SecProbe.io

CORRESP
1
filename1.htm

August
17, 2023

VIA
EDGAR SUBMISSION

U.S.
Securities and Exchange Commission

Division
of Corporation Finance

ffice of Energy & Transportation

100
F Street, N.E.

Washington,
D.C. 20549

Attention:
Myra Moosariparambil

Re:
Sustainable Projects Group Inc.

Form
10-K for the Year Ended December 31, 2022

Form
10-Q for the Quarter Ended March 31, 2023

File
No. 000-54875

Ladies
and Gentlemen:

Sustainable
Projects Group Inc. (the “Company”) hereby submits this letter in response to comments from the staff (the “Staff”)
of the U.S. Securities and Exchange Commission (the “Commission”) received by letter dated August 3, 2023 relating to the
Company’s Form 10-K for the year ended December 31, 2022 and Form 10-Q for the Quarter ended March 31, 2023 (File No. 000-54875)
filed with the Commission on March 31, 2023 and May 19, 2023, respectively. The numbered paragraphs below correspond to the numbered
comments in the Staff’s letter, as divided by the Company to address multiple comments within the numbered paragraphs. The Staff’s
comments are presented in bold italics.

Form
10-K for the Year Ended December 31, 2022

Report
of Independent Registered Public Accounting Firm, page F-2

    1.
    We
    note the audit opinion has been dated March 31, 2022, which is prior to the balance sheet date. Please request your auditor update
    the audit opinion and amend your filing.

The
audit opinion date was a typing error. We will ask our auditor to correct and will amend our filing.

Index
to Consolidated Financial Statements

Note
1. Organization and Nature Operations, page F-8

    2.
    We
    understand that you have accounted for the Exchange Transaction as a reverse merger recapitalization based on your assessment that
    Sustainable Projects Group was not a business at the time of transaction. You also state that you have presented your financial statements
    to reflect the combined operations of Lithium Harvest and Sustainable Projects Group as if the merger transaction occurred on January
    1, 2021. Please tell us why you believe this presentation is consistent with the guidance in ASC paragraphs 805-40-45-1 and 2. In
    this regard, we note the financial statements covering periods prior to the transaction should correspond to the historical accounts
    of the accounting acquirer, Lithium Harvest adjusted for the change in capital structure.

Stefan
Muehlbauer

Sustainable
Projects Group Inc.

August
17, 2023

Page
2

The
guidance under ASC paragraphs 805-40-45-1 and 2 refers to reverse acquisitions, while we believe the Exchange Transaction was a reverse
capitalization guided by the authority described under 12100 of the SEC Financial Reporting Manual and equivalent to the issuance of
stock by the private company accompanied by a recapitalization. This accounting is similar to that resulting from a reverse acquisition
but with no goodwill or similar intangible asset being recorded.

ASC
505-10-S99-4 provides guidance on retroactively applying a change in capital structure when a transaction happens subsequent to year
end. As the financial statements included in the Form 10-K cover the years 2022 and 2021, we believe the retroactive change to capital
and accompanying reorganization should be reflective throughout the two years of the financial statements. For this reason, we presented
financial statements to reflect the combined operations of Lithium Harvest and Sustainable Projects Group as if the transaction occurred
on of January 1, 2021.

Note
9. Intangible Assets, page F-14

    3.
    We
    note your intangible assets and goodwill balances at December 31, 2022 were $74,778 and $156,752, respectively and represent a combined
    total of 82% of total assets. From your disclosure, it appears these balances are related to the Soy-yer Dough purchase in May 2020.
    You disclose on page 23 you ended sales of Soy-yer Dough products in 2021.

Please
address the following:

    ●
    Please
provide a detailed explanation of your goodwill impairment analysis, including how you considered the ending of sales of the Soy-yer
Dough products as an assumption in your analysis. See ASC 350-20-35. Please revise your disclosure to include the required disclosures
in accordance with ASC 350-20-50. In addition, to the extent you have performed a quantitative impairment analysis, your disclosure should
address whether you are at risk of failing the quantitative impairment test or that the fair value of your reporting unit is substantially
in excess of carrying value.

