is obligated to issue when conditions necessary to earn the right to benefit from the instruments have been satisfied.
These equity-classified nonemployee share-based payment awards are measured at the grant date. Consistent with the accounting
for employee share-based payment awards, an entity considers the probability of satisfying performance conditions when nonemployee
share-based payment awards contain such conditions. The new standard also eliminates the requirement to reassess classification
of such awards upon vesting. The new standard is effective for annual periods, and interim periods within those annual periods,
beginning after December 15, 2018. The adoption of this new standard does not have an impact on the Company’s financial
statements.
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-13
|
The
Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued,
which may be in advance of their effective date. Management does not believe that any pronouncements not included above do not
expect to have a material effect on the accompanying financial statements.
4.
Note receivable
On
June 28, 2017, the Company entered into a note receivable with a company with a common director of the Company in the amount of
$200,000 with an interest rate of 3.5% per annum that is payable annually. Any unpaid interest shall be added to the principal
of the loan on an annual basis and together will become the new amount used to calculate the amount of interest going forward.
The note receivable, together with any accrued interest outstanding, is due March 15, 2022. As of the date of this report, the
total principal and accrued interest was paid in full. (see Note 14, Note 15).
As
of June 30, 2019, the balance and interest owing was $214,286.
June 30, 2019
|
|
|
December 31, 2018
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
200,000
|
|
|
$
|
14,286
|
|
|
$
|
214,286
|
|
|
$
|
200,000
|
|
|
$
|
10,692
|
|
|
$
|
210,692
|
|
Other
receivables – related party
On
January 18, 2018, the Company entered into an agreement with Amixca AG for a period of three years commencing February 1, 2018
in which Amixca AG has agreed to provide business development services. The prepayment of $190,000 to Amixca AG was supposed to
serve as consulting fees over the next three year period. The consulting agreement with Amixca AG was never utilized and Amixca
AG did not provide any services. The consulting agreement was annulled and Amixca AG agreed to return the deposit with a payment
schedule spanning over a year, beginning July 5, 2019 of $20,000 and thereafter, the first of every month of $15,455 until the
full $190,000 has been repaid. (As of the date of this report, the Company received $124,772. There remains $29,733 outstanding.
(See Note 14, Note 15)
The
Company entered into a Share Purchase Agreement dated July 25, 2017 with Flin Ventures AG to purchase all the shares of myfactor.io
AG for $175,500 (EUR 150,000) subject to due diligence, buy back of an outstanding bond issued by myfactor.io AG for $83,496 (EUR
70,000) and other conditions. Effective December 4, 2017, myfactor.io AG was purchased and the acquisition was classified as a
held for sale asset and was recorded at fair market value. Due diligence costs with respect to this Share Purchase Agreement were
included in investments. Each company was managed and financed autonomously. The Company held the asset and subsequently sold
this asset in its present condition as at May 31, 2018 for $257,400 (EUR 220,000). During the period ended December 31, 2018,
the full amount was paid.
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-14
|
5. Investments
As
of July 6, 2017, the Company entered into a share exchange agreement to acquire 20% ownership of SPG (Europe) AG by purchasing
2,000 shares of SP Group (Europe) AG from a shareholder of SP Group (Europe) AG, in exchange for the issuance of 6,000 common
shares of the Company at a value of $3.50 per share, which was the fair value of the shares at the time of the transaction ($21,000).
In accordance to the Dividend Agreement signed by the parties, the Company is to receive 20% of the declared dividends. The Company
shares a common director, common management and a majority shareholder with SP Group (Europe) AG. As a result, it was determined
that the Company would ordinarily have significant influence; however, the investee lacks the financial information that the Company,
and any other shareholder, would need to apply the equity method of accounting. The Company has attempted and failed to obtain
that information and accordingly concluded it appropriate to account for the investment using the cost method at this time.
