NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note
1. Financial Statement Presentation
The
unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted
accounting principles in the United States of America (“U.S. GAAP”) 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 U.S. GAAP for complete financial statements and
they should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s
Annual Report on Form 10-K for the year ended April 30, 2017 (the “Annual Report”). 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 six month period ended October 31, 2017,
are not necessarily indicative of the results that may be expected for the year ending April 30, 2018.
Basis
of Presentation
The
Company’s significant accounting policies are summarized in Note 1 of the Annual Report. These accounting policies conform
to U.S.GAAP and have been consistently applied in the preparation of the interim unaudited condensed consolidated financial statements.
There were no significant changes to these accounting policies during the six months ended October 31, 2017, and the Company does
not expect the adoption, as applicable, of other recent accounting pronouncements will have a material impact on its financial
statements.
Going
Concern
The
Company’s unaudited condensed consolidated financial statements for the period ended October 31, 2017, 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 will require additional funding to execute its future strategic business plan. Successful business
operations and its transition to attaining profitability are dependent upon obtaining additional financing and achieving a level
of revenue adequate to support its cost structure. These conditions raise substantial doubt about the Company’s ability
to continue as a going concern.
The Company will continue to incur costs that
are necessary for it to remain an active public company. In the current fiscal year, the Company used approximately $494,000
of cash to support its operations and such cash needs are expected to continue in the upcoming year. As of October 31, 2017,
the Company has approximately $25,000 in cash.
Earnings
(loss) per Share
Earnings
per share is calculated in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share (“EPS”) is
based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible
shares and stock warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this
method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later),
and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
In
periods of losses from operations, basic and diluted income per share from operations are also the same, as ASC 260-10 requires
the use of the denominator used in the calculation of loss per share from operations in all other calculations of earnings per
share presented, despite the dilutive effect of potential common shares.
The
potentially dilutive effects of 14,000,000 and 5,500,000 warrants
were not considered in the calculation of EPS as the effect would be anti-dilutive on October 31, 2017 and 2016.
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Based on the conversion prices in effect,
the potentially dilutive effects of 3,394,286 and 14,461,184
due
to convertible debt were not considered in the calculation of EPS as the effect would be anti-dilutive on October 31, 2017 and
2016 respectively.
Based
on the conversion prices in effect, the potentially dilutive effects of 293,039,697 due to convertible preferred stock series
A were not considered in the calculation of EPS as the effect would be anti-dilutive on October 31 2017 and 2016.
Based
on the conversion prices in effect, the potentially dilutive effects of 59,756,142 due to convertible preferred stock series B
were not considered in the calculation of EPS as the effect would be anti-dilutive on October 31, 2017 and 2016.
Reclassifications
Certain
amounts in previous periods have been reclassified to conform to fiscal year ending 2018 classifications.
Recent
Accounting Pronouncements
In
February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize
(i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted
basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of,
a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors;
however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard
will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The
Company is currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations,
cash flows or financial condition.
In
April 2016, the FASB issued ASU 2016–10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations
and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments
in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation
guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts
with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise
to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied
at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments
in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgment
necessary to comply with Topic 606. The Company is currently reviewing the provisions of this ASU to determine if there will be
any impact on our results of operations, cash flows or financial condition.
Management has considered all recent accounting pronouncements issued since and their potential effect on
our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect
on the Company’s consolidated financial statements.
Note
2. Rental Properties and Property under Development
Rental
properties totaled $459,485 and $732,023 as of October 31, 2017 and April 30, 2017, respectively. The Company owned six and ten
rental properties as of October 31, 2017 and April 30, 2017, respectively. The Company held no properties under development as
of October 31, 2017and April 30, 2017.
Depreciation
expense for the six month periods ended October 31, 2017 and 2016 totaled $10,044 and $15,891, respectively.
Note
3. Land Under Development and Liability under Land Contract-Related Party
The
Company held land under development in the amount of $500,000 as of October 31, 2017 and April 30, 2017. Under the terms of the
definitive purchase agreement, the Company has recorded land at cost in the amount of $500,000, paid $50,000 of the purchase price
and recorded a secured liability under land contract for the balance due in the amount of $450,000 as of October 31, 2017
and April 30, 2017. No interest is due under the terms of the definitive purchase agreement. As of October 31, 2017 payments are
due as follows:
Year
Ending
|
|
April
30 ,
|
|
2018
|
|
$
|
50,000
|
|
2019
|
|
|
100,000
|
|
2020
|
|
|
100,000
|
|
2021
|
|
|
100,000
|
|
2022
|
|
|
100,000
|
|
|
|
$
|
450,000
|
|
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note
4. Accounts Receivable
Accounts
receivable totaled $56,716, and $23,352 at October 31, 2017 and April 30, 2017, respectively and is comprised of amounts rent
due from tenants in the amount of $33,420 and $12,245 at October 31, 2017 and April 30, 2017, respectively, other receivables
in the amount of $1,800 and $0 at October 31, 2017 and April 30, 2017 respectively and Procon’s accounts receivable in the
amount of $21,496 and $11,107 at October 31, 2017 and April 30, 2017, respectively.
During
the year ended April 30, 2017, management determined the rent due from one tenant may not be collectible and an allowance for
uncollectible accounts receivable was established in the amount of $7,395, resulting in net accounts receivable of $49,321 and
$15,957 at October 31, 2017 and April 30, 2017, respectively. There was no bad debt expense recognized in the six month periods
ended October 31, 2017 and 2016.
Note
5. Notes Receivable - Land Contracts and Gain on Sale of Properties and Property under Development
On
July 12, 2017 the Company sold one of its rental properties located at 20351 Lacrosse with a selling price of $126,000. The entire
$126,000 was received in cash (net of costs totaled $113,617) in the six months ended October 31, 2017 and the Company recognized
a gain on the sale of this property in the amount of $30,339.
On
June 16, 2017 the Company sold one of its rental properties located at 26005 Franklin Pointe-with a selling price of $92,000.
The entire $92,000 was received in cash (net of costs totaled $82,597) in the six months ended October 31, 2017 and the Company
recognized a gain on the sale of this property in the amount of $9,566.
On
May 23, 2017 the Company sold one of its rental properties located at 20210 Westover with a selling price of $45,000. The Company
received a deposit of $5,000 and issued a secured Land Contract to the buyer, for the balance owed in the amount of $40,000,
to be paid in monthly installments, including principal and interest, beginning August 1, 2017 through May 20, 2020. The Land
Contract bears interest at 8% per annum. In the in the six months ended October 31 2017 the Company recognized a deferred gain
on the sale of this property in the amount of $18,822 which is offset against the receivable balance on the face of balance sheet.
