10-Q 1 form10q.htm FORM 10-Q SusGlobal Energy Corp.: Form 10-Q - Filed by newsfilecorp.com
0001652539--12-31falseQ1 0001652539 2022-03-31 0001652539 2021-12-31 0001652539us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-03-31 0001652539us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-12-31 0001652539susg:CustomerOneMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-03-31 0001652539susg:CustomerTwoMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-03-31 0001652539susg:ThreeCustomersMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-03-31 0001652539susg:FiveCustomersMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-12-31 0001652539susg:ThreeCustomersMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-03-31 0001652539susg:CustomerOneMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-03-31 0001652539susg:CustomerThreeMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-03-31 0001652539susg:TwoCustomerMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-03-31 0001652539susg:CustomerTwoMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-03-31 0001652539 2022-01-01 2022-03-31 0001652539susg:AccountsReceivableGreaterThanFivePercentageMemberus-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-03-31 0001652539susg:AccountsReceivableGreaterThanFivePercentageMemberus-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-12-31 0001652539susg:CEOAndCFOMember 2022-01-01 2022-03-31 0001652539susg:InvestorRelationsConsultingAgreementMember 2022-01-01 2022-03-31 0001652539susg:ChiefExecutiveOfficerAndChiefFinancialOfficerMember 2022-03-31 0001652539susg:InvestorRelationsConsultingAgreementMember 2022-03-31 0001652539susg:AstoriaOrganicMattersLtdMember 2022-01-01 2022-03-31 0001652539susg:LandLeaseMember 2022-03-31 0001652539srt:ChiefExecutiveOfficerMembersusg:ConsultingAgreementsMember 2022-01-01 2022-03-31 0001652539srt:ChiefFinancialOfficerMembersusg:ConsultingAgreementsMember 2022-01-01 2022-03-31 0001652539susg:HauteIncMember 2022-01-01 2022-03-31 0001652539susg:LandLeaseMember 2022-01-01 2022-03-31 0001652539us-gaap:LetterOfCreditMembersusg:MinistryOfEnvironmentConservationAndParksMember 2022-03-31 0001652539us-gaap:LetterOfCreditMembersusg:MinistryOfEnvironmentConservationAndParksMember 2022-01-01 2022-03-31 0001652539us-gaap:LetterOfCreditMembersusg:MinistryOfEnvironmentConservationAndParksMember 2021-01-01 2021-12-31 0001652539susg:HauteIncMember 2021-11-01 2021-11-05 0001652539susg:ConsultingAgreementsMember 2021-11-01 2021-11-30 0001652539susg:ConsultingForNasdaqListingMember 2021-02-03 0001652539 2021-01-01 2021-03-31 0001652539susg:CapitalLeaseMember 2022-03-31 0001652539susg:CapitalLeaseBMember 2022-03-31 0001652539susg:CapitalLeaseMember 2022-01-01 2022-03-31 0001652539susg:FirstTwoMonthlyInstalmentsMembersusg:CapitalLeaseMember 2022-01-01 2022-03-31 0001652539susg:CapitalLeaseBMember 2022-01-01 2022-03-31 0001652539susg:FirstTwoMonthlyInstalmentsMembersusg:CapitalLeaseBMember 2022-01-01 2022-03-31 0001652539susg:HauteIncMember 2022-01-01 2022-03-31 0001652539susg:HauteIncMember 2021-01-01 2021-03-31 0001652539susg:TravellersInternationalIncMember 2022-01-01 2022-03-31 0001652539susg:TravellersInternationalIncMember 2021-01-01 2021-03-31 0001652539srt:ChiefFinancialOfficerMember 2022-01-01 2022-03-31 0001652539srt:ChiefFinancialOfficerMember 2021-01-01 2021-03-31 0001652539srt:DirectorMember 2022-01-01 2022-03-31 0001652539srt:DirectorMember 2021-01-01 2021-03-31 0001652539srt:DirectorMember 2021-12-31 0001652539srt:ChiefExecutiveOfficerMember 2022-01-01 2022-03-31 0001652539susg:TravellersInternationalIncMember 2022-03-31 0001652539srt:DirectorMember 2022-03-31 0001652539susg:TravellersInternationalIncMember 2021-01-01 2021-12-31 0001652539susg:TravellersInternationalIncMember 2021-12-31 0001652539srt:ChiefFinancialOfficerMember 2022-03-31 0001652539susg:ConsultingAgreementMembersrt:ChiefExecutiveOfficerMember 2021-01-01 2021-01-01 0001652539susg:ConsultingAgreementMembersrt:ChiefExecutiveOfficerMember 2022-01-01 2022-01-01 0001652539susg:ConsultingAgreementMembersrt:ChiefExecutiveOfficerMember 2021-01-01 0001652539susg:ConsultingAgreementMembersrt:ChiefFinancialOfficerMember 2021-01-01 2021-01-01 0001652539susg:ConsultingAgreementMembersrt:ChiefFinancialOfficerMember 2021-01-01 0001652539susg:ConsultingAgreementMembersrt:ChiefFinancialOfficerMember 2022-01-01 2022-01-01 0001652539susg:ConsultingAgreementMembersrt:ChiefFinancialOfficerMember 2022-01-01 0001652539 2021-01-01 2021-12-31 0001652539 2020-12-31 0001652539susg:WagesAndBenefitsMember 2022-01-01 2022-03-31 0001652539susg:WagesAndBenefitsMember 2021-01-01 2021-03-31 0001652539susg:RepairsAndMaintenanceMember 2022-01-01 2022-03-31 0001652539susg:RepairsAndMaintenanceMember 2021-01-01 2021-03-31 0001652539us-gaap:PublicUtilitiesMember 2022-01-01 2022-03-31 0001652539us-gaap:PublicUtilitiesMember 2021-01-01 2021-03-31 0001652539susg:OutsideContractorsMember 2022-01-01 2022-03-31 0001652539susg:OutsideContractorsMember 2021-01-01 2021-03-31 0001652539susg:CostOfGoodsMember 2022-01-01 2022-03-31 0001652539susg:CostOfGoodsMember 2021-01-01 2021-03-31 0001652539 2021-03-31 0001652539us-gaap:SubsequentEventMember 2022-04-01 2022-04-21 0001652539us-gaap:SubsequentEventMember 2022-04-21 0001652539susg:ConvertiblePromissoryNotesDated2021InvestorNotesMemberus-gaap:SubsequentEventMember 2022-05-01 2022-05-05 0001652539susg:ConvertiblePromissoryNotesDated2021InvestorNotesMemberus-gaap:SubsequentEventMember 2022-05-05 0001652539susg:ConvertiblePromissoryNotesDatedAugust2021InvestorNotesMemberus-gaap:SubsequentEventMember 2022-05-01 2022-05-05 0001652539susg:ConvertiblePromissoryNotesDatedAugust2021InvestorNotesMemberus-gaap:SubsequentEventMember 2022-05-05 0001652539us-gaap:SubsequentEventMember 2022-05-01 2022-05-06 0001652539susg:ConvertiblePromissoryNotesDatedOctober2021AndMarch2022InvestorNotesMember 2022-05-01 2022-05-11 0001652539susg:ConvertiblePromissoryNotesDatedOctober2021AndMarch2022InvestorNotesMember 2022-05-11 0001652539susg:ConvertiblePromissoryNotesDatedMarch2022InvestorNotesMember 2022-05-01 2022-05-13 0001652539susg:ConvertiblePromissoryNotesDatedMarch2022InvestorNotesMember 2022-05-13 0001652539susg:ConvertiblePromissoryNotesDatedMarch312021Member 2022-03-31 0001652539susg:ConvertiblePromissoryNoteDatedApril12021Member 2022-03-31 0001652539susg:ConvertiblePromissoryNoteDatedJune162021Member 2022-03-31 0001652539susg:ConvertiblePromissoryNoteDated26August2021Member 2022-03-31 0001652539susg:ConvertiblePromissoryNotesDatedDecember22021Member 2021-12-01 2021-12-02 0001652539susg:ConvertiblePromissoryNotesDatedMarch312021Member 2021-12-31 0001652539susg:ConvertiblePromissoryNoteDatedApril12021Member 2021-12-31 0001652539susg:ConvertiblePromissoryNoteDatedJune162021Member 2021-12-31 0001652539susg:ConvertiblePromissoryNoteDated26August2021Member 2021-12-31 0001652539susg:ConvertiblePromissoryNotesDatedOctober28And292021Member 2022-03-31 0001652539susg:ConvertiblePromissoryNotesDatedOctober28And292021Member 2021-12-31 0001652539us-gaap:ConvertibleDebtMember 2022-01-01 2022-03-31 0001652539susg:ConvertiblePromissoryNotesDatedOctober28And292021Membersusg:SecuritiesPurchaseAgreementsMember 2021-10-01 2021-10-29 0001652539susg:ConvertiblePromissoryNotesDatedOctober28And292021Membersusg:SecuritiesPurchaseAgreementsMember 2021-10-29 0001652539susg:ConvertiblePromissoryNotesDatedDecember22021Member 2022-03-31 0001652539susg:ConvertiblePromissoryNotesDatedDecember22021Member 2021-12-31 0001652539susg:ConvertiblePromissoryNotesDatedMarch3And72022Member 2022-03-31 0001652539susg:ConvertiblePromissoryNoteDatedApril12021Membersusg:SecuritiesPurchaseAgreementsMember 2021-04-01 0001652539susg:ConvertiblePromissoryNoteDatedApril12021Membersusg:SecuritiesPurchaseAgreementsMember 2021-03-01 2021-04-02 0001652539susg:ConvertiblePromissoryNoteDatedJune162021Membersusg:SecuritiesPurchaseAgreementsMember 2021-06-01 2021-06-16 0001652539susg:ConvertiblePromissoryNoteDatedJune162021Membersusg:SecuritiesPurchaseAgreementsMember 2021-06-16 0001652539susg:ConvertiblePromissoryNotesDatedMarch312021Membersusg:SecuritiesPurchaseAgreementsMember 2021-03-31 0001652539susg:ConvertiblePromissoryNotesDatedMarch312021Membersusg:SecuritiesPurchaseAgreementsMember 2021-03-01 2021-03-31 0001652539susg:ConvertiblePromissoryNotesDatedMarch3And72022Member 2022-03-07 0001652539susg:ConvertiblePromissoryNoteDated26August2021Membersusg:SecuritiesPurchaseAgreementsMember 2021-08-01 2021-08-26 0001652539susg:ConvertiblePromissoryNoteDated26August2021Membersusg:SecuritiesPurchaseAgreementsMember 2021-08-26 0001652539susg:ConvertiblePromissoryNotes2019Member 2021-01-01 2021-03-31 0001652539susg:ConvertiblePromissoryNotesDatedMarch312021Membersusg:SecuritiesPurchaseAgreementsMember 2021-11-01 2021-11-22 0001652539susg:ConvertiblePromissoryNoteDatedApril12021Membersusg:SecuritiesPurchaseAgreementsMember 2022-01-01 2022-01-17 0001652539susg:ConvertiblePromissoryNoteDatedApril12021Membersusg:SecuritiesPurchaseAgreementsMember 2021-12-09 