We
considered the following quantitative factors in performing the goodwill impairment analysis.

The
carrying value of YER Brands (which owns the rights to the Soy-yer Dough product line) consists of:

Inventory:
$3,939 consisting of dough ingredients, lids and containers

Intangibles:
$64,718

Goodwill:
$156,752

Total
= $225,409

    Sustainable Projects Group Inc.

2316 Pine Ridge Rd #383

Naples, FL 34109

www.SPGroupe.com

Stefan
Muehlbauer

Sustainable
Projects Group Inc.

August
17, 2023

Page
3

As
the market capitalization of the Company at the time of the reorganization was $262,000, there is no indication of impairment using this
criterion.

Further,
there has been no material change in macroeconomic conditions, market conditions, and raw material costs. The Company’s analysis
shows the demand for gluten-free modeling dough remains high, with very few competitors in niche markets. We have calculated a discounted
cash flow value of $547,000 for YER Brands using conservative assumptions for wholesale price (20% lower than “list price”)
and a significant discount rate of 75%. This criterion indicates no impairment as well.

At
the outset, our plan was to manufacture the product in-house. However, we lacked capital to build facilities that would allow for
economies of scale and our production of small runs produced uneconomical results. Accordingly, we temporarily halted sales of the
product in 2021, but we do not consider the temporary ending of sales to be cause for an impairment for the reasons discussed
herein. During the 2022 year, we focused on finding a suitable contract manufacturer for the Soy-yer Dough product line. Cash
constraints hampered this process, but during discussions with potential manufacturers we saw an interest in licensing the brand. We
are now focusing on this approach as it would be a lot less capital intensive. Licensing fees for comparable products range from 7%
to 12% of wholesale price. After factoring in the lower capital requirements, as well as the benefits of a potentially faster market
penetration, licensing compares favorably to YER Brands doing its own distribution of the product, which we estimate would result in
a peak earnings before interest and taxes (EBIT) margin of 20%. Using the lower royalty rate of 7%, our analysis shows that the cash
flow from a licensing approach would approximate the cash flows from the internal distribution model within three years. This
analysis indicates that there is no goodwill impairment required.

Because
there was no change in goodwill, our view is that no disclosures are required pursuant to ASC 350-20-50.

    ●
    Please
    tell us how you considered the ending of sales of these products as an impairment indicator when performing an impairment analysis
    of your intangible assets in accordance with ASC 350-30-35-14 and ASC 350-30-35-17 through 35-22. To the extent you determined no
    impairment was necessary, please clearly explain the underlying factors that resulted in your conclusion.

The
temporary ending of sales of these products did not factor into our impairment analysis, as we plan to either license these products
or continue sales in the future. In performing our impairment analysis we considered the formulas held by the Company, positive notoriety
(from being on Shark Tank) and our marketing contacts. We halted sales of the products until we could either (1) find a suitable partner
to manufacture the products or (2) find manufacturers who would license the products. Because we intend to pursue one of these two
options, we do not believe the temporary halting of sales impacts carrying value.

    Sustainable Projects Group Inc.

2316 Pine Ridge Rd #383

Naples, FL 34109

www.SPGroupe.com

Stefan
Muehlbauer

Sustainable
Projects Group Inc.

August
17, 2023

Page
4

    ●
    Please
    explain why your trademark, patents net balance increased from $593 at December 31, 2021 to $10,653 at December 31, 2022. In addition,
    you disclose trademarks were identified as intangible assets with finite useful lives, however it does not appear you are recording
    amortization expense on these assets. Please clarify and revise your disclosure, if necessary.

The
increase from $593 to $10,653 in the Company’s trademark, patents net balance represents costs incurred during 2022 with
respect to the Lithium Harvest Danish patent, which were added to the net balance as of December 31, 2022. Patents are required to
be amortized over their useful life, not to exceed their legal life. The costs of the patent were incurred in late 2022 and, as we
had no active operations, we did not believe amortization was appropriate, as our view is that the “useful
life” begins when the asset is used and the patent was not used during this period.

