Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X]      No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large"large accelerated filer,” “accelerated filer”" "accelerated filer," "smaller reporting company" and “smaller reporting company” and “emerging"emerging growth company”company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. [X]

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

Securities registered pursuant to Section 12(b) of the Act:

The number of shares of the registrant’sregistrant's common stock outstanding as of May 15, 20192020 was 42,484,53164,859,127 shares.

pg.

2

SusGlobal Energy Corp.
INDEX TO FORM 10-Q
For the Three-Month Periods Ended March 31, 2019 and 2018

pg.

3

SUSGLOBAL ENERGY CORP.
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2019 and 2018

SUSGLOBAL ENERGY CORP.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020 and 2019

(Expressed in United States Dollars)

CONTENTS

Interim Condensed Consolidated Balance Sheets	5
Interim Condensed Consolidated Statements of Operations and Comprehensive Loss	6
Interim Condensed Consolidated Statements of Stockholders’Stockholders' Deficit	7
Interim Condensed Consolidated Statements of Cash Flows	8
Notes to the Interim Condensed Consolidated Financial Statements	9-20 9-22

pg.

4

SusGlobal Energy Corp.
Interim Condensed Consolidated Balance Sheets

SusGlobal Energy Corp.

Interim Condensed Consolidated Balance Sheets

As at March 31, 2020 and December 31, 2019

(Expressed in United States Dollars)

(unaudited)

As at March 31, 2019 and December 31, 2018
(Expressed in United States Dollars)
(unaudited)

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

pg.

5

SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Operations and Comprehensive Loss
For the three-month periods ended March 31, 2019 and 2018
(Expressed in United States Dollars)
(unaudited)

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

pg.

6

SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Changes in Stockholders’ Deficiency

SusGlobal Energy Corp.

Interim Condensed Consolidated Statements of Changes in Stockholders' Deficiency

For the three-month periods ended March 31, 2020 and 2019

(Expressed in United States Dollars)

(unaudited)

For the three-month periods ended March 31, 2019 and year ended December 31, 2018
(Expressed in United States Dollars)
(unaudited)

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

pg.

7

SusGlobal Energy Corp.
Interim Condensed Consolidated Statements of Cash Flows
For the three-month periods ended March 31, 2019 and 2018
(Expressed in United States Dollars)
(unaudited)

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

pg.

8

1. Nature of Business and Basis of Presentation

SusGlobal Energy Corp. (“SusGlobal”("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”("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”"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”"Shares"). As a result of the Domestication, pursuant to Section 388 of the General Corporation Law of the State of Delaware (the “DGCL”"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, 23, 2017.

On December 11, 2018, the Company began trading on the OTCQB venture market exchange, under the ticker symbol SNRG.

SusGlobal is a renewable energy 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., SusGlobal Energy Canada I Ltd. (“SGECI”("SGECI") and, SusGlobal Energy Belleville Ltd. ("SGEBL") and 1684567 Ontario Inc. ("1684567") (together, the “Company”"Company"), have been prepared following generally accepted accounting principles in the United States (“("US GAAP”GAAP") for interim financial information and the Securities Exchange Commission (“SEC”("SEC") instructions to Form 10-Q and Article 8 of SEC Regulation S-X, and are expressed in United States Dollars. The Company’sCompany's functional currency is the Canadian Dollar (“CAD”("CAD"). 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.

As at March 31, 2019,2020, the Company had a working capital deficit of $5,565,973$8,367,335 (December 31, 2018-2019-$4,830,948)8,203,742), incurred a net loss of $1,080,544 (2018-$755,290 (2019-$483,617)1,080,544) for the three months ended March 31, 20192020 and had an accumulated deficit of $9,634,856$12,204,787 (December 31, 2018-2019-$8,554,312)11,449,497) and expects to incur further losses in the development of its business.

On March 31, 2020, Pace Savings & Credit Union Limited ("PACE") and the Company reached an agreement for the repayment of the outstanding amounts owing to PACE. One of the credit facilities, in the amount of $34,391 ($48,788 CAD), was repaid in full on April 3, 2020 and the remaining credit facilities and the corporate term loan are to be repaid on or before September 30, 2020. Management continues discussions with a Canadian chartered bank to re-finance its remaining obligations to PACE.

The Company has defaulted on the convertible promissory notes (see note 12). As a result, the amounts owing to PACE (see note 10) and the obligations under capital lease (see note 11), are also in default.

9

2. Going Concern, (continued)

These factors cast substantial doubt as to the Company’sCompany's ability to continue as a going concern, which is dependent upon its ability to obtain the necessary financing to further the development of its business, satisfy its obligations to PACE Savings & Credit Union Limited (“PACE”)and its other creditors, whose debts are also in default 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.

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

These interim condensed consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result if the Company was unable to continue as a going concern.

3. Significant Accounting Policies

These interim condensed consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements of the Company for the years ended December 31, 20182019 and 20172018 and their accompanying notes.

Recently Adopted Accounting Pronouncements:

On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases which is also known as Accounting Standard Codification (“ASC”) Topic 842, that requires lessees to recognize for all operating leases a right-of-use asset and a lease obligation in the interim condensed consolidated balance sheets. Expenses are recognized in the interim condensed consolidated statements of operations and comprehensive loss in a manner similar to previous accounting guidance. Lessor accounting under the new standard is substantially unchanged and is not relevant to the Company. The Company adopted the accounting standard using a prospective transition approach, which applies the provisions of the new guidance at the effective date without adjusting the comparative periods presented, with certain practical expedients available to ease the burden of adoption.

The Company elected the following practical expedients upon adoption: not to reassess whether any expired or existing contracts are or contain leases, not to reassess the lease classification for any expired or existing leases, not to reassess initial direct costs for any existing leases, not to separately identify lease and non-lease components (i.e. maintenance costs) except for fleet vehicles and real estate, and not to evaluate historical land easements under the new guidance. Additionally, the Company elected the short-term lease exemption policy, applying the requirements of ASC 842 to long-term leases (leases greater than 1 year) for which it only has one.

Adoption of the new standard resulted in $217,755 ($297,074 CAD) of additional right-of-use lease asset and lease liability as of January 1, 2019. The new standard did not have a significant impact on the interim condensed consolidated statements of operations and comprehensive loss. See note 8, operating lease right-of-use asset, for additional information.

4. Recent Adopted Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the financial accounting standards board (the “FASB”"FASB") or other standard setting bodies and adopted by the Company as of the specified effective date or possibly early adopted, where permitted. Unless otherwise discussed, the impact of recently issued standards that are not yet effective are not expected to have a material impact on the Company’sCompany's financial position, results of operations or cash flows.

InOn January 2017,1, 2020, the FASB issuedCompany adopted ASU No. 2018-13, "Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurements to ASC Topic 820, Fair Value Movement. ASU No. 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, and/or adding certain disclosures. The adoption of ASU No. 2018-13, did not have a significant impact on the Company's consolidated financial statements.

On January 1, 2020, the Company adopted ASU No. 2017-04, “Intangibles-Goodwill"Intangibles-Goodwill and Other (Topic 350) - Simplifying the Test for GoodwillImpairment”GoodwillImpairment". The new standard simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill quantitative impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is to be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The standard is to be effective for interim and annual periods beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU No. 2017-04.

In June 2016,2017-04, did not have a significant impact on the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for mostCompany's consolidated financial assets, including trade receivables. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances for credit losses limited to the amount by which fair value is below amortized cost. ASU 2016-13 is effective for the Company beginning January 1, 2020 and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will be material to its financial position, results of operations and cash flows.statements. 

pg.

10

5. Financial Instruments

The carrying value of cash and cash equivalents, funds held in trust, trade and other receivables, bank indebtedness, accounts payable and accrued liabilities approximated their fair values as of March 31, 2020 and December 31, 2019, due to their short-term nature. The carrying value of the advance, long-term debt, obligations under capital lease, convertible promissory notes, operating lease obligationmortgage payable and loans payable to related partiesparty approximated their fair values due to their market interest rates.

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.

In the opinion of management, the Company is exposed to significant interest rate risk on its long-term debt, convertible promissory notes and mortgage payable of $3,784,588$6,830,907 ($5,057,5819,690,604 CAD) (December 31, 2018-(2019-$3,727,778; $5,085,6457,199,706; $9,351,482 CAD).

Credit risk is the risk of loss associated with a counterparty's inability to perform its payment obligations. As at March 31, 2019,2020, the Company's credit risk is primarily attributable to cash and cash equivalents and trade receivables.  As at March 31, 2020, the Company's cash and cash equivalents were held with reputable Canadian chartered banks and a credit union.

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, 2020, the allowance for doubtful accounts was $668 ($948 CAD) (December 31, 2019-$730; $948 CAD).

As at March 31, 2020, the Company is exposed to concentration risk as it had six customers (2018-five(December 31, 2019-six customers) representing greater than 5% of total trade receivables and these six customers (December 31, 2018-five2019-six customers) represented 93% (2018-90%85% (December 31, 2019-90%) of trade receivables. The Company had certain customers whose revenue individually represented 10% or more of the Company’sCompany's total revenue. These customers accounted for 90% (42%86% (27%,14%, 12%, 12%, 11% and 10%) (March 31, 2019-90%; 42%, 26%, 11% and 11%) (March 31, 2018-69%; 24%, 23% and 22%) of total revenue.

Liquidity Risk

Liquidity risk is the risk that the Company is unable to meet its obligations as they fall due. The Company takes steps to ensure it has sufficient working capital and available sources of financing to meet future cash requirements for capital programs and operations. Management is in discussions with a Canadian chartered bank to refinance its obligations to PACE and to another creditor. 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’sCompany's capital programs. In order to continue operations, the Company will need to raise capital.capital, repay PACE for all of its outstanding obligations and complete the refinancing of its real property and organic composting facility. There is no assurance of funding being available or available on acceptable terms. Realization values may be substantially different from carrying values as shown. Refer also to going concern, note 2.

Currency Risk

Although the Company’sCompany's functional currency is the CAD, the Company realizes a portion of its expenses in USD. Consequently, certain assets and liabilities are exposed to foreign currency fluctuations. As at March 31, 2019, $63,1042020, $379,228 (December 31, 2018-2019-$68,393)258,403) of the Company’sCompany's net monetary liabilities were denominated in USD. The Company has not entered into any hedging transactions to reduce the exposure to currency risk.

11

6. Restricted Cash-Funds Held in Trust

The funds held in trust are required to satisfy certain outstanding payments to PACE, including the repayment in full of one of the credit facilities in the amount of $34,391 ($48,788 CAD) and to bring the remaining outstanding PACE amounts current. The funds held in trust were provided to PACE on April 3, 2020. Refer also to going concern, note 2 and long-term debt, note 10.

7. Intangible Assets

On May 6, 2015,In 2019 and for the Company acquired an exclusive license from Syngas SDN BHD (“Syngas”), a Malaysian company to use Syngas intellectual property within North America for athree-month period of five years for $1 consideration, renewable every five years upon written request. Syngas manufactures equipment that produces liquid transportation fuel from plastic waste material. The Company issued 20,000 common shares of the Company to an introducing party, determined to be valued at $2,000.

Onended March 14, 2019,31, 2020, the Company incurred fees to register various trademarks in the United States and Canada.Canada, in the amount $13,347 ($18,935 CAD).

On September 15, 2017, the Company acquired the environmental compliance approvals, having an indefinite life, on the purchase of certain assets of Astoria from BDO Canada Limited (‘BDO”("BDO") under an asset purchase agreement (the “APA”"APA").

8. Long-lived Assets, net

pg. 11

12

7.Long-lived Assets, net

Included above are certain assets of Astoria acquired from BDO under the APA, which closed on September 15, 2017. The purchase price for the purchased assets, described as an organic composting facility, including composting buildings, gore cover system, driveway and paving, certain machinery and equipment, an office trailer, certain computer equipment and computer software consisted of cash of $3,026,114 ($3,917,300 CAD) and 529,970 restricted common shares of the Company, determined to be valued at $529,970 ($700,000 CAD), based on recent private placement pricing. In addition, legal costs in connection with acquiring the assets of $22,598 ($29,253 CAD), are included in the cost of the composting buildings. The purchase price was allocated to the assets acquired based on their estimated relative fair value as at the date the assets were acquired.

8. Operating Lease Right-of-Use Asset

The Company has one operating lease right-of-use asset and related operating leasae liability and has recognized as such, effective January 1, 2019, based on the present value of lease payments over the lease term that expires on March 31, 2034, calculated to be $217,755 ($297,074 CAD) which were included in the interim condensed consolidated balance sheet. The Company has used its estimated secured incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The operating lease right-of-use asset is being amortized on a straight-line basis over the lease term which expires March 31, 2034 and amortization expense is included under office and administration expense in the interim condensed consolidated statements of operations and comprehensive loss. The Company does not act as a lessor nor does it have any leases classified as financing leases.

The operating lease right-of-use asset is periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant and Equipment-Overall, to determine whether the operating lease right-of-use asset is impaired, and if so, the amount of the impairment loss to recognize.

The Company monitors for events or changes in circumstances that require a reassessment of its operating lease right-of-use asset. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding operating lease right-of-use asset.9. Related Party Transactions

For the three-month period ended March 31, 2019, the Company recorded $3,663 ($4,870 CAD (2018-$nil; $nil CAD) for the amortization of the operating lease right-of-use asset.

The following summarizes quantitative information about the Company’s operating lease:

9. Related Party Transactions

During the three-month period ended March 31, 2019,2020, the Company incurred $33,849$33,494 ($45,000 CAD)  (2018-(2019-$35,595;33,849; $45,000 CAD)  in management fees expense with Travellers International Inc. (“Travellers”("Travellers"), an Ontario company controlled by a director and the president of the Companyand chief executive officer (the “President”"CEO"); $33,849$nil ($45,000nil CAD)  (2018-(2019-$35,595;33,849; $45,000 CAD) in management fees expense with Landfill Gas Canada Ltd. (“LFGC”("LFGC"), an Ontario company controlled by a former director and former chief executive officer of the Company (the “CEO”); $13,540and $17,863 ($18,00024,000 CAD) (2018-(2019-$9,492; $12,00013,540; $18,000 CAD)  in management fees expense with the Company’sCompany's chief financial officer (the “CFO”); and $nil ($nil CAD) (2018-$9,492; $12,000 CAD) in management fees expense with the Company’s vice-president of corporate development (the “VPCD”"CFO").  As at March 31, 2019,2020, unpaid remuneration and unpaid expenses in the amount of $80,759$304,324 ($107,923431,727 CAD) (December 31, 2018-2019-$48,691; $66,426324,303; $421,227 CAD) is included in accounts payable and $177,347$11,278 ($237,00016,000 CAD) (December 31, 2018-2019-$184,714; $251,99712,318; $16,000 CAD) is included in accrued liabilities.liabilities in the interim condensed consolidated balance sheets.

In addition, during the three-month period ended March 31, 2019,2020, the Company incurred interest expense of $3,802$441 ($5,055592 CAD) (2018-(2019-$293; $3713,802; $5,055 CAD) on the outstanding loans from Travellers and $1,669$nil ($2,219nil CAD) (2018-(2019-$nil; $nil1,669; $2,219 CAD) on the outstanding loans from the directors. As at March 31, 2019,2020, interest of $23,698$417 ($31,669592 CAD) (December 31, 2018-2019-$17,882; $24,395nil; $nil CAD) on thesethe loans outstanding to Travellers is included in accrued liabilities.liabilities in the interim condensed consolidated balance sheets.

DuringFor the three-month period ended March 31, 2019,2020, the Company incurred $16,998$17,523 ($22,59823,543 CAD) (2018-(2019-$15,500; $19,59516,998; $22,598 CAD) in rent expense paid under a rental agreement towith Haute Inc. (“Haute”("Haute"), an Ontario company controlled by the President.CEO.