The balance due under this Land Contract totaled $40,000 and $0 plus accrued interest in the amount of $1,155 and $0 as of October
31, 2017 and April 30, 2017, respectively. At October 31, 2017 and April 30 2017 the deferred profit on the sale of this property
totaled $18,822 and $0 respectively.
On
May 23, 2017 the Company sold one of its rental properties located at 2100 Westover with a selling price of $92,000. The Company
received a deposit of $8,000 and issued a secured Land Contract to the buyer, for the balance owed in the amount of $84,000,
to be paid in monthly installments, including principal and interest, beginning June 1, 2017 through May 10, 2020. The Land Contract
bears interest at 9% per annum. In the in the six months ended October 31 2017 the Company recognized a deferred gain on the sale
of this property in the amount of $33,779 which is offset against the receivable balance on the face of balance sheet. The balance
due under this Land Contract totaled $84,000 and $0 plus accrued interest in the amount of $3,604 and $0 as of October 31, 2017
and April 30, 2017, respectively. At October 31, 2017 and April 30 2017 the deferred profit on the sale of this property totaled
$33,779 and $0 respectively.
On
June 25, 2016 the Company sold a second one of its rental properties located at 21421 Greenview Avenue with a selling price of
$109,000. The Company received a deposit of $12,000 and issued a secured Land Contract to the buyer, for the balance owed
in the amount of $97,000, to be paid in monthly installments, including principal and interest, beginning August 1, 2016 through
June 30, 2019. The Land Contract bears interest at 9% per annum. In the six months ended October 31, 2017 and 2016 the Company
recognized a gain on the sale of this property in the amount of $0 and $96. The balance due under this Land Contract totaled $94,928
and $ 96,276 plus accrued interest in the amount of $1,453 and $1,567 as of October 31, 2017 and April 30, 2017, respectively.
At October 31, 2017 and April 30 2017 the deferred profit on the sale of this property totaled $96 and $96, respectively.
On
May 20, 2016 the Company sold one of its rental properties located at 23270 Helen Street, with a selling price of $119,000. The
Company received a deposit of $10,000 and issued a secured Land Contract to the buyer, for the balance owed in the amount
of $109,000 to be paid in monthly installments, including principal and interest, beginning June 1, 2016 through June 1, 2019.
The Land Contract bears interest at 9% per annum. In the fiscal year ended April 30, 2017 the Company recognized a deferred gain
on the sale of this property in the amount of $0 and $41,507, which is offset against the receivable balance on the face of balance
sheet at October 31, 2017 and April 30, 2017, respectively. The balance due under this Land Contract totaled $107,842 and $108,280
plus accrued interest in the amount of $4,651 and $1,655 as of October 31, 2017 and April 30, 2017, respectively. At October 31,
2017 and April 30, 2017 the deferred profit on the sale of this property totaled $41,507 and $41,507, respectively.
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
During
the year ended April 30, 2017, management determined the amounts due under the secured land contracts may not be
collectible in full and an allowance for uncollectible accounts was established in the amount of $4,800 for the portion
management determined may not be collectible based on payment history. Notes receivable - land contracts, net of allowance
total $227,766 and $158,153 at October 31, 2017 and April 30, 2017, respectively. There was no bad debt expense recognized in
the six months ended October 31, 2017 and 2016.
Note
6. Note Receivable - Related Party
During
the six months ended October 31, 2017, the Company contributed an additional $272,000 to and received repayments in the amount
of $50,000, from Baja Joint Venture, which is accounted for as an investment. Note Receivable - Related Party totaled $912,500
and $690,500 as of October 31, 2017 and April 30, 2017, respectively.
Note
7. Property and Equipment
Major
classifications of property and equipment are summarized as follows:
|
|
October
31, 2017
|
|
|
April
30, 2017
|
|
Vehicles
|
|
$
|
40,902
|
|
|
$
|
40,902
|
|
Furniture
|
|
|
6,148
|
|
|
|
3,564
|
|
Office
equipment
|
|
|
2,926
|
|
|
|
2,926
|
|
Total
vehicles, furniture and equipment
|
|
|
49,976
|
|
|
|
47,392
|
|
Less:
accumulated depreciation
|
|
|
(46,525
|
)
|
|
|
(44,301
|
)
|
Net
carrying amount
|
|
$
|
3,451
|
|
|
$
|
3,091
|
|
Depreciation
expense for the six months ended October 31, 2017 and 2016 totaled $2,224 and $4,269, respectively.
Note
8. Reservation Deposits
During
the six month period ended October 31, 2017, the Company’s subsidiary Procon has collected deposits (“Reservation
Deposit”) in the amount of $9,500. Reservation deposits totaled $27,000 and $17,500 at October 31, 2017 and April 30, 2017,
respectively.
Note
9. Notes Payable
On
August 22, 2017 the Company entered into an unsecured promissory note payable with an unrelated party, borrowing $10,000.
The note is an unsecured and is due July 19, 2018. The promissory note has a onetime interest charge of 15% (in the amount of
$1,500) plus accrued interest of 5% per annum.
The
Company recorded interest expense in connection with the promissory note in the amount of $1,596 and $0 for the six month periods
ended October 31, 2017 and 2016, respectively. Accrued interest due under the promissory notes totaled $1,596 and $0 as of October
31, 2017 and April 30, 2017, respectively. The amount outstanding under the note payable totaled $10,000 and $0 at October 31,
2017 and April 30, 2017, respectively.
On
August 22, 2017 the Company entered into an unsecured promissory note payable with an unrelated party, borrowing $9,000.
The note is an unsecured and is due July 19, 2018. The promissory note has a onetime interest charge of 15% (in the amount of
$1,350) plus accrued interest of 5% per annum. The Company recorded interest expense in connection with the promissory note in
the amount of $1,436 and $0 for the six month periods ended October 31, 2017 and 2016, respectively. Accrued interest due under
the promissory notes totaled $1,436 and $0 as of October 31, 2017 and April 30, 2017, respectively. The amount outstanding under
the note payable totaled $9,000 and $0 at October 31, 2017 and April 30, 2017, respectively.
