Progreen US, Inc. - FORM 10-Q

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EX-32.1 - CERTIFICATION - Progreen US, Inc.	f10q0113ex32i_progreen.htm
EX-31.1 - CERTIFICATION - Progreen US, Inc.	f10q0113ex31i_progreen.htm
EXCEL - IDEA: XBRL DOCUMENT - Progreen US, Inc.	Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _________________

Commission File Number 000-30563

PROGREEN PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	59-3087128
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

380 North Old Woodward Ave., Suite 300, Birmingham, MI	48009
(Address of Principal Executive Offices)	(Zip Code)

(248) 530-0770

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, 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 o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. (Check One):

Large accelerated filer o		Accelerated filer o
Non-accelerated filer o		Smaller reporting company x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

The number of shares outstanding the issuer's common stock, par value $.0001 per share, was 104,329,703 as of March 14, 2013.

PROGREEN PROPERTIES, INC.

INDEX

	Page
Part I. Financial Information	1

Item 1. Financial Statements	2

Condensed Consolidated Balance Sheets as of January 31, 2013 (unaudited) and as of April 30, 2012	2

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended January 31, 2013 and 2012 (unaudited)	3

Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	4

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended January 31, 2013 and 2012 (unaudited)	5

Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.	18

Item 3. Quantitative and Qualitative Disclosures about Market Risk	23

Item 4.Controls and Procedures.	23

Part II. Other Information	23

Item 6. Exhibits.	23

Signatures	24

ProGreen Properties, Inc.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following financial statements be read in conjunction with the year-end financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended April 30, 2012.

The results of operations for the nine months ended January 31, 2013 and 2012 are not necessarily indicative of the results for the entire fiscal year or for any other period.

ProGreen Properties, Inc.
Condensed Consolidated Balance Sheets

	January 31,			April 30,
	2013			2012
Assets	(Unaudited)

Rental property, net accumulated depreciation of $4,563 and $10,645	$	118,765		$	160,852
Cash		66,855			12,984
Accounts receivable		6,557			-
Accrued interest receivable		1,245			-
Receivable - sale of properties		-			142,654
Investment - non-marketable securities		51,000			-
Note receivable - ARG		9,000			180,000
Note receivable - rental property		8,064			75,603
Prepaid expenses		1,423			6,840
Deposits		5,000			5,000
Property and equipment:
Vehicles, furniture and equipment, net of accumulated depreciation of $14,765 and $6,605		54,977			22,235
Total assets	$	322,886		$	606,168

Liabilities and Stockholders' Deficit

Accounts payable and accrued expenses	$	69,295		$	69,435
Accrued interest		-			40,211
Payable under management agreement		10,403			4,030
Note payable		46,683			14,630
Tenant deposits		11,137			11,374
Convertible debenture payable to related party, net of unamortized discount of $13,066 and $17,491		486,934			482,509
Total liabilities		624,452			622,189
Stockholders' deficit
Preferred stock, $.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $.0001 par value, 250,000,000 shares authorized and 104,329,703 outstanding at January 31, 2013;
250,000,000 shares authorized and 104,329,703 outstanding at April 30, 2012;		10,433			10,433
Common stock, $.0001 par value, 9,775,171 subscribed not issued		978			978
Additional paid in capital		3,046,813			3,007,854
Less: amount due from related party subscriber under subscription agreement		(134,398	)		(124,189	)
Accumulated deficit		(3,225,392	)		(2,911,097	)
Total stockholders' deficit		(301,566	)		(16,021	)
Total liabilities and stockholders' (deficit) equity	$	322,886		$	606,168

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

ProGreen Properties, Inc.
Condensed Consolidated Statements of Operations (Unaudited)

	Three Months Ended						Nine Months Ended
	January 31,						January 31,
	2013			2012			2013			2012
Revenues:
Condominium sales	$	95,000		$	-		$	200,000		$	90,000
Rental revenue		7,861			24,025			25,641			66,435
Commissions revenue		1,305			14,200			2,305			23,965
Management fee revenue		2,977			-			7,538			-
Other income		100			-			5,000			-
Total Revenue	$	107,243		$	38,225		$	240,484		$	180,400
Expenses:
Cost of property sales		43,145			-			108,193			90,903
Rental property operating costs		9,603			9,855			34,674			26,154
Advertising		10,931			5,034			33,318			11,080
Depreciation		4,431			5,820			11,676			15,431
Compensation Expense		11,250			-			28,750			-
General & administrative		56,158			32,410			179,032			104,094
Other expenses		-			-			1,484			-
Professional fees		18,812			32,507			107,021			162,595
Total operating expenses	$	154,330		$	85,626		$	504,148		$	410,257

Operating loss		(47,087	)		(47,401	)		(263,664	)		(229,857	)
Other expenses and income:
Interest expense		(19,933	)		(19,323	)		(57,515	)		(76,490	)
Interest income		1,219			1,707			6,884			5,134
Loss before income tax expense	$	(65,801	)	$	(65,017	)	$	(314,295	)	$	(301,213	)
Deferred income tax expense		-			-			-			-
Net Loss	$	(65,801	)	$	(65,017	)	$	(314,295	)	$	(301,213	)
Net loss per share - basic	$	-		$	-		$	-		$	-
Weighted Average Shares Outstanding - basic		103,195,684			104,329,703			104,329,703			104,306,515
Net loss per share - diluted	$	-		$	-		$	-		$	-
Weighted Average shares outstanding - fully diluted		114,104,874			114,104,874			114,104,874			114,081,686

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

ProGreen Properties
Condensed Consolidated Statement of Stockholders' (Deficit)/Equity
(UNAUDITED)

	Number of								Amount Due
	Shares				Common		Additional		Under						Net
	Issued and		Common		Stock		Paid In		Subscription			Accumulated			Stockholders'
	Outstanding		Stock		Subscribed		Capital		Agreement			Deficit			(Deficit) Equity