TheFor those independent directors providing their services throughout 2019, the Company accrued directors’directors' compensation for itstotaling $1,200, based on the subsequent issuance of 20,000 common shares of the Company to each of the five independent directors that are expected to be issued subsequent to March 31, 2020. And, for services provided in the three-month period ended March 31, 2020, $240 (2019-$2,200). The directors' compensation was priced based on the trading price of the shares at the close of business on March 31, 2020 and will be recorded based on the trading price of the shares, immediately prior to issuance. Also included in directors' compensation for the three-month period ended March 31, 20192020, are the audit committee chairman's fees, in the amount of $2,952 (2018-$791)$744 ($1,000 CAD) (2019 $752; $1,000 CAD). As at March 31, 2019, $54,2002020, outstanding directors' compensation of $797 ($1,130 CAD) (December 31, 2018-2019-$52,000) of outstanding fees to the directors3,480; $4,520 CAD) is included in accounts payable and $2,145 (December 31, 2019-$3,650) is included in accrued liabilities.liabilities, in the interim condensed consolidated balance sheets.

Furthermore, for the three-month period ended March 31, 2020, the Company grantedrecognized management compensation expense of $nil (2019-$332,500), on the CEO 3,000,000vesting of restricted stock units (“RSU”("RSUs"), under a consulting agreement effective granted in prior years to the CEO and the former chief executive officer. On January 1, 2017, determined to be valued at $990,000 based on private placement pricing at10, 2020, the time. On each of February 25, 2018 and April 2, 2019, 1,000,000CEO's remaining RSUs were exchanged into 1,000,000 common stock of the Company. The RSUs for the remaining installment are expected to vest annually on January 1, 2020, subject to meeting certain performance objectives. On May 17, 2018, at a meeting of the board of directors (the “Board”), approved an amendment to the President’s consulting agreement, to include the granting of 3,000,000 RSUs to the President, determined to be valued at $3,000,000, based on private placement pricing at the time, on the same terms and conditions as those granted to the CEO. Immediately thereafter, 1,000,000 of the President’s RSUs were exchanged for 1,000,000 common stock of the Company. On January 9, 2019, 1,000,000 of the President’s RSUs were exchanged into 1,000,000 common stockshares of the Company. Based on private placement pricing at the time of the granting of the RSUs, the common stockshares issued to the PresidentCEO on eachthe exchange of the 1,000,000 RSUs, was determined to be valued at $1,000,000. The RSUs for the remaining installment are expected to vest annually on January 1, 2020, subject to meeting certain performance objectives.

For the three-month period ended March 31, 2019, the Company recognized management compensation expense of $332,500 (2018-$82,500 on the award to the CEO) on the awards to the President and the CEO, representing one-sixth of the total value of the awards of $3,990,000, based on private placement pricing at the time.

pg.

13

10. Long-Term Debt

The presentation above is based on the due on demand terms of the long-term debt. 

On March 31, 2020, PACE and the Company reached an agreement with respect to the repayment of the outstanding balances owing to PACE. One of the credit facilities, in the amount of $34,391 ($48,788 CAD), was repaid in full on April 3, 2020, as noted below and the remaining credit facilities and the corporate term loan are due on or before September 30, 2020. On April 3, 2020, the Company provided PACE with funds, held in trust on March 31, 2020, to bring the remaining credit facilities and the corporate term loan current. The funds remaining, which were held in trust on March 31, 2020 are to be used to satisfy the principal and interest payments on the noted debt through July 2020. In addition, the letter of credit the Company has with PACE in favor of the Ministry of the Environment, Conservation and Parks (the "MECP"), will be renewed from the current expiry date of June 30, 2020 to September 30, 2020, at the appropriate time. On April 3, 2020, the shares previously pledged as security to PACE, were released. However, the personal guarantee from the CEO and charge against the Company's premises lease remain unchanged. This long-term debt is considered to be in default as a result of defaults on the convertible promissory notes (see note 12). As a result, PACE may demand repayment before September 30, 2020.

Refer also to going concern, note 2.

The long-term debt was initially payable  as noted below.

14

Repayments are as follows:10. Long-Term Debt, (continued)

For the three-month period ended March 31, 2019, $77,6192020, $76,749 ($103,189103,116 CAD) (2018-(2019-$80,775; $102,11877,619; $103,189 CAD) in interest was charged.incurred. As at March 31, 2020 $187,066 ($265,379 CAD) (December 31, 2019-$124,926; $162,263 CAD) in accrued interest is included in accrued liabilities.

11. Obligations under Capital Lease

As a result of the convertible promissory notes defaults, these leases are also in default (see note 12). The lessor may demand full repayment of these obligations under capital lease. As a result, the obligations under capital lease have been presented as current liabilities. The original terms of the obligations under capital lease are noted below under paragraphs (a), (b) and (c). Refer also to going concern, note 2.

The lease liabilities are secured by the equipment under capital lease as described in note 7.8.

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

For the three-month period ended March 31, 2019, $3,6702020, $3,089 ($4,8794,150 CAD) (2018-(2019-$4,172; $5,274 CAD)3,670; $4,879 CAD in interest was charged.incurred.

15

12. Convertible Promissory Notes

(a)      On January 28, 2019, the Company entered into securities purchase agreements (the “January 2019 SPAs”) with three investors (the “January 2019 Investors”) pursuant to which the Company issued to the January 2019 Investors 12% unsecured convertible promissory notes (the “January 2019 Notes”) in the aggregate principal amount of $337,500, with such principal and the interest thereon convertible into shares of the Company’s common stock (the “Common Stock”) at the January 2019 Investors’ option. Although the January 2019 SPAs are dated January 28, 2019 (the “January 2019 Effective Date”

			March 31, 2020			December 31, 2019
(a)	Convertible promissory notes-January 28, 2019 (net of unamortized financing costs of $nil (2019- $1,918))	$	258,073		$	176,964
(b)	Convertible promissory notes-March 7 and March 8, 2019 (net of unamortized financing costs of $nil) (2019- $25,625))		712,000			724,375
(c)	Convertible promissory note-May 23, 2019 (net of unamortized financing costs of $6,643 (2019-$17,924))		213,357			217,076
(d)	Convertible promissory note-July 19, 2019 (net of unamortized financing costs of $9,576 (2019-$17,411))		160,424			152,589
(e)	Convertible promissory note-October 17, 2019 (net of accumulated financing costs of $14,181 (2019-$20,975)		141,819			135,025
		$	1,485,673		$	1,406,029

(a)	On January 28, 2019, the Company entered into securities purchase agreements (the "January 2019 SPAs") with three investors (the "January 2019 Investors") pursuant to which the Company issued to the January 2019 Investors 12% unsecured convertible promissory notes (the "January 2019 Investor Notes") in the aggregate principal amount of $337,500, with such principal and the interest thereon convertible into shares of the Company's common stock (the "Common Stock") at the January 2019 Investors' option. Although the January 2019 SPAs are dated January 28, 2019 (the "January 2019 Effective Date"), they became effective upon the receipt in cash of the issue price by the January 2019 Investors.
	The amounts of $102,500, $100,000, and $100,000, totaling $302,500, represented the proceeds to the Company, net of transaction-related expenses, for the January 2019 Notes from the January 2019 Investors and were received in cash from February 1 through February 4, 2019.
	The maturity date of each of the January 2019 Investor Notes is January 28, 2020 (the "January 2019 Maturity Dates"). The Notes bear interest at a rate of twelve percent (12%) per annum (the "January 2019 Interest Rate"), which interest shall be paid by the Company to the January 2019 Investors in Common Stock at any time the January 2019 Investors send a notice of conversion to the Company. The January 2019 Investors are entitled to, at their option, convert all or any amount of the principal face amount and any accrued but unpaid interest of the January 2019 Notes into Common Stock, at any time, at a conversion price for each share of Common Stock equal to 65% multiplied by the lowest trading price (as defined in the January 2019 Notes) of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange upon which the Company's shares are traded during the twenty (20) consecutive Trading Day period immediately preceding (i) the January 2019 Effective Date; or (ii) the conversion date.
	The Company has reserved a minimum of eight (8) times the number of its authorized and unissued Common Stock (the "January 2019 Reserved Amounts"), free from pre-emptive rights, to provide for the issuance of Common Stock upon the full conversion of the January 2019 Notes. Upon full conversion of the January 2019 Investor Notes, any shares remaining in such reserve shall be cancelled. The Company increases the January 2019 Reserved Amount in accordance with the Company's obligations under the January 2019 Investor Notes. Since the January 2019 Investor Notes were not repaid by their January 28, 2020 maturity date, they are in default and the outstanding balance (principal plus accrued interest) of each of the January 2019 Investor Notes was increased by 50% and increased by a further $15,000 (together the "Default Amounts") along with the interest rate increasing from 12% to 24% annually. The January 2019 Investors continue to have the option to require the Company to immediately issue, in lieu of the Default Amount, the number of shares of common stock of the Company equal to the Default Amount divided by the conversion price then in effect. During the three-month period ended March 31, 2020, the January 2019 Investors converted a total of $17,000 of their January 2019 Investor Notes.

pg. 15

16

12. Convertible Promissory Notes, (continued)

(b)	On March 7 and March 8, 2019, the Company entered into two securities purchase agreements (the "March 2019 SPAs") with two investors (the "March 2019 Investors") pursuant to which the Company issued to each March 2019 Investor two 12% unsecured convertible promissory notes comprised of the first notes (the "First Notes") being in the amount of $275,000 each, and the remaining notes in the amount of $275,000 each (the "Back-End Notes," and, together with the First Notes, the "March 2019 Investor Notes") in the aggregate principal amount of $1,100,000, with such principal and the interest thereon convertible into Common Stock at the March 2019 Investors' option. Each First Note contains a $25,000 Original Issue Discount such that the issue price of each First Note was $250,000. The proceeds on the issuance of the First Notes were received from the March 2019 Investors upon the signing of the March 2019 SPAs. The proceeds on the issuance of the Back-End Notes were initially received by the issuance of two offsetting $250,000 secured notes to the Company by the March 2019 Investors (the "Buyer Notes"), provided that prior to conversion of the Back-End Notes, the March 2019 Investors must have paid back the Back-End Notes in cash.
	Although the March 2019 SPAs are dated March 7, 2019 and March 8, 2019 (each, a "March 2019 Effective Date"), they became effective upon the receipt in cash of the issue price by the March 2019 Investors. On March 11, 2019, the Company received cash of $456,000, net of transaction-related expenses, for the First Notes from the March 2019 Investors.
	On April 24, 2019, the Company received one of the Back-End Notes from the March 2019 Investors in the face value amount of $275,000. The proceeds received by the Company was $228,000, net of $25,000 discount and financing costs. The maturity dates of the March 2019 Investor Notes are March 7, 2020 and March 8, 2020. The March 2019 Investor Notes bear interest at a rate of twelve percent (12%) per annum (the "March 2019 Interest Rate"), which interest shall be paid by the Company to the March 2019 Investors in Common Stock at any time the March 2019 Investors send a notice of conversion to the Company. The March 2019 Investors are entitled to, at their option, convert all or any amount of the principal face amount and any accrued but unpaid interest of the March 2019 Investor Notes into Common Stock, at any time, at a conversion price for each share of Common Stock equal to 65% multiplied by the lowest trading price (as defined in the Notes) of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange upon which the Company's shares are traded during the twenty (20) consecutive Trading Day period immediately preceding (i) the applicable March 2019 Effective Date; or (ii) the conversion date.
	The Company reserved a minimum of eight (8) times the number of its authorized and unissued Common Stock (the "March 2019 Reserved Amounts"), free from pre-emptive rights, to provide for the issuance of Common Stock upon the full conversion of the March 2019 Investor Notes. Upon full conversion of the March 2019 Investor Notes, any shares remaining in such reserve shall be cancelled. The Company increases the March 2019 Reserved Amount in accordance with the Company's obligations under the March 2019 Investor Notes. Since the March 2019 Investor Notes were not repaid by their March 7, 2020 and March 8, 2020 maturity dates, they are also in default resulting in the interest rate on the 2019 March Investor Notes increasing from 12% to 24% annually, effective January 28, 2020. The March 2019 Investors continue to have the option to convert their March 2019 Investor Notes. During the three-month period ended March 31, 2020, the March 2019 Investors converted a total of $38,000 of their March 2019 Investor Notes.
(c)	On May 23, 2019, the Company entered into a securities purchase agreement (the "May 2019 SPA") with one investor (the "May 2019 Investor") pursuant to which the Company issued to the May 2019 Investor one 12% unsecured convertible promissory note (the "May 2019 Investor Note") in the principal amount of $250,000. On this date, the Company received proceeds of $204,250, net of transaction related expenses of $45,750.

17

18

The amounts of $102,500, $100,000, and $100,000, totaling $302,500, represented the proceeds to the Company, net of transaction-related expenses, for the January 2019 Notes from the January 2019 Investors and were received in cash from February 1 through February 4, 2019.

The maturity date of each of the January 2019 Notes is January 28, 2020 (the “January 2019 Maturity Dates”). The Notes bear interest at a rate of twelve percent (12%) per annum (the “January 2019 Interest Rate”), which interest shall be paid by the Company to the January 2019 Investors in Common Stock at any time the January 2019 Investors send a notice of conversion to the Company. The January 2019 Investors are entitled to, at their option, convert all or any amount of the principal face amount and any accrued but unpaid interest of the January 2019 Notes into Common Stock, at any time, at a conversion price for each share of Common Stock equal to 65% multiplied by the lowest trading price (as defined in the January 2019 Notes) of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange upon which the Company’s shares are traded during the twenty (20) consecutive Trading Day period immediately preceding (i) the January 2019 Effective Date; or (ii) the conversion date.

The January 2019 Notesconvertible promissory notes described above may be prepaid until 180 days from the January 2019 Effective Datetheir applicable effective date with the following penalties: (i) if any of the January 2019 Notesconvertible promissory notes are prepaid within sixty (60) days following the January 2019 Effective Date,their applicable effective date, then the prepayment premium shall be 125% of the face amount plus any accrued interest; (ii) if any of the January 2019 Notesconvertible promissory notes are prepaid during the period beginning onthe date which is sixty-one (61) days following the January 2019 Effective Date,their applicable effective date, and ending on the date which is ninety (90) days following the January 2019 Effective Date,their applicable effective date, then the prepayment premium shall be 135% of the face amount plus any accrued interest; (iii) if any of the January 2019 Notesconvertible promissory notes are prepaid during the period beginning on the date which is ninety-one (91) days following the January 2019 Effective Date,their applicable effective date, and ending on the date which is one hundred eighty (180) days following the January 2019 Effective Date,their applicable effective date, then the prepayment premium shall be 145% of the face amount plus any accrued interest. Such prepayment redemptions must be closed and funded within three days of giving notice of prepayment or the right to prepay shall be forfeited.

The Company has reserved a minimum of eight (8) times the number of its authorized and unissued Common Stock (the “January 2019 Reserved Amounts”), free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of the January 2019 Notes. Upon full conversion of the January 2019 Notes, any shares remaining in such reserve shall be cancelled. The Company increases the January 2019 Reserved Amount in accordance with the Company’s obligations under the January 2019 Notes.

Pursuant to the terms of the January 2019 SPAs,security purchase agreements for the convertible promissory notes described above, for so long as the Investorsnoted investors own any shares of Common Stock issued upon the conversion of the January 2019 Notes (the “January 2019 Conversion Shares”),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 January 2019 Notesinvestor notes and the January 2019 SPAs,security purchase agreements, including but not limited to the requirement to maintain its corporate existence and assets, subject to certain exceptions, and not to make any offers or sales of any security under circumstances that would require registration of or stockholder approval for the January 2019 Notesinvestor notes or the January 2019 Conversion Shares.

The January 2019 Notes also 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 and increases in the amount of the principal and interest rates under the January 2019 Notes in the event of such defaults. In the event of default, at the option of the January 2019 Investors and in the January 2019 Investors’ sole discretion, the January 2019 Investors may consider the January 2019 Notes immediately due and payable.

(b)        On March 7 and March 8, 2019, the Company entered into two securities purchase agreements (the “March 2019 SPAs”) with two investors (the “March 2019 Investors”) pursuant to which the Company issued to each March 2019 Investor two 12% unsecured convertible promissory notes comprised of the first notes (the “First Notes”) being in the amount of $275,000 each, and the remaining notes in the amount of $275,000 each (the “Back-End Notes,” and, together with the First Notes, the “March 2019 Notes”) in the aggregate principal amount of $1,100,000, with such principal and the interest thereon convertible into Common Stock at the March 2019 Investors’ option. Each First Note contains a $25,000 Original Issue Discount such that the issue price of each First Note was $250,000. The proceeds on the issuance of the First Notes were received from the March 2019 Investors upon the signing of the March 2019 SPAs.

