SNRG - SusGlobal Energy Corp. Reports Fourth Quarter and Full Year 2021 Financial Results
Toronto, Ontario--(Newsfile Corp. - April 19, 2022) - SusGlobal Energy Corp. (OTCQB: SNRG) ("SusGlobal") or (the "Company"), the developer of SusGro™, a revolutionary pathogen-free organic liquid fertilizer and LEADERS IN THE CIRCULAR ECONOMY®, today announced financial results for the fourth quarter and full year ended December 31, 2021 and provided an update on its operational progress.
Recent Highlights
- On August 17, 2021, the Company purchased through its wholly-owned subsidiary, SusGlobal Energy Canada I Ltd. ("SusGlobal Canada I"), a 40,535 square foot facility on 3.26 acres (the "Property") located at 520 Nash Road North, in Hamilton, Ontario, which includes Environmental Compliance Approvals (the "ECAs") to process 65,884 metric tonnes per annum of organic waste. The total purchase price including costs of acquisition of $175,615 (C$221,680) totaled $3,590,773 (C$4,532,633). The purchase of the Property was funded by cash of $396,364 (C$500,333), the issuance of 300,000 common shares to the vendor on closing, having a value based on the trading price on the issuance date of $84,781 (C$107,020), the issuance of 200,000 common shares valued based on the trading price on the issuance date at $56,621 (C$71,347) to a consultant who assisted on the closing of the transaction, a vendor take-back 1st. mortgage of $1,584,400 (C$2,000,000) and a portion of the increased existing 1st. mortgage of $1,468,686 (C$1,853,933).The cost of the purchase price was allocated rateably over the estimated fair value of each asset acquired, land of $1,724,979 (C$2,177,442), building $1,556,002 (C$1,964,141) and the balance to the ECAs acquired.
- On August 19, 2021, the Company retained the award-winning firm ZAS Architects to design and develop its recently purchased Hamilton facility. The facility will be designed using Building Information Modelling (BIM) with advanced visualization, energy modelling and a high level of technical detailing to ensure building durability. In addition to processing organic waste as mentioned in the above paragraph, the facility will be able to produce, distribute and warehouse the Company's SusGro™ organic liquid fertilizer and other products that are provided under private label and sold through big box retailers, consumer lawn and garden suppliers, and for end use to the wine, cannabis and agriculture industries. With the addition of 11,000 square feet of office space and R&D labs, the Hamilton facility will also house the continued development of SusGlobal's proprietary formulations and branded liquid and dry organic fertilizers and other complimentary products.
- On August 24, 2021, the Company announced it is the recipient of the "2021 Product Innovation Award in the Fertilizer Market" awarded by Lucintel for the Company's SusGro™ Organic Liquid Fertilizer which serves the $20 billion organic segment of the $200 billion global fertilizer market. The award marks the most recent for SusGlobal, Leaders in The Circular Economy®, which has also been recognized by The Finnish Innovation Fund Sitra ("Sitra") as one of 39 inspiring circular economy solutions from around the globe during the World Circular Economy Forum. Lucintel chose SusGlobal for this award because of its novel product, a concentrated organic pathogen-free liquid fertilizer. SusGro™ Organic Liquid Fertilizer is an economical, sustainable and highly effective alternative to traditional fertilizers, as it adds nutrients to the soil improving water retention, soil fertility, and pore space to enhance crop productivity and produce healthy plants. With a full complement of nutrients suitable for a wide range of fertilization requirements, SusGro™'s Nitrogen, Phosphorus and Potassium ("NPK") Value is modifiable with a high concentration ratio of 1:100.
- On November 3, 2021, the Company announced that its wholly-owned subsidiary SusGlobal Energy Belleville Ltd. ("SusGlobal Belleville") signed an Offset Development and Marketing Agreement (the "Agreement") with Blue Source Canada ULC ("Bluesource") to develop and market greenhouse gas offset credits from the Company's 49-acre Organic & Non-Hazardous Waste Processing & Composting Facility in Belleville, Ontario, in order for the Company to monetize and realize benefits from its voluntary activities. This monetization is an exciting development for the Company's mission to reduce organic wastes from wood, leaf and yard material, treated municipal sewage waste (biosolids), residential curbside green bin material or source separated organics ("SSO") and paper sludge otherwise destined for landfills, allowing the Company to expand this mission. Bluesource has pioneered creative solutions to climate change for over 20 years. The Company expects to monetize in Q2, 2022.
