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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Susglobal Energy Corp (QB) | USOTC:SNRG | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0375 | 0.0375 | 0.0394 | 0.00 | 13:15:31 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
[
For the quarterly period ended
or
For the transition period from ________________to ________________
Commission file number
(Exact name of registrant as specified in its charter)
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|
(State or other jurisdiction of incorporation or organization) | (I. R. S. Employer Identification No.) |
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(Address of principal executive offices) | (Zip Code) |
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
N/A |
N/A |
N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
1
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] |
|
Smaller reporting company [ |
Emerging growth company
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).
Yes [ ]
The number of shares of the registrant's common stock outstanding as of November 14, 2023, was
2
SusGlobal Energy Corp.
INDEX TO FORM 10-Q
For the Three and Nine-Month Periods Ended September 30, 2023 and 2022
3
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
CONTENTS
4 |
SusGlobal Energy Corp.
Interim Condensed Consolidated Balance Sheets
As at September 30, 2023 and December 31, 2022
(Expressed in United States Dollars)
(unaudited)
September 30, | December 31, | |||||
2023 | 2022 | |||||
ASSETS | ||||||
Current Assets | ||||||
Cash | $ | $ | ||||
Funds held in trust (note 6) | ||||||
Trade receivables | ||||||
Government remittances receivable | ||||||
Inventory | ||||||
Prepaid expenses and deposits | ||||||
Total Current Assets | ||||||
Long-lived Assets, net (note 7) | ||||||
Long-Term Assets | ||||||
Total Assets | $ | $ | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||||||
Current Liabilities | ||||||
Accounts payable (note 8) | $ | $ | ||||
Government remittances payable | ||||||
Accrued liabilities (notes 8, 9, 10 and 13) | ||||||
Current portion of long-term debt (note 9) | ||||||
Current portion of obligations under capital lease (note 10) | ||||||
Convertible promissory notes (note 11) | ||||||
Loans payable to related parties (note 13) | ||||||
Total Current Liabilities | ||||||
Long-term debt (note 9) | ||||||
Obligations under capital lease (note 10) | ||||||
Total Long-term Liabilities | ||||||
Total Liabilities | ||||||
Stockholders' Deficiency | ||||||
Preferred stock, $ |
||||||
Additional paid-in capital | ||||||
Shares to be issued | ||||||
Accumulated deficit | ( |
) | ( |
) | ||
Accumulated other comprehensive income | ||||||
Stockholders' deficiency | ( |
) | ( |
) | ||
Total Liabilities and Stockholders' Deficiency | $ | $ | ||||
Going concern (note 2) | ||||||
Commitments (note 15) | ||||||
Subsequent events (note 19) |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
5 |
SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Operations and Comprehensive Loss
For the three and nine-month periods ended September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
For the three-month periods ended | For the Nine-month periods ended | |||||||||||
September 30, 2023 | September 30,2022 | September 30, 2023 | September 30, 2022 | |||||||||
Revenue | $ | $ | $ | $ | ||||||||
Cost of Sales | ||||||||||||
Opening inventory | ||||||||||||
Depreciation (note 7) | ||||||||||||
Direct wages and benefits | ||||||||||||
Equipment rental, delivery, fuel and repairs and maintenance | ||||||||||||
Utilities | ( |
) | ||||||||||
Outside contractors | ||||||||||||
Less: closing inventory | ( |
) | ( |
) | ( |
) | ( |
) | ||||
Total cost of sales | ||||||||||||
Gross loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||
Operating expenses | ||||||||||||
Management compensation-stock-based compensation (notes 8 and 14) | ||||||||||||
Management compensation-fees (note 8) | ||||||||||||
Marketing | ( |
) | ||||||||||
Professional fees | ||||||||||||
Interest expense (notes 8, 9, 10 and 13) | ||||||||||||
Office and administration (note 7) | ||||||||||||
Rent and occupancy (note 8) | ||||||||||||
Insurance | ||||||||||||
Filing fees | ||||||||||||
Amortization of financing costs | ||||||||||||
Directors' compensation (note 8) | ||||||||||||
Stock-based compensation (note 14) | ||||||||||||
Repairs and maintenance | ( |
) | ||||||||||
Foreign exchange loss (income) | ( |
) | ||||||||||
Total operating expenses | ||||||||||||
Net loss from operating activities | ( |
) | ( |
) | ( |
) | ( |
) | ||||
Other expenses (note 16) | ( |
) | ( |
) | ( |
) | ( |
) | ||||
Net loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||
Other comprehensive loss | - | - | ||||||||||
Foreign exchange income (loss) | ( |
) | ||||||||||
Comprehensive loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
Net loss per share-basic and diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
Weighted average number of common shares outstanding- basic and diluted |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
6 |
SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Changes in Stockholders' Deficiency
For the three and nine-month periods ended September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
Number of Shares |
Common Shares |
Additional Paid- in Capital |
Shares to be Issued |
Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss) |
Stockholders' Deficiency |
||||||||||||||||
Balance-December 31, 2022 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||
Shares issued for proceeds previously received | ( |
) | - | - | - | |||||||||||||||||
Shares issued to officers | - | - | - | |||||||||||||||||||
Shares issued to employee | ||||||||||||||||||||||
Shares issued to director | ||||||||||||||||||||||
Shares issued on conversion of debt to equity | - | - | - | |||||||||||||||||||
Shares issued for professional services | - | - | - | |||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||
Net loss | - | - | - | - | ( |
) | - | ( |
) | |||||||||||||
Balance-March 31, 2023 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||
Shares issued on conversion of debt | - | - | - | |||||||||||||||||||
Shares issued on conversion of related party accounts payable and debt | - | - | - | |||||||||||||||||||
Shares issued on private placement | - | - | - | |||||||||||||||||||
Shares issued for professional services | - | - | - | |||||||||||||||||||
Shares yet to be issued on private placement received | - | - | - | - | ||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||
Net Loss | - | - | - | - | ( |
) | - | ( |
) | |||||||||||||
Balance-June 30, 2023 | ( |
) | ( |
) | ||||||||||||||||||
Shares issued for proceeds previously received | ( |
) | - | - | - | |||||||||||||||||
Shares issued on conversion of related party debt and accounts payable | - | - | - | |||||||||||||||||||
Shares issued on private placement | - | - | - | |||||||||||||||||||
Shares issued for professional services | - | - | - | |||||||||||||||||||
Shares issued for other services | - | - | - | |||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | |||||||||||||||||
Net loss | - | - | - | - | ( |
) | - | ( |
) | |||||||||||||
Balance-September 30, 2023 | ( |
) | ( |
) | ||||||||||||||||||
Balance-December 31, 2021 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||
Shares issued for proceeds previously received | ( |
) | - | - | - | |||||||||||||||||
Shares issued to officers | - | - | - | |||||||||||||||||||
Shares issued to employee | - | - | - | |||||||||||||||||||
Shares issued for professional services | - | - | ||||||||||||||||||||
Shares issued on conversion of debt to equity | - | - | ||||||||||||||||||||
Shares issued on private placement | - | - | ||||||||||||||||||||
Shares yet to be issued | - | - | - | - | - | |||||||||||||||||
Other comprehensive income | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||
Net loss | - | - | - | - | ( |
) | - | ( |
) | |||||||||||||
Balance-March 31, 2022 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||
Shares issued on private placement | - | - | - | |||||||||||||||||||
Shares issued on issuance of debt on extinguishment of existing debt | - | - | - | |||||||||||||||||||
Shares yet to be issued | - | - | - | - | - | |||||||||||||||||
Shares yet to be issued on extinguishment of existing debt | - | - | - | - | - | |||||||||||||||||
Other comprehensive loss | - | - | - | - | - | |||||||||||||||||
Net Loss | - | - | - | - | ( |
) | - | ( |
) |
7 |
SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Changes in Stockholders' Deficiency
For the three and nine-month periods ended September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
Number of Shares |
Common Shares |
Additional Paid- in Capital |
Shares to be Issued |
Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss) |
Stockholders' Deficiency |
|||||||||||||||
Balance-June 30, 2022 | ( |
) | ( |
) | ( |
) | |||||||||||||||
Shares issued for proceeds previously received | ( |
) | - | - | - | ||||||||||||||||
Shares issued for professional services | - | - | - | ||||||||||||||||||
Shares issued on conversion of debt | - | - | - | ||||||||||||||||||
Return of shares to treasury | ( |
) | ( |
) | - | - | - | - | |||||||||||||
Other comprehensive income | - | - | - | - | - | ||||||||||||||||
Net Loss | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||
Balance - Sept 30, 2022 | ( |
) | ( |
) |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
8 |
SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Cash Flows
For the nine-month periods ended September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
For the nine-month period ended September 30, 2023 |
For the nine-month period ended September 30, 2022 |
|||||
Cash flows from operating activities | ||||||
Net loss | $ | ( |
) | $ | ( |
) |
Adjustments for: | ||||||
Depreciation | ||||||
Amortization of financing fees | ||||||
Stock-based compensation | ||||||
Loss on conversion of convertible promissory notes | ||||||
Loss on revaluation of convertible promissory notes | ||||||
Gain on extinguishment of convertible promissory notes | ( |
) | ||||
Changes in non-cash working capital: | ||||||
Non-cash addition to convertible promissory notes on amendment | ||||||
Trade receivables | ( |
) | ( |
) | ||
Government remittances receivable | ( |
) | ||||
Other receivable | ( |
) | ||||
Inventory | ( |
) | ||||
Prepaid expenses and deposits | ( |
) | ( |
) | ||
Accounts payable | ||||||
Government remittances payable | ||||||
Accrued liabilities | ||||||
Net cash used in operating activities | ( |
) | ( |
) | ||
Cash flows from investing activities | ||||||
Purchase of long-lived assets | ( |
) | ||||
Net cash (used in) investing activities | ( |
) | ||||
Cash flows from financing activities | ||||||
Advances of long-term debt | ||||||
Repayment of long-term debt | ( |
) | ( |
) | ||
Financing fee on long-term debt | ( |
) | ||||
Repayments of obligations under capital lease | ( |
) | ( |
) | ||
Advances on convertible promissory notes | ||||||
Repayment of convertible promissory notes. | ( |
) | ||||
Advances of loans payable to related parties | ||||||
Repayment of loans payable to related parties | ( |
) | ( |
) | ||
Proceeds on private placement | ||||||
Subscription payable proceeds | ||||||
Net cash provided by financing activities | ||||||
Effect of exchange rate on cash | ||||||
Increase (decrease) in cash | ( |
) | ||||
Cash and cash equivalents-beginning of period | ||||||
Cash and cash equivalents and restricted cash-end of period | $ | $ | ||||
Supplemental Cash Flow Disclosure: | ||||||
Interest paid | $ | $ | ||||
Supplemental Non-Cash Disclosure: | ||||||
Common stock issued at fair value for conversion of debt, plus accrued interest, and other fees | $ | $ | ||||
Common stock issued at fair value on extinguishment of existing debt | ||||||
Common stock yet to be issued on extinguishment of existing debt | ||||||
Common stock issued at fair value for conversion of related party debt and accounts payable | $ | $ | ||||
Share issued for prepaid services | $ | $ |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
9 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
1. Nature of Business and Basis of Presentation
SusGlobal Energy Corp. ("SusGlobal") was formed by articles of amalgamation on December 3, 2014, in the Province of Ontario, Canada and its executive office is in Toronto, Ontario, Canada. SusGlobal, a company in the start-up stages and Commandcredit Corp. ("Commandcredit"), an inactive Canadian public company, amalgamated to continue business under the name of SusGlobal Energy Corp.
On May 23, 2017, SusGlobal filed an Application for Authorization to continue in another Jurisdiction with the Ministry of Government Services in Ontario and a certificate of corporate domestication and certificate of incorporation with the Secretary of State of the State of Delaware under which it changed its jurisdiction of incorporation from Ontario to the State of Delaware (the "Domestication"). In connection with the Domestication each of the currently issued and outstanding common shares were automatically converted on a one-for-one basis into common shares compliant with the laws of the state of Delaware (the "Shares"). As a result of the Domestication, pursuant to Section 388 of the General Corporation Law of the State of Delaware (the "DGCL"), SusGlobal continued its existence under the DGCL as a corporation incorporated in the State of Delaware. The business, assets and liabilities of SusGlobal and its subsidiaries on a consolidated basis, as well as its principal location and fiscal year, were the same immediately after the Domestication as they were immediately prior to the Domestication. SusGlobal filed a Registration Statement on Form S-4 to register the Shares and this registration statement was declared effective by the Securities and Exchange Commission on May 12, 2017.
On December 11, 2018, the Company began trading on the OTCQB venture market exchange, under the ticker symbol SNRG.
SusGlobal is a renewables company focused on acquiring, developing and monetizing a global portfolio of proprietary technologies in the waste to energy and regenerative products application.
These interim condensed consolidated financial statements of SusGlobal and its wholly-owned subsidiaries, SusGlobal Energy Canada Corp. ("SECC"), SusGlobal Energy Canada I Ltd. ("SGECI"), SusGlobal Energy Belleville Ltd. ("SGEBL"), SusGlobal Energy Hamilton Ltd. ("SEHL") and 1684567 Ontario Inc. ("1684567") (together, the "Company"), have been prepared following generally accepted accounting principles in the United States ("US GAAP") for interim financial information and the Securities Exchange Commission ("SEC") instructions to Form 10-Q and Article 8 of SEC Regulation S-X, and are expressed in United States Dollars. The Company's functional currency is the Canadian Dollar ("C$"). In the opinion of management, all adjustments necessary for a fair presentation have been included.
2. Going Concern
The interim condensed consolidated financial statements have been prepared in accordance with US GAAP, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months.
The Company incurred a net loss of $
On February 18, 2021, PACE Savings and Credit Union Limited ("PACE") and the Company reached a new agreement to repay all amounts owing to PACE on or before July 30, 2021. Management was not able to meet the July 30, 2021, deadline. On August 13, 2021, PACE agreed to allow the Company until August 31, 2021, to bring the arrears current and continue to September 2022, the original maturity date. Management was not able to meet the August 31, 2021, deadline. On November 15, 2021, the Company paid all arrears to PACE and PACE agreed to allow the Company to continue payments to the end of the terms of each obligation, September 2022. Similarly, the Company paid all arrears to PACE on March 15, 2022, and PACE allowed the Company to continue payments to the end of the terms of each obligation, September 2022. On March 28, 2023, the Company and PACE negotiated a full and final mutual release of all obligations owing to PACE. Management continues discussions with equity investors to raise the necessary funds to repay other creditors. The Company was successful in extending the repayment date on a 1st mortgage which had a maturity date of September 1, 2022, to December 1, 2023. One of the Company's significant customer contracts expired at the end of December 31, 2020, and one customer contract was terminated by the Company in September of 2021.
10 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
2. Going Concern, (continued)
These factors cast substantial doubt as to the Company's ability to continue as a going concern, which is dependent upon its ability to obtain the necessary financing to further the development of its business, satisfy its obligations to its creditors, and upon achieving profitable operations through revenue growth. There is no assurance of funding being available or available on acceptable terms. Realization values may be substantially different from carrying values as shown.
These interim condensed consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result if the Company was unable to continue as a going concern.
3. Significant Accounting Policies
These interim condensed consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements of the Company for the years ended December 31, 2022, and 2021 and their accompanying notes.
4. Recently Issued Accounting Pronouncements
Accounting Pronouncements Recently Adopted
The following section provides a description of new accounting pronouncements ("Accounting Standard Update" or "ASU") issued by the Financial Accounting Standards Board ("FASB") that are applicable to the Company.
In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"), which requires enhanced disclosure of certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty while eliminating certain current recognition and measurement accounting guidance. This ASU also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases. ASU No. 2022-02 became effective for the Company's annual and interim periods beginning on January 1, 2023. The Company adopted this ASU on January 1, 2023. As a result, the adoption of ASU 2022-02 did not have any impact on the opening balances in the interim condensed consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU-2016-13"). ASU 2016-13 affects loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. ASU 2016-13 is effective for the fiscal year beginning after December 15, 2022, including interim periods within that fiscal year. The Company adopted this ASU on January 1, 2023. As a result, the adoption of ASU 2016-13 did not have any impact on the opening balances in the interim condensed consolidated financial statements.
There were no new accounting pronouncements issued and not yet adopted that were expected to have a material impact on the Company's interim condensed consolidated financial position or results of operations in the current or future periods.
5. Financial Instruments
The carrying value of the Company's financial instruments, such as cash, funds held in trust, trade receivables, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these instruments. The carrying amounts of the long-term debt, obligations under capital lease and convertible promissory notes also approximates fair value due to their market interest rate.
Interest, Credit and Concentration Risk
Interest rate risk is the risk borne by an interest-bearing asset or liability as a result of fluctuations in interest rates. Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk.
11 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
5. Financial Instruments, (continued)
The Company is exposed to significant interest rate risk on the current portion of its long-term debt of $
Credit risk is the risk of loss associated with a counterparty's inability to perform its payment obligations. As at September 30, 2023, the Company's credit risk is primarily attributable to cash and trade receivables. As at September 30, 2023, the Company's cash was held with reputable Canadian chartered banks and a United States of America bank.
With regards to credit risk with customers, the customers' credit evaluation is reviewed by management and account monitoring procedures are used to minimize the risk of loss. The Company believes that no additional credit risk beyond amounts provided for by the allowance for doubtful accounts is inherent in accounts receivable. As at September 30, 2023, the allowance for doubtful accounts was $
As at September 30, 2023, the Company is exposed to concentration risk as it had
Certain of the prior period's comparative figures have been reclassified to conform to the current year's presentation. The reclassification on the interim condensed consolidated statement of operations and comprehensive loss for the sale of carbon credits from other expenses to revenue.
Liquidity Risk
Liquidity risk is the risk that the Company is unable to meet its obligations as they fall due. The Company takes steps to ensure it has sufficient working capital and available sources of financing to meet future cash requirements for capital programs and operations. Management is considering all its options to repay its creditors. Refer also to going concern, note 2.
The Company actively monitors its liquidity to ensure that its cash flows and working capital are adequate to support its financial obligations and the Company's capital programs. In order to continue operations, the Company will need to raise capital, and complete the refinancing of its real property and organic waste processing and composting facility. There is no assurance of funding being available or available on acceptable terms. Realization values may be substantially different from carrying values as shown. Refer also to going concern, note 2.
Currency Risk
Although the Company's functional currency is the C$, the Company realizes a portion of its expenses in United States Dollars ("$"). Consequently, certain assets and liabilities are exposed to foreign currency fluctuations. As at September 30, 2023, $
6. Funds Held in Trust
The Funds held in trust at September 30, 2023, in the amount of $
Refer also to subsequent events, note 19(b).
12 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
7. Long-lived Assets, net
September 30, | December 31, | |||||||||||
2023 | 2022 | |||||||||||
Cost | Accumulated depreciation |
Net book value | Net book value | |||||||||
Land | $ | $ | $ | $ | ||||||||
Property under construction | ||||||||||||
Composting buildings | ||||||||||||
Gore cover system | ||||||||||||
Driveway and paving | ||||||||||||
Machinery and equipment | ||||||||||||
Equipment under capital lease | ||||||||||||
Signage | ||||||||||||
Automotive equipment | ||||||||||||
$ | $ | $ | $ |
Depreciation for the three and nine-month periods ended September 30, 2023, is disclosed in cost of sales in the amount of $
8. Related Party Transactions
For three and nine-month periods ended September 30, 2023, the Company incurred $
During the three and nine-month periods ended September 30, 2023, Travellers converted $
For the three and nine-month periods ended September 30, 2023, the Company incurred $
In addition, during the three and nine-month periods ended September 30, 2023, the Company paid the CFO interest of $
For the independent directors, the Company recorded directors' compensation during the three and nine-month periods ended September 30, 2023 of $
13 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
8. Related Party Transactions, (continued)
As at September 30, 2023, outstanding directors' compensation of $
Pursuant to the terms of the CEO's Consulting Agreement, for his services as the CEO, the compensation is at a rate of $
Pursuant to the terms of the CFO's Consulting Agreement for his services as the CFO, the compensation is at a rate of $
Furthermore, for the three and nine-month periods ended September 30, 2023, the Company recognized management stock-based compensation expense of $
9. Long-Term Debt
September 30, 2023 |
December 31, 2022 |
||||||
(a) | PACE Credit Facility-see below | $ | $ | ||||
(b) | PACE Credit Facility-see below | ||||||
(c) | PACE Corporate Term Loan-see below | ||||||
(d)i.) | Mortgage Payable-due December 1, 2023 | ||||||
(d)ii.) | Mortgage Payable-due August 17, 2023 | ||||||
(d)iii.) | Mortgage Payable-due March 1, 2024 | ||||||
(e) | Canada Emergency Business Account-Due December 31, 2023 | ||||||
(f) | Corporate Term Loan-Due April 7, 2025 | ||||||
Current portion | ( |
) | ( |
) | |||
Long-Term portion | $ | $ |
As disclosed under funds held in trust, note 6, the Company and PACE finalized a full and final mutual release of all obligations owing to PACE, including accrued interest, in exchange for an amount of $
Refer also to going concern, note 2 and subsequent events, note 19(b).
The PACE long-term debt was initially payable as noted below:
14 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
9. Long-Term Debt, (continued)
(a)
(b) The credit facility advanced on June 15, 2017, in the amount of $
(c) The corporate term loan advanced on September 13, 2017, in the amount of $
For the three and nine-month periods ended September 30, 2023, $
(d) i) The Company obtained a 1st mortgage provided by private lenders to finance the acquisition of the shares of 1684567 and to provide funds for additional financing needs, including additional lands, received in four tranches totaling $
Financing fees on the 1st mortgage totaled $
ii) On August 17,2021, the Company obtained a vendor take-back 1st mortgage in the amount of $
iii) On March 1, 2023, the Company obtained a 2nd mortgage in the amount of $
15 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
9. Long-Term Debt, (continued)
For the three and nine-month periods ended September 30, 2023, $
(e) As a result of the COVID-19 virus, the Government of Canada launched the Canada Emergency Business Account (the "CEBA"), a program to ensure that small businesses have access to the capital they need to see them through the current challenges and better position them to quickly return to providing services to their communities and creating employment. The program is administered by Canadian chartered banks and credit unions.
The Company has received a total of $
Under the initial term date of the loans, which is detailed in the CEBA term loan agreements, the amount is due on December 31, 2022 and is interest-free.
The CEBA term loan agreements contain a number of positive and negative covenants, for which the Company is not in full compliance.
(f) On April 8, 2021, the Company took delivery of a truck and hauling trailer for a total purchase price of $
For the three and nine-month periods ended September 30, 2023, $
As a result of the Company being in default on its obligations for its convertible promissory notes, the obligations under this bank term loan are disclosed as a current obligation.
10. Obligations under Capital Lease
September 30, 2023 | December 31, 2022 | |||||||||||
(a) | (b) | Total | Total | |||||||||
Obligations under Capital Lease | $ | $ | $ | $ | ||||||||
Less: current portion | ( |
) | ( |
) | ( |
) | ||||||
Long-term portion | $ | $ | $ | $ |
Refer also to going concern, note 2.
(a) The lease agreement for certain equipment for the Company's organic composting facility at a cost of $
16 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
10. Obligations under Capital Lease, (continued)
(b) The lease agreement for certain equipment for the Company's organic waste processing and composting facility at a cost of $
The lease liabilities are secured by the equipment under capital lease as described under long-lived assets, net (note 7).
Minimum lease payments as per the original terms of the obligations under capital lease are as follows:
In the three-month period ending December 31, 2023 | $ | ||
In the year ending December 31, 2024 | |||
In the year ending December 31, 2025 | |||
Less: imputed interest | ( |
) | |
Total | $ |
For the three and nine-month periods ended September 30, 2023, $
As a result of the Company being in default on its obligations for its convertible promissory notes, the obligations under capital lease are disclosed as a current obligation.