12. Convertible Promissory Notes, (continued)

The proceeds on the issuance of the Back-End Notes were initially received by the issuance of two offsetting $250,000 secured notes to the Company by the March 2019 Investors (the “Buyer Notes”), provided that prior to conversion of the Back-End Notes, the March 2019 Investors must have paid back the Back-End Notes in cash.

Although the March 2019 SPAs are dated March 7, 2019 or March 8, 2019 (each, a “March 2019 Effective Date”), they became effective upon the receipt in cash of the issue price by the March 2019 Investors. On March 11, 2019, the Company received cash of $456,000, net of transaction-related expenses, for the First Notes from the March 2019 Investors.

The maturity dates of the March 2019 Investor Notes are March 7, 2020 or March 8, 2020. The March 2019 Investor Notes bear interest at a rate of twelve percent (12%) per annum (the “March 2019 Interest Rate”), which interest shall be paid by the Company to the March 2019 Investors in Common Stock at any time the March 2019 Investors send a notice of conversion to the Company. The March 2019 Investors are entitled to, at their option, convert all or any amount of the principal face amount and any accrued but unpaid interest of the March 2019 Investor Notes into Common Stock, at any time, at a conversion price for each share of Common Stock equal to 65% multiplied by the lowest trading price (as defined in the Notes) of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange upon which the Company’s shares are traded during the twenty (20) consecutive Trading Day period immediately preceding (i) the applicable March 2019 Effective Date; or (ii) the conversion date.

The March 2019 Investor Notes may be prepaid until 180 days from the applicable March 2019 Effective Date with the following penalties: (i) if the March 2019 Investor Notes are prepaid within sixty (60) days following the applicable March 2019 Effective Date, then the prepayment premium shall be 125% of the face amount plus any accrued interest; (ii) if the March 2019 Investor Notes are prepaid during the period beginning on the date which is sixty-one (61) days following the applicable March 2019 Effective Date, and ending on the date which is ninety (90) days following the applicable March 2019 Effective Date, then the prepayment premium shall be 135% of the face amount plus any accrued interest; (iii) if the March 2019 Investor Notes are prepaid during the period beginning on the date which is ninety-one (91) days following the applicable March 2019 Effective Date, and ending on the date which is one hundred eighty (180) days following the applicable March 2019 Effective Date, then the prepayment premium shall be 145% of the face amount plus any accrued interest. Such prepayment redemptions must be closed and funded within three days of giving notice of prepayment or the right to prepay shall be forfeited.

The Company reserved a minimum of eight (8) times the number of its authorized and unissued Common Stock (the “March 2019 Reserved Amounts”), free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of the March 2019 Investor Notes. Upon full conversion of the March 2019 Investor Notes, any shares remaining in such reserve shall be cancelled. The Company increases the March 2019 Reserved Amount in accordance with the Company’s obligations under the March 2019 Investor Notes.

Pursuant to the terms of the March 2019 SPAs, for so long as the March 2019 Investors own any shares of Common Stock issued upon the conversion of the March 2019 Investor Notes (the “March 2019 Conversion Shares”), 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 March 2019 Investor Notes and the March 2019 SPAs, including but not limited to the requirement to maintain its corporate existence and assets, subject to certain exceptions, and not to make any offers or sales of any security under circumstances that would require registration of or stockholder approval for the March 2019 Investor Notes or the March 2019 Conversion Shares.applicable investor notes.

The March 2019 Investor Notesconvertible 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 Notesconvertible promissory notes in the event of such defaults. In the event of a default, at the option of the March 2019 Investorsapplicable investor and in the March 2019 Investors’their sole discretion, the March 2019 Investorsapplicable investor may consider the March 2019 Investor Notesany of their convertible promissory notes immediately due and payable.

DuringFor the three-month period endingended March 31, 2019,2020, the Company recorded interest and Default Amounts of $183,482 (March 31, 2019-$11,039). As at March 31, 2020, $262,385 (December 31, 2019-$130,249) of accrued interest of $11,039 (2018-and Default Amounts are included in accrued liabilities in the interim condensed consolidated balance sheets. In addition, during the three-month period ended March 31, 2020, $5,311 (March 31, 2019-$nil) on the outstanding promissory notes.of accrued interest was converted.

Refer also to going concern, note 2.

pg. 17

19

13. Operating lease liabilityMortgage Payable

As noted underThe Company obtained a mortgage provided by private lenders to finance the acquisition of the shares of 1684567. The mortgage has a principal amount of $1,268,820 ($1,800,000 CAD), is repayable interest only on a monthly basis at an annual rate of the higher of the Royal Bank of Canada's prime rate plus 6.05% (currently 8.50%) and 10% per annum with a revised maturity date of October 19, 2020. The mortgage payable is secured by the shares held of 1684567, a first mortgage on the land described in note 8, Operating lease right-of-use asset,long-lived assets, with a carrying value of $1,304,694 ($1,850,892 CAD), a general assignment of rents, and a fire insurance policy. In addition, on December 19, 2019, the Company has recognized an operating lease right-of-use assetreceived a further advance of $563,920 ($800,000 CAD) from current and a related operating lease liability, effective January 1, 2019, basedadditional private lenders, on the present value of lease payments oversame terms as the lease term that expiresmortgage above. Financing fees on the mortgage totaled $120,820 ($156,929 CAD).  As at March 31, 2034, calculated to be $217,7552020, $7,451 ($297,07410,570 CAD) which were(December 31, 2019-$8,138; $10,570 CAD) of accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheet.sheets.

As at March 31, 2019, the minimum lease payments, as calculated under the new lease guidance and reconciled to the operating lease liability are as follows:

DuringFor the three-month period endingended March 31, 2019, the Company incurred interest of $6,6792020, $48,380 ($8,87965,000 CAD) (2018-(2019-$nil;nil $nil CAD) on the operating lease liability.in interest was incurred.

14. Loans Payable to Related PartiesParty

LoanLoans payable in the amount of $56,123$70,490 ($75,000100,000 CAD) (December 31, 2018-2019-$146,500; $200,000nil; $nil CAD), owing to Travellers bearsbear interest at the rate of 12% per annum, isare due on demand and is unsecured.  As at March 31, 2019 $17,1962020 $417 ($22,980592 CAD) (December 31, 2018-2019-$13,110; $17,885nil; $nil CAD) in interest iswas included in accrued liabilities.

LoansFor the three-month period ended March 31, 2020, $441 ($592 CAD) (March 31, 2019-$3,802; $5,055 CAD) in interest expense was incurred on loans payable to Travellers. In addition, for the three-month period ended March 31, 2020, $nil ($nil CAD) (three months ended March 31, 2019-$1,669; $2,219 CAD) in interest expense was incurred on loans payable to directors, outstanding as at March 31, 2019, in the amount of $56,122 ($75,000 CAD) (December 31, 2018-$54,975; $75,000 CAD), owing to three directors bears interest at the rate of 12% per annum, is due on demand and is unsecured. As at March 31, 2019, $6,532 ($8,729 CAD) (December 31, 2018-$4,772; $6,510 CAD) in interest is included in accrued liabilities.

During the three-month period ended March 31, 2019, $5,472 ($7,274 CAD) (2018-$293; $371 CAD) in interest was charged on the loans payable to related parties..

15. Capital Stock

As at March 31, 2019,2020, the Company had 150,000,000 ofauthorized common shares authorized with a par value of $.0001 per share and 41,404,531 (2018-40,299,531) common shares60,501,830 (December 31, 2019-51,784,504) issued and outstanding. Duringoutstanding common shares. For the three-month period ended March 31, 2019,2020, the Company raised $nil (December 31, 2018-$650,240) cash on a private placement, net of share issue costs of $nil (2018-$46,260),issued 7,717,326 common shares on the issuanceconversion of nil (December 31, 2018-696,500) common sharesunsecured promissory notes, in the amount of $70,000, including accrued interest and related cost of $6,727, a total of $76,727. The share conversion prices ranged from $0.0036 to $0.0176 per share.  On January 10, 2020, the Company. The Company issued 1,000,000 common shares on the exchange of the President’sCEO's 1,000,000 2018 RSUs;2019 RSUs.

During the year ended December 31,2019, the Company issued 9,289,973 common shares on the conversion of unsecured convertible promissory notes in the amount of $248,618 including accrued interest and related costs of $21,162, for a total of $269,780 at conversion prices ranging from $0.0176 to $0.0910 per share. The Company also issued 100,000 common shares for professional services determined to be valued at $53,000, 80,000 common shares to directors determined to be valued at $39,200 and 5,000 common shares to each of two employees determined to be valued at $400 in total, with amounts determined based on the closing trading price on the day immediately prior to issuance. Further, 5,000 common shares were issued for proceeds received prior to December 31, 2018 of $4,600, net of share issue costs of $400; and 100,000 common shares for professional services in the amount of $53,000, based on the closing trading price on the day immediately before issuance.

15. Capital Stock, (continued)

$400. In addition, during the prior year,on January 8, 2019, the Company issued 190,0001,000,000 common shares on the exchange of the Company, in regard to the $178,200 proceeds received from a private placement prior to December 31, 2017, net of share issue costs of $11,800 and issued 20,000 common shares of the Company to a new director,CEO's 2018 RSUs determined to be valued at $20,000,$1,000,000, based on private placement pricing at the time.time of granting the RSUs and on April 2, 2019, the Company issued 1,000,000 common shares on the exchange of the former chief executive officer's 2018 RSUs determined to be valued at $330,000, based on private placement pricing at the time of granting the RSUs.

All non-cash transactions during December 31, 2019, were valued based on the proceeds of a recent private placement.placement

The Company also granted the CEO 3,000,000 RSUs under a new consulting agreement effective January 1, 2017. The RSUs are expected to vest in three equal installments annually on January 1, 2018, 2019 and 2020. On February 25, 2018, the Company issued 1,000,000 common shares in exchange for 1,000,000 RSUs to the CEO. In addition, on May 17, 2018, at a meeting of the Board, the Board approved an amendment to the President’s consulting agreement, to include the granting of 3,000,000 RSUs to the President, determined to be valued at $3,000,000, based on private placement pricing at the time on the same terms and conditions as those granted to the CEO. Effective May 17, 2018, 1,000,000 RSUs were exchanged into 1,000,000 common stock. Based on private placement pricing at the time, the common stock issued in exchange for the RSUs, was determined to be valued at $1,000,000.

20

16.Commitments

17. Economic Dependence

The Company generated 90%86% of its revenue from six customers during the three-month period ended March 31, 2020 (March 31, 2019-90% from four customers.customers).

18. Subsequent Events

The Company’sCompany'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:

21

18. Subsequent Events, (continued)

pg. 20

22

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, 20182019 filed with the Securities and Exchange Commission on April 1, 2019.7, 2020.

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, 20192020 compared with the three-month period ended March 31, 2019 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 AUDITOR ISSUED AN OPINION 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, 20182019 AND 2017.2018. YOU SHOULD READ THIS QUARTERLY REPORT ON FORM 10-Q WITH THE “GOING CONCERN”"GOING CONCERN" ISSUES IN MIND.

This Management’sManagement'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”"Financial Statements"). The financial statements have been prepared in accordance with generally accepted accounting policies in the United States (“GAAP”("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:

23

---

SusGlobal Energy Corp. (“SusGlobal”("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”("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”"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”"Shares"). As a result of the Domestication, pursuant to Section 388 of the General Corporation Law of the State of Delaware (the “DGCL”"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, 23, 2017.

On December 11, 2018, the Company began trading on the OTCQB venture market exchange, under the ticker symbol SNRG.

When the terms “the"the Company,” “we,” “us”" "we," "us" or “our”"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. and SusGlobal Energy Belleville Ltd.

SusGlobal is a renewable energy company focused on acquiring, developing and monetizing a global portfolio of proprietary technologies in the waste to energy and regenerative products application.

With the growing amount of organic wastes being produced by society as a whole, a solution for sustainable global management of these wastes must be achieved. 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’searth'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.energy and regenerative products. The portfolio will be comprised of four distinct types of technologies: (a) Process Source Separated Organics (“SSO”("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) Increasing the capacity of existing infrastructure (anaerobic digesters) to allow processing of SSO to increase biogas yield. (c) Utilize recycled plastics to produce liquid fuels and (d) process SSO and digestate to produce an organic compost or a pathogen free organic liquid fertilizer.

pg. 22

24

---

The convertibility of organic material into valuable end products such as biogas, liquid biofuels, organic fertilizers and compost shows the utility of renewable energy. 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 emissionsGreenhouse 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 project 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, Biogas Production, Wastewater Treatment, In-Vessel Composting, SSO Treatment, Biosolids Heat Treatment and Composting.

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 identifying idle or underutilized anaerobic digesters and integrating our technologies with capital investment to optimizing the operation of the existing digesters to reach their full capacity for processing SSO. Our processes not only divert significant organic waste from landfills, but also result in methane avoidance, with significant Greenhouse Gas (“GHG”)GHG reductions from waste disposal. The processes also produce renewable energy through the conversion of wastewater biosolids and organic wastes in the same equipment (co-digestion) and valuable end products such as biogas, electricity and organic fertilizer, considered Class AA organic fertilizer.

Currently, the primary customers are municipalities in both rural and urban centers throughout southern and central Ontario, Canada. Much of the research and development that has been carried out has been completed by our CEO through multiple projects carried out on projects prior to the formation of SusGlobal. Where necessary, to be in compliance with provincial and local environmental laws and regulations, SusGlobal submits applications to the respective authorities for approval prior to any necessary engineering being carried out.

The COVID-19 Outbreak May Adversely Affect Our Business Operations and Financial Condition

In December 2019, the novel coronavirus, known as COVID-19, was initially reported, and in March 2020, the World Health Organization characterized COVID-19 as a pandemic. COVID-19 has had a widespread and detrimental effect on the global economy as a result of the continued increase in the number of cases and affected countries and actions by public health and governmental authorities, businesses and other organizations and individuals to address the outbreak including limiting non-essential gatherings of people, ceasing all non-essential travel, ordering certain businesses and government agencies to cease non-essential operations at physical locations and issuing “social or physical distancing” orders, which direct individuals to remain at their places of residence (subject to limited exceptions). The COVID-19 pandemic poses the risk that we or our employees, contractors, customers, government and third party payors and others may be prevented from conducting business activities for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns that have been and may continue to be requested or mandated by governmental authorities.

The Company has continued to carry out the aggressive emergency measures set in place by the provincial government, keeping in mind, firstly, the immediate health and safety of our employees. Employees in the head office, located in Toronto, Ontario, Canada have continued to work remotely now for two months or alternating their office time, ensuring there are no other employees present. Employees at the site in Belleville, Ontario, Canada, have also been following the same procedures. The Company has prohibited face to face meetings and all previously scheduled meetings and those in the foreseeable future have and will be held by teleconference. The Company will continue following these aggressive emergency measures as long as they are in place.

The Company is fortunate that its operations have not been forced to close as we’re considered an essential service. In some cases, the receipt of organic waste has increased, the likely impact of the requirement for the public to stay in their residences, unless they themselves are employed in an essential business or service. A broad, sustained outbreak of COVID-19 will negatively impact our results and financial condition for the following reasons: (i) a large percentage of our customers are municipalities and their limited operations has resulted in some delay in the collection of outstanding receivables, impacting our cash flows, including the use of cash (ii)  members of the board, management or employee team, some of whom may be particularly at-risk for the severe symptoms of COVID-19, or of our small number of other employees, may become ill or have family members who are ill and are absent as a result, or they may elect not to come to work due to the illness affecting others in our office or facilities (iii) the outbreak may materially impact our operations for a sustained period of time due to the current travel bans and restrictions, quarantines, social or physical distancing orders and shutdowns.

