Sustainable Green Team Ltd. (SGTM)

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Financials are out!!
THE SUSTAINABLE GREEN TEAM, LTD. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED JANUARY 1, 2022, AND JANUARY 2, 2021

Independent Auditor’s Report
Consolidated Financial Statements Consolidated Balance Sheets
Page
3
4
5 6-7 8-9 10 - 25
THE SUSTAINABLE GREEN TEAM LTD. AND SUBSIDIARIES FOR THE FISCAL YEAR ENDED JANUARY 1, 2022
TABLE OF CONTENTS
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders’ Equity Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of The Sustainable Green Team Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of The Sustainable Green Team Ltd. as of January 1, 2022 and January 2, 2021, the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 1, 2022 and January 2, 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/S/ BF Borgers CPA PC
BF Borgers CPA PC
We have served as the Company's auditor since 2020 Lakewood, CO
March 31, 2022

THE SUSTAINABLE GREEN TEAM AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
January 1, 2022
January 2, 2021
ASSETS
Current Assets
Cash $ Short-term investments
Accounts receivable, net of allowance for doubtful accounts
Inventories
Prepaid expenses and other current assets
788,242 52 2,538,626 7,588,085 1,503,504 12,418,509
52,049,146
1,051,702 324,000 84,440 977,355 2,437,497
66,905,152
2,671,776 249,186 4,486,461 - 7,407,423
751,606 17,480,621 - 18,232,227 25,639,650
-
9,046 34,636,450 6,620,006 41,265,502
66,905,152 financial statements.
$
506,287 2,801,263 1,631,921 9,806,776
628,364 15,374,611
24,158,297
842,272 100,000 95,000 313,538 1,350,810
40,883,718
711,605
132,668 2,459,945 2,982,417 6,286,635
207,328 4,794,541 18,802,355 23,804,224 30,090,859
-
8,917 6,825,996 3,957,946 10,792,859
40,883,718
Total Current Assets
Property and equipment, net
Other Assets
Long-term investments Goodwill
Intangibles, net
ROU asset
Total Other Assets
Total Assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses Current portion of lease liability
Notes payable
Notes payable - related party
Total Current Liabilities
Long-term Liabilities
Lease liabilities, net of current portion
Notes payable, net of current portion
Note payable - related party, net of current portion
Total Long-term Liabilities Total Liabilities
Commitments and contingencies
Stockholders' Equity
Preferred Series A stock, $0.0001 par value, 5,000,000 shares authorized,
90 shares outstanding
Common stock, $0.0001 par value; 245,000,000 shares authorized;
90,460,425 and 89,168,405 shares issued and outstanding, respectively Additional paid-in capital
Retained earnings
Total Stockholders' Equity
$
$
$
$
$ The accompanying footnotes are an integral part of these consolidated
$
Total Liabilities and Stockholders' Equity
4
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Net Revenue Cost of revenue
Total gross profit
Operating expenses
Selling, general and administrative Depreciation and amortization
Total operating expenses Loss from operations
Other income (expense) Interest expense, net Bargain purchase gain
Debt forgiveness
Other income (expense), net
Total other expense
Income (loss) before provision for income taxes Provision for income taxes
Net Income (loss)
Net income (loss) per common share - basic Net income (loss) per common share - diluted
Weighted average shares outstanding - basic Weighted average shares outstanding - diluted
$
Jan 1, 2022
6,038,079 6,284,044
(245,965)
1,571,667 8,361 1,580,028
(1,825,993)
(216,579) 7,123,084
- 30,938 6,937,443
5,111,450 (429,162)
5,540,612
0.06 0.06
89,779,971 95,419,975
$
Jan 2, 2021
4,553,195
5,585,999 (1,032,804)
948,460
276,366 1,224,826
(2,257,630)
(307,994) -
(47,060) (355,054)
(2,612,684) (601,848) (2,010,836)
(0.02) (0.02)
89,168,405 89,655,905
$
Jan 1, 2022
31,925,731 30,604,565 1,321,166
5,033,382 31,581 5,064,963
(3,743,797)
(508,034) 7,123,084 1,613,128
26,979 8,255,157
4,511,360 (716,002) 5,227,362
0.06 0.05
90,161,612 95,801,616
$
Jan 2, 2021
30,584,291 27,430,601 3,153,690
3,902,262 377,489 4,279,751
(1,126,061)
(1,044,941) 7,488,585
114,518 6,558,162
5,432,101 (169,191)
5,601,292
0.07 0.07
84,098,649 84,561,183
THE SUSTAINABLE GREEN TEAM AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Year Ended
$
$ $
$
$ $
$
$ $
$
$ $
The accompanying footnotes are an integral part
of these consolidated financial statements. 5

Twelve Months Ended January 1, 2022:
Balance at January 2, 2021
Stock issued for 2020 debt inducement Stock issued for compensation
Net loss
Balance as of April 3, 2021
Net income
Balance as of July 3, 2021
Related party contribution on debt forgiveness Note payable converted to stock
Net loss
Balance as of October 2, 2021
Stock subscriptions
Stock redemptions
Stock issued for compensation Stock issued for acquisitions Net income
Balance as of January 1, 2022
Preferred Stock
Additional Common Stock Paid-in
Retained Earnings
$ 3,957,946
(121,435) 3,836,511 916,915 4,753,426
(1,108,731) 3,644,695
(2,565,301)
5,540,612 $ 6,620,006
THE SUSTAINABLE GREEN TEAM AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Shares
Amount
$
Shares
- 89,168,405 300,000 25,000
- 89,493,405
- 89,493,405
6,000,000 .
- 95,493,405
5,640,004 (11,397,984) 125,000 600,000
- 90,460,425
Amount Capital
8,917 $ 6,825,996 30 62,970 3 28,797
8,950 6,917,763
8,950 6,917,763
17,484,728 600 3,699,400
9,550 28,101,891
564 4,229,439 (1,140) (1,708,558) 12 93,738 60 3,919,940
9,046 $ 34,636,450
Total
$ 10,792,859 63,000 28,800 (121,435)
10,763,224
916,915
11,680,139
17,484,728 3,700,000 (1,108,731)
31,756,136
4,230,003 (4,274,999) 93,750 3,920,000 5,540,612
$ 41,265,502
90
90
90
90
$
90
$
$
The accompanying footnotes are an integral part of these consolidated financial statements. 6