11. Convertible Promissory Notes
September 30, 2023 | December 31, 2022 | ||||||
(a) | Convertible promissory notes-October 28 and 29, 2021 | $ | $ | ||||
(b) | Convertible promissory notes-March 3 and 7, 2022 | ||||||
(c) | Convertible promissory note- June 23, 2022 | ||||||
$ | $ |
The convertible promissory notes are accounted for under the fair value option in the interim condensed consolidated balance sheets. The actual principal outstanding on the balance of the convertible promissory notes as at September 30, 2023 is $
(a) On October 28 and 29, 2021, the Company entered into two securities purchase agreement (the "October 2021 SPAs) with two investors (the "October 2021 Investors") pursuant to which the Company issued to the October 2021 Investors two
The maturity date of the October 2021 Investor Notes is the earlier of (i) July 28 and 29, 2022 and (ii) the occurrence of a Liquidity Event, as described above (the "Maturity Date"). Upon the occurrence of a Liquidity Event, the October 2021 Investors are entitled to convert all or a portion of their October 2021 Investor Notes including any accrued and unpaid interest at a conversion price (the "Conversion Price") equal to
17 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
11. Convertible Promissory Notes, (continued)
Upon the occurrence of an event of default, the interest rate on the October 2021 Investor Notes will immediately accrue at
On May 11, 2022, the holder of the October 29, 2021 investor note, provided an amendment for an optional conversion of his investor notes. The conversion price was amended to be (i) the product of the Liquidity Event price multiplied by the discount of
On August 16, 2022, the Company was sent a notice of default from one of the October 2021 Investors, whose investor note was issued on October 29, 2021. On September 15, 2022, the Company and the investor of the October 2021 investor note entered into an amendment to the October 2021 investor note which served as a cure to the previously issued default notice.
Pursuant to the September 15, 2022 amendment, the Company and the October 29, 2021 investor, agreed that the outstanding principal amount of the October 29, 2021 investor note would increase by
Further, the October 29, 2021 investor agreed not to convert more than $
On September 21, 2022 and November 10, 2022, the October 29, 2021 investor issued conversion notices to the Company and the Company issued
On December 22, 2022, the October 28, 2021 investor, whose October 28, 2021 investor note had a previous Principal Amount of $
18 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
11. Convertible Promissory Notes, (continued)
On June 8, 2023, the October 29, 2021 investor's counsel sent the Company a notice of default on the October 29, 2021 investor note and the March 2022 Investor Notes, described below. The default was caused by the holders of these promissory notes not being able to receive shares of the Company's common stock, par value $
During the three and nine-month periods ended September 30, 2023, the October 29, 2021 investor provided the Company with notices of conversion to convert in total $
The Company initially reserved
(b) On March 3 and 7, 2022, the Company executed two unsecured convertible promissory notes with two investors (the "March 2022 Investors"), who purchased
The maturity date of the Notes is the earlier of (i) June 3 and 7, 2022, and (ii) the occurrence of a Liquidity Event (as defined in the Notes) (the "Maturity Date"). The final payment of the Principal Amount (and default interest, if any) shall be paid by the Company to the Investors on the Maturity Date. On an event of default, the principal amount of the March 2020 Investor Notes will increase to
On May 11, 2022, the holder of the March 3, 2022 Investor Note and on May 13, 2022, the holder of the March 7, 2022 Investor Note, each provided an amendment for an optional conversion of their investor notes. The conversion price was amended to be (i) the product of the Liquidity Event price multiplied by the discount of 35% (previously
Further, on June 29, 2022, the March 2022 Investors revised their March 2022 Investor Notes, to extend the maturity date to August 15, 2022 and increase the principal amount of each of the March 2022 Investor Notes by twenty percent (
19 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
11. Convertible Promissory Notes, (continued)
On August 16, 2022, the Company was sent notices of default from the March 2022 Investors. And, on September 15, 2022, the Company and the March 2022 Investors entered into an amendment to the March 2022 Investor Notes which served as a cure to the previously issued default notices.
Pursuant to the September 15, 2022 amendment, the Company and the March 2022 Investors agreed that the outstanding Principal Amount totaling $
Further, in the event that the October 29, 2021 investor note has been fully converted and the conversion shares sold, thereafter, the March 2022 Investor Notes may both be converted at the March 2022 Investors' discretion on a pari-passu basis, provided, however, that no conversion shall exceed $
As noted above, on June 8, 2023 the counsel for the March 2022 Investors provided the Company with a notice of default. This resulted in the principal balance of the March 2022 Investor Notes increasing in principal from $
(c) On June 23, 2022, the Company executed one convertible promissory note (the "June 2022 Investor Note") with an investor (the "June 2022 Investor") in the amount of $
The June 2022 Investor may convert the principal amount and any accrued but unpaid interest into the Company's common stock from time to time following an event of default ('Event of Default"), as defined in the June 2022 Investor Note, with interest accruing at the default interest rate of
On December 29, 2022, the Company and the investor agreed to extend the maturity date to the earlier of June 23, 2023 or the occurrence of a Liquidity Event. In consideration for the extension of the maturity date, the Company agreed to: (i) increase the principal amount to $
On June 29, 2023, the June 2022 Investor provided a 45-day extension of the June 2022 Investor Note in exchange for an increase in the principal balance of the June 2022 Investor Note of $
20 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
11. Convertible Promissory Notes, (continued)
The Company initially reserved
Pursuant to the terms of the security purchase agreements for the convertible promissory notes described above, for so long as the noted investors own any shares of Common Stock issued upon the conversion of the applicable investor notes, the Company has covenanted to secure and maintain the listing of such shares of Common Stock. The Company is also subject to certain customary negative covenants under the investor notes and the security purchase agreements, including but not limited to the requirement to maintain its corporate existence and assets, require registration of or stockholder approval for the investor notes or the Common Stock upon the conversion of the applicable investor notes.
The convertible promissory notes described above, contain certain representations, warranties, covenants and events of default including if the Company is delinquent in its periodic report filings with the Securities and Exchange Commission which would increase the amount of the principal and interest rates under the convertible promissory notes in the event of such defaults. In the event of a default, at the option of the applicable investor and in their sole discretion, the applicable investor may consider any of their convertible promissory notes immediately due and payable.
Refer also to going concern, note 2.
Fair value option for the convertible promissory notes
The Company is eligible to elect the fair value option under ASC 825, Financial Instruments and bypass analysis of the potential embedded derivative features described above. The Company believes that the fair value option better reflects the underlying economics of the convertible promissory notes issued after December 31, 2020. As a result, the 2021 and 2022 promissory notes were recorded at fair value upon issuance and subsequently remeasured at each reporting date until settled or converted. The Company recognized the notes initially at fair value, which exceeded the proceeds received resulting in a day one loss that has been recognized in net loss. Transaction and other issuance costs have been expensed as incurred. Subsequently, the Company recognizes the notes at fair value with changes in net loss.
Gains and losses attributable to changes in credit risk were insignificant during the three and nine-month periods ended September 30, 2023 and 2022. The Company recognized a loss of $
12. Fair Value Measurement
The following table presents information about the Company's financial assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation:
Fair value as at September 30, 2023 and December 31, 2022 Using: | |||||||||
Level 3 | September 30, 2023 | December 31, 2022 | |||||||
Assets: | $ | - | $ | - | $ | - | |||
Liabilities: | |||||||||
Convertible promissory notes | |||||||||
$ | $ | $ |
21 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
12. Fair Value Measurement, (continued)
During each of the three and nine-month periods ended September 30, 2023 and 2022, there were no transfers between Level 1, Level 2, or Level 3. There were no financial assets or other liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022.
The following table summarizes the change in Level 3 financial instruments during the nine-month period ended September 30, 2023 and year ended December 31, 2022.
September 30, 2023 | December 31, 2022 | |||||
Fair value at December 31, 2022 | $ | $ | ||||
Fair value at issuance | ||||||
Amendments | ||||||
Conversions/repayments | ( |
) | ( |
) | ||
Mark to market | ||||||
Settlement | ( |
) | ||||
Fair value at September 30, 2023 and December 31, 2022 | $ | $ |
Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The fair value of the convertible promissory notes at issuance and subsequent financial reporting dates was estimated based on significant inputs not observable in the market, which represent level 3 measurements within the fair value hierarchy.
The fair value of the convertible promissory notes at issuance and at each reporting period was estimated based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The Company used a scenario-based binomial model to estimate the fair value of the convertible promissory notes. The model determines the fair value from a market participant's perspective by evaluating the payouts under hold, convert, or call decisions. The most significant estimates and assumptions used as inputs are those concerning type, timing and probability of specific scenario outcomes. Specifically, the Company assigned a probability of default, which would increase the required payout as described in note 11 and calculated the fair value under each scenario. At the issuance dates of the convertible promissory notes, the probability of default ("PD") was assumed to be
Other significant unobservable inputs include the expected volatility, discount for lack of marketability and the credit spread. The expected volatility was based on the historical volatility over a look-back period that was consistent with the balance-remaining term of the instruments. A range of
Refer also to going concern, note 2.
13. Loans Payable to Related Parties
September 30, 2023 |
December 31, 2022 |
|||||
Directors | $ | $ | ||||
Officers | ||||||
Total | $ | $ |
22 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
13. Loans Payable to Related Parties, (continued)
The loans owing to directors were received by the Company on June 6, 2022 and March 16, 2023, are unsecured, bearing interest at
During the three and nine-month periods ended September 30, 2023, $
The loans from the officers are non-interest bearing and due on demand.
14. Capital Stock
As at September 30, 2023, the Company had
For the nine -month period ended September 30, 2023, the Company issued
In addition, the Company raised $
During the nine-month period ended September 30, 2023, Travellers converted $
On January 3, 2023, the Company issued
Furthermore, on January 3, 2023, the Company issued
23 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
14. Capital Stock, (continued)
As at September 30, 2023, the Company recorded a balance of $
15. Commitments
a) Effective January 1, 2023, as stipulated in each of their respective executive consulting agreements, the CEO's monthly fee is $
For the three-month period ending December 31, 2023 | $ | ||
For the year ending December 31, 2024 | |||
$ |
b) The Company has agreed to lease its office premises from Haute on a month-to-month basis, at the monthly rate of $
c) Effective February 3, 2021, upon the successful completion of a Nasdaq listing, the Company has committed a payment of $
d) On November 5, 2021, the Company committed to the design and construction of its Hamilton, Ontario, Canada facility, including architectural and general consulting fees in the amount of $
e) On September 15, 2023, the Company signed a one-year marketing agreement with a consulting agency to provide various marketing services. As Compensation, the consulting agency received
f) Effective November 1, 2022, the Company acquired the exclusive rights to the use of a well-known athlete's name, endorsement and the like, for the purposes of advertisement, promotion and sale of the Company's products. In return, the Company issued
• $
• $
• $
There is also an arrangement to issue
g) The Company was assigned the land lease on the purchase of certain assets of Astoria Organic Matters Ltd., and Astoria Organic Matters Canada LP. The land lease, which comprises 13.88 acres in Roslin, Ontario, Canada, has a term expiring March 31, 2034. The basic monthly rent on the net lease is $
24 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
15. Commitments, (continued)
The Company is responsible through a special provision of the site plan agreement with the City of Belleville (the "City"), Ontario, Canada, that it is required to fund road maintenance required by the City through to September 30, 2025 at an annual rate of $
The future minimum commitment is as follows:
For the three-month period ending December 31, 2023 | $ | ||
For the year ending December 31, 2024 | |||
For the year ending December 31, 2025 | |||
$ |
h) PACE had provided the Company a letter of credit in favor of the MECP in the amount of $
Refer also to subsequent events, note 19(b).
The letter of credit is a requirement of the MECP and is in connection with the financial assurance provided by the Company for it to be in compliance with the MECPs environmental objectives. The MECP regularly evaluates the Company's organic waste processing and composting facility to ensure compliance is adhered to and the letter of credit is subject to change by the MECP. As a result of audits conducted by the MECP in December of 2020, the Company has accrued estimated and actual costs for corrective measures as a result of the MECP's audits totaling $
As at September 30, 2023, the MECP has not drawn on the letter of credit. The Company is in the process of obtaining a letter of credit for the new financial assurance with the MECP in the amount of $
16. Other Expenses
September 30, 2023 |
September 30, 2022 |
|||||
(a) Loss on conversion of convertible promissory note | $ | ( |
) | $ | ||
(b) Loss on revaluation of convertible promissory notes | ( |
) | ( |
) | ||
(c) Gain on extinguishment of convertible promissory notes | ||||||
(d) Settlement payment | ( |
) | ||||
$ | ( |
) | $ | ( |
) |
(a) As described under convertible promissory notes, note 11(a), the loss is on five conversions of the October 29, 2021 investor note.
(b) Loss on revaluation of convertible promissory notes. Refer to note 11, convertible promissory notes.
(c) Gain on extinguishment of convertible promissory notes. Refer to note 11, convertible promissory notes.
(d) Accrued settlement payment for the release of services of a party for an underwriting offering dated March 23, 2022 and amended May 23, 2022.
25 |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2023 and 2022
(Expressed in United States Dollars)
(unaudited)
17. Economic Dependence
The Company generated
18. Legal Proceedings
From time to time, the Company may become involved in litigation relating to claims arising from the ordinary course of business. Management believes that there are currently no claims or actions pending against us, the ultimate disposition of which would have a material adverse effect on our results of operations, financial condition or cash flows.
The Company has a claim against it for unpaid legal fees in the amount of $
19. Subsequent Events
The Company's management has evaluated subsequent events up to the date the interim condensed consolidated financial statements were issued, pursuant to the requirements of ASC 855 and has determined the following to be material subsequent events:
(a) On November 2, 2023, the Company completed the purchase of additional land, consisting of a
(b) On November 3, 2023, the funds held in escrow, in the amount of $
26
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Certain statements in this Management's Discussion and Analysis ("MD&A"), other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "would," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers should carefully review the risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission on April 17, 2023.
The following MD&A is intended to help readers understand the results of our operation and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Interim Unaudited Financial Statements and the accompanying Notes to Interim Unaudited Financial Statements under Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Growth and percentage comparisons made herein generally refer to the three and nine-month periods ended September 30, 2023 compared with the three and nine-month periods ended September 30, 2022 unless otherwise noted. Unless otherwise indicated or unless the context otherwise requires, all references in this document to "we, "us, "our," the "Company," and similar expressions refer to SusGlobal Energy Corp., and depending on the context, its subsidiaries.
SPECIAL NOTICE ABOUT GOING CONCERN AUDIT OPINION
OUR AUDITORS ISSUED OPINIONS EXPRESSING SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE IN BUSINESS AS A GOING CONCERN FOR THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021. YOU SHOULD READ THIS QUARTERLY REPORT ON FORM 10-Q WITH THE "GOING CONCERN" ISSUES IN MIND.
This Management's Discussion and Analysis should be read in conjunction with the unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q (the "Financial Statements"). The financial statements have been prepared in accordance with generally accepted accounting policies in the United States ("GAAP"). Except as otherwise disclosed, all dollar figures included therein and in the following management discussion and analysis are quoted in United States dollars.
OVERVIEW
The following organization chart sets forth our wholly-owned subsidiaries:
27
On February 4, 2019, the Company registered its common stock, having a par value of $.0001 per share, pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and is effective pursuant to General Instruction A.(d).
SusGlobal Energy Corp. ("SusGlobal") was formed by articles of amalgamation on December 3, 2014, in the Province of Ontario, Canada and its executive office is in Toronto, Ontario, Canada, at 200 Davenport Road. Our telephone number is 416-223-8500. Our website address is www.susglobalenergy.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K are all available, free of charge, on our website as soon as practicable after we file the reports with the Securities and Exchange Commission (the "SEC"). SusGlobal Energy Corp., a company in the start-up stages and Commandcredit Corp. ("Commandcredit"), an inactive Canadian public company, amalgamated to continue business under the name of SusGlobal Energy Corp.
On May 23, 2017, SusGlobal filed an Application for Authorization to continue in another Jurisdiction with the Ministry of Government Services in Ontario and a certificate of corporate domestication and certificate of incorporation with the Secretary of State of the State of Delaware under which it changed its jurisdiction of incorporation from Ontario to the State of Delaware (the "Domestication"). In connection with the Domestication each of the currently issued and outstanding common shares were automatically converted on a one-for-one basis into common shares compliant with the laws of the state of Delaware (the "Shares"). As a result of the Domestication, pursuant to Section 388 of the General Corporation Law of the State of Delaware (the "DGCL"), SusGlobal continued its existence under the DGCL as a corporation incorporated in the State of Delaware. The business, assets and liabilities of SusGlobal and its subsidiaries on a consolidated basis, as well as its principal location and fiscal year, were the same immediately after the Domestication as they were immediately prior to the Domestication. SusGlobal filed a Registration Statement on Form S-4 to register the Shares and this registration statement was declared effective by the Securities and Exchange Commission on May 12, 2017.
SusGlobal is a renewables company focused on acquiring, developing and monetizing a global portfolio of proprietary technologies in the waste to energy and regenerative products application.
When the terms "the Company," "we," "us" or "our" are used in this document, those terms refer to SusGlobal Energy Corp., and its wholly-owned subsidiaries, SusGlobal Energy Canada Corp., SusGlobal Energy Canada I Ltd., SusGlobal Energy Belleville Ltd., SusGlobal Energy Hamilton Ltd., and 1684567 Ontario Inc.
On December 11, 2018, the Company began trading on the OTCQB venture market exchange, under the ticker symbol SNRG.
As the global amount of organic waste continues to grow, a solution for sustainable global management of these wastes is paramount. SusGlobal through its proprietary technology and processes, is equipped and confident to deliver this objective. Management believes renewable energy is the energy of the future. Sources of this type of energy are more evenly distributed over the earth's surface than finite energy sources, making it an attractive alternative to petroleum-based energy. Biomass, one of the renewable resources, is derived from organic material such as forestry, food, plant and animal residuals. SusGlobal can therefore help turn what many consider waste into precious energy and regenerative products. The portfolio will be comprised of three distinct types of technologies: (a) Process Source Separated Organics ("SSO") in anaerobic digesters to divert from landfills and recover biogas. This biogas can be converted to gaseous fuel for industrial processes, electricity to the grid or cleaned for compressed renewable gas. (b) Maximizing the capacity of existing infrastructure (anaerobic digesters) to allow processing of SSO to increase biogas yield and (c) process SSO, digestate and leachate to produce an organic compost or a pathogen free organic liquid fertilizer. The convertibility of organic material into valuable end products such as biogas, liquid biofuels, organic fertilizers and compost shows the utility of renewables. These products can be converted into electricity, fuels and marketed to agricultural operations that are looking for an increase in crop yields, soil amendment and environmentally-sound practices. This practice also diverts these materials from landfills and reduces Greenhouse Gas Emissions ("GHG") that result from landfilling organic wastes. The Company can provide peace of mind that the full lifecycle of organic material is achieved, global benefits are realized and stewardship for total sustainability is upheld. It is management's objective to grow SusGlobal into a significant sustainable waste to energy and regenerative products provider, as Leaders in The Circular Economy®.
28
We believe the products and services offered can benefit both the public and private markets. The following includes some of our work managing organic waste streams: Anaerobic Digestion, Dry Digestion, Wastewater Treatment, In-Vessel Composting, SSO Treatment, Biosolids Heat Treatment, Leachate Management, Composting and Liquid Fertilizers.
The Company can provide a full range of services for handling organic residuals in a period where innovation and sustainability are paramount. From start to finish we offer in-depth knowledge, a wealth of experience and cutting-edge technology for handling organic waste.
The primary focus of the services SusGlobal provides includes integrating our technologies with capital investment to optimizing the processing of SSO. Our processes not only divert significant organic waste from landfills, but also result in methane avoidance, with significant GHG reductions from waste disposal. The processes produce regenerative products through the conversion of organic wastes into biogas, organic fertilizer, both dry compost and liquid.
Currently, the primary customers are municipalities in both rural and urban centers in Ontario, Canada. Where necessary, to be in compliance with provincial and local environmental laws and regulations, SusGlobal submits applications to the respective authorities for approval prior to any necessary engineering being carried out and has existing Environmental Compliance Approvals (ECAs) at its facilities.
We are a "smaller reporting company," as defined under SEC Regulation S-K. As such, we also are exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and also are subject to less extensive disclosure requirements regarding executive compensation in our periodic reports and proxy statements. We will continue to be deemed a smaller reporting company until (i) our public float exceeds $250 million on the last day of our second fiscal quarter in our prior fiscal year (if our annual revenues exceeded $100 million in such prior fiscal year); or (ii) our public float exceeds $700 million on the last day of our second fiscal quarter in our prior fiscal year (if our annual revenues were less than $100 million in such prior fiscal year).
RECENT BUSINESS DEVELOPMENTS
On November 9, 2023, the Company received a Ministry of the Environment, Conservation and Parks (the "MECP") Provincial Officer’s Order issued to the Belleville, Ontario, Canada site for certain compliance items. The Company is requesting a review of the Order by the MECP Director.
On November 3, 2023, the funds held in escrow, in the amount of $924,500 (C$1,250,000), were released to Alterna and Alterna released all security it held back to the Company.
On November 2, 2023, the Company completed the purchase of additional land, consisting of a 2.03-acre site in Hamilton, Ontario, Canada for $2,292,760 (C$3,100,000). Prior to completing the purchase, the Company paid deposits of $229,276 (C$310,000) to the vendor, included under prepaid expenses and deposits on the interim condensed consolidated balance sheets. The balance of the purchase price was satisfied with a $1,479,200 (C$2,000,000) vendor take-back mortgage bearing interest at 7% annually, maturing in two years and the balance in cash financed by a second mortgage on the additional land bearing interest at 13% annually, maturing in one year and is secured by a third mortgage on the property in Belleville, Ontario, Canada.
On October 12, 2023, the Company announced that additional sales of Carbon Credits and Verified Emission Reductions and Renewals ("VERRs") generated from its Belleville Composting Offset Project in Ontario (the "Project"). The Company has generated an additional 12,500 VERRs and sold a further 9,000 carbon credits as part of the Anew™ Project. The Project has generated approximately 137,000 VERRS (generated from 2017 through 2022).
The Project and report are listed on the GHG CleanProjects® Registry, https://www.csaregistries.ca/GHG_VR_Listing/CleanProjectDetail?ProjectId=909, a business unit of the Standards Division of the Canadian Standards Association ("CSA") for developed and marketed greenhouse gas ("GHG") offset credits from the Company's 49-acre Organic & Non-Hazardous Waste Processing & Composting Facility in Belleville, Ontario. The Project was developed by Anew Climate, LLC formerly known as Blue Source Canada ULC ("Anew").
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The Project has enabled an increase in the diversion of organic waste from landfills, thereby avoiding methane generation. Methane is a highly potent greenhouse gas which is 28 times more effective at trapping heat energy in our atmosphere than carbon dioxide. As organic waste decomposes in landfills, the methane builds up and must be released to prevent dangerous working conditions. By diverting waste that contributes to this problem, the Project benefits the community as well as the climate.
This initial sale of carbon credits expands the Company's ability to deliver on its mission to reduce organic wastes from wood, leaf and yard material, treated municipal sewage waste (biosolids), residential curbside green bin material or SSO and paper sludge otherwise destined for landfills.
On October 3, 2023, the Company announced that it signed commercial terms for a renewable natural gas Purchase and Sale Agreement Ten Year Offtake (the “Offtake Agreement”) valued at approximately US$138 Million. The Offtake Agreement will not take effect until after the signing of a Transaction Confirmation.
Highlights
The Offtake Agreement is an industry standard summary of the commercial terms for the RNG purchase and sale which allows the parties to maintain confidentiality while finalizing the definitive Renewable Natural Gas Purchase and Sale Agreement ("RNGPA") in the form of a GasEDI Base Contract with special provisions and transaction confirmations. The RNGPA incorporates mutually agreeable and additional, more comprehensive terms, representations, warranties, and covenants customary to meet the local natural gas operating system standards, purchase offtake arrangements and required reporting.
Under the terms of the Offtake Agreement, the Company has committed to produce up to 674,184 GJs annually of RNG to be generated through the anaerobic digestion of organic matter at the Company's licensed facilities in Belleville and Hamilton, Ontario.
On August 1, 2023, the Company announced it has received a RNG Carbon Intensity ("CI") Report. This report uses the GHGenius model to calculate the CI of the produced RNG from Source Separated Organic ("SSO") Feedstock, analyzing the energy balance and emissions of contaminants associated with the production and use of traditional and alternative transportation fuels. Versions of the model are specified in renewable fuel regulations in the provinces of Ontario, Alberta and British Columbia. The GHGenius model is capable of estimating life cycle emissions of the primary greenhouse gases ("GHG") and the criteria pollutants from combustion and process sources. GHGenius can predict emissions for past, present and future years through 2050, using historical data or correlations for changes in energy and process parameters with time that are stored in the model.
The Report and Carbon Intensity Score allows the Company to proceed and enter into a long term and lucrative offtake agreement, leading to project and equity financing. The Company has the infrastructure, assets, licenses and capabilities to produce and distribute RNG which offers lower carbon options adjacent to our existing fertilizer production facilities, building a revolutionary circular economy model for sustainable change, utilizing transformative technology solutions to regenerate organic waste to energy and fertilizers at its strategically located facilities in western and eastern Ontario near the hub of the largest integrated gas storage facility in North America. A long-term offtake agreement can ensure that the Company will continue to lead the organic waste diversion and regenerative products program, helping to reduce the world's GHG emissions creating strong alignment with our ESG and uplisting goals, maximizing shareholder value.
