Progreen US, Inc. - FORM 10-Q

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EX-32 - Progreen US, Inc.	v215007_ex32.htm
EX-31 - Progreen US, Inc.	v215007_ex31.htm

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, 2011

¨ 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 ¨

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 ¨ No ¨

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 ¨		Accelerated filer ¨

Non-accelerated filer ¨		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).

¨ Yes x No

The number of shares outstanding the issuer's common stock, par value $.0001 per share, was 103,929,703 as of March 11, 2011.

PROGREEN PROPERTIES, INC.

INDEX

		Page
Part I. Financial Information

Item 1. Financial Statements		1

Condensed Consolidated Balance Sheets as of January 31, 2011 (unaudited) and as of April 30, 2010		2

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended January 31, 2011 and 2010 (unaudited)		3

Condensed Consolidated Statements of Stockholders’ Equity (unaudited)		4

Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended January 31, 2011 and 2010 (unaudited)		5

Notes to Unaudited Condensed Consolidated Financial Statements		6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.		12

Item 4T.Controls and Procedures.		15

Part II. Other Information		15

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		15

Item 6. Exhibits.		16

Signatures		16

ProGreen Properties, Inc.

(formerly Diversified Product Inspections, 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, 2010.

The results of operations for the three and nine months ended January 31, 2011 and 2010 are not necessarily indicative of the results for the entire fiscal year or for any other period.

ProGreen Properties, Inc.

(formerly Diversified Product Inspections, Inc.)

Condensed Consolidated Balance Sheets

	January 31, 2011			April 30,2010
	(Unaudited)
ASSETS
Rental property, net accumulated depreciation of $4,016 and $1,617	$	190,977		$	98,512
Properties under development		379,824			104,508
Cash		198,352			216,669
Commissions receivable		-			1,375
Note receivable		76,288
Prepaid expenses		26,997			7,673
Deposits		6,000			48,350
Amount due from related party subscriber under subscription receivable		-			807,310
Property and equipment:
Equipment, furniture and fixtures, net of accumulated depreciation of $621 and $48		4,980			5,299
Total assets	$	883,418		$	1,289,696
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses	$	48,055		$	88,974
Accrued interest		16,089			32,548
Deferred revenue		-			3,000
Tenant deposits		6,000			2,850
Convertible debenture payable to related party (net of unamortized
discount of $54,698 and $86,706)		445,302			413,294
Total liabilities		515,446			540,666
Stockholders' equity
Preferred stock, $.0001 par value, 10,000,000 shares authorized,
no shares issued and outstanding		-			-
Common stock, $.0001 par value, 250,000,000 authorized and
103,929,703 outstanding at January 31, 2011; 250,000,000 shares
authorized and 24,898,677 outstanding at April 30, 2010		10,393			2,490
Common stock, $.0001 par value, 9,775,709 and 86,999,002
subscribed not issued		978			8,700
Additional paid-in capital		2,983,066			2,856,944
Less: amount due from related party subscriber under subscription
agreement		(107,361	)		(100,000	)
Accumulated deficit		(2,519,104	)		(2,019,104	)
Total stockholders' equity		367,972			749,030
Total liabilities and stockholders' equity	$	883,418		$	1,289,696

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

ProGreen Properties, Inc.

(formerly Diversified Product Inspections, Inc.)

Condensed Consolidated Statements of Operations (Unaudited)

	Three months ended						Nine months ended
	January 31						January 31
	2011			2010			2011			2010
Revenues:
Condominium sale	$	-		$	-		$	85,000		$	-
Rental Revenue		8,255			1,800			20,276			2,910
Commissions Revenue		-			-			6,255			-
Total Revenue		8,255			1,800			111,531			2,910
Expenses:
Cost of condominium sale		(6,798	)		-			72,335			-
Rental property operating costs		7,384			1,484			24,490			4,123
Professional fees		34,500			42,998			154,378			95,838
General & administrative		105,696			7,155			277,174			15,347
Depreciation		998			412			2,972			842
Total operating expenses		141,780			52,049			531,349			116,150