On
January 18, 2018, the Company sold 25% interest of its ownership of SP Group (Europe) AG for $6,000. The sale from SP Group (Europe)
AG created a gain of $750 for the Company. The Company sold all their remaining shares of SP Group (Europe) on December 26, 2018
back to SP Group (Europe) AG for $15,000. (See Note 14).
On
January 30, 2018, the Company acquired 10% ownership of Falcon Projects AG by purchasing 10 shares of Falcon Projects by issuing
10,000 shares of the Company valued at $4.20 per share ($42,000). On December 26, 2018, the Company sold all of its shares of
Falcon Projects AG for $11,000. During the year ended May 31, 2018, the Company recorded an impairment of $31,000. (See Note 14).
6.
Prepaid expenses and deposits
|
|
Jun 30, 2019
|
|
|
Dec 31, 2018
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
$
|
4,430
|
|
|
$
|
29,160
|
|
Deposit on lease
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
9,430
|
|
|
$
|
34,160
|
|
On
June 23, 2017, the Company acquired a lease deposit in the amount of CHF600,000 for the office building located at Falkenstrasse
28, Zurich, Switzerland, 8008, made by an arm’s length party, Daniel Greising, on behalf of SP Group (Europe) AG. As consideration
for an assignment of the lease deposit to the Company, the Company issued Mr. Greising 400,000 restricted shares of common stock.
In addition, the owner of the office building granted a sublease of the office from SP Group (Europe) AG to the Company rent-free
for a term of 10 years commencing July 1, 2017 to be completed and terminated on June 30, 2027. The shares were valued at $3.50
per share, which was the fair value of the shares at the time of the transaction, for a valuation of $1,400,000. The Company incurred
a $779,278 loss on the acquisition of the deposit. The Company no longer requires an office in Zurich and has terminated its arrangement
for the office space during the period ended December 31, 2018.
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-15
|
7.
Assets
Right
of Use Asset – Vehicle Lease
On
June 12, 2018, the Company entered into an operating vehicle lease for a period of two years. The Company made an upfront payment
of $22,724 for its obligation which covered all the monthly lease payments. The Company intends to return the vehicle at the end
of the lease period. At June 30, 2019, the remaining right of use asset was $10,888.
Right of Use Asset
|
|
$
|
22,724
|
|
Accum Amortization
|
|
$
|
(11,836
|
)
|
|
|
$
|
10,888
|
|
Right
of Use Asset – Office Lease
On
June 18, 2018, the Company entered into a sublease agreement to rent office space in Naples, Florida. The office lease commences
September 01, 2018 through to March 31, 2021. The monthly base rent for the first year is $4,552.56 (annual $54,630.75); the monthly
base rent for the second year is $4,684.52 (annual $56,214.25); and the monthly base rent for the third year is $4,816.48 (annual
$57,797.75). The Company has elected to separate the lease and non-lease components. The following remaining annual minimum lease
commitments under the lease do not include CAM costs and taxes:
2019
|
|
$
|
28,107
|
|
2020
|
|
|
57,402
|
|
2021
|
|
|
14,449
|
|
|
|
$
|
99,958
|
|
Amount representing interest
|
|
|
(3,156
|
)
|
Lease obligation, net
|
|
$
|
96,802
|
|
Less current portion
|
|
|
(54,079
|
)
|
Lease obligation - long term
|
|
$
|
42,723
|
|
The
remaining office lease liability at June 30, 2019 was $96,802. The current portion of the lease liability was $54,079 and the
non-current portion of the lease liability was $42,723.
At
June 30, 2019, the remaining right of use asset for the office lease was $94,305. An annual rate of 3.5% was used which is the
rate used for loans in the Company. The right of use asset is being amortized over the duration of the lease.