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On August 22, 2017 the Company entered into
an unsecured promissory note payable with an unrelated party, borrowing $30,000. The note is an unsecured and is due July
19, 2018. The promissory bears interest of 5% per annum. The Company recorded interest expense in connection with the promissory
note in the amount of $288 and $0 for the six month periods ended October 31, 2017 and 2016, respectively. Accrued interest due
under the promissory notes totaled $288 and $0 as of October 31, 2017 and April 30, 2017, respectively. The amount outstanding
under the note payable totaled $30,000 and $0 at October 31, 2017 and April 30, 2017, respectively.
During
the six month period ended October 31, 2017 the Company paid in full the note payable due to AMREFA in amount of $200,000. The
note was non-interest bearing. The note payable due to AMREFA had a balance outstanding of $0 and $ 200,000 as of October 31,
2017 and April 30, 2017.
The amount due under the secured Southfield
debt had a balance outstanding of $14,491 and $14,106 as of October 31, 2017 and April 30, 2017, respectively. In connection with
the Southfield debt, during the six month periods ended October 31, 2017 and 2016, the Company capitalized interest expense of
$385 and $0 a respectively. Accrued interest totaled $84 and $301 at October 31, 2017 and April 30, 2017, respectively. The accrued
interest of $385 was rolled into principal.
Note
10. Notes Payable, Related Parties
Promissory
Notes
During the six months ended October 2017,
the Company’s President entered into three unsecured 5% Promissory Note (“Credit Line 4”) whereby the
Company borrowed a total of $115,070 with interest at a rate of five (5%) percent per annum, which is payable on July 19,
2018. Notes payable related parties includes the amount due under these notes, with a balance outstanding of $115,070 and $0 as
of October 31, 2017 and April 30, 2017, respectively. The Company recorded interest expense in connection with these notes in
the amount of $756 and $0 for the six month periods ended October 31, 2017 and 2016, respectively. Accrued interest due under
the Credit Line totaled $756 and $0 as of October 31, 2017 and April 30, 2017, respectively.
Credit
Line 3
On
July 19, 2017 the Company’s President entered into a one year unsecured 5% Promissory Note (“Credit Line 3”)
whereby the Company may borrow up to $250,000 with interest at a rate of five (5%) percent per annum due on July 19, 2018. During
the six month period ended October 31, 2017 the Company borrowed $250,000 under Credit Line 3. Notes payable related parties includes
the amount due under Credit Line 3 with a balance outstanding of $250,000 and $0 as of October 31, 2017 and April 30, 2017, respectively.
The Company recorded interest expense in connection with Credit Line 3 in the amount of $2,027 and $0 for the six month periods
ended October 31, 2017 and 2016, respectively. Accrued interest due under the Credit Line totaled $2,027 and $0 as of October
31, 2017 and April 30, 2017, respectively.
Credit
Line 2
During
the six month period ended October 31, 2017, the Company borrowed the remaining $45,000 under the unsecured Credit Line
2. As a result of the derivatives calculation an additional discount of $7,590 was recorded in the six month period ended October
31, 2017. Notes payable related parties includes the amount due under Credit Line 2, with a balance outstanding of $250,000 and
$205,000, less the unamortized discount of $17,960 and $43,058 as of October 31, 2017 and April 30, 2017, respectively.
Amortization
of the related discounts totaled $32,688 and $0 for the six month periods ended October 31, 2017 and 2016, respectively. The Company
recorded interest expense in connection with Credit Line 2 in the amount of $5,531 and $0 for the six month periods ended October
31, 2017 and 2016, respectively. Accrued interest due under the Credit Line totaled $7,112 and $1,581 as of October 31, 2017and
April 30, 2017, respectively.
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Credit
Line 1
Notes
payable related parties includes the amount due under the unsecured Credit Line 1 with a balance outstanding of $250,000
less the unamortized discount of $0 and $14,947 as of October 31, 2017 and April 30, 2017, respectively. Amortization of the related
discount totaled $14,947 and $0 for the six month periods ended October 31, 2017 and 2016, respectively. The Company recorded
interest expense in connection with Credit Line 1 in the amount of $6,243 and $0 for the for the six month periods ended October
31, 2017 and 2016, respectively. Accrued interest due under the Credit Line totaled $11,304 and $5,061 as of October 31, 2017
and April 30, 2017, respectively.
Warrants
In
connection with Credit Line 1, the Company issued the President common stock purchase warrants. The number of warrant shares totals
2,500,000 as of October 31, 2017 and April 30, 2017. The warrants have a five year term. See Notes 12 and 13.
In
connection with Credit Line 2, the Company issued the President common stock purchase warrants. The warrants entitle the President
to purchase ten shares of common stock for each one ($1.00) dollar of total disbursements by the President to the Company, of
up to 2,500,000 shares of common stock at an exercise price of $0.05. During the six month period ended October 31, 2017 the remaining
450,000 warrants were issued in three 150,000 increments between July 5, 2017 and July13, 2017, resulting in a total
number of warrant shares of 2,500,000 and 2,050,000 as of October 31, 2017 and April 30, 2017. The warrants have a five year term.
See Notes 12 and 13.
Note
11. Note Payable to Bank of Ann Arbor
The
secured note payable had a balance outstanding of $308,418 and $450,258 as of October 31, 2017 and April 30, 2017, respectively
and the Company recorded interest expense in connection with this note payable in the amount of $11,918 and $17,970 for the six
months ended October 31, 2017 and 2016, respectively. The change in the outstanding balance is attributable to payments of $142,115
and $275 accrued interest which was rolled into principal. Accrued interest due under the note payable totaled $0 and $1,953 as
of October 31, 2017 and April 30, 2017, respectively.
Principal
payment requirements on the notes payable to Bank of Bank Arbor are as follows:
2018
|
|
$
|
12,126
|
|
2019
|
|
|
25,317
|
|
2020
|
|
|
26,838
|
|
2021
|
|
|
244,137
|
|
Thereafter
|
|
|
-
|
|
Total
|
|
$
|
308,418
|
|
Note
12. 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.
Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820,
Fair Value
Measurements and Disclosures
, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC
Topic 825,
Financial Instruments
, defines fair value, and establishes a three-level valuation hierarchy for disclosures
of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the
balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of
their fair values because of the short period of time between the origination of such instruments and their expected realization
and their current market rate of interest.