0001652539susg:ConvertiblePromissoryNoteDatedApril12021Membersusg:SecuritiesPurchaseAgreementsMember 2022-01-17 0001652539susg:ConvertiblePromissoryNotesDatedDecember22021Member 2021-12-02 0001652539susg:ConvertiblePromissoryNotesDatedMarch3And72022Member 2022-03-01 2022-03-07 0001652539susg:ConvertiblePromissoryNotesDatedMarch3And72022Member 2022-03-01 2022-03-11 0001652539srt:MinimumMembersusg:ConvertiblePromissoryNotes2019Member 2021-03-31 0001652539srt:MaximumMembersusg:ConvertiblePromissoryNotes2019Member 2021-03-31 0001652539susg:ConvertiblePromissoryNotesDatedMarch312021Membersusg:SecuritiesPurchaseAgreementsMember 2021-12-02 0001652539susg:ConvertiblePromissoryNotesDatedMarch312021Membersusg:SecuritiesPurchaseAgreementsMember 2022-03-31 0001652539susg:ConvertiblePromissoryNoteDated26August2021Membersusg:SecuritiesPurchaseAgreementsMember 2022-03-01 2022-03-07 0001652539srt:ScenarioPreviouslyReportedMember 2021-03-31 0001652539srt:RestatementAdjustmentMember 2021-03-31 0001652539susg:RestatedMember 2021-03-31 0001652539srt:ScenarioPreviouslyReportedMember 2021-01-01 2021-03-31 0001652539srt:RestatementAdjustmentMember 2021-01-01 2021-03-31 0001652539susg:RestatedMember 2021-01-01 2021-03-31 0001652539us-gaap:LandMember 2022-03-31 0001652539us-gaap:LandMember 2021-12-31 0001652539us-gaap:ManufacturingFacilityMember 2022-03-31 0001652539us-gaap:ManufacturingFacilityMember 2021-12-31 0001652539susg:GoreCoverSystemMember 2022-03-31 0001652539susg:GoreCoverSystemMember 2021-12-31 0001652539susg:DrivewayAndPavingMember 2022-03-31 0001652539susg:DrivewayAndPavingMember 2021-12-31 0001652539us-gaap:MachineryAndEquipmentMember 2022-03-31 0001652539us-gaap:MachineryAndEquipmentMember 2021-12-31 0001652539us-gaap:EquipmentMember 2022-03-31 0001652539us-gaap:EquipmentMember 2021-12-31 0001652539susg:OfficerTrailerMember 2022-03-31 0001652539susg:OfficerTrailerMember 2021-12-31 0001652539us-gaap:ContainersMember 2022-03-31 0001652539us-gaap:ContainersMember 2021-12-31 0001652539us-gaap:ComputerEquipmentMember 2022-03-31 0001652539us-gaap:ComputerEquipmentMember 2021-12-31 0001652539us-gaap:VehiclesMember 2022-03-31 0001652539us-gaap:VehiclesMember 2021-12-31 0001652539susg:SignageMember 2022-03-31 0001652539susg:SignageMember 2021-12-31 0001652539us-gaap:AssetUnderConstructionMember 2022-03-31 0001652539us-gaap:AssetUnderConstructionMember 2021-08-01 2021-08-17 0001652539us-gaap:LandMember 2021-08-01 2021-08-17 0001652539us-gaap:LandAndBuildingMember 2021-08-01 2021-08-17 0001652539us-gaap:AssetUnderConstructionMember 2021-12-31 0001652539us-gaap:AssetUnderConstructionMember 2021-08-17 0001652539srt:ChiefExecutiveOfficerMember 2021-01-02 2021-01-04 0001652539srt:ChiefFinancialOfficerMember 2021-01-02 2021-01-04 0001652539 2021-01-02 2021-01-04 0001652539 2021-01-01 2021-01-04 0001652539srt:ChiefExecutiveOfficerMembersusg:ConsultingAgreementsMember 2022-02-01 2022-02-07 0001652539srt:ChiefFinancialOfficerMembersusg:ConsultingAgreementsMember 2022-02-01 2022-02-07 0001652539susg:ConsultingAgreementsMember 2021-01-02 2021-01-04 0001652539 2022-03-01 2022-03-22 0001652539 2022-01-01 2022-01-17 0001652539 2022-02-01 2022-02-07 0001652539us-gaap:PrivatePlacementMember 2021-01-01 2021-12-31 0001652539srt:MinimumMemberus-gaap:PrivatePlacementMember 2021-12-31 0001652539srt:MaximumMemberus-gaap:PrivatePlacementMember 2021-12-31 0001652539srt:MinimumMember 2021-12-31 0001652539srt:MaximumMember 2021-12-31 0001652539srt:MinimumMember 2021-03-31 0001652539srt:MaximumMember 2021-03-31 0001652539susg:FormerChiefExecutiveOfficerMember 2021-12-01 2021-12-29 0001652539susg:ConvertiblePromissoryNoteDatedApril12021Member 2022-01-01 2022-03-31 0001652539susg:ConvertiblePromissoryNotesDatedJune2021InvestorNoteMember 2022-01-01 2022-03-31 0001652539susg:ConvertiblePromissoryNotesDatedAugust2021InvestorNotesMember 2022-01-01 2022-03-31 0001652539susg:TwoConsultantMembersusg:ConvertiblePromissoryNotesDatedOctomber2021InvestorNoteMember 2021-10-28 2021-10-29 0001652539 2021-12-01 2021-12-02 0001652539susg:ConvertiblePromissoryNotesDated2021InvestorNotesMember 2021-01-01 2021-03-31 0001652539susg:ConsultingAgreementsMember 2022-01-01 2022-03-31 0001652539 2022-02-07 0001652539susg:CreditFacilityMember 2022-01-01 2022-03-31 0001652539susg:CreditFacilityBMember 2022-01-01 2022-03-31 0001652539susg:CreditFacilityMembersrt:PresidentMember 2017-02-02 0001652539susg:CreditFacilityMembersrt:ChiefExecutiveOfficerMember 2017-02-02 0001652539susg:MortgagePayableMember 2022-01-01 2022-03-31 0001652539susg:MortgagePayableMember 2022-03-31 0001652539susg:CanadaEmergencyBusinessAccountMember 2022-01-01 2022-03-31 0001652539susg:CorporateTermLoansMember 2021-04-01 2021-04-08 0001652539susg:CorporateTermLoansMember 2021-04-08 0001652539susg:MortgagePayableMember 2021-08-01 2021-08-13 0001652539susg:MortgagePayableMember 2021-08-17 0001652539us-gaap:CorporateDebtSecuritiesMember 2017-09-13 0001652539us-gaap:CorporateDebtSecuritiesMember 2017-09-01 2017-09-13 0001652539susg:CreditFacilityMember 2022-03-31 0001652539susg:CreditFacilityBMember 2022-03-31 0001652539susg:CreditFacilityCMember 2022-03-31 0001652539susg:MortgagePayableTwoMember 2022-03-31 0001652539susg:CanadaEmergencyBusinessAccountMember 2022-03-31 0001652539susg:CorporateTermLoansMember 2022-03-31 0001652539susg:CreditFacilityMember 2021-12-31 0001652539susg:CreditFacilityBMember 2021-12-31 0001652539susg:CreditFacilityCMember 2021-12-31 0001652539susg:MortgagePayableMember 2021-12-31 0001652539susg:MortgagePayableTwoMember 2021-12-31 0001652539susg:CanadaEmergencyBusinessAccountMember 2021-12-31 0001652539susg:CorporateTermLoansMember 2021-12-31 0001652539us-gaap:LetterOfCreditMember 2021-11-15 0001652539susg:CreditFacilityBMember 2017-06-15 0001652539us-gaap:CorporateDebtSecuritiesMember 2022-01-01 2022-03-31 0001652539us-gaap:CorporateDebtSecuritiesMember 2021-01-01 2021-03-31 0001652539us-gaap:CorporateDebtSecuritiesMember 2022-03-31 0001652539us-gaap:CorporateDebtSecuritiesMember 2021-12-31 0001652539susg:MortgagePayableMember 2021-03-31 0001652539susg:MortgagePayableMember 2021-01-01 2021-03-31 0001652539susg:CorporateTermLoansMember 2022-01-01 2022-03-31 0001652539 2022-05-20 0001652539us-gaap:ComprehensiveIncomeMember 2021-12-31 0001652539us-gaap:RetainedEarningsMember 2021-12-31 0001652539susg:SharesToBeIssuedMember 2021-12-31 0001652539us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001652539us-gaap:CommonStockMember 2021-12-31 0001652539us-gaap:CommonStockMember 2022-01-01 2022-03-31 0001652539us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-03-31 0001652539us-gaap:ComprehensiveIncomeMember 2022-01-01 2022-03-31 0001652539us-gaap:RetainedEarningsMember 2022-01-01 2022-03-31 0001652539us-gaap:ComprehensiveIncomeMember 2022-03-31 0001652539us-gaap:RetainedEarningsMember 2022-03-31 0001652539us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001652539us-gaap:CommonStockMember 2022-03-31 0001652539us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001652539us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001652539us-gaap:ComprehensiveIncomeMember 2020-12-31 0001652539us-gaap:RetainedEarningsMember 2020-12-31 0001652539us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001652539us-gaap:CommonStockMember 2020-12-31 0001652539us-gaap:ComprehensiveIncomeMember 2021-01-01 2021-03-31 0001652539us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001652539us-gaap:ComprehensiveIncomeMember 2021-03-31 0001652539us-gaap:RetainedEarningsMember 2021-03-31 0001652539us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001652539us-gaap:CommonStockMember 2021-03-31 0001652539susg:SharesToBeIssuedMember 2022-01-01 2022-03-31 0001652539susg:SharesToBeIssuedMember 2021-01-01 2021-03-31 0001652539susg:SharesToBeIssuedMember 2022-03-31 0001652539susg:SharesToBeIssuedMember 2020-12-31 0001652539susg:StockCompensationReserveMember 2021-12-31 0001652539us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001652539us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001652539us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001652539us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember 2022-01-01 2022-03-31 0001652539us-gaap:MeasurementInputDefaultRateMember 2022-03-31 0001652539srt:MinimumMemberus-gaap:MeasurementInputPriceVolatilityMember 2022-03-31 0001652539srt:MaximumMemberus-gaap:MeasurementInputPriceVolatilityMember 2022-03-31 0001652539srt:MinimumMemberus-gaap:MeasurementInputDefaultRateMember 2022-03-31 0001652539srt:MaximumMemberus-gaap:MeasurementInputDefaultRateMember 2022-03-31 0001652539us-gaap:MeasurementInputCreditSpreadMember 2022-01-01 2022-03-31 0001652539srt:MinimumMemberus-gaap:MeasurementInputCreditSpreadMember 2022-03-31 0001652539srt:MaximumMemberus-gaap:MeasurementInputCreditSpreadMember 2022-03-31 0001652539susg:InvestorMarchTwoZeroOneNineMember 2021-01-01 2021-03-31 0001652539susg:AccruedInterestMembersusg:InvestorOfMayJulyOctoberTwoZeroOneNineMember 2021-01-01 2021-03-31 iso4217:CAD susg:Customer susg:Day susg:Security iso4217:USD iso4217:USDxbrli:shares xbrli:pure xbrli:shares