The Company has received a -24.7 on the Report's Carbon Intensity Score. As this system uses a reversed scaled approach, in which lower a number denotes a better value in the RNG and sustainability, the Company is expected to continue to receive these opportunities in the future attracting seasoned offtake partners.
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When organic waste decomposes, it naturally releases biogas, a GHG containing carbon dioxide and methane, into the atmosphere. Before this biogas can escape as GHGs it is captured and purified to create RNG. RNG is low carbon, meaning, that using RNG can reduce the amount of GHG emissions released into the atmosphere compared to conventional fossil fuels or natural gas. When added to the North American gas system, it can help reduce greenhouse gas emissions.
The RNG produced is then injected into the natural gas transmission and distribution system, providing for building space heat/hot water, industrial process heat, electricity generation and transportation, thereby reducing GHG emissions and generating additional carbon credits for the Company.
On July 17, 2023, the Company received notice from The Scotts Miracle-Gro Company that it was withdrawing its opposition to the Company's trademark SUSGRO (the "Mark") application in the U.S. and Canada. On July 27, 2023, the Mark was registered under Registration Number TMA1,192,300 with Innovation, Science and Economic Development Canada, Canadian Intellectual Property Office. This registration will be in effect for a period of ten years, expiring on July 27, 2033.
On July 14, 2023, the Company paid the final deposit of $159,306 (C$210,000) for an agreement of purchase and sale for 2.03 acres of land in Hamilton, Ontario, Canada, adjacent to the Company's current property. This deposit is in addition to the first deposit of $75,530 (C$100,000) paid on June 15, 2023.
New and Renewed Consulting Contracts
The Company entered into an Executive Chairman Consulting Agreement (the "CEO's Consulting Agreement"), by and among the Company, Travellers International Inc. ("Travellers"), and the CEO, who is also a director, the Executive Chairman and President of the Company, effective January 1, 2023 (the "Effective Date"). The CEO's Consulting Agreement replaced the consulting agreement which expired on December 31, 2022.
Pursuant to the terms of the CEO's Consulting Agreement, for his services as the CEO, the compensation is at a rate of $29,584 (C$40,000) per month for twelve (12) months, beginning on the Effective Date, and at a rate of $36,980 (C$50,000) per month for twelve (12) months, beginning January 1, 2024. In addition, the Company agreed to grant the CEO 3,000,000 restricted shares of the Company's common stock, par value of $0.0001 per share (the "Common Stock") on the Effective Date. This common stock was issued on January 3, 2023. The Company has also agreed to reimburse the CEO for certain out-of-pocket expenses incurred by the CEO.
The CEO's Consulting Agreement is for a term of twenty-four (24) months. Upon a Constructive Discharge (as defined in the CEO's Consulting Agreement) and subject to certain notification requirements and the Company's opportunity to cure the Constructive Discharge, the CEO will be entitled to a compensation of twelve (12) months' fees, as well as any bonus compensation owing.
The Company also entered into an Executive Consulting Agreement (the "CFO Consulting Agreement"), by and between the Company and the CFO of the Company, effective January 1, 2023. Pursuant to the terms of the CFO Consulting Agreement, the CFO is entitled to fees of $9,245 (C$12,500) per month for twelve (12). In addition, the Company has also agreed to grant the CFO 100,000 restricted shares of the Company's common stock, par value of $0.0001 per share on the Effective Date. The Company has also agreed to reimburse the CFO for certain out-of-pocket expenses incurred by the CFO. This common stock was issued on January 3, 2023. The CFO's Consulting Agreement replaced the consulting agreement which expired on December 31, 2022.
The CFO's Consulting Agreement is for a term of twelve (12) months. Upon a Constructive Discharge (as defined in the CFO's Consulting Agreement) and subject to certain notification requirements and the Company's opportunity to cure the Constructive Discharge, the CFO will be entitled to a compensation of two (2) months' fees, as well as any bonus compensation owing.
Financings
(a) Securities Purchase Agreements
As at September 30, 2023, the Company had and currently has 5 security purchase agreements outstanding with 4 investors. The outstanding principal balance, including accrued interest of $662,415, totaled $6,872,575 with a fair value of $9,756,700. The convertible promissory notes are currently in default and management has continued discussions with the investors.
Please refer to the interim condensed consolidated financial statements, convertible promissory notes, note 11 and fair value measurement, note 12 for details on the convertible promissory notes.
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(b) Pace Savings & Credit Union Limited ("PACE")
On March 28, 2023, the Company and PACE finalized a full and final mutual release of all obligations owing to PACE, including accrued interest, in exchange for an amount of $924,500 (C$1,250,000). The funds were held in escrow by the Company's Canadian legal counsel until released to PACE (now Alterna) on November 3, 2023. Immediately prior to this full and final mutual release, the amounts owing to PACE, included in the interim condensed consolidated balance sheets, include $3,452,655 (C$4,668,274) disclosed under long-term debt and accrued interest of $391,785 (C$529,725) disclosed under accrued liabilities in the interim condensed consolidated balance sheets. The Company raised the funds by securing a 2nd mortgage on March 1, 2023 in the amount of $1,109,400 (C$1,500,000) prior to disbursements of $184,900 (C$250,000), on its Belleville, Ontario Canada property.
The remaining PACE long-term debt was initially payable as noted below:
(i) The credit facility bore interest at the PACE base rate of 7.00% plus 1.25% per annum, was payable in monthly blended installments of principal and interest of $6,482 (C$8,764) and matured on September 2, 2022. The first and only advance on the credit facility on February 2, 2017, in the amount of $1,183,360 (C$1,600,000), is secured by a business loan general security agreement, a $1,183,360 (C$1,600,000) personal guarantee from the CEO and a charge against the Haute leased premises. Also pledged as security are the shares of the wholly-owned subsidiaries, and a limited recourse guarantee against each of these parties. On April 3, 2020, the pledged shares were delivered by PACE and are currently held as security for the personal guarantee from the CEO and charge against the Haute leased premises. The credit facility is fully open for prepayment at any time without notice or bonus.
(ii) The credit facility advanced on June 15, 2017, in the amount of $443,760 (C$600,000), bore interest at the PACE base of 7.00% plus 1.25% per annum, was payable in monthly blended installments of principal and interest of $3,625 (C$4,901), and matured on September 2, 2022. The credit facility is secured by a variable rate business loan agreement on the same terms, conditions and security as noted above.
(iii) The corporate term loan advanced on September 13, 2017, in the amount of $2,754,379 (C$3,724,147), bore interest at PACE base rate of 7.00% plus 1.25% per annum, was payable in monthly blended installments of principal and interest of $21,974 (C$29,711), and matured September 13, 2022. The corporate term loan is secured by a business loan general security agreement representing a floating charge over the assets and undertakings of the Company, a first priority charge under a registered debenture and a lien registered under the Personal Property Security Act in the amount of $2,959,123 (C$4,000,978) against the assets including inventory, accounts receivable and equipment. The corporate term loan also included an assignment of existing contracts included in the asset purchase agreement.
For the three and nine-month periods ended September 30, 2023, $nil (C$nil) and $103,371 (C$139,089) (2022-$100,983; C$131,211 and $255,412; C$327,535) respectively, in interest was incurred on the PACE long-term debt. As at September 30, 2023 $391,785 (C$529,725) (December 31, 2022-$288,407; C$390,636) in accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheets
(c) Other Financings
(i) The Company obtained a 1st mortgage provided by private lenders to finance the acquisition of the shares of 1684567 and to provide funds for additional financing needs, including additional lands, received in four tranches totaling $3,845,920 (C$5,200,000) (December 31, 2022-$3,839,160; C$5,200,000). The fourth tranche was received on August 13, 2021 in the amount of $1,405,240 (C$1,900,000) and a portion of this fourth tranche, $1,371,169 (C$1,853,933), was used to fund a portion of the purchase of the Hamilton Property, described under long-lived assets, net (note 7), to the interim condensed consolidated financial statements. The 1st mortgage is repayable interest only on a monthly basis at an annual rate of the higher of the Royal Bank of Canada's prime rate plus 6.05% per annum (currently 13.25%) and 10% per annum with a maturity date of December 1, 2023. The Company continues to be charged at the rate of 10% per annum. The 1st mortgage payable is secured by the shares held of 1684567, a 1st mortgage on the premises located at 704 Phillipston Road, Roslin, Ontario, Canada and a general assignment of rents.
Financing fees on the 1st mortgage totaled $298,369 (C$403,419). In addition, as at September 30, 2023 there is $10,458 (C$14,140) (December 31, 2022-$56,409; C$76,404) of unamortized financing fees included in long-term debt in the interim condensed consolidated balance sheets.
(ii) On August 17, 2021, the Company obtained a vendor take-back 1st mortgage in the amount of $1,479,200 (C$2,000,000), on the purchase of the Hamilton Property, described under long-lived assets, net (note 7) to the interim condensed consolidated financial statements. The 1st mortgage bears interest at an annual rate of 2% per annum, repayable monthly interest only with a maturity date of August 17, 2023, secured by the assets on the Hamilton Property. Management has been in discussions with the mortgagee to extend the maturity date.
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(iii) On March 1, 2023, the Company obtained a 2nd mortgage in the amount of $1,109,400 (C$1,500,000) bearing interest at the annual rate of 12%, repayable monthly, interest only with a maturity date of March 1, 2024, secured as noted under (d) i) above. The Company incurred financing fees of $44,376 (C$60,0000). In addition, as at September 30, 2023 there is $18,480 (C$24,986) of unamortized financing fees included in long-term debt in the interim condensed consolidated balance sheets
For the three and nine-month periods ended September 30, 2023, $138,015 (C$185,000) and $388,605 (C$522,833) (2022-$104,681; C$136,682 and $324,937; C$416,692) respectively, in interest was incurred on the mortgages payable. As at September 30, 2023 $43,599 (C$58,950) (December 31, 2022- $31,555; C$42,740) in accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheets.
(iv) As a result of the COVID-19 virus, the Government of Canada launched the Canada Emergency Business Account (the "CEBA"), a program to ensure that small businesses have access to the capital they need to see them through the current challenges and better position them to quickly return to providing services to their communities and creating employment. The program is administered by Canadian chartered banks and credit unions.
The Company has received a total of $73,960 (C$100,000) under this program, from its Canadian chartered bank.
Under the initial term date of the loans, which is detailed in the CEBA term loan agreements, the amount is due on December 31, 2022 and is interest-free. If the loans are not repaid by December 31, 2022, the Company can make payments, interest only, on a monthly basis at an annual rate of 5%, under the extended term date, beginning January 1, 2023, maturing December 31, 2025.
The CEBA term loan agreements were amended by extending the interest free repayment date by one year to December 31, 2023. (subsequently extended to January 18, 2024). If paid by December 31, 2023, 33.33% ($25,176; C$33,333), previously 25%, of the loans would be forgiven. Repayment terms on the extended period are unchanged.
The CEBA term loan agreements contain a number of positive and negative covenants, for which the Company is not in full compliance.
(v) On April 8, 2021, the Company took delivery of a truck and hauling trailer for a total purchase price of $161,483 (C$218,338) plus applicable harmonized sales taxes. The purchase was financed by a bank term loan of $147,920 (C$200,000), over a forty-eight-month term, bearing interest at 4.95% per annum with monthly blended instalments of principal and interest payments of $3,625 (C$4,901) due April 7, 2025.
For the three and nine-month periods ended September 30, 2023, $823 (C$1,103) and $2,794(C$3,760) (2022- $1,312; C$1,716 and $4,342; C$5,568) respectively, in interest was incurred.
(vi) During the three and nine-month periods ended September 30, 2023, the CEO converted $233,558 (C$316,400) and $233,558 (C$316,400) respectively, of outstanding accounts payable at prices ranging from $0.1678 to $0.261 per share, priced at the closing trading prices immediately prior to the conversion dates for 1,254,792 common shares of the Company. During the three and nine-month periods ended September 30, 2023, the CEO converted $nil (C$nil) and $278,845 (C$372,483) respectively, of outstanding loans at prices ranging from $nil to $nil and $0.2076 to $0.325 per share respectively, priced at the closing trading prices immediately prior to the conversion dates for nil and 1,167,371 common shares of the Company respectively.
(d) Financings Related to Obligations Under Capital Lease
There were no new capital leases entered into by the Company during the three and nine-month periods ended September 30, 2023.The original terms of the remaining obligation under capital lease outstanding at September 30, 2023 are noted below.
(i) The lease agreement for certain equipment for the Company's organic waste processing and composting facility at a cost of $288,185 (C$389,650), is payable in monthly blended installments of principal and interest of $5,068 (C$6,852), plus applicable harmonized sales taxes for a period of fifty-nine months plus an initial deposit of $14,385 (C$19,450) plus applicable harmonized sales taxes and an option to purchase the equipment for a final payment of a nominal amount of $74 (C$100) plus applicable harmonized sales taxes on February 27, 2025. The leasing agreement bears interest at the rate of 3.59% annually, compounded monthly, due February 27, 2025.
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For the three and nine-month periods ended September 30, 2023, $785 (C$1,053) and $2,768 (C$3,725) (2022-$1,361; C$1,770 and $3,599; C$4,616) respectively, in interest was incurred.
Operations
The Company owns Environmental Compliance Approvals (the "ECAs") issued by the MECP from the Province of Ontario, in place to accept up to 70,000 metric tonnes ("MT") of waste annually from the provinces of Ontario, Quebec and from New York state, and to operate a waste transfer station with the capacity to process up to an additional 50,000 MT of waste annually. Once built, the location of the waste transfer station will be alongside the Organic and Non-Hazardous Waste Processing and Composting Facility which is currently operating in Belleville, Ontario, Canada.
Waste Transfer Station- Access to the waste transfer station is critical to haulers who collect waste in areas not in close proximity to disposal facilities where such disposal continues to be permitted. Tipping fees charged to third parties at waste transfer stations are usually based on the type and volume or weight of the waste deposited at the waste transfer station, the distance to the disposal site, market rates for disposal costs and other general market factors.
Organic Composting Facility- As noted above, the Company's organic waste processing and composting facility, located in Belleville, Ontario Canada, has ECAs in place to accept up to 70,000 MT of waste annually and is currently in operation. Certain assets of the organic waste processing and composting facility, including the ECAs for the waste transfer station (not yet built), were acquired by the Company on September 15, 2017, from the Receiver for Astoria, under the APA. The Company charges tipping fees for the waste accepted at the organic waste composting facility based on arrangements in place with the customers and the type of waste accepted. Typical waste accepted includes, SSO, leaf and yard, food, liquid, paper sludge and biosolids. During the nine-month period ended September 30, 2023, tipping fees ranged from $51 (C$69) to $118 (C$159) per MT.
The Company owns a 40,535 square foot facility on 5.29 acres in Hamilton, Ontario (the "Hamilton Facility"), which includes an Environmental Compliance Approval to process 65,884 MT per annum of organic waste, 24 hours per day 7 days a week. The facility will be designed to produce, distribute and warehouse the Company's SusGro™ organic liquid fertilizer and other products that are to be provided under private label and to be sold through big box retailers, consumer lawn and garden suppliers, and for end use to the wine, cannabis and agriculture industries. With the addition of a further 11,000 square feet of office space and R&D labs, the Hamilton facility will also house the continued development of SusGlobal's proprietary formulations and branded liquid and dry organic fertilizers.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2023, the Company had a bank balance of $6,431 (December 31, 2022-$42,900) and current debt obligations and other current liabilities in the amount of $26,203,416 (December 31, 2022-$22,339,175). As at September 30, 2023, the Company had a working capital deficit of $24,425,747 (December 31, 2022-$21,580,552). The Company does not currently have sufficient funds to satisfy the current debt obligations.
The Company's total assets as at September 30, 2023 were $10,599,934 (December 31, 2022-$9,865,775) and total current liabilities were $26,203,416 (December 31, 2022-$22,339,175). Significant losses from operations have been incurred since inception and there is an accumulated deficit of $35,520,256 as at September 30, 2023 (December 31, 2022 -$30,345,197). Continuation as a going concern is dependent upon generating significant new revenue and generating external capital and securing debt to satisfy its creditors' demands and to achieve profitable operations while maintaining current fixed expense levels.
To pay current liabilities and to fund any future operations, the Company requires significant new funds, which the Company may not be able to obtain. In addition to the funds required to liquidate the $26,203,416 in current debt obligations and other current liabilities, the Company estimates that approximately an additional $31,000,000 must be raised to fund capital requirements and general corporate expenses for the next 12 months.
In the normal course of business, we are exposed to market risks, including changes in interest rates, certain commodity prices and Canadian currency rates. The Company does not use derivatives to manage these risks.
During the three and nine-month periods ended September 30, 2023, the October 29, 2021 investor converted part of his unsecured convertible promissory note having a fair value of $nil and $374,000 respectively, for nil and 1,650,709 respectively, common shares of the Company.
As at September 30, 2023, the current and long-term portions of our debt obligations totaled $19,894,856 (December 31, 2022-$16,827,617).
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In addition, as at September 30, 2023, the Company had an outstanding letter of credit provided by PACE, in the amount of $204,744 (C$276,831), in favor of the MECP. The letter of credit is a requirement of the MECP and is in connection with the financial assurance provided by the Company, for it to be in compliance with the MECPs environmental objectives. The MECP regularly evaluates the Company's organic waste processing and composting facility to ensure compliance is adhered to and the letter of credit is subject to change by the MECP. The MECP released the expired letter of credit provided by PACE subsequent to September 30, 2023. The Company is in the process of obtaining a letter of credit for the new financial assurance with the MECP in the amount of $471,596 (C$637,637).
CONSOLIDATED RESULTS OF OPERATIONS - FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 COMPARED TO THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2022
For the three-month periods ended | ||||||
September 30, 2023 | September 30, 2022 | |||||
Revenue | $ | 186,901 | $ | 297,202 | ||
Cost of Sales | ||||||
Opening inventory | 64,578 | 19,555 | ||||
Depreciation | 87,528 | 112,731 | ||||
Direct wages and benefits | 36,349 | 52,860 | ||||
Equipment rental, delivery, fuel and repairs and maintenance | 14,723 | 365,975 | ||||
Utilities | 32,721 | (7,760 | ) | |||
Outside contractors | - | 535 | ||||
236,009 | 543,896 | |||||
Less: closing inventory | (42,889 | ) | (48,154 | ) | ||
Total cost of sales | 193,120 | 495,742 | ||||
Gross loss | (6,219 | ) | (198,540 | ) | ||
Operating expenses | ||||||
Management compensation-stock-based compensation | 57,600 | 60,113 | ||||
Management compensation-fees | 117,401 | 115,175 | ||||
Marketing | 923 | (250 | ) | |||
Professional fees | 103,930 | 190,653 | ||||
Interest expense | 140,161 | 208,537 | ||||
Office and administration | 56,567 | 67,377 | ||||
Rent and occupancy | 58,385 | 54,586 | ||||
Insurance | 10,974 | 12,867 | ||||
Filing fees | 8,562 | 9,699 | ||||
Amortization of financing costs | 26,901 | 27,752 | ||||
Directors' compensation | 18,631 | 14,366 | ||||
Stock-based compensation | 254,724 | 659,050 | ||||
Repairs and maintenance | 1,015 | 2,386 | ||||
Foreign exchange loss | 214,406 | 378,510 | ||||
Total operating expenses | 1,070,180 | 1,800,821 | ||||
Net Loss Before Other Expenses | (1,076,399 | ) | (1,999,361 | ) | ||
Other Expenses | (116,710 | ) | (1,697,619 | ) | ||
Net Loss | $ | (1,193,109 | ) | $ | (3,696,980 | ) |
During the three-month period ended September 30, 2023, the Company generated $186,901 of revenue from its organic waste processing and composting facility compared to $297,202 in the three-month period ended September 30, 2022. The decrease in revenue is primarily due to lower carbon credit revenue of approximately $83,000 and lower waste revenue of approximately $27,000. In the operation of the organic waste processing and composting facility, the Company processes organic and other waste received and produces the end product, compost. The cost of producing the compost totaled $193,120 for the three-month period ended September 30, 2023 compared to $495,742 for the three-month period ended September 30, 2022. These costs include equipment rental, delivery, fuel, repairs and maintenance, direct wages and benefits, depreciation, utilities and outside contractors. Included are the costs for the estimate of the clean-up of certain waste as ordered by the MECP, which decreased significantly from the prior period. In addition, with ceasing the garbage collection operation, the Company no longer requires the use of outside contractors.
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Operating expenses reduced by $730,641 from $1,800,821 in the three-month period ended September 30, 2022 to $1,070,180 in the three-month period ended September 30, 2023, explained further below.
Management compensation related to stock-based compensation reduced by $2,513, in the three-month period ended September 30, 2023 compared to the three-month period ended September 30, 2022, as a result of the new common stock issued to the officers as stipulated in their executive consulting contracts, effective January 1, 2023. The total stock-based compensation valued at $446,400 (2022-$240,450), based on the trading price of the shares on the effective date will be expensed over the terms of the executive consulting contracts. And the management compensation relating to fees was relatively flat, with little change between the three-month period ended September 30, 2023 compared to the three-month period ended September 30, 2022.
Marketing increased by a nominal amount of $1,173, from $(250) in the three-month period ended September 30, 2022 to $923 for the three-month period ended September 30, 2023, primarily the result of a new and scaled back marketing program in 2023 compared to that in 2022.
Professional fees reduced by $86,723, from $190,653 in the three-month period ended September 30, 2022 to $103,930 in the three-month period ended September 30, 2023. The primary reasons for the decrease includes lower estimated and actual costs for various audit, review and tax services totaling approximately $66,500, lower consulting fees resulting from not re-engaging certain consultants totaling approximately $68,000 offset by higher legal fees of approximately $48,000.
Interest expense reduced by $68,376 from $208,537 in the three-month period September 30, 2022 to $140,161 in the three-month period ended September 30, 2023. The decrease is partially due to the absence of interest on the PACE debt, after the Company obtained a full and final mutual release on March 28, 2023, offset by additional interest on the new mortgage effective March 1, 2023, which bears interest at the rate of 12% per annum.
Office and administration expenses reduced by $10,810, from $67,377 in the three-month period ended September 30, 2022 to $56,567 in the three-month period ended September 30, 2023, primarily due to a reduction in various expenditures including lab testing and the state of Delaware franchise tax.
Rent and occupancy increased by $3,799, from $54,586 in the three-month period ended September 30, 2022 to $58,385 in the three-month period ended September 30, 2023 as a result of the effect of the translation rate for a weakening Canadian dollar quarter to quarter.
Insurance expense remained relatively flat with a nominal decrease of $1,893, from $12,867 in the three-month period ended September 30, 2022 to $10,974 in the three-month period ended September 30, 2023.
Filing fees expense remained relatively flat with a nominal decrease of $1,137, from $9,699 in the three-month period ended September 30, 2022 to $8,562 in the three-month period ended September 30, 2023.
The amortization of financing costs remained relatively flat with a nominal decrease of $851, from $27,752 in the three-month period ended September 30, 2022 to $26,901 in the three-month period ended September 30, 2023.
Directors' compensation increased by $4,265 from $14,366 in the three-month period ended September 30, 2022 to $18,631 in the three-month period ended September 30, due to the appointment of a new independent director during the during the three-month period ended March 31, 2023.
Stock-based compensation decreased by $404,326, from $659,050 in the three-month period ended September 30, 2022 to $254,724 in the three-month period ended September 30, 2023, due to the absence of multiple consultants providing services compared to the prior period.
Repairs and maintenance decreased nominally by $1,371, from $2,386 in the three-month period ended September 30, 2022 to $1,015 in the three-month period ended September 30, 2023.
The foreign exchange income decreased by $164,104, from $378,510 in the three-month period ended September 30, 2022 to $214,406 in the three-month period ended September 30, 2023, due primarily to the translation of significant United States dollar denominated transactions and balances during the period including the convertible promissory notes, compared to the prior period, during a period in which the Canadian dollar weakened but not as significantly as in the prior period.
During the current three-month period ended September 30, 2023, the Company recorded a loss on the revaluation of the convertible promissory notes in the amount of $116,710 compared to loss of $1,447,619 in the prior period ended September 30, 2022. In addition, in the prior period the Company recorded an amount of $250,000 for the accrued settlement payment for the release of services of a party for an underwriting offering dated March 23, 2022 and amended May 23, 2022. In total, the other expenses decreased by $1,580,909.
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The interim condensed consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result if the Company was unable to continue as a going concern.
