NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2020
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 consulting services
and collaborative partnerships.
2.
Going Concern
These
condensed consolidated 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 $3,100,629 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 unaudited interim
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The
Company has $1,265 cash on hand as at December 31, 2020. The Company will need to raise additional cash in order to fund ongoing operations
over the next 12 month 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.
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-8
|
3.
Summary of principal accounting policies
Use
of estimates
The
preparation of the consolidated 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.
Consolidation
The
accompanying consolidated financial statements include the accounts of the Company, it’s wholly subsidiary YER Brands Inc., 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 the joint venture companies
are considered variable interest entities that requires the Company to consolidate their accounts. 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 and the non-controlling interest that were not attributable to the Company have been reported separately. At June
30, 2020, Cormo USA Inc.’s assets were impaired and the Company impaired its investment and eliminated that company’s accounts
from the condensed consolidated financial statements.
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 operations consist of Hero Wellness Systems, YER Brands and Sustainable Projects
Group. The segment for Cormo USA was de-consolidated effective June 30, 2020 (See Notes 15 and 16). 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 gross
sales and miscellaneous income. As at December 31, 2020, revenues were reported from YER Brands and Hero Wellness Systems.
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-9
|
|
|
For
the year
|
|
|
For
the year
|
|
|
|
ended
|
|
|
ended
|
|
|
|
Dec
31 2020
|
|
|
Dec
31 2019
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
Sustainable
Projects Group
|
|
$
|
-
|
|
|
$
|
95,986
|
|
YER
Brands
|
|
|
4,069
|
|
|
|
-
|
|
Hero
Wellness Systems
|
|
|
500
|
|
|
|
6,080
|
|
Cormo
USA
|
|
|
-
|
|
|
|
-
|
|
Total
Sales
|
|
$
|
4,569
|
|
|
$
|
103,066
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
|
|
|
|
|
|
Sustainable
Projects Group
|
|
$
|
10,049
|
|
|
$
|
423,984
|
|
YER
Brands
|
|
|
284,973
|
|
|
|
-
|
|
Hero
Wellness Systems
|
|
|
60,205
|
|
|
|
66,686
|
|
Cormo
USA
|
|
|
-
|
|
|
|
684,635
|
|
Total
Assets
|
|
$
|
355,227
|
|
|
$
|
1,175,305
|
|
Intangible
assets
Intangible
assets are non-monetary identifiable assets, controlled by the Company that will produce future economic benefits, based on reasonable
and supportable assumptions about conditions that will exist over the life of the asset. An intangible asset that does not meet these
attributes will be recognized as an expense when it is incurred. Intangible assets that do, are capitalized and initially measured at
cost. Those with a determinable life will be amortized on a systematic basis over their future economic life. Those with a indefinite
useful life shall not be amortized until its useful life is determined to be longer indefinite. An intangible asset subject to amortization
shall be periodically reviewed for impairment. A recoverability test will be performed and, if applicable, unscheduled amortization is
considered.
License
agreements have been capitalized, recorded at cost and amortized over the life of the contracts. Website costs have been capitalized
and will be subject to amortization once the website is operational. They will be amortized over the life of the license to which it
supports.
Comprehensive
income
The
Company has adopted ASU 220 “Reporting Comprehensive Income”, which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders’ Equity.
Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners.
For
the year period ended December 31, 2020, there was $74,292 (December 31, 2019 - $983,441) of non-controlling interest that was reconciled
to the net loss and comprehensive loss presented in the statements of operations.
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-10
|
Loss
per share
The
Company reports basic loss per share in accordance with ASC Topic 260 Earnings Per Share (“EPS”). Basic loss per share is
based on the weighted average number of common shares outstanding and diluted EPS is based on the weighted average number of common shares
outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net loss (numerator) applicable to common stockholders
by the weighted average number of common shares outstanding (denominator) for the period. All EPS presented in the financial statements
are basic EPS as defined by ASU 260, “Earnings Per Share”. There are no diluted net income/ (loss) per share on the
potential exercise of the equity-based financial instruments, hence a state of anti-dilution has occurred.
Website
development costs
The
Company recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost”
that codified the American Institute of Certified Public Accountants (“AICPA”) Statement of Position (“SOP”)
NO. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Relating to website development
costs the Company follows the guidance pursuant to the Emerging Issues Task Force (EITF) NO. 00-2, “Accounting for Website Development
Costs”. The website development costs are divided into three stages, planning, development and production. The development stage
can further be classified as application and infrastructure development, graphics development and content development. In short, website
development cost for internal use should be capitalized except content input and data conversion costs in content development stage.