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The
three levels of valuation hierarchy are defined as follows:
Level
1 -
|
Observable
inputs such as quoted market prices in active markets.
|
|
|
Level
2 -
|
Inputs
other than 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.
|
The
Company held certain financial instruments that are measured at fair value on a recurring basis. These consisted of
convertible debt totaling $0 and $105,000 at October 31, 2017 and April 30, 2017 respectively, with a derivative liability
totaling $0 (including 13,000,000 stock warrants) and $361,742 (including 10,550,000 stock warrants) at October 31, 2017 and
April 30, 2017, respectively, which are categorized as Level 3. The related gain on change in fair value of derivatives
totaled $628,925 and $16,660 for the six month periods ended October 31, 2017 and 2016, respectively.
See
Notes 10 and 13.
Note
13 - Derivative Liabilities
During
the six month period ended October 31, 2017 the Company identified conversion features embedded within its convertible debt. See
Note 14. The Company determined that the conversion feature of the convertible notes represents an embedded derivative since the
Notes are convertible into a variable number of shares upon conversion. Accordingly, the Notes are not considered to be conventional
debt and the embedded conversion feature must be bifurcated from the debt host and accounted for as a derivative liability. Since
the convertible notes are not convertible until 180 days subsequent to the execution date (“conversion date”), only
notes which were outstanding as of the conversion date were considered for valuation. In prior periods, it was determined that
due to the conversion terms of the convertible debt along with the convertible debt reserve requirement, no common shares were
available under the authorized common share limit. As such, convertible debt beyond the conversion date along with warrants were
valued as a derivative. As of October 31, 2017, there are sufficient shares for conversion. Therefore, the derivative liability
were released.
The
fair value of the embedded derivative liabilities on the convertible notes were determined using a multinomial lattice model with
the assumptions in the table below.
The
fair value of the Company’s derivative liabilities at October 31, 2017 is as follows:
April
30, 2017 Balance
|
|
$
|
361,742
|
|
Discount
on debt
|
|
|
490,371
|
|
Reclass
from equity due to tainting
|
|
|
151,166
|
|
Reclass
to equity due to conversion
|
|
|
(374,354
|
)
|
Fair
value mark to market adjustment
|
|
|
(628,925
|
)
|
Derivative
liabilities, balance
|
|
$
|
-
|
|
The
fair values at the commitment dates and remeasurement dates for the convertible debt and warrants treated as derivative liabilities
are based upon the following estimates and assumptions made by management for the six months ended October 31, 2017:
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
●
|
The
stock prices ranged from
$0.0175
to
$0.0100
(10/31/17) in this periods would fluctuate with the Company projected
volatility;
|
|
|
|
|
●
|
An
event of default for the Convertible Note would occur
0%
of the time, increasing
0%
per month to a maximum of
0%;
|
|
|
|
|
●
|
Alternative
financing for the Convertible Notes would be initially available to redeem the note
0%
of the time and increase monthly
by
1%
to a maximum of
10%;
|
|
|
|
|
●
|
The
Holder would automatically convert (limited by trading volume and ownership limits of 4.99% to 9.99%) the note starting after
180 days
if the Company was not in default.
|
|
|
|
|
●
|
The
projected annual volatility for each valuation period was based on the historical volatility of the Company and the remaining
term of the instrument and ranged from
267%
and
62.1%
to
130.6%
.
|
|
|
|
|
●
|
Default
at maturity would occur100% of the time for the Hoppel Notes and they would convert at a percentage of market.
|
|
|
|
|
●
|
The
risk-free rates were based on the remaining term of the instrument and ranged from
0.08%
to
1.27%.
|
|
|
|
|
●
|
The
926,000 Inducement Shares issued if the stock falls below $0.0125 were not valued as they were part of the Settlement Agreement.
See Note 14.
|
Note
14. Financing Agreement and Convertible Debentures
Vista
Capital Investments LLC Convertible Note
On
May 3, 2017, the Company issued an unsecured 8% Fixed Rate Convertible Debenture in the principal amount of $110,000, with
an Original Issue Discount of $10,000, to Vista Capital Investments LLC (“Vista Capital Convertible Note”). This convertible
note is due and payable on November 29, 2017, plus interest on the unpaid principal balance at a rate of 8% per annum. The Holder
shall have the right, in its sole and absolute discretion, as of the date which is one hundred and eighty days following the Closing
Date (May 3, 2017), to convert all or any part of the outstanding amount due under this Note into fully paid and nonassessable
shares of Common Stock. The conversion price shall equal $.035.
The
Company may prepay the amounts outstanding to the holder at any time up to the 180th day (the “Prepayment Date”) following
the issue date of this note by making a payment to the note holder of an amount in cash equal i) if the redemption is prior to
the 90th day this Note is in effect (including the 90th day), then for an amount equal to 105% of the unpaid principal amount
of this Note along with any interest that has accrued during that period; (ii) if the redemption is on the 91st day this
Note is in effect, up to and including the 120th day this Note is in effect, then for an amount equal to 110% of the unpaid principal
amount of this Note along with any accrued interest; (iii) if the redemption is on the 121st day this Note is in effect,
up to and including the 150th day this Note is in effect, then for an amount equal to 115% of the unpaid principal amount of this
Note along with any accrued interest, (iv) if the redemption is on the 151st day this Note is in effect, up to and including the
151th day this Note is in effect, then for an amount equal to 120% of the unpaid principal amount of this Note along with any
accrued interest.
During
the six month periods ended October 31, 2017 and 2016, respectively the Company recognized interest expense in the amount of
$8,619 and $0 relating to the amortization of the original issue discount. The unamortized balance of original issue discount
totaled $1,381 and $0 at October 31, 2017 and April 30, 2017, respectively. As a result of the derivatives calculation an
additional discount of $33,722 relating to warrants granted, was recorded in the six month period ended October 31, 2017.
During the six month periods ended October 31, 2017 and 2016 the Company recognized interest expense in the amount of $33,722
and $0 relating to the derivatives discount. The unamortized balance of the derivatives discount totaled $0 and $0 at October
31, 2017 and April 30, 2017, respectively.
The
Company recorded interest expense in connection with the Vista Capital Convertible Note in the amount of $7,602 and $0, six month
periods ended October 31, 2017 and 2016, respectively. Accrued interest due under the Vista Capital Convertible Note totaled $7,602
and $0 as of October 31, 2017 and April 30, 2017, respectively.
In
connection with Vista Capital Convertible Note 1, the Company granted Vista Capital Investments LLC 2,000,000 Warrant Shares of
the Company’s common stock, par value $0.0001 per share. The warrant entitles the holder to purchase up to 2,000,000 shares
of common stock at an exercise price of $0.05. The warrant expires on May 3, 2022. See Notes 12 and 13
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JSJ
Investments Inc.