CONSOLIDATED RESULTS OF OPERATIONS - FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2023 COMPARED TO THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2022
For the nine-month periods ended | ||||||
September 30, 2023 | September 30, 2022 | |||||
Revenue | $ | 505,075 | $ | 551,815 | ||
Cost of Sales | ||||||
Opening inventory | 58,695 | 20,582 | ||||
Depreciation | 301,467 | 344,196 | ||||
Direct wages and benefits | 111,984 | 158,356 | ||||
Equipment rental, delivery, fuel and repairs and maintenance | 55,569 | 477,128 | ||||
Utilities | 89,578 | 35,410 | ||||
Outside contractors | - | 26,018 | ||||
617,293 | 1,061,690 | |||||
Less: closing inventory | (42,889 | ) | (48,154 | ) | ||
Total cost of sales | 574,404 | 1,013,536 | ||||
Gross loss | (69,329 | ) | (461,721 | ) | ||
Operating expenses | ||||||
Management compensation-stock-based compensation | 172,800 | 180,339 | ||||
Management compensation-fees | 351,162 | 350,910 | ||||
Marketing | 122,098 | 1,003,959 | ||||
Professional fees | 286,723 | 812,738 | ||||
Interest expense | 499,222 | 589,488 | ||||
Office and administration | 176,120 | 259,193 | ||||
Rent and occupancy | 161,127 | 171,177 | ||||
Insurance | 33,167 | 76,304 | ||||
Filing fees | 31,852 | 71,242 | ||||
Amortization of financing costs | 72,296 | 94,916 | ||||
Directors' compensation | 53,211 | 43,864 | ||||
Stock-based compensation | 785,149 | 955,837 | ||||
Repairs and maintenance | 22,636 | (8,773 | ) | |||
Foreign exchange (income) loss | (33,037 | ) | 518,690 | |||
Total operating expenses | 2,734,526 | 5,119,884 | ||||
Net Loss Before Other Expenses | (2,803,855 | ) | (5,581,605 | ) | ||
Other Expenses | (2,371,204 | ) | (3,202,270 | ) | ||
Net Loss | $ | (5,175,059 | ) | $ | (8,788,875 | ) |
During the nine-month period ended September 30, 2023, the Company generated $505,075 of revenue from its organic waste processing and composting facility compared to $551,815 in the nine-month period ended September 30, 2022, a decrease of $46,740. The decrease in revenue is due to the reduction in carbon credit revenue of approximately $72,000, the reduction in garbage collection revenue of approximately $27,000 after ceasing this operation in the prior period, offset by an increase in waste processing revenue in the form of tipping fees from new business from existing customers of approximately $52,000.
In the operation of the organic waste processing and composting facility, the Company processes organic and other waste received and produces the end product, compost. The cost of producing the compost totaled $574,404 for the nine-month period ended September 30, 2023 compared to $1,013,536 for the nine-month period ended September 30, 2022. These costs include equipment rental, delivery, fuel, repairs and maintenance, direct wages and benefits, depreciation, utilities and outside contractors. The reduction in costs of $439,132 is attributable to reduced depreciation as several of the Company's mobile equipment were fully depreciated in the current period, a reduction in direct labour and benefits from reduced overtime and one less staff member, offset by increased utilities costs as projected credits offered by the hydro utility expired. In addition, the equipment rental, delivery, fuel, repairs and maintenance include an estimate for the clean-up of certain waste as ordered by the MECP. The cost of this estimate has not increased significantly since the prior period's estimate.
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Operating expenses reduced by $2,385,358 from $5,119,884 in the nine-month period ended September 30, 2022 to $2,734,526 in the nine-month period ended September 30, 2023, explained further below.
Management compensation related to stock-based compensation reduced by $7,539, in the nine-month period ended September 30, 2023 compared to the nine-month period ended September 30, 2022, as a result of the new common stock issued to the officers as stipulated in their executive consulting contracts, effective January 1, 2023. The total stock-based compensation valued at $446,400 (2022-$240,450), based on the trading price of the shares on the effective date is being expensed over the terms of the executive consulting contracts. And the management compensation relating to fees increased slightly by $252, from $350,910 in the nine-month period ended September 30, 2022 to $351,162 in the nine-month period ended September 30, 2023.
Marketing expenses decreased by $881,861, from $1,003,959 in the nine-month period ended September 30, 2022 to $122,098 for the nine-month period ended September 30, 2023, primarily the result of a new and scaled back marketing campaign in 2023 compared to that in 2022.
Professional fees reduced by $526,015, from $812,738 in the nine-month period ended September 30, 2022 to $286,723 in the nine-month period ended September 30, 2023. The primary reasons for the decrease included the absence of professional fees incurred on the issuance of convertible promissory notes in the current period whereas $75,000 in such professional fees was incurred in the prior period. In addition, the Company did not re-engage certain consultants who provided services in the prior period, a saving of approximately $296,000 and savings for various audit, review, tax and legal services, including the absence of fees in connection with its S-1/A registration statement, a total savings of approximately $155,000.
Interest expense decreased by $90,266 from $589,488 in the nine-month period ended September 30, 2022 to $499,222 in the nine-month period ended September 30, 2023. The decrease is partially due to the absence of interest on the PACE debt, after the Company obtained a full and final mutual release on March 28, 2023, offset by additional interest on the new mortgage effective March 1, 2023, which bears interest at the rate of 12% per annum.
Office and administration expenses reduced by $83,072, from $259,193 in the nine-month period ended September 30, 2022 to $176,121 in the nine-month period ended September 30, 2023. This is primarily due to the absence of certain expenditures including a claim from a municipality of approximately $29,000, website costs of approximately $16,000, a reduction in other expenditures including lab testing and security and the effect of the translation rate for a weakening Canadian dollar quarter to quarter.
Rent and occupancy reduced by $10,050, from $171,177 in the nine-month period ended September 30, 2022 to $161,127 in the nine-month period ended September 30, 2023, primarily due to the absence of additional rent expense for roof repairs in the prior period and the effect of the translation rate for a weakening Canadian dollar from 2022 to 2023.
Insurance reduced by $43,137, from $76,304 in the nine-month period ended September 30, 2022 to $33,167 in the nine-month period ended September 30, 2023, primarily due to the absence of insurance on the Company's new facility under construction in Hamilton, Ontario, Canada, whose construction had ceased temporarily and the Company self-insuring on certain other insurance.
Filing fees decreased by $39,390, from $71,242 in the nine-month period ended September 30, 2022 to $31,852 in the nine-month period ended September 30, 2023, primarily due to the absence of costs associated with the special meeting of the shareholders held last period on March 24, 2022 and the absence of administrative costs incurred in the filing of the S-1 (and S-1/A) registration statement and reduced investor relations activities.
The amortization of financing costs increased by $22,620, from $94,916 in the nine-month period ended September 30, 2022 to $72,296 in the nine-month period ended September 30, 2023, due to certain financing costs in connection with the mortgages payable having been fully amortized by the end of Q3-2022.
Directors' compensation increased nominally from $43,864 in the nine-month period ended September 30, 2022 to $53,211 in the nine-month period ended September 30, 2023, due to the appointment of a new independent director during the during the three-month period ended March 31, 2023.
Stock-based compensation decreased by $170,688, from $955,837 in the nine-month period ended September 30, 2022 to $785,149 in the nine-month period ended September 30, 2023, as a result of the absence new consulting services provided during the current period.
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Repairs and maintenance increased by $31,409, from income of $8,773 in the nine-month period ended September 30, 2022 to an expense of $22,636 in the nine-month period ended September 30, 2023, due to the absence of a credit adjustment on a prior period expenditure.
The foreign exchange income decreased by $551,727, from a loss of $518,690 in the nine-month period ended September 30, 2022 to income of $33,037 in the nine-month period ended September 30, 2023, due primarily to the translation of significant United States dollar denominated transactions and balances during the period including the convertible promissory notes, compared to the prior period, during a period in which the Canadian dollar strengthened.
During the current nine-month period ended September 30, 2023, the Company recorded a loss on the revaluation of convertible promissory notes of in the amount of $2,296,845 compared to a loss of 2,957,270 (including net of the gain on extinguishment of convertible promissory notes) in the prior period ended September 30, 2022. The increase is primarily due to an increase in principal for certain convertible promissory notes due to an amendment and defaults along with the impact of default interest accruing at 24% per annum. In addition, during the nine-month period ended September 30, 2023, the Company recorded a loss of $74,359 on the conversions of a convertible promissory note. Also included in the prior period, the Company recorded an amount of $250,000 for the accrued settlement payment for the release of services of a party for an underwriting offering dated March 23, 2022 and amended May 23, 2022. Overall, the other expenses decreased by $831,066.
As at September 30, 2023, the Company had a working capital deficit of $24,425,747 (December 31, 2022-$21,580,552), incurred a net loss of $5,175,059 (September 30, 2022-$8,788,875) for the nine months ended September 30, 2023 and had an accumulated deficit of $35,520,256 (December 31, 2022-$30,345,197) and expects to incur further losses in the development of its business.
These factors cast substantial doubt as to the Company's ability to continue as a going concern, which is dependent upon its ability to obtain the necessary financing to further the development of its business, satisfy its obligations to its creditors and upon achieving profitable operations. There is no assurance of funding being available or available on acceptable terms. Realization values may be substantially different from carrying values as shown.
The interim condensed consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result if the Company was unable to continue as a going concern.
CRITICAL ACCOUNTING ESTIMATES
Use of estimates
The preparation of the Company's consolidated financial statements in conformity with US GAAP 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 revenues and expenses during the reporting period. These estimates are based on management's best knowledge of current events and actions the Company may undertake in the future. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Areas involving significant estimates and assumptions include: the allowance for doubtful accounts, inventory valuation, useful lives of long-lived and intangible assets, impairment of long-lived assets and intangible assets, valuation of asset acquisition, accruals, fair value of convertible promissory notes, deferred income tax assets and related valuation allowance, environmental remediation costs, stock-based compensation and going concern. Actual results could differ from these estimates. These estimates are reviewed periodically and as adjustments become necessary, they are reported in earnings in the period in which they become available.
Stock-based compensation
The Company records compensation costs related to stock-based awards in accordance with ASC 718, Compensation-Stock Compensation, whereby the Company measures stock-based compensation cost at the grant date based on the estimated fair value of the award. Compensation cost is recognized on a straight-line basis over the requisite service period of the award. Where necessary, the Company utilizes the Black-Scholes option-pricing model to estimate the fair value of stock options granted, which requires the input of highly subjective assumptions including: the expected option life, the risk-free rate, the dividend yield, the volatility of the Company's stock price and an assumption for employee forfeitures. The risk-free rate is based on the U.S. Treasury bill rate at the date of the grant with maturity dates approximately equal to the expected term of the option. The Company has not historically issued any dividends and does not expect to in the near future. Changes in any of these subjective input assumptions can materially affect the fair value estimates and the resulting stock- based compensation recognized. The Company has not issued any stock options and has no stock options outstanding at September 30, 2023 and as of the date of the filing of this document.
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Indefinite Asset Impairments
The Company evaluates the intangible assets for impairment annually in the fourth quarter or when triggering events are identified and whether events and circumstances continue to support the indefinite useful life using Level 3 inputs.
Long-Lived Asset Impairments
In accordance with ASC 360, "Property, Plant and Equipment", long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.
The Company evaluates at each balance sheet date whether events or circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the carrying amounts are recoverable. In the event that such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value.
Convertible Promissory Notes
The Company has elected the fair value option to account for its convertible promissory notes issued after December 31, 2020. In accordance with ASC 825, the convertible promissory notes are marked-to-market at each reporting date with changes in fair value recorded as a component of other income (expense), in the interim condensed consolidated statements of operations and comprehensive loss. The Company has elected to include interest expense in the changes in fair value. Transaction costs are incurred as expensed. The Company did not elect the fair value option for the convertible promissory notes issued in 2019. These notes are measured at amortized cost.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
The following section provides a description of new accounting pronouncements ("Accounting Standard Update" or "ASU") issued by the Financial Accounting Standards Board ("FASB") that are applicable to the Company.
In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"), which requires enhanced disclosure of certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty while eliminating certain current recognition and measurement accounting guidance. This ASU also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases. ASU No. 2022-02 became effective for the Company's annual and interim periods beginning on January 1, 2023. As a result, the adoption of ASU 2022-02 did not have any impact on the opening balances in the interim condensed consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU-2016-13"). ASU 2016-13 affects loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. ASU 2016-13 is effective for the fiscal year beginning after December 15, 2022, including interim periods within that fiscal year. The Company adopted this ASU on January 1, 2023. As a result, the adoption of ASU 2016-13 did not have any impact on the opening balances in the interim condensed consolidated financial statements.
EQUITY
As at September 30, 2023, the Company had 124,783,286 common shares issued and outstanding. As at November 14, 2023, the Company had 124,783,286 common shares issued and outstanding.
STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS
The Company has no stock options, warrants or restricted stock units outstanding as at September 30, 2023 and as of the date of the filing of this document.
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RELATED PARTY TRANSACTIONS
For three and nine-month periods ended September 30, 2023, the Company incurred $89,449 (C$120,000) and $267,552 (C$360,000) (2022-$92,189; C$120,000 and $280,728; C$360,000) respectively, in management fees expense with Travellers International Inc. ("Travellers"), an Ontario company controlled by a director and the president and chief executive officer (the "CEO"); and $27,952 (C$37,500) and $83,610 (C$112,500) (2022-$22,986; C$30,000 and $70,182; C$90,000) respectively, in management fees expense with the Company's chief financial officer (the "CFO"). As at September 30, 2023, unpaid remuneration and unpaid expenses in the amount of $204,728 (C$276,809) (December 31, 2022-$161,790; C$219,138) is included in accounts payable and $107,634 (C$145,530) (December 31, 2022-$22,705; C$30,753) is included in accrued liabilities in the interim condensed consolidated balance sheets.
During the three and nine-month periods ended September 30, 2023, Travellers converted $233,558 (C$316,400) and $512,403 (C$688,883) (2022-$nil; C$nil and $nil; C$nil) respectively, in outstanding loans and outstanding accounts payable for 1,254,792 and 2,422,163 (2022-nil and nil) respectively, common shares of the Company, based on closing trading prices on the day prior to each conversion.
For the three and nine-month periods ended September 30, 2023, the Company incurred $30,014 (C$40,046) and $80,452 (C$108,251) (2022-$27,728; C$36,244 and $89,530; C$114,812) respectively, in rent expense paid under a lease arrangement with Haute Inc. ("Haute"), an Ontario company controlled by the CEO.
In addition, during the three and nine-month periods ended September 30, 2023, the Company paid the CFO interest of $nil (C$nil) and $nil (C$nil) (2022-$nil; C$nil and $526; C$674) respectively, on loans totaling $nil (C$nil) (2022-$29,211 (C$36,000) respectively, provided to the Company and repaid during the three month period ended March 31, 2022.
For the independent directors, the Company recorded directors' compensation during the three and nine-month periods ended September 30, 2023 of $18,631 (C$25,000) and $53,211 (C$71,597) (2022-$14,366; C$18,750 and $43,864; C$56,250) respectively. In addition, on February 18, 2023 a new independent director was appointed and was awarded 100,000 common shares of the Company on March 1, 2023 valued at $21,000 based on the closing trading price on the appointed date and included under stock-based compensation in the interim condensed consolidated statements of operations and comprehensive loss. Further, the new independent director provided the Company funds of $101,039 (C$134,483) for a private placement in exchange for 310,888 common shares of the Company priced at $0.3250 per share.
As at September 30, 2023, outstanding directors' compensation of $174,393 (C$235,793) (December 31, 2022-$121,226; C$164,196) is included in accrued liabilities, in the interim condensed consolidated balance sheets.
During the three and nine-month periods ended September 30, 2023, $538 and $1,684 (2022-$548 and $679) respectively, in interest was incurred on the directors' loans. As at September 30, 2023, $2,839 (December 31, 2022-$1,088) of accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheets.
Pursuant to the terms of the CEO's Consulting Agreement, for his services as the CEO, the compensation is at a rate of $29,728 (C$40,000) per month for twelve (12) months, beginning on the Effective Date, January 1, 2023, and at a rate of $37,160 (C$50,000) per month for twelve (12) months, beginning January 1, 2024. In addition, the Company agreed to grant the CEO 3,000,000 restricted shares of the Company's Common Stock, par value of $0.0001 per share (the "Common Stock") on the Effective Date. The Company has also agreed to reimburse the CEO for certain out-of-pocket expenses incurred by the CEO.
Pursuant to the terms of the CFO's Consulting Agreement for his services as the CFO, the compensation is at a rate of $9,290 (C$12,500) per month for twelve (12) months, beginning on the Effective Date, January 1, 2023. In addition, the Company agreed to grant the CFO 100,000 restricted shares of the Company's Common Stock, par value of $0.0001 per share (the "Common Stock") on the Effective Date. The Company has also agreed to reimburse the CFO for certain out-of-pocket expenses incurred by the CFO.
Furthermore, for the three and nine-month periods ended September 30, 2023, the Company recognized management stock-based compensation expense of $57,600 and $172,800 (2022-$60,113 and $180,339) respectively, on the common stock issued to the CEO and the CFO, 3,000,000 and 100,000 common stock, respectively, as stipulated in their executive consulting agreements, effective January 1, 2023 valued at the trading price on the Effective Date. The total stock-based compensation on the issuance of the common stock totaled $446,400 (2022-$240,450). The portion to be expensed for the balance of the consulting agreements, $273,600 (2022-$60,111) is included in prepaid expenses and deposits in the interim condensed consolidated balance sheets.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk.
As a smaller reporting company, as that term is defined in Item 10(f)(1) of Regulation S-K, we are not required to provide information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this Quarterly Report on Form 10-Q.
Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met. Due to inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Based on our evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective. The matters involving internal controls over financial reporting that may be considered material weaknesses included the small size of the Company and the resulting lack of a segregation of duties.
Notwithstanding these material weaknesses, management has concluded that the unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q present fairly, in all material respects, the financial position, results of operations and cash flows in conformity with generally accepted accounting principles.
Changes in Internal Control over Financial Reporting
During the nine-month period ended September, 2023, there were no changes made by management to its internal controls over financial reporting.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, the Company may become involved in litigation relating to claims arising from the ordinary course of business. Management believes that there are currently no claims or actions pending against us, the ultimate disposition of which would have a material adverse effect on our results of operations, financial condition or cash flows.
The Company has a claim against it for unpaid legal fees in the amount of $48,252 (C$65,241). The amount is included in accounts payable on the Company's interim condensed consolidated balance sheets.
Item 1A. Risk Factors.
As a smaller reporting company, we are not required to provide the information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the nine-month period ended September 30, 2023, the Company issued:
(i) 500,000 common shares for proceeds previously received.
(ii) 3,000,000 common shares issued to the CEO as stipulated in his 2023 executive consulting agreement and 100,000 common shares issued to the CFO as stipulated in his 2023 executive consulting agreement.
(iii) 1,650,709 common shares issued on the conversion of a convertible promissory note to equity.
(iv) 1,790,000 common shares were issued for professional services.
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(v) 225,000 common shares issued for other services.
(vi) 20,000 common shares issued to an employee.
(vii) 100,000 common shares were issued to a new director.
(viii) 1,536,582 common shares issued on a private placement.
(ix) 2,422,163 of common shares issued on the conversion of related party debt and accounts payable.
The securities above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act since, among other things, the transactions did not involve a public offering.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
Not Applicable.
Item 6. Exhibits.
The following exhibits are filed as part of this quarterly report on Form 10-Q:
* | Filed herewith |
** | Management contract or compensatory plan or arrangement |
+ | In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SUSGLOBAL ENERGY CORP. | ||
November 14, 2023 | By: | /s/ Marc Hazout |
Marc Hazout | ||
Executive Chairman, President and Chief Executive Officer | ||
November 14, 2023 | By: | /s/ Ike Makrimichalos |
Ike Makrimichalos | ||
Chief Financial Officer (Principal Financial and Accounting Officer) |
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LRO # 62 Transfer | Receipted as WE1708026 on 2023 11 02 at 15:55 | |
The applicant(s) hereby applies to the Land Registrar. | yyyy mm dd Page 1 of 3 |
Properties |
PIN | 17566 - 0052 LT Interest/Estate Fee Simple | ||
Description | PT LT 28 CON 1 SALTFLEET BEING PTS 9,10 & 28 PL 62R15125; CITY OF HAMILTON | ||
Address | 490 NASH ROAD NORTH | ||
HAMILTON |
Consideration |
Consideration $3,100,000.00
Transferor(s) |
The transferor(s) hereby transfers the land to the transferee(s).
Name | SNAVE HOLDINGS LTD. |
Address for Service | 206 Lakeside Avenue |
Burlington, ON L7N 1T5 |
A person or persons with authority to bind the corporation has/have consented to the registration of this document.
This document is not authorized under Power of Attorney by this party.
Transferee(s) | Capacity | Share |
Name | SUSGLOBAL ENERGY CANADA CORP. | |
Address for Service | 200 Davenport Road | |
Toronto, Ontario M5R 1J2 |
Statements |
STATEMENT OF THE TRANSFEROR (S): The transferor(s) verifies that to the best of the transferor's knowledge and belief, this transfer does not contravene the Planning Act.
STATEMENT OF THE SOLICITOR FOR THE TRANSFEROR (S): I have explained the effect of the Planning Act to the transferor(s) and I have made inquiries of the transferor(s) to determine that this transfer does not contravene that Act and based on the information supplied by the transferor(s), to the best of my knowledge and belief, this transfer does not contravene that Act. I am an Ontario solicitor in good standing.
STATEMENT OF THE SOLICITOR FOR THE TRANSFEREE (S): I have investigated the title to this land and to abutting land where relevant and I am satisfied that the title records reveal no contravention as set out in the Planning Act, and to the best of my knowledge and belief this transfer does not contravene the Planning Act. I act independently of the solicitor for the transferor(s) and I am an Ontario solicitor in good standing.
Signed By |
Paul Douglas Michael Mazza | 69 Markland Street | acting for | Signed | 2023 11 02 | |
Hamilton | Transferor(s) | ||||
L8P 2J8 | |||||
Tel | 905-777-1136 | ||||
Fax | 905-777-1140 | ||||
I am the solicitor for the transferor(s) and I am not one and the same as the solicitor for the transferee(s). | |||||
I have the authority to sign and register the document on behalf of the Transferor(s). | |||||
Anthony Tyler D'Angelo | Bay Adelaide Centre 333 Bay | acting for | Signed | 2023 11 02 | |
Street Suite 3400 | Transferee(s) | ||||
Toronto | |||||
M5H 2S7 | |||||
Tel | 416-979-2211 | ||||
Fax | 416-979-1234 | ||||
I am the solicitor for the transferee(s) and I am not one and the same as the solicitor for the transferor(s). | |||||
I have the authority to sign and register the document on behalf of the Transferee(s). |
Submitted By |
GOODMANS LLP | Bay Adelaide Centre 333 Bay Street | 2023 11 02 | |
Suite 3400 | |||
Toronto | |||
M5H 2S7 | |||
Tel | 416-979-2211 | ||
Fax | 416-979-1234 |
LRO # 62 Transfer | Receipted as WE1708026 on 2023 11 02 at 15:55 | |
The applicant(s) hereby applies to the Land Registrar. | yyyy mm dd Page 2 of 3 |
Fees/Taxes/Payment |
Statutory Registration Fee |
$69.00 |
Provincial Land Transfer Tax |
$58,475.00 |
Total Paid |
$58,544.00 |
File Number |
Transferor Client File Number : |
517737 |
Transferee Client File Number : |
23.1069 [ATD/SM] |
LAND TRANSFER TAX STATEMENTS |
In the matter of the conveyance of: | 17566 - 0052 | PT LT 28 CON 1 SALTFLEET BEING PTS 9,10 & 28 PL 62R15125; CITY OF HAMILTON |
BY: | SNAVE HOLDINGS LTD. |
TO: | SUSGLOBAL ENERGY CANADA CORP. |
1. MARC HAZOUT
I am
☐ (a) A person in trust for whom the land conveyed in the above-described conveyance is being conveyed;
☐ (b) A trustee named in the above-described conveyance to whom the land is being conveyed;
☐ (c) A transferee named in the above-described conveyance;
☐ (d) The authorized agent or solicitor acting in this transaction for _____ described in paragraph(s) (_) above.
☑ (e) The President, Vice-President, Manager, Secretary, Director, or Treasurer authorized to act for SUSGLOBAL ENERGY CANADA CORP. described in paragraph(s) (c) above.
☐ (f) A transferee described in paragraph (_) and am making these statements on my own behalf and on behalf of _____ who is my spouse described in paragraph (_) and as such, I have personal knowledge of the facts herein deposed to.
