UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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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.
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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).
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The number of shares of the registrant's common stock outstanding as of June 16, 2025 was
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SusGlobal Energy Corp.
INDEX TO FORM 10-Q
For the Three-Month Periods Ended March 31, 2025 and 2024
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SUSGLOBAL ENERGY CORP.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
CONTENTS
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SusGlobal Energy Corp.
Interim Condensed Consolidated Balance Sheets
As at March 31, 2025 and December 31, 2024
(Expressed in United States Dollars)
(unaudited)
| March 31, 2025 | December 31, 2024 | |||||
| ASSETS | ||||||
| Current Assets | ||||||
| Cash | $ | $ | ||||
| Government remittances receivable | ||||||
| Prepaid expenses and deposits (note 6) | ||||||
| Total Current Assets | ||||||
| Long-lived Assets, net (note 7) | ||||||
| Long-lived Assets held for sale (note 7) | ||||||
| Long-Term Assets | ||||||
| Total Assets | $ | $ | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||||||
| Current Liabilities | ||||||
| Accounts payable (note 8) | $ | $ | ||||
| Government remittances payable | ||||||
| Accrued liabilities (notes 8, 9, and 12) | ||||||
| Current portion of long-term debt (note 9) | ||||||
| Convertible promissory notes (note 10)-in default | ||||||
| Loans payable to related parties (note 12) | ||||||
| Total Current Liabilities | ||||||
| Total Liabilities | ||||||
| Stockholders' Deficiency | ||||||
| Preferred stock, $ |
||||||
| Common stock, $ |
||||||
| Additional paid-in capital | ||||||
| Accumulated deficit | ( |
) | ( |
) | ||
| Accumulated other comprehensive income | ||||||
| Stockholders' deficiency | ( |
) | ( |
) | ||
| Total Liabilities and Stockholders' Deficiency | $ | $ |
| Going concern (note 2) | ||||||
| Commitments (note 14) | ||||||
| Subsequent events (note 18) |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
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SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Operations and Comprehensive Loss
For the three-month periods ended March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
| For the three-month periods ended |
||||||
| March 31, 2025 | March 31, 2024 | |||||
| Revenue | $ | $ | ||||
| Cost of Sales | ||||||
| Opening inventory | ||||||
| Depreciation | ||||||
| Direct wages and benefits | ||||||
| Equipment rental, delivery, fuel and repairs and maintenance | ||||||
| Utilities | ( |
) | ||||
| Outside contractors | ||||||
| Less: closing inventory | ||||||
| Total cost of sales | ||||||
| Gross loss | ( |
) | ( |
) | ||
| Operating expenses | ||||||
|
Management compensation-stock- based compensation (notes 8 and 13) |
||||||
| Management compensation-fees (note 8) | ||||||
| Marketing | ||||||
| Professional fees | ||||||
| Interest expense (notes 8, 9 and 12) | ||||||
| Office and administration (note 8) | ||||||
| Rent and occupancy (note 8) | ||||||
| Insurance | ||||||
| Filing fees | ||||||
| Amortization of financing costs | ||||||
| Directors' compensation (note 8) | ||||||
| Repairs and maintenance | ||||||
| Foreign exchange (income) loss | ( |
) | ||||
| Total operating expenses | ||||||
| Net loss from operations before other expenses | ( |
) | ( |
) | ||
| Other expenses (note 15) | ( |
) | ( |
) | ||
| Net loss | ( |
) | ( |
) | ||
| Other comprehensive (loss) income | ||||||
| Foreign exchange income | ( |
) | ||||
| Comprehensive loss | $ | ( |
) | $ | ( |
) |
| Net loss per share-basic and diluted | $ | ( |
) | $ | ( |
) |
| Weighted average number of common shares outstanding- basic and diluted | ||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
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SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Changes in Stockholders' Deficiency
For the three-month periods ended March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
| Number of Shares |
Common Shares |
Additional Paid- in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Stockholders' Deficiency |
|||||||||||||
| Balance-December 31, 2024 | $ | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||
| Shares issued on private placement | - | - | ||||||||||||||||
| Other comprehensive loss | - | - | - | - | ( |
) | ( |
) | ||||||||||
| Net loss | - | - | - | ( |
) | - | ( |
) | ||||||||||
| Balance-March 31, 2025 | $ | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||
| Balance-December 31, 2023 | ( |
) | ( |
) | ( |
) | ||||||||||||
| Shares issued on conversion of related party debt | - | - | ||||||||||||||||
| Cancellation of shares for professional services | ( |
) | ( |
) | - | - | ||||||||||||
| Other comprehensive loss | - | - | - | - | ||||||||||||||
| Net loss | - | - | - | ( |
) | - | ( |
) | ||||||||||
| Balance-March 31, 2024 | $ | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
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SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Cash Flows
For the three-month periods ended March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
| For the three-month period ended March 31, 2025 |
For the three-month period ended March 31, 2024 |
|||||
| Cash flows from operating activities | ||||||
| Net loss | $ | ( |
) | $ | ( |
) |
| Adjustments for: | ||||||
| Depreciation | ||||||
| Amortization of financing fees | ||||||
| Stock-based compensation | ||||||
| Provision for loss | ||||||
| Loss on revaluation of convertible promissory notes | ||||||
| Gain on forgiveness of long-term debt | ( |
) | ||||
| Changes in non-cash working capital: | ||||||
| Trade receivables | ||||||
| Government remittances receivable | ||||||
| Prepaid expenses and deposits | ( |
) | ||||
| Accounts payable | ||||||
| Government remittances payable | ( |
) | ( |
) | ||
| Accrued liabilities | ||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||
| Cash flows from financing activities | ||||||
| Repayment of long-term debt | ( |
) | ||||
| Repayments of obligations under capital lease | ( |
) | ||||
| Financing fee on loans payable to related parties | ( |
) | ||||
| Advances of loans payable to related parties | ||||||
| Repayment of advances of loans payable to related parties | ( |
) | ||||
| Proceeds on private placement | ||||||
| Net cash provided by financing activities | ||||||
| Effect of exchange rate on cash | ||||||
| Decrease in cash | ( |
) | ( |
) | ||
| Cash-beginning of period | ||||||
| Cash-end of period | $ | $ | ||||
| Supplemental Cash Flow Disclosure: | ||||||
| Interest paid | $ | $ | ||||
| Supplemental Non-Cash Disclosure: | ||||||
| Common stock issued at fair value for conversion of debt | $ | $ | ||||
| Cancellation of common stock | $ | $ |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
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SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
1. Nature of Business and Basis of Presentation
SusGlobal Energy Corp. ("SusGlobal") was formed by articles of amalgamation on December 3, 2014, in the Province of Ontario, Canada and its executive office is in Toronto, Ontario, Canada. SusGlobal, a company in the start-up stages and Commandcredit Corp. ("Commandcredit"), an inactive Canadian public company, amalgamated to continue business under the name of SusGlobal Energy Corp.
On May 23, 2017, SusGlobal filed an Application for Authorization to continue in another Jurisdiction with the Ministry of Government Services in Ontario and a certificate of corporate domestication and certificate of incorporation with the Secretary of State of the State of Delaware under which it changed its jurisdiction of incorporation from Ontario to the State of Delaware (the "Domestication"). In connection with the Domestication each of the currently issued and outstanding common shares were automatically converted on a one-for-one basis into common shares compliant with the laws of the state of Delaware (the "Shares"). As a result of the Domestication, pursuant to Section 388 of the General Corporation Law of the State of Delaware (the "DGCL"), SusGlobal continued its existence under the DGCL as a corporation incorporated in the State of Delaware. The business, assets and liabilities of SusGlobal and its subsidiaries on a consolidated basis, as well as its principal location and fiscal year, were the same immediately after the Domestication as they were immediately prior to the Domestication. SusGlobal filed a Registration Statement on Form S-4 to register the Shares and this registration statement was declared effective by the Securities and Exchange Commission on May 12, 2017.
On December 11, 2018, the Company began trading on the OTCQB venture market exchange, under the ticker symbol SNRG.
SusGlobal is a renewables company focused on acquiring, developing and monetizing a global portfolio of proprietary technologies in the waste to energy and regenerative products application.