On
May 10, 2017, the Company issued an unsecured convertible promissory note in the principal amount of $113,000 to JSJ Investments
Inc. (“JSJ Convertible Note”). This convertible note is due and payable on February 10, 2018 plus interest on the
unpaid principal balance at a rate of 12% per annum. The Holder shall have the right, in its sole and absolute discretion, as
of the date which is one hundred and eighty days following the Closing Date (On May 10, 2017), to convert all or any part of the
outstanding amount due under this Note into fully paid and nonassessable shares of Common Stock. The conversion price shall equal
52% discount to the lowest trading price during the previous fifteen trading days to the date of Conversion Notice.
The
Company may pay JSJ Convertible Note in full, together with any and all accrued and unpaid interest, plus any
applicable prepayment premium at any time on or prior to the date which occurs 180 days after the May 10, 2017 (the
“Prepayment Date”). In the event the Note is not prepaid in full on or before the Prepayment Date, it shall be
deemed a “Pre-Payment Default” hereunder. Until the Ninetieth (90th) day after the Issuance Date (May 10, 2017)
the Company may pay the principal at a cash redemption premium of 120%, in addition to outstanding interest, without the
Holder’s consent; from the 91st day to the Prepayment Date, the Company may pay the principal at a cash redemption
premium of 125%, in addition to outstanding interest, without the Holder’s consent. After the Prepayment Date up to the
Maturity Date this Note shall have a cash redemption premium of 135% of the then outstanding principal amount of the Note,
plus accrued interest and Default Interest, if any, which may only be paid by the Company upon Holder’s prior
written consent. At any time on or after the Maturity Date, the Company may repay the then outstanding principal plus
accrued interest and Default Interest (as defined in the JSJ Convertible Note).
In
connection with the JSJ Convertible Note the Company paid $7,000 in debt issuance costs which are being amortized to interest
expense using the effective interest method. During the six month periods ended October 31, 2017 and 2016, the Company recognized
interest expense in the amount of $4,413 and $0, respectively, relating to the amortization of the debt issuance costs. The unamortized
balance of debt issuance costs totaled $2,587 and $0 at October 31, 2017 and April 30, 2017, respectively. The Company recorded
interest expense in connection with the JSJ Convertible Note in the amount of $6,612 and $0 for the six month periods ended October
31, 2017 and 2016, respectively. Accrued interest due under JSJ Convertible Note totaled $6,612 and $0 as of October 31, 2017
and April 30, 2017, respectively.
Power
Up Lending Group Ltd - Convertible Note #1 & #2
On
May 15, 2017, the Company issued a second unsecured convertible promissory note in the amount of principal amount of $46,500
to Power Up Lending Group Ltd (“Power Up Convertible Note # 2”). This convertible note is due and payable on February
15, 2018 plus interest on the unpaid principal balance at a rate of 12% per annum.
The
Holder shall have the right from time to time, at any time during the period beginning on the date which is one hundred eighty
(180) days following the date of the Note, to convert all or any part of the outstanding and unpaid principal amount of this Note
into fully paid and nonassessable shares of Common Stock. The conversion price shall equal 58% multiplied by the average of the
lowest two (2) Trading Prices for the Common Stock during the fifteen (15) Trading Day period ending on the latest complete Trading
Day prior to the Conversion Date.
The
Company may prepay the amounts outstanding to the holder at any time up to the 180th day (the “Prepayment Date”) following
the issue date of this note by making a payment to the note holder of an amount in cash equal to 120% (for the first 150 days)
and to 125% (between 151 -180 days). After 180 days from the Effective Date this Note may not be prepaid.
In
connection with the Power Up unsecured Convertible Note 2 paid $1,500 in debt issuance costs which are being amortized
to interest expense using the effective interest method. During the six month periods ended October 31, 2017 and 2016, the Company
recognized interest expense in the amount of $918 and $0, respectively, relating to the amortization of the debt issuance costs.
The unamortized balance of debt issuance costs totaled $582 and $0 at October 31, 2017 and April 30, 2017, respectively. The Company
recorded interest expense in connection with the Power Up Convertible Note # 2 in the amount of $2,704 and $0 for six month periods
ended October 31, 2017 and 2016, respectively. Accrued interest due under Power Up Convertible Note #2 totaled $2,704 and $0 as
of October 31, 2017 and April 30, 2017, respectively.
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In
connection with the Power Up unsecured Convertible Note #1 (dated February 21, 2017) the Company paid $3,500 in debt issuance
costs which are being amortized to interest expense using the effective interest method. During the six month periods ended October
31, 2017 and 2016, the Company recognized interest expense in the amount of amount of $2,655 and $0 relating to the amortization
of the debt issuance costs, respectively. The unamortized balance of debt issuance costs totaled $0 and $2,655 at October 31 2017
and April 30, 2017.
As
a result of the derivatives calculation an additional discount of $102,956 was recorded in the six month period ended October
31, 2017. The unamortized balance of the discount totaled $0 at October 31, 2017 and April 30, 2017.
The
total balance due was $122,135 comprised of principal of $103,500, interest of $6,370 and prepayment premium of $12,265. During
the six month period ended October 31, 2017 the Company repaid $61,989 of the amount due under Power Up Convertible Note 1 in
cash and the remaining balance of $60,146 was converted to 8,534,554 shares of the Company’s Common Stock at fair value
as follows:
Conversion
Date
|
|
Number
of Shares
of Common Stock
|
|
|
Principal
and
Amount
Converted
|
|
|
Price
per share
|
|
August
24, 2017
|
|
|
2,386,634
|
|
|
$
|
20,000
|
|
|
$
|
0.00838
|
|
August 29,
2017
|
|
|
2,898,551
|
|
|
|
20,000
|
|
|
$
|
0.00690
|
|
August
31, 2017
|
|
|
3,249,369
|
|
|
|
20,146
|
|
|
$
|
0.00620
|
|
Totals
- Six Months Ended October 31, 2017
|
|
|
8,534,554
|
|
|
$
|
60,146
|
|
|
|
|
|
See
Note 15.
In
connection with the prepayment of the debt, during the six month period ended October 31, 2017 the Company recognized $12,265
in prepayment penalties which recorded as interest expense.
The
balance of the convertible note was $0 and $103,500 at October 31, 2017 and April 30, 2017, respectively.