Right of Use Asset
|
|
$
|
139,212
|
|
Accum Amortization
|
|
$
|
(44,907
|
)
|
|
|
$
|
94,305
|
|
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-16
|
Leasehold
Improvements
On
July 6, 2017, the Company issued 10,000 restricted common shares at a value of $3.50 per share for leasehold improvements rendered
for a total valuation of $35,000. The fair value of the shares issued was used to measure the value of services received as that
was more reliably measurable. The office lease in Zurich was terminated at the end of December 31, 2018. The Company has written
down $29,750 to reflect the extinguishment of the leasehold improvements.
The
leasehold improvements for the Florida office will be depreciated straight-line over the term of the office lease commencing September
1, 2018 and ending March 31, 2021.
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Cost
|
|
|
Depreciation
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold Improvements
|
|
$
|
35,000
|
|
|
|
|
|
|
|
|
|
Write down of assets
|
|
$
|
(29,750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,250
|
|
|
$
|
5,250
|
|
|
$
|
-
|
|
Leasehold Improvements (Florida)
|
|
$
|
6,072
|
|
|
$
|
1,959
|
|
|
$
|
4,113
|
|
|
|
$
|
11,322
|
|
|
$
|
7,209
|
|
|
$
|
4,113
|
|
Office
Furniture and Equipment
The
office furniture and equipment is depreciated straight-line for a period of 3 years.
Cost
|
|
|
Additions
|
|
|
Accumulated Depreciation
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,698
|
|
|
$
|
1,394
|
|
|
$
|
4,552
|
|
|
$
|
10,540
|
|
8.
Mineral Properties
On
March 13, 2017, the Company entered into a property purchase agreement to acquire mineral claims located in the Thunder Bay Mining
Division in the townships of Rickaby and Lapierre, Ontario, Canada. The Company paid 1,250,000 restricted common stocks at $3.00
per share, which was the fair value of the shares at the time of the transaction, for a total value of $3,750,000. (See Note 12).
The
Company had an interest in 13 mineral claims. All the mineral claims are contiguous. Nine (9) of the mineral claims are
freehold patented mineral claims and the other four (4) mineral claims are unpatented Crown Land claims. The combined claims make
up an area of 336 hectares which is equivalent to approximately 810 acres.
On December 31, 2018,
the Company returned the interest of the mineral properties back to its original owner and negotiated the return of 1,052,631
of the restricted shares back to treasury and cancelled. The Company calculated the re-acquisition of the 1,052,631 restricted
shares and determined that an impairment of $276,318 was required.
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-17
|
9.
Intangible Assets
The
Company entered into an agreement with Global Gaming Media Inc., a company with a common majority shareholder and acquired the
Gator Lotto App on May 25, 2018 by issuing 100,000 restricted shares at $4.00 per share for the valuation of $400,000. The purchase
includes the application for the Florida lotteries, all software rights to the Gator Lotto App, the domain, etc. The Company spent
an additional $11,000 toward development costs. The Company commenced amortization of its intangible asset over a three-year period
effective January 2019. The latest version of the Lotto App was launched February 2019. At December 31, 2018, the Company recorded
an impairment of $168,000 which approximate its market value. The Company currently does not have the resources to exploit the
app and may consider selling this asset in the future.
Cormo
USA Inc., the joint venture with the Company, has an exclusive license agreement from Cormo AG (of Switzerland) for North America.
The exclusive license includes, but not limited to, the intellectual property, know-how, patent trade marks and all present and
future process improvements, product applications and related know how from Cormo AG. As part of the joint venture agreement,
Cormo AG’s contribution for its 35% interest was the license to Cormo USA. The license was valued to be $700,000 pursuant
to its authorized share capital. The license will be amortized over its estimated useful life of twenty years, which is the term
of the registered patent. The Company commenced amortization of the license effective January 2019. The following is the amortization
amounts for each of the next five years:
Remaining 2019
|
|
$
|
17,500
|
|
2020
|
|
$
|
35,000
|
|
2021
|
|
$
|
35,000
|
|
2022
|
|
$
|
35,000
|
|
2023
|
|
$
|
35,000
|
|
And thereafter
|
|
$
|
525,000
|
|
Summary
of intangibles:
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Cost
|
|
|
Depreciation
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
Gator Lotto App
|
|
$
|
243,000
|
|
|
$
|
40,500
|
|
|
$
|
202,500
|
|
License
|
|
|
700,000
|
|
|
|
17,500
|
|
|
|
682,500
|
|
Trademark
|
|
|
474
|
|
|
|
-
|
|
|
|
474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
943,474
|
|
|
$
|
58,000
|
|
|
$
|
885,474
|
|
10.