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549

FORM 10-Q 

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________to ________________

Commission file number 000-56024 

SUSGLOBAL ENERGY CORP. 
(Exact name of registrant as specified in its charter)

Delaware  38-4039116
(State or other jurisdiction of incorporation or organization) (I. R. S. Employer Identification No.)
   
200 Davenport Road  M5R 1J2 
Toronto, ON   
(Address of principal executive offices) (Zip Code)

416-223-8500 
(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.
Yes [X]     No [  ]

1

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).
Yes [X]     No [  ]

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 [  ]
Non-accelerated filer [X] Smaller reporting company [X]
  Emerging growth company [X]

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. [X]

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).
Yes [  ]    No [X]

The number of shares of the registrant's common stock outstanding as of May 20, 2022 was 101,254,466 shares.

2

 
SusGlobal Energy Corp.
INDEX TO FORM 10-Q
For the Three-Month Periods Ended March 31, 2022 and 2021

 

Part I FINANCIAL INFORMATION  
Item 1 Financial Statements 4
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 33
Item 3 Quantitative and Qualitative Disclosures About Market Risk 51
Item 4 Controls and Procedures 51
Part II OTHER INFORMATION 52
Item 1 Legal Proceedings 52
Item 1A Risk Factors 52
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 52
Item 3 Defaults Upon Senior Securities 53
Item 4 Mine Safety Disclosures 53
Item 5 Other Information 53
Item 6 Exhibits 53
 
3

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 and 2021

(Expressed in United States Dollars)

(unaudited)

CONTENTS

Interim Condensed Consolidated Balance Sheets 5
Interim Condensed Consolidated Statements of Operations and Comprehensive Loss 6
Interim Condensed Consolidated Statements of Stockholders' Deficiency 7
Interim Condensed Consolidated Statements of Cash Flows 8
Notes to the Interim Condensed Consolidated Financial Statements 9-32
 
4

Interim Condensed Consolidated Balance Sheets
As at March 31, 2022 and December 31, 2021
(Expressed in United States Dollars)
(unaudited)
 
    March 31,     December 31,  
    2022     2021  
ASSETS            
Current Assets            
Cash $ 36,058   $ 36,033  
Trade receivables   47,380     59,665  
Government remittances receivable   82,028     13,265  
Inventory   16,806     20,582  
Prepaid expenses and deposits   756,936     163,343  
Total Current Assets   939,208     292,888  
             
Long-lived Assets, net (note 6)   9,027,664     8,278,833  
Long-Term Assets   9,027,664     8,278,833  
Total Assets $ 9,966,872   $ 8,571,721  
LIABILITIES AND STOCKHOLDERS' DEFICIENCY            
Current Liabilities            
Accounts payable (note 7) $ 1,922,316   $ 1,085,235  
Government remittances payable   285,573     262,047  
Accrued liabilities (notes 7, 8, 9, 10 and 13)   1,127,852     942,241  
Current portion of long-term debt (note 8)   7,876,242     7,765,421  
Current portion of obligations under capital lease (note 9)   89,953     91,047  
Convertible promissory notes (note 10)   6,063,926     3,798,516  
Total Current Liabilities   17,365,862     13,944,507  
Long-term debt (note 8)   1,767,933     1,752,271  
Obligations under capital lease (note 9)   116,670     130,086  
Deferred tax liability   75,003     73,925  
Total Long-term Liabilities   1,959,606     1,956,282  
Total Liabilities   19,325,468     15,900,789  
             
Stockholders' Deficiency            
Preferred stock, $.0001 par value, 10,000,000 authorized, none issued and outstanding Common stock, $.0001 par value, 150,000,000 authorized, 97,208,547 (2021- 92,983,547) shares issued and outstanding (note 12)   9,725     9,302  
Additional paid-in capital   12,267,938     11,272,599  
Shares to be issued   40,100     59,640  
Accumulated deficit   (21,197,875 )   (18,334,649 )
Accumulated other comprehensive loss   (478,484 )   (335,960 )
             
Stockholders' deficiency   (9,358,596 )   (7,329,068 )
             
Total Liabilities and Stockholders' Deficiency $ 9,966,872   $ 8,571,721  
             
Going concern (note 2)            
Commitments (note 13)            
Subsequent events (note 17)            

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-month periods ended March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)
 
    For the three-month periods ended  
    March 31, 2022     March 31, 2021 (correction-see note 5)  
Revenue $ 144,470   $ 192,660  
             
Cost of Sales            
Opening inventory   20,582     24,740  
Depreciation   116,203     136,560  
Direct wages and benefits   52,088     71,059  
Equipment rental, delivery, fuel and repairs and maintenance   170,188     105,893  
Utilities   38,812     18,263  
Outside contractors   24,568     -  
    422,441     356,515  
Less: closing inventory   (16,806 )   (45,923 )
Total cost of sales   405,635     310,592  
             