The occurrence of any of the these noted events and potentially others, could have a material adverse effect on our business, financial condition and results of operations. The COVID-19 outbreak and mitigation measures have had and may continue to have an adverse impact on global economic conditions which could have an adverse effect on our business and financial condition. The extent to which the COVID-19 outbreak impacts our results will depend on future developments that are highly uncertain and cannot be predicted with confidence, including the duration and severity of the COVID-19 pandemic and any additional preventative and protective actions that governments or we or our customers, may direct, which may result in an extended period of continued business disruption and reduced operations.

RECENT BUSINESS DEVELOPMENTS

Energy Retrofit Program

On January 15, 2020, the Independent Electrical System Operator (the "IESO") pre-approved the Company's Save on Energy Retrofit Program Application (the "Program"). The total cost of the Program is estimated at $83,666 ($118,692 CAD). On successful completion, the Company expects to receive a hydro grant from the IESO of approximately 50% of the total cost of the Program, or $42,175 ($59,831 CAD). The Program is designed to realize a savings of approximately 50% in hydro costs annually, with an overall return on investment estimated at 125%.

Business Acquisition

In connection with the Company's business acquisition of 1684567 Ontario Inc. ("1684567"), which closed on May 28, 2019, as noted below, the Company intends to exercise the option to purchase certain additional lands described in the share purchase agreement from the previous owners of 1684567. The option to purchase the additional lands from the previous owner of 1684567, is in the amount of $148,029 ($210,000 CAD). It is anticipated that this transaction will close before the end of the year.

Effective May 24, 2019, the Company purchased all the issued and outstanding shares of 1684567. The transaction closed on May 28, 2019. The purchase consideration consisted of cash from working capital of $209,952 ($282,308 CAD) and cash from a third-party mortgage obtained in the amount of $1,258,273 ($1,691,910 CAD, net of financing fees of $80,387 ($108,090 CAD)). The total purchase price includes the original offer of $1,314,304 ($1,767,250 CAD) and acquisition costs of $153,922 ($206,968 CAD). The mortgage payable has a principal amount of $1,385,820 ($1,800,000 CAD), is repayable interest only on a monthly basis at an annual rate of the higher of the Royal Bank of Canada's prime rate plus 6.05% (currently 8.50%) and 10% per annum with a revised maturity date of October 19, 2020. The mortgage payable is secured by the shares held of 1684567, a first mortgage on the land held having a carrying value of $1,304,694, a general assignment of rents, and a fire insurance policy. In addition, on December 19, 2019, the Company received an additional advance of $615,920 ($800,000) from one of the same private lenders and additional private lenders. Financing fees on the additional, advance totaled $40.433 ($48,839 CAD) on the same terms and conditions as the mortgage noted above.

25

---

The principal asset of this acquired company was the land upon which the Company's organic composting facility is situated. The Company continues to operate the garbage collection and landfill management operations that it acquired under this transaction.

Trademark Applications

On March 13, 2019, the Company filed trademark applications with the Canadian and US trademark offices to register the SusGlobal logo, Earth’sEarth's Journey, SusGro, Leaders in the Circular Economy and Caring for Earth’sEarth's Journey.

Financings

(a)Securities Purchase Agreements

On October 18, 2019, the Company entered into a securities purchase agreement (the "October 2019 SPA") with one investor (the "October 2019 Investor") pursuant to which the Company issued to the October 2019 Investor one 12% unsecured convertible promissory note (the "October 2019 Investor Note") in the principal amount of $156,000, due October 18, 2020. On this date the Company received proceeds of $129,600, net of transaction related expenses of $26,400. The maturity date of the October 2019 Investor Note is October 18, 2020.

As noted below, as a result of the January 2019 Investor Notes and the March 2019 Investor Notes not having been repaid by their respective due dates, these defaults resulted in the interest rate on the October 2019 Investor Note increasing from 12% to 24% annually, effective January 28, 2020. The October 2019 Investor continues to have the option to convert its October 2019 Investor Note.

On July 19, 2019, the Company entered into a securities purchase agreement (the "July 2019 SPA") with one investor (the "July 2019 Investor") pursuant to which the Company issued to the July 2019 Investor one 12% unsecured convertible promissory note (the "July 2019 Investor Note") in the principal amount of $170,000. On this date, the Company received proceeds of $138,225, net of transaction related expenses of $31,775. The maturity date of the July 2019 Investor note is July 19, 2020.

As noted below, as a result of the January 2019 Investor Notes and the March 2019 Investor Notes not having been repaid by their respective due dates, these defaults resulted in the interest rate on the July 2019 Investor note increasing from 12% to 24% annually, effective January 28, 2020. The July 2019 Investor continues to have the option to convert its July 2019 Investor Note.

On May 23, 2019, the Company entered into a securities purchase agreement (the "May 2019 SPA") with one investor (the "May 2019 Investor") pursuant to which the Company issued to the May 2019 Investor one 12% unsecured convertible promissory note (the "May 2019 Investor Note") in the principal amount of $250,000. On this date, the Company received proceeds of $204,250, net of transaction related expenses of $45,750. The maturity date of the May 2019 Investor note is May 23, 2020.

During the three-month period ended March 31, 2020, the May 2019 Investor converted a total of $15,000 of its May 2019 Note.

As noted below, as a result of the January 2019 Investor Notes and the March 2019 Investor Notes not having been repaid by their respective due dates, these defaults resulted in the interest rate on the May 2019 Investor Note increasing from 12% to 24% annually, effective January 28, 2020. The May 2019 Investor continues to have the option to convert its May 2019 Investor Note.

26

---

On March 7 and March 8, 2019, the Company entered into two securities purchase agreements (the "March 2019 SPAs") with two investors (the "March 2019 Investors") pursuant to which the Company issued to each March 2019 Investor two 12% unsecured convertible promissory notes comprised of the first notes (the "First Notes") being in the amount of $275,000 each, and the remaining notes in the amount of $275,000 each (the "Back-End Notes," and, together with the First Notes, the "March 2019 Investor Notes") in the aggregate principal amount of $1,100,000, with such principal and the interest thereon convertible into Common Stock at the March 2019 Investors' option. Each First Note contains a $25,000 Original Issue Discount such that the issue price of each First Note was $250,000. The proceeds on the issuance of the First Notes were received from the March 2019 Investors upon the signing of the March 2019 SPAs. The proceeds on the issuance of the Back-End Notes were initially received by the issuance of two offsetting $250,000 secured notes to the Company by the March 2019 Investors (the "Buyer Notes"), provided that prior to conversion of the Back-End Notes, the March 2019 Investors must have paid back the Back-End Notes in cash. The maturity dates of the March 2019 Investor Notes were March 7, 2020 and March 8, 2020, respectively.

Although the March 2019 SPAs are dated March 7, 2019 and March 8, 2019 (each, a "March 2019 Effective Date"), they became effective upon the receipt in cash of the issue price by the March 2019 Investors. On March 11, 2019, the Company received cash of $456,000, net of transaction-related expenses, for the First Notes from the March 2019 Investors.

On April 24, 2019, the Company received one of the Back-End Notes from the March 2019 Investors with a face value amount of $275,000. The proceeds received by the Company was $228,000, net of $25,000 discount and financing costs.

During the three-month period ended March 31, 2020, the March 2019 Investors converted a total of $38,000 of their March 2019 Investor Notes.

As a result of these March 2019 Notes not having been repaid by their respective due dates, as with the January 2019 Investor Notes, they were also in default, with their interest rate increasing from 12% to 24% annually, effective January 28, 2020.

On January 28, 2019, the Company entered into securities purchase agreements (the "January 2019 SPAs") with three investors (the "January 2019 Investors") pursuant to which the Company issued to the January 2019 Investors 12% unsecured convertible promissory notes (the "January 2019 Investor Notes") in the aggregate principal amount of $337,500, with such principal and the interest thereon convertible into shares of the Company's common stock (the "Common Stock") at the January 2019 Investors' option. Although the January 2019 SPAs are dated January 28, 2019 (the "January 2019 Effective Date"), they became effective upon the receipt in cash of the issue price by the January 2019 Investors. The maturity date of the January 2019 Investor Notes was January 28, 2020.

During the three-month period ended March 31, 2020, the January 2019 Investors converted a total of $17,000 of their January 2019 Investor Notes.

Since the January 2019 Investor Notes were not repaid by their January 28, 2020 maturity date, they are in default and the outstanding balance (principal plus accrued interest) of each of the January 2019 Investor Notes is subject to increase by 50% and by a further $15,000 (together the "Default Amounts") and the interest rate increased from 12% to 24% annually. The January 2019 Investors continue to have the option to require the Company to immediately issue, in lieu of the Default Amount, the number of shares of common stock of the Company equal to the Default Amount divided by the conversion price then in effect.

The convertible promissory notes described above may be prepaid until 180 days from their applicable effective date with the following penalties: (i) if any of the convertible promissory notes are prepaid within sixty (60) days following their applicable effective date, then the prepayment premium shall be 125% of the face amount plus any accrued interest; (ii) if any of the convertible promissory notes are prepaid during the period beginning onthe date which is sixty-one (61) days following their applicable effective date, and ending on the date which is ninety (90) days following their applicable effective date, then the prepayment premium shall be 135% of the face amount plus any accrued interest; (iii) if any of the convertible promissory notes are prepaid during the period beginning on the date which is ninety-one (91) days following their applicable effective date, and ending on the date which is one hundred eighty (180) days following their applicable effective date, then the prepayment premium shall be 145% of the face amount plus any accrued interest. Such prepayment redemptions must be closed and funded within three days of giving notice of prepayment or the right to prepay shall be forfeited.

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.

27

---

The convertible promissory notes described above contain certain representations, warranties, covenants and events of default including if the Company is delinquent in its periodic report filings with the Securities and Exchange Commission which would increase the amount of the principal and interest rates under the convertible promissory notes in the event of such defaults. In the event of a default, at the option of the applicable investor and in their sole discretion, the applicable investor may consider any of their convertible promissory notes immediately due and payable.

For the three-month period ended March 31, 2020, the Company recorded interest and Default Amounts of $183,482 (March 31, 2019-$11,039). As at March 31, 2020, $262,385 (December 31, 2019-$130,249) of accrued interest and Default Amounts are included in accrued liabilities in the interim condensed consolidated balance sheets. In addition, during the three-month period ended March 31, 2020, $5,311 (March 31, 2019-$nil) of accrued interest was converted.

(b)Pace Savings & Credit Union Limited ("PACE")

On March 31, 2020, PACE and the Company reached an agreement with respect to the repayment of the outstanding balances owing to PACE. One of the credit facilities, in the amount of $34,391 ($48,788 CAD), was repaid in full after the Company provided the funds to PACE on April 3, 2020, as noted below and the remaining credit facilities and the corporate term loan are to be repaid on or before September 30, 2020. On April 3, 2020, the Company provided PACE with funds, held in trust on March 31, 2020, to bring the remaining credit facilities and the corporate term loan current. The funds remaining, which were held in trust on March 31, 2020, will be used to satisfy the principal and interest payments on the noted debt through July 2020. In addition, the letter of credit the Company has with PACE in favor of the Ministry of the Environment, Conservation and Parks (the "MECP"), will be renewed from the current expiry date of June 30, 2020 to September 30, 2020, at the appropriate time. On April 3, 2020, the shares previously pledged as security to PACE, were released. However,  the personal guarantee from the CEO and charge against the Company's premises lease remain unchanged.

As a result of defaults on the convertible promissory notes, PACE may demand repayment before September 30, 2020.

The PACE long-term debt was payable as noted below.

(i)	The credit facility bears interest at the PACE base rate of 7.00% plus 1.25% per annum, currently 8.25%, is payable in monthly blended installments of principal and interest of $6,178 ($8,764 CAD), and matures on September 2, 2022. The first and only advance on the credit facility on February 2, 2017, in the amount of $1,127,840 ($1,600,000 CAD), is secured by a business loan general security agreement, a $1,127,840 ($1,600,000 CAD) personal guarantee from the CEO and a charge against the Company's premises lease. Also pledged as security are the shares of the wholly-owned subsidiaries, a pledge of 3,300,000 of the Company's shares held by LFGC, 500,000 of the Company's shares held by the CFO, 2,000,000 of the Company's shares held by a director's company and a limited recourse guarantee against each of these parties. As noted above, the pledged shares were delivered by PACE to the Company's counsel as a personal guarantee from the CEO and a charge against the Company's premises lease remain. The credit facility is fully open for prepayment at any time without notice or bonus.
(ii)	The credit facility advanced on June 15, 2017, in the amount of $422,940 ($600,000 CAD), bears interest at the PACE base of 7.00% plus 1.25% per annum, currently 8.25%, is payable in monthly blended installments of principal and interest of $3,455 ($4,901 CAD), and matures on September 2, 2022. The credit facility is secured by a variable rate business loan agreement on the same terms, conditions and security as noted above.
(iii)	The credit facility advanced on August 4, 2017, in the amount of $35,245 ($50,000 CAD), bears interest at the PACE base of 7.00% plus 1.25% per annum, currently 8.25%, is payable in monthly blended installments of principal and interest of $301 ($427 CAD), and matures on September 4, 2022. The credit facility is secured by a variable rate business loan agreement on the same terms, conditions and security as noted above.
(iv)	The corporate term loan advanced on September 13, 2017, in the amount of $2,625,151 ($3,724,147 CAD), bears interest at PACE base rate of 7.00% plus 1.25% per annum, currently 8.25%, is payable in monthly blended installments of principal and interest of $20,943 ($29,711 CAD), and matures September 13, 2022. The corporate term loan is secured by a business loan general security agreement representing a floating charge over the assets and undertakings of the Company, a first priority charge under a registered debenture and a lien registered under the Personal Property Security Act in the amount of $2,820,289 ($4,000,978 CAD) against the assets including inventory, accounts receivable and equipment. The corporate term loan also included an assignment of existing contracts included in the APA.

28

---

For the three-month period ended March 31, 2020, $76,749 ($103,116 CAD) (2019-$77,619; $103,189 CAD) in interest was incurred. As at March 31, 2020 $187,066 ($265,379 CAD) (December 31, 2019-$124,926; $162,263 CAD) in accrued interest is included in accrued liabilities in the interim condensed consolidated balance sheets.

(c)Other Financings

As a result of the COVID-19 virus, the Company applied for interest-free loans made available by the Canadian federal government and administered by Canadian chartered banks and credit unions. On April 27, 2020, the Company received a total of $56,392 ($80,000 CAD) under the Canadian Emergency Benefit Account. If the loans are repaid by December 31, 2022, 25% of the loans will be forgiven. If the loans are not repaid by December 31, 2022, the remaining balance of the loans will be converted to three-year terms at the rate of 5% per annum.

On March 6, 2020 and March 25, 2020, Travellers International Inc. ("Travellers"), a company controlled by the president and chief executive officer (the "CEO") of the Company, who is also a director, loaned the Company $52,868 ($75,000 CAD) and $17,622 ($25,000 CAD), respectively. The loans bear interest at the rate of 12% annually, are due on demand and are unsecured. There are no written agreements evidencing these loans. For the three-month period ended March 31, 2020, $441 ($592 CAD) (March 31, 2019-$3,802; $5,055 CAD) in interest was incurred on the loans to Travellers. As at March 31, 2020, $70,490 ($100,000 CAD) (December 31, 2019-$nil; $nil CAD), remains outstanding.

On July 29, 2019, the Company received an advance in the amount of $30,396 ($40,000 CAD) from a private lender. The advance was repayable at an amount of $344 ($488 CAD) every business day until repaid in full on January 14, 2020.  The advance was guaranteed by the CEO.  For the three-month period ended March 31, 2020, $441 ($592 CAD) (March 31, 2019-$nil; $nil CAD) in interest was incurred on this advance.

(d)Financings Related to Obligations Under Capital Lease

As a result of the defaults noted above, these leases are also in default. The lessor may demand full repayment of these obligations under capital lease. The original terms of the obligations under capital lease are noted below under paragraphs (i), (ii and (iii).

(i) The lease agreement for certain equipment for the Company's organic composting facility at a cost of $202,060 ($286,650 CAD), is payable in monthly blended installments of principal and interest of $4,117 ($5,840 CAD), plus applicable harmonized sales taxes and an option to purchase the equipment for a final payment of $20,160 ($28,600 CAD), plus applicable harmonized sales taxes on October 31, 2021. The lease agreement bears interest at the rate of 5.982% annually, compounded monthly, due September 30, 2021.