Twelve Months Ended January 2, 2021:
Balance at December 28, 2019
Mulch Mfg pre-acquisition distributions Mulch Mfg equity, net of
intercompany gain, at time of acquisition Issued ICW Mulch Mfg acquisition
Issued ICW reverse merger
Net income
Balance as of March 28, 2020
Cancelled ICW Mulch Mfg acquisition Subscription issuance
Issued ICW reverse merger
Issued ICW conversion of notes payable Net income
Balance as of June 27, 2020
Net loss
Balance as of January 2, 2021
Net loss
Balance as of January 2, 2021
Preferred Stock
Common Stock
Additional Paid-in Capital
Retained Earnings
$ 8,844,692 (12,887,403)
2,399,365
7,507,316 5,863,970
1,214,231
7,078,201 (1,109,419) 5,968,782 (2,010,836) $ 3,957,946
THE SUSTAINABLE GREEN TEAM AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (continued)
Shares
Amount
$
Shares
- 43,752,636
40,000,000 4,000,000
- 87,752,636
(1,000,000) 1,250,000 25,000 1,140,769
- 89,168,405
- 89,168,405
- 89,168,405
Amount
4,875
(500) 4,000 400
8,775
(100) 125 3 114
8,917
8,917
8,917
Total
$ 9,145,467 (12,887,403)
2,348,845 6,000,000 100,000 7,507,316
12,214,225
- 100,000 - 384,658 1,214,231
13,913,114 (1,109,419) 12,803,695 (2,010,836) $ 10,792,859
90
$
$
295,900
(50,020) 5,996,000 99,600
6,341,480
100 99,875 (3) 384,544
6,825,996
6,825,996
6,825,996
90
90
90
90
$
$
$
The accompanying footnotes are an integral part of these consolidated financial statements. 7

THE SUSTAINABLE GREEN TEAM AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended
Jan 1, 2022
Jan 2, 2021
Cash flows from operating activities:
Net Income
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for (recovery of) doubtful accounts Depreciation and amortization
Common stock issued as compensation
Gain on sale of fixed assets
Gain on Paycheck Protection Program debt forgiveness Equity increase in long term investment
Bargain purchase gain
Changes in operating assets and liabilities: Accounts receivable, net
Inventory
Prepaid expenses and other current assets Accounts payable and accrued expenses
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property and equipment
Proceeds from sale of property and equipment
Net short-term investment redemptions (purchases) Purchases of long-term investments
Proceeds from long-term investments
Net cash from (used in) investing activities
Cash flows from financing activities: Principal payments on leases Proceeds from notes payable Payment on notes payable
Payment on notes payable, related parties Stock subscriptions
Stock redemptions
Distributions
Net cash provided by (used in) financing activities Net increase (decrease) in cash
Cash - beginning of period
Cash - end of period
$
5,227,362
(79,598) 3,565,912 122,550
(1,613,128) (315,281) (7,123,084)
(827,107) 2,218,691 (875,140) 2,121,321 2,422,498
(3,835,636) 2,801,210
105,850 (928,576)
(233,575) 1,236,080 (1,471,282) (698,194) 4,230,003 (4,274,999)
(1,211,967) 281,955 506,287 788,242
$
5,601,292
81,321 3,142,292
(63,562)
(7,488,585)
447,892 689,156 150,986
(834,342) 1,726,450
(3,234,652) 60,855 5,123,933 (253,500) 321,500 2,018,136
(107,648) 9,137,232 (596,737)
(3,858,253)
(7,844,981) (3,270,387)
474,199 32,088 506,287
$
$
The accompanying footnotes are an integral part of these consolidated financial statements. 8

THE SUSTAINABLE GREEN TEAM AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS continued
Supplemental cash flow information: Cash paid for:
Interest
Income taxes
Non-cash investing and financing activities:
Note and interest payable contribution to capital
Purchase of plant, property and equipment for notes payable Purchase of plant, property and equipment for common stock Acquisition of right of use assets for lease obligations
Stock issued for accrued interest and compensation
Stock issued for accrued stock subscription and compensation Stock issued for accrued debt inducement
Stock issued for acquisition of Day Dreamer Productions, LLC Conversion of notes payable to stock
Stock issued and liabilities assumed for equipment
Property and equipment bargain purchase recognition Distribution of property and equipment
Twelve Months Ended
Jan 1, 2022 Jan 2, 2021
$ 716,432 $ 832,760 $ 50 $ 159,179
$ 17,484,728
$ 16,560,927 $ 4,948,908 $ 3,696,000
$ 895,781
$ 200,000
$ 63,000
$ 224,000
$ 3,700,000 $ 384,657
$ 7,856,052 $ 7,123,084 $ 7,488,585 $ 5,042,424
The accompanying footnotes are an integral part of these consolidated financial statements. 9