The
Company recorded interest expense in connection with the Power Up Convertible Note 1 in the amount of $3,990 and $0 for the six
month periods ended October 31, 2017 and 2016, respectively. Accrued interest due under the Power Up Convertible Note totaled
$0 and $2,380 as of October 31, 2017 and April 30, 2017, respectively.
Hoppel
Convertible Note #2
On
July 17, 2017 the Company entered into a Settlement Agreement with Mr. Luca Hoppel to settle all claims between them with respect
to the unsecured Hoppel Convertible Note 2. The terms of the Settlement Agreement are as follows: In exchange for Mr. Hoppel’s
settlement and release of the Settled Claims, the Company was required to make three equal cash payments of $44,940. The first
cash payment was due on or before August 1st, 2017. The second cash payment was due on or before August 10th 2017 and the third
and final cash payment was due on or before August 20th, 2017. Upon the issuance of 926,000 shares and payment of $134,820, the
Note would be considered fully repaid.
On
July 17, 2017 the Company issued 926,000 shares of Common Stock at an issuance price of $0.0192 per Common Share, to Lucas Hopple
under the terms of the Settlement Agreement for a total fair value of $17,779. See Note 15. The total balance of the note was
$130,832 comprised of the principal of $105,000, interest of $7,350, penalty of $5,000 and prepayment premium of $13,482. During
the six month period ended October 31, 2017 the Company made the first two cash payments of $89,880 due under the Settlement Agreement.
The Company recorded a total loss of $44,659 as a loss on the settlement of liabilities relating to this transaction, including
$17,779 for the fair value of the 926,000 shares of common stock and $26,880 for increase of the principal balance.
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The
remaining balance of the note was satisfied through conversion of debt into common stock as follows
Conversion
Date
|
|
Number
of Shares
of Common Stock
|
|
|
Principal
and
Amount
Converted
|
|
|
Price
per share
|
|
August
25, 2017
|
|
|
1,500,000
|
|
|
|
13,650
|
|
|
$
|
0.00910
|
|
August 29,
2017
|
|
|
3,000,000
|
|
|
|
15,750
|
|
|
$
|
0.00525
|
|
August
31, 2017
|
|
|
2,200,381
|
|
|
|
11,552
|
|
|
$
|
0.00525
|
|
Totals
- Six Months Ended October 31, 2017
|
|
|
6,700,381
|
|
|
$
|
40,952
|
|
|
|
|
|
The
outstanding Note balance totaled $0 and $57,739, net of the unamortized discount of $0 and $47,261 at October 31, 2017 and April
30, 2017, respectively. Amortization of the related discounts totaled $47,261 and $0 for six month periods ended October 31, 2017
and 2016, respectively.
Accrued
interest due totaled $0 and $7,350 at October 31, 2017 and April 30, 2017 respectively.
A
total of $105,000 debt discount was recorded on Hoppel Convertible Note 2 including original issuance discount of $5,000, stock
issuance discount of $12,408 and derivative discount of $87,592. See Notes 12 and 13.
The
Company recorded interest expense in connection with the Hoppel convertible note of $2,940 and 0 for the quarters ended July 31,
2017 and 2016, respectively.
EMA
Financial, LLC Convertible Note
On
April 3, 2017, the Company issued an unsecured convertible promissory note in the principal amount of $113,000 to EMA Financial,
LLC (“EMA Convertible Note”), including debt issuance costs of $6,800. This convertible note is due and payable on
April 3, 2018 plus interest on the unpaid principal balance at a rate of 10% per annum.
During
the six month periods ended October 31, 2017 and 2016 the Company recognized interest expense in the amount of amount of $6,278
and $0 relating to the amortization of the original issuance discount in connection with the EMA Convertible Note. The unamortized
balance of original issuance totaled $0 and $6,278 at October 31, 2017 and April 30, 2017, respectively. The Company recorded
interest expense in connection with the EMA Convertible Note in the amount of $5,301 and $0 for the six month periods ended October
31, 2017 and 2016, respectively. Accrued interest due under the EMA Convertible Note totaled $0 and $868 as of October 31, 2017
and April 30, 2017, respectively.
On
October 19, 2017 the Company paid the EMA Convertible Note in full in the amount of $113,000 plus accrued interest in the amount
of $6,200, resulting in prepayment penalties of $29,792 which the Company recorded as interest expense. As a result of the derivative
calculation an additional discount of $113,000 was recorded in the six month period ended October 31, 2017. The unamortized balance
of the discount totaled $0 at October 31, 2017 and April 30, 2017.
The
principal balance of the EMA Convertible Note was $0 and $113,000 at October 31, 2017 and April 30, 2017, respectively.
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Bellridge
Capital, LP
On March 15, 2017, the Company issued an
unsecured convertible promissory note in the amount of principal amount of $105,000 to Bellridge Capital, LP (“Bellridge
Convertible Note”) including an OID of $5,000 This convertible note is due and payable on March 15, 2018 plus interest on
the unpaid principal balance at a rate of 10% per annum.
During
the six month periods ended October 31, 2017 and 2016 the Company recognized interest expense in the amount of amount of
$4,356 and $0 relating to the amortization of the original issuance discount in connection with the Bellridge Convertible
Note. The unamortized balance of original issuance totaled $0and $4,356 at October 31, 2017 and April 30, 2017, respectively.
The Company recorded interest expense in connection with the Bellridge Convertible Note in the amount of $4,196 and $0 for
the six month periods ended October 31, 2017 and 2016, respectively. Accrued interest due under the Bellridge Convertible
Note totaled $0 and $1,334 as of October 31, 2017 and April 30, 2017, respectively.
On
September 21, 2017, the Company paid the Bellridge Convertible Note, in full, in the amount of $105,000 plus accrued interest
in the amount of $5,510, prepayment premium of $27,628 which the Company recorded as interest expense. During the six month periods
ended October 31, 2017 and 2016, the Company recognized interest expense in the amount of amount of $5,894 and $0, respectively
in connection with a derivatives loss.
The
principal balance of the Bellridge Convertible Note was $0 and $105,000 at October 31, 2017 and April 30, 2017, respectively.
As a result of the derivative calculation an additional discount of $102,854 was recorded in the six month period ended October
31, 2017. The unamortized balance of the discount totaled $0 at October 31, 2017 and April 30, 2017.