These interim condensed consolidated financial statements of SusGlobal and its wholly-owned subsidiaries, SusGlobal Energy Canada Corp. ("SECC"), SusGlobal Energy Canada I Ltd. ("SGECI"), SusGlobal Energy Belleville Ltd. ("SGEBL"), SusGlobal Energy Hamilton Ltd. ("SEHL") and 1684567 Ontario Inc. ("1684567") (together, the "Company"), have been prepared following generally accepted accounting principles in the United States ("US GAAP") for interim financial information and the Securities Exchange Commission ("SEC") instructions to Form 10-Q and Article 8 of SEC Regulation S-X, and are expressed in United States Dollars. The Company's functional currency is the Canadian Dollar ("C$"). In the opinion of management, all adjustments necessary for a fair presentation have been included.
2. Going Concern
The interim condensed consolidated financial statements have been prepared in accordance with US GAAP, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months.
The Company incurred a net loss of $
On January 10, 2024, the Company stopped receiving waste at its waste processing and composting operation in Belleville, Ontario Canada, to address several non-compliance matters described in orders from the Ministry of the Environment, Conservation and Parks (the "MECP"). The Company continues to seek investors to raise funds through debt or equity. The Company was unsuccessful in raising funds with a firm through an advisory and distribution agreement announced on December 14, 2023.
These factors cast substantial doubt as to the Company's ability to continue as a going concern, which is dependent upon its ability to obtain the necessary financing to further the development of its business, satisfy its obligations to its creditors, and upon achieving profitable operations through revenue growth. There is no assurance of funding being available or available on acceptable terms. Realization values may be substantially different from carrying values as shown.
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
2. Going Concern, (continued)
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 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, 2024 and 2023 and their accompanying notes.
4. Recently Issued Accounting Pronouncements
Accounting Pronouncements Recently Adopted
The following section provides a description of new accounting pronouncements ("Accounting Standard Update" or "ASU") issued by the Financial Accounting Standards Board ("FASB") that are applicable to the Company.
There were no new accounting pronouncements issued and not yet adopted that were expected to have a material impact on the Company's interim condensed consolidated financial position or results of operations in the current or future periods.
5. Financial Instruments
The carrying value of the Company's financial instruments, such as cash, 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, convertible promissory notes and loans payable to related parties 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 not exposed to significant interest rate risk on its long-term debt as at March 31, 2025 and December 31, 2024.
Credit risk is the risk of loss associated with a counterparty's inability to perform its payment obligations. As at March 31, 2025, the Company's credit risk is primarily attributable to cash and trade receivables. As at March 31, 2025, the Company's cash was held with a reputable Canadian chartered bank 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, 2025 and December 31, 2024, there was
As at March 31, 2025, the Company is not exposed to concentration risk as it has no customers as at March 31, 2025 and December 31, 2024. The Company had
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
5. Financial Instruments, (continued)
Liquidity Risk
Liquidity risk is the risk that the Company is unable to meet its obligations as they fall due. The Company takes steps to ensure it has sufficient working capital and available sources of financing to meet future cash requirements for capital programs and operations. Management is considering all its options to repay its creditors. Refer also to going concern, note 2.
The Company actively monitors its liquidity to ensure that its cash flows and working capital are adequate to support its financial obligations and the Company's capital programs. To continue operations, the Company will need to raise capital and complete the refinancing of its real property and organic waste processing and composting facility (the "Belleville 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, 2025, $
6. Prepaid Expenses and Deposits
Included in prepaid expenses and deposits are costs, primarily for administrative services to be expensed after March 31, 2025.
7. Long-lived Assets, net
| March 31, 2025 | December 31, 2024 | |||||||||||
| Cost |
Accumulated depreciation |
Net book value | Net book value | |||||||||
| Land | $ | $ | $ | $ | ||||||||
| Composting buildings | ||||||||||||
| Gore cover system | ||||||||||||
| Driveway and paving | ||||||||||||
| $ | $ | $ | $ |
Depreciation for the three-month period ended March 31, 2025, is disclosed in cost of sales in the amount of $
Long-lived Assets-held for sale
On July 28, 2024, the Company's real estate broker listed the Company's two properties located in Hamilton, Ontario, Canada, (the "Hamilton Facility") for sale. On the recommendation of the real estate broker, there was no selling price noted.
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
7. Long-lived Assets, net, (continued)
In accordance with ASC 205-20, a disposal of a component or a group of components should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results when a component of or group of components meets the initial criteria for classification of held for sale to be classified as held for sale. Per the initial criteria for classification of held for sale, a component or a group of components, or a business or nonprofit activity (the entity to be sold), should be classified as held for sale in the period in which all of the following criteria are met:
• Management, having the authority to approve the action, commits to a plan to sell the long-lived assets to be sold.
• The long-lived assets to be sold are available for immediate sale in their present condition subject only to terms that are usual and customary for sales of such long-lived assets to be sold.
• An active program to locate a buyer or buyers and other actions required to complete the plan to sell the long-lived assets to be sold have been initiated.
• The sale of the long-lived assets to be sold is probable (the future event or events are likely to occur), and transfer of the long-lived assets to be sold is expected to qualify for recognition as a completed sale, within one year, unless events or circumstances beyond an entity's control extend the period required to complete the sale as discussed below.
• The long-lived assets to be sold are being actively marketed for sale at a price that is reasonable in relation to its current fair value.
Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
On December 31, 2024, the Company recorded an impairment loss in the long-lived assets-held for sale, as a result of current market conditions.
8. Related Party Transactions
For the three-month period ended March 31, 2025, the Company incurred $
For the three-month period ended March 31, 2025, the Company incurred $
In the prior year, on January 11, 2024, Travellers converted $
For the independent directors, the Company recorded directors' compensation during the three months ended March 31, 2025 of $
9. Long-Term Debt
| March 31, 2025 | December 31, 2024 | ||||||
| (a)i) | Mortgage Payable-due June 1, 2024 | $ | $ | ||||
| (a)ii) | Mortgage Payable-due March 1, 2024 | ||||||
| (a)iii) | Mortgage Payable-due November 2, 2025 | ||||||
| (a)iv) | Mortgage Payable-due November 2, 2024 | ||||||
| (a)v) | Mortgage Payable-due December 14, 2024 | ||||||
| (a)vi) | Mortgage Payable-due October 2, 2024 | ||||||
| Current portion | ( |
) | ( |
) | |||
| Long-Term portion | $ | $ | |||||
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
9. Long-Term Debt, (continued)
Refer also to going concern, note 2.
(a) i. On December 1, 2023, this 1st mortgage was renewed with a new maturity date of
ii. On March 1, 2023, the Company obtained a 2nd mortgage in the amount of $
iii. On November 2, 2023, the Company completed the purchase of additional land, consisting of a
iv. In connection with the purchase of additional land noted above under paragraph iii) above, a 2nd mortgage was obtained in the amount of $
v. On December 14, 2023, the Company made arrangements to repay the previous 1st mortgage on the first property purchased in Hamilton, Ontario, Canada on August 17, 2021, for a new 1st mortgage in the amount of $
vi On April 2, 2024, the Company received funds in the amount of $
For the three-month period ended March 31, 2025, $
10. Convertible Promissory Notes
| March 31, 2025 | December 31, 2024 | ||||||
| (a) | Convertible promissory note-October 28 and 29, 2021 | $ | $ | ||||
| (b) | Convertible promissory note-March 3 and 7, 2022 | ||||||
| (c) | Convertible promissory note- June 23, 2022 | ||||||
| (d) | Convertible promissory note-April 12, 2024, amended May 23, 2024 | ||||||
| $ | $ |
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
10. Convertible Promissory Notes, (continued)
The convertible promissory notes are accounted for under the fair value option in the consolidated balance sheets. The actual principal outstanding on the balance of the notes as at March 31, 2025 is $
(a) On October 28 and 29, 2021, the Company entered into two securities purchase agreement (the "October 2021 SPAs) with two investors (the "October 2021 Investors") pursuant to which the Company issued to the October 2021 Investors two
The maturity date of the October 2021 Investor Notes is the earlier of (i) July 28 and 29, 2022 and (ii) the occurrence of a Liquidity Event, as described above (the "Maturity Date"). Upon the occurrence of a Liquidity Event, the October 2021 Investors are entitled to convert all or a portion of their October 2021 Investor Notes including any accrued and unpaid interest at a conversion price (the "Conversion Price") equal to
Upon the occurrence of an event of default, the interest rate on the October 2021 Investor Notes will immediately accrue at
On May 11, 2022, the holder of the October 29, 2021, investor note, provided an amendment for an optional conversion of his investor notes. The conversion price was amended to be (i) the product of the Liquidity Event price multiplied by the discount of
On August 16, 2022, the Company was sent a notice of default from one of the October 2021 Investors, whose investor note was issued on October 29, 2021. On September 15, 2022, the Company and the investor of the October 2021 investor note entered into an amendment to the October 2021 investor note which served as a cure to the previously issued default notice.
