United states
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| [X] | quarterly report under section 13 0r 15( d ) of the securities exchange act of 1934 |
| For the quarterly period ended | November 30, 2017 |
| [ ] | transition report under section 13 0r 15( d ) of the securities exchange act of 1934 |
For the transition period from ________________________ ____ to ___________ _______________
| Commission file number | 000-54875 |
Sustainable Projects Group Inc.
(Exact name of registrant as specified in its charter)
|
Incorporated in the State of Nevada |
85-5445107 |
|
|
(State
or other jurisdiction
of incorporation or organization) |
(I.R.S.
Employer
|
| 2316 Pine Ridge Road, 383, Naples, Florida | 34109 | |
| (Address of principal executive offices) | (Zip Code) |
239-316-4593
(Registrant’s telephone number, including area code)
Sustainable Petroleum Group Inc.
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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.
[X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s. 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, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company in Rule 12b-2 of the Exchange Act.
| Larger accelerated filer | [ ] | Accelerated filer | [ ] |
|
Non-accelerated filer |
[ ]
|
Smaller reporting company | [X] |
| (Do not check if a smaller reporting company) | |||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[ ] Yes [ X ] No
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
|
Class
|
Outstanding at January 19, 2018 | |||
| common stock - $0.0001 par value | 8,953,518 | |||
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 2 |
part I – financial information
Item 1. Financial Statements.
sustaianble projects group inc.
(Formerly known as Sustainable Petroleum Group Inc .)
(Formerly known as BLUE SPA INCORPORATED)
For the SIX Months Ended NOVEMBER 30, 2017
index to condensed unaudited interim financial statements
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 3 |
SUSTAINABLE PROJECTS GROUP INC.
Condensed Unaudited Interim Financial Statements
For the six months ended November 30, 2017
(Stated in US Dollars)
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 4 |
SUSTAINABLE PROJECTS GROUP INC.
(Formerly known as SUSTAINABLE PETROLEUM GROUP INC .)
(Formerly known as BLUE SPA INCORPORATED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2017
INDEX TO CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 5 |
SUSTAINABLE PROJECTS GROUP INC.
CONDENSED UNAUDITED INTERIM BALANCE SHEETS
See accompanying notes to condensed unaudited interim financial statements
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 6 |
SUSTAINABLE PROJECTS GROUP INC.
CONDENSED UNAUDITED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the three | For the three | For the six | For the six | |||||||||||||
| months ended | months ended | months ended | months ended | |||||||||||||
| November 30, | November 30, | November 30, | November 30, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues | ||||||||||||||||
| Revenues | $ | 15,000 | $ | - | $ | 30,000 | $ | - | ||||||||
| Interest Income | 1,746 | - | 2,973 | - | ||||||||||||
| 16,746 | - | 32,973 | - | |||||||||||||
| Operating Expenses | ||||||||||||||||
| Administrative and other operating expenses | 16,148 | 6,913 | 24,275 | 9,617 | ||||||||||||
| Amortization | 875 | - | 1,458 | - | ||||||||||||
| Consulting fees | 10,500 | - | 21,000 | - | ||||||||||||
| Management fees | 3,582 | - | 69,100 | - | ||||||||||||
| Professional fees | 58,614 | 15,855 | 76,514 | 29,634 | ||||||||||||
| Rent | 750 | - | 1,750 | - | ||||||||||||
| Loss on acquisition of deposit | - | - | 779,278 | - | ||||||||||||
| 90,469 | 22,768 | 973,375 | 39,251 | |||||||||||||
| Operating loss before interest expense | (73,723 | ) | (22,768 | ) | (940,402 | ) | (39,251 | ) | ||||||||
| Interest expense | - | (3,497 | ) | (2,727 | ) | (6,746 | ) | |||||||||
| Operating loss before income taxes | (73,723 | ) | (26,265 | ) | (943,129 | ) | (45,997 | ) | ||||||||
| Income Taxes | - | - | - | - | ||||||||||||
| Net loss and comprehensive loss | $ | (73,723 | ) | $ | (26,265 | ) | $ | (943,129 | ) | $ | (45,997 | ) | ||||
| Loss per share of common stock | ||||||||||||||||
| -Basic and diluted | $ | (0.008 | ) | $ | (0.004 | ) | $ | (0.107 | ) | $ | (0.007 | ) | ||||
| Weighted average no. of shares of common stock | ||||||||||||||||
| -Basic and diluted | 8,938,147 | 7,000,000 | 8,778,049 | 7,000,000 | ||||||||||||
See accompanying notes to condensed unaudited interim financial statements
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 7 |
SUSTAINABLE PROJECTS GROUP INC.