THE SUSTAINABLE GREEN TEAM, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS
Corporate History
The Sustainable Green Team, Ltd., (f/k/a Sierra Gold Corp.) (the “Parent” or “SGTM”), a Delaware corporation, conducts business activities principally through its three wholly-owned subsidiaries: National Storm Recovery LLC (“NSR LLC”), a Delaware limited liability company, Mulch Manufacturing, Inc., an Ohio corporation (“MM”) and Sierra Gold Merger Corp. (“SGMC”), a Delaware corporation (collectively, the “Company”).
The Company was initially formed, under the name Alpha Diamond Corporation in the State of Nevada on January 22, 1997. It’s undergone multiple name changes over the years and a domicile change to Wyoming on February 15, 2011.
Effective April 18, 2019, Sierra Gold Corp., (“SGCP”), entered into an equity exchange agreement (the “Merger”), as amended on December 31, 2019 with NSR LLC, pursuant to which SGCP acquired all of the membership units of NSR LLC. Upon closing, NSR LLC became a wholly-owned subsidiary of SGCP.
On July 22, 2019, a Certificate of Amendment was filed with the State of Wyoming to change the name of the Company from “Sierra Gold Corporation” to “National Storm Recovery, Inc.” and to affect a 1 for 10,000 reverse stock split. At September 11, 2019, the Company’s trading symbol changed from “SGCP” to “NSRI”.
The stock split decreased the issued and outstanding shares of its common stock from 3,406,865,285 to 602,636 (after rounding up to a 100 share minimum) before SGCP issued 40,000,000 shares of its common stock to the members of NSR LLC as consideration for the equity interests exchange. As a result of the Merger, NSR LLC members acquired 99% of SGCP’s issued and outstanding shares of common stock and SGCP changed its principal focus to providing tree services, debris hauling and removal, biomass recycling, mulch manufacturing, packaging and sales.
The Merger was treated as a reverse recapitalization effected by an equity exchange for financial and reporting purposes since SGCP was deemed to be a shell corporation with nominal operations and no assets at the time of the merger. NSR LLC is considered the acquirer for accounting purposes, and the SGCP’s historical financial statements before the Merger have been replaced with the historical financial statements of NSR LLC before the Merger in future filings.
On December 31, 2019 the Company entered into a restructuring as a holding company pursuant to Delaware General Corporation Law (“DGCL”) §251(g) known as “the Delaware Holding Company Statute.” In order to effect this restructuring NSRI and NSR LLC company each changed domiciles to the State of Delaware by filing Certificates of Conversion. Immediately thereafter, NSRI incorporated SGTM as its wholly-owned subsidiary and SGTM formed Sierra Gold Merger Corp., a Delaware corporation (“SGMC”) as its wholly-owned subsidiary. Similarly, NSR LLC issued SGTM, 1,000 limited liability company Common Membership Units. Each of the four parties next executed an Agreement and Plan of Merger (the “Merger Agreement”) as well as a Certificate of Merger, the latter of which was filed with the Delaware Secretary of State Division of Corporations on December 31, 2019 (collectively, the “Reorganization”). Pursuant to the terms of the Reorganization, NSRI merged down into SGMC with SGMC surviving as the successor to the reorganization, with all of the assets and liabilities of NSRI merging into SGMC and the separate existence of NSRI ceasing. The shares of SGTM and Membership Interests of NSR LLC, held by NSRI were canceled in the reorganization as part of the restructuring and the shares of NSRI became exchangeable for shares of SGTM on a one for one basis making SGTM the parent to both SGMC and NSR LLC as well as making SGTM the publicly-traded successor to NSRI. After obtaining FINRA approval on July 21, 2020, the Company changed its trading symbol to SGTM.
Effective January 31, 2020, the Company entered into a Business Combination Agreement (the “Mulch Acquisition”) pursuant to which MM has become its wholly-owned subsidiary. Under the Mulch Acquisition, all issued and outstanding common stock in MM were converted into an aggregate of 40,000,000 shares of the Company’s common stock (See Note 6).
The Company closed on the acquisition of 100% of the membership interests in Day Dreamer Productions LLC (DDP) on December 30, 2021. DDP is in the business of producing informational and promotional videography (See Note 6).
Business Overview
The Company provides tree services, debris hauling and removal, biomass recycling, mulch manufacturing, packaging and sales. The Company’s objective is to provide a solution for the treatment and handling of tree debris that has historically been disposed
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of in landfills, creating an environmental burden and pressure on disposal sites around the nation. This objective is founded in sustainability, based on vertically integrated operations that begin with collecting of tree debris through its tree services and collection sites, through its processing services, and then recycling and using that tree debris as a feedstock that is manufactured into a variety of organic, attractive, next-generation mulch products that are packaged and sold to landscapers, installers and garden centers. The Company plans to expand its operations through a combination of organic growth and strategic acquisitions of synergistic companies that are both accretive to earnings and enable the Company to be positioned for rapid growth. The Company operates in a highly seasonal industry generating most of its sales and profits in the first six months of the year.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements as of January 1, 2022, and January 2, 2021, and for the three months and year ended January 1, 2022, and January 2, 2021, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the Company’s financial position at such date and the operating results and cash flows for such periods. Operating results for the three months and year ended January 1, 2022 are not necessarily indicative of the results that may be expected for the entire year or for any subsequent interim period.
The Company has adopted the period end dates conforming to the industry standards used by MM, the Company’s largest operating subsidiary. These period end dates follow a 52/53 week fiscal year which ends on the Saturday nearest to December 31. The years ended January 1, 2022, and January 2, 2021, included 52 and 53 weeks, respectively.
Principles of Consolidation
The consolidated financial statements are presented on a comparative basis. The consolidated balance sheets at January 1, 2022 and January 2, 2021 include the accounts of SGTM, NRS LLC, MM, DDP LLC, Rose, and SGMC.
The consolidated statements of operations for the three months and year ended January 1, 2022, and January 2, 2021, include the accounts of SGTM, NRS LLC, MM, Rose, and SGMC. For the year ended January 2, 2021, which includes the one month period ended January 31, 2020, the date of the Business Combination with MM, the accounts of SGTM, NRS LLC, MM and Rose are consolidated on a pro forma basis. The impact of including this one month of 2020 in the statement of operations for that year was to lower income by around $280,000 for the loss MM sustained for that month.
The consolidated statement of changes in stockholders’ equity for the year ended January 1, 2022, includes the account balances of SGTM, NRS LLC, MM, DDP LLC, Rose, and SGMC. For the year ended January 2, 2021, the accounts of SGTM, NRS LLC, MM, Rose, and SGMC are presented on a pro forma basis. The net income for this year includes that of MM and Rose for the one month ending January 31, 2020, on a pro forma basis.
The consolidated statement of cash flows for the year ended January 1, 2022, includes the accounts of SGTM, NRS LLC, MM, DDP LLC and Rose. The year ended January 2, 2021, include the accounts of SGTM, NRS LLC, MM and Rose; with the latter two included on a pro forma basis for the one month ended January 31, 2020.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity-based transactions, revenue and expenses and disclosure of contingent liabilities at the date of the consolidated financial statements. The Company bases its estimates and assumptions on historical experience, known or expected trends and various other assumptions that it believes to be reasonable. As future events and their effects cannot be determined with precision, actual results could differ from these estimates which may cause the Company’s future results to be affected.
Revenue
The Company’s revenues are derived from two major types of services to clients: landscape recovery services and the manufacturing and sale of landscape mulch. With respect to landscape recovery services, the Company provides tree services, debris hauling and removal and biomass recycling.
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The Company recognizes revenue when its performance obligations are satisfied. With respect to landscape recovery services, its performance obligation is satisfied upon the completion of the landscape services for its customers. With respect to the manufacturing and selling of landscape mulch, its performance obligation is satisfied upon delivery to its customers. Services are provided for cash or on credit terms. These credit terms, which are established in accordance with local and industry practices, require payment generally within 30 days of performance or end of season for qualifying orders. The Company estimates and reserves for its bad debt exposure based on its experience with past due accounts and collectability, the aging of accounts receivable and its analysis of customer data.
Disaggregated Revenues
Revenue consists of the following by service and product offering for the three months ended January 1, 2022:
Manufacturing and Sales of
Mulch Total
$ 775,038 $
Revenue consists of the following by service and product offering for the year ended January 1, 2022:
Landscaping Recovery Services
5,706,294 $ 6,481,332
Manufacturing and Sales of
Mulch Total
$ 3,430,464 $
Revenue consists of the following by service and product offering for the three months ended January 2, 2021:
Landscaping Recovery Services
28,938,520 $ 32,368.984
Manufacturing and Sales of
Mulch Total
$ 1,079,621 $
Revenue consists of the following by service and product offering for the year ended January 2, 2021:
Landscaping Recovery Services
3,473,574 $ 4,553,195
Landscaping Recovery Services
$ 3,227,218 $
Manufacturing and Sales of
Mulch Total
27,357,073 $ 30,584,291
Cash
The Company considers all highly liquid short-term instruments that are purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of January 1, 2022 and January 2, 2021.
Account Receivable and Retainage
The Company periodically assesses its accounts receivable for collectability on a specific identification basis. If collectability of an account becomes unlikely, an allowance is recorded for that doubtful account. As of January 1, 2022, and January 2, 2021, the Company’s allowance for doubtful accounts was $60,000 and $150,000, respectively.
From time to time, the Company’s customers may retain a portion of the amount due the Company for large landscaping or disaster recovery jobs until all contract obligations have been met. As of January 1, 2022, and January 2, 2021, the Company was due approximately $-0- and $63,000, respectively, in such retainage. This retainage was included in the Company’s Accounts Receivable balance.
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Inventory
Inventories are stated at the lower of cost or net realizable value, with cost determined by the weighted-average cost method using full absorption costing for manufactured goods.
Property and Equipment
Property and equipment are recorded at cost. During the year ended January 2, 2021, previously expensed rental deposits of approximately $455,000 were capitalized and applied to the buy-out of assets pursuant to their rental purchase agreements, the impact, of which, was to lower cost of sales for that year. Expenditures that enhance the useful lives of the assets are capitalized and depreciated.
Depreciation is computed using the straight-line method over the estimated useful lives of the related capitalized assets. Machinery and equipment is generally depreciated over 7 to 10 years. Vehicles are generally depreciated over 5 years.
Maintenance and repairs are charged to expense as incurred. At the time of retirement or other disposition of property and equipment, its cost and accumulated depreciation is removed from the accounts and the resulting gain or loss, if any, is reflected in operations.
Impairment of Long-Lived Assets and Right of Use Assets
Intangible Assets
The Company records its intangible assets at cost in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other. Finite lived intangible assets are amortized over their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the asset are expected to be generated. During the three months and year ended January 1, 2022, the Company did not record a loss on impairment. For the three months and year ended January 2, 2021, the Company recorded a $317,500 loss on the impairment of an advantageous supply contract.
Goodwill
Goodwill represents the excess of the purchase price of the acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at year end, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is tested for impairment at the reporting level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. The fair values of the reporting units are estimated using market and discounted cash flow approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause in a future impairment of goodwill at the reporting unit.
Advertising and Marketing Costs
The Company expenses advertising and marketing costs as they are incurred. Advertising and marketing expenses were approximately $90,000 and $303,000 for the three months and year ended January 1, 2022, respectively, and $70,000 and $305,000 for the three months and year ended January 2, 2021, respectively, and are recorded in selling, general and administrative expenses on the statement of operations.
Fair Value Measurements
ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement.
The Company reviews long-lived assets, including finite-lived intangible assets and right of use (“ROU”) lease assets, for
impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on
discounted cash flows or appraised values, depending on the nature of the assets.
13

