NOTES
TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
February
28, 2018
1.
|
Organization
and Nature of Operations
|
Sustainable
Projects Group Inc. (“the Company”) was incorporated in the State of Nevada, USA on September 4, 2009 as Blue Spa
Incorporated which was engaged in the development of an internet based retailer of a multi-channel concept combining a wholesale
distribution with a retail strategy relating to the quality personal care products, fitness apparel and related accessories. On
December 19, 2016, the Company amended its name from “Blue Spa Incorporated” to “Sustainable Petroleum Group
Inc.” On September 6, 2017, the Company obtained a majority vote from its shareholders to amend the Company’s name
from “Sustainable Petroleum Group Inc.” to “Sustainable Projects Group Inc.” to better reflect the business
it has undertaken. The name change was effective on October 20, 2017.
The
Company is a multinational business development company that pursue investments and partnerships with companies across sustainable
sectors. It is continually evaluating and acquiring assets for holding and/or for development. The Company is involved in mineral
exploration, consulting services and collaborative partnerships.
These
condensed unaudited interim financial statements have been prepared in conformity with generally accepted accounting principles
in the United States or “GAAP”, which contemplate continuation of the Company as a going concern. However, the Company
has limited operations and has sustained operating losses resulting in a deficit. In view of these matters, realization of a major
portion of the assets in the accompanying balance sheet is dependent upon the continued operations of the Company, which in turn
is dependent upon the Company’s ability to meet its financing requirements, and the success of its future operations.
The
Company has accumulated a deficit of $1,585,333 since inception and has yet to achieve profitable operations and further losses
are anticipated in the development of its business. The Company’s ability to continue as a going concern is in substantial
doubt and is dependent upon obtaining additional financing and/or achieving a sustainable profitable level of operations. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The
Company has $6,419 cash on hand as at February 28, 2018. Cash used in operations was $298,011 for the nine-month period ended
February 28, 2018. Therefore, the Company will need to raise additional cash in order to fund ongoing operations over the next
12-month period. The Company may seek additional equity as necessary and it expects to raise funds through private or public equity
investment in order to support existing operations and expand the range of its business. There is no assurance that such additional
funds will be available for the Company on acceptable terms, if at all.
3.
|
Interim
reporting and significant accounting policies
|
While
the information presented is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present
fairly the financial position, result of operations and cash flows for the interim periods presented in accordance with accounting
principles generally accepted in the United States of America. All adjustments are of a normal recurring nature. These interim
financial statements should be read in conjunction with the Company’s May 31, 2017 annual financial statements. Operating
results for the nine months period ended February 28, 2018 are not necessarily indicative of the results that can be expected
for the year ended May 31, 2018.
There
have been no changes in the accounting policies from those disclosed in the notes to the audited financial statements for the
year ended May 31, 2017.
Form 10-Q/A - Amendment No. 1
|
Sustainable Projects Group Inc.
|
Page F-
7
|
Equity
investments
Investments
where the Company exercises significant influence but does not exercise control over these investments are accounted for using
the equity method of accounting and are initially recorded at cost. The Company’s allocation of the entities’ profits
or losses is recognized in the statements of operations and comprehensive income. Where the Company’s share of losses on
its investments equal or exceed the carrying amount of the investments, the Company would then only recognize further losses if
it incurred obligations or made payments on behalf of the equity investments. The Company’s equity investments are reduced
by any distributions received and may increase for any additional investments made.
Foreign
currency translations
The
Company maintains an office in Naples, Florida. The functional currency of the Company is the U.S. Dollar, which is also its reporting
currency, all figures presented unless otherwise indicated are stated in U.S. Dollar. At the transaction date, each asset, liability,
revenue and expense is translated into U.S. dollars by the use of the exchange rate in effect at that date. At the period end,
monetary assets and liabilities are re-measured by using the exchange rate in effect at that date. The resulting foreign exchange
gains and losses are included in operations.
During
the period the Company entered into a transaction whereby it acquired a lease deposit denominated in Swiss Francs, as denoted
by “CHF” (see Note 7).