Accounts payable and accrued liabilities
Accounts
payable and accrued liabilities as of June 30, 2019 are summarized as follows:
|
|
Jun 30, 2019
|
|
|
Dec 31, 2018
|
|
|
|
|
|
|
|
|
Accrued audit fees
|
|
$
|
41,500
|
|
|
$
|
53,500
|
|
Accrued accounting fees
|
|
|
36,500
|
|
|
|
50,500
|
|
Accrued legal fees
|
|
|
24,548
|
|
|
|
6,075
|
|
Accrued office expenses
|
|
|
47,176
|
|
|
|
39,530
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
149,724
|
|
|
$
|
149,605
|
|
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-18
|
11.
Notes Payable
On
March 1, 2019, the Company entered into a loan agreement with a shareholder for $50,000 with an interest rate of 3.5% per annum.
The loan is due on or before April 15, 2022. As at June 30, 2019, there was $585 in accrued interest (see Note 14).
12.
Common stock
Share
transactions during the six months ended June 30, 2019:
a)
|
Issued
725 shares of common stock for cash at $2.75 per share.
|
Share
transactions during the seven months ended December 31, 2018:
a)
|
Cancellation
and the return of 400,000 restricted shares of common stock for the deposit for the office lease back to treasury. The cancellation
of the lease deposit was valued at $612,000 which is the deposit of CHF 600,000.
|
|
|
b)
|
The
Company settled debts totaling $33,001 to shareholders by providing 10,001 shares at $3.30 per share, which was the fair value
of the shares at the time of the transaction. The shares were issued subsequent to the period ended December 31, 2018.
|
|
|
c)
|
The
Company returned the interest of the mineral properties back to its original owner and negotiated the return of 1,052,631
of the restricted shares back to treasury and cancelled. The Company calculated the re-acquisition of the 1,052,631 restricted
shares and determined that an impairment of $276,318 was required. The cancelled shares were valued at $3,473,682 valued at
$3.30 per share, which was the market value.
|
Share
transactions during the year ended May 31, 2018:
a)
|
Issued
400,000 restricted shares of common stock for the deposit for the office lease. The stocks issued were valued at $3.50 per
share, which was the fair value of the shares at the time of the transaction, for a total value of $1,400,000. The Company
recorded a $779,278 loss on the exchange.
|
|
|
b)
|
Issued
6,000 shares of common to acquire 20% of SP Group (Europe) AG. The shares were valued at $3.50 per share, which was the fair
value of the shares at the time of the transaction, which was determined based on previous issuances in the current fiscal
year.
|
|
|
c)
|
Sold
31,128 shares of common stock for cash at $3.50 per share.
|
|
|
d)
|
Issued
10,000 shares of common stock at $3.50 per share for leasehold improvements.
|
|
|
e)
|
Sold
78,671 shares of common stock for cash at $3.50 per share.
|
|
|
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-19
|
f)
|
Issued
101,778 shares of common stock at $3.00 per share for debt of $305,334 which consisted of $253,901 in principal loan and $51,433
in interest. At the time, the Company’s stock price was at $3.75 per share. The Company recorded a debt extinguishment
loss of $76,334.
|
|
|
g)
|
Issued
16,000 shares of common stock at $3.50 per share for services rendered by a director of the Company in lieu of cash payment.
|
|
|
h)
|
Sold
40,609 shares of common stock for cash at $3.50 per share.