- On January 5, 2022, the Company announced that its wholly-owned subsidiary SusGlobal Energy Belleville Ltd. ("SusGlobal Belleville") has received Licence # 2984, at Pt. Lot 20, Conc. 8, Geographic Township of Thurlow, City of Belleville, Hastings County, approved by The Ministry of Northern Development, Mines, Natural Resources and Forestry ("NDMNRF") to operate a pit above water under Section 18(3)1 of the Aggregate Resources Act ("ARA") for a 2.66 hectare site with a tonnage condition authorizing removal of 20,000 tonnes of aggregate annually from the site.
- On March 3, 2022, the Company executed two unsecured convertible promissory notes with two investors (the "Investors"), who purchased 25% original issue discount (the "OID") unsecured convertible promissory notes (the "Notes") in the aggregate principal amount totaling $2,000,000 (the "Principal Amount") with such Principal Amount convertible into shares of common stock from time to time triggered by the occurrence of certain events. The Notes carried an OID totaling $500,000 which is included in the principal balance of the Notes. The funds were received on March 7, 2022 and March 11, 2022.
The maturity date of the Notes is the earlier of (i) June 3, 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 Notes will increase to 120% of their original principal amounts. The Investors are entitled to, following an event of default, (as defined in the Notes) to convert all or any amount of the Principal Amount and any interest accruing at the default rate of 24% into common stock, at a conversion price (the "Conversion Price") equal to the lesser of 70% (representing a 30% discount) multiplied by the price per share of the common stock at any national security exchange or over-the-counter marketplace for the five (5) trading days immediately prior to the Investors' notice of conversion.
On March 14, 2022, the Company announced that its wholly owned subsidiary, SusGlobal Energy Canada Corp. ("SusGlobal Canada"), entered into a non-binding letter of intent to acquire a soil media, plant nutrients, and amendments producer approved for organic use and specifically formulated for producing high-quality fruit and flowering crops (the "Target") for an aggregate purchase price of US$15,701,885 (CA$20,000,000) (the "Acquisition"). As a condition of the Acquisition, SusGlobal Canada will make a US$3,925,471 (CA$5,000,000) investment into the Target and provided a US$157,018 (CA$200,000) deposit (the "Deposit") on March 8, 2022. SusGlobal Canada is preparing definitive transaction documents including a Share Purchase Agreement (the "SPA") for all of the shares of Target. If the closing of the Acquisition does not occur by an agreed upon date, the Deposit shall be refunded to SusGlobal Canada.
On March 21, 2022, the Company received Building Permit No. 21 158028 00 I3 from the City of Hamilton Building Division and on March 29th the Company announced that its wholly-owned subsidiary, SusGlobal Energy Hamilton Ltd. ("SusGlobal Hamilton"), commenced the development of its 51,535 square foot facility on 3.26 acres (the "Property") located at 520 Nash Road North, in Hamilton, Ontario, which includes an Environmental Compliance Approval ("ECA") to process up to 65,884 metric tonnes per annum of organic waste into regenerative products as part of the Company's circular economy model and continued climate change initiatives. Completion of the second facility is on track and slated for Q3, 2022, is expected to generate, starting in 2023, an annual revenue run rate of US$106,000,000 (CA$135,000,000), based on 12,000 Metric Tonnes of organic waste processing or 18.5% of the Environmental Compliance Approval capacity in the first 12 months of processing.
Revenue decreased by 66.63% during the fourth quarter of 2021 to $144,246 compared to the fourth quarter of 2020 in the amount of $432,263, from decreased business from the Company's organic waste processing and composting facility.
"We continue to process municipal organic waste streams, diverting them from landfills, while producing regenerative products as part of our Circular Economy model. We have confidence in a revenue ramp up this year," said Marc Hazout, Executive Chairman, President and CEO of SusGlobal Energy Corp. "Our goal is to complete the acquisition strategy and have our second facility commence the commercialization of our proprietary organic liquid fertilizer in order to increase revenue and cash flow, maximizing shareholder value with an objective to up-list to a major exchange."
Unaudited 2021 Fourth Quarter Financial Results
For the fourth quarter ended December 31, 2021, SusGlobal recorded:
- Revenue of $144,246.
- Cost of sales of $19,667.
- Operating expenses of $1,003,039 comprised of $187,119 of interest expenses, $452,807 of professional fees, $163,898 of office and administration, $148,217 of stock-based compensation, 139,812 of marketing, offset by a reduction of amortization of financing costs of $270,485.
- Net loss of $2,341,551, or $0.02 loss per share- basic and diluted.
