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EXCEL - IDEA: XBRL DOCUMENT - ProGreen Properties, Inc.Financial_Report.xls
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EX-31 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002, FILED HEREWITH. - ProGreen Properties, Inc.f10q1012ex31_progreen.htm
10-Q - QUARTERLY REPORT - ProGreen Properties, Inc.f10q1012_progreen.htm
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EX-32 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, FILED HEREWITH. - ProGreen Properties, Inc.f10q1012ex32_progreen.htm
v2.4.0.6
Financial Statement Presentation
6 Months Ended
Oct. 31, 2012
Financial Statement Presentation [Abstract]  
Financial Statement Presentation
 
Note 1. Financial Statement Presentation
 
The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (the “SEC”).  Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements.  The accompanying interim financial statements are unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  The results of operations for the three and six month periods ended October 31, 2012, are not necessarily indicative of the results that may be expected for the year ending April 30, 2013.    For further information, reference should be made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2012.
 
The summary of significant accounting policies is presented to assist in the understanding of the financial statements. The financial statements and notes are the representations of management. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.
 
History and nature of business
 
ProGreen Properties, Inc., a Delaware corporation, and its wholly owned subsidiaries (collectively, the “Company”) own and manage residential real estate rental property in the Oakland County, Michigan area.  
 
On April 30, 2009, the Company (formerly known as Diversified Product Inspections, Inc.) ceased previous operations and settled an outstanding lawsuit which resulted in a change of ownership and management.  Following the settlement on April 30, 2009, the Company had no assets, no liabilities, and had 13,645,990 shares of common stock outstanding.
 
On July 21, 2009, the Company formed ProGreen Properties, Inc. as a wholly-owned subsidiary and merged ProGreen Properties, Inc. into the Company, which was the surviving corporation in the merger.  In connection with the merger, the Company changed its name from Diversified Product Inspections, Inc. to ProGreen Properties, Inc.  The change of the Company’s name to ProGreen Properties, Inc. became effective on September 11, 2009 with approval by the Financial Industry Regulatory Authority as effective for trading purposes in the OTC Bulletin Board market under the new symbol PGEI.
 
In December 2009, ProGreen Realty LLC (“ProGreen Realty”) was formed as a wholly owned subsidiary of the Company. ProGreen Realty is the real estate broker for the Company and facilitates the acquisition of real properties. All assets, liabilities, revenues and expenses are included in the financial statements of the Company.
 
On October 31, 2011 ProGreen Properties Management LLC (“ProGreen  Management”) was formed as a wholly owned subsidiary of the Company which manages the Company owned properties as well as certain of the sold properties under management agreements. All assets, liabilities, revenues and expenses are included in the financial statements of the Company.
 
These investment properties are marketed exclusively by ProGreen Realty and managed by ProGreen Management, another wholly owned subsidiary. In addition to ProGreen Realty, the Company has established separate LLCs for each of the three properties owned. The Company is the sole member of each LLC.
  
SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
Going Concern
 
The Company’s unaudited condensed consolidated financial statements for the period ended October 31, 2012, have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company has incurred losses from operations since its change of ownership, management and line of business on April 30, 2009. Management recognizes that the Company’s continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing, as the Company continues to incur losses from operations.
 
The Company will continue to incur costs that are necessary for it to remain an active public company. In the prior fiscal year, the Company used approximately $214,000 of cash to support its operations and such cash needs are expected to continue in the upcoming year. As of October 31, 2012, the Company has approximately $71,000 in cash and a working arrangement with American Residential Gap ApS, which will provide liquidity.
 
The Company has recently financed its operations through sales of its properties and through a sale of a portion of its investment notes and securities. The Company does not expect to receive revenues to cover its costs of property acquisitions in the near future and will require external financing to continue acquisitions and sales of properties. There is no guarantee that the Company will be successful in arranging financing on acceptable terms.
 
The Company’s ability to raise additional capital is affected by trends and uncertainties beyond its control. Obtaining additional financing from current or other sources would be subject to a number of factors, including investor sentiment. Market factors may make the timing, amount, terms or conditions of additional financing unavailable to it. These uncertainties raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include adjustments that might result from the outcome of these uncertainties.
 
Basis of consolidation
 
The unaudited condensed consolidated financial statements include the accounts and records of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.  FASB Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” requires a company’s consolidated financial statements to include subsidiaries in which the company has a controlling financial interest.  This requirement usually has been applied to subsidiaries in which a company has a majority voting interest.  Currently, all of the Company’s subsidiaries are wholly-owned.
 
Estimates
The preparation of financial statements in conformity with the accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.
 
Property and real estate costs
Property and real estate expenditures relating to the acquisition, development, construction, and other costs that enhance the value or extend the life of rental properties are capitalized using the specific identification method.   All other expenditures necessary to maintain the properties are expensed as incurred.
 
Depreciation is computed using the straight-line method over the estimated useful life of the property, as follows:
 
 
Lives
 
Method
Condominium
27.5 years
 
Straight line
Furniture
10 years
 
Straight line
Equipment
5 years
 
Straight line
Vehicles
5 years
 
Straight line
 
Receivable - sale of properties
The receivable sale of properties receivable is carried at net realizable value.
 
Investment - non-marketable securities
Investment - non-marketable securities are carried at cost which approximates fair value.
 
Note receivable - ARG
Note receivable- ARG is carried at cost which approximates fair value
 
Note receivable – rental property
The note receivable is carried at amortized cost.  Interest income on the note receivable is recognized on the accrual basis based on the principal balance outstanding.
 
Property sales revenue recognition
Condominium sales revenue and related profit are generally recognized at the time of the closing of the sale, when title to and possession of the property are transferred to the buyer. In situations where the buyer's financing is provided by the Company and the buyer has not made an adequate initial or continuing investment as required by ASC 360-20, "Property, Plant, and Equipment - Real Estate Sales" ("ASC 360-20"), the profit on such sales is deferred or recognized under the installment method, unless there is a loss on the sale in which case the loss on such sale would be recognized at the time of closing. There were no such deferred amounts at either October 31, 2012 or April 30, 2012.
 
Rental revenue recognition
Real estate properties are leased under operating leases with terms of twelve to twenty-four months. Rental income from these leases is recognized on a straight-line basis over the term of each lease.
 
Advertising costs
Advertising costs are expensed as incurred. Total advertising expenditures for the six months ended October 31, 2012 and 2011 were $22,387 and $6,046, respectively.
 
Tenant deposits
The Company requires tenants to pay a deposit at the beginning of each lease. This deposit may be used for unpaid lease obligations or repair of damages based on the Company’s determination. If the tenant has not defaulted on the lease, the Company will return the deposit to the tenant at the end of the lease.
 
Deferred revenue
The Company may require tenants to prepay rent. The prepaid rent is amortized over the term of the lease using the straight-line method. Deferred revenue is $0 at October 31, 2012 and April 30, 2012.
 
Income taxes
The Company accounts for income taxes using an asset and liability approach under which deferred income taxes are recognized by applying enacted tax rates applicable to future years to the differences between the financial statement carrying amounts and the tax bases of reported assets and liabilities.
 
Reclassifications
Certain amounts in previous periods have been reclassified to conform to 2013 classifications.
 
Recent Accounting Pronouncements
In July 2012 the FASB issued ASU No. 2012-02 “ Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” The amendment permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill. This guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of the guidance is not expected to have a material impact on the Company's Consolidated Financial Statements or the Notes thereto.