Costs
associated with the website consist primarily of website development costs paid to third party. These capitalized costs will be amortized
based on their estimated useful life over three years upon the website becoming operational. Internal costs related to the development
of website content will be charged to operations as incurred. Web-site development costs related to the customers are charged to cost
of sales.
Concentration
of credit risk
The
Company places its cash and cash equivalents with a high credit quality financial institution. The Company maintains United States Dollars.
The Company minimizes its credit risks associated with cash by periodically evaluating the credit quality of its primary financial institution.
Financial
instruments
The
Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities and notes payable. The carrying
amounts of such financial instruments in the accompanying financial statements approximate their fair values due to their relatively
short-term nature or the underlying terms are consistent with market terms. It is the management’s opinion that the Company is
not exposed to any significant currency or credit risks arising from these financial instruments.
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-11
|
Fair
value measurements
The
Company follows the guidelines in ASC Topic 820 “Fair Value Measurements and Disclosures”. Fair value is defined as the price
that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair
value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk
measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions
and credit risk.
The
Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases
the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement.
All financial instruments approximate their fair value.
|
Level
1 — Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.
|
|
|
|
Level
2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical
or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market
data for substantially the full term of the assets or liabilities
|
|
|
|
Level
3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option
pricing models and discounted cash flow models.
|
Advertising
and Promotion Costs
The
Company follows ASC 720 “Advertising Costs” and expenses costs as incurred.
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-12
|
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.
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.
Stock
based compensation
The
Company follows the guideline under ASC 718, “Stock Compensation”. The standard provides that for all stock based compensation
plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights, which requires
that all share-based payments to both employees and directors be recognized in the income statement based on their fair values. For non-employees
stock based compensation, the Company applies ASC 505 Equity-Based Payments to Non-employees. This standard provides that all stock based
compensation related to non-employees be measured at the fair value of the consideration received or the fair value of the equity instruments
issued, whichever can be most reliably be measured or determinable.
In
June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718), Improvements to Non-employee
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 non-employee 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 re-assess 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.
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-13
|
Operating
Leases
In
February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”). The new standard establishes a right-of-use model that
requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12
months. For leases with an initial term of 12 months or less, a lessee is permitted to make an accounting policy election by class of
underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense
for such leases generally on a straight-line basis over the term of the lease. Leases will be classified as either finance or operating,
with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as sales-type,
finance or operating, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will
be based on an assessment of whether risks and rewards as well as substantive control have been transferred through a lease contract.
The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years,
with early adoption permitted. The Company adopted the new standard June 01, 2018. The Company has elected not to recognize lease assets
and lease liabilities for leases with an initial term of 12 months or less.
Credit
Losses
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.
Government
forgivable loans
The
Company initially records government loans that may be forgiven as debt. The loan is shown as a cash inflow from financing activities
and then as a non-cash reconciling items on the operation cash flow when it is forgiven. However, it the Company reaches all the criteria
for forgiveness it may record the proceeds as a grant.
Income
taxes
The
Company follows the guideline under ASC Topic 740 Income Taxes. “Accounting for Income Taxes” which requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between
the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory
tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be realized. Since the Company is in the developmental stage
and has losses, no deferred tax asset or income taxes have been recorded in the financial statements. There are no uncertain tax positions
as at December 31, 2020 and 2019.
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-14
|
Correction
of an Error in Previously Issued Financial statements
The
Company follows ASC Topic 250, Accounting Changes and Error Corrections when accounting for accounting changes and errors in previously
issued financial statements. The former is a change in accounting principle, a change in accounting estimates or a change in reporting
entity. The latter is an error in recognition, measurement, presentation, or disclosure in financial statements resulting from mathematical
mistakes, mistakes in the application of generally accepted accounting principles, or oversight or misuse of facts that existed at the
time the financial statements were prepared.
Discontinued
operations
Discontinued
operations are components of an entity that either have been disposed or abandoned or is classified as held for sale. Additionally, in
order to qualify as a discontinued operation, the disposal or abandonment must represent a strategic shift that has or will have, a major
effect on an entity’s operations and financial results.
Recently
issued accounting pronouncements
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 will have a material
effect on the accompanying financial statements.
4.
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. At December 31,
2020, the full amount was repaid.
5.
Inventory
Inventories
are stated at the lower of cost or net realizable value using the first-in, first out (FIFO) cost method of accounting. 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.
At December 31, 2020, inventory consists of following:
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
|
|
|
|
|
|
|
Hero
Wellness Systems (finished goods)
|
|
$
|
59,972
|
|
|
$
|
62,077
|
|
YER
Brands (supplies)
|
|
|
5,025
|
|
|
|
-
|
|
Total
|
|
$
|
64,997
|
|
|
$
|
62,077
|
|
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-15
|
6.