    ●
    Please
    also address how the goodwill and intangible assets were considered when allocating the relative fair value of the assets for the
    reorganization transaction with Lithium Harvest based on the requirements of ASC 805-50-30-1 and 30-3.

The
values of the goodwill and intangible assets acquired by Lithium Harvest were the values represented by the Soy-yer Dough segment of
the business. As shown above, these values, when combined with the values of the other assets of the Soy-yer Dough segment of the business,
were less than the fair value of the operating segment. Note that pursuant to ASC 805-50-30-1 and 30-3 no additional goodwill
may be allocated on reorganization, so we did not believe any increase in goodwill was appropriate.

Form
10-Q for the Quarter Ended March 31, 2023

Consolidated
Interim Balance Sheets, page F-2

    4.
    Please
tell us why the financial statement amounts reflected for the year ended December 31, 2022 in your Form 10-Q for the quarter ended March
31, 2023 do not agree with the corresponding amounts presented in the audited financial statements in your Form 10-K for the year ended
December 31, 2022. Clearly explain how you derived the revised amounts and why they have been revised. To the extent you have restated
your December 31, 2022 financial statements due to error, please provide appropriate disclosures under ASC 250 and tell us how you considered
the need for amendment of your Form 10-K for the year ended December 31, 2022.

We
acknowledge that the balance sheet amounts reflected for the year ended December 31, 2022 in the Company’s Form 10-Q for the quarter
ended March 31, 2023 are incorrect. These amounts do not give retroactive effect to the reverse capitalization, but rather record the
transaction as if it had occurred during the first quarter of 2023, namely on February 14, 2023. We will file an amendment to the Company’s
Form 10-Q for the quarter ended March 31, 2023 that will correct the December 31, 2022 balance sheet amounts and the amounts as of December
31, 2022 in the statements of stockholders’ equity (deficit). Additionally, the amendment will correct the statements of operations
and comprehensive income (loss) for the quarters ended March 31, 2023 and 2022 to include the results of both Sustainable Projects Group
Inc. and Lithium Harvest on a pro forma basis.

    Sustainable Projects Group Inc.

2316 Pine Ridge Rd #383

Naples, FL 34109

www.SPGroupe.com

Stefan
Muehlbauer

Sustainable
Projects Group Inc.

August
17, 2023

Page
5

Notes
to the Interim Consolidated Financial Statements

Note
8. Reorganization, page F-10

    5.
    We
    note on February 14, 2023, you entered into an agreement with Lithium Harvest and the Shareholders to acquire all outstanding shares
    of capital stock of Lithium Harvest in exchange for issuing to the Shareholders 206,667,233 shares of your common stock. You disclose
    the Exchange Transaction represents a change of control and was accounted for as a share reorganization with Lithium Harvest being
    the accounting acquirer and the Company being the accounting acquiree. Please tell us how you considered ASC 805-40-45-2 when presenting
    the equity balances given Lithium Harvest has been considered the accounting acquirer.

As
noted in our response to question #4 above, we acknowledge that the interim financial statements for the quarter ended March
31, 2023 require amendment. The statements of stockholders’ equity (deficit) in the Form 10-Q amendment will reflect the accumulated
deficit of Lithium Harvest as of December 31, 2021 and will include the operating losses of both Sustainable Projects Group Inc. and
Lithium Harvest going forward from that point.

If
there are further questions or additional information is required, please do not hesitate to contact the undersigned at (305) 209-0844.

    Sincerely,

    SUSTAINABLE PROJECTS GROUP INC.

    By:
    /s/ Stefan Muehlbauer

    Name:
    Stefan
    Muehlbauer

    Title:
    Chief
    Financial Officer

    cc:
    Craig
    Arakawa

    Sune
    Mathiesen, Chief Executive Officer

    Sustainable Projects Group Inc.

2316 Pine Ridge Rd #383

Naples, FL 34109

www.SPGroupe.com