- Included in the other (loss) income for the period was a charge of $1,018,825 on the revaluation of the convertible promissory notes and impairment losses of $513,254, offset by a gain on the forgiveness of a convertible promissory note, including accrued interest of $60,756.
- Adjusted EBITDA (a non-GAAP financial measure) loss of $2,157,091.
- $8,571,721 in total assets at the end of the year, with total current liabilities of $13,944,507.
About SusGlobal Energy Corp.
SusGlobal Energy Corp., the developer of SusGro™, an award winning and revolutionary pathogen free organic liquid fertilizer, is an industrial, environmental and agricultural biotechnology company focused on acquiring, developing, and monetizing a portfolio of proprietary technologies in the waste to energy and regenerative product applications globally. It is management's objective to grow SusGlobal into a significant sustainable waste to energy and regenerative products provider and a trusted brand for the fertilizer, soil and aquaculture market, as LEADERS IN THE CIRCULAR ECONOMY®. For more information, please visit the Company's website at: www.susglobalenergy.com
In accordance with SEC Regulation G, the non-GAAP measurements in this press release have been reconciled to the nearest GAAP measurement, which can be viewed under the heading "Interim Condensed Consolidated Reconciliation of Non-GAAP Information" in the financial table included in this press release.
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's objectives. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes," "intends," "estimates," "projects," "aims," "potential," "goal," "objective," "prospective," and similar expressions, or that events or conditions "will," "would," "may," "can," "could" or "should" occur. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking statements as a result of various factors, including, but not limited to, lack of sufficient financial resources; variations in market conditions, currency and our stock; the Company's ability to obtain any necessary permits, approvals, consents or authorizations required for its activities; the Company's ability to produce energy, biogas, compost or organic fertilizer from its properties successfully or profitably, to continue its projected growth, or to be fully able to implement its business strategies and other risk factors described in the Company's filings with the U.S. Securities and Exchange Commission, which may be viewed at www.sec.gov.
- Financial Tables Follow -
SusGlobal Energy Corp.
Consolidated Balance Sheets
As at December 31, 2021 and 2020
(Expressed in United States Dollars)
| |
| 2021 |
| 2020 |
| |
| ASSETS |
| |
| Current Assets |
| |
| Cash |
| $ |
| 36,033 |
| $ |
| 6,457 |
| |
| Trade receivables |
| 59,665 |
| 182,871 |
| |
| Government remittances receivable |
| 13,265 |
| 3,746 |
| Inventory |
| 20,582 |
| 24,740 |
| Prepaid expenses and deposits |
| 163,343 |
| 94,131 |
| Deferred assets |
| - |
| 215,953 |
| |
| Total Current Assets |
| 292,888 |
| 527,898 |
| |
| Intangible Assets |
| - |
| 188,180 |
| Long-lived Assets, net |
| 8,278,833 |
| 5,042,225 |
| Long-Term Assets |
| 8,278,833 |
| 5,230,405 |
| Total Assets |
| $ |
| 8,571,721 |
| $ |
| 5,758,303 |
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY |
| Current Liabilities |
| Accounts payable |
| $ |
| 1,085,235 |
| $ |
| 1,073,454 |
| Government remittances payable |
| 262,047 |
| 229,358 |
| Accrued liabilities |
| 942,241 |
| 1,206,618 |
| Advance |
| - |
| 15,460 |
| Deferred revenue |
| - |
| 4,790 |
| Current portion of long-term debt |
| 7,765,421 |
| 6,327,520 |
| Current portion of obligations under capital lease |
| 91,047 |
| 375,140 |
| Convertible promissory notes |
| 3,798,516 |
| 1,092,100 |
| Loans payable to related parties |
| - |
| 33,772 |
| Total Current Liabilities |
| 13,944,507 |
| 10,358,212 |
| Long-term debt |
| 1,752,271 |
| 78,540 |
| Obligations under capital lease |
| 130,086 |
| - |
| Deferred tax liability |
| 73,925 |
| 82,501 |