Prepaid expenses and deposits
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
$
|
8,622
|
|
|
$
|
7,521
|
|
Deposit
on lease
|
|
|
-
|
|
|
|
5,000
|
|
Total
|
|
$
|
8,622
|
|
|
$
|
12,521
|
|
7.
Right of Use Assets , leasehold improvements and office equipment
ROU
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 returned the vehicle at the end of the lease period.
At September 30, 2020, the remaining right of use asset was $Nil.
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
|
|
|
|
|
|
|
Right
of Use Asset
|
|
$
|
22,724
|
|
|
$
|
22,724
|
|
Accum.
Amortization
|
|
|
(22,724
|
)
|
|
|
(17,517
|
)
|
Net
|
|
$
|
-
|
|
|
$
|
5,207
|
|
ROU
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 elected to separate the lease and non-lease components.
On
May 31, 2020, the office lease was terminated and the Company agreed to pay the past due amount of $36,304. In addition, the Company
also agreed that the sub-landlord may add a late fee of $50 every week that there remains any past due rent. The Company is obligated
to pay the sub-landlord an additional $32,300 which represent all the remaining rent due, beginning June 1 2020 through to December 2020.
The $5,000 security deposit provided by the Company has been relinquished and the sub-landlord may use those funds to pay the rent obligation.
At December 31, 2020, the Company owed $36,304 and owed $27,688 for the additional remaining rent due.
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-16
|
At
June 30, 2020 the Company wrote off the remaining lease liability of $47,401 and the right of use asset of $44,907 to reflect the extinguishment
of the office lease, thereby creating a gain on disposal of the office lease of $2,494.
Remaining
annual minimum lease commitments under the lease:
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
|
|
|
|
|
|
|
Commitments
|
|
$
|
48,165
|
|
|
$
|
71,851
|
|
Amount
representing interest
|
|
|
(764
|
)
|
|
|
(1,656
|
)
|
Lease
obligation
|
|
|
47,401
|
|
|
|
70,195
|
|
Write
down
|
|
|
(47,401
|
)
|
|
|
-
|
|
Balance
|
|
|
-
|
|
|
|
70,195
|
|
Current
portion
|
|
|
-
|
|
|
|
55,850
|
|
Long
term portion
|
|
$
|
-
|
|
|
|
14,365
|
|
The
remaining right of use asset for the office lease:
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
|
|
|
|
|
|
|
Right
of Use Asset
|
|
$
|
139,212
|
|
|
$
|
139,212
|
|
Accumulated
Amortization
|
|
|
(94,305
|
)
|
|
|
(71,851
|
)
|
Lease
obligation
|
|
|
44,907
|
|
|
|
67,361
|
|
Write
down
|
|
|
(44,907
|
)
|
|
|
-
|
|
Net
|
|
$
|
-
|
|
|
$
|
67,361
|
|
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-17
|
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. The Company’s lease was terminated on May 31, 2020 and the Company has written down the balance
$1,959 to reflect the extinguishment of the leasehold improvements.
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
For
Florida office
|
|
|
|
|
|
|
|
|
Cost
|
|
$
|
6,072
|
|
|
$
|
6,072
|
|
Accumulated.
Depreciation
|
|
|
(4,113
|
)
|
|
|
(3,134
|
)
|
Net
|
|
|
1,959
|
|
|
|
2,938
|
|
Write
down
|
|
|
(1,959
|
)
|
|
|
-
|
|
Net
|
|
$
|
-
|
|
|
$
|
2,938
|
|
Office
Furniture and Equipment
The
office furniture and equipment are depreciated straight-line for a period of 3 years.
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
|
|
|
|
|
|
|
Cost
|
|
$
|
13,698
|
|
|
$
|
13,698
|
|
Additions
|
|
|
10,070
|
|
|
|
1,394
|
|
Disposals
|
|
|
(13,979
|
)
|
|
|
-
|
|
|
|
|
9,789
|
|
|
|
15,092
|
|
Accumulated.
Depreciation
|
|
|
(4,916
|
)
|
|
|
(7,064
|
)
|
Net
|
|
$
|
4,873
|
|
|
$
|
8,028
|
|
8.
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
reflecting its approximate market value at that time. The Company currently does not have the resources to exploit the app and effective
June 30, 2020, the Company wrote down the asset in its entirety.