Accounts
Receivables
Trade
accounts receivable are stated at the amount the Company expects to collect. Management considers the following factors when determining
the collectability of specific customer accounts: customer credit worthiness, past transaction history, current economic industry
trends and changes in customer payment terms. Past due balances over 90 days and other higher risk amounts are reviewed individually
for collectability. Based on the management’s assessment, the Company provides for estimated uncollectible amounts through
a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable
collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. There are
no receivables considered uncollectible as of February 28, 2018 except as disclosed in this report. As of February 28, 2018, there
are no trade accounts receivables.
Stock
Based Compensation
The
Company follows the guideline under ASC 718, Stock Compensation. The standard provides that for all stock based compensation plans,
including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights, which requires
that all share-based payments to both employees and directors be recognized in the income statement based on their fair values.
For non-employees stock based compensation, the Company applies ASC 505 Equity-Based Payments to Non-employees. This standard
provides that all stock based compensation related to non-employees be measured at the fair value of the consideration received
or the fair value of the equity instruments issued, whichever can be most reliably be measured or determinable.
4.
|
Recently
issued accounting pronouncements
|
In
May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) as modified
by ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” ASU 2016-08,
“Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus
Net),” ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,”
and ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.”
The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either
using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon
adoption approach. The Company implemented the standard on the effective date of June 1, 2018 on a modified retrospective basis
to contracts which were not completed as of this date. Adoption of this standard did not have a material impact on the Company’s
financial statements as the Company did not have a material amount of revenue.
Form 10-Q/A - Amendment No. 1
|
Sustainable Projects Group Inc.
|
Page F-
8
|
In
February 2016, the FASB issued ASU 2016-02, “Leases”. The new standard establishes a right-of-use model that requires
a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.
Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly,
lessors will be required to classify leases as sales-type, finance or operating, with classification affecting the pattern of
income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards as
well as substantive control have been transferred through a lease contract. The new standard is effective for fiscal years beginning
after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company does
not have any leases at February 28, 2018 and will adopt the provisions effective June 1, 2018.
In
June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”. The provision sets forth a
“current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial
instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.
This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured
at amortized cost and applies to some off-balance sheet credit exposures. This provision is effective for fiscal years beginning
after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The Company is currently
evaluating the impact of adopting this guidance.
In
June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee
Share-Based Payment Accounting”, which is intended to improve the usefulness of the information provided to the users of
financial statements while reducing cost and complexity in financial reporting. Under the new standard, nonemployee share-based
payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is
obligated to issue when conditions necessary to earn the right to benefit from the instruments have been satisfied. These equity-classified
nonemployee share-based payment awards are measured at the grant date. Consistent with the accounting for employee share-based
payment awards, an entity considers the probability of satisfying performance conditions when nonemployee share-based payment
awards contain such conditions. The new standard also eliminates the requirement to reassess classification of such awards upon
vesting. The new standard is effective for annual periods, and interim periods within those annual periods, beginning after December
15, 2018. Management is currently evaluating the impact of adopting this standard.
The
Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued,
which may be in advance of their effective date. Management does not believe that any pronouncement not yet effective but recently
issued would, if adopted, have a material effect on the accompanying financial statements.
On
June 28, 2017, the Company entered into a note receivable with a company with a common director of the Company in the amount of
$200,000 with an interest rate of 3.5% per annum that is payable annually. Any unpaid interest shall be added to the principal
of the loan on an annual basis and together will become the new amount used to calculate the amount of interest going forward.
The note receivable, together with any accrued interest outstanding, is due March 15, 2022.
As
of February 28, 2018, the balance and interest owing was $204,698.
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
200,000
|
|
|
$
|
4,698
|
|
|
$
|
204,698
|
|
Form 10-Q/A - Amendment No. 1
|
Sustainable Projects Group Inc.
|
Page F-
9
|
Other
receivable – related party
At
February 28, 2018, there was $6,000 owing for the sale of the SP Group (Europe) AG shares (see note 6) and $190,000 from the refundable
deposit to Amixca AG.