Pursuant to the September 15, 2022 amendment, the Company and the October 29, 2021 investor agreed that the outstanding principal amount of the October 29, 2021 investor note would increase by
As a result of the default on November 15, 2022, the Company was informed that the October 29, 2021 investor will now be accruing interest at the default rate of
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
10. Convertible Promissory Notes, (continued)
Further, the October 29, 2021 investor agreed not to convert more than $
On December 22, 2022, the October 28, 2021 investor, whose October 28, 2021 investor note had a previous Principal Amount of $
Previously, the conversion price was a
On June 8, 2023, the October 29, 2021 investor's counsel sent the Company a notice of default on the October 29, 2021 investor note and the March 2022 Investor Notes, described below. The default was caused by the holders of these promissory notes not being able to receive shares of the Company's common stock, par value $
The Company initially reserved
(b) On March 3 and 7, 2022, the Company executed two unsecured convertible promissory notes with two investors (the "March 2022 Investors"), who purchased
The maturity date of the Notes is the earlier of (i) June 3 and 7, 2022, and (ii) the occurrence of a Liquidity Event (as defined in the Notes) (the "Maturity Date"). The final payment of the Principal Amount (and default interest, if any) shall be paid by the Company to the Investors on the Maturity Date. On an event of default, the principal amount of the March 2020 Investor Notes will increase to
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
10. Convertible Promissory Notes, (continued)
On May 11, 2022, the holder of the March 3, 2022 Investor Note and on May 13, 2022, the holder of the March 7, 2022 Investor Note, each provided an amendment for an optional conversion of their investor notes. The conversion price was amended to be (i) the product of the Liquidity Event price multiplied by the discount of
Further, on June 29, 2022, the March 2022 Investors revised their March 2022 Investor Notes, to extend the maturity date to August 15, 2022 and increase the principal amount of each of the March 2022 Investor Notes by twenty percent (
On August 16, 2022, the Company was sent notices of default from the March 2022 Investors. And, on September 15, 2022, the Company and the March 2022 Investors entered into an amendment to the March 2022 Investor Notes which served as a cure to the previously issued default notices.
Pursuant to the September 15, 2022 amendment, the Company and the March 2022 Investors agreed that the outstanding principal amount totaling $
Further, in the event that the October 29, 2021 investor note has been fully converted and the conversion shares sold, thereafter, the March 2022 Investor Notes may both be converted at the March 2022 Investors' discretion on a pari-passu basis, provided, however, that no conversion shall exceed $
As noted above, on June 8, 2023 the counsel for the March 2022 Investors provided the Company with a notice of default. This resulted in the principal balance of the March 2022 Investor Notes increasing in principal from $
(c) On June 23, 2022, the Company executed one convertible promissory note (the "June 2022 Investor Note") with an investor (the "June 2022 Investor") in the amount of $
The June 2022 Investor may convert the principal amount and any accrued but unpaid interest into the Company's common stock from time to time following an event of default ('Event of Default"), as defined in the June 2022 Investor Note, with interest accruing at the default interest rate of
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
10. Convertible Promissory Notes, (continued)
On December 29, 2022, the Company and the investor agreed to extend the maturity date to the earlier of June 23, 2023 or the occurrence of a Liquidity Event. In consideration for the extension of the maturity date, the Company agreed to: (i) increase the principal amount to $
On June 29, 2023, the June 2022 Investor provided a 45-day extension of the June 2022 Investor Note in exchange for an increase in the principal balance of the June 2022 Investor Note of $
The Company initially reserved
(d) On April 12, 2024, the Company executed one convertible promissory note (the "April 2024 Investor Note") with the June 2022 in the amount of $
Pursuant to the terms of the security purchase agreements for the convertible promissory notes described above, for so long as the noted investors own any shares of Common Stock issued upon the conversion of the applicable investor notes, the Company has covenanted to secure and maintain the listing of such shares of Common Stock. The Company is also subject to certain customary negative covenants under the investor notes and the security purchase agreements, including but not limited to the requirement to maintain its corporate existence and assets, require registration of or stockholder approval for the investor notes or the Common Stock upon the conversion of the applicable investor notes.
The convertible promissory notes described above, contain certain representations, warranties, covenants and events of default including if the Company is delinquent in its periodic report filings with the Securities and Exchange Commission which would increase the amount of the principal and interest rates under the convertible promissory notes in the event of such defaults. In the event of a default, at the option of the applicable investor and in their sole discretion, the applicable investor may consider any of their convertible promissory notes immediately due and payable.
Refer also to going concern, note 2.
Fair value option for the convertible promissory notes
The Company is eligible to elect the fair value option under ASC 825, Financial Instruments and bypass analysis of the potential embedded derivative features described above. The Company believes that the fair value option better reflects the underlying economics of the convertible promissory notes issued after December 31, 2020. As a result, the 2021 and 2022 promissory notes were recorded at fair value upon issuance and subsequently remeasured at each reporting date until settled or converted. The Company recognized the notes initially at fair value, which exceeded the proceeds received resulting in a day one loss that has been recognized in net loss.
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
10. Convertible Promissory Notes, (continued)
Any transaction and other issuance costs have been expensed as incurred. Subsequently, the Company recognizes the notes at fair value with changes in net loss.
Gains and losses attributable to changes in credit risk were insignificant during the three-month periods ended March 31, 2025 and 2024. The Company recognized a loss of $
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 as at March 31, 2025 and December 31, 2024 Using: | |||||||||
| Level 3 | March 31, 2025 | December 31, 2024 | |||||||
| Assets: | $ | $ | $ | ||||||
| Liabilities: | |||||||||
| Convertible promissory notes | |||||||||
| $ | $ | $ | |||||||
During each of the three-month periods ended March 31, 2025 and 2024, there were no transfers between Level 1, Level 2, or Level 3. There were no financial assets or other liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024.
The following table summarizes the change in Level 3 financial instruments during the three-month period ended March 31, 2025 and year ended December 31, 2024.
| March 31, 2025 | December 31, 2024 | |||||
| Fair value at December 31, 2024 and 2023 | $ | $ | ||||
| Fair value at issuance | ||||||
| Amendment | ||||||
| Mark to market | ||||||
| Fair value at March 31, 2025 and December 31, 2024 | $ | $ |
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 10 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
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
11. Fair Value Measurement, continued
Other significant unobservable inputs include the expected volatility 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
12. Loans Payable to Related Parties
| March 31, 2025 | December 31, 2024 | |||||
| Directors | $ | $ | ||||
| CFO | ||||||
| Shareholders | ||||||
| Haute Inc. | ||||||
| Total | $ | $ |
The loans owing to directors were received by the Company on June 6, 2022, March 16, 2023 and June 21, 2024, are unsecured, bearing interest at
On December 5, 2023, the Company received a loan from Haute Inc., in the amount of $
On January 9, 2024, the Company received a loan from Haute Inc., in the amount of $
During the three-month period ended March 31, 2025, $
During the three-month period ended March 31, 2025, Travellers, converted a total of $
13. Capital Stock
As at March 31, 2025, the Company had
On February 18, 2025, the Company raised $
During the three-month period ended March 31, 2025, Travellers, converted a total of $
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
14. Commitments
a) Effective January 1, 2023, new executive consulting agreements were finalized for the services of the CEO and the CFO, for two years and one year, respectively. The CEO's monthly fee was $
b) The Company has agreed to lease its office premises from Haute on a month-to-month basis, at the monthly rate of $
c) Effective February 3, 2021, upon the successful completion of a Nasdaq listing, the Company has committed a payment of $
d) On November 5, 2021, the Company committed to the design and construction of its Hamilton Facility including architectural and general contracting fees in the amount of $
e) Effective November 1, 2022, the Company acquired the exclusive rights to the use of a well-known athlete's name, endorsement and the like, for the purposes of advertisement, promotion and sale of the Company's products. In return, the Company issued
• $
• $
• $
There is also an arrangement to issue
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 on September 15, 2017. 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 $
| For the nine-month period ending December 31, 2025 | $ |
Up until September 30, 2023, PACE had provided the Company a letter of credit in favor of the MECP in the amount of $
The current letter of credit required by the MECP for the Belleville Facility is $
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
14. Commitments, (continued)
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 Belleville Facility to ensure compliance is adhered to and the letter of credit is subject to change by the MECP. The Company had engaged an environmental consulting firm to re-evaluate the financial assurance with the MECP which is based on the estimated environmental remediation and clean-up costs for the Belleville Facility. As a result of inspections carried out by the MECP during the prior years, some of which have resulted in MECP orders having been issued, the Company has accrued estimated and actual costs for corrective measures in orders issued by the MECP $
15. Other Expenses
| March 31, 2025 | March 31, 2024 | |||||
| (a) Loss on revaluation of convertible promissory notes | $ | ( |
) | $ | ( |
) |
| (b) Provision for loss | ( |
) | ||||
| (c) Gain on forgiveness of CEBE loans | ||||||
| $ | ( |
) | $ | ( |
) |
(a) Loss on revaluation of convertible promissory notes. Refer also to convertible promissory notes, note 10.