Gross (loss)   (261,165 )   (117,932 )
             
Operating expenses            
Management compensation-stock- based            
compensation (notes 7 and 12)   60,113     54,259  
Management compensation-fees (note 7)   118,469     90,049  
Marketing   376,488     45,727  
Professional fees   261,652     69,402  
Interest expense (notes 7, 8, 9 and 10)   191,243     163,874  
Office and administration (note 6)   60,577     75,215  
Rent and occupancy (note 7)   50,925     32,339  
Insurance   28,838     15,002  
Filing fees   54,175     18,959  
Amortization of financing costs   33,532     13,578  
Directors' compensation (note 7)   14,809     10,664  
Stock-based compensation (note 12)   130,512     8,073  
Repairs and maintenance   2,329     13,189  
Foreign exchange (income)   (77,749 )   (12,118 )
Total operating expenses   1,305,913     598,212  
             
Net loss from operating activities   (1,567,078 )   (716,144  
Other (expense) income (note 14)   (1,296,148 )   323,612  
Net loss   (2,863,226 )   (392,532 )
Other comprehensive (loss)            
Foreign exchange (loss)   (142,524 )   (61,192 )
             
Comprehensive loss $ (3,005,750 ) $ (453,724 )
             
Net loss per share-basic and diluted $ (0.03 ) $ (0.01 )
             
Weighted average number of common shares outstanding- basic and diluted   95,990,936     86,818,361  

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-month periods ended March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)
 
    Number of
Shares
    Common
Shares
    Additional
Paid- in
Capital
    Shares
to be
Issued
    Stock
Compensation
Reserve
    Accumulated
Deficit
    Accumulated
Other
Comprehensive
Income (Loss)
    Stockholders'
Deficiency
 
Balance-December 31, 2021   92,983,547     9,302     11,272,599     59,640     -     (18,334,649 )   (335,960 )   (7,329,068 )
Shares issued for proceeds previously received   230,000     23     48,967     (48,990 )   -     -     -     -  
Shares issued to officers   1,050,000     105     240,345     -     -     -     -     240,450  
Shares issued to employee   10,000     1     1,989     -     -     -     -     1,990  
Shares issued for professional services   895,000     90     223,820           -     -     -     223,910  
Shares issued on conversion of debt to equity   2,000,000     200     463,662           -     -     -     463,862  
Shares issued on private placement   40,000     4     16,556           -     -     -     16,560  
Shares yet to be issued   -     -     -     29,450     -     -     -     29,450  
Other comprehensive income   -     -     -     -     -     -     (142,524 )   (142,524 )
Net loss   -     -     -     -     -     (2,863,226 )   -     (2,863,226 )
Balance-March 31, 2022   97,208,547   $ 9,725   $ 12,267,938   $ 40,100   $ -   $ (21,197,875 ) $ (478,484 ) $ (9,358,596 )
                                              (correction-see note 5)  
Balance-December 31, 2020   82,860,619   $ 8,288   $ 9,045,187   $ 8,580   $ -   $ (13,468,794 ) $ (354,211 ) $ (4,760,950 )
Shares issued for proceeds previously received   400,000     40     8,540     (8,580 )   -     -     -     -  
Shares issued to officers   1,050,000     105     216,930     -     -     -     -     217,035  
Shares issued on conversion of related party debt and accounts payable to equity   1,005,728     100     285,544     -     -     -     -     285,644  
Shares issued for conversion of debt to equity   3,175,124     318     713,398     -     -     -     -     713,716  
Shares issued for professional services   63,000     6     24,213     -     -     -     -     24,219  
Shares issued on private placement   630,480     63     157,557     -     -     -     -     157,620  
Other comprehensive loss   -     -     -     -     -     -     (61,192     (61,192  
Net loss   -     -     -     -     -     (392,532 )   -     (392,532 )
Balance-March 31, 2021   89,184,951   $ 8,920   $ 10,451,369   $ -   $ -   $ (13,861,326 ) $ (415,403 ) $ (3,816,440 )

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

7

 

SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Cash Flows
For the three-month periods ended March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)
 
    For the three-month period ended
March 31, 2022
    For the three-month period ended
March 31, 2021
(correction-see note 5)
 
Cash flows from operating activities            
Net loss $ (2,863,226 ) $ (392,532 )
Adjustments for:            
Depreciation   116,529     137,751  
Amortization of intangible assets   -     979  
Non-cash professional fees on conversion of debt   -     275  
Non-cash interest expense on conversion of debt   -     (32,444 )
Amortization of financing fees   33,532     13,578  
Stock-based compensation   190,625     62,332  
Loss on revaluation of convertible promissory notes   1,296,148     81,197  
Gain on forgiveness of convertible promissory notes and accrued interest   -     (359,460 )
Gain on disposal of long-lived assets   -     (45,349 )
Changes in non-cash working capital:            
Trade receivables   12,983     116,589  
Government remittances receivable   (67,671 )   (2,027 )
Other receivables   -     (52,208 )
Inventory   4,022     (20,735 )
Prepaid expenses and deposits   (295,664 )   (165,959 )
Deferred assets   -     3,916  
Accounts payable   800,629     104,781  
Government remittances payable   19,447     27,166  
Accrued liabilities   169,619     89,613  
Deferred revenue   -     (2,080 )
Net cash used in operating activities   (583,027 )   (434,617 )
Cash flows from investing activities            
Purchase of intangible assets   -     (3,593 )
Proceeds on disposal of long-lived assets   -     47,394  
Adjustments (purchase) of long-lived assets   (736,421 )   45,475  
Net cash provided by (used in) investing activities   (736,421 )   89,276  
Cash flows from financing activities            
Repayments of advance   -     (15,548 )
Repayment/advance of long-term debt   (45,647 )   (15,217 )
Repayments of obligations under capital lease   (17,502 )   (25,393 )
Advances on convertible promissory notes (ii)   1,425,000     245,000  
Repayment of convertible promissory notes   (42,660 )   (50,000 )
Advances of loans payable to related parties(i)   28,828     206,654  
Repayment of loans payable to related parties   (28,828 )   (15,798 )
Proceeds on private placement   16,560     157,620  
Net cash provided by financing activities   1,335,751     487,318  
Effect of exchange rate on cash   (16,278 )   18,564  
Increase (decrease) in cash   25     160,541  
Cash and cash equivalents-beginning of period   36,033     6,457  
             
Cash and cash equivalents -end of period $ 36,058   $ 166,998  
Supplemental Cash Flow Disclosure:            
Interest paid $ 207,548   $ 104,705  
 
(i) Refer to note 10, convertible promissory notes, for the issuance of capital stock on the conversion of debt
(ii) Refer to note 12, for the issuance of capital stock on the conversion of debt.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

8

SusGlobal Energy Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(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 $2,863,226 (2021-$392,532) for the three months ended March 31, 2022 and as at that date had a working capital deficit of $16,426,654 (December 31, 2021-$13,651,619) and an accumulated deficit of $21,197,875 (December 31, 2021-$18,334,649) and expects to incur further losses in the development of its business.

9

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

2. Going Concern, (continued)

On February 18, 2021, 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. Management continues discussions with equity investors to re-finance its remaining obligations to PACE, and repay other creditors and has had discussions with the appropriate party to extend the repayment date on the 1st mortgage which currently matures September 1, 2022. One of the Company's significant customer contracts expired at the end of the prior year and one customer contract was terminated by the Company at the end of this year's third quarter. The Company is also anticipating a successful underwritten offering in connection with its filed registration statement although there can be no assurance that the underwritten offering will be completed.

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 PACE and its other 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.

Beginning in March 2020 the Governments of Canada and Ontario, as well as foreign governments, instituted emergency measures as a result of the novel strain of coronavirus ("COVID-19"). The virus has had a major impact on Canadian and international securities and currency markets and consumer activity which may impact the Company's financial position, its results of operations and its cash flows significantly. The situation is constantly evolving, however, so the extent to which the COVID-19 outbreak will impact businesses and the economy is highly uncertain and cannot be predicted. Accordingly, the Company cannot predict the extent to which its financial position, results of operations and cash flows will be affected in the future.

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, 2021 and 2020 and their accompanying notes.

10

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

4. Financial Instruments

The carrying value of the Company's financial instruments, such as cash, 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 $7,837,423 (C$9,793,106) (December 31,2021-$7,727,628; C$9,796,689).

Credit risk is the risk of loss associated with a counterparty's inability to perform its payment obligations. As at March 31, 2022, the Company's credit risk is primarily attributable to cash and trade receivables. As at March 31, 2022, the Company's cash was held with reputable Canadian chartered banks, a credit union 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 are inherent in accounts receivable. As at March 31, 2022, the allowance for doubtful accounts was $nil (C$nil) (December 31, 2021-$nil; C$nil).