On
January 18, 2018, the Company entered into an agreement with Amixca AG for a period of three years commencing February 1, 2018
to provide business development services. The prepayment of $190,000 to Amixca AG was supposed to serve as consulting fees over
the next three year period. The consulting agreement with Amixca AG was never utilized and Amixca AG did not provide any services.
The consulting agreement was annulled and Amixca AG agreed to return the deposit with a payment schedule spanning over a year,
beginning July 5, 2019 of $20,000 and thereafter, the first of every month of $15,455 until the full $190,000 has been repaid.
As of the date of this report, the Company is in receipt of the initial repayment of $20,000. (See Note 13)
As
of July 6, 2017, the Company entered into a share exchange agreement to acquire 20% ownership of SPG (Europe) AG by purchasing
2,000 shares of SP Group (Europe) AG from a shareholder of SP Group (Europe) AG, in exchange for the issuance of 6,000 common
shares of the Company at a value of $3.50 per share, which was the fair value of the shares at the time of the transaction. In
accordance to the Dividend Agreement signed by the parties, the Company is to receive 20% of the declared dividends. The Company
shares a common director, common management and a majority shareholder with SP Group (Europe) AG. As a result, it was determined
that the Company would ordinarily have significant influence; however, the investee lacks the financial information that the Company,
and any other shareholder, would need to apply the equity method of accounting. The Company has attempted and failed to obtain
that information and accordingly concluded it appropriate to account for the investment using the cost method at this time.
On
January 18, 2018, the Company sold 25% interest of its ownership of SP Group (Europe) AG for $6,000. Therefore, the Company now
holds 15% interest of SP Group (Europe) AG. The sale from SP Group (Europe) AG created a gain of $750 for the Company. The amount
of $6,000 was paid subsequent to the period ending February 28, 2018. Furthermore, the Company sold all their remaining shares
of SP Group (Europe) on December 26, 2018 back to SP Group (Europe) AG for $15,000. See Note 14.
On
January 30, 2018, the Company acquired 10% ownership of Falcon Projects AG by purchasing 10 shares of Falcon Projects by issuing
10,000 shares of the Company valued at $4.20 per share. On December 26, 2018, the Company sold all of their shares of Falcon Projects
AG for $11,000. See Note 14.
7.
|
Prepaid
expenses and deposits
|
|
|
February 28, 2018
|
|
|
May 31, 2017
|
|
|
|
|
|
|
|
|
Prepaid legal
|
|
$
|
-
|
|
|
$
|
6,917
|
|
Prepaid expenses
|
|
|
2,500
|
|
|
|
-
|
|
Deposit on lease (CHF)
|
|
|
600,000
|
|
|
|
-
|
|
Foreign exchange on lease deposit
|
|
|
36,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
638,500
|
|
|
$
|
6,917
|
|
Prepaid
expenses represent rent of $2,500.
On
June 23, 2017, the Company acquired a lease deposit in the amount of CHF600,000 for the office building located at Falkenstrasse
28, Zurich, Switzerland, 8008, made by an arm’s length party, Daniel Greising, on behalf of SP Group (Europe) AG. As consideration
for an assignment of the lease deposit to the Company, the Company issued Mr. Greising 400,000 restricted shares of common stock.
In addition, the owner of the office building granted a sublease of the office from SP Group (Europe) AG to the Company rent-free
for a term of 10 years commencing July 1, 2017 to be completed and terminated on June 30, 2027. The shares were valued at $3.50
per share, which was the fair value of the shares at the time of the transaction, for a valuation of $1,400,000. The Company has
incurred a $779,278 loss on the acquisition of the deposit. The 400,000 restricted shares of common stock were returned back to
treasury and subsequently cancelled at the beginning of February 2019. The Company no longer requires an office in Zurich and
has terminated its arrangement for the office space.