CONDENSED UNAUDITED INTERIM STATEMENTS OF STOCKHOLDERS’ DEFICIT
| par value | Additional | |||||||||||||||||||||||
| Common | at $0.0001 | Paid-in | Shares | Deficit | ||||||||||||||||||||
| Shares | Amount | Capital | Subscribed | Accumulated | Total | |||||||||||||||||||
| Balance, May 31, 2016 | 7,000,000 | $ | 700 | $ | 16,300 | $ | - | $ | (229,097 | ) | $ | (212,097 | ) | |||||||||||
| Shares Issued at $3.00 per share for assets | 1,250,000 | 125 | 3,749,875 | - | - | 3,750,000 | ||||||||||||||||||
| Shares Issued at $3.00 per share | 13,332 | 1 | 39,995 | - | - | 39,996 | ||||||||||||||||||
| Subscriptions received at $3.50 per share | - | - | - | 59,598 | - | 59,598 | ||||||||||||||||||
| Net loss and comprehensive loss | - | - | - | - | (101,285 | ) | (101,285 | ) | ||||||||||||||||
| Balance, May 31, 2017 | 8,263,332 | $ | 826 | $ | 3,806,170 | $ | 59,598 | $ | (330,382 | ) | $ | 3,536,212 | ||||||||||||
| Shares issued at $3.50 per share for lease deposit | 400,000 | 40 | 1,399,960 | - | - | 1,400,000 | ||||||||||||||||||
| Shares issued at $3.50 per share for equity investment | 6,000 | 1 | 20,999 | - | - | 21,000 | ||||||||||||||||||
| Shares issued at $3.50 per share | 31,128 | 3 | 108,945 | (59,598 | ) | - | 49,350 | |||||||||||||||||
| Shares issued at $3.50 per share for services | 10,000 | 1 | 34,999 | - | - | 35,000 | ||||||||||||||||||
| Shares issued at $3.50 per share | 78,671 | 8 | 275,340 | - | - | 275,348 | ||||||||||||||||||
| Shares issued at $3.00 per share for debts | 101,778 | 10 | 305,324 | - | - | 305,334 | ||||||||||||||||||
| Shares issued at $3.50 per share for services | 16,000 | 2 | 55,998 | - | - | 56,000 | ||||||||||||||||||
| Shares issued at $3.50 per share | 40,609 | 4 | 142,127 | - | - | 142,131 | ||||||||||||||||||
| Subscriptions received at $3.50 per share | - | - | - | 23,500 | - | 23,500 | ||||||||||||||||||
| Net loss and comprehensive loss | - | - | - | - | (943,129 | ) | (943,129 | ) | ||||||||||||||||
| Balance, November 30, 2017 | 8,947,518 | $ | 895 | $ | 6,149,862 | $ | 23,500 | $ | (1,273,511 | ) | $ | 4,900,746 | ||||||||||||
See accompanying notes to condensed unaudited interim financial statements
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 8 |
SUSTAINABLE PROJECTS GROUP INC.