2. I have read and considered the definition of "single family residence" set out in subsection 1(1) of the Act. The land being conveyed herein:
does not contain a single family residence or contains more than two single family residences.
3. The total consideration for this transaction is allocated as follows:
(a) Monies paid or to be paid in cash | $1,100,000.00 |
(b) Mortgages (i) assumed (show principal and interest to be credited against purchase price) | $0.00 |
(ii) Given Back to Vendor | $2,000,000.00 |
(c) Property transferred in exchange (detail below) | $0.00 |
d) Fair market value of the land(s) | $0.00 |
(e) Liens, legacies, annuities and maintenance charges to which transfer is subject $0.00 | $0.00 |
(f) Other valuable consideration subject to land transfer tax (detail below) $0.00 | $0.00 |
(g) Value of land, building, fixtures and goodwill subject to land transfer tax (total of (a) to (f)) | $3,100,000.00 |
(h) VALUE OF ALL CHATTELS -items of tangible personal property | $0.00 |
(i) Other considerations for transaction not included in (g) or (h) above | $0.00 |
(j) Total consideration | $3,100,000.00 |
6. Other remarks and explanations, if necessary.
1. The information prescribed for purposes of section 5.0.1 of the Land Transfer Tax Act is not required to be provided for this conveyance.
2. The transferee(s) has read and considered the definitions of "designated land", "foreign corporation", "foreign entity", "foreign national", "Greater Golden Horseshoe Region", "specified region", "spouse" and "taxable trustee" as set out in subsection 1(1) of the Land Transfer Tax Act and O. Reg 182/17. The transferee(s) declare that this conveyance is not subject to additional tax as set out in subsection 2(2.1) of the Act because:
3. (b) This is not a conveyance of "designated land".
4. The transferee(s) declare that they will keep at their place of residence in Ontario (or at their principal place of business in Ontario) such documents, records and accounts in such form and containing such information as will enable an accurate determination of the taxes payable under the Land Transfer Tax Act for a period of at least seven years.
5. The transferee(s) agree that they or the designated custodian will provide such documents, records and accounts in such form and containing such information as will enable an accurate determination of the taxes payable under the Land Transfer Tax Act, to the Ministry of Finance upon request.
PROPERTY Information Record | |||||||
A. Nature of Instrument: | Transfer | ||||||
LRO 62 Registration No. | WE1708026 | Date: | 2023/11/02 | ||||
B. Property(s): | PIN 17566 - 0052 | Address 490 NASH ROAD | Assessment | - | |||
NORTH | Roll No | ||||||
HAMILTON | |||||||
C. Address for Service: | 200 Davenport Road | ||||||
Toronto, Ontario M5R 1J2 | |||||||
D. (i) Last Conveyance(s): | PIN | Registration No. | WE697915 | ||||
(ii) Legal Description for Property Conveyed: Same as in last conveyance? | Yes ☑ | No ☐ | Not known ☐ | ||||
E. Tax Statements Prepared By: | Anthony Tyler D'Angelo | ||||||
Bay Adelaide Centre 333 Bay Street Suite 3400 Toronto M5H 2S7 |
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LRO # 62 Charge/Mortgage |
Receipted as WE1708027 on 2023 11 02 |
at 15:55 |
The applicant(s) hereby applies to the Land Registrar. |
yyyy mm dd |
Page 1 of 2 |
Properties |
PIN |
17566 - 0052 LT |
Interest/Estate |
Fee Simple |
Description |
PT LT 28 CON 1 SALTFLEET BEING PTS 9,10 & 28 PL 62R15125; CITY OF HAMILTON |
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Address |
490 NASH ROAD NORTH |
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HAMILTON |
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Chargor(s) |
The chargor(s) hereby charges the land to the chargee(s). The chargor(s) acknowledges the receipt of the charge and the standard charge terms, if any.
Name |
SUSGLOBAL ENERGY CANADA CORP. |
Address for Service |
200 Davenport Road |
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Toronto, Ontario M5R 1J2 |
A person or persons with authority to bind the corporation has/have consented to the registration of this document. |
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This document is not authorized under Power of Attorney by this party. |
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Chargee(s) | Capacity | Share |
Name | SNAVE HOLDINGS LTD. | |||
Address for Service | 206 Lakeside Avenue | |||
Burlington, ON L7N 1T5 | ||||
Provisions | ||||
Principal | $2,000,000.00 | Currency | CDN | |
Calculation Period | Monthly, not in advance | |||
Balance Due Date | 2025/11/02 | |||
Interest Rate | 7% per annum | |||
Payments | $11,666.67 | |||
Interest Adjustment Date | 2023 11 02 | |||
Payment Date | Monthly | |||
First Payment Date | 2023 12 02 | |||
Last Payment Date | 2025 11 02 | |||
Standard Charge Terms | 200033 | |||
Insurance Amount | Full insurable value | |||
Guarantor |
Additional Provisions |
The Chargor shall have the option to prepay this charge, in whole or in part, without bonus or penalty.
This charge shall be repayable, interest only, on a monthly basis until the balance due date.
Section 14 of the standard charge terms are hereby amended by adding the following sentence immediately after the first sentence "Notwithstanding the foregoing, nothing herein shall prevent the Chargor from registering subsequent charges on title to the land.".
Signed By |
Pamela Margaret Lord |
69 Markland Street |
acting for |
Signed 2023 11 02 |
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Hamilton |
Chargor(s) |
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L8P 2J8 |
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Tel |
905-777-1136 |
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Fax |
905-777-1140 |
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I have the authority to sign and register the document on behalf of the Chargor(s). |
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Submitted By |
PAUL D. MAZZA |
69 Markland Street |
2023 11 02 |
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Hamilton |
Hamilton |
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L8P 2J8 |
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Tel 905-777-1136 |
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Fax 905-777-1140 |
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LRO # 62 Charge/Mortgage |
Receipted as WE1708027 on 2023 11 02 |
at 15:55 |
The applicant(s) hereby applies to the Land Registrar. |
yyyy mm dd |
Page 2 of 2 |
Fees/Taxes/Payment |
Statutory Registration Fee | $69.00 |
Total Paid | $69.00 |
File Number |
Chargor Client File Number : | 23.1069 [ATD/SM] |
LRO # 21 Charge/Mortgage | Receipted as HT339120 on 2023 11 02 |
at 15:56 |
The applicant(s) hereby applies to the Land Registrar. | yyyy mm dd | Page 1 of 6 |
Properties |
PIN | 40532 - 0031 | LT | Interest/Estate | Fee Simple |
Description | PT LT 20 CON 8 THURLOW PT 1 21R18453; BELLEVILLE ; COUNTY OF HASTINGS | |||
Address | PHILLIPSTON ROAD | |||
BELLEVILLE | ||||
PIN | 40532 - 0032 | LT | Interest/Estate | Fee Simple |
Description | PT LT 20 CON 8 THURLOW PT 1 21R19513; BELLEVILLE; COUNTY OF HASTINGS | |||
Address | 704 PHILLIPSTON ROAD | |||
ROSLIN | ||||
PIN | 40532 - 0033 | LT | Interest/Estate | Fee Simple |
Description | PT LT 20 CON 8 THURLOW PT 2 21R19513; S/T QR266045; BELLEVILLE ; COUNTY | |||
OF HASTINGS | ||||
Address | PHILLIPSTON ROAD | |||
BELLEVILLE | ||||
PIN | 40532 - 0041 | LT | Interest/Estate | Fee Simple |
Description | PT LT 20 CON 8 THURLOW PT 25, 27 AND 29 21R6801; BELLEVILLE ; COUNTY OF | |||
HASTINGS | ||||
Address | PHILLIPSTON ROAD | |||
BELLEVILLE |
Chargor(s) |
The chargor(s) hereby charges the land to the chargee(s). The chargor(s) acknowledges the receipt of the charge and the standard charge terms, if any.
Name |
1684567 ONTARIO INC. |
Address for Service |
200 Davenport Road, Toronto, Ontario, |
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M5R 1J2 |
A person or persons with authority to bind the corporation has/have consented to the registration of this document. |
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This document is not authorized under Power of Attorney by this party. |
Chargee(s) |
Capacity |
Share |
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Name |
R. WILLIAMSON CONSULTANTS LIMITED |
350000/105000 |
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0 |
Address for Service |
86 Carrick Trail, Gravenhurst, Ontario, P1P 0A6 |
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Name |
P.I.C.K.S. INC. |
350000/105000 |
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0 |
Address for Service |
1-85 West Wilmot Street, Richmond Hill, Ontario L4B 1K7 |
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Name |
2654666 ONTARIO INC. |
350000/105000 |
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0 |
Address for Service |
98-83 Mondeo Drive, Scarborough, Ontario M1P 5B6 |
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Statements |
Schedule: See Schedules
Provisions |
Principal | $1,050,000.00 | Currency | CDN | |
Calculation Period | monthly | |||
Balance Due Date | 2024/11/02 | |||
Interest Rate | 13% | |||
Payments | $11,375.00 | |||
Interest Adjustment Date | 2023 11 02 | |||
Payment Date | 2nd day, monthly | |||
First Payment Date | 2023 12 02 | |||
Last Payment Date | 2024 11 02 | |||
Standard Charge Terms | 200033 | |||
Insurance Amount | Full insurable value | |||
Guarantor | Susglobal Energy Canada Corp. |
LRO # 21 Charge/Mortgage | Receipted as HT339120 on 2023 11 02 | at 15:56 |
The applicant(s) hereby applies to the Land Registrar. | yyyy mm dd | Page 2 of 6 |
Signed By |
Timothy Alex Petrou | 200-9100 Jane Street, Building A | acting for | Signed | 2023 10 30 | |
Vaughan | Chargor(s) | ||||
L4K 0A4 | |||||
Tel | 905-695-5300 | ||||
Fax | 905-695-5301 | ||||
I have the authority to sign and register the document on behalf of the Chargor(s). |
Submitted By |
CIRILLO PETROU LAW PROFESSIONAL | 200-9100 Jane Street, Building A | 2023 11 02 | |
CORPORATION | Vaughan | ||
L4K 0A4 | |||
Tel | 905-695-5300 | ||
Fax | 905-695-5301 |
Fees/Taxes/Payment |
Statutory Registration Fee | $69.00 |
Total Paid | $69.00 |
File Number |
Chargee Client File Number : |
10362-23 |
ADDITIONAL PROVISIONS
1. POST-DATED CHEQUES
PROVIDED that the Chargors do hereby covenant and agree to provide to the each of the Chargees, upon the execution of this mortgage and thereafter during the term of this mortgage, a series of post-dated cheques each in the amount of the monthly installment due hereunder for the duration of the term of this mortgage as set out herein.
2. SALES CLAUSE
PROVIDED that if the Chargor, at any time, shall sell, transfer, convey or otherwise dispose of the herein described lands and building(s) without the prior consent of the Chargee at the Chargee's option, the within mortgage shall immediately become due and payable in full including interest to the maturity date of the mortgage herein set forth.
3. BY-LAW CONFORMITY AND OCCUPANCY CLAUSE
PROVIDED that if at any time, the said property and/or the building(s) located on the said property, do not comply with the municipal by-laws, or the by-laws of any other level of government and/or the building becomes unoccupied, then in either of these events the balance of the principal monies hereby secured, together with interest as herein provided shall forthwith become due and payable upon demand. PROVIDED further that nothing herein shall be construed so as to permit the Chargor the privilege of prepaying the said mortgage in whole or in part.
4. ADMINISTRATIVE FEES
a. In the event it is necessary for the Chargee to have a letter sent by the Chargee's solicitor to the Chargor because of default or non-payment, then the Chargor shall be charged the sum of $250.00 plus applicable taxes for such letter and such sum shall be a charge on the said lands and shall bear interest at the rate herein stated.
b. In the event of any of the Chargor's post-dated or pre-authorized cheques are not honoured when presented for payment to the Bank or Trust Company on which they are drawn, the Chargor shall pay to each of the Chargees for each such returned cheque the sum of $250.00 plus applicable taxes as a liquidated amount to cover each of the Chargees' administration costs and not as a penalty and such sum shall be a charge upon the said lands and shall bear interest at the rate hereinbefore stated.
c. In the event that the Chargor fails to provide proof of insurance on an annual basis, the Chargee is entitled to charge the Chargor the sum of $250.00 plus applicable taxes as an administrative fee.
d. Failure to provide post-dated cheques will result in default and the Chargee will be entitled to charge the Chargor the sum of $250.00 plus applicable taxes and in addition will be entitled to commence default proceedings at the expense of the Chargor with all costs including but not limited to legal fees on a solicitor and client basis to be added to the principal balance then outstanding as of the date the bill is submitted to the Chargee.
5. ADMINISTRATION FEES
a. In the event that the Chargee is required by the Chargor or is otherwise required to provide a mortgage statement, there shall be an administrative fee of $250.00 plus applicable taxes for each such statement.
b. The Chargee shall have the exclusive right to prepare and execute the Discharge of the Charge/Mortgage of Land. The Chargor shall pay an additional $350.00 plus applicable taxes to the chargee as an administrative fee for the preparation of the said Discharge of Charge.
6. PREPAYMENT
Provided that the Chargors are not in default herein, the Chargors have the right to prepay the whole amount of the principal herein then outstanding, upon a payment of TWO (2) months' interest on the principal being prepaid as of the date of prepayment, as a bonus and not as a penalty.
7. INTEREST CALCULATION
For the purpose of calculation of interest, any payment of principal received after 1:00 p.m. shall be deemed to have been received on the next following banking day.
8. RENT AND MANAGEMENT
PROVIDED also, and it is hereby further agreed by and between the Chargor and the Chargee, that should default be made by the Chargor in the observance or performance of any of the covenants, provisos, agreements or conditions contained in this Mortgage, the Chargee reserves the right to enter into the said lands and premises and to receive the rents and profits and to be entitled to receive in addition to all other fees, charges and disbursements to which the Chargee is entitled, a management fee so as to reimburse the Chargee for reasonable time and trouble in the management of the said lands and premises it being understood and agreed that in the circumstances a management fee equal to $100.00 plus applicable taxes per day is a just and equitable fee, having regard to all of the circumstances.
9. MATRIMONIAL HOME
PROVIDED that in the event that any part of the properties herein becomes the matrimonial home of either of the Chargors herein, then the monies secured hereby shall become due and payable unless the spouse of such party consents to this mortgage and releases to the Chargee his or her interest herein.
10. EXPROPRIATION
PROVIDED that if the said lands shall be expropriated by any government, authority, body or corporation clothed with the powers of expropriation, the amount of the principal hereby secured remaining unpaid shall forthwith become due and payable together with interest at the said rate to the date of payment and together with a bonus equal to the sum of three months interest at the said rate calculated on the remaining principal balance from the said date of payment to the date the said principal sum or balance thereof remaining unpaid would otherwise under the provision of this mortgage become due and payable.
11. DEFAULT PROCEEDINGS
The Chargor agrees that should the Chargee commence legal action due to default under the Charge/Mortgage of Land that the Chargee shall be entitled to charge an additional fee equivalent to three months interest.
12. DEFAULT OF OTHER CHARGES
In the event that the Chargor is in default in any other Charge/Mortgage of Land registered against the property herein charged, the Chargor shall be deemed to be in default under this Mortgage and the Chargee shall have all of the remedies contained herein for a default under this Charge/Mortgage of Land.
13. SEVERABILITY
Should any clause and/or clauses contained in the Charge/Mortgage of Land be found to be illegal, void as against public policy or unenforceable in law, the offending clause or clauses as the case may be, is and or are to be severed from this Charge/Mortgage of Land and deemed never to be part of this Charge/Mortgage of Land.
14. LEGAL PROCEEDINGS
The Chargor covenants and agrees that if collection or other legal proceedings are taken in connection with or to realize upon this security, an administrative fee of $3,500.00 plus applicable taxes shall be added to the Charge debt on each occasion such proceedings are so taken and said fee or fees, shall form a Charge upon the charged property in favour of the Chargee.
GUARANTORS CLAUSE
The Guarantor, in consideration of such advance or advances as the mortgagee may make under this mortgage and in consideration of the sum of One ($1.00) Dollar now paid to him by the mortgagee, the receipt whereof is hereby acknowledged:
1. Hereby covenants and agrees with the mortgagee, as principal debtor and not as surety, to well and truly pay or cause to be paid to the mortgagee the principal money, interest, taxes and all other monies which the mortgagor has by this mortgage covenanted to pay to the mortgagee or which are secured by this mortgage or intended so to be secured, the said payments to be made on the days and times and in the manner provided for in this mortgage;
2. Hereby further covenants and agrees to keep, observe and perform the covenants, terms, provisos, stipulations and conditions of this mortgage which are to be kept, observed and performed by the mortgagor and at all times to indemnify, protect and save harmless the
mortgagee from all loss, costs and damage in respect of the advances of the mortgage money and every matter and thing contained in this mortgage;
3. Further agrees that the mortgagee may from time to time without notice to him extend the time for payment of all monies secured by this mortgage, amend the terms and times of payment and the rate of interest with respect to the said monies refrain from enforcing payment of the said monies, release any portion or portions of the mortgaged premises and waive or vary any of the covenants and conditions in this mortgage to be kept observed and performed by the mortgagor and grant any indulgence to the mortgagor in respect of any default by the mortgagor which may arise under this mortgage, and that notwithstanding any such act by the mortgagee, the guarantor shall be bound by the provisions of this mortgage until all of the monies secured under this said mortgage shall have been fully paid and satisfied;
4. Further acknowledges that the mortgagee may at any time grant or refuse any additional credit to the mortgagor, accept or release or renounce any collateral or other security, administer or otherwise deal with the land and premises described in this mortgage, take an assignment of the rentals with respect to the said lands and premises and apply any and all monies at any time received from the mortgagor or from any other person or from the proceeds of any securities given in connection with this mortgage in any manner the mortgagee may deem appropriate. The mortgagee may also utilize any and all insurance proceeds in reduction of the principal monies and interest secured, by this mortgage or for the refurbishing of the lands and premises or in any other manner that the mortgagee may in its absolute discretion deem advisable.
5. Agrees that all of the matters mentioned herein may be performed by the mortgagee without notice to him, the guarantor, without releasing or in any way modifying, altering, varying or in any way affecting the liability of the guarantor hereunder; and
6. Agrees that all of the covenants and agreements of him the guarantor, contained herein shall be binding upon him and his respective heirs, executors, administrators, and assigns and shall accrue to the benefit of the mortgagee, its successors and assigns and that his liability as guarantor hereunder and the liability of his executors, administrators and assigns shall be joint and several.
Collateral Provisions
The Chargor and Chargee herein agree that this Charge is given as collateral security to a charge of even date, with identical terms and conditions, made by SUSGLOBAL ENERGY CANADA CORP, as Chargor, in favour of R. WILLIAMSON CONSULTANTS LTD., P.I.C.K.S. INC., and 2654666 ONTAIRO INC., as Chargee, and registered against the lands and premises described as 490 Nash Road North, Hamilton (bearing PIN 17566-0052LT) ("Nash Charge").
PROVIDED that all payments made under the said Nash Charge shall constitute payments under the charge herein and all payments made under the charge herein shall constitute payments under the said Nash Charge. Upon payment of the principal and interest secured hereunder in accordance with the terms and conditions hereof, a discharge of charge/mortgage shall be given to the Chargor by the Chargee in respect of the charge herein and the Nash Charge.
Exhibit 31.1
CERTIFICATION
I, Marc Hazout, certify that:
1. I have reviewed this quarterly report on Form 10-Q of SusGlobal Energy Corp. (the "Company");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and
5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the Company's board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
Date: November 14, 2023 | ||
By: | /s/ Marc Hazout | |
Marc Hazout | ||
Executive Chairman, President and Chief Executive Officer | ||
(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, Ike Makrimichalos, certify that:
1. I have reviewed this quarterly report on Form 10-Q of SusGlobal Energy Corp. (the "Company");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and
5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the Company's board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
Date: November 14, 2023 |
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By: |
/s/ Ike Makrimichalos |
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Ike Makrimichalos |
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Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Marc Hazout, the Chief Executive Officer of SusGlobal Energy Corp. (the "Registrant"), and Ike Makrimichalos, the Chief Financial Officer of the Registrant, each hereby certifies that, to the best of his knowledge:
1. The Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 2023, to which this Certification is attached as Exhibit 32.1 (the "Report"), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition of the Registrant at the end of the period covered by the Report and results of operations of the Registrant for the periods covered by the Report.