Form 10-Q/A - Amendment No. 1
|
Sustainable Projects Group Inc.
|
Page F-
10
|
8.
|
Leasehold
Improvements
|
On
July 6, 2017, the Company issued 10,000 restricted common shares at a value of $3.50 per share for leasehold improvements rendered
for a total valuation of $35,000. The fair value of the shares issued was used to measure the value of services received as that
was more reliably measurable. The office lease in Zurich was terminated at the end of December 31, 2018. The Company has written
down $29,750 to reflect the extinguishment of the leasehold improvements.
|
|
Cost
|
|
|
Accumulated
Depreciation
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold
Improvements
|
|
$
|
35,000
|
|
|
|
|
|
|
|
|
|
Write
down of asset
|
|
|
(29,750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,250
|
|
|
$
|
2,333
|
|
|
$
|
2,917
|
|
On
March 13, 2017, the Company entered into a property purchase agreement to acquire mineral claims located in the Thunder Bay Mining
Division in the townships of Rickaby and Lapierre, Ontario, Canada. The Company paid 1,250,000 restricted common stocks at $3.00
per share, which was the fair value of the shares at the time of the transaction, for a total value of $3,750,000. (See Note 11).
The
Company has an interest in 13 mineral claims. All the mineral claims are contiguous. Nine (9) of the mineral claims are freehold
patented mineral claims and the other four (4) mineral claims are unpatented Crown Land claims. The combined claims make up an
area of 336 hectares which is equivalent to approximately 810 acres.
Subsequent
to February 28, 2018, the Company returned the interest of the mineral properties back to its original owner and negotiated the
return of 1,052,631 of the restricted shares back to treasury and cancelled. The Company calculated the re-acquisition of the
1,052,631 restricted shares and determined that an impairment of $276,318 was required.
10.
|
Accounts
payable and accrued liabilities
|
Accounts
payable and accrued liabilities as of February 28, 2018 are summarized as follows:
|
|
February 28, 2018
|
|
|
May 31, 2017
|
|
|
|
|
|
|
|
|
Accrued audit fees
|
|
$
|
21,157
|
|
|
$
|
9,000
|
|
Accrued accounting fees
|
|
|
1,500
|
|
|
|
1,126
|
|
Accrued legal fees
|
|
|
7,814
|
|
|
|
22,756
|
|
Accrued office expenses
|
|
|
7,134
|
|
|
|
5,190
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
37,605
|
|
|
$
|
38,072
|
|
Form 10-Q/A - Amendment No. 1
|
Sustainable Projects Group Inc.
|
Page F-
11
|
Share
issuances during the nine months ended February 28, 2018:
|
a)
|
Issued
400,000 restricted shares of common stock for the deposit for the office lease. The stocks issued were valued at
$3.50 per share, which was the fair value of the shares at the time of the transaction, for a total value of $1,400,000. The
Company recorded a $779,278 loss on the exchange.
|
|
|
|
|
b)
|
Issued
6,000 shares of common to acquire 20% of SP Group (Europe) AG. The shares were valued at $3.50 per share, which was the fair
value of the shares at the time of the transaction, which was determined based on previous issuances in the current fiscal
year.
|
|
|
|
|
c)
|
Sold
31,128 shares of common stock for cash at $3.50 per share.
|
|
|
|
|
d)
|
Issued
10,000 shares of common stock at $3.50 per share for leasehold improvements.
|
|
|
|
|
e)
|
Sold
78,671 shares of common stock for cash at $3.50 per share.
|
|
|
|
|
f)
|
Issued
101,778 shares of common stock at $3.00 per share, which was the fair value of the shares at the time of the transaction,
for debt of $305,334 which consisted of $253,901 in principal loan and $51,433 in interest.
|
|
|
|
|
g)
|
Issued
16,000 shares of common stock at $3.50 per share for services rendered by a director of the Company in lieu of cash payment.
|
|
|
|
|
h)
|
Sold
40,609 shares of common stock for cash at $3.50 per share.
|
|
|
|
|
i)
|
Sold
1,000 shares of common stock for cash at $3.50 per share.
|
|
|
|
|
j)
|
Sold
5,000 shares of common stock for cash at $4.00 per share.
|
|
|
|
|
k)
|
Issued
10,000 shares of common stock at $4.20 per share for the purchase of 10% holdings of Falcon Projects AG.