The Company’s financial assets and liabilities carried at fair value measured on a recurring basis as of January 1, 2022 and January 2, 2021, consisted of the following:
Total fair value at January 1, 2022 $ 52
Total fair value at January 2, 2021 $ 2,801,263
Quoted prices in active markets for identical Assets (Level 1) $ 52
Quoted prices in active markets
for identical Assets (Level 1) $ 2,801,263
Significant other Observable inputs (Level 2)
Significant other Unobservable inputs (Level 3)
Investment in mutual funds
Investment in mutual funds
$
- $
-
Significant other
Observable inputs (Level 2)
Significant other Unobservable inputs (Level 3)
$
- $
-
Net Income (Loss) per Common Share
Basic net income (loss) per common share is computed by dividing the net income by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share includes the effect of Common Stock equivalents (stock options, unvested restricted stock, and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive.
Three Months Ended
Year Ended
January 1, 2022
Numerator for basic and diluted earnings (loss) per share:
January 2, 2021
$ (2,010,836)
89,168,405 - 487,500
89,655,905
$ (0.02) $ (0.02)
January 1, 2022
$ 5,227,362
90,161,612 5,640,004
-
95,801,616
$ 0.06 $ 0.05
January 2, 2021
$ 5,601,292
84,098,649 - 462,534
84,561,183
$ 0.07 $ 0.07
Net income (loss)
Denominator for basic earnings (loss) per share - weighted average shares outstanding
Stock warrants
Convertible notes
Denominator for diluted earnings (loss) per share –
weighted average and assumed conversion
Net income (loss) per share:
Basic net income (loss) per share
Diluted net income (loss) per share
Income Taxes
$ 5,540,612
89,779,971 5,640,004 -
95,419,975
$ 0.06 $ 0.06
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
14

The Company utilizes ASC Topic 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely- than-not” that a deferred tax asset will not be realized. For tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit in the consolidated financial statements.
For the three months ended January 1, 2022 and January 2, 2021, the Company recognized approximately $429,000 and $602,000 tax benefit, respectively, and $716,000 and $169,000 tax benefit for the years ended January 1, 2022 and January 2, 2021, respectively. These tax provisions were based on a 27% effective rate for federal and state income taxes after accounting for permanent differences between book and taxable income. The Company has recorded a $901,876 and $175,471 deferred tax asset, net of a valuation allowance, as of January 1, 2022, and January 2, 2021, respectively. Management believes this asset to be “more likely than not” fully realized in future periods.
The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the consolidated statements of operations.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, simplifying the Accounting for Income Taxes (Topic 740) as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. This guidance is effective for interim and annual reporting periods beginning within 2021.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard was effective for the Company’s interim and annual periods beginning January 1, 2019 and was applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The adoption of ASU 2016 - 02 had a material impact on the Company’s consolidated financial statements and related disclosures.
NOTE 3 – INVENTORIES
The Company’s inventories are comprised of the following for the periods ended January 1, 2022 and January 2, 2021:
Raw Materials Work in process Finished goods
January 1, 2022
$4,453,785 1,155,439 1,978,861
$7,588,085
January 2, 2021
$ 6,968,808 1,712,380 1,125,588
$9,806,776
The Company has also advanced deposits for the production and delivery of mulch products in the amount of $-0- and $250,000 as of January 1, 2022, and January 2, 2021, respectively, which are included in “Prepaid expenses and other current assets.”
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
15