CONDENSED UNAUDITED INTERIM STATEMENTS OF CASH FLOWS
| For the six | For the six | |||||||
| months ended | months ended | |||||||
| Nov 30, 2017 | Nov 30, 2016 | |||||||
| Cash Flows from operating activities: | ||||||||
| Net loss and comprehensive loss | $ | (943,129 | ) | $ | (45,997 | ) | ||
| Loss on acquisition of deposit | 779,278 | - | ||||||
| Interest | (2,972 | ) | - | |||||
| Amortization | 1,458 | - | ||||||
| Shares for debt | 2,730 | - | ||||||
| Shares for services | 56,000 | - | ||||||
| Changes in current assets and liabilities | ||||||||
| Prepaid Expenses | (333,607 | ) | (9,166 | ) | ||||
| Accounts payable and accrued expenses | 37,286 | 4,085 | ||||||
| Amount due to a director | 2,289 | - | ||||||
| Deferred revenue | (30,000 | ) | - | |||||
| Interest payable | - | 6,746 | ||||||
| Net cash used in operating activities | (430,667 | ) | (44,332 | ) | ||||
| Cash Flows from investing activities: | ||||||||
| Note Receivables | (200,000 | ) | - | |||||
| Net Cash used in investing activities | (200,000 | ) | - | |||||
| Cash Flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | 466,830 | - | ||||||
| Shares subscribed, not issued | 23,500 | - | ||||||
| Notes payable | - | 46,000 | ||||||
| Net Cash generated from financing activities | 490,330 | 46,000 | ||||||
| Net (decrease) increase in cash and cash equivalents | (140,337 | ) | 1,668 | |||||
| Cash and cash equivalents at beginning of period | 161,096 | - | ||||||
| Cash and cash equivalents at end of period | $ | 20,759 | $ | 1,668 | ||||
| Supplement Disclosures | ||||||||
| Interest | $ | 14,478 | $ | 6,746 | ||||
| Non-cash Financing and Investing Activities | ||||||||
| Common stock issued for deposit on lease | $ | 1,400,000 | $ | - | ||||
| Common stock issued for leasehold improvements | 35,000 | - | ||||||
| Common stock issued for investments | 21,000 | - | ||||||
| Common stock issued for debts | 305,334 | - | ||||||
| Common stock issued for services | 56,000 | - | ||||||
| $ | 1,817,334 | $ | - | |||||
See accompanying notes to condensed unaudited interim financial statements
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 9 |
SUSTAINABLE PROJECTS GROUP INC.
(Formerly SUSTAINABLE PETROLEUM GROUP INC.)
(Formerly known as BLUE SPA INCORPORATED)
NOTES TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 2017
| 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 engaged in the business of natural resource development and holdings through value based investments and collaborative partnerships with companies across the natural resources sector. It is continually evaluating and acquiring assets for holding and or development. The Company initiated its goals by pursuing investment and partnerships amongst diversified holdings and companies globally. |
| 2. | Going Concern |
| 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 $1,273,511 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 $20,759 cash on hand as at November 30, 2017. Cash used in operations was $430,667 for the six-month period ended November 30, 2017. 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 six months period ended November 30, 2017 are not necessarily indicative of the results that can be expected for the year ended May 31, 2018. |
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 10 |
SUSTAINABLE PROJECTS GROUP INC.
(Formerly SUSTAINABLE PETROLEUM GROUP INC.)
(Formerly known as BLUE SPA INCORPORATED)
NOTES TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 2017
| 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. | |
| 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). | |
| 4. | Recently issued accounting pronouncements |
| The Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective date. Management does not believe that any pronouncement not yet effective but recently issued would, if adopted, have a material effect on the accompanying financial statements. | |
| 5. | Note receivables |
| 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 November 30, 2017, the balance and interest owing was $202,972. |
| Date | Principal | Interest | Total | |||||||||
| As at | ||||||||||||
| November 30, 2017 | $ | 200,000 | $ | 2,972 | $ | 202,972 | ||||||
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 11 |
SUSTAINABLE PROJECTS GROUP INC.
(Formerly SUSTAINABLE PETROLEUM GROUP INC.)