|
|
|
|
|
l)
|
The
Company settled a debt with Workplan Holding AG of CHF 100,000 by providing 25,000 restricted shares valued at $4.00 per share
(see Note 13). The shares were issued subsequent to February 28, 2018.
|
Share
issuances during the year ended May 31, 2017
:
|
a)
|
Sold
13,332 shares of common stock at $3.00 per share.
|
|
|
|
|
b)
|
Issued
1,250,000 shares of common stock for the acquisition of 2 mineral properties. The shares were valued at $3.00 per
share.
|
At
February 28, 2018, the Company had 8,963,518 common shares outstanding (May 31, 2017 – 8,263,332).
There
were no warrants or stock options outstanding as of February 28, 2018 and February 28, 2017.
Share
Subscriptions
At
February 28, 2018, the Company received 1,500 common shares subscriptions at a price of $4.00 per share for a value of $6,000
(see Note 13) which were issued subsequent to February 28, 2018.
Form 10-Q/A - Amendment No. 1
|
Sustainable Projects Group Inc.
|
Page F-
12
|
On
July 31, 2017, all the notes below were repaid in full. The Company issued 101,778 common shares by converting the debt at $3.00
per share.
Related
Parties:
There
were six (6) unsecured promissory notes bearing interest at 8% per annum which were due on demand to a shareholder of the Company.
These promissory notes were repaid in full by converting into common shares of the Company at $3.00 per share. The balances shown
were as of the date of the repayment.
Date
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
October 6, 2010
|
|
$
|
3,000
|
|
|
$
|
1,638
|
|
|
$
|
4,638
|
|
February 22, 2011
|
|
|
1,500
|
|
|
|
773
|
|
|
|
2,273
|
|
May 17, 2011
|
|
|
7,500
|
|
|
|
3,727
|
|
|
|
11,227
|
|
September 16, 2011
|
|
|
5,000
|
|
|
|
2,351
|
|
|
|
7,351
|
|
November 4, 2011
|
|
|
5,000
|
|
|
|
2,297
|
|
|
|
7,297
|
|
December 14, 2012
|
|
|
13,000
|
|
|
|
4,647
|
|
|
|
17,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
35,000
|
|
|
$
|
15,433
|
|
|
$
|
50,433
|
|
There
were six (6) unsecured promissory notes bearing interest at 4% per annum which were due on demand due to shareholders of the Company.
These promissory notes were repaid in full by converting into common shares of the Company at $3.00 per share. The balances shown
were as of the date of the repayment.
Date
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
July 4, 2016
|
|
$
|
1,000
|
|
|
$
|
43
|
|
|
$
|
1,043
|
|
July 12, 2016
|
|
|
25,000
|
|
|
|
1,052
|
|
|
|
26,052
|
|
September 15, 2016
|
|
|
20,000
|
|
|
|
699
|
|
|
|
20,699
|
|
December 22, 2016
|
|
|
13,901
|
|
|
|
337
|
|
|
|
14,238
|
|
January 13, 2017
|
|
|
10,000
|
|
|
|
218
|
|
|
|
10,218
|
|
March 08, 2017
|
|
|
30,000
|
|
|
|
477
|
|
|
|
30,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
99,901
|
|
|
$
|
2,826
|
|
|
$
|
102,727
|
|
There
was one (1) unsecured promissory note bearing interest at 8% per annum which was due on demand, and convertible at a conversion
price of US$0.005 per share at the lender’s option. The convertible note was at the same interest rate as promissory notes
that have no conversion feature. The promissory note was repaid in full by converting into common shares of the Company at $3.00
per share. The balance shown were as of the date of the repayment.
Date
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 04, 2013
|
|
$
|
30,000
|
|
|
$
|
9,376
|
|
|
$
|
39,376
|
|
Form 10-Q/A - Amendment No. 1
|
Sustainable Projects Group Inc.
|
Page F-
13
|
Unrelated
Parties:
There
was one (1) unsecured promissory note bearing interest at 8% per annum which was due on demand. The promissory note was repaid
in full by converting into common shares of the Company at $3.00 per share. The balance shown were as of the date of the repayment.