Leasehold improvements Construction in process
Less: accumulated depreciation Property and equipment, net
$
283,268 19,599,106 58,085,173 (6,036,027) 52,049,146
January 1, 2022
January 2, 2021
Machinery and equipment $ 20,777,465 Vehicles 4,383,043 Land 6,807,573 Buildings 6,234,718
$
$
20,135,720 4,177,851 1,502,024
- 826,737 465,750 27,108,082 (2,949,785) 24,158,297
Total depreciation expense between cost of revenue and operating expenses
2022, was $895,950 and $3,324,798, respectively. For the three months and year ended January 2, 2021, the total depreciation expense between cost of revenue and operating expenses was $882,814 and $2,668,230, respectively.
The Company had several bulk sawmill equipment purchases on December 31, 2021, that are included in construction in process above. The first one was for 400,000 shares of common stock, valued at $3,696,000, for equipment in Beaver, WA, appraised for $8,570,600. The $4,874,600 difference between the 400,000 shares closing at $9.24 per share on the date of the transaction resulted in the recognition of a bargain purchase gain.
The second bulk sawmill equipment purchase was for a facility in Jasper, FL, which was appraised for $9,798,550. The $7,550,066 purchase price was paid for by cash and debt. The $2,248,484 difference between the equipment’s appraised value and its purchase price was recognized as a bargain purchase gain.
NOTE 5 – ACQUISITIONS
Mulch Manufacturing, Inc. Acquisition
On January 31, 2020, the Company entered into a Business Combination Agreement (the “Mulch Acquisition”) with MM and its sole shareholder, Ralph Spencer (“Spencer”) (collectively the “MM Parties”), pursuant to which the Company acquired all of the shares of MM. Upon closing, MM became a wholly-owned subsidiary of SGTM.
Pursuant to the Mulch Acquisition, at the effective time of the acquisition:
• All of MM’s outstanding common stock was exchanged for an aggregate of 40,000,000 shares of SGTM’s common stock.
• One million shares previously issued to the MM shareholder in connection with the sale of equipment by MM to NSR LLC in November 2019 were cancelled.
• There were specific excluded assets that were retained by Spencer and treated as transferred to Spencer prior to the acquisition consisting of cash, real estate, and certain vehicles and equipment. Spencer agreed to allow the Company to use some of the real estate rent-free until January 31, 2022, at which time the Company had the option of either leasing or purchasing it at the fair market value.
• All of the existing MM notes, notes and accounts receivable, and inventory at the date of the Mulch Acquisition are included in the acquisition and the Company had immediate possession of them by its ownership of MM. However, the 40 million shares of the Company’s common stock that was issued as consideration was based on these assets being removed from MM prior to the acquisition. The value of these assets are valued separately from the share exchange and that certain demand promissory note payable to Spencer in the amount of approximately $14 million was adjusted to reflect the value of the inventory, accounts receivable, and any other sums lent by Spencer to MM.
The Company accounted for these transactions in accordance with the acquisition method of accounting for business combinations. An independent appraisal, made in February 2020, determined the fair market value of MM’s property and equipment to be $17,228,295. Assets and liabilities of the acquired business were included in the consolidated balance sheets as of January 1, 2022, and January 2, 2021, based on their respective estimated fair values on the date of acquisition. Based on a closing market price of $0.15
16
for the three months and year ended January 1,

per share on the January 31, 2020, business combination date, the assumption of net liabilities plus a bargain purchase recognition and asset write-up, the Company is recognizing the allocation to the accounts of MM as follows:
Appraised fair market value of property and equipment
Less: Net book value of just MM's property and equipment on January 31, 2020
Excess of fair market over net book value of MM property and equipment
$
17,228,295 1,883,657
15,344,638
Value of common stock issued for MM
Net book value of MM on January 31, 2020: Property and equipment
Investments
Prepaid expenses and other assets
Supply agreement
Accounts payable and accrued expenses Notes payable
Net book value (assumed) of MM on January 31, 2020
$
1,883,657 830,000 192,361 453,750
(1,215,820) (4,000,000)
$6,000,000
(1,856,052)
Total purchase price, including assumed net liabilities, of MM
Excess of fair value over net book value plus
purchase price of MM property and equipment (bargain purchase gain)
Purchase price of MM
Bargain purchase gain and property and equipment write-up Net book value of MM on January 31, 2020
Total to be allocated
Allocation of MM purchase price and bargain purchase gain: Property and equipment
Investments
Prepaid expenses and other assets
Supply agreement
Accounts payable and accrued expenses Notes payable
Day Dreamer Productions LLC Acquisition
$ $ $ $
$
7,856,052 7,488,586
7,856,052
7,488,586 (1,856,052) 13,488,586
17,228,295 830,000 192,361 453,750 (1,215,820) (4,000,000) 13,488,586
The Company entered into an agreement to acquire 100% of the membership interest of Day Dreamer Productions, LLC around January18,2021,inexchangefor200,000sharesoftheCompany’sstock. ThistransactionwasclosedonDecember30,2021,when the Company issued the shares to its sole member. This member was also retained as an employee with responsibility for managing the activities of Day Dreamer Productions, LLC.
NOTE 6 – INTANGIBLE ASSETS
The below table summarizes the identifiable intangible assets as of January 1, 2022, and January 2, 2021: 17