Date: November 14, 2023
By: |
/s/ Marc Hazout |
|
Marc Hazout |
|
Chief Executive Officer |
|
(Principal Executive Officer) |
By: |
/s/ Ike Makrimichalos |
|
Ike Makrimichalos |
|
Chief Financial Officer |
|
(Principal Financial and Accounting Officer) |
Interim Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred Stock, Par Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 124,783,286 | 113,438,832 |
Common Stock, Shares, Outstanding | 124,783,286 | 113,438,832 |
Interim Condensed Consolidated Statements of Operations and Comprehensive Loss |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2023
CAD ($)
shares
|
Sep. 30, 2023
USD ($)
$ / shares
shares
|
Sep. 30, 2022
CAD ($)
shares
|
Sep. 30, 2022
USD ($)
$ / shares
shares
|
Sep. 30, 2023
CAD ($)
shares
|
Sep. 30, 2023
USD ($)
$ / shares
shares
|
Sep. 30, 2022
CAD ($)
shares
|
Sep. 30, 2022
USD ($)
$ / shares
shares
|
|
Revenue | $ 186,901 | $ 297,202 | $ 505,075 | $ 551,815 | ||||
Cost of Sales | ||||||||
Opening inventory | 64,578 | 19,555 | 58,695 | 20,582 | ||||
Depreciation | $ 117,344 | 87,528 | $ 144,564 | 112,731 | $ 405,633 | 301,467 | $ 441,390 | 344,196 |
Cost of sales | 236,009 | 543,896 | 617,293 | 1,061,690 | ||||
Less: closing inventory | (42,889) | (48,154) | (42,889) | (48,154) | ||||
Total cost of sales | 193,120 | 495,742 | 574,404 | 1,013,536 | ||||
Gross loss | (6,219) | (198,540) | (69,329) | (461,721) | ||||
Operating expenses | ||||||||
Management compensation-stock-based compensation | 57,600 | 60,113 | 172,800 | 180,339 | ||||
Management compensation-fees | 117,401 | 115,175 | 351,162 | 350,910 | ||||
Marketing | 923 | (250) | 122,098 | 1,003,959 | ||||
Professional fees | 103,930 | 190,653 | 286,723 | 812,738 | ||||
Interest expense | 140,161 | 208,537 | 499,222 | 589,488 | ||||
Office and administration | 56,567 | 67,377 | 176,120 | 259,193 | ||||
Rent and occupancy | 58,385 | 54,586 | 161,127 | 171,177 | ||||
Insurance | 10,974 | 12,867 | 33,167 | 76,304 | ||||
Filing fees | 8,562 | 9,699 | 31,852 | 71,242 | ||||
Amortization of financing costs | 26,901 | 27,752 | 72,296 | 94,916 | ||||
Directors' compensation | 18,631 | 14,366 | 53,211 | 43,864 | ||||
Stock-based compensation | 254,724 | 659,050 | 785,149 | 955,837 | ||||
Repairs and maintenance | 1,015 | 2,386 | 22,636 | (8,773) | ||||
Foreign exchange loss (income) | 214,406 | 378,510 | (33,037) | 518,690 | ||||
Total operating expenses | 1,070,180 | 1,800,821 | 2,734,526 | 5,119,884 | ||||
Net loss from operating activities | (1,076,399) | (1,999,361) | (2,803,855) | (5,581,605) | ||||
Other expense | (116,710) | (1,697,619) | (2,371,204) | (3,207,270) | ||||
Net loss | (1,193,109) | (3,696,980) | (5,175,059) | (8,788,875) | ||||
Other comprehensive loss | ||||||||
Foreign exchange income (loss) | 327,961 | 652,484 | (6,718) | 819,813 | ||||
Comprehensive loss | $ (865,148) | $ (3,044,496) | $ (5,181,777) | $ (7,969,062) | ||||
Net loss per share basic | $ / shares | $ (0.01) | $ (0.04) | $ (0.04) | $ (0.09) | ||||
Net loss per share diluted | $ / shares | $ (0.01) | $ (0.04) | $ (0.04) | $ (0.09) | ||||
Weighted average number of common shares outstanding basic | shares | 122,972,355 | 122,972,355 | 105,189,849 | 105,189,849 | 120,391,943 | 120,391,943 | 100,335,858 | 100,335,858 |
Weighted average number of common shares outstanding diluted | shares | 122,972,355 | 122,972,355 | 105,189,849 | 105,189,849 | 120,391,943 | 120,391,943 | 100,335,858 | 100,335,858 |
Direct wages and benefits [Member] | ||||||||
Cost of Sales | ||||||||
Cost of sales | $ 36,459 | $ 52,860 | $ 111,984 | $ 158,356 | ||||
Equipment rental, delivery, fuel and repairs and maintenance [Member] | ||||||||
Cost of Sales | ||||||||
Cost of sales | 14,723 | 365,975 | 55,569 | 477,128 | ||||
Utilities [Member] | ||||||||
Cost of Sales | ||||||||
Cost of sales | 32,721 | (7,760) | 89,578 | 35,410 | ||||
Outside contractors [Member] | ||||||||
Cost of Sales | ||||||||
Cost of sales | $ 0 | $ 535 | $ 0 | $ 26,018 |
Nature of Business and Basis of Presentation |
9 Months Ended |
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Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Basis of Presentation [Text Block] |
1. Nature of Business and Basis of Presentation SusGlobal Energy Corp. ("SusGlobal") was formed by articles of amalgamation on December 3, 2014, in the Province of Ontario, Canada and its executive office is in Toronto, Ontario, Canada. SusGlobal, a company in the start-up stages and Commandcredit Corp. ("Commandcredit"), an inactive Canadian public company, amalgamated to continue business under the name of SusGlobal Energy Corp. On May 23, 2017, SusGlobal filed an Application for Authorization to continue in another Jurisdiction with the Ministry of Government Services in Ontario and a certificate of corporate domestication and certificate of incorporation with the Secretary of State of the State of Delaware under which it changed its jurisdiction of incorporation from Ontario to the State of Delaware (the "Domestication"). In connection with the Domestication each of the currently issued and outstanding common shares were automatically converted on a one-for-one basis into common shares compliant with the laws of the state of Delaware (the "Shares"). As a result of the Domestication, pursuant to Section 388 of the General Corporation Law of the State of Delaware (the "DGCL"), SusGlobal continued its existence under the DGCL as a corporation incorporated in the State of Delaware. The business, assets and liabilities of SusGlobal and its subsidiaries on a consolidated basis, as well as its principal location and fiscal year, were the same immediately after the Domestication as they were immediately prior to the Domestication. SusGlobal filed a Registration Statement on Form S-4 to register the Shares and this registration statement was declared effective by the Securities and Exchange Commission on May 12, 2017. On December 11, 2018, the Company began trading on the OTCQB venture market exchange, under the ticker symbol SNRG. SusGlobal is a renewables company focused on acquiring, developing and monetizing a global portfolio of proprietary technologies in the waste to energy and regenerative products application. These interim condensed consolidated financial statements of SusGlobal and its wholly-owned subsidiaries, SusGlobal Energy Canada Corp. ("SECC"), SusGlobal Energy Canada I Ltd. ("SGECI"), SusGlobal Energy Belleville Ltd. ("SGEBL"), SusGlobal Energy Hamilton Ltd. ("SEHL") and 1684567 Ontario Inc. ("1684567") (together, the "Company"), have been prepared following generally accepted accounting principles in the United States ("US GAAP") for interim financial information and the Securities Exchange Commission ("SEC") instructions to Form 10-Q and Article 8 of SEC Regulation S-X, and are expressed in United States Dollars. The Company's functional currency is the Canadian Dollar ("C$"). In the opinion of management, all adjustments necessary for a fair presentation have been included. |
Going Concern |
9 Months Ended |
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Sep. 30, 2023 | |
Going Concern [Abstract] | |
Going Concern [Text Block] |
2. Going Concern The interim condensed consolidated financial statements have been prepared in accordance with US GAAP, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. The Company incurred a net loss of $5,175,059 (2022-$8,788,875) for the nine months ended September, 2023, and as at that date had a working capital deficit of $24,425,747 (December 31, 2022-$21,580,552) and an accumulated deficit of $35,520,256 (December 31, 2022-$30,345,197) and expects to incur further losses in the development of its business. On February 18, 2021, PACE Savings and Credit Union Limited ("PACE") and the Company reached a new agreement to repay all amounts owing to PACE on or before July 30, 2021. Management was not able to meet the July 30, 2021, deadline. On August 13, 2021, PACE agreed to allow the Company until August 31, 2021, to bring the arrears current and continue to September 2022, the original maturity date. Management was not able to meet the August 31, 2021, deadline. On November 15, 2021, the Company paid all arrears to PACE and PACE agreed to allow the Company to continue payments to the end of the terms of each obligation, September 2022. Similarly, the Company paid all arrears to PACE on March 15, 2022, and PACE allowed the Company to continue payments to the end of the terms of each obligation, September 2022. On March 28, 2023, the Company and PACE negotiated a full and final mutual release of all obligations owing to PACE. Management continues discussions with equity investors to raise the necessary funds to repay other creditors. The Company was successful in extending the repayment date on a 1st mortgage which had a maturity date of September 1, 2022, to December 1, 2023. One of the Company's significant customer contracts expired at the end of December 31, 2020, and one customer contract was terminated by the Company in September of 2021. These factors cast substantial doubt as to the Company's ability to continue as a going concern, which is dependent upon its ability to obtain the necessary financing to further the development of its business, satisfy its obligations to its creditors, and upon achieving profitable operations through revenue growth. There is no assurance of funding being available or available on acceptable terms. Realization values may be substantially different from carrying values as shown. These interim condensed consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result if the Company was unable to continue as a going concern. |
Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] |
3. Significant Accounting Policies These interim condensed consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements of the Company for the years ended December 31, 2022, and 2021 and their accompanying notes. |
Recently Issued Accounting Pronouncements |
9 Months Ended |
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Sep. 30, 2023 | |
Recently Issued Accounting Pronouncements [Abstract] | |
Recently Issued Accounting Pronouncements [Text Block] |
4. Recently Issued Accounting Pronouncements Accounting Pronouncements Recently Adopted The following section provides a description of new accounting pronouncements ("Accounting Standard Update" or "ASU") issued by the Financial Accounting Standards Board ("FASB") that are applicable to the Company. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"), which requires enhanced disclosure of certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty while eliminating certain current recognition and measurement accounting guidance. This ASU also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases. ASU No. 2022-02 became effective for the Company's annual and interim periods beginning on January 1, 2023. The Company adopted this ASU on January 1, 2023. As a result, the adoption of ASU 2022-02 did not have any impact on the opening balances in the interim condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU-2016-13"). ASU 2016-13 affects loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. ASU 2016-13 is effective for the fiscal year beginning after December 15, 2022, including interim periods within that fiscal year. The Company adopted this ASU on January 1, 2023. As a result, the adoption of ASU 2016-13 did not have any impact on the opening balances in the interim condensed consolidated financial statements. There were no new accounting pronouncements issued and not yet adopted that were expected to have a material impact on the Company's interim condensed consolidated financial position or results of operations in the current or future periods. |
Financial Instruments |
9 Months Ended |
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Sep. 30, 2023 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments [Text Block] |
5. Financial Instruments The carrying value of the Company's financial instruments, such as cash, funds held in trust, trade receivables, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these instruments. The carrying amounts of the long-term debt, obligations under capital lease and convertible promissory notes also approximates fair value due to their market interest rate. Interest, Credit and Concentration Risk Interest rate risk is the risk borne by an interest-bearing asset or liability as a result of fluctuations in interest rates. Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company is exposed to significant interest rate risk on the current portion of its long-term debt of $3,909,422 (C$5,285,860) (December 31,2022-$7,285,747; C$9,868,274). Credit risk is the risk of loss associated with a counterparty's inability to perform its payment obligations. As at September 30, 2023, the Company's credit risk is primarily attributable to cash and trade receivables. As at September 30, 2023, the Company's cash was held with reputable Canadian chartered banks and a United States of America bank. With regards to credit risk with customers, the customers' credit evaluation is reviewed by management and account monitoring procedures are used to minimize the risk of loss. The Company believes that no additional credit risk beyond amounts provided for by the allowance for doubtful accounts is inherent in accounts receivable. As at September 30, 2023, the allowance for doubtful accounts was $nil (C$nil) (December 31, 2022-$nil; C$nil). As at September 30, 2023, the Company is exposed to concentration risk as it had five customers (December 31, 2022-four customers) representing greater than 5% of total trade receivables and five customers (December 31, 2022-four customers) represented 98% (December 31, 2022-90%) of trade receivables. The Company had certain customers whose revenue individually represented 10% or more of the Company's total revenue. These customers accounted for 93% (37%, 31%, 13% and 12%) (September 30, 2022-85%; 36%, 24%, 13% and 12%) of total revenue. Certain of the prior period's comparative figures have been reclassified to conform to the current year's presentation. The reclassification on the interim condensed consolidated statement of operations and comprehensive loss for the sale of carbon credits from other expenses to revenue. Liquidity Risk Liquidity risk is the risk that the Company is unable to meet its obligations as they fall due. The Company takes steps to ensure it has sufficient working capital and available sources of financing to meet future cash requirements for capital programs and operations. Management is considering all its options to repay its creditors. Refer also to going concern, note 2. The Company actively monitors its liquidity to ensure that its cash flows and working capital are adequate to support its financial obligations and the Company's capital programs. In order to continue operations, the Company will need to raise capital, and complete the refinancing of its real property and organic waste processing and composting facility. There is no assurance of funding being available or available on acceptable terms. Realization values may be substantially different from carrying values as shown. Refer also to going concern, note 2. Currency Risk Although the Company's functional currency is the C$, the Company realizes a portion of its expenses in United States Dollars ("$"). Consequently, certain assets and liabilities are exposed to foreign currency fluctuations. As at September 30, 2023, $352,299 (December 31, 2022-$80,843) of the Company's net monetary liabilities were denominated in $. The Company has not entered into any hedging transactions to reduce the exposure to currency risk. |
Funds Held in Trust |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Funds Held In Trust [Abstract] | |
Funds Held in Trust [Text Block] |
6. Funds Held in Trust The Funds held in trust at September 30, 2023, in the amount of $924,500 (C$1,250,000), relate to a full and final mutual release of all obligations owing to PACE, including accrued interest, in exchange for an amount of $924,500 (C$1,250,000). The funds are held in escrow by the Company's Canadian legal counsel. The funds will be released to PACE once the letter of credit, in the amount of $204,744 (C$276,831) is released by the Ministry of the Environment, Conservation and Parks (the "MECP") to PACE and the Company replaces with the new letter of credit in the amount of $471,596 (C$637,637). Immediately prior to this full and final mutual release, the amounts owing to PACE, included in the interim condensed consolidated balance sheets, include $3,452,655 (C$4,668,274) disclosed under long-term debt and accrued interest of $391,785 (C$529,725) disclosed under accrued liabilities. The Company raised the funds by securing a 2nd. mortgage on March 1, 2023, in the amount of $1,109,400 (C$1,500,000) prior to disbursements of $184,900 (C$250,000), on its Belleville, Ontario Canada property. Refer also to subsequent events, note 19(b). |
Long-lived Assets, net |
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Long lived Assets net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-lived Assets, net [Text Block] |
7. Long-lived Assets, net
Depreciation for the three and nine-month periods ended September 30, 2023, is disclosed in cost of sales in the amount of $87,528 (C$117,344) and $301,467 (C$405,633) (2022-$112,731; C$144,564 and $344,196; C$441,390) respectively and in office and administration in the amount of $307 (C$413) and $921 (C$1,240) (2022-$325; C$413 and $967; C$1,240) respectively, in the interim condensed consolidated statements of operations and comprehensive loss. |
Related Party Transactions |
9 Months Ended |
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Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions [Text Block] |
8. Related Party Transactions For three and nine-month periods ended September 30, 2023, the Company incurred $89,449 (C$120,000) and $267,552 (C$360,000) (2022-$92,189; C$120,000 and $280,728; C$360,000) respectively, in management fees expense with Travellers International Inc. ("Travellers"), an Ontario company controlled by a director and the president and chief executive officer (the "CEO"); and $27,952 (C$37,500) and $83,610 (C$112,500) (2022-$22,986; C$30,000 and $70,182; C$90,000) respectively, in management fees expense with the Company's chief financial officer (the "CFO"). As at September 30, 2023, unpaid remuneration and unpaid expenses in the amount of $204,728 (C$276,809) (December 31, 2022-$161,790; C$219,138) is included in accounts payable and $107,634 (C$145,530) (December 31, 2022-$22,705; C$30,753) is included in accrued liabilities in the interim condensed consolidated balance sheets. During the three and nine-month periods ended September 30, 2023, Travellers converted $233,558 (C$316,400) and $512,403 (C$688,883) (2022-$nil; C$nil and $nil; C$nil) respectively, in outstanding loans and outstanding accounts payable for 1,254,792 and 2,422,163 (2022-nil and nil) respectively, common shares of the Company, based on closing trading prices on the day prior to each conversion. For the three and nine-month periods ended September 30, 2023, the Company incurred $30,014 (C$40,046) and $80,452 (C$108,251) (2022-$27,728; C$36,244 and $89,530; C$114,812) respectively, in rent expense paid under a lease arrangement with Haute Inc. ("Haute"), an Ontario company controlled by the CEO. In addition, during the three and nine-month periods ended September 30, 2023, the Company paid the CFO interest of $nil (C$nil) and $nil (C$nil) (2022-$nil; C$nil and $526; C$674) respectively, on loans totaling $nil (C$nil) (2022-$29,211 (C$36,000) respectively, provided to the Company and repaid during the three month period ended March 31, 2022. For the independent directors, the Company recorded directors' compensation during the three and nine-month periods ended September 30, 2023 of $18,631 (C$25,000) and $53,211 (C$71,597) (2022-$14,366; C$18,750 and $43,864; C$56,250) respectively. In addition, on February 18, 2023 a new independent director was appointed and was awarded 100,000 common shares of the Company on March 1, 2023 valued at $21,000 based on the closing trading price on the appointed date and included under stock-based compensation in the interim condensed consolidated statements of operations and comprehensive loss. Further, the new independent director provided the Company funds of $101,039 (C$134,483) for a private placement in exchange for 310,888 common shares of the Company priced at $0.3250 per share. As at September 30, 2023, outstanding directors' compensation of $174,393 (C$235,793) (December 31, 2022-$121,226; C$164,196) is included in accrued liabilities, in the interim condensed consolidated balance sheets. Pursuant to the terms of the CEO's Consulting Agreement, for his services as the CEO, the compensation is at a rate of $29,728 (C$40,000) per month for twelve (12) months, beginning on the Effective Date, January 1, 2023, and at a rate of $37,160 (C$50,000) per month for twelve (12) months, beginning January 1, 2024. In addition, the Company agreed to grant the CEO 3,000,000 restricted shares of the Company's Common Stock, par value of $0.0001 per share (the "Common Stock") on the Effective Date. The Company has also agreed to reimburse the CEO for certain out-of-pocket expenses incurred by the CEO. Pursuant to the terms of the CFO's Consulting Agreement for his services as the CFO, the compensation is at a rate of $9,290 (C$12,500) per month for twelve (12) months, beginning on the Effective Date, January 1, 2023. In addition, the Company agreed to grant the CFO 100,000 restricted shares of the Company's Common Stock, par value of $0.0001 per share (the "Common Stock") on the Effective Date. The Company has also agreed to reimburse the CFO for certain out-of-pocket expenses incurred by the CFO. Furthermore, for the three and nine-month periods ended September 30, 2023, the Company recognized management stock-based compensation expense of $57,600 and $172,800 (2022-$60,113 and $180,339) respectively, on the common stock issued to the CEO and the CFO, 3,000,000 and 100,000 common stock, respectively, as stipulated in their executive consulting agreements, effective January 1, 2023 valued at the trading price on the Effective Date. The total stock-based compensation on the issuance of the common stock totaled $446,400 (2022-$240,450). The portion to be expensed for the balance of the consulting agreements, $273,600 (2022-$60,111) is included in prepaid expenses and deposits in the interim condensed consolidated balance sheets. |
Long-Term Debt |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt [Text Block] |
9. Long-Term Debt
As disclosed under funds held in trust, note 6, the Company and PACE finalized a full and final mutual release of all obligations owing to PACE, including accrued interest, in exchange for an amount of $924,500 (C$1,250,000). The funds are being held in escrow by the Company's Canadian legal counsel. The funds will be released to PACE once the letter of credit, in the amount of $204,744 (C$276,831) is released by the MECP to PACE and the Company replaces with the new letter of credit in the amount of $471,596 (C$637,637). Immediately prior to this full and final release, the amounts owing to PACE, included above under a), b) and c) totaled $3,452,655 (C$4,668,274). Refer also to going concern, note 2 and subsequent events, note 19(b). The PACE long-term debt was initially payable as noted below: (a) The credit facility bore interest at the PACE base rate of 7.00% plus 1.25% per annum or 12.50% prior to the full and final mutual release, was payable in monthly blended installments of principal and interest of $6,482 (C$8,764) and matured on September 2, 2022. The first and only advance on the credit facility on February 2, 2017, in the amount of $1,183,360 (C$1,600,000), is secured by a business loan general security agreement, a $1,183,360 (C$1,600,000) personal guarantee from the CEO and a charge against the Haute leased premises. Also pledged as security are the shares of the wholly-owned subsidiaries, and a limited recourse guarantee against each of these parties. On April 3, 2020, the pledged shares were delivered by PACE and are currently held as security for the personal guarantee from the CEO and charge against the Haute leased premises. The credit facility was fully open for prepayment at any time without notice or bonus. (b) The credit facility advanced on June 15, 2017, in the amount of $443,760 (C$600,000), bore interest at the PACE base of 7.00% plus 1.25% per annum or 12.50% prior to the full and final mutual release, was payable in monthly blended installments of principal and interest of $3,625 (C$4,901), and matured on September 2, 2022. The credit facility is secured by a variable rate business loan agreement on the same terms, conditions and security as noted above. (c) The corporate term loan advanced on September 13, 2017, in the amount of $2,754,379 (C$3,724,147), bore interest at PACE base rate of 7.00% plus 1.25% per annum or 12.50% prior to the full and final mutual release, was payable in monthly blended installments of principal and interest of $21,974 (C$29,711), and matures September 13, 2022. The corporate term loan is secured by a business loan general security agreement representing a floating charge over the assets and undertakings of the Company, a first priority charge under a registered debenture and a lien registered under the Personal Property Security Act in the amount of $2,959,123 (C$4,000,978) against the assets including inventory, accounts receivable and equipment. The corporate term loan also included an assignment of existing contracts included in the asset purchase agreement. For the three and nine-month periods ended September 30, 2023, $nil (C$nil) and $103,371 (C$139,089) (2022-$100,983; C$131,211 and $255,412; C$327,535) respectively, in interest was incurred on the PACE long-term debt. As at September 30, 2023, $391,785 (C$529,725) (December 31, 2022-$288,407; C$390,636) in accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheets. (d) i) The Company obtained a 1st mortgage provided by private lenders to finance the acquisition of the shares of 1684567 and to provide funds for additional financing needs, including additional lands, received in four tranches totaling $3,845,920 (C$5,200,000) (December 31, 2022-$3,839,160; C$5,200,000). The fourth tranche was received on August 13, 2021 in the amount of $1,405,240 (C$1,900,000) and a portion of this fourth tranche, $1,371,169 (C$1,853,933), was used to fund a portion of the purchase of the Hamilton Property, described under long-lived assets, net (note 7). The 1st mortgage is repayable interest only on a monthly basis at an annual rate of the higher of the Royal Bank of Canada's prime rate plus 6.05% per annum (currently 13.25%) and 10% per annum with a maturity date of December 1, 2023. The Company continues to be charged at the rate of 10% per annum. The 1st mortgage payable is secured by the shares held of 1684567, a 1st mortgage on the premises located at 704 Phillipston Road, Roslin, Ontario, Canada and a general assignment of rents. Financing fees on the 1st mortgage totaled $298,369 (C$403,419). In addition, as at September 30, 2023 there is $10,458 (C$14,140) (December 31, 2022-$56,409; C$76,404) of unamortized financing fees included in long-term debt in the interim condensed consolidated balance sheets. ii) On August 17,2021, the Company obtained a vendor take-back 1st mortgage in the amount of $1,479,200 (C$2,000,000), on the purchase of the Hamilton Property, described under long-lived assets, net (note 7). The 1st mortgage bears interest at an annual rate of 2% per annum, repayable monthly interest only with a maturity date of August 17, 2023, secured by the assets on the Hamilton Property. Management has been in discussions with the mortgagee to extend the maturity date. iii) On March 1, 2023, the Company obtained a 2nd mortgage in the amount of $1,109,400 (C$1,500,000) bearing interest at the annual rate of 12%, repayable monthly, interest only with a maturity date of March 1, 2024, secured as noted under (d) i) above. The Company incurred financing fees of $44,376 (C$60,000). As at September 30, 2023 $10,577 (C$14,301) (December 31, 2022-$31,555; C$42,740) of accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheets. In addition, as at September 30, 2023 there is $18,480 (C$24,986) of unamortized financing fees included in long-term debt in the interim condensed consolidated balance sheets. For the three and nine-month periods ended September 30, 2023, $138,015 (C$185,000) and $388,605 (C$522,833) (2022-$104,681; C$136,682 and $324,937; C$416,692) respectively, in interest was incurred on the mortgages payable. As at September 30, 2023 $43,599 (C$58,950) (December 31, 2022- $31,555; C$42,740) in accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheets. (e) As a result of the COVID-19 virus, the Government of Canada launched the Canada Emergency Business Account (the "CEBA"), a program to ensure that small businesses have access to the capital they need to see them through the current challenges and better position them to quickly return to providing services to their communities and creating employment. The program is administered by Canadian chartered banks and credit unions. The Company has received a total of $73,960 (C$100,000) under this program, from its Canadian chartered bank. Under the initial term date of the loans, which is detailed in the CEBA term loan agreements, the amount is due on December 31, 2022 and is interest-free. If the loans are not repaid by December 31, 2022, the Company can make payments, interest only, on a monthly basis at an annual rate of 5%, under the extended term date, beginning January 1, 2023, maturing December 31, 2025. The CEBA term loan agreements were amended by extending the interest free repayment date by one year to December 31, 2023 (subsequently extended to January 18, 2024). If paid by December 31, 2023, 33.33% ($25,176; C$33,333), previously 25%, of the loans would be forgiven. Repayment terms on the extended period are unchanged. The CEBA term loan agreements contain a number of positive and negative covenants, for which the Company is not in full compliance. (f) On April 8, 2021, the Company took delivery of a truck and hauling trailer for a total purchase price of $161,483 (C$218,338) plus applicable harmonized sales taxes. The purchase was financed by a bank term loan of $147,920 (C$200,000), over a forty-eight-month term, bearing interest at 4.95% per annum with monthly blended instalments of principal and interest payments of $3,625 (C$4,901) due April 7, 2025. For the three and nine-month periods ended September 30, 2023, $823 (C$1,103) and $2,794 (C$3,760) (2022- $1,312; C$1,716 and $4,342; C$5,568) in interest was incurred. As a result of the Company being in default on its obligations for its convertible promissory notes, the obligations under this bank term loan are disclosed as a current obligation. |
Obligations under Capital Lease |
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Obligations Under Capital Lease [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Obligations under Capital Lease [Text Block] |
10. Obligations under Capital Lease
Refer also to going concern, note 2. (a) The lease agreement for certain equipment for the Company's organic composting facility at a cost of $183,014 (C$247,450), is payable in monthly blended installments of principal and interest of $3,785 (C$5,118), plus applicable harmonized sales taxes for a period of forty-six months plus the first two monthly blended installments of $7,396 (C$10,000) plus applicable harmonized sales taxes and an option to purchase the equipment for a final payment of $18,253 (C$24,680) plus applicable harmonized sales taxes on February 27, 2022. The leasing agreement bears interest at the rate of 6.15% annually, compounded monthly, due January 27, 2022. The final payment was made on June 7, 2022. (b) The lease agreement for certain equipment for the Company's organic waste processing and composting facility at a cost of $288,185 (C$389,650), is payable in monthly blended installments of principal and interest of $5,068 (C$6,852), plus applicable harmonized sales taxes for a period of fifty-nine months plus an initial deposit of $14,385 (C$19,450) plus applicable harmonized sales taxes and an option to purchase the equipment for a final payment of a nominal amount of $74 (C$100) plus applicable harmonized sales taxes on February 27, 2025. The leasing agreement bears interest at the rate of 3.59% annually, compounded monthly, due February 27, 2025. The lease liabilities are secured by the equipment under capital lease as described under long-lived assets, net (note 7). Minimum lease payments as per the original terms of the obligations under capital lease are as follows:
For the three and nine-month periods ended September 30, 2023, $785 (C$1,053) and $2,768 (C$3,725) (2022-$1,361; C$1,770 and $3,599; C$4,616) in interest was incurred. As a result of the Company being in default on its obligations for its convertible promissory notes, the obligations under capital lease are disclosed as a current obligation. |
Convertible Promissory Notes |
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Convertible Promissory Notes [Text Block] |
11. Convertible Promissory Notes