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
For
Gator Lotto App
|
|
|
|
|
|
|
|
|
Cost
|
|
$
|
243,000
|
|
|
$
|
243,000
|
|
Accumulated.
depreciation
|
|
|
(101,250
|
)
|
|
|
(81,000
|
)
|
Net
|
|
|
141,750
|
|
|
|
162,000
|
|
Write
down
|
|
|
(141,750
|
)
|
|
|
-
|
|
Net
|
|
$
|
-
|
|
|
$
|
162,000
|
|
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-18
|
Cormo
USA Inc., the joint venture with the Company (See Note 15), 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 at $700,000 pursuant to its authorized
share capital. The license was to be amortized over its estimated useful life of fifteen years. The amortization commenced January 1,
2019. At June 30, 2020, the Company determined that Cormo USA Inc. was no longer a viable company and de-consolidated the assets, liabilities
and equity in that company thereby eliminating the asset from the Company’s consolidated financial statements. (See Note13)
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
For
Cormo USA License
|
|
|
|
|
|
|
|
|
Cost
|
|
$
|
700,000
|
|
|
$
|
700,000
|
|
Accumulated.
depreciation
|
|
|
(69,991
|
)
|
|
|
(46,666
|
)
|
Net
|
|
|
630,001
|
|
|
|
653,334
|
|
Disposal
|
|
|
(630,001
|
)
|
|
|
-
|
|
Net
|
|
$
|
-
|
|
|
$
|
653,334
|
|
The
trademark for Cormo USA Inc. of $574 was similarly de-consolidated as of June 30, 2020.
YER
Brands, the Company’s wholly owned subsidiary acquired intellectual properties (see Note 11).
The
Company entered into an asset purchase with Soy Yer Dough to acquire intellectual property and trademarks. The following assets were
identified as intangible assets with finite useful lives and are amortized on a straight-line basis over their useful lives of five years.
Amortization commences when the assets are available for use. Intellectual properties consist of production process, know-how, product
recipe, marketing, and branding,
|
|
Cost
|
|
|
Amortization
|
|
|
Net
|
|
Intellectual
properties
|
|
$
|
135,000
|
|
|
$
|
(16,875
|
)
|
|
$
|
118,125
|
|
Trademark
|
|
|
593
|
|
|
|
-
|
|
|
|
593
|
|
Balance
as at December 31, 2020
|
|
$
|
135,593
|
|
|
$
|
(16,875
|
)
|
|
$
|
118,718
|
|
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-19
|
Amortization
for over the next 5 years will be as follows:
Year
ended December 31
|
|
|
|
2021
|
|
$
|
27,000
|
|
2022
|
|
$
|
27,000
|
|
2023
|
|
$
|
27,000
|
|
2024
|
|
$
|
27,000
|
|
2025
|
|
$
|
10,125
|
|
Total
|
|
$
|
118,125
|
|
9.
Goodwill
Goodwill
has been recorded on the Soy Yer Dough purchase as the amount of the investment was greater than the identifiable net assets purchased.
The amount is not amortized but rather is tested for impairment at least annually. A recap of the assets purchased from Soy Yer Dough
is as follows:
Purchase
Price
|
|
$
|
300,002
|
|
|
|
|
|
|
Allocated
to - License
|
|
|
135,000
|
|
Equipment
|
|
|
5,000
|
|
Inventory
|
|
|
3,250
|
|
Identifiable
net assets
|
|
|
143,250
|
|
|
|
|
|
|
Allocated
to Goodwill
|
|
$
|
156,752
|
|
10.
Accounts payable and accrued liabilities
Accounts
payable and accrued liabilities as of December 31, 2020 and 2019 are summarized as follows:
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
|
|
|
|
|
|
|
Accrued
audit fees
|
|
$
|
11,000
|
|
|
$
|
42,750
|
|
Accrued
accounting fees
|
|
|
31,250
|
|
|
|
26,000
|
|
Accrued
legal fees
|
|
|
23,040
|
|
|
|
23,040
|
|
Accrued
office expenses
|
|
|
72,590
|
|
|
|
18,964
|
|
Total
|
|
$
|
137,880
|
|
|
$
|
110,784
|
|
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 December 31, 2020, there was $3,222 in accrued interest (see Note 13).
On
July 12, 2019, the Company entered into a convertible loan agreement with a relative of the CEO for $20,000 with an interest rate of
3.0% per annum. The loan is due on or before July 12, 2022. The lender has the option to convert the whole loan and the accrued interest
into shares of the Company at the price of $1.45 per share. The closing price of the Company’s stock was $1.45 at July 11, 2019.
As at December, 2020, there was $884 in accrued interest (See Note 13).
On
May 5, 2020, the Company entered in a promissory note with the Bank of America for $52,327 pursuant to the Paycheck Protection Program
(“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The loan has a two-year
term and bears interest at a rate of 1.0% per annum. The monthly principal and interest payments are deferred for six months after the
date of disbursement. The PPP loan may be paid back at any time prior to the maturity date with no penalties. During the 2020 fiscal
year, the Company reached its criteria for loan forgiveness and the amount was recorded as a government grant. The loan was forgiven
on May 20, 2021.