(ii) The lease agreement for certain equipment for the Company's organic composting facility at a cost of $174,428  ($247,450CAD), is payable in monthly blended installments of principal and interest of $3,608 ($5,118 CAD), plus applicable  harmonized sales taxes for a period of forty-six months plus the first two monthly blended installments of $7,049 ($10,000 CAD) plus applicable harmonized sales taxes and an option to purchase the equipment for a final payment of $ 17,397 ($24,680 CAD) plus applicable harmonized sales taxes on February 27, 2022. The leasing agreement bears interest at the rate of 6.15% annually, compounded monthly, due January 27, 2022. (iii) The lease agreement for certain equipment for the Company's organic composting facility at a cost of $274,664 ($389,650 CAD), is payable in monthly blended installments of principal and interest of $4,830 ($6,852 CAD), plus applicable harmonized sales taxes for a period of fifty-nine months plus an initial deposit of $13,710 ($19,450 CAD) plus applicable harmonized sales taxes and an option to purchase the equipment for a final payment of a nominal amount of $70 ($100 CAD) plus applicable harmonized sales taxes on February 27, 2025. The leasing agreement bears interest at the rate of 3.59% annually, compounded monthly, due February 27, 2025.

For the three-month period ended March 31, 2020, $3,089 ($4,150 CAD) (2019-$3,670; $4,879 CAD in interest was incurred.

Treatment of Organic Waste and Septage

On February 28, 2019, the Company announced that it had received the project completion report titled: Development Optimization and Validation of an Innovative Integrated Anaerobic Thermophilic Digester Treatment of Organic Waste and Septage. The report was written by a research team at Fleming College’sCollege's Centre for Advancement of Water and Wastewater Technologies, located in Lindsay, Ontario, Canada. The collaborative project was supported by the Advancing Water Technologies Program (the “AWT Program”"AWT Program") of Southern Ontario Water Consortium. The project focused on the development of a new and innovative technology for handling and processing organic residuals. This new technology utilizes the anaerobic mesophilic digestion process coupled with thermophilic digestion to maximize biogas yields and produce organic fertilizer through optimal operations.

pg. 23

29

---

Deposits on Acquisition of Shares and Assets

On March 19, 2019, the Company paid a deposit of $14,966 ($20,000 CAD) in connection with the financing commitment in the form of a one-year mortgage in the amount of $1,346,940 ($1,800,000 CAD), in connection with the offer to purchase the shares of 168457 Ontario Inc., described below.

On February 5, 2019, the Company advanced a non-refundable deposit of $52,776 ($72,000 CAD) in connection with an executed non-binding letter of intent in the amount of $1,295,394 ($1,767,250 CAD) to acquire 100% of the shares of a company, whose primary asset includes the 39.44 acres of property in Roslin (near Belleville), Ontario, Canada which includes the site the Company currently leases for its organic composting facility.

On January 31, 2019, the Company advanced a deposit of $36,650 ($50,000 CAD) in connection with a $1,905,800 ($2,600,000 CAD) offer to purchase certain property located in Hamilton, Ontario, Canada, from the court appointed receiver for future operations.

Asset Purchase

On September 15, 2017, the Company entered into an asset purchase agreement (the “APA)"APA) with Astoria Organic Matters Ltd., and Astoria Organic Matters Canada LP (“Astoria”("Astoria"), pursuant to which the Company purchased certain assets of Astoria from the court appointed receiver of Astoria, BDO Canada Limited (the “Receiver”"Receiver"). The purchase price for the composting buildings, Gore cover system, driveway and paving, office trailer, certain machinery and equipment, computer equipment, computer software and intangible assets (the “Assets”"Assets") consisted of cash of $3,005,300$3,167,250 ($4,100,000 CAD), funded by PACE Savings and Credit Union Limited (“PACE”)  and 529,970 restricted common shares of the Company, determined to be valued at $529,970 ($700,000 CAD) based on private placement pricing at the time. In addition, legal costs of $21,442$22,598 ($29,253 CAD) in connection with acquiring the Assets are included in the cost of the organic composting facility. In addition, the Company purchased certain accounts receivable which it was required to collect, totaling $127,650$134,529 ($174,147 CAD) and a deposit with a local municipality in the amount of $36,650$38,625 ($50,000 CAD).

Other

On February 16, 2018,October 15, 2019, the Company finalizedwas awarded an organic processing contract, in connection with a lease agreement for certain equipment for its organic composting facility, which was previously on monthly rental, in the amount of $185,167 ($247,450 CAD) (the “2018 Equipment Lease Agreement”). The 2018 Equipment Lease Agreement isrecently submitted bid, for a period of forty-eight months,local municipality. This organic processing contract is in conjunction with two initial monthly installments of $7,483the local municipality's green bin program. The tipping fee for this organic processing contract has been set at $78 per metric tonne ("MT") ($10,000110/MT CAD) each, plus the applicable harmonized sales taxes, followed by forty-six monthly blended installments of principal and interest of $3,830 ($5,118 CAD), plus the applicable harmonized sales taxes. .

The Company has the optionalso secured an organic processing arrangement with another local municipality, in conjunction with their green bin program, with a tipping fee set at $92/MT ($130/MT).

In addition, several other contracts have been renewed, one, a municipality and another a private composting operation to purchase the equipment on the forty ninth month for an amount of $18,468 ($24,680 CAD), plus the applicable harmonized sales taxes. The 2018 Equipment Lease Agreement bears interest at the rate of 6.15% annually, compounded monthly, due January 27, 2022. During the three-month period ending MarchNovember 18, 2020 and December 31, 2019 $2,178 ($2,895 CAD) (2018-$963; $1,217 CAD) of interest was charged on the 2018 Equipment Lease Agreement.2020, respectively.

On October 30, 2017,July 22, 2019, the council for one of the Company's customers, a local township, approved an extension of contracts for the services provided by the Company finalized a lease agreement for certain equipment for its organic composting facility, which commenced on October 30, 2017, in the amount of $214,500 ($286,650 CAD) (the “October 2017 Equipment Lease Agreement”). The October 2017 Equipment Lease Agreement requires monthly blended installments of principalgarbage collection and interest of $4,370 ($5,840 CAD), plus applicable harmonized sales taxes and a final balloon payment of $21,401 ($28,600 CAD), plus applicable harmonized sales taxes on October 31, 2021. The October 2017 Equipment Lease Agreement bears interest at the rate of 5.982% annually, compounded monthly, due September 30, 2021. During the three-month period ending March 31, 2019, $1,492 ($1,984 CAD) (2018-$2,994; $3,785 CCAD) of interest was charged on the October 2017 Equipment Lease Agreement.

On September 21, 2017, the company finalized a lease agreement for the lease of certain equipment for its organic composting facility, in the amount of $12,856 ($17,180 CAD) (the “September 2017 Equipment Lease Agreement”). The September 2017 Equipment Lease Agreement requires monthly blended installments of principaloperation and interest of $949 ($1,268 CAD) at a monthly interest rate of 5.95%, due and fully paid on November 10, 2018. During the three-month period ending March 31, 2019, $nil ($nil CAD) (2018-$209; $264 CAD) of interest was charged under the September 2017 Equipment Lease Agreement.

On May 11, 2017, the Company signed a posting agreement with CrowdVest, a Tennessee limited liability company (“CrowdVest”), to act as the Company’s online intermediary technology platform in connection with the Company’s offering of shares of Common Stock pursuant to Rule 506 of Regulation D under the Securities Act of 1933. As compensation, CrowdVest received 20,000 restricted shares of Common Stockmaintenance of the Company, basedtownship's two waste disposal sites. The new contracts expire on an issuance price of $5 per share, once the 506(c)-general solicitation offering commenced. The offering terminated on October 27, 2017February 28, 2023 and was not extended.amount to $135,163 ($179,000 CAD) annually.

pg. 24

---

On May 9, 2017, the company signed a memorandum of agreement with Kentech (the “Kentech Agreement”"Kentech Agreement"), a corporation existing under the laws of the province of Ontario, Canada (“Kentech”("Kentech"). The Kentech Agreement provides the Company the right to acquire and the right to use the equipment and innovative processes of Kentech in relation to the production of liquid fertilizer from organic waste material. The Kentech Agreement is for a period of five years, commencing on the date of the Kentech Agreement. The Kentech Agreement may be terminated by either party upon providing six months’months' notice.

Effective January 1, 2017, new consulting agreements were finalized for the services of the President and the CEO (the “Consulting Agreements”). The Consulting Agreements are for a period of three years, commencing January 1, 2017. For each of the President and the CEO, the monthly fees are as follows: $3,742 ($5,000 CAD) for 2017 and $11,225 ($15,000 CAD) for 2018 and 2019. In addition, the CEO was granted 3,000,000 RSUs on January 1, 2017, determined to be valued at $990,000, based on private placement pricing at the time. On each of February 25, 2018 and April 2, 2019, 1,000,000 RSUs were exchanged into 1,000,000 shares of common stock of the Company. The RSUs of the remaining installment are expected to vest on January 1, 2020, upon meeting certain performance objectives. On May 17, 2018, the President’s Consulting Agreement was amended by the Board of Directors’ (the “Board”), to add the granting of 3,000,000 RSUs, determined to be valued at $3,000,000 based on private placement pricing at the time on the same terms and conditions as those of the CEO. On this date, the President was issued 1,000,000 shares of common stock of the Company in exchange for 1,000,000 RSUs. On January 9, 2019, 1,000,000 RSUs were exchanged for 1,000,000 common stock of the Company. The RSUs of the remaining installment are expected to vest on January 1, 2020, upon meeting certain performance objectives.

On December 7, 2016, the Company was awarded funding for the AWT Program, a program for business led collaborations in the water sector. The AWT Program is administered by the Southern Ontario Water Consortium to assist small and medium sized businesses in the Province of Ontario, Canada, leverage world-class research facilities and academic expertise to develop and demonstrate water technologies for successful introduction to market. In addition, the AWT Program is designed to enhance the Ontario water cluster and continue to build Ontario’s reputation for water excellence around the world. The Company’s academic partner is the CAWT at Fleming College in Lindsay, Ontario, Canada. The original AWT Program budget was for $586,400 ($800,000 CAD), of which the Company contributes 50% in cash and in-kind contributions and CAWT contributes 50%. CAWT revised its budget for the second and third years of the AWT Program. As a result, the cash commitments for 2017 and 2018, the second and third years of the AWT Program were cancelled.

The Company had already completed and provided its commitment for the first year of the AWT Program which ended March 31, 2017, consisting of professional fees of $7,217 ($9,432 CAD) and a contribution to the capital requirements of the AWT Program, totaling $71,017 ($94,000 CAD), for equipment to be used in the AWT Program and to be retained by CAWT.

On October 21, 2016, the Company hired the services of a contractor to assume the role of vice-president of corporate development (“VPCD”), effective November 1, 2016, for a period of fourteen months, at the rate of $2,993 ($4,000 CAD) per month, plus applicable taxes. In addition, the contractor was offered up to 115,000 shares of Common Stock of the Company, at a price of $0.10 per common share, exercisable within 180 days of the effective date of the contract. On April 30, 2017, the contractor exercised the offer to purchase 115,000 shares of Common Stock of the Company. At the end of the fourteen-month term, the VPCD continued to provide services on a monthly basis for the first three months of 2018.

On November 4, 2016, the Company’s BioGrid Project, a project described in the expansion and operation agreement (the “BioGrid Agreement”) with the Township of Georgian Bluffs and the Township of Chatsworth (the “Municipalities”), was terminated.

On August 19, 2016, Travellers provided an unsecured loan bearing interest at an annual rate of 12% in the amount of 157,143 ($210,000 CAD) which was required to initiate a letter of credit in the amount of $149,660 ($200,000 CAD). This loan was repaid in full, with accrued interest on April 3, 2018. Fees for the letter of credit included $7,483 ($10,000 CAD) incurred and charged by Travellers and $2,245 ($3,000 CAD) charged by the Company’s chartered bank. There is no written agreement evidencing this loan and the loan was approved by the Board of Directors of the Company.

On May 14, 2015, the Ontario Ministry of the Environment, Conservation and Parks (the “MOECP”"MECP") formerly the Ontario Ministry of the Environment and Climate Change, announced formal targets to be met to satisfy a commitment necessary to join the Western Climate Initiative (the “WCI”"WCI") along with Quebec and California, who are in the WCI with Cap and Trade commitments since 2014. The Ontario emission targets are very ambitious, with GHG emission reductions of 15% by 2020, 37% by 2030 and 80% by 2050, all from a 1990 baseline. Ontario achieved a 6% reduction in GHG emissions from 1990 levels in 2014, mainly by closing all coal-fired power plants. The targets announced will require a focused program to reduce GHG emissions.

pg. 25

---

The Company’sCompany's activities all contribute to GHG reductions, so we will be a key part of Ontario’sOntario's initiative. The Company has also contacted counterparties in Quebec and California to explore opportunities for relevant projects. SusGlobal is committed to making all its commercial activities carbon neutral. New Cap and Trade regulations became effective on January 2017. Subsequently, onOn July 3, 2018, the new premier of the Province of Ontario announced the end of the Cap and Trade program in Ontario.

30

---

On May 6, 2015, the Company finalized an agreement with Syngas, a company incorporated under the laws of Malaysia (“Syngas”("Syngas"), providing an exclusive license for the Company to use Syngas Intellectual Property within North America for a period of five years from the date of this agreement, for a consideration of $1, renewable every five years upon written request (the “Syngas"Syngas License Agreement”Agreement"). Syngas produces equipment that uses an innovative process to produce liquid transportation fuel from plastic waste material. The Company issued 20,000 shares of Common Stock of the Company to an introducing party, determined to be valued at $2,000. The Syngas License Agreement is being amortized on a straight-line basis, over a period of 10 years. There are no other obligations under the Syngas License Agreement.

The Company and Syngas intend to collaborate and cooperate with a view to achieving economic and financial success for their respective businesses. The Company will continue to pursue other similar intellectual property around the world as we combine this and other technologies in innovative configurations to monetize the portfolio of proprietary technologies and processes to deliver value to our customers and shareholders.

The Company and the new owners of Syngas are negotiating the renewal of this agreement.

Operations

The Company owns the Environmental Compliance Approvals (the “ECAs”"ECAs") issued by the MOECP,MECP from the Province of Ontario, in place to accept up to 70,000 metric tonnes of waste annually from the provinces of Ontario and Quebec and from western New York state, and to operate a waste transfer station with the capacity to process up to an additional 50,000 metric tonnes of waste annually. Once built, the location of the waste transfer station will be alongside the organic waste composting facility which is currently in operation near Belleville, Ontario, Canada.

Waste Transfer Station:Station-Access to the waste transfer stationsstation 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.FacilityThe Company’s-As noted above, the Company's organic waste composting facility, located near Belleville, Ontario Canada, has ECAs in place to accept up to 70,000 metric tonnes of waste annually and is currently in operation. Certain assets of the organic composting facility, including the ECAs for the waste transfer station, were acquired by the Company on September 15, 2017, from the court appointed receiver, BDO,Receiver for Astoria, under the APA. The Company charges tipping fees for the waste accepted at the organic waste composting facility based on arrangements in place with the customers and the type of waste accepted. Typical waste accepted includes, leaf and yard, biosolids, food, liquid, paper sludge and source separated organics. During the three-month period endingended March 31, 2019,2020, tipping fees ranged from $19$22 ($2530 CAD) to $64$118 ($85159 CAD) per metric tonne.

Compost Sales.The Company also sells organic compost (screened and unscreened) to local customers. During the three-month period ending March 31, 2019, the average selling price of the compost per metric tonne was approximately $8 ($11 CAD).