The convertible promissory notes are accounted for under the fair value option in the interim condensed consolidated balance sheets. The actual principal outstanding on the balance of the convertible promissory notes as at September 30, 2023 is $6,872,575 (December 31, 2022-$5,825,260), including accrued interest of $662,415 (2022-$nil). (a) On October 28 and 29, 2021, the Company entered into two securities purchase agreement (the "October 2021 SPAs) with two investors (the "October 2021 Investors") pursuant to which the Company issued to the October 2021 Investors two 15% OID unsecured convertible promissory notes (the "October 2021 Investor Notes") in the principal amount of $1,765,118. The October 2021 Investor Notes are convertible, with accrued interest, from time to time on notice of a liquidity event (a "Liquidity Event"). A Liquidity Event is defined as a public offering of the Company's common stock resulting in the listing for trading of the common stock on any one of a number of exchanges. The October 2021 Investor Notes can be prepaid prior to maturity for an amount of 120% of the prepayment amount. The maturity date of the October 2021 Investor Notes is the earlier of (i) July 28 and 29, 2022 and (ii) the occurrence of a Liquidity Event, as described above (the "Maturity Date"). Upon the occurrence of a Liquidity Event, the October 2021 Investors are entitled to convert all or a portion of their October 2021 Investor Notes including any accrued and unpaid interest at a conversion price (the "Conversion Price") equal to 70% (representing a 30% discount) multiplied by the price per share of the Common Stock at the public offering associated with the Liquidity Event. Upon the occurrence of an event of default, the interest rate on the October 2021 Investor Notes will immediately accrue at 24% per annum and be paid in cash monthly to the October 2021 Investors, until the default is cured. And the Conversion Price will be reset to 85% of the lowest volume weighted average price for the ten consecutive trading days ending on the trading day that is immediately prior to the applicable conversion date. On May 11, 2022, the holder of the October 29, 2021 investor note, provided an amendment for an optional conversion of his investor notes. The conversion price was amended to be (i) the product of the Liquidity Event price multiplied by the discount of 35% (previously 30%) or (2) the greater of (i) the product of the closing price per share of the Company's Common Stock as reported by the applicable trading market on the trading day immediately prior to the conversion date multiplied by the discount (35%) or $1.70 multiplied by the discount (35%), provided that in the event of a conversion, of investor note, at a time that a Liquidity Event shall not have previously occurred and be continuing, the conversion price for such conversion shall be as provided in the amendment. On August 16, 2022, the Company was sent a notice of default from one of the October 2021 Investors, whose investor note was issued on October 29, 2021. On September 15, 2022, the Company and the investor of the October 2021 investor note entered into an amendment to the October 2021 investor note which served as a cure to the previously issued default notice. Pursuant to the September 15, 2022 amendment, the Company and the October 29, 2021 investor, agreed that the outstanding principal amount of the October 29, 2021 investor note would increase by 10% to $1,618,100 from the previously issued principal amount of $1,471,000. The new agreed upon maturity date was changed to November 15, 2022, subject to certain conditions and the maturity date would automatically be extended to January 15, 2023 provided that the October 29, 2021 investor does not notify the Company in writing prior to the maturity date that the automatic extension of the maturity date has been cancelled. In connection with this amendment, the Company agreed to use its best efforts to promptly facilitate the conversion of the October 29, 2021 investor note into shares of the Company's common stock. Further, the October 29, 2021 investor agreed not to convert more than $100,000 in any one conversion notice and the October 29, 2021 investor agreed not to issue an additional conversion notice unless and until any previously issued conversion shares have been sold by the October 29, 2021 investor or exceed 10% of the daily trading volume in selling the shares of the Company's common stock On September 21, 2022 and November 10, 2022, the October 29, 2021 investor issued conversion notices to the Company and the Company issued 372,090 common shares at conversion prices ranging from $0.1885 to $0.2339 per share respectively, on the conversion of $25,000 and $50,000 respectively, of the October 29, 2021 investor note, having a fair market value of $97,129 on conversion. The October 29, 2021 investor has not informed the Company of an extension to the current maturity date but continued to issue conversion notices to the Company prior to the default notice of June 8, 2023, noted below. On December 22, 2022, the October 28, 2021 investor, whose October 28, 2021 investor note had a previous Principal Amount of $294,118 and a maturity date of July 28, 2022, provided the Company with an amendment whereby the maturity date of the October 28, 2021 investor note was extended to the earlier of July 28, 2023 or the occurrence of a Liquidity Event. In addition, the Company agreed that the investor could convert his October 28, 2021, investor note into shares of the Company's common stock at any time at the investor's option. Previously, the October 28, 2021 Note was only convertible upon the occurrence of the Liquidity Event. The Company also agreed to change the conversion price to be the lowest trading bid price of the Company's common stock on the trading day immediately prior to the conversion date multiplied with a 35% discount to that lowest price. Previously, the conversion price was a 30% discount to the price at which the securities were sold in connection with the Liquidity Event. In consideration for the extension of the maturity date, the Company agreed to issue the investor 500,000 shares of the Company's common stock. The Company used the with-and-without method to allocate the proceeds between the convertible promissory note and the common shares. As a result, all the proceeds were allocated to the convertible promissory note and $nil to the common shares. On June 8, 2023, the October 29, 2021 investor's counsel sent the Company a notice of default on the October 29, 2021 investor note and the March 2022 Investor Notes, described below. The default was caused by the holders of these promissory notes not being able to receive shares of the Company's common stock, par value $0.0001 (the "Common Stock") pursuant to the conversion terms of these promissory notes. All cure periods available pursuant to the promissory notes had expired prior to June 8, 2023. The October 29, 2021 investor note had a principal balance of $1,300,000 before and after the default and the March 2022 Investor Notes, whose principal balance totaled $2,640,000 prior to the notice of default, increased by 20% or $528,000 in total as a result of the notice of default. In addition, default interest at the rate of 24% per annum accrued on the March 2022 Investor Notes and totaled $424,946 the June 8, 2023. During the three and nine-month periods ended September 30, 2023, the October 29, 2021 investor provided the Company with notices of conversion to convert in total $nil and $243,100 respectively, of his investor note having a fair value on conversion of $nil and $374,000 respectively, for nil and 1,650,709 respectively, of common shares of the Company. The conversion prices per share for the three and nine-month periods ended September 30, 2023 ranged from $nil to $nil and $0.1294 to $0.3400 respectively. The Company initially reserved 1,905,000 of its authorized and unissued Common Stock (the "October 2021 Reserved Amount"), free from pre-emptive rights, to be issued upon conversion of the October 2021 Investor Notes. (b) On March 3 and 7, 2022, the Company executed two unsecured convertible promissory notes with two investors (the "March 2022 Investors"), who purchased 25% original issue discount (the "OID") unsecured convertible promissory notes (the "The March 2022 Investor Notes") in the aggregate principal amount totaling $2,000,000 (the "Principal Amount") with such Principal Amount convertible into shares of the Company's common stock (the "Common Stock") from time to time triggered by the occurrence of certain events. The March 2022 Investor Notes carried an OID totaling $500,000 which is included in the principal balance of the Notes. The funds were received on March 7, 2022 and March 11, 2022 in the total amount of $1,425,000, net of the OID and professional fees. The maturity date of the Notes is the earlier of (i) June 3 and 7, 2022, and (ii) the occurrence of a Liquidity Event (as defined in the Notes) (the "Maturity Date"). The final payment of the Principal Amount (and default interest, if any) shall be paid by the Company to the Investors on the Maturity Date. On an event of default, the principal amount of the March 2020 Investor Notes will increase to 120% of their original principal amounts. The Investors are entitled to, following an event of default, (as defined in the March 2022 Investor Notes) to convert all or any amount of the Principal Amount and any interest accruing at the default interest rate of 24% per annum into Common Stock, at a conversion price (the "Conversion Price") equal to 70% (representing a 30% discount) multiplied by the price per share of the Common Stock at any national security exchange or over-the-counter marketplace for the five (5) trading days immediately prior to the March 2022 Investors' notice of conversion. On May 11, 2022, the holder of the March 3, 2022 Investor Note and on May 13, 2022, the holder of the March 7, 2022 Investor Note, each provided an amendment for an optional conversion of their investor notes. The conversion price was amended to be (i) the product of the Liquidity Event price multiplied by the discount of 35% (previously 30%) or (2) the greater of (i) the product of the closing price per share of the Company's Common Stock as reported by the applicable trading market on the trading day immediately prior to the conversion date multiplied by the discount (35%) or $1.70 multiplied by the discount (35%), provided that in the event of a conversion, of his investor note, at a time that a Liquidity Event shall not have previously occurred and be continuing, the conversion price for such conversion shall be as provided in amendment for each. Further, on June 29, 2022, the March 2022 Investors revised their March 2022 Investor Notes, to extend the maturity date to August 15, 2022 and increase the principal amount of each of the March 2022 Investor Notes by twenty percent (20%), from a Principal Amount of $2,000,000 to $2,400,000. In addition, the Company agreed to issue 100,000 common shares to the March 2022 Investor. These restricted shares of the Company's common stock will survive a reverse stock split prior to listing. The common shares were issued on July 11, 2022. The restructurings were accounted for as extinguishments as they were renegotiated after maturity. On August 16, 2022, the Company was sent notices of default from the March 2022 Investors. And, on September 15, 2022, the Company and the March 2022 Investors entered into an amendment to the March 2022 Investor Notes which served as a cure to the previously issued default notices. Pursuant to the September 15, 2022 amendment, the Company and the March 2022 Investors agreed that the outstanding Principal Amount totaling $2,400,000 would increase by 10% to $2,640,000. The new agreed upon maturity date was now November 15, 2022, subject to certain conditions and the maturity date was extended to January 15, 2023. In connection with this amendment, the Company agreed to use its best efforts to promptly facilitate the conversion of the March 2022 Investor Notes into shares of the Company's common stock only after the October 29, 2021 investor note, as described under paragraph (a) above, has been fully converted. Further, in the event that the October 29, 2021 investor note has been fully converted and the conversion shares sold, thereafter, the March 2022 Investor Notes may both be converted at the March 2022 Investors' discretion on a pari-passu basis, provided, however, that no conversion shall exceed $50,000 for each of the March 2022 Investor Notes and each of the March 2022 Investors shall not sell more than 5% of the daily trading volume in selling the Company's shares of common stock. As noted above, on June 8, 2023 the counsel for the March 2022 Investors provided the Company with a notice of default. This resulted in the principal balance of the March 2022 Investor Notes increasing in principal from $2,640,000 in total to $3,168,000, in total. In addition, interest is accruing at the rate of 24% per annum. As at September 30, 2023, accrued interest of $662,415 (2022-$nil) is included in the convertible promissory notes balance. (c) On June 23, 2022, the Company executed one convertible promissory note (the "June 2022 Investor Note") with an investor (the "June 2022 Investor") in the amount of $1,200,000 bearing interest at 10% per annum and having an OID of 10%. The maturity date of the June 2022 Investor Note is the earlier of December 23, 2022 and the date of the Company's uplist to a national securities exchange. The proceeds from the June 2022 Investor Note were used to repay this investor's June 2021 Investor Note and their December 2021 Investor Note which matured June 16, 2022 and June 2, 2022 respectively, plus accrued interest. The net proceeds, after repaying the December 2021 Investor Note and the June 2021 Investor Note with accrued interest and related disbursements totaled approximately $204,000. The net proceeds were received on June 28, 2022. In addition, the Company issued 1,333,333 common shares to the June 2022 Investor on June 29, 2022 which have been included in the determination of the extinguishment gain and recognized at fair value. The restructuring was accounted for as extinguishments as it was renegotiated after maturity. The June 2022 Investor may convert the principal amount and any accrued but unpaid interest into the Company's common stock from time to time following an event of default ('Event of Default"), as defined in the June 2022 Investor Note, with interest accruing at the default interest rate of 15% per annum from the Event of Default, at a conversion price (the "Conversion Price") equal to the lesser of 90% (representing a 10% discount) multiplied by the price per share of the Common Stock at the public offering associated with the Event of Default. On December 29, 2022, the Company and the investor agreed to extend the maturity date to the earlier of June 23, 2023 or the occurrence of a Liquidity Event. In consideration for the extension of the maturity date, the Company agreed to: (i) increase the principal amount to $1,320,000.00 (the "Increased Principal Amount"); (ii) that interest is payable on the Increased Principal Amount and that such interest (but not any default interest that becomes due) is paid in full and in advance by the Company issuing to the June 2022 Investor 450,000 shares of the Company's common stock and (iii) issue to the June 2022 Investor 666,667 shares of the Company's common stock (the "Modification Fee Shares"). The parties agreed that the Modification Fee Shares served as an increase in the amount of commitment fee shares issued to the investor pursuant to the securities purchase agreement signed by the Company and the June 2022 Investor on June 23, 2022, in connection with the issuance of the June 2022 Investor Note. The Company used the with-and-without method to allocate the proceeds between the convertible promissory note and the common shares. As a result, all the proceeds were allocated to the convertible promissory note and $nil to the common shares. On June 29, 2023, the June 2022 Investor provided a 45-day extension of the June 2022 Investor Note in exchange for an increase in the principal balance of the June 2022 Investor Note of $100,000, from $1,320,000 to $1,420,000. The Company initially reserved 8,000,000 of its authorized and unissued Common Stock (the "June 2022 Reserved Amount"), free from pre-emptive rights, to provide for the issuance of Common Stock upon the full conversion of the June 2022 Investor Note. Pursuant to the terms of the security purchase agreements for the convertible promissory notes described above, for so long as the noted investors own any shares of Common Stock issued upon the conversion of the applicable investor notes, the Company has covenanted to secure and maintain the listing of such shares of Common Stock. The Company is also subject to certain customary negative covenants under the investor notes and the security purchase agreements, including but not limited to the requirement to maintain its corporate existence and assets, require registration of or stockholder approval for the investor notes or the Common Stock upon the conversion of the applicable investor notes. The convertible promissory notes described above, contain certain representations, warranties, covenants and events of default including if the Company is delinquent in its periodic report filings with the Securities and Exchange Commission which would increase the amount of the principal and interest rates under the convertible promissory notes in the event of such defaults. In the event of a default, at the option of the applicable investor and in their sole discretion, the applicable investor may consider any of their convertible promissory notes immediately due and payable. Refer also to going concern, note 2. Fair value option for the convertible promissory notes The Company is eligible to elect the fair value option under ASC 825, Financial Instruments and bypass analysis of the potential embedded derivative features described above. The Company believes that the fair value option better reflects the underlying economics of the convertible promissory notes issued after December 31, 2020. As a result, the 2021 and 2022 promissory notes were recorded at fair value upon issuance and subsequently remeasured at each reporting date until settled or converted. The Company recognized the notes initially at fair value, which exceeded the proceeds received resulting in a day one loss that has been recognized in net loss. Transaction and other issuance costs have been expensed as incurred. Subsequently, the Company recognizes the notes at fair value with changes in net loss. Gains and losses attributable to changes in credit risk were insignificant during the three and nine-month periods ended September 30, 2023 and 2022. The Company recognized a loss of $nil (2022-$659,526) at the time of issuance of the convertible promissory notes and an additional loss of $117,710 and $2,296,845 (2022-$1,447,619 and $6,572,564) attributed to the change in fair value of the convertible promissory notes for the three and nine-month periods ended September 30, 2023. In addition, for the three and nine-month periods ended September 30, 2023, the Company recognized a gain on extinguishment of convertible promissory notes of $nil and $nil (2022-$nil and $4,274,820). Further, for the three and nine-month periods ended September 30, 2023, the Company incurred debt issuance costs of $nil and $nil (2022-$nil and $101,000) respectively, which were expensed as incurred. |
Fair Value Measurement |
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Fair Value Measurement [Text Block] |
12. Fair Value Measurement The following table presents information about the Company's financial assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation:
During each of the three and nine-month periods ended September 30, 2023 and 2022, there were no transfers between Level 1, Level 2, or Level 3. There were no financial assets or other liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022. The following table summarizes the change in Level 3 financial instruments during the nine-month period ended September 30, 2023 and year ended December 31, 2022.
Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The fair value of the convertible promissory notes at issuance and subsequent financial reporting dates was estimated based on significant inputs not observable in the market, which represent level 3 measurements within the fair value hierarchy. The fair value of the convertible promissory notes at issuance and at each reporting period was estimated based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The Company used a scenario-based binomial model to estimate the fair value of the convertible promissory notes. The model determines the fair value from a market participant's perspective by evaluating the payouts under hold, convert, or call decisions. The most significant estimates and assumptions used as inputs are those concerning type, timing and probability of specific scenario outcomes. Specifically, the Company assigned a probability of default, which would increase the required payout as described in note 11 and calculated the fair value under each scenario. At the issuance dates of the convertible promissory notes, the probability of default ("PD") was assumed to be 75% (2022-75%), except for those that were amended post maturity which were assumed to be 100%. The probability of default was determined in reference to a 1-year PD rate for a 'CCC+' rating at issuance, and a combination of 'CC' and 'CCC-' credit ratings at September 30, 2023 and December 31, 2022. Increasing (decreasing) the probability of default would result in a significantly higher (lower) fair value measurement. Other significant unobservable inputs include the expected volatility, discount for lack of marketability and the credit spread. The expected volatility was based on the historical volatility over a look-back period that was consistent with the balance-remaining term of the instruments. A range of 138.4% to 161.4% was used for the expected volatility (2022-92% to 159%). The discount for lack of marketability was determined using a range of option pricing methodologies using the remaining restriction term corresponding to each instrument on the relevant valuation date. A range of 0% to 40% was used for the discount for lack of marketability. The credit spread was determined in reference to credit yields of companies with similar credit risk at the date of valuation. A premium of 10% was added to the credit spread as an instrument specific adjustment to reflect the Company's risk of default. A figure of 23.92% (2022-24.4% to 25.6%) was used for the credit spread. Refer also to going concern, note 2. |
Loans Payable to Related Parties |
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Loans Payable to Related Parties [Text Block] |
13. Loans Payable to Related Parties
The loans owing to directors were received by the Company on June 6, 2022 and March 16, 2023, are unsecured, bearing interest at 5% per annum and due on demand. During the three and nine-month periods ended September 30, 2023, $538 and $1,684 (2022-$548 and $679) respectively, in interest was incurred on the directors' loans. As at September 30, 2023, $2,839 (December 31, 2022-$1,088) of accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheets. The loans from the officers are non-interest bearing and due on demand. |
Capital Stock |
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Sep. 30, 2023 | |
Equity [Abstract] | |
Capital Stock [Text Block] |
14. Capital Stock As at September 30, 2023, the Company had 150,000,000 common shares authorized with a par value of $.0001 per share and 124,783,286 (December 31, 2022-113,438,832) common shares issued and outstanding. For the nine -month period ended September 30, 2023, the Company issued 1,650,709 (December 31, 2022-2,372,090) common shares on the conversion of a convertible promissory note having a fair value on conversion in the amount of $374,000 (December 31, 2022-$579,247) at conversion prices ranging from $0.1294 to $0.3400 (December 31, 2022- $0.1885 to $0.2339) per share. This resulted in a loss on conversion of $74,359 disclosed under other expenses, note 16. During the nine-month period ended September 30, 2023, Travellers converted $512,403 (C$688,883) (December 31, 2022-$33,371; C$45,200 in outstanding accounts payable) in outstanding loans and outstanding accounts payable for 2,422,163 (December 31, 2022-193,778) common shares of the Company, based on closing trading prices on the day prior to each conversion. On January 3, 2023, the Company issued 3,000,000 (January 2, 2022-1,000,000) common shares to the CEO and 100,000 (January 2, 2022-50,000) common shares to the CFO in connection with their executive consulting agreements, valued at $446,400 (December 31, 2022-$240,450), based on the closing trading price on the effective date of their executive consulting agreements. Included under management stock-based compensation in the interim condensed consolidated statements of operations and comprehensive loss for the three and nine-month periods ended September 30, 2023 is an amount of $57,600 and $172,800 (2022-$60,113 and $180,339) respectively. Also, on January 17, 2022 and March 22, 2022, the Company issued 230,000 common shares on proceeds previously received. As at September 30, 2023, the Company recorded a balance of $60,100 (December 31, 2022-$213,600 for 750,000 shares to be issued relating to consulting agreements, of which 500,000 were issued on January 27, 2023, valued on the effective dates stipulated in the consulting agreements) for 250,000 shares to be issued relating to a consulting agreement with a service provider for professional services, valued on the effective dates stipulated in the consulting agreement. These professional services are included under stock-based compensation in the interim condensed consolidated statements of operations and comprehensive loss. During the three-month period ended March 31, 2023, the Company issued 500,000 (2022-230,000) common shares for proceeds previously received. |
Commitments |
9 Months Ended | ||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||
Commitments [Text Block] |
15. Commitments a) Effective January 1, 2023, as stipulated in each of their respective executive consulting agreements, the CEO's monthly fee is $29,584 (C$40,000) for 2023 and $36,980 (C$50,000) for 2024 and for the CFO $9,245 (C$12,500). The future minimum commitment under these consulting agreements, is as follows:
b) The Company has agreed to lease its office premises from Haute on a month-to-month basis, at the monthly rate of $6,656 (C$9,000). The Company is responsible for all expenses and outlays in connection with its occupancy of the leased premises, including, but not limited to utilities, realty taxes and maintenance. c) Effective February 3, 2021, upon the successful completion of a Nasdaq listing, the Company has committed a payment of $300,000 to a consulting firm providing advisory and consulting services. d) On November 5, 2021, the Company committed to the design and construction of its Hamilton, Ontario, Canada facility, including architectural and general consulting fees in the amount of $6,749,448 ($9,125,809). e) On September 15, 2023, the Company signed a one-year marketing agreement with a consulting agency to provide various marketing services. As Compensation, the consulting agency received 750,000 common shares of the Company valued at $194,250, priced at the closing trading price on commencement of the agreement or $0.2590 per share. In addition, the consulting agency will receive as a fee, 10% of an annual marketing budget anticipated to be $1,000,000 annually, subject to a $15,000,000 equity financing by December 31, 2023. f) Effective November 1, 2022, the Company acquired the exclusive rights to the use of a well-known athlete's name, endorsement and the like, for the purposes of advertisement, promotion and sale of the Company's products. In return, the Company issued 500,000 common shares of the Company and the individual's company is entitled to the following fees: • $125,000 sixty days subsequent to the Company's shares listed on the Nasdaq or another senior exchange. • $125,000 on the one-year anniversary of the first payment above and, • $125,000 on the one-year anniversary of the second payment above. There is also an arrangement to issue 250,000 warrants to the individual's company once the Company's shares are listed on the Nasdaq or another major exchange. g) The Company was assigned the land lease on the purchase of certain assets of Astoria Organic Matters Ltd., and Astoria Organic Matters Canada LP. The land lease, which comprises 13.88 acres in Roslin, Ontario, Canada, has a term expiring March 31, 2034. The basic monthly rent on the net lease is $2,219 (C$3,000) and is subject to adjustment based on the consumer price index as published by Statistics Canada ("CPI"). To date, no adjustment for CPI has been charged. The Company is also responsible for any property taxes, maintenance, insurance and utilities. In addition, the Company has the right to extend the lease for five further terms of five years each and one further term of five years less one day. As the Company acquired the business of 1684567, the previous landlord, in 2019, there are no future commitments for this lease. The Company is responsible through a special provision of the site plan agreement with the City of Belleville (the "City"), Ontario, Canada, that it is required to fund road maintenance required by the City through to September 30, 2025 at an annual rate of $7,396 (C$10,000). The future minimum commitment is as follows:
h) PACE had provided the Company a letter of credit in favor of the MECP in the amount of $204,744 (C$276,831) and, as security, has registered a charge of lease over the organic waste processing and composting facility, located at 704 Phillipston Road, Roslin, Ontario, Canada. As noted under funds held in trust, note 6, the Company and PACE finalized a full and final release of all obligations owed to PACE The funds held in trust are being held in escrow with the Company's Canadian legal counsel and will be released to PACE once this current letter of credit is returned to PACE by the MECP. This will occur once the Company replaces this letter of credit with a new letter of credit in the amount of $471,596 ($C637,637). As security, PACE had registered a charge of lease over the premises, located at 704 Phillipston Road, Roslin, Ontario, Canada. The Company is required to provide for environmental remediation and clean-up costs for its organic waste processing and composting facility. Refer also to subsequent events, note 19(b). The letter of credit is a requirement of the MECP and is in connection with the financial assurance provided by the Company for it to be in compliance with the MECPs environmental objectives. The MECP regularly evaluates the Company's organic waste processing and composting facility to ensure compliance is adhered to and the letter of credit is subject to change by the MECP. As a result of audits conducted by the MECP in December of 2020, the Company has accrued estimated and actual costs for corrective measures as a result of the MECP's audits totaling $692,799 (C$936,721) (December 31, 2022-$676,635; C$904,287). As at September 30, 2023, the MECP has not drawn on the letter of credit. The Company is in the process of obtaining a letter of credit for the new financial assurance with the MECP in the amount of $471,596 (C$637,637). |
Other Expenses |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Other Expenses [Text Block] |
16. Other Expenses
(a) As described under convertible promissory notes, note 11(a), the loss is on five conversions of the October 29, 2021 investor note. (b) Loss on revaluation of convertible promissory notes. Refer to note 11, convertible promissory notes. (c) Gain on extinguishment of convertible promissory notes. Refer to note 11, convertible promissory notes. (d) Accrued settlement payment for the release of services of a party for an underwriting offering dated March 23, 2022 and amended May 23, 2022. |
Economic Dependence |
9 Months Ended |
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Sep. 30, 2023 | |
Risks and Uncertainties [Abstract] | |
Economic Dependence [Text Block] |
17. Economic Dependence The Company generated 95% and 93% of its revenue from four customers, during the three and nine-month periods ended September 30, 2023 (2022-93% and 85% from four customers) respectively. |
Legal Proceedings |
9 Months Ended |
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Sep. 30, 2023 | |
Legal Proceeding [Abstract] | |
Legal Proceedings [Text Block] |
18. Legal Proceedings From time to time, the Company may become involved in litigation relating to claims arising from the ordinary course of business. Management believes that there are currently no claims or actions pending against us, the ultimate disposition of which would have a material adverse effect on our results of operations, financial condition or cash flows. The Company has a claim against it for unpaid legal fees in the amount of $48,252 (C$65,241). The amount is included in accounts payable on the Company's interim condensed consolidated balance sheets. |
Subsequent Events |
9 Months Ended |
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Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] |
19. Subsequent Events The Company's management has evaluated subsequent events up to the date the interim condensed consolidated financial statements were issued, pursuant to the requirements of ASC 855 and has determined the following to be material subsequent events:
(a) On November 2, 2023, the Company completed the purchase of additional land, consisting of a 2.03-acre site in Hamilton, Ontario, Canada for $2,292,760 (C$3,100,000). Prior to completing the purchase, the Company paid deposits of $229,276 (C$310,000) to the vendor, included under prepaid expenses and deposits on the interim condensed consolidated balance sheets. The balance of the purchase price was satisfied with a $1,479,200 (C$2,000,000) vendor take-back mortgage bearing interest at 7% annually, maturing in two years and the balance in cash financed by a second mortgage on the additional land bearing interest at 13% annually, maturing in one year and is secured by a third mortgage on the property in Belleville, Ontario, Canada.