Supply contract (1) Less:
Total, net (1)
Useful life
10
January 1, 2022
$ 453,750 (51,810) (317,500) $ 84,440
$ $
January 2, 2021
453,750 (41,250) (317,500) 95,000
Accumulated amortization Impairment
These intangible assets were acquired in the acquisition of MM on January 31, 2020.
The weighted average useful life remaining on identifiable intangible assets is 8 years.
Amortization of identifiable intangible assets for the three months and year ended January 1, 2022, was $2,640 and $10,560, respectively. Amortization of identifiable intangible assets for the three months and year ended January 2, 2021, was $11,250 and $33,750, respectively.
The below table summarizes the future amortization expense for the next five years:
2022 $ 2023
2024
2025
2026 Thereafter
$
NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
10,560 10,560 10,560 10,560 10,560 31,640 84,440
Accounts payable and accrued expenses consist of the following amounts:
January 1, 2022
January 2, 2021
Accounts payable Accrued interest Accrued expenses
NOTE 8 –NOTES PAYABLE
$ $
2,350,056 8,076 313,644 2,671,776
$
$ $
Jan 1, 2022
10,580,504
4,100,000
1,400,000
557,145 91,983 62,477
711,605
Seller note payable bearing interest at 6.0%, monthly payments of principal and interest of $76,300 beginning October 2021 with a $9,819,606 balloon due September 2024, secured by mortgaged real estate
$
Jan 2, 2021
-0-
-0-
-0-
Various third-party obligations secured by assets the Company
acquired subject to this indebtedness to various third-party creditors, bearing interest at a 5% average rate. Monthly payments of $122,881 principal and interest beginning January 2022 through December 2024
Unsecured note payable to seller on bulk equipment purchase, bearing 4.0% interest. First $300,000 payment of principal and interest due March 2022, $200,000 payments of principal and interest due quarterly thereafter until paid in full
Note payable to a bank, secured by equipment, bearing interest at 2.95%. Monthly payments of principal and interest in the amount of $28,698
18

beginning January 2021 and due through December 2025
1,297,817 1,599,068
Unsecured note payable to a financial institution under the SBA Paycheck Protection Program for MM bearing interest at 1.0%. Monthly payments of principal and interest in the amount of $82,061 beginning August 2022 are due through April 2023.
Unsecured note payable to a financial institution under the SBA Paycheck Protection Program for MM bearing interest at 1.0%. Monthly payments of
1,236,080 -0-
-0- 1,458,200
342,680 432,211
325,718 410,817
347,452 416,642
334,000 399,247
222,887 275,707
217,213 269,915
212,727 265,602
209,200 263,857
208,226 261,275
195,779 244,656 134,353 -0- 65,838 -0-
principal and interest in the amount of $82,061 beginning November due through April 2022.
Note payable to an equipment financing company bearing interest
at 3.95%. Monthly payments of principal and interest of $8,750 due August 2020 through July 2025.
Note payable to an equipment financing company bearing interest
at 3.95%. Monthly payments of principal and interest of $8,316 due August 2020 through July 2025.
Note payable to an equipment financing company bearing interest
at 3.95%. Monthly payments of principal and interest of $7,034 due August 2020 through July 2025.
Note payable to an equipment financing company bearing interest
at 3.95%. Monthly payments of principal and interest of $7,392 due February 2021 through January 2026.
Note payable to an equipment financing company bearing interest
at 3.95%. Monthly payments of principal and interest of $5,230 due December 2020 through November 2025.
Note payable to an equipment financing company bearing interest
at 3.95%. Monthly payments of principal and interest of $5,201 due November 2020 through October 2025.
Note payable to an equipment financing company bearing interest
at 3.95%. Monthly payments of principal and interest of $5,201 due October 2020 through September 2025.
Note payable to an equipment financing company bearing interest
at 3.95%. Monthly payments of principal and interest of $5,341 due August 2020 through July 2025.
Note payable to an equipment financing company bearing interest
at 3.95%. Monthly payments of principal and interest of $5,201 due August 2020 through July 2025.
Note payable to the individual seller of the landscaping and recovery
business to NSR LLC bearing interest at 5%. Monthly payments of $5,000 are due through October 2023 with a $100,000 balloon due November 2023
Non-interest bearing note payable to an equipment financing company with monthly principal payments of $5,842 due December 2021 through November 2023
Non-interest bearing note payable to an equipment financing company with monthly principal payments of $16,460 due May 2021 through April 2022.
Unsecured note payable to a financial institution under the SBA Paycheck Protection Program for NSR LLC bearing interest at 1.0%. Monthly payments
19
2020 are
services

of principal and interest of $8,719 beginning November 2020 are due through April 2022.
Note payable to an equipment financing company bearing interest
at 0.00%. Monthly payments of principal of $6,993 beginning November 2020 are due through October 2022
Note payable to an equipment financing company bearing interest
at 9%. Due to three month COVID-19 payment suspension, monthly payments
of principal and interest increased from $3,933 to $3,993 and extended three months through December 2023
Note payable to an equipment financing company bearing interest at 5.94%. Monthly payments of principal and interest of $1,174 beginning January 2022 through March 2028
Note payable to an equipment financing company bearing interest
at 8%. Due to three month COVID-19 payment suspension, monthly payments
of principal and interest increased from $2,410 to $2,452 and extended three months through December 2023
Convertible note payable to a private investor bearing interest at 10%. Principal and accrued interest are due January 2021. The Company has the option of granting conversion rights at a 30% discount on the average closing price over the last 10 trading days. The Company is also obligated to issue 300,000 shares of common stock as an inducement on the issuance of the note
Note payable to an equipment financing company bearing interest
at 9%. Due to three month COVID-19 payment suspension, monthly payments
of principal and interest increased from $1,861 to $1,890 and extended three months through December 2023
Note payable to an equipment financing company bearing interest
at 8%. Due to three month COVID-19 payment suspension, monthly payments
of principal and interest increased from $1,808 to $1,840 and extended three months through December 2023
Note payable to an equipment financing company bearing interest
at 11%. Due to five month COVID-19 payment suspension, monthly payments of principal and interest of $1,692 due from August through July 2023 with a $10,152 balloon payment in August 2023
Note payable to an equipment financing company bearing interest
at 12%. Due to five month COVID-19 payment suspension, monthly payments of principal and interest of $1,749 due from August 2020 through June 2023 with a $10,496 balloon payment in July 2023
Note payable to an equipment financing company bearing interest
at 8%. Monthly payments of principal and interest of $977 due through August 2024
Note payable to an equipment financing company bearing interest
at 8%. Monthly payments of principal and interest of $932 due through September 2024
Note payable to an equipment financing company bearing interest
at 8%. Monthly payments of principal and interest of $766 due through August 2024
Note payable to an investment company non-interest bearing with 20
-0- 154,928
69,928 153,842
87,611 126,005
73,217 -0-
54,397 78,628
-0- 75,000
41,466 59,633
40,764 58,892
36,446 51,753
37,220 52,540
28,071 37,153
27,581 35,525
22,395 29,746