(b) The provision for loss relates to one of the March 2022 Investor Notes as disclosed under note17, legal proceedings.
(c) In the prior period ended March 31, 2024, the Company recognized a gain on the forgiveness of the Canada Emergency Business Account ("CEBA") as a result of repaying the required portion of the CEBA loans within the time period to allow for a forgiven amount of $
16. Economic Dependence
The Company generated
17. 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, except as follows:
The Company has a claim against it for unpaid legal fees in the amount of $
On October 4, 2023, an action was launched by one of the October 2021 Investors, who claimed he was owed $
On November 27, 2023 and March 6, 2024, the Company experienced an outflow of leachate impacted water from the stormwater pond at the Belleville Facility into the City of Belleville's (the "City") roadside ditch. The Company is collaborating with its environmental consultants and its Canadian legal counsel to assess the damage caused, remediate this occurrence and report regularly to the MECP. As noted below, on August 30, 2024, the Company and the City remediated with a settlement in the amount of $
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
17. Legal Proceedings, continued
On October 24, 2023, the Company received a letter from the utility company for unpaid hydro bills in the amount of $
In addition, on November 17, 2023, the Company received an amended claim filed against it from 2023 by Tradigital in the sum of $
On April 1, 2024, the Company received notice of a complaint filed against it by one of the March 2022 Investors, seeking damages of no less than $
On May 16, 2024, the Company was informed by its Canadian legal counsel that the City issued an order against the Belleville Facility, its numbered company, 1684567 and its officers for the repayment of the cost of pumping out contaminated water from the City's roadside ditch, along with legal and other associated costs. On May 31, 2024, the companies and the officers filed notices of appeal to the Ontario Land Tribunal. The Company and its Canadian legal counsel were in discussions with the legal representatives from the City, to come to a resolution before any action by the Ontario Land Tribunal. On August 30, 2024, minutes of settlement were finalized between the City and the Company to settle for an amount of $
On June 10, 2024, the Company received a statement of claim from the general contractor, Gillam Construction Group Ltd. ("Gillam"), for the construction of the Hamilton Facility. Gillam also named the Company's two officers as defendants. The Company and its Canadian legal counsel were able to resolve the matter with the Plaintiff with a final settlement of $
SusGlobal Energy Corp.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2025 and 2024
(Expressed in United States Dollars)
(unaudited)
On September 5, 2024, one of the Company's subsidiaries was served with a construction lien on the property at the Belleville Facility in the amount of $
On March 3, 2025, the Company received a notice from the Ontario Supreme Court of Justice for unpaid fees with the Company's prior auditors. The outstanding amount includes fees of $
On March 10, 2025, the City provided 1684567, the owner of the property at the Belleville Facility with a statement of outstanding property taxes, annual road maintenance assessments, interest, penalties and related totaling $
On March 12, 2025, the City informed 1684567 for outstanding property taxes, other charges including the amounts described above for costs resulting from the spill at the Belleville Facility. The amount noted by the City includes certain costs relating to 2025, in total $
In a letter dated March 20, 2025, the Canada Revenue Agency (the "CRA"), informed the Company of outstanding harmonized sales taxes and payroll remittance amounts, including interest and penalties, owing for the Belleville Facility. The total amount is $
18. 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 22, 2025, the City and 1684567 signed an extension agreement to provide for the payment of the amounts noted above along with the property taxes to be invoiced by the City during the extension period and any additional interest and penalties. The payments are to be made monthly, commencing April 22, 2025 through to March 22, 2026 in the amount of $
(b) On May 14, 2025, Travellers entered into a private placement for
(c) On May 29, 2025, the Company signed an extension with Gillam, extending the repayment date from May 29, 2025 to August 15, 2025 on the same terms and conditions as the previous extension dated February 1, 2025.
(d) On June 12, 2025, Travellers entered into a private placement for
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Certain statements in this Management's Discussion and Analysis ("MD&A"), other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "would," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers should carefully review the risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission on May 14, 2025.
The following MD&A is intended to help readers understand the results of our operation and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Interim Unaudited Financial Statements and the accompanying Notes to Interim Unaudited Financial Statements under Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Growth and percentage comparisons made herein generally refer to the three-month period ended March 31, 2025 compared with the three-month period ended March 31, 2024 unless otherwise noted. Unless otherwise indicated or unless the context otherwise requires, all references in this document to "we, "us, "our," the "Company," and similar expressions refer to SusGlobal Energy Corp., and depending on the context, its subsidiaries.
SPECIAL NOTICE ABOUT GOING CONCERN AUDIT OPINION
OUR AUDITORS ISSUED OPINIONS EXPRESSING SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE IN BUSINESS AS A GOING CONCERN FOR THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023. YOU SHOULD READ THIS QUARTERLY REPORT ON FORM 10-Q WITH THE "GOING CONCERN" ISSUES IN MIND.
This Management's Discussion and Analysis should be read in conjunction with the unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q (the "Financial Statements"). The financial statements have been prepared in accordance with generally accepted accounting policies in the United States ("GAAP"). Except as otherwise disclosed, all dollar figures included therein and in the following management discussion and analysis are quoted in United States dollars.
OVERVIEW
The following organization chart sets forth our wholly-owned subsidiaries:
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On February 4, 2019, the Company registered its common stock, having a par value of $.0001 per share, pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and is effective pursuant to General Instruction A.(d).
SusGlobal Energy Corp. ("SusGlobal") was formed by articles of amalgamation on December 3, 2014, in the Province of Ontario, Canada and its executive office is in Toronto, Ontario, Canada, at 200 Davenport Road. Our telephone number is 416-223-8500. Our website address is www.susglobalenergy.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K are all available, free of charge, on our website as soon as practicable after we file the reports with the Securities and Exchange Commission (the "SEC"). SusGlobal Energy Corp., a company in the start-up stages and Commandcredit Corp. ("Commandcredit"), an inactive Canadian public company, amalgamated to continue business under the name of SusGlobal Energy Corp.
On May 23, 2017, SusGlobal filed an Application for Authorization to continue in another Jurisdiction with the Ministry of Government Services in Ontario and a certificate of corporate domestication and certificate of incorporation with the Secretary of State of the State of Delaware under which it changed its jurisdiction of incorporation from Ontario to the State of Delaware (the "Domestication"). In connection with the Domestication each of the currently issued and outstanding common shares were automatically converted on a one-for-one basis into common shares compliant with the laws of the state of Delaware (the "Shares"). As a result of the Domestication, pursuant to Section 388 of the General Corporation Law of the State of Delaware (the "DGCL"), SusGlobal continued its existence under the DGCL as a corporation incorporated in the State of Delaware. The business, assets and liabilities of SusGlobal and its subsidiaries on a consolidated basis, as well as its principal location and fiscal year, were the same immediately after the Domestication as they were immediately prior to the Domestication. SusGlobal filed a Registration Statement on Form S-4 to register the Shares and this registration statement was declared effective by the Securities and Exchange Commission on May 12, 2017.
SusGlobal is a renewables company focused on acquiring, developing and monetizing a global portfolio of proprietary technologies in the waste to energy and regenerative products application.
When the terms "the Company," "we," "us" or "our" are used in this document, those terms refer to SusGlobal Energy Corp., and its wholly-owned subsidiaries, SusGlobal Energy Canada Corp., SusGlobal Energy Canada I Ltd., SusGlobal Energy Belleville Ltd., SusGlobal Energy Hamilton Ltd., and 1684567 Ontario Inc.