|
|
|
i)
|
Sold
1,000 shares of common stock for cash at $3.50 per share.
|
|
|
j)
|
Sold
5,000 shares of common stock for cash at $4.00 per share.
|
|
|
k)
|
Issued
10,000 shares of common stock at $4.20 per share for the purchase of 10% holdings of Falcon Projects AG.
|
|
|
l)
|
The
Company settled a debt with Workplan Holding AG of CHF 100,000 by providing 25,000 restricted shares valued at $4.00 per share.
|
|
|
m)
|
Sold
1,500 shares of common stock for cash at $4.00 per share.
|
|
|
n)
|
Issued
100,000 shares of common stock at $4.00 per share for the acquisition of Gator Lotto.
|
At
June 30, 2019, the Company had 7,648,113 common shares outstanding (December 31, 2018 – 7,647,388 common shares).
There
were no warrants or stock options outstanding as of June 30, 2019 and December 31, 2018.
13.
Equity in joint venture, Non-controlling interest
The
Company is involved in two joint venture businesses and has a majority control of both Hero Wellness Systems Inc. and Cormo USA
Inc. Pursuant to Accounting Standards Codification Topic 810, both of these companies are considered variable interest entities
that requires the Company to consolidate. It runs the day to day operations, makes all managerial decisions and has the voting
power over these entities. The Company will provide and help in the financial support of these ventures, on an as needed basis.
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-20
|
Hero
Wellness Systems Inc.
The
Company has a controlling interest of 55% in a joint venture of Hero Wellness Systems Inc. (formerly Vitalizer Americas Inc.)
(See Note 14). Hero Wellness Systems Inc. is in the business of importing, marketing, distribution and sale of luxury massage
therapeutic chairs. As at June 30, 2019, Hero Wellness Systems is still in its early stages of development. The company participated
in several conferences in 2019 to showcase and introduce its products in the market. The company has ordered and received some
inventory for sale. The following summary information on the joint venture amounts are based on contributions received from
activities since inception through to June 30, 2019:
Assets
|
|
$
|
289,589
|
|
Liabilities
|
|
|
17,049
|
|
Net Assets
|
|
$
|
272,539
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
Expenses
|
|
|
138,183
|
|
Net Income
|
|
$
|
(138,183
|
)
|
|
|
|
|
|
Company’s interest share on net income
|
|
$
|
(76,001
|
)
|
|
|
|
|
|
Capital contribution to joint venture
|
|
$
|
160,672
|
|
|
|
|
|
|
Company’s interest share in net assets
|
|
$
|
149,897
|
|
|
|
|
|
|
Non-controlling interest on net income
|
|
$
|
(62,182
|
)
|
|
|
|
|
|
Equity of Joint Venture
|
|
$
|
521,500
|
|
Company’s portion
|
|
|
286,825
|
|
Non-controlling interest in equity
|
|
$
|
234,675
|
|
Cormo
USA Inc.
The
Company has a controlling interest of 35% in a joint venture of Cormo USA Inc. (See Note 14) Cormo USA Inc. is in the business
of producing and developing peat moss replacement and natural foam products and technologies. Cormo USA was incorporated November
2018 and has just started to set up its business. The company is researching viable properties to set up its manufacturing plant.
It is also investigating various economic development programs for assistance to build its plant and operations. The following
summary information on the joint venture amounts are based on contributions received from activities since inception through
to June 30, 2019:
Assets
|
|
$
|
1,517,314
|
|
Liabilities
|
|
|
25,500
|
|
Net Assets
|
|
$
|
1,491,814
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
Expenses
|
|
|
378,862
|
|
Net Income
|
|
$
|
(378,862
|
)
|
|
|
|
|
|
Company’s interest share on net income
|
|
$
|
(132,602
|
)
|
|
|
|
|
|
Capital contribution to joint venture
|
|
$
|
80,152
|
|
|
|
|
|
|
Company’s interest share in net assets
|
|
$
|
522,135
|
|
|
|
|
|
|
Non-controlling interest on net income
|
|
$
|
(246,260
|
)
|
|
|
|
|
|
Equity of Joint Venture
|
|
$
|
1,900,000
|
|
Company’s portion
|
|
|
700,000
|
|
Non-controlling interest in equity
|
|
$
|
1,200,000
|
|
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-21
|
In
summary, the total aggregate non-controlling interest on net income for the period was ($308,443) and the total aggregate non-controlling
interest in equity was $1,434,675 since inception to June 30, 2019.