As at March 31, 2022, the Company is exposed to concentration risk as it had four customers (December 31, 2021-five customers) representing greater than 5% of total trade receivables and three customers (December 31, 2021-five customers) represented 90% (December 31, 2021-74%) 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 67% (22% and 45%) (March 31, 2021-82%; 39%, 26% and 17%) of total 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 refinance its obligations to PACE and repay other creditors. Refer also to going concern, note 2.

11

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

4. Financial Instruments, (continued)

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, repay PACE for all of its outstanding obligations by September 2022 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 March 31, 2022, $181,345, net monetary assets (December 31, 2021-$175,790, net monetary liabilities) of the Company's net monetary assets were denominated in $. The Company has not entered into any hedging transactions to reduce the exposure to currency risk.

5. Correction for Fair Value Option Election

Subsequent to the issuance of our Quarterly Report on Form 10-Q for the period ended March 31, 2021, we identified an error in our historical financial statements related to the measurement of convertible promissory notes. The Company elected the fair value option to account for certain of its convertible promissory notes and should have recorded the convertible promissory notes subsequently at fair value instead of amortized cost.

In accordance with FASB Accounting Standards Codification 250, Accounting Changes and Error Corrections, we evaluated the materiality of the error from both a quantitative and qualitative perspective, and concluded that the error was immaterial to our prior period interim condensed consolidated financial statements. Since the error was not material, no amendments to previously filed interim reports are required. Consequently, we have adjusted for these errors by revising our historical Interim Condensed Consolidated Financial Statements presented herein.

The effects of the corrections to each of the individual affected line items were as follows:

Interim Condensed Consolidated Balance Sheets
    March 31,     Adjustments     March 31,     Notes  
    2021           2021        
    As Previously           As        
    Reported           Adjusted        
    $     $     $        
                         
Convertible promissory notes   479,000     152,197     631,197     (a)  
Total Current Liabilities   9,432,847     152,197     9,585,044     (a)  
Total Liabilities   9,772,324     152,197     9,924,521     (a)  
Shares to be issued   66,000     (66,000 )   -     (b)  
Accumulated deficit   (13,775,129 )   (86,197 )   (13,861,326 )   (c)  
Stockholders' deficiency   (3,664,243 )   (152,197 )   (3,816,440 )   (a)  
Total Liabilities and Stockholders' Deficiency   6,108,081     -     6,108,081        
12

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

5. Correction for Fair Value Option Election, (continued)

Interim Condensed Statements of Operations and Comprehensive Loss

    March 31,     Adjustments     March 31,     Notes  
    2021           2021        
    As Previously           As        
    Reported           Adjusted        
    $     $     $        
                         
Professional fees   64,402     5,000     69,402     (c)  
Total operating expenses   593,212     5,000     598,212     (c)  
Net Loss From Operating Activities   (711,144 )   (5,000 )   (716,144 )   (c)  
Other income   404,809     (81,197 )   323,612     (c)  
Net Loss   (306,335 )   (86,197 )   (392,532 )   (c)  

The adjustments did not have an impact on loss per share, basic and diluted, due to rounding.

 

 

         

 

       

Interim Condensed Consolidated Statements of Cash Flows

    March 31,     Adjustments     March 31,     Notes  
    2021           2021        
    As Previously           As        
    Reported           Adjusted        
    $     $     $        
                         
Cash flows from operating activities                        
Net Loss   (306,335 )   (86,197 )   (392,532 )   (c)  
Adjustments for:                        
Loss on revaluation   -     81,197     81,197     (c)  
Net cash used in operating activities   (429,617 )   (5,000 )   (434,617 )   (c)  

(a) The Company elected fair the fair value option to account for its convertible promissory notes issued in 2021. In accordance with ASC 825, the convertible promissory notes are mark-to-market at each reporting date with changes in fair value recorded as a component of other (expense) income. As a result, there was a mark-to-market adjustment of $152,197 in the interim condensed consolidated statements of operations and comprehensive loss as of March 31, 2021.

(b) 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. The previously recognized amount of $66,000 in shares to be issued was adjusted to $nil.

(c)  The transaction costs of $5,000 were previously capitalized against the convertible promissory note. The transaction costs were expensed, and a day one revaluation loss of $81,197 was recognized.

13

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

 

6. Long-lived Assets, net

          March 31,           December 31,  
          2022           2021  
    Cost     Accumulated
depreciation
    Net book value     Net book value  
                         
Land $ 3,429,638   $ -   $ 3,429,638   $ 3,380,356  
Property under construction   2,648,438     -     2,648,438     1,874,892  
Composting buildings   2,426,605     652,792     1,773,813     1,784,200  
Gore cover system   1,126,840     484,832     642,008     660,549  
Driveway and paving   370,939     134,774     236,165     240,083  
Machinery and equipment   416,536     360,023     56,513     64,282  
Equipment under capital lease   509,871     396,811     113,060     134,487  
Office trailer   9,604     9,604     -     -  
Vacuum trailer   6,002     4,952     1,050     1,479  
Computer equipment   7,073     7,073     -     -  
Signage   6,614     2,970     3,644     3,918  
Automotive equipment   176,193     52,858     123,335     134,587  
  $ 11,134,353   $ 2,106,689   $ 9,027,664   $ 8,278,833  
On August 17 2021, the Company acquired the Hamilton Property assets, consisting of land, a vacant building and ECAs. The total purchase price including costs of acquisition of $175,615 (C$221,680) totaled $3,590,773 (C$4,532,633). The costs of acquisition, were settled through cash payments of $119,094 (C$150,333) and the issuance of 200,000 common shares valued based on the trading price on the issuance date at $56,521 (C$71,347) to a consultant who assisted on the closing of the transaction. The issuance of common shares is also noted under capital stock, note 12, common shares issued for professional services. The purchase of the Hamilton Property was funded by cash of $396,364 (C$500,333), the issuance of 300,000 common shares to the vendor on closing, having a value based on the trading price on the issuance date of $84,781 (C$107,020), the issuance noted above of 200,000 common shares to a consultant who assisted on the closing of the transaction disclosed as part of common shares issued for professional services, under capital stock, note 12, a vendor take-back 1st mortgage of $1,584,400 (C$2,000,000) and a portion of the increased existing 1st mortgage of $1,468,686 (C$1,853,933), disclosed under note 8 (d) ii), long-term debt. The cost of the purchase price was allocated ratably over the estimated fair value of each long-lived asset acquired, land of $1,724,979 (C$2,177,442), included above under land and building $1,556,002 (C$1,964,141), described above as property under construction.

Also included under property under construction, are construction costs incurred subsequent to the acquisition in the amount of $1,097,724 (C$1,371,641).

14

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

6. Long-lived Assets, net, (continued)

Depreciation for the three-month period ended March 31, 2022, is disclosed in cost of sales in the amount of $116,203 (C$147,130) (2021-$136,560; C$172,883) and in office and administration in the amount of $326 (C$413) (2021-$1,191; C$1,508), in the interim condensed consolidated statements of operations and comprehensive loss.

7. Related Party Transactions

For three-month period ended March 31, 2022, the Company incurred $94,776 (C$120,000) (2021-$71,091; C$90,000), 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 $23,693 (C$30,000) (2021-$18,958; C$24,000) in management fees expense with the Company's chief financial officer (the "CFO"). As at March 31, 2022, unpaid remuneration and unpaid expenses in the amount of $33,533 (C$41,901) (December 31, 2021-$14,755; C$18,706) is included in accounts payable in the interim condensed consolidated balance sheets. 

For the three-month period ended March 31, 2022, the Company incurred $23,506 (C$29,762) (2021-$21,165; C$26,795) in rent expense paid under a lease agreement with Haute Inc. ("Haute"), an Ontario company controlled by the CEO.

During the three-month period ended March 31, 2022, Travellers converted a total of $ (C$) (December 31, 2021-$371,001 (C$461,620) of loans provided during the period and $ (C$) (December 31, 2021-$80,323; C$101,700) of accounts payable owing to Travellers for nil common shares (December 31, 2021-1,726,076 common shares).

In addition, during the three-month period ended March 31, 2022, the Company paid the CFO interest of $504 (C$638) on loans totaling $29,211 (C$36,000) provided to the Company and repaid during the period.

For those independent directors providing their services throughout 2022, the Company accrued directors' compensation to each director in the amount of $4,936 (C$6,250), in total, $14,808 (C$18,750) (2021-$9,874; C$12,500). Also included in directors' compensation for the three-month period ended March 31, 2022, is the audit committee chairman's fees, in the amount of $ (C$) (2021-$790; C$1,000). As at March 31, 2022, outstanding directors' compensation of $86,389 (C$107,946) (December 31, 2021-$70,358; C$89,196) 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 $24,009 (C$30,000) per month for twelve (12) months, beginning on the Effective Date, January 1, 2021, and at a rate of $32,012 (C$40,000) per month for twelve (12) months, beginning January 1, 2022. In addition, the Company agreed to grant the CEO 1,000,000 restricted shares of the Company's Common Stock, par value of $0.0001 per share (the "Common Stock") on the Effective Date, and 1,000,000 shares of Common Stock on January 1, 2022. The Company has also agreed to reimburse the CEO for certain out-of-pocket expenses incurred by the CEO.