On December 11, 2018, the Company began trading on the OTCQB venture market exchange, under the ticker symbol SNRG.
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As the global amount of organic waste continues to grow, a solution for sustainable global management of these wastes is paramount. SusGlobal through its proprietary technology and processes is equipped and confident to deliver this objective. Management believes renewable energy is the energy of the future. Sources of this type of energy are more evenly distributed over the earth's surface than finite energy sources, making it an attractive alternative to petroleum-based energy. Biomass, one of the renewable resources, is derived from organic material such as forestry, food, plant and animal residuals. SusGlobal can therefore help you turn what many consider waste into precious energy and regenerative products. The portfolio will be comprised of three distinct types of technologies: (a) Process Source Separated Organics ("SSO") in anaerobic digesters to divert from landfills and recover biogas. This biogas can be converted to gaseous fuel for industrial processes, electricity to the grid or cleaned for compressed renewable gas. (b) Maximizing the capacity of existing infrastructure (anaerobic digesters) to allow processing of SSO to increase biogas yield. (c) and (c) process SSO and digestate to produce an organic compost or a pathogen free organic liquid fertilizer. The convertibility of organic material into valuable end products such as biogas, liquid biofuels, organic fertilizers and compost shows the utility of renewables. These products can be converted into electricity, fuels and marketed to agricultural operations that are looking for an increase in crop yields, soil amendment and environmentally-sound practices. This practice also diverts these materials from landfills and reduces Greenhouse Gas Emissions ("GHG") that result from landfilling organic wastes. The Company can provide peace of mind that the full lifecycle of organic material is achieved, global benefits are realized and stewardship for total sustainability is upheld. It is management's objective to grow SusGlobal into a significant sustainable waste to energy and regenerative products provider, as Leaders in The Circular Economy®.
We believe the products and services offered can benefit both the public and private markets. The following includes some of our work managing organic waste streams: Anaerobic Digestion, Dry Digestion, Wastewater Treatment, In-Vessel Composting, SSO Treatment, Biosolids Heat Treatment, Leachate Management, Composting and Liquid Fertilizers.
The Company can provide a full range of services for handling organic residuals in a period where innovation and sustainability are paramount. From start to finish we offer in-depth knowledge, a wealth of experience and cutting-edge technology for handling organic waste.
The primary focus of the services SusGlobal provides includes integrating our technologies with capital investment to optimize the processing of SSO. Our processes not only divert significant organic waste from landfills, but also result in methane avoidance, with significant GHG reductions from waste disposal. The processes produce regenerative products through the conversion of organic wastes into organic fertilizer, both dry compost and liquid.
Currently, the primary customers are municipalities in both rural and urban centers in Ontario, Canada. Where necessary, to follow provincial and local environmental laws and regulations, SusGlobal submits applications to the respective authorities for approval prior to any necessary engineering being carried out.
We are a "smaller reporting company," as defined under SEC Regulation S-K. As such, we also are exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and are subject to less extensive disclosure requirements regarding executive compensation in our periodic reports and proxy statements. We will continue to be deemed a smaller reporting company until (i) our public float exceeds $250 million on the last day of our second fiscal quarter in our prior fiscal year (if our annual revenues exceeded $100 million in such prior fiscal year); or (ii) our public float exceeds $700 million on the last day of our second fiscal quarter in our prior fiscal year (if our annual revenues were less than $100 million in such prior fiscal year).
RECENT BUSINESS DEVELOPMENTS
On March 10, 2025, the Company signed a service agreement which provides for the overall rehabilitation to operational readiness of the Company's Belleville facility in Belleville, Ontario Canada (the "Belleville Facility"). Once the Belleville Facility becomes operationally ready and all government orders have been fulfilled, the Company will retain a third party to operate the Belleville Facility including an operate and manage agreement.
As a result of an order issued by the Ministry of Labour, Immigration, Training and Skills Development, specifically relating to high ammonia levels in one of the Company's composting buildings, the Company ceased accepting waste after January 10, 2024, to address this and other compliance matters issued by the MECP. The Company also received orders from the MECP to address repairs, the clean-up of unusable waste on site, re-habilitating its stormwater management system and other matters. Management anticipates these matters will take the balance of the year to be completed and be able to re-open. This will require significant investment and is dependent on the Company securing funding. Our operating property, vehicle and equipment will require significant investment to carry out repairs and improvements as ordered by the MECP. This will also include the replacement of certain equipment at the Company's Belleville Facility.
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Financings
(a) Securities Purchase Agreements
On March 31, 2025, the Company had and currently has 6 security purchase agreements outstanding with 4 investors. The outstanding principal balance at March 31, 2025 of the convertible promissory notes was $9,023,175, including accrued interest of $2,680,792 with a fair value of $12,707,666. Please refer to the consolidated financial statements, convertible promissory notes, note 10 and fair value measurement, note 11 for details on the convertible promissory notes.
Please refer to the interim condensed consolidated financial statements, convertible promissory notes, note 10 and fair value measurement, note 11 for details on the convertible promissory notes.
(b) Mortgages
On March 31, 2025, the Company had a total of six mortgages totaling $8,928,428 (C$12,835,578). The mortgages are all past due. Please refer to long-term debt, note 9, for details on the mortgages.
(c) Other Financings
On December 5, 2023 and January 9, 2024, the Company arranged for two loans from Haute Inc., in total $646,678 (C$929,670). The loans are accruing interest at the rate of 13% per annum.
On February 18, 2025, the Company raised $120,000 in a private placement for the issuance of 6,000,000 common shares to Travellers, priced at $0.02 per share.
On May 14, 2025, the Company raised $50,000 in a private placement for the issuance of 2,500,000 common shares to Travellers, priced at $0.02 per share.
On June 12, 2025, the Company raised $50,000 in a private placement for 2,500,000 common shares to Travellers, of the Company for $50,000, priced at $0.02 per share. The common shares are expected to be issued following the filing date.
Operations
The Company owns Environmental Compliance Approvals (the "ECAs") issued by the MECP from the Province of Ontario, in place to accept up to 70,000 metric tonnes ("MT") of waste annually from the provinces of Ontario, Quebec and from New York state, and to operate a waste transfer station with the capacity to process up to an additional 50,000 MT of waste annually. Once built, the location of the waste transfer station will be alongside the Organic and Non-Hazardous Waste Processing and Composting Facility which is currently operating in Belleville, Ontario, Canada.
Waste Transfer Station- Access to the waste transfer station is critical to haulers who collect waste in areas not in close proximity to disposal facilities where such disposal continues to be permitted. Tipping fees charged to third parties at waste transfer stations are usually based on the type and volume or weight of the waste deposited at the waste transfer station, the distance to the disposal site, market rates for disposal costs and other general market factors.
Organic Composting Facility- As noted above, the Company's Belleville Facility, located in Belleville, Ontario Canada, has ECAs in place to accept up to 70,000 MT of waste annually and is currently in operation. Certain assets of the organic waste processing and composting facility, including the ECAs for the waste transfer station (not yet built), were acquired by the Company on September 15, 2017, from the Receiver for Astoria, under the asset purchase agreement (the "APA"). The Company charges tipping fees for the waste accepted at the Belleville Facility based on arrangements in place with the customers and the type of waste accepted. Typical waste accepted includes, SSO, leaf and yard, food, liquid, paper sludge and biosolids. As a result of ceasing the acceptance of waste after January 10, 2024, there was no revenue from tipping fees or the sale of compost.
The Company owns a 41,535 square foot facility (approximately 27% complete) on 5.29 acres in Hamilton, Ontario (the "Hamilton Facility"), which includes an Environmental Compliance Approval to process 65,884 MT per annum of organic waste, 24 hours per day 7 days a week. The facility has been originally designed to produce, distribute and warehouse the Company's SusGro™ organic liquid fertilizer and other products that were anticipated to be provided under private label and to be sold through big box retailers, consumer lawn and garden suppliers, and for end use to the wine, cannabis and agriculture industries.
On July 28, 2024, the Company's real estate broker listed the Company's two properties located in Hamilton, Ontario, Canada, (the "Hamilton Facility") for sale. On the recommendation of the real estate broker, there was no selling price noted. Once the Hamilton Facility sale listing expired on February 28, 2025, it was not renewed.