For Hero Wellness Systems Inc.
|
|
$
|
(62,183
|
)
|
For Cormo USA Inc.
|
|
|
(246,260
|
)
|
Total non-controlling interest on net income current period
|
|
$
|
(308,443
|
)
|
|
|
|
|
|
For Hero Wellness Systems Inc.
|
|
$
|
234,675
|
|
For Cormo USA Inc.
|
|
|
1,200,000
|
|
Total non-controlling interest in equity
|
|
$
|
1,434,675
|
|
Less total non-controlling interest on net income
|
|
|
(377,354
|
)
|
Total non-controlling interest
|
|
$
|
1,057,321
|
|
14.
Related party transactions
During
the period ended June 30, 2019, the Company incurred management fees from a director totaling an aggregate of $45,000 (for the
seven months ended December 31, 2018 - $56,090 from two directors). As at June 30, 2019, $Nil was owing to a director for out
of pocket expenses (for the seven months ended December 31, 2018 - $1,200); and $32,832 was owing to shareholders for expenses
paid on behalf of the Company and consulting fees (for the seven months ended December 31, 2018, $12,068). As at June 30, 2019,
an aggregate of $11,167 was owing to a company with a director in common for office expenses.
During
the period ended June 30, 2019, the Company incurred $Nil (June 30, 2018 - $1,250) to a company with a director in common for
rent for its office in Naples, Florida; $5,000 (June 30, 2018 - $Nil) for website/app maintenance; $1,123 for communication
expenses (June 30, 2018 - $Nil).
During
the period ending June 30, 2019, the Company entered into a note payable with a shareholder of the Company for $50,000. The loan
bears an annual interest rate of 3.5% and is due on April 15, 2022 (see Note 11).
Transactions
with a Majority Shareholder
Workplan
Holdings Inc.
During
the year ended May 31, 2017, Workplan Holdings Inc., a company controlled by a sole shareholder, purchased 4,000,000 restricted
common shares from the former sole officer and director of the Company.
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-22
|
The
Company entered into a property purchase agreement with Workplan Holdings Inc. and issued 1,250,000 restricted common stocks at
$3.00 per share and acquired two mineral properties. (see Note 8)
The
shareholder paid expenses on behalf of the Company in the amount of $500 during the period ended May 31, 2017. As June 30, 2019,
$Nil was owing (December 31, 2018 - $236).
The
Company entered into a $30,000 demand note payable with Workplan Holding AG, a company controlled by Workplan Holdings Inc., at
an interest rate of 4% per annum. During the period ended May 31, 2018, the total principal and interest outstanding on the note
was repaid in full by converting the principal loan and interest at $3.00 per share. The Company issued 10,159 common shares.
The
Company settled a CHF 100,000 debt with Workplan Holding AG by entering into an agreement to issue 25,000 restricted shares valued
at $4.00 per share. The CHF 100,000 was a loan from Workplan Holding AG to pay Flin Ventures to complete the Share Purchase Agreement
for myfactor.io. The shares were issued during the period ended May 31, 2018.
The
Company settled $25,000 debt with Workplan Holding Inc. by entering into an agreement to issue 7,576 restricted shares valued
at $3.30 per share.