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-20
|
12.
Asset Purchase
On
May 8th, the Company entered into a Letter of Intent with Sawyer & Samantha Sparks to purchase all marketing rights, production
know-how and limited existing inventory and equipment (the “Assets”) of Soy-yer Dough. Soy-yer Dough is a gluten free modeling
clay. As part of the agreement, the Company issued 105,264 common shares to Sawyer & Samantha Sparks for meeting certain milestones
which were at $2.85 per share that was valued at $300,002. (See Note 8, Other intangibles and goodwill.)
13.
Agreements
On
May 1, 2020, the Company’s joint venture Cormo USA Inc. entered into a commercial lease of approximately 100,000 square feet of
building space for one year with an option to renew. The monthly rent was $12,500.
Effective
May 1, 2020, the Company’s joint venture Cormo USA Inc. entered into a Development Agreement with the City of Rushville, Rushville
Development Commission, and Rushville Economic Development Commission (the “City Parties”) to do business in Indiana. The
City Parties was to assist Cormo USA Inc. with its business in Indiana and provided financial incentives of up to $1,100,000 for Cormo
USA Inc. to pay for its project costs. These include:
|
1.
|
Cash
incentives sufficient to reimburse the acquisition of twenty acres of property in the Commerce Park at Rushville following purchase
of site in the Commerce Park at Rushville which shall be subject to rights of first refusal and repurchase rights on the purchased
site granted to the City
|
|
2.
|
A
commitment that at least twenty acres of land in the Commerce Park at Rushville or equivalent property suitable for the contemplated
commercial development shall be kept available for a period of two years
|
|
3.
|
Up
to $225,000 in the form of forgivable loan
|
|
4.
|
An
initial 3 year tax abatement on eligible personal property in place in Rushville in 2020 with an alternative phase-in schedule of
100%, 67% and 33%
|
|
5.
|
Tax
abatement for future eligible personal property and real property improvements at a standard ten yar tax abatement schedule
|
On
May 1, 2020, Cormo USA Inc. entered into a forgivable loan agreement and promissory note with the City of Rushville, Indiana in conjunction
to the Development Agreement of up to $225,000 at 9% interest rate for a period of two years.
Effective
June 30, 2020, as a result of disappointing product performances, difficulty in fund raising for the project and impacts of Covid-19
on knowledge transfer and sourcing of equipment, the Company determined that Cormo was no longer a viable operation. Accordingly,
the operating results of Cormo USA Inc. were de-consolidated at that time.
14.
Common stock
During
the year ended December 31, 2020, the Company issued the following shares:
a)
|
7,500
shares of common stock for services rendered by a consultant at $1.80 per share valued at $13,500;
|
b)
|
25,000
shares of common stock for debt was issued for a consultant at $0.80 per share valued at $20,000; and
|
c)
|
105,264
shares of common stock for the acquisition of assets from Soy-Yer Dough at $2.85 per share valued at $300,002. (See Note 8, Other
intangibles and goodwill.)
|
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-21
|
Share
transactions during the year ended December 31, 2019:
a)
|
Issued
725 shares of common stock for cash at $2.75 per share.
|
15.
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 those entities. 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.
The
Company has a controlling interest of 55% in a joint venture of Hero Wellness Systems Inc. (formerly Vitalizer Americas Inc.) Hero Wellness Systems Inc. is in the business of importing, marketing, distribution and sale of luxury massage therapeutic chairs.