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LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2025, the Company had a bank balance of $953 (December 31, 2024-$1,295) and current debt obligations and other current liabilities in the amount of $35,215,732 (December 31, 2024-$33,510,297). As at March 31, 2025, the Company had a working capital deficit of $35,167,772 (December 31, 2024-$33,441,301). The Company does not currently have sufficient funds to satisfy the current debt obligations.
The Company's total assets as at March 31, 2025 were $8,633,271 (December 31, 2024-$8,709,418) and total current liabilities were $35,215,732 (December 31, 2024-$33,510,297). Significant losses from operations have been incurred since inception and there is an accumulated deficit of $48,311,360 as at March 31, 2025 (December 31, 2024 -$46,429,702). Continuation as a going concern is dependent upon generating significant new revenue and generating external capital and securing debt to satisfy its creditors' demands and to achieve profitable operations while maintaining current fixed expense levels.
To pay current liabilities and to fund any future operations, the Company requires significant new funds, which the Company may not be able to obtain. In addition to the funds required to liquidate the $35,215,732 in current debt obligations and other current liabilities, the Company estimates that approximately $10,000,000 must be raised to fund capital requirements and general corporate expenses for the next 12 months.
In the normal course of business, we are exposed to market risks, including changes in interest rates, certain commodity prices and Canadian currency rates. The Company does not use derivatives to manage these risks.
As at March 31, 2025, the current and long-term portions of our debt obligations totaled $22,357,826 (December 31, 2024-$21,730,791). Except for one mortgage included under the long-term debt in the amount of $1,391,200 (C$2,000,000), all other debt is past due.
The current letter of credit required by the MECP for the Belleville Facility is $443,540 (C$637,637) and now $101,896 (C$146,487), while the Company re-assesses and re-submits it financial assurance to the MECP with the assistance of its environmental consultant. The Company has not yet satisfied this requirement of the MECP.
The letter of credit is a requirement of the MECP and is in connection with the financial assurance provided by the Company for it to be in compliance with the MECPs environmental objectives. The MECP regularly evaluates the Company's Belleville Facility to ensure compliance is adhered to and the letter of credit is subject to change by the MECP. The Company had engaged an environmental consulting firm to re-evaluate the financial assurance with the MECP which is based on the estimated environmental remediation and clean-up costs for the Belleville Facility. As a result of inspections carried out by the MECP during the prior years, some of which have resulted in MECP orders having been issued, the Company has accrued estimated and actual costs for corrective measures in orders issued by the MECP $2,692,633 (C$3,870,950) (December 31, 2024-$2,344,600; C$3,373,525).
CONSOLIDATED RESULTS OF OPERATIONS - FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2025 COMPARED TO THE THREE-MONTH PERIOD ENDED MARCH 31, 2024
| For the three-month periods ended |
||||||
| March 31, 2025 | March 31, 2024 | |||||
| Revenue | $ | 6,345 | $ | 38,575 | ||
| Cost of Sales | ||||||
| Opening inventory | - | - | ||||
| Depreciation | 62,679 | 78,933 | ||||
| Direct wages and benefits | 10,238 | 18,102 | ||||
| Equipment rental, delivery, fuel and repairs and maintenance | 376,881 | 172,870 | ||||
| Utilities | 922 | (5,201 | ) | |||
| Outside contractors | - | 4,448 | ||||
| 450,720 | 269,152 | |||||
| Less: closing inventory | - | - | ||||
| Total cost of sales | 450,720 | 269,152 | ||||
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| Gross loss | (444,375 | ) | (230,577 | ) | ||
| Operating expenses | ||||||
| Management compensation-stock-based compensation | - | 54,000 | ||||
| Management compensation-fees | 130,650 | 139,013 | ||||
| Marketing | - | 501 | ||||
| Professional fees | 106,395 | 160,387 | ||||
| Interest expense | 348,090 | 285,316 | ||||
| Office and administration | 69,132 | 57,122 | ||||
| Rent and occupancy | 55,513 | 60,330 | ||||
| Insurance | - | 14,649 | ||||
| Filing fees | 7,021 | 11,137 | ||||
| Amortization of financing costs | - | 57,516 | ||||
| Directors' compensation | 13,065 | 18,535 | ||||
| Repairs and maintenance | 261 | - | ||||
| Foreign exchange (income) loss | (20,197 | ) | 325,217 | |||
| Total operating expenses | 709,930 | 1,183,723 | ||||
| Net loss from operations before other expenses | (1,154,305 | ) | (1,414,300 | ) | ||
| Other expenses | (727,353 | ) | (111,444 | ) | ||
| Net Loss | $ | (1,881,658 | ) | $ | (1,525,744 | ) |
RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2025 AND 2024
As a result of an order issued by the Ministry of Labour, Immigration, Training and Skills Development, specifically relating to high ammonia levels in one of the Company's composting buildings at its Belleville Facility, the Company ceased accepting waste after January 10, 2024, to address this and other compliance matters issued by the MECP. The Company also received orders from the MECP to address repairs, the clean-up of unusable waste on site, re-habilitating its stormwater management system and other matters. Management anticipates these matters will take the balance of the year to be completed and be able to reopen in 2026. This will require significant investment and is dependent on the Company securing funding. The Company will require significant investment to carry out repairs and improvements, some of which as ordered by the MECP. This will also include replacement of certain equipment at the Belleville Facility.
During the three-month period ended March 31, 2025, the Company generated $6,345 of revenue from its Belleville Facility compared to $38,575 in the three-month period ended March 31, 2024. The decrease in revenue is due to the result of not accepting waste after January 10, 2024. The current revenue is from the sale of carbon credits. The prior period's revenue consists of tipping fees earned on the acceptance of waste during the short period the Belleville Facility was open and revenue from the sale of carbon credits.
In the operation of the Belleville Facility, the Company processes organic and other waste received and produces the end product, compost. The cost of sales totaled $450,720 for the three-month period ended March 31, 2025 compared to $269,152 for the three-month period ended March 31, 2024. These costs include equipment rental, delivery, fuel, repairs and maintenance, direct wages and benefits, depreciation, utilities and outside contractors. Included are costs for actual and estimated expenditures for completing certain known compliance matters as ordered by the MECP.
Operating expenses reduced by $473,793 from $1,183,723 in the three-month period ended March 31, 2024 to $709,930 in the three-month period ended March 31, 2025, explained further below.
Management compensation related to stock-based compensation reduced by $54,000, in the three-month period ended March 31, 2025 compared to the three-month period ended March 31, 2024, since any remaining stock-based compensation became fully vested by December 31, 2024. And the management compensation relating to fees reduced by $8,363 impacted only by the translation of the Canadian dollar fees to the United States dollar. In Canadian dollars, the fees were unchanged.
There has been no marketing plan in either three-month period thus no marketing expenses in the current three-month period ended March 31, 2025.
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Professional fees reduced by $53,992, from $160,387 in the three-month period ended March 31, 2024 to $106,395 in the three-month period ended March 31, 2025, primarily due to a reduction in legal fees incurred in addressing the orders issued by the MECP.
Interest expense increased by $62,774 from $285,316 in the three-month period ended March 31, 2024 to $348,090 in the three-month period ended March 31, 2025. This increase was primarily due to the new fourth mortgage for the Belleville Facility received in April 2024 and the interest accruing on the obligation owing to the Company's general contractor for the Hamilton Facility.
Office and administration expenses increased by $12,010, from $57,122 in the three-month period ended March 31, 2024 to $69,132 in the three-month period ended March 31, 2025. The increase was primarily due to an increase in interest and penalties related to unpaid accounts payable.
Rent and occupancy reduced nominally by $4,817 from $60,330 in the three-month period ended March 31, 2024 to $55,513 in the three-month period ended March 31, 2025.
Insurance reduced by $14,649 from $14,649 in the three-month period ended March 31, 2024 to $nil in the three-month period ended March 31, 2025, as the Company has no active insurance policies in place.
Filing fees decreased by $4,116, from $11,137 in the three-month period ended March 31, 2024 to $7,021 in the three-month period ended March 31, 2025, primarily due to the absence of an investor relations website service in the current three-month period ended March 31, 2025.
The amortization of financing costs reduced by $57,516, from $57,516 in the three-month period ended March 31, 2024 to $nil in the three-month period ended March 31, 2025, as the financing fees have now been fully amortized.
Directors' compensation reduced by $5,470 from $18,535 in the three-month period ended March 31, 2024 to $13,065 in the three-month period ended March 31, 2025, as there are now three independent directors compared to four in the prior period.