(b) On November 3, 2023, the funds held in escrow, in the amount of $924,500 (C$1,250,000), were released to PACE (now Alterna Savings and Credit Union Limited "Alterna") and Alterna released all security it held to the Company. |
Long-lived Assets, net (Tables) |
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Long lived Assets net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-lived assets [Table Text Block] |
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt instruments [Table Text Block] |
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Obligations under Capital Lease (Tables) |
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Obligations Under Capital Lease [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of obligations under capital lease [Table Text Block] |
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Schedule of future minimum lease payments for capital leases [Table Text Block] |
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Convertible Promissory Notes (Tables) |
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Convertible Notes Payable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of convertible promissory notes [Table Text Block] |
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Fair Value Measurement (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial assets and liabilities that measured at fair value on a recurring basis [Table Text Block] |
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Schedule of change in Level 3 financial instruments [Table Text Block] |
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Loans Payable to Related Parties (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||
Loan Payable To Related Party [Abstract] | |||||||||||||||||||||||||||||
Schedule of loan payable to related party [Table Text Block] |
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Commitments (Tables) |
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Sep. 30, 2023 | |||||||||||||||||
The CEO and the CFO [Member] | |||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||
Schedule of commitments [Table Text Block] |
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Astoria Organic Matters Ltd. [Member] | |||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||
Schedule of commitments [Table Text Block] |
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Other Expenses (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Schedule of other expense [Table Text Block] |
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Going Concern (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||||||
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Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
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Going Concern [Abstract] | |||||||||
Net loss | $ (1,193,109) | $ (2,946,778) | $ (1,035,172) | $ (3,696,980) | $ (2,228,669) | $ (2,863,226) | $ (5,175,059) | $ (8,788,875) | |
Working capital deficit | 24,425,747 | 24,425,747 | $ 21,580,552 | ||||||
Accumulated deficit | $ (35,520,256) | $ (35,520,256) | $ (30,345,197) |
Funds Held in Trust (Narrative) (Details) |
Mar. 01, 2023
CAD ($)
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Mar. 01, 2023
USD ($)
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Sep. 30, 2023
CAD ($)
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Sep. 30, 2023
USD ($)
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Mar. 01, 2023
USD ($)
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Dec. 31, 2022
USD ($)
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Funds held in trust | $ 1,250,000 | $ 924,500 | $ 0 | |||
Long-term debt | 9,994,265 | 8,869,426 | ||||
Accrued liabilities | 1,983,650 | $ 1,781,258 | ||||
Secured Debt [Member] | ||||||
Description of collateral | raised the funds by securing a 2nd. mortgage | raised the funds by securing a 2nd. mortgage | ||||
Collateral amount | $ 1,500,000 | $ 1,109,400 | ||||
Amount prior to disbursements | $ 250,000 | $ 184,900 | ||||
PACE [Member] | ||||||
Funds held in trust | 1,250,000 | 924,500 | ||||
Long-term debt | 4,668,274 | 3,452,655 | ||||
Accrued liabilities | 529,725 | 391,785 | ||||
PACE [Member] | Letter of Credit [Member] | ||||||
Other commitment | 276,831 | 204,744 | ||||
PACE [Member] | New Letter of Credit [Member] | ||||||
Other commitment | $ 637,637 | $ 471,596 |
Long-lived Assets, net (Narrative) (Details) |
3 Months Ended | 9 Months Ended | ||||||
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Sep. 30, 2023
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Sep. 30, 2023
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Sep. 30, 2022
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Sep. 30, 2023
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Property, Plant and Equipment [Line Items] | ||||||||
Depreciation disclosed in cost of sales | $ 117,344 | $ 87,528 | $ 144,564 | $ 112,731 | $ 405,633 | $ 301,467 | $ 441,390 | $ 344,196 |
Office and administration | $ 413 | $ 307 | $ 413 | $ 325 | $ 1,240 | $ 921 | $ 1,240 | $ 967 |
Long-Term Debt (Narrative) (Details) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||||||||||||||
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Aug. 13, 2021
CAD ($)
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Aug. 13, 2021
USD ($)
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Apr. 08, 2021
CAD ($)
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Apr. 08, 2021
USD ($)
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Sep. 13, 2017
CAD ($)
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Sep. 13, 2017
USD ($)
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Jun. 15, 2017
CAD ($)
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Jun. 15, 2017
USD ($)
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Sep. 30, 2023
CAD ($)
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Sep. 30, 2023
USD ($)
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Sep. 30, 2022
CAD ($)
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Sep. 30, 2022
USD ($)
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Sep. 30, 2023
CAD ($)
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Sep. 30, 2023
USD ($)
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Sep. 30, 2022
CAD ($)
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Sep. 30, 2022
USD ($)
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Sep. 30, 2023
USD ($)
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Mar. 01, 2023
CAD ($)
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Mar. 01, 2023
USD ($)
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Dec. 31, 2022
CAD ($)
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Dec. 31, 2022
USD ($)
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Aug. 17, 2021
CAD ($)
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Aug. 17, 2021
USD ($)
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Apr. 08, 2021
USD ($)
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Sep. 13, 2017
USD ($)
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Jun. 15, 2017
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Feb. 02, 2017
CAD ($)
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Feb. 02, 2017
USD ($)
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Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Funds held in trust | $ 1,250,000 | $ 1,250,000 | $ 924,500 | $ 0 | ||||||||||||||||||||||||
Long-term debt | 9,994,265 | 8,869,426 | ||||||||||||||||||||||||||
Accrued interest and default amounts | 58,950 | 58,950 | 43,599 | $ 42,740 | 31,555 | |||||||||||||||||||||||
PACE [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Funds held in trust | 1,250,000 | 1,250,000 | 924,500 | |||||||||||||||||||||||||
Long-term debt | 4,668,274 | $ 4,668,274 | 3,452,655 | |||||||||||||||||||||||||
Credit facility (a) [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Long-term debt | 697,199 | 695,974 | ||||||||||||||||||||||||||
Line of credit facility, interest rate description | The credit facility bore interest at the PACE base rate of 7.00% plus 1.25% per annum | The credit facility bore interest at the PACE base rate of 7.00% plus 1.25% per annum | ||||||||||||||||||||||||||
Line of credit facility, interest rate during period | 12.50% | 12.50% | ||||||||||||||||||||||||||
Debt instrument, periodic payment | $ 8,764 | $ 6,482 | ||||||||||||||||||||||||||
Credit facility (a) [Member] | Chief Executive Officer [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Amount of personal guarantee | $ 1,600,000 | $ 1,183,360 | ||||||||||||||||||||||||||
Credit facility (b) [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Long-term debt | 389,874 | 389,188 | ||||||||||||||||||||||||||
Line of credit facility, interest rate description | bore interest at the PACE base of 7.00% plus 1.25% per annum | bore interest at the PACE base of 7.00% plus 1.25% per annum | ||||||||||||||||||||||||||
Line of credit facility, interest rate during period | 12.50% | 12.50% | ||||||||||||||||||||||||||
Debt face amount | $ 600,000 | $ 443,760 | ||||||||||||||||||||||||||
Debt instrument, periodic payment | $ 4,901 | $ 3,625 | ||||||||||||||||||||||||||
Credit facility (c) [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Long-term debt | 2,365,582 | 2,361,424 | ||||||||||||||||||||||||||
Corporate Term Loan [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Line of credit facility, interest rate description | bore interest at PACE base rate of 7.00% plus 1.25% per annum | bore interest at PACE base rate of 7.00% plus 1.25% per annum | ||||||||||||||||||||||||||
Line of credit facility, interest rate during period | 12.50% | 12.50% | ||||||||||||||||||||||||||
Debt face amount | $ 3,724,147 | $ 2,754,379 | ||||||||||||||||||||||||||
Debt instrument, periodic payment | 29,711 | $ 21,974 | ||||||||||||||||||||||||||
Cash collateral for letter of credit | $ 4,000,978 | $ 2,959,123 | ||||||||||||||||||||||||||
Interest expense, debt | 0 | $ 0 | $ 131,211 | $ 100,983 | 139,089 | $ 103,371 | $ 327,535 | $ 255,412 | ||||||||||||||||||||
Accrued interest and default amounts | 529,725 | $ 529,725 | 391,785 | 390,636 | 288,407 | |||||||||||||||||||||||
First mortgage [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Long-term debt | 3,835,462 | 3,782,751 | ||||||||||||||||||||||||||
Line of credit facility, interest rate description | is repayable interest only on a monthly basis at an annual rate of the higher of the Royal Bank of Canada's prime rate plus 6.05% per annum | is repayable interest only on a monthly basis at an annual rate of the higher of the Royal Bank of Canada's prime rate plus 6.05% per annum | ||||||||||||||||||||||||||
Line of credit facility, interest rate during period | 13.25% | 13.25% | ||||||||||||||||||||||||||
Debt face amount | 5,200,000 | $ 5,200,000 | 3,845,920 | 5,200,000 | 3,839,160 | $ 2,000,000 | $ 1,479,200 | |||||||||||||||||||||
Fourth tranche amount of long-term debt received | $ 1,900,000 | $ 1,405,240 | ||||||||||||||||||||||||||
Portion of fourth tranche used for portion fund to purchase property | $ 1,853,933 | $ 1,371,169 | ||||||||||||||||||||||||||
Financing fees on mortgage | 403,419 | 403,419 | 298,369 | |||||||||||||||||||||||||
Unamortized finance fees | $ 14,140 | $ 14,140 | $ 10,458 | 76,404 | 56,409 | |||||||||||||||||||||||
Debt instrument, interest rate, stated percentage | 10.00% | 10.00% | 10.00% | |||||||||||||||||||||||||
Second mortgage [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Debt face amount | $ 1,500,000 | $ 1,109,400 | ||||||||||||||||||||||||||
Financing fees on mortgage | $ 60,000 | $ 44,376 | ||||||||||||||||||||||||||
Unamortized finance fees | $ 24,986 | $ 24,986 | $ 18,480 | |||||||||||||||||||||||||
Debt instrument, interest rate, stated percentage | 12.00% | 12.00% | ||||||||||||||||||||||||||
Accrued interest and default amounts | 14,301 | 14,301 | 10,577 | $ 42,740 | 31,555 | |||||||||||||||||||||||
Canada Emergency Business Account [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Long-term debt | 73,960 | 73,830 | ||||||||||||||||||||||||||
Proceeds from the Canadian Emergency Benefit Account | $ 100,000 | $ 73,960 | ||||||||||||||||||||||||||
Description of terms of government grants | If the loans are not repaid by December 31, 2022, the Company can make payments, interest only, on a monthly basis at an annual rate of 5%, under the extended term date, beginning January 1, 2023, maturing December 31, 2025. | If the loans are not repaid by December 31, 2022, the Company can make payments, interest only, on a monthly basis at an annual rate of 5%, under the extended term date, beginning January 1, 2023, maturing December 31, 2025. | ||||||||||||||||||||||||||
Description terms of partial forgiveness | The CEBA term loan agreements were amended by extending the interest free repayment date by one year to December 31, 2023 (subsequently extended to January 18, 2024). If paid by December 31, 2023, 33.33% ($25,176; C$33,333), previously 25%, of the loans would be forgiven. Repayment terms on the extended period are unchanged. | The CEBA term loan agreements were amended by extending the interest free repayment date by one year to December 31, 2023 (subsequently extended to January 18, 2024). If paid by December 31, 2023, 33.33% ($25,176; C$33,333), previously 25%, of the loans would be forgiven. Repayment terms on the extended period are unchanged. | ||||||||||||||||||||||||||
Corporate Term Loans [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Long-term debt | 62,068 | $ 89,659 | ||||||||||||||||||||||||||
Purchase price | $ 218,338 | $ 161,483 | ||||||||||||||||||||||||||
Bank term loan | 200,000 | $ 147,920 | ||||||||||||||||||||||||||
Debt instrument, periodic payment | $ 4,901 | $ 3,625 | ||||||||||||||||||||||||||
Debt instrument, interest rate, stated percentage | 4.95% | 4.95% | ||||||||||||||||||||||||||
Interest expense, debt | 1,103 | 823 | 1,716 | 1,312 | $ 3,760 | $ 2,794 | 5,568 | 4,342 | ||||||||||||||||||||
Mortgages payable [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Interest expense, debt | 185,000 | $ 138,015 | $ 136,682 | $ 104,681 | 522,833 | $ 388,605 | $ 416,692 | $ 324,937 | ||||||||||||||||||||
Letter of Credit [Member] | PACE [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Other commitment | 276,831 | 276,831 | 204,744 | |||||||||||||||||||||||||
Letter of Credit [Member] | Ministry of the Environment, Conservation and Parks [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Other commitment | 276,831 | 276,831 | 204,744 | |||||||||||||||||||||||||
New Letter Of Credit [Member] | PACE [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Other commitment | $ 637,637 | $ 637,637 | $ 471,596 | |||||||||||||||||||||||||
Business Loan General Security Agreement [Member] | Credit facility (a) [Member] | ||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||
Cash collateral for borrowed securities | $ 1,600,000 | $ 1,183,360 |
Obligations under Capital Lease (Narrative) (Details) |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2023
CAD ($)
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
CAD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
CAD ($)
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
CAD ($)
|
Sep. 30, 2022
USD ($)
|
|
Obligations Under Capital Lease [Line Items] | ||||||||
Finance lease, interest expense | $ 1,053 | $ 785 | $ 1,770 | $ 1,361 | $ 3,725 | $ 2,768 | $ 4,616 | $ 3,599 |
Capital Lease (a) [Member] | ||||||||
Obligations Under Capital Lease [Line Items] | ||||||||
Capital lease obligations incurred | 247,450 | 183,014 | ||||||
Debt instrument, periodic payment | $ 5,118 | $ 3,785 | ||||||
Lessee, finance lease, option to terminate | an option to purchase the equipment for a final payment of $18,253 (C$24,680) plus applicable harmonized sales taxes on February 27, 2022. | an option to purchase the equipment for a final payment of $18,253 (C$24,680) plus applicable harmonized sales taxes on February 27, 2022. | ||||||
Debt instrument interest rate | 6.15% | 6.15% | 6.15% | 6.15% | ||||
Capital Lease (a) [Member] | First two monthly instalments [Member] | ||||||||
Obligations Under Capital Lease [Line Items] | ||||||||
Debt instrument, periodic payment | $ 10,000 | $ 7,396 | ||||||
Capital Lease (b) [Member] | ||||||||
Obligations Under Capital Lease [Line Items] | ||||||||
Capital lease obligations incurred | 389,650 | 288,185 | ||||||
Debt instrument, periodic payment | $ 6,852 | $ 5,068 | ||||||
Lessee, finance lease, option to terminate | an option to purchase the equipment for a final payment of a nominal amount of $74 (C$100) plus applicable harmonized sales taxes on February 27, 2025. | an option to purchase the equipment for a final payment of a nominal amount of $74 (C$100) plus applicable harmonized sales taxes on February 27, 2025. | ||||||
Debt instrument interest rate | 3.59% | 3.59% | 3.59% | 3.59% | ||||
Capital Lease (b) [Member] | First two monthly instalments [Member] | ||||||||
Obligations Under Capital Lease [Line Items] | ||||||||
Debt instrument, periodic payment | $ 19,450 | $ 14,385 |
Obligations under Capital Lease - Schedule of obligations under capital lease (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Obligations Under Capital Lease [Line Items] | ||
Obligations under Capital Lease | $ 83,950 | $ 121,758 |
Less: current portion | (83,950) | (57,275) |
Long-term portion | 0 | $ 64,483 |
Capital Lease (a) [Member] | ||
Obligations Under Capital Lease [Line Items] | ||
Obligations under Capital Lease | 0 | |
Long-term portion | 0 | |
Capital Lease (b) [Member] | ||
Obligations Under Capital Lease [Line Items] | ||
Obligations under Capital Lease | 83,950 | |
Less: current portion | (83,950) | |
Long-term portion | $ 0 |
Obligations under Capital Lease - Schedule of future minimum lease payments for capital leases (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Obligations Under Capital Lease [Abstract] | ||
In the three-month period ending December 31, 2023 | $ 20,272 | |
In the year ending December 31, 2024 | 60,817 | |
In the year ending December 31, 2025 | 5,142 | |
Minimum Payments Due | 86,231 | |
Less: imputed interest | (2,281) | |
Total | $ 83,950 | $ 121,758 |
Convertible Promissory Notes - Schedule of convertible promissory notes (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Convertible promissory notes | $ 9,756,700 | $ 7,796,433 |
Convertible promissory note-October 28 and 29, 2021 [Member] | ||
Debt Instrument [Line Items] | ||
Convertible promissory notes | 2,251,696 | 2,599,925 |
Convertible promissory note-March 3 and 7, 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Convertible promissory notes | 5,948,014 | 3,696,044 |
Convertible promissory note- June 23, 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Convertible promissory notes | $ 1,556,990 | $ 1,500,464 |
Fair Value Measurement - Schedule of fair value on a recurring basis (Details) - Fair Value, Recurring [Member] - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Liabilities, Fair Value Disclosure [Abstract] | ||
Convertible promissory notes | $ 9,756,700 | $ 7,796,433 |
Financial assets and liabilities measured at fair value | 9,756,700 | $ 7,796,433 |
Level 3 [Member] | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Convertible promissory notes | 9,756,700 | |
Financial assets and liabilities measured at fair value | $ 9,756,700 |
Fair Value Measurement - Schedule of Summarizes change in Level 3 financial instruments (Details) - Level 3 [Member] - Fair Value, Recurring [Member] - USD ($) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value, Beginning Balance | $ 7,796,433 | $ 3,798,516 |
Fair value at issuance | 0 | 2,159,526 |
Amendments | 2,180,923 | 0 |
Conversions/repayments | (336,578) | (136,880) |
Mark to market | 115,922 | 7,663,844 |
Settlement | 0 | (5,688,573) |
Fair value, Ending Balance | $ 9,756,700 | $ 7,796,433 |
Loans Payable to Related Parties (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Related Party Transaction [Line Items] | |||||
Interest rate on loan payable to related parties | 5.00% | ||||
Interest incurred on the director loan | $ 538 | $ 548 | $ 1,684 | $ 679 | |
Accrued interest in accrued liabilities | $ 2,839 | $ 2,839 | $ 1,088 | ||
Travellers International Inc. [Member] | |||||
Related Party Transaction [Line Items] | |||||
Shares issued to officers (Shares) | 2,422,163 | 193,778 |
Loans Payable to Related Parties - Schedule of loan payable to related party (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Related Party Transaction [Line Items] | ||
Loans payable to related parties | $ 59,941 | $ 40,000 |
Director [Member] | ||
Related Party Transaction [Line Items] | ||
Loans payable to related parties | 47,500 | 40,000 |
Officers [Member] | ||
Related Party Transaction [Line Items] | ||
Loans payable to related parties | $ 12,441 | $ 0 |
Commitments - Schedule of commitments (Details) |
Sep. 30, 2023
USD ($)
|
---|---|
Chief Executive Officer and Chief Financial Officer [Member] | |
Other Commitments [Line Items] | |
For the three-month period ending December 31, 2023 | $ 116,487 |
For the year ending December 31, 2024 | 443,760 |
Contractual Obligation | 560,247 |
Land Lease [Member] | |
Other Commitments [Line Items] | |
For the three-month period ending December 31, 2023 | 0 |
For the year ending December 31, 2024 | 7,396 |
For the year ending December 31, 2025 | 7,396 |
Contractual Obligation | $ 14,792 |
Other Expenses - Schedule of other expenses (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Other Income and Expenses [Abstract] | ||||
Loss on conversion of convertible promissory note | $ (74,359) | $ 0 | ||
Loss on revaluation of convertible promissory notes | (2,296,845) | (7,232,090) | ||
Gain on extinguishment of convertible promissory notes | $ 0 | $ 0 | 0 | 4,274,820 |
Settlement payment | 0 | (250,000) | ||
Other expenses | $ (2,371,204) | $ (3,207,270) |
Economic Dependence (Narrative) (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Four Customers [Member] | Revenue [Member] | Customer Concentration Risk [Member] | ||||
Concentration risk, percentage | 95.00% | 93.00% | 93.00% | 85.00% |
Legal Proceedings (Narrative) (Details) - Sep. 30, 2023 |
CAD ($) |
USD ($) |
---|---|---|
Legal Proceeding [Line Items] | ||
Unpaid legal fees | $ 65,241 | $ 48,252 |
Subsequent Events (Narrative) (Details) |
Nov. 02, 2023
CAD ($)
a
|
Nov. 03, 2023
CAD ($)
|
Nov. 03, 2023
USD ($)
|
Nov. 02, 2023
USD ($)
a
|
Sep. 30, 2023
CAD ($)
|
Sep. 30, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
---|---|---|---|---|---|---|---|
Subsequent Event [Line Items] | |||||||
Long-term debt | $ | $ 9,994,265 | $ 8,869,426 | |||||
Funds held in escrow | $ 1,250,000 | $ 924,500 | $ 0 | ||||
Subsequent Event [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Land | $ 3,100,000 | $ 2,292,760 | |||||
Long-term debt | $ 2,000,000 | $ 1,479,200 | |||||
Interest rate | 7.00% | ||||||
Debt instrument, maturity description | maturing in two years and the balance in cash financed by a second mortgage on the additional land bearing interest at 13% annually, maturing in one year | ||||||
Subsequent Event [Member] | Canada [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Area of land for sale | a | 2.03 | 2.03 | |||||
Subsequent Event [Member] | PACE [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Funds held in escrow | $ 1,250,000 | $ 924,500 | |||||
Subsequent Event [Member] | Prepaid Expenses and Deposits [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Final deposit amount | $ 310,000 | $ 229,276 |
1 Year Susglobal Energy (QB) Chart |
1 Month Susglobal Energy (QB) Chart |
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