(Formerly known as BLUE SPA INCORPORATED)
NOTES TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 2017
| 6. | Investments |
| As of July 6, 2017, the Company entered into a share exchange agreement to acquire 20% ownership of SPG (Europe) AG by purchasing 2,000 shares of SP Group (Europe) AG from a shareholder of SP Group (Europe) AG, in exchange for the issuance of 6,000 common shares of the Company at a value of $3.50 per share, which was the fair value of the shares at the time of the transaction. 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. | |
| Subsequent to the period ending November 30, 2017, 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 15). | |
| 7. | Prepaid expenses and deposits |
| November 30, 2017 | May 31, 2017 | |||||||
| Prepaid legal | $ | - | $ | 6,917 | ||||
| Prepaid expenses | 349,246 | - | ||||||
| Deposit on lease (CHF) | 600,000 | - | ||||||
| Foreign exchange on lease deposit | 12,000 | - | ||||||
| Total | $ | 961,246 | $ | 6,917 | ||||
| Prepaid expenses represent refundable due diligence deposits in relation to the planned acquisitions of myfactor.io AG and Amixca AG. The acquisition of myfactor.io AG closed on December 4, 2017 (see Note 15). The acquisition of Amixca AG is still in the due diligence phase, but is still expected to be completed in the current fiscal year. | |
| 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 an $779,278 loss on the acquisition of the deposit. |
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 12 |
SUSTAINABLE PROJECTS GROUP INC.
(Formerly SUSTAINABLE PETROLEUM GROUP INC.)
(Formerly known as BLUE SPA INCORPORATED)
NOTES TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 2017
| 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. |
| Accumulated | ||||||||||||
| Cost | Depreciation | Net | ||||||||||
| Leasehold Improvements | $ | 35,000 | $ | 1,458 | $ | 33,542 | ||||||
| 9. | Mineral Properties |
On March 13, 2017, the Company entered into a property purchase agreement to acquire mineral claims located in the Thunder Bay Mining Division in the townships of Rickaby and Lapierre, Ontario, Canada. The Company paid 1,250,000 restricted common stocks at $3.00 per share, which was the fair value of the shares at the time of the transaction, for a total value of $3,750,000. (See Note 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.
| 10. | Accounts payable and accrued liabilities |
Accounts payable and accrued liabilities as of November 30, 2017 are summarized as follows:
| November 30, 2017 | May 31, 2017 | |||||||
| Accrued audit fees | $ | 48,638 | $ | 9,000 | ||||
| Accrued accounting fees | 2,250 | 1,126 | ||||||
| Accrued legal fees | 20,645 | 22,756 | ||||||
| Accrued office expenses | 3,825 | 5,190 | ||||||
| Total | $ | 75,358 | $ | 38,072 | ||||
| 11. | Common stock |
Share issuances during the six months ended November 30, 2017:
| 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. |
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 13 |
SUSTAINABLE PROJECTS GROUP INC.
(Formerly SUSTAINABLE PETROLEUM GROUP INC.)
(Formerly known as BLUE SPA INCORPORATED)
NOTES TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 2017
| 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. |
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 November 30, 2017, the Company had 8,947,518 common shares outstanding (May 31, 2017 – 8,263,332).
There were no warrants or stock options outstanding as of November 30, 2017 and November 30, 2016.
Share Subscriptions
At November 30, 2017, the Company received 1,000 common shares subscriptions at a price of $3.50 per share for a value of $3,500 (see Note 13); and 5,000 common shares subscriptions at a price of $4.00 per share for a value of $20,000 for a total aggregate of $23,500 that have not yet been issued.
Subsequent to November 30, 2017, the Company issued an aggregate of 6,000 common shares for subscriptions received of $23,500 (See Note 15).
| 12. | Notes payable |
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.
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 14 |
SUSTAINABLE PROJECTS GROUP INC.
(Formerly SUSTAINABLE PETROLEUM GROUP INC.)
(Formerly known as BLUE SPA INCORPORATED)
NOTES TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 2017
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.
| 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.
| 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.
| Date | Principal | Interest | Total | |||||||||
| September 04, 2013 | $ | 30,000 | $ | 9,376 | $ | 39,376 | ||||||
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 15 |
SUSTAINABLE PROJECTS GROUP INC.