Date
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 15, 2012
|
|
$
|
10,000
|
|
|
$
|
4,305
|
|
|
$
|
14,305
|
|
There
were five (5) unsecured promissory notes bearing interest at 8% per annum which were due on demand, and convertible at a conversion
price of US$0.005 per share at the lender’s option. The convertible notes were at the same interest rate as promissory notes
that have no conversion feature. These promissory were repaid in full by converting into common shares of the Company at $3.00
per share. The balances shown were as of the date of the repayment.
Date
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
April 2, 2013
|
|
$
|
14,000
|
|
|
$
|
4,851
|
|
|
$
|
18,851
|
|
October 15, 2013
|
|
|
15,000
|
|
|
|
4,554
|
|
|
|
19,554
|
|
January 8, 2014
|
|
|
10,000
|
|
|
|
2,849
|
|
|
|
12,849
|
|
December 3, 2014
|
|
|
20,000
|
|
|
|
4,261
|
|
|
|
24,261
|
|
September 22, 2015
|
|
|
20,000
|
|
|
|
2,976
|
|
|
|
22,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
79,000
|
|
|
$
|
19,491
|
|
|
$
|
98,491
|
|
13.
|
Related
Party Transactions
|
During
the period ended February 28, 2018, the Company incurred management fees from two directors totaling an aggregate of $78,700 (2017
– nil). As at February 28, 2018, $8,600 (2017 - $1,293) was owing to directors for management fees and $9,833 (2017 - $9,833)
was owing to two shareholders for expenses paid on behalf of the Company.
One
director participated in the subscription of 1,000 shares of the Company valued at $3,500 (see Note 11).
During
the period ended February 28, 2018, the Company paid $2,500 (2017 - $1,000) to a company with a director in common for rent for
its office in Naples, Florida and $ Nil (2017 - $10,500) for advertising and website design.
Form 10-Q/A - Amendment No. 1
|
Sustainable Projects Group Inc.
|
Page F-
14
|
Transactions
with a Majority Shareholder
Workplan
Holdings Inc.
During
the year ended May 31, 2017, Workplan Holdings Inc., a company controlled by a sole shareholder, purchased 4,000,000 restricted
common shares from the former sole officer and director of the Company.
The
Company entered into a property purchase agreement with Workplan Holdings Inc. and issued 1,250,000 restricted common stocks at
$3.00 per share and acquired two mineral properties. (see Note 9)
The
shareholder paid expenses on behalf of the Company in the amount of $500. As at February 28, 2018, this amount was owing.
The
Company entered into a $30,000 demand notes payable with Workplan Holding AG, a company controlled by Workplan Holdings Inc.,
at an interest rate of 4% per annum. As at February 28, 2018, the total principal and interest outstanding on the note was repaid
in full by converting the principal loan and interest at $3.00 per share. The Company issued 10,159 common shares.
The
Company settled a CHF 100,000 debt with Workplan Holding AG by entering into an agreement to issue 25,000 restricted shares valued
at $4.00 per share. The CHF 100,000 was a loan from Workplan Holding AG to pay Flin Ventures to complete the Share Purchase Agreement
for myfactor.io. The shares were issued subsequent to February 28, 2018.
Amixca
AG
The
Company advanced a refundable $190,000 deposit to Amixca AG for due diligence. After such due diligence, the Company decided not
to proceed with the acquisition of Amixca AG. Amixca AG and Workplan Holdings AG have a common significant shareholder. On January
18, 2018, the Company entered into an agreement with Amixca AG for a period of three years commencing February 1, 2018 to provide
business development services. The prepayment of $190,000 to Amixca AG was supposed to serve as consulting fees over the next
three year period. The consulting agreement with Amixca AG was never utilized and Amixca AG did not provide any services. The
consulting agreement was annulled and Amixca AG agreed to return the deposit with a payment schedule spanning over a year, beginning
July 5, 2019 of $20,000 and thereafter, the first of every month of $15,455 until the full $190,000 has been repaid.