| Total Long-term Liabilities |
| 1,956,282 |
| 161,041 |
| Total Liabilities |
| 15,900,789 |
| 10,519,253 |
| Stockholders' Deficiency |
| Preferred stock, $.0001 par value, 10,000,000 authorized, none issued and outstanding Common stock, $.0001 par value, 150,000,000 authorized, 92,983,547 (2020- 82,860,619) shares issued and outstanding |
| 9,302 |
| 8,288 |
| Additional paid-in capital |
| 11,272,599 |
| 9,045,187 |
| Shares to be issued |
| 59,640 |
| 8,580 |
| Accumulated deficit |
| (18,334,649 |
| ) |
| (13,468,794 |
| ) |
| Accumulated other comprehensive loss |
| (335,960 |
| ) |
| (354,211 |
| ) |
| Stockholders' deficiency |
| (7,329,068 |
| ) |
| (4,760,950 |
| ) |
| Total Liabilities and Stockholders' Deficiency |
| $ |
| 8,571,721 |
| $ |
| 5,758,303 |
SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Operations and Comprehensive Loss
For the three-month periods ended December 31, 2021 and 2020
(Expressed in United States Dollars)
(Unaudited)
| For the three-month periods ended |
| |
| December 31, 2021 |
| December 31, 2020 |
| Revenue |
| $ |
| 144,246 |
| $ |
| 432,263 |
| |
| Cost of Sales |
| Opening inventory |
| - |
| - |
| Depreciation |
| 118,339 |
| 137,104 |
| Direct wages and benefits |
| 54,056 |
| 76,865 |
| Equipment rental, delivery, fuel and repairs and maintenance |
| (247,566 |
| ) |
| 401,304 |
| Utilities |
| 56,817 |
| 15,080 |
| Outside contractors |
| 37,097 |
| 385 |
| 18,743 |
| 630,738 |
| Add (less): closing inventory |
| 924 |
| (24,740 |
| ) |
| Total cost of sales |
| 19,667 |
| 605,998 |
| |
| Gross profit (loss) |
| 124,579 |
| (173,735 |
| ) |
| |
| Operating expenses |
| Management compensation-stock- based compensation |
| 54,258 |
| - |
| Management compensation-fees |
| 10,693 |
| 52,930 |
| Marketing |
| 139,812 |
| - |
| Professional fees |
| 452,807 |
| 90,134 |
| Interest expense and default payments |
| 187,119 |
| 297,381 |
| Office and administration |
| 163,898 |
| 54,125 |
| Rent and occupancy |
| 34,952 |
| 30,665 |
| Insurance |
| 30,232 |
| 16,776 |
| Filing fees |
| 37,130 |
| 10,993 |
| Amortization of financing costs |
| (270,485 |
| ) |
| 11,880 |
| Directors' compensation (recovery) |
| 14,895 |
| (19,451 |
| ) |
| Stock-based compensation |
| 93,959 |
| 56,571 |
| Repairs and maintenance |
| 30,708 |
| 1,110 |
| Foreign exchange loss (income) |
| 23,061 |
| (90,180 |
| ) |
| Total operating expenses |
| 1,003,039 |
| 512,934 |
| |
| Net Loss from operating activities |
| (878,460 |
| ) |
| (686,669 |
| ) |
| Other (loss) income |
| (1,472,081 |
| ) |
| 239,405 |
| |
| Net loss before deferred taxes recovery |
| (2,350,541 |
| ) |
| (447,264 |
| ) |
| Income taxes recovery (provision) |
| 8,990 |
| (57,543 |
| ) |
| Net Loss |
| (2,341,551 |
| ) |
| (504,807 |
| ) |
| Other comprehensive loss |
| Foreign exchange loss |
| 2,431 |
| (207,550 |
| ) |
| |
| Comprehensive loss |
| $ |
| (2,339,120 |
| ) |
| $ |
| (712,357 |
| ) |
| Net loss per share-basic and diluted |
| $ |
| (0.02 |
| ) |
| $ |
| (0.01 |
| ) |
| |
| Weighted average number of common shares outstanding- basic and diluted |
| 93,857,932 |
| 79,845,460 |
SusGlobal Energy Corp.
Interim Condensed Consolidated Reconciliation of Non-GAAP Information
For the three-month periods ended December 31, 2021 and 2020
(Expressed in United States Dollars)
(Unaudited)
| For the three-month periods ended |
| December 31, 2021 |
| December 31, 2020 |
| |
| Net loss (GAAP) |
| $ |
| (2,341,551 |
| ) |
| $ |
| (504,807 |
| ) |
| Add the following items: |
| Interest expense |
| 187,119 |
| 297,381 |
| Depreciation and amortization |
| 119,609 |
| 143,664 |
| Stock-based compensation |
| 148,217 |
| 56,571 |
| Amortization of financing costs |
| (270,485 |
| ) |
| 11,880 |
| Adjusted EBITDA (non-GAAP) |
| $ |
| (2,157,091 |
| ) |
| $ |
| 4,689 |
Contact
SusGlobal Energy Corp.
Marc Hazout, President and CEO
(416) 223-8500 or Toll Free: 1-866-512-7374
Email: info@susglobalenergy.com
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/120791