15

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

7. Related Party Transactions, (continued)

Pursuant to the terms of the CFO's Consulting Agreement for his services as the CFO, the compensation is at a rate of $6,402 (C$8,000) per month for twelve (12) months, beginning on the Effective Date, January 1, 2021. In addition, the Company agreed to grant the CFO 50,000 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.

Pursuant to the terms of the CFO's Consulting Agreement for his services as the CFO, the compensation is at a rate of $8,003 (C$10,000) per month for twelve (12) months, beginning on the Effective Date, January 1, 2022. In addition, the Company agreed to grant the CFO 50,000 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-month period ended March 31, 2022, the Company recognized management stock-based compensation expense of $60,113 (2021-$54,259), on the common stock issued to the CEO and the CFO, 1,000,000 and 50,000 common stock, respectively, as stipulated in their executive consulting agreements, effective January 1, 2022. The total stock-based compensation on the issuance of the common stock totaled $240,450 (2021-$217,035). The portion to be expensed for the balance of the year, $180,337 (2021-$162,776 is included in prepaid expenses and deposits in the interim condensed consolidated balance sheets.

8. Long-Term Debt
      March 31, 2022     December 31, 2021  
(a) PACE Credit Facility-Due September 2, 2022 $ 753,970   $ 750,465  
(b) PACE Credit Facility-Due September 2, 2022   421,620     419,661  
(c) PACE Corporate Term Loan-Due September 13, 2022   2,558,413     2,546,536  
(d)i.) Mortgage Payable-Due September 1, 2022   4,103,420     4,010,966  
(d)ii.) Mortgage Payable-Due August 17, 2023   1,600,600     1,577,600  
(e) Canada Emergency Business Account-Due December 31, 2023   80,030     78,880  
(f) Corporate Term Loan-Due April 7, 2025   126,122     133,584  
      9,644,175     9,517,692  
Current portion   (7,876,242 )   (7,765,421 )
Long-Term portion $ 1,767,933   $ 1,752,271  

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. Management continues discussions with equity investors to re-finance its remaining obligations to PACE and repay other creditors. In addition, the existing letter of credit, in the amount of $221,548 (C$276,831) was renewed by PACE to the termination of the Company's obligations to PACE, September 2022. The Company is in the process of obtaining a letter of credit for the new financial assurance with the Ministry of the Environment, Conservation and Parks (the "MECP") in the amount of $510,301 (C$637,637).

16

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

8. Long-Term Debt, (continued)

Refer also to going concern, note 2.

The remaining PACE long-term debt was initially payable as noted below:

(a) The credit facility bears interest at the PACE base rate of 7.00% plus 1.25% per annum, currently 8.25%, is payable in monthly blended installments of principal and interest of $7,014 (C$8,764) and matures on September 2, 2022. The first and only advance on the credit facility on February 2, 2017, in the amount of $1,280,480 (C$1,600,000), is secured by a business loan general security agreement, a $1,280,480 (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.
   
(b) The credit facility advanced on June 15, 2017, in the amount of $480,180 (C$600,000), bears interest at the PACE base of 7.00% plus 1.25% per annum, currently 8.25%, is payable in monthly blended installments of principal and interest of $3,922 (C$4,901), and matures 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 $2,980,435 (C$3,724,147), bears interest at PACE base rate of 7.00% plus 1.25% per annum, currently 8.25%, is payable in monthly blended installments of principal and interest of $23,778 (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 $3,201,983 (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-month period ended March 31, 2022, $75,525 (C$95,625) (2021-$77,265; C$97,816) in interest was incurred on the PACE long-term debt. As at March 31, 2022 $18,139 (C$22,967) (December 31, 2021-$42,686; C$53,680) 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 $4,161,560 (C$5,200,000) (December 31, 2021-$4,101,760; C$5,200,000). The fourth tranche was received on August 13, 2021 in the amount of $1,520,570 (C$1,900,000) and a portion of this fourth tranche, $1,483,703 (C$1,853,933), was used to fund a portion of the purchase of the Hamilton Property, described under long-lived assets, net (note 6). 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 8.50%) and 10% per annum with a maturity date of September 1, 2022. 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.

17

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

8. Long-Term Debt, (continued)

    Financing fees on the 1st mortgage totaled $322,856 (C$403,419). As at March 31, 2022, $34,205 (C$42,740) (December 31, 2021-$33,713; C$42,740) of accrued interest is included in accrued liabilities in the consolidated balance sheets. In addition, as at March 31, 2022, there is $58,140 (C$72,648) (December 31, 2021-$90,794; C$115,104) of unamortized financing fees included in long-term debt in the consolidated balance sheets.
     
  ii) On August 17, 2021, the Company obtained a vendor take-back 1st mortgage in the amount of $1,600,600 (C$2,000,000), on the purchase of the Hamilton Property, described under long-lived assets, net (note 6). 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
     
For the three-month period ended March 31, 2022, $111,853 (C$141,622) (2021-$62,530; C$79,162) in interest was incurred on the 1st mortgages payable. As at March 31, 2022 $34,205 (C$42,740) (December 31, 2021- $33,713; 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 $80,030 (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. If paid by December 31, 2023, 33.33% ($26,676; C$33,333), previously 25%, of the loans would be forgiven. Repayment terms on the extended period are unchanged.
 
18

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

8. Long-Term Debt, (continued)

  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 $172,225 (C$218,338) plus applicable harmonized sales taxes. The purchase was financed by a bank term loan of $157,760 (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 $3,866 (C$4,901) due April 7, 2025.

For the three-month period ended March 1, 2022, $1,576 (C$1,996) in interest was incurred.

9. Obligations under Capital Lease

               

March 31,

    December 31,  
                2022     2021  
    (a)     (b)     Total     Total  
Obligations under Capital Lease $ 19,651   $ 186,972   $ 206,623   $ 221,133  
Less: current portion   (19,651 )   (70,302 )   (89,953 )   (91,047 )
Long-term portion $ -   $ 116,670   $ 116,670   $ 130,086  

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 $198,034 (C$247,450), is payable in monthly blended installments of principal and interest of $4,096 (C$5,118), plus applicable harmonized sales taxes for a period of forty-six months plus the first two monthly blended installments of $8,003 (C$10,000) plus applicable harmonized sales taxes and an option to purchase the equipment for a final payment of $19,651 (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 subsequent to March 31, 2022.

   
(b)

The lease agreement for certain equipment for the Company's organic waste processing and composting facility at a cost of $311,837 (C$389,650), is payable in monthly blended installments of principal and interest of $5,484 (C$6,852), plus applicable harmonized sales taxes for a period of fifty-nine months plus an initial deposit of $15,566 (C$19,450) plus applicable harmonized sales taxes and an option to purchase the equipment for a final payment of a nominal amount of $80 (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 6).

 

19

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

9. Obligations under Capital Lease, (continued)

Minimum lease payments as per the original terms of the obligations under capital lease are as follows:

In the nine-month period ending December 31, 2022 $ 80,075  
In the year ending December 31, 2023   65,808  
In the year ending December 31, 2024   65,808  
In the year ending December 31, 2025   5,564  
    217,255  
Less: imputed interest   (10,632 )
Total $ 206,623  


For the three-month period ended March 31, 2022, $1,760 (C$2,229) (2021-$4,903; C$5,181) in interest was incurred. As at March 31, 2022 $1,159 (C$1,448) (December 31, 2021- $800; C$999) in accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheets. As at March 31, 2022, the Company had not paid the final payout amount on the obligations under capital lease (a) and the last two monthly instalments on the obligations under capital lease (b).

10. Convertible Promissory Notes

      March 31, 2022     December 31, 2021  
               
(a) Convertible promissory note-March 31, 2021   1,021,463     553,453  
(b) Convertible promissory note-April 1, 2021   -     455,072  
(c) Convertible promissory note-June 16, 2021   448,853     460,418  
(d) Convertible promissory note-August 26, 2021   60,420     143,109  
(e) Convertible promissory notes-October 28 and 29, 2021   2,016,074     1,852,495  
(f) Convertible promissory notes-December 2, 2021   345,075     333,969  
(g) Convertible promissory notes-March 3 and 7, 2022   2,172,041        
    $ 6,063,926   $ 3,798,516  
 

a)

On March 31, 2021, the Company entered into a securities purchase agreement (the "March 2021 SPA") with one investor (the "March 2021 Investor") pursuant to which the Company issued to the March 2021 Investor one 10% unsecured convertible promissory note (the "March 2021 Investor Note") in the principal amount of $275,000. The March 2021 Investor Note includes an original issue discount of (the "OID") of $25,000. In addition, the March 31, 2021 Investor was issued 200,000 common shares immediately subsequent to the issue date. 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 of the proceeds were allocated to the convertible promissory note and $nil to the common shares.

20

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

10. Convertible Promissory Notes, (continued)

The maturity date of the March 2021 Investor Note was September 30, 2021. The March 2021 Investor Note bears interest at a rate of 10% per annum (the "March 2021 Interest Rate"). The March 2021 Investor is entitled to, at its option, at any time after issuance of the March 2021 Investor Note, convert all or any amount of the principal amount and any accrued but unpaid interest of the March 2021 Investor Note into Common Stock, at a conversion price of $0.20 per share. Under the original terms of the March 2021 Investor Note may be prepaid until 180 days from its issue date at a prepayment premium of 120%. Any portion of the March 2021 Investor Note which is not repaid by the maturity date will bear interest at the default interest rate of 18% per annum.