As
of the date of this report, the Company is in receipt of the initial repayment of $20,000. (see Note 5)
Alimex
GmbH
On
June 28, 2017, the Company entered into a note receivable with a company with a common director of the Company in the amount of
$200,000 with an interest rate of 3.5% per annum that is payable annually. Any unpaid interest shall be added to the principal
of the loan on an annual basis and together will become the new amount used to calculate the amount of interest going forward.
The note receivable, together with any accrued interest outstanding, is due March 15, 2022. As of February 28, 2018, the principal
and interest owing was $204,698. On May 2, 2018, Alimex Gmbh assigned its interest in the note receivable from the Company to
Workplan Holding on the same repayment terms.
SP
Group (Europe) AG
SP
Group (Europe) AG and the Company share a common majority shareholder. The Company entered into a 3 year consulting agreement
with SP Group (Europe) AG whereby the Company will provide advisory and consulting services commencing May 1, 2017. The agreement
provides that SP Group (Europe) AG pays the Company as follows:
|
a.
|
$5,000
per month for the first year
|
|
b.
|
$10,000
per month for the second year
|
|
c.
|
$15,000
per month for the third year
|
The
Company received a lump sum payment which have been allocated to deferred revenues. As of February 28, 2018, there was $15,000
remaining in deferred revenues (May 31, 2017 - $30,000). As of the February 28, 2018, the Company booked $45,000 in consulting
revenues from SP Group (Europe) AG (May 31, 2017 - $5,000).
Form 10-Q/A - Amendment No. 1
|
Sustainable Projects Group Inc.
|
Page F-
15
|
On
July 6, 2017, the Company entered into an agreement with SP Group (Europe) AG to acquire 20% ownership of SP Group (Europe) AG
by issuing 6,000 restricted common stock of the Company at $3.50 per share for a total value of $21,000. SP Group (Europe) AG
has a portfolio of approximately 20 different projects in the natural resources sector which it develops and finances. SP Group
(Europe) AG and Workplan Holdings Inc. have a common shareholder and director. (See Note 6)
The
Company sold 25% interest of its ownership of SP Group (Europe) AG for $6,000. Therefore, the Company now holds 15% interest of
SPG Group (Europe) AG. The sale from SP Group (Europe) AG created a gain of $750 for the Company. (see Note 6). The $6,000 was
paid by the buyer subsequent to the period ended February 28, 2018.
Subsequent
to February 28, 2018, the following events took place:
|
A.
|
The
Company received $6,000 from the sale of 25% interest of its ownership of SP Group (Europe)
AG.
|
|
|
|
|
B.
|
The
Company issued 25,000 restricted shares valued at $4.00 per share to Workplan Holding
AG in relation to the CHF 100,000 loan it provided for the completion of the Share Purchase
Agreement for myfactor.io.
|
|
|
|
|
C.
|
The
Company entered into an agreement with Global Gaming Media Inc., a company with a common
majority shareholder (Christopher Grunder), and acquired the Gator Lotto App on May 25,
2018 by issuing 100,000 restricted shares at $4.00 per share for the valuation of $400,000.
The purchase includes the application for the Florida lotteries, all software rights
to the Gator Lotto App, the domain, etc.
|
|
|
|
|
D.
|
The
Company entered into an agreement to lease a vehicle and made an upfront payment of $22,757
which covers the lease payments for 2 years.
|
|
|
|
|
E.
|
The
Company entered into an agreement to sub-lease office space in Naples, Florida effective
July 1, 2018 to March 31, 2021. The monthly base rent for the first year is $4,552.56
(annual $54,630.75); the monthly base rent for the second year is $4,684.52 (annual $56,214.25);
and the monthly base rent for the third year is $4,816.48 (annual $57,797.75).
|
|
|
|
|
F.
|
The
Company’s majority shareholder, Christopher Grunder of Workplan Holding Inc., sold
an aggregate 4,148,868 restricted shares of the Company in three separate private transactions.