(Formerly SUSTAINABLE PETROLEUM GROUP INC.)
(Formerly known as BLUE SPA INCORPORATED)
NOTES TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 2017
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.
| 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.
| 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 November 30, 2017, the Company incurred management fees from two directors totaling an aggregate of $69,100 (2017 – nil). As at November 30, 2017, $3,582 (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 November 30, 2017, the Company paid $1750 (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 – Q2 | Sustainable Projects Group Inc. | Page 16 |
SUSTAINABLE PROJECTS GROUP INC.
(Formerly SUSTAINABLE PETROLEUM GROUP INC.)
(Formerly known as BLUE SPA INCORPORATED)
NOTES TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 2017
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 November 30, 2017, 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 November 30, 2017, 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.
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 November 30, 2017, there was $nil remaining in deferred revenues (May 31, 2017 - $30,000).
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)
Subsequent to the period ending November 30, 2017, 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)
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 17 |
SUSTAINABLE PROJECTS GROUP INC.
(Formerly SUSTAINABLE PETROLEUM GROUP INC.)
(Formerly known as BLUE SPA INCORPORATED)
NOTES TO THE CONDENSED UNAUDITED INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 2017
| 14. | Entry to Agreement |
The Company entered into a Share Purchase Agreement dated July 25, 2017 with Flin Ventures AG to purchase all the shares of myfactor.io AG for $175,500 (EUR 150,000) subject to due diligence, buy back of all outstanding bonds issued by myfactor.io AG and other conditions. Effective December 4, 2017, myfactor.io AG became a wholly owned subsidiary of the Company, pending regulatory approval. Due diligence costs with respect to this Share Purchase Agreement are included in prepaid expenses. (See Note 7)
| 15. | Subsequent Events |
On December 4, 2017, the Company closed a Share Purchase Agreement dated for reference July 25, 2017 with Flin Ventures AG to purchase all the shares of myfactor.io AG for $175,500 (EUR 150,000), subject to regulatory approval. (See Note 14).
The Company settled a debt with Workplan Holding AG of CHF 100,000 by issuing 25,000 restricted shares valued at $4.00 per share (see Notes 13 and 14).
On December 11, 2017, the board of directors authorized the issuance of 6,000 restricted shares of common stock at an offering price of 1,000 shares at $3.50 per share and 5,000 shares at $4.00 per share. The Company raised $23,500 cash in this offering to non-US subscribers.
Subsequent to the period ending November 30, 2017, 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)
| Form 10-Q – Q2 | Sustainable Projects Group Inc. | Page 18 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
General
The following discussion of SPGX’s financial condition, changes in financial condition and results of operations for the three and six months ended November 30, 2017 should be read in conjunction with SPGX’s unaudited interim financial statements and related notes for the three and six months ended November 30, 2017.
SPGX is an exploration stage issuer engaged in the business of natural resource development and holdings through value based investments and collaborative partnerships with companies across the natural resources sector. It is continually evaluating and acquiring assets for holding and or development. SPGX initiated its goals by pursuing investment and partnerships amongst diversified holdings and companies globally. SPGX is currently involved in the following businesses: (1) Mineral Exploration; (2) Consulting Services; and (3) Collaborative partnerships.
Through its main initiatives, the development of natural resources, holdings, consulting services, and collaborative partnerships, SPGX plans to build on shareholder value which in return, will present opportunity for new and exciting projects ahead .
Forward Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding SPGX’s capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding SPGX’s ability to carry out its planned development and production of products. Forward-looking statements are made, without limitation, in relation to SPGX’s operating plans, SPGX’s liquidity and financial condition, availability of funds, operating and exploration costs and the market in which SPGX competes. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined below, and, from time to time, in other reports SPGX files with the SEC. These factors may cause SPGX’s actual results to differ materially from any forward-looking statement. SPGX disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Given these uncertainties,