Amixca
AG
On
January 18, 2018, the Company entered into an agreement with Amixca AG for a period of three years commencing February 1, 2018
to provide business development services. The prepayment of $190,000 to Amixca AG was supposed to serve as consulting fees over
the next three year period. The consulting agreement with Amixca AG was never utilized and Amixca AG did not provide any services.
The consulting agreement was annulled and Amixca AG agreed to return the deposit with a payment schedule spanning over a year,
beginning July 5, 2019 of $20,000 and thereafter, the first of every month of $15,455 until the full $190,000 has been repaid.
As of the date of this report, the Company received $124,772. There remains $29,733 outstanding. (see Note 4).
Alimex
GmbH
On
June 28, 2017, the Company entered into a note receivable with a company with a common director of the Company in the amount of
$200,000 with an interest rate of 3.5% per annum that is payable annually. Any unpaid interest shall be added to the principal
of the loan on an annual basis and together will become the new amount used to calculate the amount of interest going forward.
The note receivable, together with any accrued interest outstanding, is due June 28, 2022. As of December 31, 2018, the principal
and interest owing was $210,692. On May 2, 2018, Alimex Gmbh assigned its interest in the note receivable from the Company to
Workplan Holding on the same repayment terms. As of the date of this report, the note receivable and accrued interest totaling
$215,228 was paid in full. (see Note 4).
SP
Group (Europe) AG
SP
Group (Europe) AG and the Company share a common majority shareholder. The Company entered into a 3 year consulting agreement
with SP Group (Europe) AG whereby the Company will provide advisory and consulting services commencing May 1, 2017. This consulting
agreement was terminated in August 2018. A new consulting agreement was entered on June 27, 2018 for a two year period commencing
July 1, 2018 and ending June 30, 2020 in which SP Group (Europe) AG agrees to pay the Company $40,000 per month for financial
research, due diligence services, and presentation materials for developmental prospects. The Company performs the obligations
and invoices SP Group (Europe) AG on a monthly basis for services as rendered. Either party may terminate the agreement
by providing 2 weeks written notice. As of December 31, 2018, there was $Nil remaining in deferred revenues. As of the December
31, 2018 Company booked $240,000 in consulting revenues from SP Group (Europe) AG. The consultancy agreement with SP Group (Europe)
AG was mutually terminated at the end of March 2019. At June 30, 2019, owing in receivables for consultancy fees was $101,985.
Form 10-Q
|
Sustainable Projects Group Inc.
|
F-23
|
On
July 6, 2017, the Company entered into an agreement with SP Group (Europe) AG to acquire 20% ownership of SP Group (Europe) AG
by issuing 6,000 restricted common stock of the Company at $3.50 per share for a total value of $21,000. SP Group (Europe) AG
has a portfolio of approximately 20 different projects in the natural resources sector which it develops and finances. SP Group
(Europe) AG and Workplan Holdings Inc. have a common shareholder and director. (See Note 5).
The
Company sold 25% interest of its ownership of SP Group (Europe) AG for $6,000. The sale from SP Group (Europe) AG created a gain
of $750 for the Company. The $6,000 was paid by the buyer during the period ended May 31, 2018. The Company sold all their remaining
shares of SP Group (Europe) on December 26, 2018 back to SP Group (Europe) AG for $15,000.
During December 2018,
the Company’s majority shareholder, Christopher
Grunder of Workplan Holding Inc., sold an aggregate 4,148,868 restricted shares of the Company in three separate private transactions.
As a result, there was a change in the voting shares of the Company. Stefan Muehlbauer, the CEO of the Company, now owns 13.1%
of the issued and outstanding shares of Company; Paul Meier now owns 19.7% of the issued and outstanding shares of the Company;
and Kurt Muehlbauer now owns 6.5% of the issued and outstanding shares of the Company. Christopher Grunder, sole shareholder of
Workplan Holding Inc., now owns 1.1% of the issued and outstanding shares of the Company. Kurt Muehlbauer is the father of Stefan
Muehlbauer, CEO and director of the Company
Global
Gaming Media Inc.