Balance at April 30, 2011		103,929,703	$	10,393	$	978	$	2,986,358	$	(110,653	)	$	(2,680,133	)	$	206,943

Stock issued under LeadDog agreement		400,000		40				7,960								8,000
Amount due from subscriber under subscription agreement								13,536		(13,536	)
Net loss													(230,964	)		(230,964	)
Balance at April 30, 2012		104,329,703	$	10,433	$	978	$	3,007,854	$	(124,189	)	$	(2,911,097	)	$	(16,021	)

Amount due from subscriber under subscription agreement								10,209		(10,209	)
Amount due under restricted stock unit agreement								28,750								28,750
Net loss													(314,295	)		(314,295	)
Balance at January 31, 2013		104,329,703	$	10,433	$	978	$	3,046,813	$	(134,398	)	$	(3,225,392	)	$	(301,566	)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

ProGreen Properties, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)
	Nine Months Ended
	January 31,
	2013			2012
Cash used in operating activities
Net loss	$	(314,295	)	$	(301,213	)
Adjustments to reconcile net loss to net cash used in operating activities:
Compensation - restricted stock units		28,750			-
Depreciation and amortization		11,676			15,431
(Gain) Loss on sale of properties		(91,807	)		903
Interest expense on debenture to related party		51,589
Amortization of discounts on debenture to related party		4,425			24,743
Investor relations expense		-			10,000
Acquisition and development of properties		(68,622	)		(17,961	)
Proceeds from sale of properties		318,590			90,000
Commitment fee		-			8,000
Changes in operating assets and liabilities:
Accounts receivable		(6,557	)		-
Accrued interest receivable		(3,045	)		-
Note receivable		75,603			412
Prepaid expenses		5,417			(2,332	)
Deposits		-			1,000
Accounts payable and accrued expenses		14,623			50,738
Payable under management agreement		6,373			-
Cash provided by (used in) operating activities		32,720			(120,279	)

Cash provided by (used in) investing activities
Purchase of vehicles, furniture and equipment		(40,902	)		-
Proceeds from sale of investment notes		30,000			-
Cash (used in) investing activities		(10,902	)		-

Cash provided by financing activities
Proceeds from note payable		40,902			-
Repayments of note payable		(8,849	)		(3,463	)
Cash provided by (used in) financing activities		32,053			(3,463	)

Net change in cash		53,871			(123,742	)

Cash at beginning of period		12,984			157,707
Cash at end of period	$	66,855		$	33,965
Supplemental information:

Non-cash Transaction: Sale of investment in payment of debenture interest	$	91,800		$	-
Non-cash Transaction: Payment from accumulated rent due	$	16,000		$	-
Non-cash Transaction: issuance of stock as commitment fee	$	-		$	8,000
Cash paid for interest	$	590		$	706
Cash paid for income taxes	$	-		$	-

Cash paid for income taxes	$	-		$	-

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

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 nine month periods ended January 31, 2013, 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. In addition to ProGreen Realty, the Company has established separate LLCs for each of the properties owned. The Company is the sole member of each LLC.

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

Note 1. Financial Statement Presentation (continued)

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Going Concern

The Company’s unaudited condensed consolidated financial statements for the period ended January 31, 2013, 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 January 31, 2013, the Company has approximately $67,000 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.

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

Note 1. Financial Statement Presentation (continued)

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/Houses	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 January 31, 2013 or April 30, 2012.

Rental revenue recognition

Real estate properties are leased under operating leases with terms of month to month to twenty-four months. Rental income from these leases is recognized on a straight-line basis over the term of each lease.

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

Note 1. Financial Statement Presentation (continued)

Advertising costs

Advertising costs are expensed as incurred. Total advertising expenditures for the nine months ended January 31, 2013 and 2012 were $33,300 and $11,100 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 January 31, 2013 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.

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

Note 2. Property and Equipment

Major classifications of property and equipment at January 31, 2013, and April 30, 2012 are summarized as follows:

The Company owned one condominium and one single-family house as of January 31, 2013 and three condominiums as of and April 30, 2012.

	January 31, 2013			April 30, 2012
Condominiums – rental properties	$	123,328		$	171,497
Less: accumulated depreciation		(4,563	)		(10,645	)
Rental properties, net of accumulated depreciation	$	118,765		$	160,852
Properties under development	$	-		$	-

	January 31,			April 30,
		2013			2012
Vehicles	$	63,252		$	22,350
Furniture		3,563			3,563
Office equipment		2,927			2,927
Total vehicles, furniture and equipment		69,742			28,840
Less: accumulated depreciation		(14,765	)		(6,605	)
Net carrying amount	$	54,977		$	22,235

Note 3. Residential Leases

As of January 31, 2013, the Company has entered into a lease on one renovated property. The lease term is twenty-four months with lease payments of $1,400 per month. Below are the future minimum rental payments related to the lease:

Year ending April 30,	Rental Amount
2013	$	16,800
2014		14,000
	$	30,800

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

Note 4. Receivable - Sale of Properties

On December 11, 2012 the Company sold 100% of its membership interest in one Michigan limited liability company, which held title to a property, to American Residential GAP, LLC (“ARG US”) pursuant to a Membership Interest Purchase Agreement, dated December 11, 2012 (the “Agreement”), between the Company and ARG US. The purchase price for the property was $95,000 of which $49,000 was received in cash on the closing date, $16,000 was paid from funds accumulated from rents held by ProGreen Property Management LLC on behalf of ARG US and $30,000 plus interest at the rate of 9% per annum which was to be paid on or before June 30, 2013 as stated in a Promissory Note. The Promissory Note and related interest were paid in full on January 15, 2013 thus the receivable relating to this sale is $0 at January 31, 2013.