On November 22, 2021, the March 2021 Investor extended the maturity date to March 31, 2022 in exchange for a payment of $486,474. On April 7, 2022, the March 2021 Investor extended the maturity date of the March 2021 Investor Note to April 30, 2022. Refer to note 17(b), subsequent events for details on a conversion and forgiveness of the March 2021 Investor Note.

The Company initially reserved 5,000,000 of its authorized and unissued Common Stock (the "March 2021 Reserved Amount"), free from pre-emptive rights, to provide for the issuance of Common Stock upon the full conversion of the March 2021 Investor Note.

b) On April 1, 2021, the Company entered into a securities purchase agreement (the "April 2021 SPA") with one investor (the "April 2021 Investor") pursuant to which the Company issued to the April 2021 Investor one 10% unsecured convertible promissory note (the "April 2021 Investor Note") in the principal amount of $275,000. The April 2021 Investor Note includes an OID of $25,000. In addition, the April 2021 Investor was issued 200,000 common shares immediately subsequent to the issue date 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 of the proceeds were allocated to the convertible promissory note and $nil to the common shares.

The maturity date of the April 2021 Investor Note was September 30, 2021. The April 2021 Investor Note bears interest at a rate of 10% per annum (the "April 2021 Interest Rate"). The April 2021 Investor is entitled to, at its option, at any time after issuance of the April 2021 Investor Note, convert all or any amount of the principal amount and any accrued but unpaid interest of the April 2021 Investor Note into Common Stock, at a conversion price of $0.20 per share. The original terms of the April 2021 Investor Note may be prepaid until 180 days from its issue date at a prepayment premium of 120%. Any portion of the April 2021 Investor Note which is not repaid by the maturity date will bear interest at the default interest rate of 18% per annum.

The Company initially reserved 5,000,000 of its authorized and unissued Common Stock (the "April 2021 Reserved Amount"), free from pre-emptive rights, to provide for the issuance of Common Stock upon the full conversion of the April 2021 Investor Note.

21

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

10. Convertible Promissory Notes, (continued)

On December 9, 2021, the April 2021 Investor agreed to adjust the balance of the note, as it was past due, to $400,000. On January 4, 2022, the April 2021 Investor provided the Company with a request to convert the April 2021 Investor Note into 2,000,000 common shares of the Company issued on January 17, 2022, at a conversion price of $0.20 per share, as stipulated in the April 2021 SPA. On conversion, the fair value of the April 2021 Investor Note was $8,790 higher than the balance at December 31, 2021. This increase is included in the loss on revaluation of convertible promissory notes in the interim condensed consolidated statements of operations and comprehensive loss under other (expense) income.

c) On June 16, 2021, the Company entered into a securities purchase agreement (the "June 2021 SPA") with one investor (the "June 2021 Investor") pursuant to which the Company issued to the June 2021 Investor one 10% unsecured convertible promissory note (the "June 2021 Investor Note") in the principal amount of $450,000. The June 2021 Investor Note includes an OID of $35,000. In addition, the June 2021 Investor was issued 1,000,000 common shares of the Company. 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 of the proceeds were allocated to the convertible promissory note and $nil to the common shares

The maturity date of the June 2021 Investor Note is June 16, 2022. The June 2021 Investor Note bears interest at a rate of 10% per annum (the "June 2021 Interest Rate"), which shall be paid by the Company to the June 2021 Investor on a monthly basis, commencing on the first of the month following issuance. The June 2021 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 (as defined in the June 2021 Investor Note), with interest accruing at the default interest rate of 15% per annum from an event of default, at a conversion price (the "Conversion Price") equal to the lesser of 90% (representing a 10% discount) multiplied by the lowest trading price (i) during the previous twenty (20) trading day (as defined in the June 2021 Investor Note) period ending on the issuance date of the June 2021 Investor Note, or (ii) during the previous twenty (20) trading day period ending on date of conversion of the June 2021 Investor Note. The June 2021 Investor Note may be prepaid at any time in cash equal to the sum of (a) the then outstanding principal amount of the June 2021 Investor Note plus (b) accrued and unpaid interest on the unpaid principal balance of the June 2021 Investor Note plus (c) default interest (as defined in the June 2021 Investor note on the occurrence of a default), if any.

 

The Company initially reserved 7,000,000 of its authorized and unissued Common Stock (the "June 2021 Reserved Amount"), free from pre-emptive rights, to provide for the issuance of Common Stock upon the full conversion of the June 2021 Investor Note.

d) On August 26, 2021, the Company entered into a securities purchase agreement (the "August 2021 SPA") with one investor (the "August 2021 Investor") pursuant to which the Company issued to the August 2021 Investor one 10% unsecured convertible promissory note (the "August 2021 Investor Note") in the principal amount of $142,200. The August 2021 Investor Note included an OID of $13,450. In addition, the August 2021 Investor was issued 80,000 common shares of the Company. 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 of the proceeds were allocated to the convertible promissory note and $nil to the common shares

22

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

10. Convertible Promissory Notes, (continued)

The maturity date of the August 2021 Investor Note is August 26, 2022. The August 2021 Investor Note bears interest at a rate of 10% per annum (the "August 2021 Interest Rate"). The August 2021 Investor Note will include a one-time interest charge of $14,220, which shall be at repayable by the Company in 10 equal monthly amounts of $15,642 (including principal and interest) commencing October 15, 2021.

The August 2021 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 (as defined in the August 2021 Investor Note), with default interest accruing at the default interest rate of 22% per annum, at a conversion price (the "Conversion Price") equal to 75% (representing a 25% discount) multiplied by the lowest trading price (i) during the previous five (5) trading day (as defined in the August 2021 Investor Note), period prior to conversion. The Company has the right to accelerate the monthly payments or prepay the August 2021 Investor Note at any time without penalty.

The Company initially reserved 2,972,951 of its authorized and unissued Common Stock (the "August 2021 Reserved Amount"), free from pre-emptive rights, to provide for the issuance of Common Stock upon the full conversion of the August 2021 Investor Note.

Refer to note 17(b), subsequent events, for details on the conversion of the August 2021 Investor Note.

e) 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.

23

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

10. 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 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.

The Company initially reserved 1,585,000 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.

Refer to note 17 (d), subsequent events, for an amendment to the conversion terms on the October 29, 2021 investor note.

f) The maturity date of the December 2021 Investor Note is June 2, 2022. The December 2021 Investor Note bears interest at a rate of 10% per annum (the "December 2021 Interest Rate"), which shall be paid by the Company to the December 2021 Investor on a monthly basis, commencing on the first of the month following issuance. The December 2021 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 (as defined in the December 2021 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 lowest trading price (i) during the previous twenty (20) trading day (as defined in the December 2021 Investor Note) period ending on the issuance date of the December 2021 Investor Note, or (ii) during the previous twenty (20) trading day period ending on date of conversion of the December 2021 Investor Note. The December 2021 Investor Note may be prepaid at any time in cash equal to the sum of (a) the then outstanding principal amount of the December 2021 Investor Note plus (b) accrued and unpaid interest on the unpaid principal balance of the December 2021 Investor Note plus (c) default interest (as defined in the December 2021 Investor Note) on the occurrence of an event of default), if any.
 
The Company initially reserved 5,000,000 of its authorized and unissued Common Stock (the "December 2021 Reserved Amount"), free from pre-emptive rights, to provide for the issuance of Common Stock upon the full conversion of the December 2021 Investor Note.
   
g) 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.
24

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

10. Convertible Promissory Notes, (continued)

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.

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.

For the three-month period ended March 31, 2022, the Company issued 2,000,000 common shares on the conversion of a convertible promissory note, having a fair value on conversion in the amount of $463,862 at a conversion price of $0.20 per share. And, for the three-month period ended March 31, 2021, the Company issued 3,175,124 common shares on the conversion of convertible promissory notes, in the amount of $713,716, including accrued interest and related costs of $32,716. The share conversion prices ranged from $0.156 to $0.26 per share (on the 2019 convertible promissory notes).

For the three-month period ended March 31, 2022, the Company incurred interest of $nil (2021-$14,756 on the 2019 convertible promissory notes).

Refer to note 17(d) and (e), subsequent events, for details on amendments to the conversion terms of the March 2022 Investor Notes.

Refer also to going concern, note 2.

25

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

10. Convertible Promissory Notes, (continued)

Fair value option for the 2021 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 in 2021 and 2022. 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 in the interim condensed consolidated financial statements. 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 all periods presented. The Company recognized a loss of $659,525 at the time of issuance of the convertible promissory notes, and an additional loss of $636,623 attributed to the change in fair value of the convertible promissory notes for the three-month period ended March 31, 2022. The Company incurred debt issuance costs of $75,000 (December 31, 2021-$159,250) which were expensed as incurred.