There were minimal repairs of $261 in the three-month period ended March 31, 2025 with no repairs in the prior three-month period ended March 31, 2024.
The foreign exchange loss in the three-month period ended March 31, 2024 in the amount of $325,217 reduced to income of $20,197 in the three-month period ended March 31, 2025 a change of $345,414, due primarily to the translation of significant United States dollar denominated balances, such as the convertible promissory notes during a period of a more stable Canadian dollar compared to the United States dollar.
During the current three-month period ended March 31, 2025, the Company recorded a loss on the revaluation of the convertible promissory notes in the amount of $618,755 compared to a loss of $133,686 in the three-month period ended March 31, 2024. In addition, the company recognized a provision for loss for a March 2022 convertible promissory note in the amount of $108,598. In the prior three-month period ended March 31, 2024, the Company recognized a gain of $22,242 on the forgiveness of a portion of the CEBA loans on repayment in January of 2024. Overall, the other expense increased by $615,909, from $111,444 in the three-month period ended March 31, 2024 to $727,353 in the three-month period ended March 31, 2025.
As at March 31, 2025, the Company had a working capital deficit of $35,167,772 (December 31, 2024-$33,441,301), incurred a net loss of $1,881,658 (March 31, 2024-$1,525,744) for the three months ended March 31, 2025 and had an accumulated deficit of $48,311,360 (December 31, 2024-$46,429,702) and expects to incur further losses in the development of its business.
These factors cast substantial doubt as to the Company's ability to continue as a going concern, which is dependent upon its ability to obtain the necessary financing to further the development of its business, satisfy its outstanding obligations to its creditors and upon achieving profitable operations. There is no assurance of funding being available or available on acceptable terms. Realization values may be substantially different from carrying values as shown.
The interim condensed consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result if the Company was unable to continue as a going concern.
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CRITICAL ACCOUNTING ESTIMATES
Use of estimates
The preparation of the Company's consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on management's best knowledge of current events and actions the Company may undertake in the future. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Areas involving significant estimates and assumptions include: the allowance for doubtful accounts, inventory valuation, useful lives of long-lived and intangible assets, impairment of long-lived assets and intangible assets, valuation of asset acquisition, accruals, fair value of convertible promissory notes, deferred income tax assets and related valuation allowance, environmental remediation costs, stock-based compensation and going concern. Actual results could differ from these estimates. These estimates are reviewed periodically and as adjustments become necessary, they are reported in earnings in the period in which they become available.
Stock-based compensation
The Company records compensation costs related to stock-based awards in accordance with ASC 718, Compensation-Stock Compensation, whereby the Company measures stock-based compensation cost at the grant date based on the estimated fair value of the award. Compensation cost is recognized on a straight-line basis over the requisite service period of the award. Where necessary, the Company utilizes the Black-Scholes option-pricing model to estimate the fair value of stock options granted, which requires the input of highly subjective assumptions including: the expected option life, the risk-free rate, the dividend yield, the volatility of the Company's stock price and an assumption for employee forfeitures. The risk-free rate is based on the U.S. Treasury bill rate at the date of the grant with maturity dates approximately equal to the expected term of the option. The Company has not historically issued any dividends and does not expect to in the near future. Changes in any of these subjective input assumptions can materially affect the fair value estimates and the resulting stock- based compensation recognized. The Company has not issued any stock options and has no stock options outstanding at March 31, 2025.
Indefinite Asset Impairments
The Company evaluates the intangible assets for impairment annually in the fourth quarter or when triggering events are identified and whether events and circumstances continue to support the indefinite useful life using Level 3 inputs.
Long-Lived Asset Impairments
In accordance with ASC 360, "Property, Plant and Equipment", long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.
The Company evaluates at each balance sheet date whether events or circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the carrying amounts are recoverable. In the event that such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value.
Convertible Promissory Notes
The Company has elected the fair value option to account for its convertible promissory notes issued after December 31, 2020. In accordance with ASC 825, the convertible promissory notes are marked-to-market at each reporting date with changes in fair value recorded as a component of other expenses, in the interim condensed consolidated statements of operations and comprehensive loss. The Company has elected to include interest expense in the changes in fair value. Transaction costs are incurred as expensed. The Company did not elect the fair value option for the convertible promissory notes issued in 2019. These notes are measured at amortized cost.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
There were no new accounting pronouncements issued and not yet adopted that were expected to have a material impact on the Company's interim condensed consolidated financial position or results of operations in the current or future periods.
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EQUITY
As at March 31, 2025, the Company had 137,332,019 common shares issued and outstanding. As at the date of this filing, the Company had 139,832,019 common shares issued and outstanding.
STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS
The Company has no stock options, warrants or restricted stock units outstanding as at March 31, 2025 and as of the date of this filing.
RELATED PARTY TRANSACTIONS
For the three-month period ended March 31, 2025, the Company incurred $104,520 (C$150,000) (2024-$111,210; C$150,000), 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 $26,130 (C$37,500) (2024-$27,803; C$37,500) in management fees expense with the Company's chief financial officer (the "CFO"). As at March 31, 2025, unpaid remuneration and unpaid expenses in the amount of $606,619 (C$872,081) (December 31, 2024-$488,294; C$702,581) is included in accounts payable and $238,964 (C$343,536) (December 31, 2024-$212,695; C$306,036) is included in accrued liabilities in the interim condensed consolidated balance sheets.
For the three-month period ended March 31, 2025, the Company incurred $24,511 (C$35,176) (2024-$31,266; C$42,172) in rent expense paid under a lease agreement with Haute Inc. ("Haute"), an Ontario company controlled by the CEO. The lease agreement had expired and the Company is currently on a month-to-month arrangement.
In the prior year, on January 11, 2024, Travellers converted $101,130 (C$135,600) of accounts payable into 809,044 common shares of the Company at the closing trading price immediately prior to the conversion. There was no gain or loss on this conversion.
For the independent directors, the Company recorded directors' compensation during the three months ended March 31, 2025 of $13,065 (C$18,750) (2024-$18,535; C$25,000). As at March 31, 2025, outstanding directors' compensation of $259,663 (C$373,293) (December 31, 2024-$246,407; C$354,543) is included in accrued liabilities, in the interim condensed consolidated balance sheets.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
As a smaller reporting company, as that term is defined in Item 10(f)(1) of Regulation S-K, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this Quarterly Report on Form 10-Q.
Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met. Due to inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Based on our evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective. The matters involving internal controls over financial reporting that may be considered material weaknesses included the small size of the Company and the resulting lack of a segregation of duties.
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Notwithstanding these material weaknesses, management has concluded that the unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q present fairly, in all material respects, the financial position, results of operations and cash flows in conformity with generally accepted accounting principles.
Changes in Internal Control over Financial Reporting
During the three-month period ended March 31, 2025, there were no changes made by management to its internal controls over financial reporting.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, the Company may become involved in litigation relating to claims arising from the ordinary course of business. Management believes that there are currently no claims or actions pending against us, the ultimate disposition of which would have a material adverse effect on our results of operations, financial condition, or cash flows, except as follows:
The Company has a claim against it for unpaid legal fees in the amount of $45,382 (C$65,241). The amount is included in accounts payable on the Company's consolidated balance sheets.
On October 4, 2023, an action was launched by one of the October 2021 Investors, who claimed he was owed $1,300,000 plus accrued interest. The principal balance in the accounts and noted under convertible promissory notes, note 10(a) is $2,034,269 (December 31, 2024-$1,957,337), which is after conversions of $318,100 during 2022 and 2023 and includes accrued interest of $734,269 (December 31, 2024-$657,337). The Company has disclosed the fair value of this convertible promissory note as $2,989,127 (December 31, 2024-$2,835,298). The Company intends to repay the balance owed when it is financially able to do so.
On November 27, 2023 and March 6, 2024, the Company experienced an outflow of leachate impacted water from the stormwater pond at the Belleville Facility into the City of Belleville's (the "City") roadside ditch. The Company is collaborating with its environmental consultants and its Canadian legal counsel to assess the damage caused, remediate this occurrence and report regularly to the MECP. As noted below, on August 30, 2024, the Company and the City remediated with a settlement in the amount of $90,428 (C$130,000). This amount is included under accrued liabilities in the Company's interim condensed consolidated balance sheets.
On October 24, 2023, the Company received a letter from the utility company for unpaid hydro bills in the amount of $233,228 (C$335,291). The amount of this original claim and any amounts subsequently invoiced are included in accounts payable on the Company's interim condensed consolidated balance sheets.