On December 15, 2012 the Company and ARG US entered into a management agreement whereby the Company will manage, lease, operate, maintain and repair the property for which it receives a management fee of ten percent of the monthly rent. The Company has guaranteed rents, in accordance with the terms of each lease, through December 15, 2013 and has recorded a reserve in the amount of $4,750.

On October 31, 2012 the Company sold 100% of its membership interest in one Michigan limited liability company, which held title to a property, to American Residential GAP, LLC (“ARG US”) pursuant to a Membership Interest Purchase Agreement, dated October 31, 2012 (the “Agreement”), between the Company and ARG US. The purchase price for the property was $45,000 which is recorded as a receivable as of October 31, 2012. In November 2012 the Company collected the $45,000 in cash thus the receivable relating to this sale is $0 at January 31, 2013.

On October 31, 2012 the Company and ARG US entered into a management agreement whereby the Company will manage, lease, operate, maintain and repair the property for which it receives a management fee of ten percent of the monthly rent. The Company has guaranteed rents, in accordance with the terms of each lease, through October 31, 2013. The Company has guaranteed rents, in accordance with the terms of each lease, through October 31, 2013 and has recorded a reserve in the amount of $2,250.

On April 30, 2012 the Company sold 100% of its membership interest in five Michigan limited liability companies, which each held title to a property, to ARG US pursuant to a Membership Interest Purchase Agreement, dated as of April 30, 2012 (the “Agreement”), between the Company and ARG US. The purchase price for the five properties was $384,000, of which $144,000 (gross contract amount) was paid in cash, and the balance evidenced by 48 American Residential Gap ApS (“ARG”) corporate bonds (as so termed under ARG’s corporate documents), of the nominal value of $5,000 per bond. Of the bonds, 24 were debt obligations (“ARG debt obligation bonds”) in the principal amount of $5,000 each, due in five years and bearing interest at the rate of 6% per annum, payable quarterly commencing December 31, 2012, and 24 of the bonds were convertible into shares of ARG common stock, each bond being convertible into 5,000 shares of ARG common stock with a market value of $1.00 each (“ARG convertible share bonds”). The outstanding ARG convertible share bonds were entirely converted to shares of ARG common stock at ARG’s annual general meeting held on June 29, 2012. Following the transfer of six ARG debt obligation bonds and the rights to conversion shares for six ARG convertible share bonds in satisfaction of $60,000 of an April 30, 2012 interest payment due Rupes Futura AB on the Company’s outstanding $500,000 convertible debenture, and the sale of three ARG debt obligation bonds and three ARG convertible share bonds to an independent investor, the Company held 15 ARG debt obligation bonds and 75,000 shares of ARG common stock (issued following conversion of the 15 ARG convertible share bonds). Henrick Sellman is a director and shareholder of ARG and a director of the Company. ARG is the sole member of ARG US. The cash portion is recorded as a receivable in the amount of $142,654 (net of settlement) as of April 30, 2012. In May 2012 the cash was received.

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

Note 4. Receivable - Sale of Properties – (continued)

Effective December 31, 2012, following a ten-for-one split of outstanding ARG debt obligation bonds, Progreen converted 105 of the debt obligation bonds into 52,500 ARG common shares. Effective December 31, 2012 the $500,000 convertible debenture was amended and the Company transferred 27 of the new debt obligation bonds in the amount of $13,500, 76,500 ARG common shares and accrued interest on the bonds in the amount of $1,800, totaling an agreed upon value of $91,800 in payment of the interest due Rupes Futura AB on the Company’s outstanding $500,000 convertible debenture as of December 31, 2012. (See Note 9).

During the nine month period ended January 31, 2013 the Company sold three ARG debt obligation bonds in the amount of $15,000 and three ARG convertible share bonds (which were converted to shares of ARG common stock at ARG’s annual general meeting held on June 29, 2012) in the amount of $15,000 to an independent investor totaling $30,000.

At January 31, 2013, the Company continues to hold 18 of the ARG new debt obligation bonds recorded as Note Receivable – ARG in the amount of $9,000 and 51,000 shares of ARG common stock recorded as Investment –non-marketable securities in the amount of $51,000. (See Notes 5 and 6)

Effective April 30, 2012 the Company and ARG US entered into a management agreement whereby the Company will manage, lease, operate, maintain and repair the five properties for which it receives a management fee of ten percent of the monthly rent. The Company has guaranteed rents, in accordance with the terms of each lease, through April 30, 2013. No reserve for the guarantee has been recorded as management believes the likelihood is remote that material amounts will be required under this guarantee.

Note 5. Investment - Non-marketable Securities

At January 31, 2013 the Company held 51,000 shares of ARG common stock with a total cost of $51,000. (see Note 4)

Note 6. Note Receivable – ARG

At October 31, 2012 the Company held fifteen ARG debt obligation bonds in the principal amount of $75,000, due in five years and bearing interest at the rate of 6% per annum, payable quarterly commencing December 31, 2012.

Effective December 31, 2012 the Company waived its right to the interest payment on ARG’s bonds originally due on December 31, 2012, instead interest will be paid no later than December 31, 2013.

At January31, 2013 the Company held 18 ARG debt obligation bonds in the principal amount of $9,000 bearing interest at the rate of 6% per annum until otherwise agreed by ARG and the Company, payable annually

At April 30, 2012 the Company held eighteen ARG debt obligation bonds in the principal amount of $90,000, due in five years and bearing interest at the rate of 6% per annum, payable quarterly commencing December 31, 2012, and eighteen ARG convertible share bonds in the principal amount of $90,000 which were convertible into shares of ARG common stock, each bond being convertible into 5,000 shares of ARG common stock with a market value of $1.00 each (see Note 5). The corporate bonds balance totaled $9,000 and $180,000 at January 31, 2013 and April 30, 2012, respectively.

Note 7. Note receivable - rental property

On August 21, 2012 the Company sold one property with a sales price of $60,000 of which $10,000 was financed by the Company which is recorded as a note receivable with a balance of $8,064 as of January 31, 2013. The note is due in August 21, 2014 with monthly payments of $457, including interest at 9.00% per annum.