The
Company entered into an agreement with Global Gaming Media Inc., a company with a common majority shareholder (Christopher Grunder),
and acquired the Gator Lotto App on May 25, 2018 by issuing 100,000 restricted shares at $4.00 per share for the valuation of
$400,000. The purchase includes the application for the Florida lotteries, all software rights to the Gator Lotto App, the domain,
etc. The Company spent an additional $11,000 toward development costs. The Company commenced amortization of its intangible asset
over a three-year period effected January 2019. The latest version of the Lotto App was launched February 2019. At December 31,
2018, the Company recorded an impairment of $168,000 which approximate its market value. The Company currently does not have the
resources to exploit the app and may consider selling this asset in the future.
Transactions
in Joint Ventures
The
Company is involved in two joint venture businesses and has a majority control of both Hero Wellness Systems Inc. and Cormo USA
Inc. Pursuant to Accounting Standards Codification Topic 810, both of these companies are considered variable interest entities
that requires the Company to consolidate. It runs the day to day operations, makes all managerial decisions and has the voting
power over these entities. The Company will provide and help in the financial support of these ventures, on an as needed basis.
Hero
Wellness Systems Inc.
On
September 29, 2018, the Company entered into a joint venture agreement with Vitalizer Americas Inc. with its principal purpose
to import, sale and distribute certain products offered by Vitalizer International AG of Switzerland. In April 2019, Vitalizer
Americas Inc.’s name was changed to Hero Wellness Systems Inc. as it was no longer dealing with Vitalizer International
AG. The Company holds 55% interest, Christopher Grunder of Workplan Holding Inc. holds 15% interest and Kurt Muehlbauer holds
15% interest. Hero Wellness Systems is in the business of providing luxury massage therapy solutions. The operating results of
Hero Wellness Systems Inc. have been incorporated in the consolidated financial statements of the Company. The non-controlling
interest that were not attributable to the Company have been reported separately.
Form 10-Q
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Sustainable Projects Group Inc.
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F-24
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Cormo
USA Inc.
The
Company entered into a letter of intent with Cormo AG on October 25, 2018 to form a joint venture agreement for the Company to
provide business development, market research, sourcing, distribution and overall operations of Cormo AG’s exclusive unrestricted
use of its patents and licenses in North America. Cormo AG is in the business of producing and developing peat moss replacement,
natural foam products and technologies. On February 25, 2019 the joint venture shareholder’s agreement was finalized with
a group of investors whereby the Company holds 35% interest, Cormo AG holds 35% interest, Paul Meier holds 2.5% interest, Stefan
Muehlbauer holds 2.5% interest, and other investors hold an aggregate of 25% interest. As of the date of this report, the other
investors contributed an aggregate of $400,000 to the joint venture. The operating results of Cormo USA Inc. have been incorporated
in the consolidated financial statements of the Company. The non-controlling interest that were not attributable to the Company
have been reported separately.
15.
Subsequent events
Subsequent
to June 30, 2019, the following events took place:
A.
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On
July 12, 2019, the Company entered into a convertible loan agreement with a relative of the Chief Executive Officer of $20,000.
The loan bears an interest rate of 3.5% per annum and is due on or before July 12, 2022. The loan is convertible in whole
or in part at $1.45 per share.
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B.
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On
August 7, 2019, the Company entered into an assignment of receivables with a shareholder whereby the Company assigned $471,759
of receivables and accrued interest in return for a cash payment of $450,000, payable in three separate transactions by September
15, 2019. As of the date of this report, the Company was in receipt of $340,000. The cash payment received was applied towards
the Alimex Gmbh loan and accrued interest thereof, the Amixca AG deposit, and other receivables.
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The
Company evaluated all events and transactions that occurred after June 30, 2019 through the date the Company issued these financial
statements and found no other subsequent events that needed to be reported.
Form 10-Q
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Sustainable Projects Group Inc.
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