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2019,2020, the Company had a cashbank balance (bank indebtedness) of $3,933$15,002 (December 31, 2018-2019-$42,711)7,926) and current debt obligations and other current liabilities in the amount of $5,804,761$9,026,499 (December 31, 2018-2019-$5,045,362)8,911,361). As at March 31, 2019,2020, the Company had a working capital deficit of $5,565,973$8,367,335 (December 31, 2018-2019-$4,830,948)8,203,742). The Company does not currently have sufficient funds to satisfy the current debt obligations. Should the Company’s creditors seek or demand payment,

On March 31, 2020, PACE and the Company does not havereached an agreement with respect to the resourcesrepayment of the outstanding balances owing to payPACE. One of the credit facilities, in the amount of $34,391 ($48,788 CAD), was repaid in full after the Company provided the funds to PACE on April 3, 2020, as noted below and the remaining credit facilities and the corporate term loan will be repaid on or before September 30, 2020. On April 3, 2020, the Company provided PACE with sufficient funds, held in trust on March 31, 2020, to bring the remaining credit facilities and the corporate term loan current. The funds remaining, which were held in trust on March 31, 2020 will be used to satisfy any such claims currently.the principal and interest payments on the noted debt through July 2020. In addition, the letter of credit the Company has with PACE in favor of the ministry of the environment, conservation and parks (the "MECP"), will be renewed from the current expiry date of June 30, 2020 to September 30, 2020, at the appropriate time. On April 3, 2020, the shares previously pledged as security to PACE, were released. However, the personal guarantee from the CEO and charge against the Company's premises lease remain unchanged.

The Company’sCompany's total assets as at March 31, 20192020 were $3,940,172$5,452,807 (December 31, 2018-2019-$3,710,713)5,707,343) and total current liabilities were $5,804,761$9,026,499 (December 31, 2018-2019-$5,045,362)8,911,361). Significant losses from operations have been incurred since inception and there is an accumulated deficit of $9,634,856$12,204,787 as ofat March 31, 20192020 (December 31, 20182019 -$8,554,312)11,449,497). 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.

pg. 26

---

To pay current debt obligationsliabilities 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 $5,804,761$9,026,499 in current debt obligations and other current liabilities, the Company estimates that approximately $13,000,000$3,000,000 must be raised to fund capital requirements and general corporate expenses for the next 12 months.

31

---

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.

OnDuring the three-month period ended March 7 and March 8, 2019,31, 2020, the Company entered into two securities purchase agreements (the “March 2019 SPAs”) with two investors (the “March 2019 Investors”) pursuant to whichof the Company issued to each March 2019 Investor two 12% unsecured convertible promissory notes, comprisedconverted a total of the first notes (the “First Notes”) being in the amount$70,000 of $275,000 each, and the remaining notes in the amount of $275,000 each (the “Back-End Notes,” and, together with the First Notes, the “March 2019 Notes”) in the aggregate principal amount of $1,100,000, with such principal and the interest thereon convertible into Common Stock at the March 2019 Investors’ option. Each First Note contains a $25,000 Original Issue Discount such that the issue price of each First Note was $250,000. The proceeds on the issuance of the First Notes were received from the March 2019 Investors upon the signing of the March 2019 SPAs.

Although the March 2019 SPAs are dated March 7, 2019 or March 8, 2019 (each, a “March 2019 Effective Date”), they became effective upon the receipt in cash of the issue price by the March 2019 Investors. On March 11, 2019, the Company received cash of $456,000, net of transaction-related expenses, for the First Notes from the March 2019 Investors.

The maturity dates of the March 2019 Investor Notes are March 7, 2020 or March 8, 2020. The March 2019 Investor Notes bear interest at a rate of twelve percent (12%) per annum (the “March 2019 Interest Rate”), which interest shall be paid by the Company to the March 2019 Investors in Common Stock at any time the March 2019 Investors send a notice of conversion to the Company. The March 2019 Investors are entitled to, at their option, convert all or any amount of the principal face amount and any accrued but unpaid interest of the March 2019 Investor Notes into Common Stock, at any time, at a conversion price for each share of Common Stock equal to 65% multiplied by the lowest trading price (as defined in the Notes) of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange upon which the Company’s shares are traded during the twenty (20) consecutive Trading Day period immediately preceding (i) the applicable March 2019 Effective Date; or (ii) the conversion date.

The March 2019 Investor Notes may be prepaid until 180 days from the applicable March 2019 Effective Date with the following penalties: (i) if the March 2019 Investor Notes are prepaid within sixty (60) days following the applicable March 2019 Effective Date, then the prepayment premium shall be 125% of the face amount plus any accrued interest; (ii) if the March 2019 Investor Notes are prepaid during the period beginning on the date which is sixty-one (61) days following the applicable March 2019 Effective Date, and ending on the date which is ninety (90) days following the applicable March 2019 Effective Date, then the prepayment premium shall be 135% of the face amount plus any accrued interest; (iii) if the March 2019 Investor Notes are prepaid during the period beginning on the date which is ninety-one (91) days following the applicable March 2019 Effective Date, and ending on the date which is one hundred eighty (180) days following the applicable March 2019 Effective Date, then the prepayment premium shall be 145% of the face amount plus any accrued interest. Such prepayment redemptions must be closed and funded within three days of giving notice of prepayment or the right to prepay shall be forfeited.

The Company reserved a minimum of eight (8) times the number of its authorized and unissued Common Stock (the “March 2019 Reserved Amounts”), free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of the March 2019 Investor Notes. Upon full conversion of the March 2019 Investor Notes, any shares remaining in such reserve shall be cancelled. The Company increases the March 2019 Reserved Amount in accordance with the Company’s obligations under the March 2019 Investor Notes.

Pursuant to the terms of the March 2019 SPAs, for so long as the March 2019 Investors own any shares of Common Stock issued upon the conversion of the March 2019 Investor Notes (the “March 2019 Conversion Shares”), 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 March 2019 Investor Notes and the March 2019 SPAs, including but not limited to the requirement to maintain its corporate existence and assets, subject to certain exceptions, and not to make any offers or sales of any security under circumstances that would require registration of or stockholder approval for the March 2019 Investor Notes or the March 2019 Conversion Shares.

The March 2019 Investor Notes 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 Notes in the event of such defaults. In the event of default, at the option of the March 2019 Investors and in the March 2019 Investors’ sole discretion, the March 2019 Investors may consider the March 2019 Investor Notes immediately due and payable.

pg. 27

---

On April 24, 2019, the Company received one of the Back-End Notes from the March 2019 Investors in the principal amount of $275,000. The cash proceeds received by the Company was $228,000, net of financing costs.

On January 28, 2019, the Company entered into securities purchase agreements (the “January 2019 SPAs”) with three investors (the “January 2019 Investors”) pursuant to which the Company issued to the January 2019 Investors 12% unsecured convertible promissory notes, (the “January 2019 Notes”) inalong with a portion of their accrued interest and related costs of $6,727, a total of $76,727 for 7,717,326 common shares at prices ranging from $0.003575 to $0.01755 per share. And, subsequent to March 31, 2020 and up to the aggregate principal amountdate of $337,500,this filing, the investors of the unsecured convertible promissory notes converted a total of $16,250 of their unsecured convertible promissory notes, along with such principala portion of their accrued interest and the interest thereon convertible intorelated costs of $2,503, a total of $18,753 for 4,357,297 common shares of the Company’s common stock (the “Common Stock”)Company at the January 2019 Investors’ option. Although the January 2019 SPAs are dated January 28, 2019 (the “January 2019 Effective Date”), they became effective upon the receipt in cash of the issue price by the January 2019 Investors.prices ranging from $0.0039 to $0.005 per share.

The amounts of $102,500, $100,000, and $100,000, totaling $302,500, represented the proceeds to the Company, net of transaction-related expenses, for the January 2019 Notes from the January 2019 Investors and were received in cash from February 1 through February 4, 2019.

The maturity date of each of the January 2019 Notes is January 28, 2020 (the “January 2019 Maturity Dates”). The Notes bear interest at a rate of twelve percent (12%) per annum (the “January 2019 Interest Rate”), which interest shall be paid by the Company to the January 2019 Investors in Common Stock at any time the January 2019 Investors send a notice of conversion to the Company. The January 2019 Investors are entitled to, at their option, convert all or any amount of the principal face amount and any accrued but unpaid interest of the January 2019 Notes into Common Stock, at any time, at a conversion price for each share of Common Stock equal to 65% multiplied by the lowest trading price (as defined in the January 2019 Notes) of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange upon which the Company’s shares are traded during the twenty (20) consecutive Trading Day period immediately preceding (i) the January 2019 Effective Date; or (ii) the conversion date.

The January 2019 Notes may be prepaid until 180 days from the January 2019 Effective Date with the following penalties: (i) if the January 2019 Notes are prepaid within sixty (60) days following the January 2019 Effective Date, then the prepayment premium shall be 125% of the face amount plus any accrued interest; (ii) if the January 2019 Notes are prepaid during the period beginning on the date which is sixty-one (61) days following the January 2019 Effective Date, and ending on the date which is ninety (90) days following the January 2019 Effective Date, then the prepayment premium shall be 135% of the face amount plus any accrued interest; (iii) if the January 2019 Notes are prepaid during the period beginning on the date which is ninety-one (91) days following the January 2019 Effective Date, and ending on the date which is one hundred eighty (180) days following the January 2019 Effective Date, then the prepayment premium shall be 145% of the face amount plus any accrued interest. Such prepayment redemptions must be closed and funded within three days of giving notice of prepayment or the right to prepay shall be forfeited.

The Company has reserved a minimum of eight (8) times the number of its authorized and unissued Common Stock (the “January 2019 Reserved Amounts”), free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of the January 2019 Notes. Upon full conversion of the January 2019 Notes, any shares remaining in such reserve shall be cancelled. The Company increases the January 2019 Reserved Amount in accordance with the Company’s obligations under the January 2019 Notes.

Pursuant to the terms of the January 2019 SPAs, for so long as the Investors own any shares of Common Stock issued upon the conversion of the January 2019 Notes (the “January 2019 Conversion Shares”), 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 January 2019 Notes and the January 2019 SPAs, including but not limited to the requirement to maintain its corporate existence and assets, subject to certain exceptions, and not to make any offers or sales of any security under circumstances that would require registration of or stockholder approval for the January 2019 Notes or the January 2019 Conversion Shares.

The January 2019 Notes also 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 and increases in the amount of the principal and interest rates under the January 2019 Notes in the event of such defaults. In the event of default, at the option of the January 2019 Investors and in the January 2019 Investors’ sole discretion, the January 2019 Investors may consider the January 2019 Notes immediately due and payable.

During the three-month period ending March 31, 2019, the Company accrued interest of $11,039 (2018-$nil) on the outstanding promissory notes.

On April 11, 2018, three directors each loaned the Company $19,928 ($25,000 CAD) for working capital purposes (the “Director Loans”). The Director Loans bear interest at the rate of 12% per annum, are due on demand and unsecured. There are no written agreements evidencing the Director Loans. During the three-month period ending March 31, 2019 $1,669 ($2,219 CAD) (2018-$nil; $nil CAD) of interest was charged on the Director Loans. As at March 31, 2019, 2018, $6,521 ($8,729 CAD) (December 31, 2018-$4,772; $6,510 CAD) in interest is included in accrued liabilities and the Director Loans remain outstanding in the amount of $56,123 ($75,000 CAD) (December 31, 2018-$54,975; $75,000 CAD).

pg. 28

---

On April 3, 2018, a new loan was provided by Travellers International Inc. (“Travellers”), an Ontario company controlled by the Executive Chairman and President, who is also a director of the Company, in the amount of $159,420 ($200,000 CAD) (the “Travellers Loan”). A portion of the funds, $110,777 ($151,128 CAD), was used to pay two overdue monthly principal and interest instalments on the Company’s PACE Corporate Term Loan. This new loan is due on demand, unsecured and bears interest at the rate of 12% per annum. There is no written agreement evidencing the Travellers Loan. During the three-month period ending March 31, 2019, $3,802 ($5,055 CAD) (2018-$293,094; $371 CAD) in interest was charged on the Travellers Loan and other loans repaid to Travellers during the year. As at March 31, 2019, $17,166 ($22,940 CAD) (December 31, 2018-$13,110; $17,885 CAD) in interest is included in accrued liabilities and the Travellers Loan remains outstanding in the amount of $56,123 ($75,000 CAD) (December 31, 2018-$146,600; $200,000 CAD).

As of March 31, 2019,2020, the current and long-term portions of our long-term debt balance and our obligations under capital lease were $3,784,588totaled $7,341,303 ($5,057,58810,414,673 CAD) and $278,155 ($371,716(December 31, 2019-$7,421,030; $9,638,953 CAD) respectively of $4,062,743 ($5,429,297 CAD) in total..

In addition, as at March 31, 2019,2020, the Company had an outstanding letter of credit preparedprovided by PACE, in the amount of $207,153$195,138 ($276,831 CAD), in favor of the MOECP.MECP. The letter of credit is a requirement of the MOECPMECP and is in connection with the financial assurance provided by the Company, for it to be in compliance with the MOECPsMECPs environmental objectives. The MOECPMECP regularly evaluates the Company’sCompany's organic composting facility to ensure compliance is adhered to and the letter of credit is subject to change by the MOECP.MECP. As ofat March 31, 2019,2020, and the date of this filing, the MOECP has not drawn on this letter of credit.

Effective January 1, 2017, the Company obtained a Line of Credit of up to $4,031,500 ($5,500,000 CAD) with PACE (the “PACE Line of Credit”). On February 2, 2017, the Company received the first and only advance in the amount of $1,172,800 ($1,600,000 CAD) on the PACE Line of Credit. The PACE Line of Credit was due February 2, 2019 and is now one of multiple credit facilities with PACE, as noted below.

The funds advanced on the PACE Line of Credit of $1,172,800 ($1,600,000 CAD) bore interest at the PACE base rate of 6.75% plus 1.25% per annum, at the time 8%, and was payable on a monthly basis, interest only, until refinanced, as noted below. The PACE Line of Credit is secured by a business loan general security agreement, a $1,172,800 ($1,600,000 CAD) personal guarantee from the president of the Company (the “President”) and a charge against the Company’s office premises lease. Also pledged as security are the shares of the wholly-owned subsidiaries and a pledge of 3,300,000 shares of Common Stock of the Company held by Landfill Gas Canada Ltd. (“LFGC”), an Ontario company controlled by a director and chief executive officer of the Company (the “CEO”), 500,000 shares of Common Stock of the Company held by the chief financial officer (the “CFO”) and 2,000,000 shares of Common Stock of the Company held by a director’s company, and a limited recourse guarantee by each. The PACE Line of Credit is fully open for prepayment at any time without notice or bonus. A total commitment fee of $80,630 ($110,000 CAD) was paid to PACE. In addition, the agents who assisted in establishing the PACE Line of Credit received 1,620,000 shares of Common Stock of the Company determined to be valued at $469,800, based on private placement pricing at the time and cash of $300,000, on closing, for their services. Other closing costs in connection with the PACE Line of Credit included legal fees of $28,377 ($38,713 CAD). As at March 31, 2019, $757,258 ($1,011,971 CAD) (December 31, 2018-$745,897; $1,017,595 CAD) remains outstanding. During the three-month period ending March 31, 2019, the Company incurred interest charges of $15,502 ($20,609 CAD) (2018-$16,011; $20,242 CAD) on the PACE Line of Credit.

On July 27, 2018, the Company refinanced this credit facility at the PACE base rate of 7% plus 1.25% per annum, currently 8.25%. The credit facility is due on demand, but until a demand is made, is payable in monthly blended installments of principal and interest of $6,558 ($8,764 CAD), commencing August 2, 2018, amortized over a twenty-year period and matures on September 2, 2022.

On June 15, 2017, PACE loaned the Company $439,800 ($600,000 CAD) under a variable rate business loan agreement (the “PACE Business Loan Agreement”), for its bid for the purchase of certain assets of Astoria on terms and conditions similar to the abovementioned PACE Line of Credit. As at March 31, 2019, $423,490 ($565,936 CAD) (December 31, 2018-$417,137; $559,081 CAD) remains outstanding under the PACE Business Loan Agreement. During the three-month period ending March 31, 2019, the Company incurred interest charges of $8,695 ($11,559 CAD) (2018-$8,780; $11,320 CAD) in connection with the PACE Business Loan Agreement.