As at June 30, 2020, 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 inventory for sale. The following
summary information on the joint venture amounts are based on contributions received from activities since inception through to December
31, 2020 and December 31, 2019 with intercompany transactions eliminated:
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
Assets
|
|
$
|
60,205
|
|
|
$
|
66,686
|
|
Liabilities
|
|
|
(2,000
|
)
|
|
|
(6,178
|
)
|
Net
Assets
|
|
$
|
58,205
|
|
|
$
|
60,508
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
500
|
|
|
$
|
8,743
|
|
Expenses
|
|
|
(12,760
|
)
|
|
|
(68,279
|
)
|
Net
Income
|
|
$
|
(12,260
|
)
|
|
$
|
(59,536
|
)
|
|
|
|
|
|
|
|
|
|
Company’s
joint venture interest portion on net income
|
|
$
|
(6,743
|
)
|
|
$
|
(32,745
|
)
|
|
|
|
|
|
|
|
|
|
Non-controlling
joint venture interest on net income
|
|
$
|
(5,517
|
)
|
|
$
|
(26,791
|
)
|
|
|
|
|
|
|
|
|
|
Company’s
Capital contribution to joint venture
|
|
$
|
286,825
|
|
|
$
|
250,191
|
|
|
|
|
|
|
|
|
|
|
Company’s
joint venture interest portion in net assets
|
|
$
|
(31,127
|
)
|
|
$
|
33,279
|
|
|
|
|
|
|
|
|
|
|
Total
Equity of Joint Venture
|
|
$
|
443,275
|
|
|
$
|
443,275
|
|
Company’s
portion of the Joint Venture
|
|
|
286,825
|
|
|
|
286,825
|
|
Non-controlling
interest portion in equity
|
|
|
156,450
|
|
|
|
156,450
|
|
Reduced
by losses to date
|
|
|
|
|
|
|
|
|
Prior
years
|
|
|
(76,641
|
)
|
|
|
(49,850
|
)
|
Current
years
|
|
|
(5,517
|
)
|
|
|
(26,791
|
)
|
Net
non-controlling interest in portion of equity, adjusted for losses to date
|
|
$
|
74,292
|
|
|
$
|
79,809
|
|
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-22
|
Cormo
USA Inc. (“Cormo”)
The
Company had a controlling interest of 35% in a joint venture of Cormo. (See Note 13) Cormo was in the business of producing and developing
peat moss replacement and natural foam products and technologies. Cormo was incorporated November 2018 and started operations shortly
thereafter. The following summary information on the joint venture amounts are based on contributions received from activities since
inception through to abandonment on June 30, 2020 with intercompany transactions eliminated. Effective June 30, 2020, the assets, liabilities
and non-controlling interest of Cormo that were consolidated on the balance sheet were eliminated (See Note 15).
|
|
June
30, 2020
|
|
|
Dec
31, 2019
|
|
|
|
|
|
|
|
|
Assets
|
|
$
|
633,950
|
|
|
$
|
684,635
|
|
Liabilities
|
|
|
(18,958
|
)
|
|
|
(11,543
|
)
|
Net
Assets
|
|
$
|
614,992
|
|
|
$
|
673,092
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
Expenses
|
|
|
(64,861
|
)
|
|
|
(426,626
|
)
|
Net
Income
|
|
$
|
(64,861
|
)
|
|
$
|
(426,626
|
)
|
|
|
|
|
|
|
|
|
|
Company’s
joint venture interest portion of net income
|
|
$
|
(22,701
|
)
|
|
$
|
(149,319
|
)
|
|
|
|
|
|
|
|
|
|
Company’s
Capital contribution to joint venture
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Company’s
joint venture interest share in net assets
|
|
$
|
214,580
|
|
|
$
|
235,582
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
joint venture interest on net income
|
|
$
|
(42,160
|
)
|
|
$
|
(277,307
|
)
|
|
|
|
|
|
|
|
|
|
Total
equity of joint venture received
|
|
$
|
1,900,000
|
|
|
$
|
1,900,000
|
|
Company’s
portion of the joint venture
|
|
|
700,000
|
|
|
|
700,000
|
|
Non-controlling
interest portion in equity
|
|
|
1,200,000
|
|
|
|
1,200,000
|
|
Reduced
by losses to date
|
|
|
|
|
|
|
|
|
Prior
years
|
|
|
(296,368
|
)
|
|
|
(19,061
|
)
|
Current
years
|
|
|
(42,160
|
)
|
|
|
(277,307
|
)
|
Non-controlling
interest portion in equity, adjusted for Loss to date
|
|
$
|
861,472
|
|
|
$
|
903,632
|
|
|
|
|
|
|
|
|
|
|
Assets
and equity eliminated on deconsolidation
|
|
|
|
|
|
|
|
|
Net
Asset
|
|
$
|
(614,992
|
)
|
|
$
|
-
|
|
Non-controlling
interest
|
|
|
861,472
|
|
|
|
-
|
|
Gain
on deconsolidation
|
|
$
|
246,480
|
|
|
$
|
-
|
|
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-23
|
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
|
|
|
|
|
|
|
For
Hero Wellness Systems Inc.
|
|
$
|
(5,517
|
)
|
|
$
|
(26,761
|
)
|
For
Cormo USA Inc.
|
|
|
(42,160
|
)
|
|
|
(277,337
|
)
|
Total
non-controlling joint venture interest on net income current period
|
|
$
|
(47,677
|
)
|
|
$
|
(304,098
|
)
|
|
|
|
|
|
|
|
|
|
For
Hero Wellness Systems Inc.
|
|
$
|
156,450
|
|
|
$
|
156,450
|
|
For
Cormo USA Inc.
|
|
|
-
|
|
|
|
1,200,000
|
|
Total
non-controlling joint venture interest in equity
|
|
|
156,450
|
|
|
|
1,356,450
|
|
Less
total non-controlling joint venture interest on net income in prior period
|
|
|
(76,641
|
)
|
|
|
(68,911
|
)
|
Less
total non-controlling joint venture interest on net income, current period
|
|
|
(5,517
|
)
|
|
|
(304,098
|
)
|
Total
non-controlling joint venture interest remaining
|
|
$
|
74,292
|
|
|
$
|
983,441
|
|
16.