In addition, on November 17, 2023, the Company received an amended claim filed against it from 2023 by Tradigital in the sum of $219,834 in owed fees plus the difference in stock price, 300,000 common shares of the Company, plus attorney fees and expenses. The case went to arbitration on March 11, 2024 and the Company defended its position. On April 4, 2024, the International Centre for Dispute Resolution indicated that no additional evidence is to be submitted and the hearings were declared closed as of April 29, 2024. The tribunal endeavored to render the final decision within the timeframe provided for in the rules. Management agrees that outstanding fees, which are included in accounts payable in the interim condensed consolidated balance sheets, are only in the amount of $30,000, which was agreed to by the parties in earlier communications and through various e-mail correspondence. In addition, management has no issue with the outstanding common shares to be provided to the claimant totaling 300,000. Management believes that the additional claim amount of $189,834 is without merit. Of the total of 300,000 common shares, 50,000 have been issued and the remaining 250,000 were previously disclosed as shares to be issued in the consolidated statements of stockholders' deficiency. On April 26, 2024, the arbitrator for this claim awarded Tradigital the sum of $118,170 which had been accrued by the Company. In addition, the remaining 250,000 common shares were not required to be issued by the Company and are no longer disclosed as shares to be issued.
On April 1, 2024, the Company received notice of a complaint filed against it by one of the March 2022 Investors, seeking damages of no less than $4,545,393. The Company had thirty calendar days to respond and on April 30, 2024, the Company was able to extend the time to respond with opposing counsel, a further fifteen days. The Company has been unable to retain counsel to represent it in this matter. The full amount of the complaint was included in the accounts at December 31, 2023, March 31, 2024 and June 30, 2024. On May 21, 2024, the counsel for the plaintiff requested an entry for a default judgement against the Company. On September 11, 2024, the default judgement was filed in the amount of $2,848,744. In addition, pre-judgement interest was granted in the amount of $87,414 at the rate of 10% per annum on the principal balance from May 22, 2024 through September 11, 2024. On the filing of this default judgement, the March 2022 Investor removed two causes of action previously filed in their complaint which the Company received notice of on April 1, 2024 and accrued for accordingly. The impact of the removal of the two causes of action totaling $2,250,000, plus the additional pre-judgement and other interest charged resulted in a reduction in the previous accrual for loss in the amount of $1,191,033, which was disclosed in the December 31, 2024 consolidated financial statements. During the current three-month period ended March 31, 2025, the Company has accrued interest of 15% on the outstanding balance, as noted in the default judgement. Refer to note 15(b), other expenses.
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On May 16, 2024, the Company was informed by its Canadian legal counsel that the City issued an order against the Belleville Facility, its numbered company, 1684567 and its officers for the repayment of the cost of pumping out contaminated water from the City's roadside ditch, along with legal and other associated costs. On May 31, 2024, the companies and the officers filed notices of appeal to the Ontario Land Tribunal. The Company and its Canadian legal counsel were in discussions with the legal representatives from the City, to come to a resolution before any action by the Ontario Land Tribunal. On August 30, 2024, minutes of settlement were finalized between the City and the Company to settle for an amount of $90,428 (C$130,000) ten days following the sale of the Hamilton Facility. There are certain events of default, including not meeting the timeline set above and if the sale of the Hamilton Facility does not occur before January 31, 2025, it would result in the actual cost incurred by the City to be paid by the Company. The actual costs noted in the minutes of settlement totaled $133,896 (C$192,490). In addition, in connection with the minutes of settlement, the Company and its officers subsequently withdrew their appeals with the Ontario Land Tribunal on September 4, 2024, and the Ontario Land Tribunal closed their case. The Company's Hamilton Facility was not sold by January 31, 2025 and on February 10, 2025, the City issued a second order to the Companies and its two officers for an additional sum of $25,881 (C$37,207) representing additional costs resulting from the spill. The Company's counsel has responded to the City's counsel. See below on March 12, 2025.
On June 10, 2024, the Company received a statement of claim from the general contractor, Gillam Construction Group Ltd. ("Gillam"), for the construction of the Hamilton Facility. Gillam also named the Company's two officers as defendants. The Company and its Canadian legal counsel were able to resolve the matter with the Plaintiff with a final settlement of $2,017,240 (C$2,900,000) if paid on or before November 30, 2024. Effective December 1, 2024, as a result of non-payment by the Company, the final settlement was now $2,086,800 ($3,000,000) and accrues interest at a variable rate using the Bank of Nova Scotia prime rate plus four percent (4%), compounded daily, due February 1, 2025. The settlement reached was over and above the original amount included in the accounts of the Company. The Company provided for this excess in the amount of $300,565 (C$409,122) as a loss on settlement during the year ended December 31, 2024. On February 1, 2025, the Company signed an extension to May 29, 2025, to repay the principal amount of $2,086,800 (C$3,000,000) plus accrued interest and legal fees. Effective February 1, 2025, the principal amount is accruing interest at a fixed rate of twelve and one-half percent (12.5%) annually, compounded daily. On May 29, 2025, the Company signed an extension with Gillam, extending the repayment date from May 29, 2025 to August 15, 2025 on the same terms and conditions as the previous extension dated February 1, 2025.
On September 5, 2024, one of the Company's subsidiaries was served with a construction lien on the property at the Belleville Facility in the amount of $158,530 (C$227,904) representing outstanding accounts payable for environmental services provided by the contractor.
On March 3, 2025, the Company received a notice from the Ontario Supreme Court of Justice for unpaid fees with the Company's prior auditors. The outstanding amount includes fees of $49,444 (C$71,081), which is included under accounts payable in the consolidated balance sheets and interest charged of $27,181 (C$39,076), which has been provided for, in total $76,625 (C$110,157). On May 6, 2025, the Company received an amended notice of motion returnable the week of May 19, 2025. The plaintiff would also seek to recover other costs and disbursements along with additional interest.
On March 10, 2025, the City provided 1684567, the owner of the property at the Belleville Facility with a statement of outstanding property taxes, annual road maintenance assessments, interest, penalties and related totaling $157,071 (C$225,807). The outstanding property taxes, including annual road maintenance costs, interest and penalties at December 31, 2024, are included in accounts payable in the consolidated balance sheets.
On March 12, 2025, the City informed 1684567 for outstanding property taxes, other charges including the amounts described above for costs resulting from the spill at the Belleville Facility. The amount noted by the City includes certain costs relating to 2025, in total $299,575 ($430,672). The City is demanding payment on or before April 23, 2025. On April 22, 2025, the City and 1684567 signed an extension agreement to provide for the payment of the amounts noted above along with the property taxes to be invoiced by the City during the extension period and any additional interest and penalties. The payments are to be made monthly, commencing April 22, 2025 through to March 22, 2026 in the amount of $31,836 (C$45,767).
In a letter dated March 20, 2025, the Canada Revenue Agency (the "CRA"), informed the Company of outstanding harmonized sales taxes and payroll remittance amounts, including interest and penalties, owing for the Belleville Facility. The total amount is $531,497 (C$764,084) and includes amounts relating to 2025. The Company has included under accounts payable and under accrued liabilities in the consolidated financial statements the amounts owing as at March 31, 2025. Management has been in discussions with the CRA to repay the outstanding amounts over a reasonable amount of time once funding is received.
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Item 1A. Risk Factors.
As a smaller reporting company, we are not required to provide the information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three-month period ended March 31, 2025, the Company did not issue shares for non-cash proceeds and 6,000,000 shares for cash proceeds as follows:
(i) 6,000,000 common shares were issued on a private placement for $120,000.
The securities above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act since, among other things, the transactions did not involve a public offering.
Item 3. Defaults upon Senior Securities.
Refer to Financings (a) Securities Purchase Agreements and (b) Mortgages, on page 27.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
Not Applicable.
Item 6. Exhibits.
The following exhibits are filed as part of this quarterly report on Form 10-Q:
| * | Filed herewith |
| ** | Management contract or compensatory plan or arrangement |
| + | In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SUSGLOBAL ENERGY CORP. | ||
| June 16, 2025 | By: | /s/ Marc Hazout |
| Marc Hazout | ||
| Executive Chairman, President and Chief Executive Officer | ||
| June 16, 2025 | By: | /s/ Ike Makrimichalos |
| Ike Makrimichalos | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
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