Silo
Equity Partners Venture Fund LLC Convertible Note
On
March 22, 2017, the Company issued an unsecured convertible promissory note in the amount of principal amount of $100,000
to Silo Equity Partners Venture Fund LLC (“Silo Convertible Note”). This convertible note is due and payable on September
22, 2017 plus interest on the unpaid principal balance at a rate of 8% per annum.
The
Company recorded interest expense in connection with the Silo Convertible Note in the amount of $ 3,454 and $0 for the six month
periods ended October 31, 2017 and 2016, respectively. Accrued interest due under the Silo Convertible Note totaled $0 and $858
as of October 31, 2017 and April 30, 2017, respectively.
On
October 6, 2017, the Company paid the Silo Convertible Note in full in the amount of $100,000 plus accrued interest in the amount
of $4,341, prepayment premium of $26,056 which the Company recorded as interest expense. As a result of the derivative calculation
an additional discount of $100,000 was recorded in the six month period ended October 31, 2017. The unamortized balance of the
discount totaled $0 at October 31, 2017 and April 30, 2017.
The
principal balance of the Silo Convertible Note was $0 and $100,000 at October 31, 2017 and April 30, 2017, respectively.
Tangiers
Global, LLC Convertible Note
On
March 21, 2017, the Company issued an unsecured convertible promissory note in the amount of principal amount of $105,000
to Tangiers Global, LLC (“Tangiers Convertible Note”) including an Original Issue Discount (“OID”) of
$5,000. This convertible note is due and payable on September 21, 2018 plus interest on the unpaid principal balance at a rate
of 7% per annum.
During
the six month periods ended October 31, 2017 and 2016 the Company recognized interest expense in the amount of amount of
$4,625 and $0 relating to the amortization of the original issuance discount in connection with the Tangiers Convertible
Note. The unamortized balance of original issuance totaled $0 and $4,634 at October 31, 2017 and April 30, 2017,
respectively. The Company recorded interest expense in connection with the Tangiers Convertible Note in the amount of $3,468
and $0 for the six month periods ended October 31, 2017 and 2016, respectively. Accrued interest due under the Tangiers
Convertible Note totaled $0 and $827 as of October 31, 2017 and April 30, 2017, respectively. As a result of the derivative
calculation an additional discount of $30,249 was recorded in the six month period ended October 31, 2017. The unamortized
balance of the discount totaled $0 at October 31, 2017 and April 30, 2017.
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On
October 19, 2017 the Company paid the Tangiers Convertible Note in full in the amount of $105,000 plus accrued interest in the
amount of $7,350, prepayment premium of $28,088 which the Company recorded as interest expense.
The
principal balance of the Tangiers Convertible Note was $0 and $105,000 at October 31, 2017 and April 30, 2017, respectively.
Tangiers
Global, LLC Convertible Note 2
On
October 17, 2017, the Company issued an unsecured convertible promissory note in the amount of principal amount of $306,804
to Tangiers Global, LLC (“Tangiers Convertible Note 2”) including an Original Issue Discount (“OID”) of
$17,366. This convertible note is due and payable on July 13, 2018, plus interest on the unpaid principal balance at a rate of
12% per annum. Guaranteed interest totals $36,820.
The
Company may pay Tangiers Convertible Note 2 in full, together with any and all accrued and unpaid interest, at any time on or
prior to the date which occurs 180 days after the October 17, 2017 (the “Funding Date”). Under the Ninetieth (90th)
day after the Funding Date the Company may pay the principal at a cash redemption premium of 115%, in addition to outstanding
interest, without the Holder’s consent; from the 90th day to the 150th day, the Company may pay the principal at a
cash redemption premium of 120%, in addition to outstanding interest, without the Holder’s consent and from the 151st day
to the 180th day, the Company may pay the principal at a cash redemption premium of 125%, in addition to outstanding interest,
without the Holder’s consent.
The
Holder shall have the right from time to time, at any time during the period beginning on the date which is one hundred eighty
(180) days following the date of the Tangiers Convertible Note 2 to convert all or any part of the outstanding and unpaid principal
amount of this Note into fully paid and non-assessable shares of Common Stock. The conversion price shall equal 55% multiplied
by the lowest Trading Price for the Common Stock during the fifteen (15) Trading Days prior to the date on which the holder elects
to convert all or part of the Tangiers Convertible Note 2.
During
the six month periods ended October 31, 2017 and 2016 the Company recognized interest expense in the amount of amount of
$904 and $0 relating to the amortization of the original issuance discount in connection with the Tangiers Convertible Note.
The unamortized balance of original issuance totaled $16,462 and $0 at October 31, 2017 and April 30, 2017, respectively. The
Company recorded interest expense in connection with the Tangiers Convertible Note in the amount of $1,917 and $0 for the six
month periods ended October 31, 2017 and 2016, respectively. Accrued interest due under the Tangiers Convertible Note totaled
$1,917 and $0 as of October 31, 2017 and April 30, 2017, respectively.
The
principal balance of the convertible promissory note was $306,804 and $0 at October 31, 2017 and April 30, 2017, respectively.
Power
Up Lending Group Ltd - Convertible Note #3
On
August 25, 2017, the Company issued a third unsecured convertible promissory note in the principal amount of $78,000 to
Power Up Lending Group Ltd (“Power Up Convertible Note #3”), including debt issuance costs of $3,000. This convertible
note is due and payable on May 30, 2018 plus interest on the unpaid principal balance at a rate of 12% per annum.
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The
Company may pay Power Up Convertible Note #3 in full, together with any and all accrued and unpaid interest, at any time on or
prior to the date which occurs 180 days after the August 25, 2017 (the “Issue Date”). From Issue Date through One
hundred and fifty days (150th) day after the Issue Date the Company may pay the principal at a cash redemption premium of 125%,
in addition to outstanding interest, without the Holder’s consent and from the 151st day to the 180th day, the Company may
pay the principal at a cash redemption premium of 130%, in addition to outstanding interest, without the Holder’s consent.
The
Holder shall have the right from time to time, at any time during the period beginning on the date which is one hundred eighty
(180) days following the date of the Note, to convert all or any part of the outstanding and unpaid principal amount of this Note
into fully paid and non-assessable shares of Common Stock. The conversion price shall equal 58% multiplied by the average of the
lowest two (2) Trading Prices for the Common Stock during the fifteen (15) Trading Day period ending on the latest complete Trading
Day prior to the Conversion Date.