Discontinued Operations
Effective
June 30, 2020, the Company impaired its investment in Cormo USA Inc. and eliminated that company’s accounts from the consolidated
financial statements through deconsolidation. All expenses incurred by Cormo USA Inc. up to June 30, 2020 have been disclosed
as discontinued operations. The previous year’s assets, liabilities and expenses have been similarly classified for comparative
purposes. An analysis of the financial results of the discontinued operations are as follows.
Consolidated
Balance Sheet
|
|
December
31 2020
|
|
|
December
31 2019
|
|
|
|
|
$
|
|
|
|
$
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash
|
|
|
-
|
|
|
|
31,167
|
|
Total
current assets
|
|
|
-
|
|
|
|
31,167
|
|
|
|
|
|
|
|
|
|
|
Long
term assets
|
|
|
|
|
|
|
|
|
Office
equipment, net of amortization
|
|
|
-
|
|
|
|
560
|
|
Intangible
assets
|
|
|
|
|
|
|
|
|
License,
net of amortization
|
|
|
-
|
|
|
|
653,334
|
|
Trademark
|
|
|
-
|
|
|
|
574
|
|
Total
long term assets
|
|
|
-
|
|
|
|
654,468
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued charges
|
|
|
-
|
|
|
|
11,543
|
|
|
|
|
-
|
|
|
|
11,543
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statement of Operations and Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
1,012
|
|
|
|
8,377
|
|
Advertising
and promotion
|
|
|
-
|
|
|
|
1,777
|
|
Depreciation
|
|
|
23,449
|
|
|
|
46,801
|
|
Consulting
fees
|
|
|
5,000
|
|
|
|
285,500
|
|
Management
fees
|
|
|
30,000
|
|
|
|
37,500
|
|
Professional
fees
|
|
|
1,500
|
|
|
|
6,750
|
|
Travel
|
|
|
3,900
|
|
|
|
39,921
|
|
|
|
|
64,861
|
|
|
|
426,626
|
|
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-24
|
17.
Related party transactions
During
the period ended December 31, 2020, the Company incurred management fees from a director totaling an aggregate of $74,500, including
$30,000 from discontinued operations. (December 31, 2019 - $127,500). As at December 31, 2020, $18,250 was owing to a director for
management fees and small out of pocket costs. During the period ended December 31, 2020, the Company incurred management fees
from an officer totaling $30,000 (December 31, 2019 - $58,269). As at December 31, 2020, $12,766 was owing to an officer for salaries.
Finally, as at December 31, 2020, the Company owed $20,825 (December 31, 2019 - $16,123) to a company controlled by officers for various
operating expenses paid for by that company.
During
the period ended December 31, 2020, the Company incurred $Nil to a company with a director and officer in common for website/app maintenance
(December 31, 2019 - $9,500), and owe $20,825 for office expenses (December 31, 2019 - $19,403)
During
the period ending December 31, 2020, the Company owes $3,222 (December 31, 2019 - $1,467) for interest to a shareholder of the
Company for a note payable with a principal amount of $50,000. The loan bears an annual interest rate of 3.5% and is due on or before
April 15, 2022 (see Note 10).
During
the period ending December 31, 2020, the Company owes $884 (December 31, 2019 - $283) for interest to a relative of the CEO for
a convertible note payable with a principal amount of $20,000. The loan bears an annual interest rate of 3.0% and is due on or before
July 12, 2022. The lender has the option to convert the whole loan and the accrued interest into shares of the Company at the price of
$1.45 per share. The closing price of the Company’s stock was $1.45 at July 11, 2019. (see Note 10). On May 10, 2021, the Company
entered into an agreement and agreed to issue 640,000 common shares at $0.033 per share to redeem a convertible note payable with a principal
amount of $20,000 plus accrued interest and fees valued at $21,098.
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.
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-25
|
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.
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 shareholders’ 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. 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 prior consolidated financial statements of the Company. At June
30, 2020 the operating results of Cormo USA Inc. have been deconsolidated as the Cormo license was recognized as impaired. The
non-controlling interest that were not attributable to the Company have been reported separately.
18.