On July 27, 2018, the Company refinanced this credit facility at the PACE base rate of 7% plus 1.25% per annum, currently 8.25%. The credit facility is due on demand, but until a demand is made, is payable in monthly blended installments of principal and interest of $3,667 ($4,901 CAD), commencing August 2, 2018, amortized over a twenty-year period and matures on September 2, 2022.

pg. 29

---

On August 4, 2017, PACE loaned the Company $36,665 ($50,000 CAD) under a variable business loan agreement, to satisfy an outstanding liability on terms and conditions similar to the abovementioned PACE Line of Credit, except that the loan was due February 4, 2019. As at March 31, 2019, $36,898 ($49,309 CAD) (December 31, 2018-$36,344; $49,583 CAD) remains outstanding. During the three-month period ending March 31 2019, the Company incurred interest charges of $757 ($1,007 CAD) (2018-$780; $986 CAD) on this credit facility.

On July 27, 2018, the Company refinanced this credit facility at the PACE base rate of 7% plus 1.25% per annum, currently 8.25%. The credit facility is payable on demand, but until a demand is made, is payable in monthly blended installments of principal and interest of $320 ($427 CAD), commencing August 4, 2018, amortized over a twenty-year period and matures on September 4, 2022.

On September 13, 2017, PACE loaned the Company $2,729,800 ($3,724,147 CAD) under a corporate term loan (the “PACE Corporate Term Loan”). The funds were used for the purpose of acquiring certain assets of Astoria from the court appointed receiver on September 15, 2017. The PACE Corporate Term Loan bore interest at the PACE base rate of 6.75% plus 1.25% per annum, 8% at the time, payable in monthly blended installments of principal and interest of $56,545 ($75,564 CAD), and matures on September 13, 2022. The PACE Corporate Term Loan is secured by a business loan general security agreement representing a floating charge over the assets and undertakings of the Company, a first priority charge under a registered debenture and a lien registered under the Personal Property Securities Act in the amount of $2,993,932 ($4,000,978 CAD) against the Company’s assets, including accounts receivable, inventory and equipment. PACE has also provided the Company with a letter of credit in the favor of the MOECP in the amount of $207,153 ($276,831 CAD) and, as security, has registered a charge of lease over the premises, located at 704 Phillipston Road, Roslin (near Belleville), Ontario, Canada. As at March 31, 2019, and the date of this filing, the MOECCMECP has not drawn on this letter of credit. The PACE Corporate Term Loan also includes an assignmentCompany has renewed this letter of existing contracts included under the APA. Oncredit to June 13, 2018, the unpaid and previously deferred interest on the PACE Corporate Term Loan for the period beginning on March 13, 2018 and ending June 13, 2018, in the amount of $51,889 ($69,343 CAD), was capitalized and included in the principal balance of the PACE Corporate Term Loan. As at March 31, 2019 $2,566,942 ($3,430,365 CAD) (December 31, 2018-$2,528,400; $3,449,387 CAD) remains outstanding under the PACE Corporate Term Loan. During the three-month period ended March 31, 2019, the Company incurred interest charges of $52,665 ($70,014 CAD) (2018-$55,030; $69,570 CAD) under PACE Corporate Term Loan. The shares pledged as security for the Line of Credit and the other credit facilities also pertain to this corporate term loan.30, 2020.

On July 26, 2018, the Company refinanced the PACE Corporate Term Loan. The first and only blended installment of principal and interest of $21,377 ($29,164 CAD) was due August 1, 2018 at the rate of 8% per annum, and amortized over a twenty-year period. The PACE Corporate Term Loan is due on demand, but until a demand is made, is payable in monthly blended installments of principal and interest of $21,823 ($29,711 CAD), commencing August 13, 2018, at the PACE base rate of 7% plus 1.25% per annum, currently 8.25%. The PACE Corporate Term Loan continues to be amortized over a twenty-year period and matures on September 13, 2022.

Refer to notes 10, 11, 12, 13 and 14 to the interim condensed consolidated financial statements for details on the long-term debt, obligations under capital lease and commitments, convertible promissory notes, operating lease liability and loans payable to related parties, as at March 31, 2019.

pg. 30

---

CONSOLIDATED RESULTS OF OPERATIONS – - FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 20192020COMPARED TO THE THREE-MONTH PERIOD ENDED MARCH 31, 20182019

		For the three-month periods ended
		March 31, 2018			March 31, 2019
Revenue	$	350,197		$	253,138
Cost of Sales
Opening inventory		5,389			18,550
Depreciation		113,109			95,754
Direct wages and benefits		76,183			49,365
Equipment rental, delivery, fuel and repairs and maintenance		61,302			99,566
Utilities		38,277			27,531
Outside contractors		3,573			105
		297,833			290,871
Less: closing inventory		(4,071	)		(26,409	)
Total cost of sales		293,762			264,462
Gross profit (loss)		56,435			(11,324	)
Operating expenses
Management compensation-stock-based compensation		-			332,500
Management compensation-fees		51,357			81,238
Marketing		2,917			280,000
Professional fees		81,448			134,702
Interest expense and default amounts		312,291			105,023
Office and administration		55,685			58,182
Rent and occupancy		28,297			24,241
Insurance		18,179			14,059
Filing fees		13,880			12,683
Amortization of financing costs		92,538			11,997
Directors' compensation		(1,420	)		2,952
Repairs and maintenance		6,458			2,261
Foreign exchange loss		150,095			9,382
Total operating expenses		811,725			1,069,220
Net loss	$	(755,290	)	$	(1,080,544	)

		For the three-month periods ended
		March 31, 2019			March 31, 2018
Revenue	$	253,138		$	132,721
Cost of Sales
Opening inventory		18,550			53,964
Depreciation		95,754			94,043
Direct wages and benefits		49,365			40,059
Equipment rental, delivery, fuel and
repairs and maintenance		99,566			35,040
Utilities		27,531			22,200
Outside contractors		105			3,844
		290,871			249,150
Less: closing inventory		(26,409	)		(67,210	)
Total cost of sales		264,462			181,940
Gross loss		(11,324	)		(49,219	)
Operating expenses
Management compensation-stock- based
compensation		332,500			82,500
Management compensation-fees		81,238			90,174
Marketing		280,000			-
Professional fees		134,702			60,822
Interest expense		105,023			85,240
Office and administration		67,564			51,084
Rent and occupancy		24,241			34,201
Insurance		14,059			15,119
Filing fees		12,683			6,458
Amortization of financing costs		11,997			-
Directors’ compensation		2,952			791
Repairs and maintenance		2,261			8,009
Total operating expenses		1,069,220			434,398
Net loss		(1,080,544	)		(483,617	)

32

---

During the three-month period ended March 31, 2019,2020, the Company generated $253,138$350,197 of revenue from its organic composting facilityoperations compared to $132,721for$253,138 in the three-month period ended March 31, 2018.2019. The Company’sCompany's cost of sales in connection with this revenue totaled $293,762 in the three-month period ended March 31, 2020 compared to $264,462 in the three-month period ended March 31, 2019 compared to 181,940 for the three-month period ended March 31, 2018.2019. These costs consisted of depreciation, direct wages and benefits, equipment rental, delivery, fuel, repairs and maintenance, utilities and outside contractors. Of the revenue generated for the three-month period ended March 31, 2020, $299,042 (2019-$253,138) related to the organic waste composting operations and $51,155 (2019-$nil) related to the garbage collection and landfill management operations. The significant increase in both the revenue and the cost of sales in the current period was primarily due to new business and the related cost of processing the waste from this new business. The opening inventory for the three months ended March 31, 2019 in the amount of $18,550 was significantly lower than the closing inventory of $26,409 due primarily to the production of compost during the current period.

The net loss for the three-month period ended March 31, 20192020 was $1,080,544,$755,290, significantly higherlower than the net loss of $483,617 in the three-month period ended March 31, 2018, primarily due to the increase in management compensation relating to stock-based compensation, the start of the new marketing campaign and professional fees.

Operating expenses increased by $634,822, from $434,398 in the three-month period ended March 31, 2018 to $1,069,220 for the three-month period ended March 31, 2019, primarily due to the increase in various expenses, explained further below.

Management compensation related to stock-based compensation increased by $250,000, from $82,500 in the three-month period ended March 31, 2018 to $332,500 in the three-month period ended March 31, 2019, as a result of the vesting of the President’s RSUs in the amount of $250,000. The compensation relating to fee charged by management reduced by $8,936, as a result of not incurring any fees charged by the Company’s VPCD in the current period as her services terminated on March 31, 2018.

pg. 31

---

During the three-month period ended March 31, 2019, the Company incurred marketing fees for its marketing campaign in the amount of $280,000 with no comparable prior period amount.

Professional fees increased by $73,880, from $60,822 in the three-month period ended March 31, 2018 to $134,702$1,080,544 in the three-month period ended March 31, 2019, primarily due to the following; an increasereduction in legal services on the Company’s claim against a third party representedmanagement compensation relating to stock-based compensation, marketing costs and professional fees offset by BDOincreases in the amountinterest expense and default amounts, amortization of $8,747 related to thefinancing costs awarded BDO on the Court’s dismissal of the Company’s motions, an increase in audit and review fees of $8,433, the issuance of shares for legal services providedforeign exchange losses.

Operating expenses were reduced by the Company’s legal counsel valued at $53,000 based on the closing trading price on the day prior to issuance and other legal expenses incurred of $3,700.

Interest expense increased by $19,783$257,495, from $85,240$1,080,544 in the three-month period ended March 31, 20182019 to $811,725 in the three-month period ended March 31, 2020, explained further below.

Management compensation related to stock-based compensation reduced by $332,500, from $332,500 in the three-month period ended March 31, 2019 to $nil in the three-month period ended March 31, 2020. The 2019 and final RSUs fully vested during 2019, resulting in no similar expense in the current three-month period ended March 31, 2020.

Marketing costs reduced by $277,083, from $280,000 in the three-month period ended March 31, 2019 to $2,917 in the three-month period ended March 31, 2020, as a result of no similar marketing plans in the current three-month period ended March 31, 2020.

Professional fees reduced by $53,254, from $134,702 in the three-month period ended March 31, 2019 to $81,448 in the three-month period ended March 31, 2020. The main reason for the difference relates to the 100,000 shares issued in the prior three-month period ended March 31, 2019 for legal services determined to be valued at $53,000.

Interest expense and default amounts increased by $207,268 from $105,023 in the three-month period ended March 31, 2019 to $312,291 for the three-month period ended March 31, 2020, primarily as a result of the increased interest expense and default amounts on the convertible promissory notes in the amount of $172,443 and the new mortgage interest of $48,379, offset by reductions in interest expense on the various PACE debt, obligations under capital leases and related party balances. The interest expense and default amounts include the increased interest rate to 24% as a result of the defaults and default amounts of $108,441, effective January 28, 2020.

Office and administration expenses reduced minimally by $2,497.

Rent and occupancy for the three-month period ended March 31, 2020, increased by $4,056 from $24,241 for the three-month period ended March 31, 2019 primarily as a result of the accrued interest on the new convertible promissory notes in the amount of $11,039 and the operating lease liability in the amount of $6,679 and the increase in the borrowing rate from 8% to 8.25%.

Rent and occupancy increased by $29,755, from $25,170 in the three-month period ended September 30, 2017 to $54,925$28,279 for the three-month period ended September 30, 2018,March 31, 2020, primarily due to the new rentincrease in property taxes and occupancy costs associated with the Company’s organic composting facility which operated for three months in the current three-month period versus only fifteen days in the prior year’s three-month period. Also included is an estimate of the additional rent for road maintenance levied by the City of Belleville at the Company’s organic composting facility.related charges.

Office and administrationInsurance increased by $16,480,$4,120 from $51,084$14,059 in the three-month period ended March 31, 20182019 to $67,564$18,179 in the three-month period ended March 31, 2020, primarily due to an increase in premiums for coverages for new equipment and liability coverage for the business acquisition in May of 2019.

Filing fees increased by a nominal amount of $1,197, from $11,683 for the three-month period ended March 31, 2019 as a result of an increase in foreign exchange losses of $9,335, an increase in laboratory testing of $5,366 and various other office and administrative expenses of $1,779.

Rent and occupancy reduced by $9,960, from $34,201to $13,880 for the three-month period ending March 31, 2018 to $24,241 for the three-month period ending March 31,2019, primarily due to the presentation of the operating lease liability and related interest expense of $6,679 as opposed to rent expense of a similar amount and the absence of the apartment and trailer rentals.

Insurance decreased by $1,060 from $15,119 in the three-month period ended March 31, 2018 to $14,0592020.

The amortization of financing costs incurred increased by $80,541 from $11,997 for the three-month period ended March 31, 2019 primarily due to a lower premium$92,538 for directors’ and officers’ insurance.

Filing fees were higher by 9,177 in the current three-month period ended March 31, 2020, due to the amortization of the additional financing costs on the new convertible promissory notes acquired after March 31, 2019, versusa total increase of $41,255, and the prior year’samortization of the financing costs of the mortgage advances obtained during Q2-2019 and Q4-2019 of $39,286.

A portion of the directors' compensation for 2020 and for 2019 is based on an accrual of fees for services payable in shares, determined using the trading price at the end of each reporting period. Since the trading price has dropped since December 31, 2019, the resulting expense in the three-month period ended March 31, 2018, as2020 is a resultcredit of fees$1,420 (2019-$2,952). In addition, the directors' compensation includes an accrual for an investor communications service in the amountfee charged by the audit committee chairman, a total of $9,995 offset$744 ($1,000 CAD) (2019-$752; $1,000 CAD).

33

---

Repairs and maintenance expenses increased by lower overall filing fees charges.

During$4,197, from $2,261 for the three-month period ended March 31, 2019 the Company amortized the financing costs incurred on the new security purchase agreements in the amount of $11,997. The financing costs are being amortized over the life of the new securities purchase agreements which expire prior to March 31, 2020.

Directors’ compensation increased by $2,161$6,458 in the three-month period ended March 31, 2019 compared2020, due to additional repairs and maintenance expenses incurred at the Company's organic composting facility.

The foreign exchange loss increased by $140,713, from $9,382 for the three-month period ended March 31, 2018 due2019 to an estimate$150,095 for directors’ compensation for the current period with no comparative amount in the prior year’s three-month period ended March 31, 2018.

Repairs and maintenance expenses were lower by $5,748 in the current three-month period ended March 31, 2019 compared to the three-month period ended March 31, 20182020, due primarily to lower overall expenses incurred at the Company’s organic composting facility.significant devaluation of the Canadian dollar compared to the United Statements dollar, during the current period.

As at March 31, 2019,2020, the Company had a working capital deficit of $5,565,973$8,367,335 (December 31, 2018-2019-$4,830,948)8,203,742), incurred a net loss of $1,080,544 (2018-$755,290 (2019-$483,617)1,080,544) for the three-month periodthree months ended March 31, 20192020 and had an accumulated deficit of $9,634,856$12,204,787 (December 31, 2018-2019-$8,554,312)11,449,497) and expects to incur further losses in the development of its business.

On March 31, 2020, PACE and the Company reached an agreement for the repayment of the outstanding amounts owing to PACE. One of the credit facilities, in the amount of $34,391 ($48,788 CAD), was repaid in full on April 3, 2020 and the remaining credit facilities and the corporate term loan are due on or before September 30, 2020. Management continues to be discussions with a Canadian chartered bank to re-finance its remaining obligations to PACE.

The Company has defaulted on the convertible promissory notes (see note 12). As a result, the amounts owing to PACE (see note 10) and the obligations under capital lease (see note 11) are also in default.

These factors cast substantial doubt as to the Company’sCompany's ability to continue as a going concern, which is dependent upon its ability to obtain the necessary financing to further the development of its business, satisfy its obligations to PACE and its other creditors, whose debts are also in default 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.

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

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.

pg. 32

---

CRITICAL ACCOUNTING ESTIMATES

Use of estimates

The preparation of the Company’sCompany'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’smanagement'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 judgmentsjudgements 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, deferred income tax assets and related valuation allowance, accruals, environmental remediation costs, stock-based compensation and stock-based compensation.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

From time to time the Company may grant options and/or warrants to management, directors, employees and consultants. The Company recognizes compensation expense at fair value. Under this method, the fair value of each warrant is estimated on the date of the grant and amortized over the vesting period, with the resulting amortization credited to paid in capital. The fair value of each grant is determined using the Black-Scholes option-pricing model. Consideration paid upon exercise of stock options and/or warrants is recorded in equity as share capital.