The Company sold one property on land contract in the year ended April 30, 2011. The remaining balance of the note receivable was $0 as of January 31, 2013, down from approximately $75,600 as of April 30, 2012.

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

Note 8. Fair Value Measurement

The Company utilizes the accounting guidance for fair value measurements and discloses for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis during the reporting period.

The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. ASC 820, "Fair Value Measurements and Disclosures", establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows:

Level 1 - Observable inputs such as quoted market prices in active markets.

Level 2 - Inputs other then quoted prices in active markets that are either directly or indirectly observable.

Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of January 31, 2013, the Company held certain financial instruments that are measured at cost on a recurring basis. These consisted of non-marketable securities of $51,000 and a note receivable from ARG of $9,000. The cost of the non-marketable securities and note receivable from ARG approximate their fair value and are categorized as Level 3.

Note 9. Related Party Secured Convertible Debenture Agreement

On November 5, 2009, the Company issued a 13.5% Secured Convertible Debenture (the “Debenture”) to Rupes Futura AB (“RF”), an investment company controlled by Henrik Sellmann, a director of the Company, providing for a loan to the Company of $500,000. The Debenture is due November 2014. Additionally, the Company issued to RF 500,000 shares of Common Stock of the Company as a Commitment Fee. The value of the Common Stock at the time of issuance was $30,000 and is recorded as debt discount. The Commitment Fee will be amortized over five years, the term of the Debenture, using the effective interest method.

Interest is payable at an annual rate of 13.5%, payable annually in arrears in shares of Common Stock of the Company, valued at the Conversion Price (defined below) as of the due date of the interest payment or the Company, at its sole option, may elect to pay any interest payment on the Debenture in cash, such cash interest payment to be payable no later than one hundred eighty (180) days from the original interest payment due date. The Debenture is convertible in whole or in part into Common Stock at the option of RF at the Conversion Price at any time following the date that is two years from the Closing Date. If RF elects to convert any unpaid principal amount of the Debenture it shall be entitled to receive shares of Common Stock on conversion equal in value, at the Conversion Price, to 115% of the unpaid principal amount of the Debenture. The conversion feature has intrinsic value of $75,000 that is recorded as debt discount and amortized over two years, the required holding period for RF, using the effective interest method. The effective interest rate on the Debenture as a result of the debt discounts noted above was 11.57% and 21.50 % which resulted in interest expense of $56,100 and $76,200 for the nine months ended January 31, 2013 and 2012, respectively.

As of April 30, 2012, the Company transferred six ARG debt obligation bonds and the rights to the conversion shares for six ARG convertible share bonds to Rupes Futura AB (owned by Henrik Sellmann, a director of the Company), in satisfaction of $60,000 of the $67,500 annual interest payment due Rupes Futura under the terms of the Company’s outstanding $500,000 debenture held by Rupes Futura.

As of October 31, 2012, the Company had not paid the $7,500 balance owing of the annual interest payment, which default has been waived by Rupes Futura. (See Note 4)

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

Note 9. Related Party Secured Convertible Debenture Agreement – (continued)

Effective December 31, 2012, following a ten-for-one split of outstanding ARG debt obligation bonds, Progreen converted 105 of the debt obligation bonds. into 52,500 ARG common shares. Effective December 31, 2012 the $500,000 convertible debenture was amended and the Company transferred 27 of the new debt obligation bonds, 76,500 ARG common shares and accrued interest on the bonds with an agreed upon value of $91,800 in payment of the interest due Rupes Futura AB on the Company’s outstanding $500,000 convertible debenture as of December 31, 2012. (See Note 4)

Note 10. Related Party Subscription Agreement

On July 21, 2009, the Company entered into a Subscription Agreement with EIG Venture Capital, Ltd. (“EIG”), an investment company controlled by Jan Telander, the Company’s Chief Executive Officer and controlling stockholder for the sale by the Company to EIG of an aggregate of 97,751,710 shares of the Company’s Common Stock, at a fixed price of $0.01023 per share, in three tranches: the Phase I tranche consisted of 5,767,350 shares of Common Stock to be purchased by EIG on or before July 16, 2009; the Phase II tranche of 43,108,504 shares to be purchased by EIG on or before December 31, 2009; and the Phase III tranche of 48,875,855 shares of Common Stock to be purchased by EIG on or before July 16, 2010. As of April 30, 2012 all of the Phase I and Phase II shares, and 39,100,684 shares of the Phase III tranche, have been purchased, and there is a remaining balance of $100,000 payable to complete payment of the Phase III purchase price.

Under a December 1, 2009 Amendment to the Subscription Agreement, EIG pays penalty interest at a rate of 13.5% per annum on the unpaid balance as of the final purchase date of the Phase III shares from that date to the date the shares are purchased.

As of January 31, 2013 all of the Phase I and Phase II shares have been purchased and 39,100,684 shares of the Phase III tranche.

As of January 31, 2013 the remainder of the Phase III purchase price and the applicable interest has been included in stockholders’ equity as amount due from subscriber under subscription agreement. The remaining balance of $100,000 and related interest have not been received prior to the issuance of the financial statements.

Note 11. Corporate Lease Agreement

On March 24, 2010, the Company entered into a lease agreement for office space for a period of sixty-six (66) months. The Company does not have a lease payment for the first 9 months of the lease agreement, and subsequent payments are as follows:

Year ending April 30,	Rental Amount
2013	$	21,518
2014		28,714
2015		28,965
2016		12,069
	$	91,266

In addition to the base monthly rent the Company is responsible for a pro-rata share of operating expenses and real estate taxes as determined by the lessor. At the beginning of the lease the Company paid a security deposit of $5,000, which is reflected as deposits on the January 31, 2013 balance sheet.