11. 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 Measurements as of March 31, 2022
Using:
 
    Level 1     Level 2     Level 3     Total  
Assets: $                 $ -  
Liabilities:                        
Convertible promissory notes               6,063,926     6,063,926  
  $             6,063,926   $ 6,063,926  

During each of the three-month periods ended March 31, 2022 and 2021, there were no transfers between Level 1, Level 2, or Level 3. There were no financial assets or liabilities measured at fair value on a recurring basis as of March 31, 2022.

The following table summarizes the change in Level 3 financial instruments during the three-month period ended March 31, 2022.

Fair value at December 31, 2021 $ 3,798,516  
Fair value at issuance   2,159,525  
Repayments   (66,876 )
Conversion   (463,862 )
Mark to market adjustment   636,623  
Fair value at March 31, 2022 $ 6,063,926  

 

26

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

11. Fair Value Measurement, (continued)

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 9 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 50%, except for the convertible promissory notes issued in the last quarter of the 2021 year and for those issued during the three-month period ended March 31, 2022, which had a PD of 50% and for all convertible promissory notes, a PD of 50% at March 31, 2022 and at December 31, 2021. 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 March 31, 2022 and December 31, 2021. 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 95% to 160% was used for the expected volatility. 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 range of 15.25% to 18.39% was used for the credit spread.

Refer also to going concern, note 2.

12. Capital Stock

As at March 31, 2022, the Company had 150,000,000 common shares authorized with a par value of $.0001 per share and 97,208,547 (December 31, 2021-92,983,547) common shares issued and outstanding.

For the three-month period ended March 31, 2022, the Company issued 2,000,000 common shares on the conversion of a convertible promissory note, having a fair value on conversion in the amount of $463,862 at a conversion price of $0.20 per share. On conversion, the fair value of the April 2021 Investor Note was $8,790 higher than the balance at December 31, 2021. This increase is included in the loss on revaluation of convertible promissory notes under other (expense) income in the interim condensed consolidated statements of operations and comprehensive loss. For the three-month period ended March 31, 2021, the Company issued 3,175,124 common shares on the conversion of convertible promissory notes, in the amount of $713,716, including accrued interest and related costs of $32,716. The share conversion prices ranged from $0.156 to $0.26 per share.

27

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

12. Capital Stock, (continued)

In addition, the Company raised $16,560, net of share issue costs of $1,440, on a private placement for 40,000 common shares at an issue price of $0.45 per share. Further, 895,000 common shares of the Company were issued for professional services valued at $223,910, based on the closing trading prices on issuance. The portion relating to the three-month period ended March 31, 2022, $74,398 is included in the amount disclosed as stock-based compensation in the interim condensed consolidated statements of operations and comprehensive loss and the balance is included in prepaid expenses and deposits in the interim condensed consolidated balance sheets.

On January 3, 2022, the Company issued 1,000,000 common shares to the CEO and on February 7, 2022 50,000 common shares to the CFO in connection with their executive consulting agreements, valued at $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, is an amount of $60,113, representing that portion of the stock-based compensation for the period. Also, on January 17, 2022 and March 22, 2022, the Company issued 230,000 common shares on proceeds previously received. And, on February 7, 2022, the Company issued 10,000 common shares to an employee valued at $0.199, the trading price on closing, disclosed under office and administration in the interim condensed consolidated statements of operations and comprehensive loss.

At March 31, 2022, the Company recorded in total, $40,100, for 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. The professional services are included under stock-based compensation in the interim condensed consolidated statements of operations and comprehensive loss.

During the year ended December 31, 2021, the Company issued 3,767,029 common shares on the conversion of convertible promissory notes, in the amount of $756,000, including accrued interest and related costs of $53,901, for a total of $809,901. The share conversion prices ranged from $0.156 to $0.26 per share. The Company also issued 1,726,076 common shares on the conversion of loans payable and accounts payable to related party (Travellers), in the amount of $451,324 (C$563,320).

In addition, the Company raised $292,866 net of share issue costs of $10,620, on private placements for 1,195,348 common shares of the Company at per share issue prices ranging from $0.25 to $0.26. Further, during the year ended December 31, 2021, 1,658,832 common shares of the Company were issued for professional services valued at $448,719, based on the closing trading prices on issuance, disclosed as stock-based compensation in the consolidated statements of operations and comprehensive loss and disclosed as acquisition costs on the purchase of the Hamilton assets and financing cost on the mortgages payable in the consolidated balance sheets.

On March 31, 2021, the Company issued the March 2021 Investor Note to the March 2021 Investor, and issued, subsequent to March 31, 2021, 200,000 common shares disclosed under note 10(a), convertible promissory notes.

28

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

12. Capital Stock, (continued)

On April 1, 2021, the Company issued the April 2021 Investor Note to the April 2021 Investor, and subsequently issued 200,000 common shares disclosed under note 10(b), convertible promissory notes. On June 16, 2021, the Company issued the June 2021 Investor Note to the June 2021 Investor, and subsequently issued 1,000,000 common shares. disclosed under note 10(c), convertible promissory notes. On August 26, 2021, the Company issued the August 2021 Investor Note to the August 2021 Investor and subsequently issued 80,000 common shares., disclosed under note 10(d), convertible promissory notes. On October 28 and 29, 2021, the Company issued a total of 72,500 common shares to two consultants representing the October 2021 Investors, valued at $16,240, based on the closing trading price on issuance. And, on December 2, 2021, the Company issued 857,143 common shares., disclosed under note 10(f), convertible promissory notes

On January 4, 2021, the Company issued 1,000,000 common shares to the CEO and 50,000 common shares to the CFO in connection with their executive consulting agreements, valued at $217,035, based on the closing trading price on issuance and included under management stock-based compensation in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021. Also, on January 4, 2021, the Company issued 400,000 common shares on proceeds of $8,580, previously received on a conversion of debt in December 2020.

Pursuant to the Minutes of Settlement, the former chief executive officer returned 2,011,500 shares of the Company's Common Stock which the Company later canceled on December 29, 2021.

13. Commitments

a) Effective January 1, 2022, as stipulated in each of their respective executive consulting agreements the CEO's monthly fee is $32,012 (C$40,000) and for the CFO $8,003 (C$10,000). The future minimum commitment under these consulting agreements, is as follows:
 
For the nine-month period ending December 31, 2022 $ 360,135  
b) The Company has agreed to lease its office premises from Haute on a month-to-month basis, at the monthly rate of $6,402 (C$8,000). 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) Effective November 1, 2021, the Company signed a new investor relations consulting agreement for strategic advisory and digital marketing services for a term of six months upon the Company's uplist to the Nasdaq, in total $208,000. In addition, the consultant will be issued 250,000 common shares subsequent to March 31, 2022.
 
For the nine-month period ending December 31, 2022 $ 10,000  
29

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

13. Commitments, (continued)

e) 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 $7,303,385 ($9,125,809).

f) 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 $2,401 (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 $8,003 (C$10,000). The future minimum commitment is as follows:

For the nine-month period ending December 31, 2022 $ 8,003  
For the year ending December 31, 2023   8,003  
For the year ending December 31, 2024   8,003  
For the year ending December 31, 2025   8,003  
  $ 32,012  

g) PACE has provided the Company a letter of credit in favor of the MECP in the amount of $221,548 (C$276,831) and, as security, has 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.

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 Company is currently updating its financial assurance with 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 $486,582 (C$608,000) (December 31, 2021-$334,498; C$424,059).

As at March 31, 2022, 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 $510,301 (C$637,637).

30

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

14. Other (Expense) Income

    March 31, 2022     March 31, 2021  
(a) Gain on forgiveness of convertible promissory notes $ -   $ 359,460  
(b) Gain on disposal of long-lived assets   -     45,349  
(c) Loss on revaluation of convertible promissory notes   (1,296,148 )   (81,197 )
  $ (1,296,148 ) $ 323,612  

(a) During the prior three-month period ended March 31, 2021, the settlement of the March 2019 Investor Notes resulted in a forgiveness of $135,641, including accrued interest and related costs and on the settlement of the May 2019 Investor Note, the July 2019 Investor Note and the October 2019 Investor Note, $223,819, including accrued and related costs.

(b) During the prior three-month period ended March 31, 2021, the Company disposed of certain long-lived assets for proceeds of $47,394 (C$60,000) and realized a gain on disposal of $45,349.

(c) Loss on revaluation of convertible promissory notes.

15. Economic Dependence

The Company generated 67% of its revenue from two customers, during the three-month period ended March 31, 2022 (March 31, 2021-82% from three customers).

16. 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 $52,212 (C$65,241). The amount is included in accounts payable on the Company's consolidated balance sheets.

17. 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 April 21, 2022, the Company received proceeds from an employee of $28,000 on a private placement for 70,708 common shares of the Company, at a price of $0.396.
31

SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Expressed in United States Dollars)
(unaudited)

17. Subsequent Events, (continued)

(b) On May 5, 2022, the March 2021 Investor converted a portion of his March 2021 Investor Note, in the amount of $300,000 for 1,500,000 common shares of the Company, at a conversion price of $