34

---

Long-Lived Asset Impairments

We assess our long-lived assets for impairment as required under the applicable accounting standards. If necessary, impairments are recorded in (income) expense from divestitures, asset impairments and unusual items, net in our Consolidated Statements of Operations and Comprehensive Loss.

Indefinite-Lived Intangible Assets —- At least annually, and more frequently if warranted, we assess the indefinite-lived intangible assets, including the goodwill of our reporting units for impairment using Level 3 inputs.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases which is also known as Accounting Standard Codification (“ASC”) Topic 842, that requires lessees to recognize for all operating leases a right-of-use asset and a lease obligation in the interim condensed consolidated balance sheets. Expenses are recognized in the interim condensed consolidated statements of operations and comprehensive loss in a manner similar to previous accounting guidance. Lessor accounting under the new standard is substantially unchanged and is not relevant to the Company. The Company adopted the accounting standard using a prospective transition approach, which applies the provisions of the new guidance at the effective date without adjusting the comparative periods presented, with certain practical expedients available to ease the burden of adoption.

The Company elected the following practical expedients upon adoption: not to reassess whether any expired or existing contracts are or contain leases, not to reassess the lease classification for any expired or existing leases, not to reassess initial direct costs for any existing leases, not to separately identify lease and non-lease components (i.e. maintenance costs) except for fleet vehicles and real estate, and not to evaluate historical land easements under the new guidance. Additionally, the Company elected the short-term lease exemption policy, applying the requirements of ASC 842 to long-term leases (leases greater than 1 year) for which it only has one.

Adoption of the new standard resulted in $217,755 ($297,074 CAD) of additional right-of-use lease asset and lease liability as of January 1, 2019. The new standard did not have a significant impact on the interim condensed consolidated statements of operations and comprehensive loss. See note 8, Operating lease right-of-use asset, contained in the interim condensed consolidated financial statements for additional information.

pg. 33

---

RECENT ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by FASBthe financial accounting standards board (the "FASB") or other standard setting bodies and adopted by the Company as of the specified effective date or possibly early adopted, where permitted. Unless otherwise discussed, the impact of recently issued standards that are not yet effective willare not expected to have a material impact on the Company’sCompany's financial position, results of operations or cash flows.

InOn January 2017,1, 2020, the FASB issuedCompany adopted ASU No. 2018-13, "Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurements to ASC Topic 820, Fair Value Movement. ASU No. 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, and/or adding certain disclosures. The adoption of ASU No. 2018-13, did not have a significant impact on the Company's consolidated financial statements.

On January 1, 2020, the Company adopted ASU No. 2017-04, “Intangibles-Goodwill"Intangibles-Goodwill and Other (Topic 350) - Simplifying the Test for GoodwillImpairment”GoodwillImpairment". The new standard simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill quantitative impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is to be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The adoption of ASU No. 2017-04, did not have a significant impact on the Company's consolidated financial statements. 

RECENT ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by FASB or other standard is to besetting bodies and adopted by the Company as of the specified effective for interim and annual periods beginning after December 15, 2019 anddate or possibly early adoption isadopted, where permitted. The Company is currently evaluatingUnless otherwise discussed, the impact of adopting ASU No. 2017-04.

In June 2016,recently issued standards that are not yet effective will not have a material impact on the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including trade receivables. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances for credit losses limited to the amount by which fair value is below amortized cost. ASU 2016-13 is effective for the Company beginning January 1, 2020 and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will be material to itsCompany's financial position, results of operations andor cash flows.

EQUITY

As at March 31, 2019,2020, the Company had 41,404,53160,501,830 common shares issued and outstanding. AtAs at the date of this filing, the Company had 42,484,53164,859,127 common shares issued and outstanding.

STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS

Effective January 1, 2017, the Company granted the CEO 3,000,000 restricted stock units (“RSU”), under a consulting agreement effective January 1, 2017, determined to be valued at $990,000 based on private placement pricing at the time. On each of February 25, 2018, and April 2, 2019, 1,000,000 RSUs were exchanged into 1,000,000 common stock of the Company. The RSUs for the CEOs remaining installment are expected to vest on January 1, 2020, subject to meeting certain performance objectives. On May 17, 2018, at a meeting of the board of directors (the “Board”), approved an amendment to the President’s consulting agreement, to include the granting of 3,000,000 RSUs to the President, determined to be valued at $3,000,000, based on private placement pricing at the time, on the same terms and conditions as those granted to the CEO. On January 9, 2019 1,000,000 of the President’s RSUs were exchanged into 1,000,000 common stock of the Company. Based on private placement pricing at the time, the common stock issued to the President in exchange for the RSUs, was determined to be valued at $1,000,000. The RSUs for the President’s remaining installment are expected to vest on January 1, 2020, subject to meeting certain performance objectives.

The Company has no other stock options, warrants or restricted stock units outstanding as at March 31, 20192020 and as of the date of this filing.

RELATED PARTY TRANSACTIONS

On November 6, 2019, by resolution of the Board, the consulting contracts for the president and the CFO were renewed, each for a one-year period, commencing January 1, 2020. For the president, at the same monthly amount and on the same terms and conditions, as his previous consulting contract, $10,574 ($15,000 CAD), monthly. For the CFO, at a monthly amount of $5,639 ($8,000 CAD), an increase of $1,410 ($2,000 CAD) over his previous consulting contract and on the same terms and conditions as his previous consulting contract.

In addition, on November 6, 2019, by resolution of the Board, the president was appointed Chief Executive Officer ("CEO").

35

---

The Company transacts with related parties in the normal course of business.

DuringFor the three-month period ended March 31, 2019,2020, the Company incurred $33,849$33,494 ($45,000 CAD)  (2018-(2019-$35,595;33,849; $45,000 CAD)  in management fees expense with Travellers International Inc. (“Travellers”("Travellers"), an Ontario company controlled by a director and president of the Company (the “President”); $33,849CEO; $nil ($45,000nil CAD)  (2018-(2019-$35,595;33,849; $45,000 CAD) in management fees expense with Landfill Gas Canada Ltd. (“LFGC”("LFGC"), an Ontario company controlled by a former director and former chief executive officer of the Company (the “CEO”); $13,540and $17,863 ($18,00024,000 CAD) (2018-(2019-$9,492; $12,00013,540; $18,000 CAD)  in management fees expense with the Company’sCompany's chief financial officer (the “CFO”); and $nil ($nil CAD) (2018-$9,492; $12,000 CAD) in management fees expense with the Company’s vice-president of corporate development (the “VPCD”"CFO").  As at March 31, 2019,2020, unpaid remuneration and unpaid expenses in the amount of $80,759$304,324 ($107,923431,727 CAD) (December 31, 2018-2019-$48,691; $66,426324,303; $421,227 CAD) is included in accounts payable and $177,347$11,278 ($237,00016,000 CAD) (December 31, 2018-2019-$184,714; $251,99712,318; $16,000 CAD) is included in accrued liabilities.liabilities in the interim condensed consolidated balance sheets.

In addition, duringfor the three-month period ended March 31, 2019,2020, the Company incurred interest expense of $3,802$441 ($5,055592 CAD) (2018-(2019-$293; $3713,802; $5,055 CAD) on the outstanding loans from Travellers and $1,669$nil ($2,219nil CAD) (2018-(2019-$nil; $nil1,669; $2,219 CAD) on the outstanding loans from the directors. As at March 31, 2019,2020, interest of $23,698$417 ($31,669592 CAD) (December 31, 2018-2019-$17,882; $24,395nil; $nil CAD) on thesethe loans outstanding to Travellers is included in accrued liabilities.liabilities in the interim condensed consolidated balance sheets.

DuringFor the three-month period ended March 31, 2019,2020, the Company incurred $16,998$17,523 ($22,59823,543 CAD) (2018-(2019-$15,500; $19,59516,998; $22,598 CAD) in rent expense paid under a rental agreement towith Haute Inc. (“Haute”("Haute"), an Ontario company controlled by the President.CEO.

pg. 34

---

TheFor those independent directors providing their services throughout 2019, the Company accrued directors’directors' compensation for itstotaling $1,200, based on the subsequent issuance of 20,000 common shares of the Company to each of the five independent directors that are expected to be issued subsequent to March 31, 2020. And, for services provided in the three-month period ended March 31, 2020, $240 (2019-$2,200). The directors' compensation was priced based on the trading price of the shares at the close of business on March 31, 2020 and will be recorded based on the trading price of the shares, immediately prior to issuance. Also included in directors' compensation for the three-month period ended March 31, 20192020, are the audit committee chairman's fees, in the amount of $2,952 (2018-$791)$744 ($1,000 CAD) (2019 $752; $1,000 CAD). As at March 31, 2019, $54,2002020, outstanding directors' compensation of $797 ($1,130 CAD) (December 31, 2018-2019-$52,000) of outstanding fees to the directors3,480; $4,520 CAD) is included in accounts payable and $2,145 (December 31, 2019-$3,650) is included in accrued liabilities.liabilities, in the interim condensed consolidated balance sheets.

Furthermore, for the three-month period ended March 31, 2020, the Company grantedrecognized management compensation expense of $nil (2019-$332,500), on the CEO 3,000,000vesting of the restricted stock units (“RSU”("RSUs"), under a consulting agreement effective granted in prior years to the CEO and the former chief executive officer. On January 1, 2017, determined to be valued at $990,000 based on private placement pricing at10, 2020, the time. On each of February 25, 2018 and April 2, 2019, 1,000,000CEO's remaining RSUs were exchanged into 1,000,000 common stock of the Company. The RSUs for the CEOs remaining installment are expected to vest annually on January 1, 2020, subject to meeting certain performance objectives. On May 17, 2018, at a meeting of the board of directors (the “Board”), approved an amendment to the President’s consulting agreement, to include the granting of 3,000,000 RSUs to the President, determined to be valued at $3,000,000, based on private placement pricing at the time, on the same terms and conditions as those granted to the CEO. Immediately thereafter, 1,000,000 of the President’s RSUs were exchanged for 1,000,000 common stock of the Company. And, on January 9, 2019, 1,000,000 of the President’s RSUs were exchanged into 1,000,000 commonshares of the Company. Based on private placement pricing at the time of granting of the RUSs, the common stockshares issued to the PresidentCEO on eachthe exchange of the 1,000,000 RSUs, was determined to be valued at $1,000,000. The RSUs for the remaining installment are expected to vest annually on January 1, 2020, subject to meeting certain performance objectives.

For the three-month period ended March 31, 2019, the Company recognized management compensation expense of $332,500 (2018-$82,500 on the award to the CEO) on the awards to the President and the CEO, representing one-sixth of the total value of the awards of $3,990,000.

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 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”"Exchange Act") as of the end of the period covered by this Quarterly Report on Form 10-Q.

36

---

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 due primarily to the small size of the Company and the lack of a segregation of duties.

Notwithstanding this material weakness, 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

There was no change in our internal control over financial reporting during the three-month period ended March 31, 20192020 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

pg. 35

---

PART II: OTHER INFORMATION

Item 1A. Legal Proceedings.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Except as set forth in this Form 10-Q, we are not currently aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, or operating results.

On December 15, 2017, the The Company has one known claim filed a motion record in the Ontario Superior Court of Justice (the “Court”) against the Business Development Bank of Canada and Astoria, togetherit for unpaid legal fees, in the amount of $565,267$45,988 ($755,40065,241 CAD) in connection with. The amount claimed by the Company’s purchase of certain assets from the court appointed receiver for Astoria, BDO, on September 15, 2017. The basis for the claim is for the Company’s costs to process biosolids stored onsite that amounted to approximately more than 10 times the amount permitted to be stored by conditions setplaintiff has been recorded in the Environmental Compliance Approval foraccounts of the site. The processing costs are paid when the biosolids are received onsite. Costs to process are incurred over the 12 weeks it takes to incorporate the biosolids into a compost product. The Court ruled against the Company’s motion. Subsequently, on June 12, 2018, the Company, upon unanimous approval by the Board, filed an appeal. The motion on the appeal was heard before the Court on September 21, 2018. On November 8, 2018, The Court dismissed the motion and awarded BDO its costs in the amount of $118,305 ($158,099 CAD). The Company appealed the Court’s decision and filed an appeal which was heard by a panel of three judges. On April 8, 2019, the Company was informed that the appeal was rejected by the panel of three judges.Company.

Item 1B. 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.

All ofDuring the Company’s unregistered sales of equity securities during the three monthsthree-month period ended March 31, 2019 have been previously disclosed2020, the Company issued:

(i)	1,000,000 common shares on the exchange of the CEO's 1,000,000 2019 RSUs.
(ii)	7,717,326 common shares to the January 2019 Investors, the March 2019 Investors and the May 2019 Investors for the conversion of a portion of their unsecured convertible promissory notes, including accrued interest and related cost of $6,727, for a total of $76,727 at per share conversion prices ranging from $0.0036 to $0.0176 per share.

The issuance of the securities set forth in Form 8-Ksthis Part II, Item 2 was made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act") for the offer and sale of securities not involving a public offering. The Company's reliance upon Section 4(a)(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities were isolated private transactions by us which did not involve a public offering; (b) each transaction had fewer than five recipients; (c) there were no subsequent or contemporaneous public offerings of the Form 10-K filedsecurities by the Company.Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual entities and the Company; and (f) the recipients of the securities are accredited investors

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

37

---

Item 5. Other Information.

Not Applicable.

pg. 36

---

Item 6. Exhibits.

The following exhibits are filed as part of this quarterly report on Form 10-Q:

Exhibit No.	Description
4.1	Form 12% Convertible Redeemable Note (filed as Exhibit 4.1 to the Registrant’s Form 8-K filed with the SEC on February 8, 2019 and incorporated by reference herein by reference).Description
4,231.1*	Form of 12% Convertible Promissory Note Issued by the Company (filed as Exhibit 4.1 to the Registrant’s Form 8-K filed with the SEC on March 15, 2019 and incorporated herein by reference).
4.3	Form of 12% Convertible Redeemable Note (Back End Note) Issued by the Company (filed as Exhibit 4.2 to the Registrant’s Form 8-K filed with the SEC on March 15, 2019 and incorporated herein by reference).
4.4	Form of Collateralized Secured Promissory Note Issued by the Investor (filed as Exhibit 4.3 to the Registrant’s Form 8- K filed with the SEC on March 15, 2019 and incorporated herein by reference).
10.1	Form Securities Purchase Agreement dated January 28, 2019 (filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on February 8, 2019 and incorporated herein by reference).
10.2	Letter of Intent, dated January 8, 2019, from David Moore and Kim Moore to SusGlobal Energy Belleville Ltd. (filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on February 20, 2019 and incorporated herein by reference).
10.3	Form Securities Purchase Agreement dated March 7, 2019 (filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on March 15, 2019 and incorporated herein by reference).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.231.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1 32.1+	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of Sarbanes-Oxley Act of 2002)+
32.2 32.2+	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of Sarbanes-Oxley Act of 2002)+
101.INS101.INS*	XBRL Instance Document*Document
101.SCH101.SCH*	XBRL Taxonomy Extension Schema Document*Document
101.CAL101.CAL*	XBRL Taxonomy Calculation Linkbase Document*Document
101.DEF101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document*Document
101.LAB101.LAB*	XBRL Taxonomy Label Linkbase Document*Document
101.PRE101.PRE*	XBRL Taxonomy Presentation Linkbase Document*Document

*	Filed herewith
+	* Filed herewith. + In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.

pg. 37

38

---

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.

May 15, 2019	By:	/s/ Gerald Hamaliuk
		Gerald Hamaliuk
May 15, 2020	By:	/s/ Marc Hazout
		Marc Hazout
		Executive Chairman, President and Chief Executive Officer
May 15, 20192020	By:	/s/ Ike Makrimichalos
		Ike Makrimichalos
		Chief Financial Officer (Principal Financial and Accounting Officer)

		Officer)39

pg. 38

---