The Company recorded $18,110 rental expense as a result of the lease for each of the nine months ended January 31, 2013 and 2012.

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

Note 12. Payable Under Management Agreement

ProGreenManagement has entered into management agreements with certain property owners to manage rental properties and under the terms of the agreements ProGreen Management collects rent and remits the property owners’ portion of collected rent, net of a management fee to the owners. At January 31, 2013 and April 30, 2012 net rent amounts due totaled $ 0 and $4,030, respectively.

Note 13. Note Payable

The Company has a note payable of $11,100 and $14,600 outstanding as of January 31, 2013 and April 30, 2012, respectively, which bears a fixed rate of interest of 6.99% and provides for monthly payments of $463 through March 2015.

The Company has a note payable of $35,600 and $0 outstanding as of January 31, 2013 and April 30, 2012, respectively, which bears a fixed rate of interest of 2.90% and provides for monthly payments of $679 through October 2017.

Note 14. Income Taxes

The Company has not recorded any income tax benefit for the nine months ended January 31, 2013 and 2012. The Company has recorded an income tax valuation allowance equal to the benefit of its income tax carry forward because of the uncertainty relating to the Company’s ability to utilize the Net Operating Loss carry forward.

Note 15. Loss per Share

Basic earnings (loss) per share assumes no dilution and is computed by dividing net income available to common stockholders by the weighted average number of common stock outstanding during each period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the effect of common shares issuable under the subscription agreement.

Losses per share have been computed based on the following:

	Nine months ended January 31, 2013			Nine months ended January 31, 2012
Net loss	$	(314,295	)	$	(301,213	)
Average number of common shares outstanding used to calculate basic loss per share		104,329,703			104,306,515
Effect of dilutive subscribed shares		9,775,171			9,775,171
Average number of common shares outstanding used to calculate diluted earnings per share		114,104,874			114,081,686

Note 16. Commitments

The Company has no pending offers to purchase additional properties as of January 31, 2013.

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

Note 17. Amendments to Certificate of Incorporation

Increase in Authorized Common Stock

In October 8, 2009, the Company filed a Certificate of Amendment to its Certificate of Incorporation increasing the number of authorized shares of common stock from 50,000,000, par value $.01 per share to 250,000,000, par value $.0001 per share.

The amendments to the Company’s Certificate of Incorporation that were so approved also authorized a new class of 10,000,000 shares of preferred stock, par value $0.0001 per share, and authorize the Board of Directors to issue one or more series of the preferred stock with such designations, rights, preferences, limitations and/or restrictions as it should determine by vote of a majority of such directors. As of January 31, 2013, no shares of preferred stock were issued and outstanding.

Note 18. Employee Stock Option Plan

Restricted Stock Units

As of April 30, 2012, the Board of Directors approved the Company’s 2012 Employee Stock Option Plan, pursuant to which 10,000,000 shares of Common Stock are reserved for issuance to employees and officers and directors of, and consultants to, the Company. Effective June 1, 2012 the Board of Directors approved the award of 4,200,000 restricted stock units (“RSUs”) under the Company’s 2012 Employee Stock Option Plan as follows: 3,000,000 RSUs were awarded to the Company’s Chief Executive Officer; 600,000 RSUs to a director of the Company; and 600,000 RSUs to the manager of the Company’s real estate operations.

Effective December 3, 2012 Company has retained a new Controller to whom 600,000 RSUs have been issued as part of his initial remuneration package.

The RSUs were awarded pursuant to restricted stock units agreements (“RSU Agreement”) which provide for a period of five years from the date of the award during which, once vesting conditions are satisfied, that the shares of our common stock underlying the RSU at the option of the holder of the RSU can be released. The vesting conditions set forth in the three RSU Agreements approved June 1, 2012 are as follows: The interest of the holder of the RSU’s pursuant to a RSU Agreement shall become non-forfeitable or vested in 1/3 increments on the later of (i) the first, second and third anniversary dates of the grant of the award, and (ii) the trading price of our common stock for a period of twenty days having equaled or exceeded $0.15 per share for the first annual vesting date, $0.25 per share for the second annual vesting date, and $0.35 per share for the third annual vesting date.

The vesting set forth in the RSU Agreement dated December 3, 2012 is as follows: The interest of the holder of the RSUs shall become non-forfeitable or vested as follows: i)150,000 shall become Vested as of December 1, 2013, or such later date as of which the Common Stock Market Price shall have equaled or exceeded $0.15 per share; ii) 150,000 shall become Vested as of December 1, 2014, or such later date as of which the Common Stock Market Price shall have equaled or exceeded $0.25 per share; iii) 150,000 of the RSUs shall become Vested as of December 1,2015, or such later date as of which the Common Stock Market Price shall have equaled or exceeded $0.35 per share; and iv) 150,000 of the RSUs shall become Vested as of December 1, 2016, or such later date as of which the Common Stock Market Price shall have equaled or exceeded $0.45 per share. The Agreement also requires the controller be the financial controller of the Company (or alternatively have been appointed an executive officer of the Company) as of the applicable Vesting Date and have been so engaged throughout the period beginning on the date of the Agreement and ending on the applicable Vesting Date and (b) that the common stock has traded for a period of twenty trading days at the market price as specified in Agreement.

ProGreen Properties, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2013

Note 18. Employee Stock Option Plan (continued)

As of January 31, 2013 compensation expense of $28,750 was recorded as follows:

Number of restricted stock units issued on June 1, 2012		4,200,000
Stock price on grant date	$	0.03
Vesting Period	3 years
Estimated fair value at issuance	$	126,000
June 1, 2012 through January 31, 2013 Compensation Expense	$	28,000

Number of restricted stock units issued on December 3, 2012		600,000
Stock price on grant date	$	0.03
Vesting Period	4 years
Estimated fair value at issuance	$	18,000
December 3, 2012 through January 31, 2013 Compensation Expense	$	750
Total compensation expense as of January 31, 2013	$	28,750

Note 19. Subsequent Events

In March 2013 the Company entered into an agreement to sell its interest in one property to ARG.