monthly payments of $5,000 principal due through
March 2021. -0-
Note payable to an equipment financing company bearing interest
at 8%. Due to three month COVID-19 payment suspension, monthly payments of
principal and interest increased from $751 to $765 and extended three months
through January 2024 17,512
15,000
24,908
3,736 7,254,486 2,459,945 4,794,541
Note payable to an equipment financing company bearing interest
at 14%. Due to three month COVID-19 payment suspension, monthly payments of principal and interest increased from $1,874 to $1,900 and extended three months through February 2021
_________-0- 21,967,082 4,486,461 $ 17,480,621
Total notes payable to unrelated parties Short-term portion of notes payable
Long-term portion of notes payable
The schedule of future maturities on the above notes are as follows:
$
Year 2022 2023 2024 2025 2026 2027
$
Amount 4,486,461 4,135,389
& after
12,440,896 825,632 61,774 16,930 $ 21,967,082
The above notes include three Paycheck Protection Program (PPP) loans between MM and NSR LLC totaling $2,849,208, of which the $1,458,200 and $154,928 loans were forgiven during the year ended January 1, 2022. Under the PPP, to the extent the Company uses the loan proceeds on qualifying disbursements, these loans may be forgiven. Although the Company believes that the majority of the proceeds under the remaining loan of $1,236,080 has been spent on qualifying expenditures, it has not recorded any gain on forgiveness of this indebtedness for the year ended January 1, 2022.
Related Party
On the January 31, 2020, date of the Mulch Acquisition, there was a balance on a note payable to MM’s sole shareholder in the amount of $14,223,046. This note was adjusted for the receivables and inventory of MM that was excluded from the share exchange resulting in a restated and amended $15,402,355 promissory note bearing 4% interest. Also on January 31, 2020, this shareholder placed a $6,240,670 deposit with the Company. To the extent the Company consumed this cash deposit for operations, this shareholder was paid 4% interest. In August 2021 the outstanding balance on these two obligations plus accrued interest as of January 2, 2021, totaled $17,484,728, which was contributed to the capital of the Company. Interest accrued on these obligations for 2021 was credited against interest expense. Accordingly, the balance on the shareholder deposit as of January 1, 2022, and January 2, 2021, was $-0- and $2,382,417, respectively. The balance on the restated and amended promissory note was $-0- and $15,402,355 as of January 1, 2022, and January 2, 2021, respectively.
In January 2019, MM issued a promissory note to an employee in the amount of $6,000,000, $2,000,000 of which was paid during the year ended December 28, 2019. The note bore interest at 3% per annum payable quarterly, required semi-annual principal payments of $300,000 starting on June 1, 2021 and had no maturity date. As part of the Mulch Acquisition, this note was assumed by the Company. In August 2021, the holder of this note exchanged his, at that time, $3,700,000 balance in the note for 6,000,000 Company shares. As of January 1, 2022, and January 2, 2021, the balance on this note was $-0- and $4,000,000, respectively.
Total interest expense (credit) on the above related party notes and deposit was approximately $ -0- and $184,000 for the three months ended January 1, 2022, and January 2, 2021, respectively. Total interest expense on the above related party notes and deposit for the year ended January 1, 2022, and January 2, 2021, was approximately $77,000 and $722,000, respectively.
21

NOTE 9 - STOCKHOLDERS’ EQUITY
Preferred Stock
On December 31, 2019, the Company’s Board of Directors adopted articles of incorporation in the state of Delaware authorizing, without further vote or action by the stockholders, to create out of the unissued shares of the Company’s common stock, $0.0001 par value Preferred Stock. The Board of Directors is authorized to establish, from the authorized and unissued shares of Preferred Stock, one or more classes or series of shares, to designate each such class and series, and fix the rights and preferences of each such class of Preferred Stock; which class or series shall have such voting powers, such preferences, relative, participating, optional or other special rights, and such qualifications, limitations or restrictions as shall be stated and expressed in the resolution or resolutions providing for the issuance of such class or series of Preferred Stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof. The articles of incorporation and designation authorizes the issuance of 5,000,000 shares of Preferred Stock, of which 100 shares have been designated as Series A Preferred Stock, of which 90 of Series A are issued and outstanding as of January 1, 2022. Each holder of outstanding shares of Series A Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Series A Preferred Stock held by such holder as of the record date for determining stockholders entitled to vote on such matter, with each share casting a vote equal to: the quotient of the sum of all outstanding shares of common stock together with any and all other securities of the Company that provide for voting on an “as converted” basis divided by 0.99.
Equity Transactions During the Period
The following issuances of common stock affected the Company’s Stockholders’ Equity:
On January 31, 2020, as a result of the Mulch Acquisition, 40,000,000 shares of common stock were issued along with 1,000,000 shares cancelled from the October 2, 2019, effective issuance to the same shareholder (Note 5).
On February 26, 2020, the Company issued 4,000,000 shares of common stock at par value as part of the amended and restated share purchase and equity exchange agreement with SGCP.
Between April 9 and May 20, 2020, the Company issued 1,250,000 shares in connection with a $100,000 stock subscription on November 26, 2019.
On May 14, 2020 the Company issued 25,000 shares in satisfaction of an obligation assumed pursuant to the reverse merger with SGCP in 2019.
On May 20, 2020 the Company issued 786,045 shares upon a note holder’s exercise of a conversion feature permitting the holder to acquire shares at a 30% discount to the prior 12 day average price as of May 15, 2020, $0.349417 per share, in satisfaction of $250,000 principal and $24,658 accrued interest on the note.
On June 12, 2020 the Company issued 354,724 shares upon a note holder’s exercise of a conversion feature permitting the holder to acquire shares at a 30% discount to the prior 12 day average price as of June 10, 2020, $0.310010 per share, in satisfaction of $100,000 principal and $10,000 accrued interest on the note.
On January 13, 2021, the Company issued 300,000 shares in satisfaction of a 2020 accrual for debt financing cost. On March 5, 2021, the Company issued 25,000 shares to an employee as compensation.
On August 16, 2021, the Company recognized a $17,484,728 capital contribution from the extinguishment of debt. On August 25, 2021, the Company issued 6,000,000 shares in exchange for a $3,400,000 note.
On October 4, 2021, the Company issued 125,000 shares for consulting service compensation.
Between October 15, and December 15, 2021, the Company redeemed 11,397,984 shares pursuant to a stock repurchase agreement (see Note 12).
Between October and December 15, 2021, the Company issued 5,640,004 shares pursuant to subscription agreements at a price of $0.75 per share. These agreements provided for piggyback registration rights on a potential future registration of Company stock. The agreements also provided stock warrants equal to the number of subscribed shares. These warrants can be exercised at a price of
22