In
connection with the Power Up Convertible Note #3 paid $3,000 in debt issuance costs which are being amortized to interest expense
using the effective interest method. During the six month periods ended October 31, 2017 and 2016, the Company recognized interest
expense in the amount of $723 and $0, respectively, relating to the amortization of the debt issuance costs. The unamortized balance
of debt issuance costs totaled $2,277 and $0 at October 31, 2017 and April 30, 2017, respectively. The Company recorded interest
expense in connection with the Power Up Convertible Note #3 in the amount of $1,742 and $0 for six month periods ended October
31, 2017 and 2016, respectively. Accrued interest due under Power Up Convertible Note #3 totaled $1,742 and $0 as of October 31,
2017 and April 30, 2017, respectively.
The
principal balance of the Power Up Convertible Note #3 was $78,000 and $0 at October 31, 2017 and April 30, 2017, respectively.
Note
15. Common Stock
On
July 17, 2017 the Company issued 926,000 shares of Common Stock in connection with the Hoppel Convertible Note 2 Settlement Agreement.
During
the six month period ended October 31, 2017 the Company issued an additional 15,234,935 shares of Common Stock to settle conversions
of $101,098 of the principal amounts of convertible debentures. See Note 14.
On
October 24, 2017 the Company issued 6,818,182 shares of Common Stock at a purchase price of $.011 to an outside investor for cash
in the amount of $75,000.
Note
16. Series A Convertible Preferred Stock
As
of October 31 2017 and April 30, 2017, 967,031 shares of Series A Preferred Stock were issued and outstanding. There was no activity
relating to the Company’s Shares of Series A Preferred Stock during the six month period ended October 31, 2017.
Note
17. Series B Convertible Redeemable Preferred Stock
As
of October 31 2017 and April 30, 2017, 8,534,625 shares of Series B Preferred Stock were issued and outstanding.
During
the six month period ended October 31, 2017, the Company paid no cash dividends Series B and accrued an additional dividend payable
of $47,796. Dividend payable totaled $61,563 and $13,767 as of October 31, 2017 and April 30, 2017, respectively.
As
of October 31, 2017, there have been no conversion of the Preferred Stock into Common Stock.
Note
18. Employee Stock Option Plan
Restricted
Stock Units
PROGREEN
US, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the six month period ended October 31, 2017 compensation expense relating to RSUs was recorded as follows:
|
|
October
31, 2017
|
|
Number
of restricted stock units issued on June 1, 2014
|
|
|
600,000
|
|
Stock
price on grant date
|
|
$
|
0.02
|
|
Vesting
Period
|
|
|
3
years
|
|
Estimated
fair value at issuance
|
|
$
|
12,000
|
|
|
|
|
|
|
May
1, 2017 through October 31, 2017 Compensation Expense
|
|
$
|
1,000
|
|
|
|
|
|
|
Total
compensation expense
|
|
$
|
1,000
|
|
Note
19. Warrants
For
the six month period ended October 31, 2017, 2,450,000 warrants were issued, and none were exercised or forfeited. See Note
11 and Note 14. The Company’s outstanding and exercisable warrants as of October 31, 2017 are presented below:
|
|
Number
Outstanding
|
|
|
Weighted
Average Exercise Price
|
|
|
Contractual
Life in Years
|
|
|
Intrinsic
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
outstanding as of April 30, 2017
|
|
|
13,550,000
|
|
|
$
|
0.03
|
|
|
|
4.53
|
|
|
|
-
|
|
Warrants exercisable
as of April 30, 2017
|
|
|
11,550,000
|
|
|
$
|
0.03
|
|
|
|
4.49
|
|
|
$
|
16,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
Granted
|
|
|
2,450,000
|
|
|
|
0.05
|
|
|
|
|
|
|
|
-
|
|
Warrants
Forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Warrants
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants Outstanding
as of October 31, 2017
|
|
|
16,000,000
|
|
|
$
|
0.03
|
|
|
|
4.11
|
|
|
|
-
|
|
Warrants exercisable
as of October 31, 2017
|
|
|
14,000,000
|
|
|
$
|
0.04
|
|
|
|
4.08
|
|
|
$
|
-
|
|
Note
20. Subsequent Events
On
November 7, 2017, the Company paid the balance in cash of the convertible promissory note in the principal amount of $46,500 to
Power Up Lending Group, LTD. The total balance of the note was $61,488 comprised of principal of $46,500, interest of $2,816 and
prepayment premium of $12,172.
On
November 10, 2017, the Company issued a 12% Convertible Promissory Note, in the principal amount of $51,500 to Power Up Lending
Group Ltd. The Note is due August 15, 2018. The Holder has the right from time to time, at any time during the period beginning
on the date which is 180 days following the date of the Note, to convert all or any part of the outstanding and unpaid principal
amount of this Note into fully paid and nonassessable shares of Common Stock. The conversion price is 58% of the lowest two trading
prices for the common stock during the fifteen trading day period ending on the latest complete trading day prior to the conversion
date.
On
November 13, 2017, the Company paid the balance in cash of the convertible promissory note in the principal amount of $113,000
to JSJ Investments Inc. The total balance of the note was $148,086 comprised of principal of $113,000, interest of $6,992 and
prepayment premium of $28,094.
On
November 24, 2017, the Company issued a 12% Convertible Promissory Note, in the principal amount of $65,000 to BlueHawk Capital,
LLC. The Note is due August 20, 2018. The Holder has the right from time to time, at any time during the period beginning on the
date which is 180 days following the date of the Note, to convert all or any part of the outstanding and unpaid principal amount
of this Note into fully paid and nonassessable shares of Common Stock. The conversion price is 55% of the lowest trading price
for the common stock during the twenty trading day period ending on the latest complete trading day prior to the conversion date.
On
November 29, 2017, the Company issued a 12% Convertible Promissory Note, in the principal amount of $110,875 to Auctus
Fund, LLC. The Note is due August 29, 2018. The Holder has the right from time to time, at any time during the period beginning
on the date which is 180 days following the date of the Note, to convert all or any part of the outstanding and unpaid principal
amount of this Note into fully paid and nonassessable shares of Common Stock. The conversion price shall equal the lesser of (i)
the lowest trading price during the previous twenty-five trading day period ending on the latest complete trading day prior to
the date of the note and (ii) 55% of the lowest trading price for the common stock during the twenty-five trading day period ending
on the latest complete trading day prior to the conversion date.
On
December 8, 2017, the Company closed the sale of the Lahser property. The total sale price was $34,000.
On December 12, 2017, the Company closed the sale of 27971 Rollcrest Road, Unit 13. The total sales price
was $75,000.