On March 10, 2013 the Company entered into a Memorandum of Understanding with an outside investment company whereby the investment company would invest capital in the Company to fund property acquisitions and development.

Management has evaluated subsequent events through March 13, 2013 the date on which the financial statements were available to be issued.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto and other financial information included elsewhere in this report.

Certain statements contained in this report, including, without limitation, statements containing the words "believes," "anticipates," "expects" and words of similar import, constitute "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including our ability to create, sustain, manage or forecast our growth; our ability to attract and retain key personnel; changes in our business strategy or development plans; competition; business disruptions; adverse publicity; and international, national and local general economic and market conditions.

GENERAL

Throughout this Form 10-Q, the terms "we," "us," "our," “ProGreen” and the "Company" refer to ProGreen Properties, Inc., a Delaware corporation, and, unless the context indicates otherwise, includes our subsidiaries.

The Company was incorporated in Florida on April 23, 1998 and reincorporated in Delaware on December 12, 2008. Effective September 11, 2009, we changed our name from Diversified Product Inspections, Inc. to ProGreen Properties, Inc. to reflect the change in our business operations from the conduct of investigations and laboratory analyses to the purchase of income producing real estate assets.

The Company had maintained its conduct of investigations and laboratory analyses operations until the April 30, 2009 closing of a Settlement and Asset Purchase Agreement (the “Agreement”). On April 30, 2009, we ceased our investigations and laboratory analyses operations and closed the Agreement pursuant to which $230,000 was paid to a plaintiff to settle material litigation, and our remaining assets and liabilities were transferred to a separate entity owned by the previous executive officers of the Company.

Our Business

Our offices are located in Birmingham, Oakland County, Michigan. The purchase of a condominium unit on July 28, 2009 initiated our planned new business operations directed at purchasing income-producing residential real estate apartment homes, condominiums and houses in the State of Michigan, where we believe favorable investment opportunities exist based on current market conditions.

Our business model since our initial property purchases has been to acquire, refurbish and upgrade existing properties into more energy efficient, comfortable and healthier living spaces so that they meet standards that exceed what is often the norm for most single family homes, condominiums and apartments. Once a property has been acquired, refurbished and rented, we put the property back on the market, but now as a fully managed investment property, with a favorable yield. These investment properties are marketed exclusively by ProGreen Realty LLC, a wholly owned subsidiary of ProGreen and managed by ProGreen Properties Management LLC, another wholly owned subsidiary.

We will have to raise additional capital to continue to purchase residential properties and to expand our property portfolio by purchasing large-scale multi-family properties. We have no firm third party commitments for the capital we will require for these planned investments, although we have concluded a working agreement, resulting in the sale of eight properties, with one group, and on March 10, 2013, we signed a Memorandum of Understanding (MOU) with Futura Fastigheter AB (Futura), a Swedish investment company, subject to execution of definitive agreements expected to be signed within the next four weeks. Futura was set up exclusively for the purpose of investing in income producing residential properties with Progreen, and expects to make its first investment of up to $3,000,000 before the summer with a second larger round is planned for this fall. Under the terms of the MOU, the investments by Futura would be used as capital for ProGreen to cover the cost of acquisition and refurbishment of potential investment properties. Once refurbishment has been completed and the property has been leased to a suitable tenant, Futura would acquire the property from ProGreen but ProGreen would maintain the property management.

Sale of Properties to American Residential Gap ApS

In the fourth quarter of fiscal 2012 we entered into our first working agreement with a European group through American Residential Gap LLC (ARG US). ARG US is a wholly-owned subsidiary of American Residential Gap ApS (ARG), a newly formed property investment company that has been set up in Denmark by a number of Scandinavian investors. ARG’s business plan is to acquire income producing residential properties in the US. Under the terms of the working agreement, we will sell income producing properties to ARG. The properties will have been initially been purchased, refurbished and leased to suitable tenants by ProGreen, yielding a stipulated minimum return on investment. All properties sold will continue to be managed by ProGreen. We have also agreed with ARG that they will be financing properties for ProGreen during the process of refurbishment and leasing, prior to the properties being sold to ARG as income producing investment properties.

On December 11, 2012 the Company sold one property to ARG US. The purchase price for the property was $95,000 of which $49,000 was received in cash on the closing date, $16,000 was paid from funds accumulated from rents held by ProGreen Property Management LLC on behalf of ARG US and $30,000 plus interest at the rate of 9% per annum which was to be paid on or before June 30, 2013 as stated in a Promissory Note. The Promissory Note and related interest were paid in full on January 15, 2013,thus the receivable relating to this sale is $0 at January 31, 2013. The Company has guaranteed rents, in accordance with the terms of each lease, through December 15, 2013 and has recorded a reserve in the amount of $4,750.

We completed the first sale of five properties to ARG on April 30, 2012. The purchase price for the five properties was $384,000, of which $144,000 (gross contract amount) was paid in cash and the balance of $240,000 is evidenced by 48 ARG corporate bonds (as so termed under ARG’s corporate documents) with a nominal value of $5,000 per bond. The cash portion was recorded as a receivable in the amount of $142,654 (net of settlement) as of April 30, 2012. In May 2012 the cash was received thus the receivable relating to the cash portion of the sale is $0 at January 31, 2013.