$1.50 per share and expire after one year. No allocation of proceeds was made to the warrants since the subscribed shares of common stock were issued at a price below that of the publicly traded shares.
On December 30, 2021, the Company issued 200,000 shares pursuant to an agreement to acquire 100% of the membership interest in Day Dreamer Production, LLC.
On December 31, 2021, the Company issued 400,000 shares to acquire equipment in Beaver, WA.
NOTE 10 – LEASES
A lease is defined as a contract that conveys the right to control the use of identified tangible property for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASC Topic 842 which primarily affected the accounting treatment for operating and finance lease agreements in which the Company is the lessee including Company leases of vehicles and equipment for use in the storm and disaster recovery work. The Company elected to not recognize ROU assets and lease liabilities arising from short-term leases with initial lease terms of twelve months or less (deemed immaterial) on the accompanying consolidated balance sheets.
ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on the effective interest plus: for finance type leases, straight-line amortization of the asset’s original ROU over its lease term; or, for operating leases, the effective amortization on the lease liability. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.
When measuring lease liabilities for leases that were classified as operating and financing leases as of January 1, 2019, NSR LLC discounted lease payments using its estimated incremental borrowing rate of 10% at January 1, 2019. From April 2020, to September 2021, MM entered into operating leases using its incremental borrowing rate of 4% to discount lease payments. Since October 2021, MM uses a 6% incremental borrowing rate.
The following table presents supplemental lease information:
Lease cost Finance lease cost
Amortization on ROU assets
Interest on lease liabilities Operating lease cost
Short-term lease cost Total lease cost
Cash paid for amounts included in the measurement of lease liabilities for:
Finance leases: Financing cash flows
Operating leases: Operating cash flows
Weighted-average remaining lease term: Finance leases
Operating leases Weighted-average discount rate:
Finance leases Operating leases
Three Months Ended
Year Ended
January 1, 2022
$ 17,792 4,120 65,098 28,876 $115,886
$ 23,366 $ 65,098
January 2, 2021
$ 20,301 9,327 17,806 73,114 $120,548
$ 23,366 $ 17,806
January 1, 2022
$ 71,169 19,275 177,034 387,517 $654,995
$93,465 $ 177,034
1.8 years 4.3 years
10.0% 4.3%
January 2, 2021
$ 79,273 30,707 36,371 457,085 $603,436
$103,768 $ 36,371
2.2 years 1.9 years
10.0% 5.0%
23

Supplemental balance sheet information related to leases is as follows:
Financial Statement Line Item
ROU asset
Current portion of lease liability
Lease liabilities, net of current portion
January 1, 2022
Jan 2, 2021
113,854 199,684 313,538
58,478
74,190 132,668
55,376 151,952 207,328 339,996
Assets:
Operating lease assets Finance lease assets Total leased assets
Liabilities: Current:
Operating lease assets Finance lease assets
Non-current
Operating lease assets Finance lease assets
Total lease liabilities
$ $
$
$
848,840 128,515 977,355
183,874 65,312 249,186
664,966 86,639 751,605 1,000,791
$ $
$
$
As of January 1, 2022, remaining maturities of lease liabilities were as follows: Finance
Operating 216,600
168,570 139,469 107,969 106,553 220,235 959,396
(110,556) 848,840
2022
2023
2024
2025
2026
2027
Total
Amount representing interest Lease liability
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Legal Claims
$
$ $
77,094 54,172 40,629
- - -
171,895 (19,944) 151,951
$
$ $
and thereafter
The Sustainable Green Team, LTD is currently involved in arbitration with
former service provider of the Company. On October 21, 2020, EMC initiated arbitration against the Company, alleging, among other things, breach of contract related to an agreement entered into between the Company (via NSR LLC) and EMC, in which the Company engaged EMC to provide it with consulting services related to the Company’s capital structure, investor relations strategies, and fundraising plans, including the filing of an S-1 registration statement at some point in the future, in exchange for equity compensation in the Company. EMC seeks relief against the Company in the form of the equity compensation pursuant to the agreement (2,000,000 shares of the Company’s Common Stock) and damages. The Company denies EMC’s allegations, and has also initiated counterclaims against EMC for breach of the agreement by EMC, in which it is seeking damages resulting from EMC’s breach of its duties under the agreement.
In addition, the Company named in its counterclaim to EMC’s claim another similar service provider, Rainmaker Group Consulting, LLC (“Rainmaker”), as a pre-emptive defense against any actions brought by Rainmaker against the Company. Rainmaker engaged by the Company in 2019 to provide similar consulting services as EMC was engaged to provide in exchange for the same compensation (2,000,000 shares of the Company’s Common Stock). The Company alleges that Rainmaker breached its agreement with the Company by not providing the services provided in the agreement between the Company and Rainmaker, and therefore Rainmaker is not entitled to any equity compensation by the Company. The Company has taken this action as a defensive measure against potential (in the Company’s opinion) frivolous lawsuits brought by Rainmaker against the Company.
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Emerging Markets Consulting, LLC (“EMC”), a

The Company is confident it will prevail in the ongoing arbitration described above being overseen by the American Arbitration Association.
On March 25, 2021, the Company filed a civil complaint in the Ninth Judicial Circuit Court in Orange County, Florida against Ralph Spencer, the former owner and CEO of Mulch Manufacturing, Inc., alleging certain tortious interference with the Company’s business operations and dealings. On April 1, 2021, the Company was granted an Emergency Temporary Injunction by the Ninth Judicial Circuit Court in Orange County, Florida enjoining Mr. Spencer from, among other things, further attempts to interfere with the Company’s business operations. On August 16, 2021, the Company settled this dispute and has released Ralph Spencer from the Emergency Temporary Injunction.
Stock Redemptions
The Company is committed to buying back 40,000,000 shares of its common stock over 24 months beginning in October, 2021, at a price of $0.375 per share.
NOTE 12 – CONCENTRATION OF CREDIT RISK
Cash Deposits
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. As of January 1, 2022, the excess of the insured limit in one account was $130,930. As of January 2, 2021, the Company had $78,688 in excess of the FDIC insured limit in one account.
Revenues
For the three months ending January 1, 2022, one customer accounted for 19% of revenue. For the year ending January 1, 2022, another customer accounted for 17% of revenue. For the three months and year ended January 2, 2021, there was no customer accounting for more than 10% and one customer accounting for 19% of revenue, respectively.
Accounts Receivable
As of January 1, 2022, one customer accounted for 24% of the Company’s accounts receivable. As of January 2, 2021, one customer accounted for 14% of the accounts receivable.
NOTE 13 – SUBSEQUENT EVENTS
There are no material subsequent events.
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