As a result, there was a change in the voting shares of the Company. Stefan Muehlbauer,
the CEO of the Company, now owns 13.1% of the issued and outstanding shares of Company;
Paul Meier now owns 19.7% of the issued and outstanding shares of the Company; and Kurt
Muehlbauer now owns 6.5% of the issued and outstanding shares of the Company. Christopher
Grunder, sole shareholder of Workplan Holding Inc., now owns 1.1% of the issued and outstanding
shares of the Company. Kurt Muehlbauer is the father of Stefan Muehlbauer, CEO and director
of the Company.
|
|
|
|
|
G.
|
On
September 29, 2018, the Company entered into a joint venture agreement with Vitalizer
Americas Inc. with its principal purpose to import, sale and distribute certain products
offered by Vitalizer International AG of Switzerland. In April 2019, Vitalizer Americas
Inc.’s name was changed to Hero Wellness Systems Inc. as it was no longer dealing
with Vitalizer International AG. The Company has 55% interest, Christopher Grunder of
Workplan Holding Inc. has 15% interest and Kurt Muehlbauer has 15% interest. Hero Wellness
Systems is in the business of providing luxury massage therapy solutions.
|
|
|
|
|
H.
|
The
Company disposed all its remaining shares of Falcon Projects AG for a total of $11,000
to Workplan Holding Inc.
|
|
|
|
|
I.
|
The
Company disposed all its remaining shares of SP Group (Europe) AG for a total of $15,000
back to SP Group (Europe) AG.
|
Form 10-Q/A - Amendment No. 1
|
Sustainable Projects Group Inc.
|
Page F-
16
|
|
J.
|
The
Company sold and transferred all the mineral properties claims located in the Thunder
Bay Mining Division in the townships of Rickaby and Lapierre, Ontario, Canada to John
Leliever in exchange for the return of 1,052,631 common shares of the Company for cancellation.
|
|
|
|
|
K.
|
The
400,000 restricted shares of common stock issued to Daniel Greising for the office lease
deposit in Switzerland were returned back to treasury and subsequently cancelled at December
31, 2018. The Company no longer requires an office in Zurich and has terminated its arrangement
for the office space.
|
|
L.
|
The
Company settled debts of $8,001 with a shareholder of the Company by issuing 2,425 restricted
shares of the Company at $3.30 per share. The Company settled debts with Workplan Holding
Inc. of $25,000 by issuing 7,576 restricted shares of the Company at $3.30 per share.
|
|
|
|
|
M.
|
The
Company issued 725 shares of the Company for subscription of $2.75 per share for the
total amount of $1,993.75.
|
|
|
|
|
N.
|
On
February 25, 2019 the Company entered into a joint venture shareholder’s agreement
with a group of investors with its principal purpose to import, sale, distribute and
license products offered by Cormo AG of Switzerland. The joint venture is owned by the
Company with 35% interest, Cormo AG with 35% interest, Paul Meier with 2.5% interest,
Stefan Muehlbauer of 2.5% interest, and other investors totaling an aggregate of 15%
interest. Cormo AG is in the business of producing and developing peat moss replacement,
natural foam products and technologies. As part of the joint venture agreement, the Company
will provide business development, market research, sourcing, determination of market
distribution and overall operations of the joint venture. Cormo AG will provide the exclusive
unrestricted use of the patents and licenses in North America. The other group of investors
will contribute an aggregate of CHF 400,000 to the joint venture.
|
|
|
|
|
O.
|
On
March 1, 2019, the Company entered into a loan agreement with a shareholder of $50,000
with an interest rate of 3.5% per annum. The loan is due on or before April 15, 2022.
|
|
|
|
|
P.
|
On
July 12, 2019, the Company entered into a convertible loan agreement with a relative
of the Chief Executive Officer of $20,000. The loan bears an interest rate of 3.5% per
annum and is due on or before July 12, 2022. The loan is convertible in whole or in part
at $1.45 per share.
|
The
Company evaluated all events and transactions that occurred after February 28, 2018 through the date the Company issued these
financial statements and found no other subsequent events that needed to be reported.
Form 10-Q/A - Amendment No. 1
|
Sustainable Projects Group Inc.
|
Page
4
|