In connection with the April 2012 sale of properties discussed in the previous paragraph, the $240,000 balance due under the sale was evidenced by 48 ARG corporate bonds (as so termed under ARG’s corporate documents) with a nominal value of $5,000 per bond (totaling $240,000). Of the 48 ARG bonds, 24 were ARG debt obligations (“ARG debt obligation bonds”) in the principal amount of $5,000 each, totaling $120,000, due in five years and bearing interest at the rate of 6% per annum, receivable quarterly commencing December 31, 2012. The remaining 24 ARG bonds were convertible into shares of ARG common stock, each bond being convertible into 5,000 shares of ARG common stock with a market value of $1.00 each (“ARG convertible share bonds”), totaling $120,000. As of April 30, 2012 the Company transferred six ARG debt obligation bonds in the amount of $30,000 and the rights to conversion shares for six ARG convertible share bonds in the amount of $30,000 in satisfaction of $60,000 of an April 30, 2012 interest payment due Rupes Futura AB on the Company’s outstanding $500,000 convertible debenture resulting in a Note Receivable - ARG balance $180,000 at April 30, 2012.

On October 31, 2012 the Company sold one property ARG US for $45,000, which was recorded as a receivable as of October 31, 2012. In November 2012 the Company collected the $45,000 in cash thus the receivable relating to this sale is $0 at January 31, 2013. The Company has guaranteed rents, in accordance with the terms of each lease, through October 31, 2013 and has recorded a reserve in the amount of $2,250.

During the nine month period ended January 31, 2013 the Company sold three ARG debt obligation bonds in the amount of $15,000 and three ARG convertible share bonds (which were converted to converted to shares of ARG common stock at ARG’s annual general meeting held on June 29, 2012) in the amount of $15,000 to an independent investor totaling $30,000.

The Company and ARG entered into a management agreements whereby the Company will manage, lease, operate, maintain and repair the above seven properties for which it receives a management fee of ten percent of the monthly rent.

RESULTS OF OPERATIONS

Nine Months Ended January 31, 2013 Compared to Nine Months Ended January 31, 2012

During the nine months ended January 31, 2013, we incurred a net loss from continuing operations of $263,700 compared to a loss of $229,900 for the nine months ended January 31, 2012. The increase in our loss from continuing operations for the nine months ended January 31, 2013 over the comparable period of the prior year is due to an increase in revenue of $60,100 which was offset by an overall increase in expenses. Revenue increased due to an increase in proceeds from the sale of condominiums of $110,000 to $200,000 for the six months ended January 31, 2013. The related cost of the properties of increased $17,300 resulting in gain on sale of properties of $92,000 for the nine months ended January 31, 2013 compared to a loss of $903 for the nine months ended January 31, 2012. In the first nine months of the current period the Company sold three properties compared to one sale in the same period of the prior year. Revenue from the proceeds from the sale of condominiums was offset by a decrease in rental revenue of $40,800. Rental revenue decreased because the number of rental units has decreased to one property at January 31, 2013 as properties were sold. One new property was purchased in the current quarter however it was not leased as of January, 31, 2013. Commission revenue decreased from $24,000 to $2,300 in the nine months ended January 31, 2013 compared to the nine months ended January 31, 2012 because only two properties were purchased generating commission income. The Company earned management fees and other revenue of approximately $7,500 and $5,000, respectively for the nine months ended January 31, 2013 as compared with $0 for the comparable period in 2012. This increase is the result of the management agreements the Company has entered into to manage some of the sold properties and fees charged to upgrade sold properties.

There have been increases in certain expenses in the nine months ended January 31, 2013 compared to the nine months ended January 31, 2012 as follows: rental property operating costs increased $8,500 due to improvement and maintenance on 8 Mile as well as on Country Way and Lasher; advertising increased $22,200; compensation expense increased $28,750 from the comparable period as a result of the award of restricted stock units in the nine month period ended January 31, 2013. General and administrative expenses increased $75,000 mainly due to the Company President’s salary of $72,000 and housing allowance of $17,500 as compared to $4,000 and $0 respectively, for the comparable period of the prior year. This increase in general and administrative expenses was partially offset by a decrease of $11,600 in real estate taxes from the nine months ended January 31, 2012 to the comparable current period due to the reduced number of rental properties. Professional fees decreased $55,600 attributable to an increase in professional, accounting and legal fees of $25,900 offset by a decrease in consulting and investing fees of $81,000 mainly due to the Company President’s consulting fee of $64,000 and investor relations fees of $17,000 in the prior period. In addition, interest expense decreased $18,975 due to the discount on the conversion feature of the debenture being fully amortized at April 30, 2012. Such amortization of discount resulted in interest expense of $20,700 for the nine months ended January 31, 2012 and $0 for the current nine month period.

Professional expenses continue to be significant due to the compliance costs associated with being a public company.

Quarter Ended January 31, 2013 Compared to Quarter Ended January 31, 2012

During the quarter ended January 31, 2013, we incurred a net loss of $65,800 compared to a net loss of $65,000 for the quarter ended January 31, 2012. Our loss from continuing operations for the three months ended January 31, 2013 is flat as compared to the comparable period of the prior year. Revenue increased $69,000 from the quarter ended January 31, 2012 compared to the quarter ended January 31, 2012; however this increase was offset by the an overall increase in expenses. Revenue increased due to an increase in proceeds from the sale of condominiums of $95,000, net of an increase in the related cost of the properties of $43,100, resulting in gain on sale of properties of $51,900 from $0 in the prior period. In the third quarter of the current period the Company sold one property compared to no sales in the same period of the prior year. Revenue from the proceeds from the sale of condominiums was offset by a decrease in rental revenue of $16,200. Rental revenue decreased because the number of rental units has decreased to one property at January 31, 2013, compared to eight properties in the comparable period ended January 31, 2012. Commission revenue decreased from $14,200 to $ 1,300 in the three months ended January 31, 2013 as compared to three months ended January 31, 2012, as there was one property purchased in the current quarter. The Company earned management fees of approximately $3,000 for the three months ended January 31, 2013 as compared with $0 for the comparable period in 2012. This increase is the result of the management agreements the Company has entered into to manage some of the sold properties.

There have been fluctuations in certain expenses in the three months ended January 31, 2013, as compared to the three months ended January 31, 2012. Advertising increased $5,900. Compensation expense increased $11,250 from the comparable period as a result of the award of restricted stock units in the second and third quarters of fiscal 2013.