Income Taxes
The
following income tax do not include amounts from the joint ventures as the Company does not file consolidated income tax returns. Income
tax recovery differs from that which would be expected from applying the effective tax rates to the net loss for the year ended December
31, 2020 and 2019 for the Company is as follows:
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
|
|
|
|
|
|
|
Net
loss for the year
|
|
$
|
(499,713
|
)
|
|
$
|
(155,660
|
)
|
|
|
|
|
|
|
|
|
|
Statutory
and effective tax rate
|
|
|
21
|
%
|
|
|
21
|
%
|
Income
tax recovery at the effective rate
|
|
|
(104,940
|
)
|
|
|
(32,689
|
)
|
Permanent
differences
|
|
|
(11,409
|
)
|
|
|
-
|
|
Tax
benefit deferred
|
|
|
116,349
|
|
|
|
32,689
|
|
|
|
|
|
|
|
|
|
|
Income
tax recovery
|
|
$
|
-
|
|
|
$
|
-
|
|
The
Company has accumulated net operating losses for income taxes purposes of $1,807,175 of which $625,796 will expire beginning in 2032
and the balance of $1,181,379 is indefinite. The components of the net deferred tax asset at December 31, 2020 and December 31, 2019
and the statutory tax rate and the effective tax rate, and the amount of the valuation respectively, are scheduled below:
|
|
Dec
31, 2020
|
|
|
Dec
31, 2019
|
|
|
|
|
|
|
|
|
Tax
losses carried forward
|
|
$
|
1,967,684
|
|
|
$
|
1,413,644
|
|
|
|
|
|
|
|
|
|
|
Statutory
and effective tax rate
|
|
|
21
|
%
|
|
|
21
|
%
|
Deferred
tax assets
|
|
|
413,214
|
|
|
|
296,865
|
|
Valuation
allowance
|
|
|
(413,214
|
)
|
|
|
(296,685
|
)
|
|
|
|
|
|
|
|
|
|
Net
deferred asset
|
|
$
|
-
|
|
|
$
|
-
|
|
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-26
|
The
change in the valuation allowance for the period ended December 31, 2020 was $116,349. The change in valuation for year ended
December 31, 2019 was $32,688.
The
Company file income tax returns in the United States of America and in the State of Nevada. The Company maintains its office in the State
of Florida and is subject to state tax returns as well. At December 31, 2020, the Company is current with all its filings.
19.
Correction of previously issued financial statements
For
the year ended December 31, 2019, there was a mathematical error in allocating the net loss between the Company and non-controlling interest.
An adjustment of $247,681 was required to reduce the amount allocated to the non-controlling interests and increase the loss allocated
to shareholders. The following adjustments were made to the previously issued financial statements as at December 31 2019 and
for the year ended December 31, 2019:
|
|
Previously
Stated
|
|
|
Adjustment
|
|
|
Restated
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Consolidated
Balance Sheet and
Consolidated Statement of Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
deficit
|
|
|
(2,632,115
|
)
|
|
|
(247,681
|
)
|
|
|
(2,879,796
|
)
|
Non-controlling
interest
|
|
|
735,760
|
|
|
|
247,681
|
|
|
|
983,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations and Comprehensive Loss and Consolidated Statement of Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss allocated to non-controlling interest
|
|
|
(551,779
|
)
|
|
|
247,681
|
|
|
|
(304,098
|
)
|
Net
loss allocated to shareholders
|
|
|
(523,744
|
)
|
|
|
(247,681
|
)
|
|
|
(771,425
|
)
|
20.
Prior Period Reclassifications
Certain
prior period amounts have been reclassified to conform to the current period presentations. Due to related parties and due to directors
have both been classified as due to related parties.
21.
Subsequent Events
On
May 10, 2021, the Company agreed to issue 640,000 common shares at $0.033 per share to a relative of the CEO to redeem a convertible
note payable with a principal amount of $20,000 plus accrued interest and fees valued at $21,098.
Pursuant
to an agreement entered into by the Company with a consultant on May 10,, 2021, the Company agreed to issue 300,000 common
shares at $0.035 per share for services valued at $10,500. Those shares have not yet been issued.
On
July 23, 2021, the Company entered into a two year $100,000 convertible promissory note bearing an interest of 10% per annum. The loan
may be renewed at the option of the Lender and is secured with the Company’s assets. The outstanding principal and unpaid accrued
interest will automatically convert into shares of the Company on or before the maturity date upon the closing of a qualified transaction
to an amount equal to 25% of the fully diluted capitalization of the Company on a post-money basis. If the event that the qualified transaction
is not consummated on or prior to the maturity date, the Lender have the right to convert the principal and unpaid accrued interest of
the note into shares of the Company to an amount equal to 25% of the fully diluted capitalization of the Company.
Sustainable Projects Group Inc.
|
Form 10-K
|
Page F-27
|