General and administrative fees increased $23,800 for the quarter ended January 31, 2013 as compared to the same period of the prior year mainly due to a salary of $24,000 paid to the Company’s President. The increases in expenses were offset by a $13,700 decrease in professional fees for the three months ended January 31, 2012.

LIQUIDITY AND CAPITAL RESOURCES

At January 31, 2013, we had total assets of $323,000, compared to total assets of $606,000 at April 30, 2012. The decrease in total assets was due to the following: the receipt of cash relating to the Company’s sale of properties, which was a receivable on April 30, 2012 in the amount of $143,000; a decrease $42,000 in rental properties as the Company sold two properties held at April 30, 2012; Note Receivable ARG decreased $171,000 as the underlying bonds were converted to ARG stock in the amount of $127,500; $30,000 was received in cash due to a sale of a portion of the investment and an additional $13,500 transfered in partial settlement of debenture interest due. Note receivable rental property decreased $68,000 due to the receipt in full of $75,603 relating to a land contract on a prior year sale of property which was offset by a note receivable relating to the sale of property under development in the prior quarter. The Company financed a portion of the sale and the balance of note receivable is $8,064 as of January 31, 2013.

These decreases were partially offset by an increase of $51,000 in Investments Marketable Securities which is net of ARG bond conversions to ARG stock and a sale of $76,500 to ARG in partial settlement of debenture interest due.

Cash increased $53,900 from April 30, 2012 to January 31, 2013. At January 31, 2013, we had stockholders’ deficit of $302,000 compared to deficit of $16,000 as of April 30, 2012. The increase in stockholders’ deficit was primarily due to net operating losses of $314,000 in the nine month period ended January 31, 2013.

Rental property

Rental properties decreased to approximately $118,800 as of January 31, 2013, from $160,900 as of April 30, 2012 due to the sale of two completed rental properties offset by the purchase of one additional property. As of January 31, 2013, the Company held one renovated property which was leased for a term of twenty-four months with lease payments of $1,400 per month.

Properties under development

Properties under development remains unchanged as of January 31, 2013 from April 30, 2012; however, one property in the amount of $20,460 was developed and sold in the first nine months of fiscal 2013.

Cash

Cash increased approximately $53,900 for the nine months ended January 31, 2013. The Company received $319,000 in proceeds from the sale of property and approximately $30,000 from the sale of investment notes. The Company invested approximately $68,600 in properties, expended approximately $217,000 to fund operations and repaid $8,800 on notes payable.

Note receivable - rental property

On August 21, 2012 the Company sold one property with a sales price of $60,000 of which $10,000 was financed by the Company, which is recorded as a note receivable with a balance of $8,000 as of January 31, 2013. The note is due in August 21, 2014 with monthly payments of $457, including interest at 9.00% per annum.

The Company sold one property on land contract in the year ended April 30, 2011. The remaining balance of the note receivable was $0 as of January 31, 2013 down from approximately $75,600 as of April 30, 2012.

Related Party Subscription Agreement

On July 21, 2009, the Company entered into a Subscription Agreement with EIG Venture Capital, Ltd. (“EIG”), an investment company controlled by Jan Telander, the Company’s Chief Executive Officer and controlling stockholder for the sale by the Company to EIG of an aggregate of 97,751,710 shares of the Company’s Common Stock at a fixed price of $0.01023 per share, in three tranches: the Phase I tranche consisted of 5,767,350 shares of Common Stock, to be purchased by EIG on or before July 16, 2009; the Phase II tranche, of 43,108,504 shares, to be purchased by EIG on or before December 31, 2009; and the Phase III tranche, of 48,875,855 shares of Common Stock, to be purchased by EIG on or before July 16, 2010. As of July 31, 2012 all of the Phase I and Phase II shares, and 39,100,684 shares of the Phase III tranche, have been purchased, and there is a remaining balance of $100,000 payable to complete payment of the Phase II purchase price. Under a December 1, 2009, Amendment to the Subscription Agreement, EIG pays a penalty interest rate of 13.5% per annum on the unpaid balance as of the final purchase date of the Phase III shares from that date to the date the shares are purchased.

In the current fiscal year, management expects to satisfy liquidity needs of the Company through sale of renovated condominiums and purchase of remaining shares under the subscription agreement described above. With any purchases of larger apartment complex properties, we estimate that we will be required to find investment partners to provide financing in the range of $5 million to $25 million over the next 12-24 months.

Critical Accounting Policies

The summary of critical accounting policies below should be read in conjunction with the discussion of the Company’s accounting policies included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2012. We consider the following accounting policies to be the most critical going forward:

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.

Rental Revenue Recognition - Rental income is recognized on a straight-line basis over the term of each lease.

Rental Property and Real Estate Costs - Our property is recorded at cost and depreciation is computed using the straight-line method over the estimated useful lives of the assets. We charge repairs and maintenance to expense as it is incurred.

Estimates - The preparation of financial statements required us to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. We based our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurances that actual results will not differ from those estimates. On an ongoing basis, we will evaluate our accounting policies and disclosure practices as necessary.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

a. Disclosure controls and procedures.

As of the end of period covered by this report, the Company carried out an evaluation, with the participation of the Company's Chief Executive Officer and Principal Financial Officer, of the effectiveness of the Company's disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Company's Chief Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms.

b. Changes in internal controls over financial reporting.

No changes were made to the Company's internal controls in the quarterly period covered by this report that have materially affected, or are reasonably likely materially to affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 6. EXHIBITS.

31	Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
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.

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PROGREEN PROPERTIES, INC.

	BY:	/s/ Jan Telander
		Jan Telander
		President and Chief Executive Officer

Dated: March 18, 2013

EXHIBIT INDEX

31	Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
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.

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.

Attached files

Progreen US, Inc. Reports

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