Operating Loss		(133,525	)		(50,249	)		(419,818	)		(113,240	)
Other expenses and income:
Interest expense		(29,048	)		(27,030	)		(83,049	)		(27,030	)
Interest income		1,719			-			2,867			-
Loss before income taxes		(160,854	)		(77,279	)		(500,000	)		(140,270	)

Deferred income tax expense		-			-			-			-

Net loss	$	(160,854	)	$	(77,279	)	$	(500,000	)	$	(140,270	)

Basic and diluted loss per share	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Weighted Average Shares Outstanding		103,611,220			24,871,503			90,738,866			20,633,113

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

ProGreen Properties, Inc.

(formerly Diversified Product Inspections, Inc.)

Condensed Consolidated Statements of Stockholders' Equity

(UNAUDITED)

	Number of									Amount
	Shares				Common			Additional		Due Under						Net
	Issued and		Common		Stock			Paid In		Subscription			Accumulated			Stockholders'
	Outstanding		Stock		Subscribed			Capital		Agreement			Deficit			Equity
Balance at April 30, 2009		13,645,990	$	1,365	$	-		$	1,744,459	$	-		$	(1,745,824	)	$	-
Stock issued under subscription agreement		10,752,687		1,075		-			108,925		-			-			110,000
Stock issued in connection with debenture agreement		500,000		50		-			29,950		-			-			30,000
Stock available under debenture conversion option		-		-		-			75,000		-			-			75,000
Stock due under subscription agreement		-		-		8,700			898,610		-			-			907,310
Amount due from subscriber under subscription agreement		-		-		-			-		(100,000	)		-			(100,000	)

Net loss		-		-		-			-		-			(273,280	)		(273,280	)

Balance at April 30, 2010		24,898,677	$	2,490	$	8,700		$	2,856,944	$	(100,000	)	$	(2,019,104	)	$	749,030

Stock issued under subscription agreement		77,223,851		7,722		(7,722	)		1,442		-			-			1,442
Stock issued under City Vac agreement		1,000,000		100		-			49,900								50,000
Stock issued for debenture interest		807,175		81		-			67,419								67,500
Amount due from subscriber under subscription agreement		-		-		-			7,361		(7,361	)		-			-
Net loss		-		-		-			-		-			(500,000	)		(500,000	)

Balance at January 31, 2011		103,929,703	$	10,393	$	978		$	2,983,066	$	(107,361	)	$	(2,519,104	)	$	367,972

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

ProGreen Properties, Inc.

(formerly Diversified Product Inspections, Inc.)

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Nine months ended January 31
	2011			2010
Operating activities
Net loss	$	(500,000	)	$	(140,270	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,972			842
Amortization of discounts on debentures to related party		32,008			10,941
Investor relations expense		30,000			-
Changes in operating assets and liabilities:
Commission receivable		1,375			-
Note receivable		212			-
Prepaid expenses		676			(1,207	)
Deposits		42,350			(9,000	)
Accounts payable and accrued expenses		10,272			43,452
Net cash used in operating activities		(380,135	)		(95,242	)

Investing activities
Acquisition and development of properties		(446,680	)		(49,500	)
Purchase of furniture and equipment		(254	)		-
Cash used in investing activities		(446,934	)		(49,500	)

Financing activities
Proceeds from common stock through subscription agreement		808,752			110,000
Proceeds from debenture issued		-			500,000
Net cash provided by financing activities		808,752			610,000

Net change in cash		(18,317	)		465,258

Cash at beginning of period		216,669			-
Cash at end of period	$	198,352		$	465,258
Supplemental information:
Non-cash transaction: Issuance of stock as commitment fee	$	-		$	30,000
Non-cash transaction: Issuance of stock in payment of debenture interest	$	67,500		$	-
Non-cash transaction: Issuance of stock in payment of investor relations services	$	50,000		$	-
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

ProGreen Properties, Inc.

(formerly Diversified Product Inspections, Inc.)

Notes to Unaudited Condensed Consolidated Financial Statements

January 31, 2011

Note 1. Financial statement presentation

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. (formerly Diversified Products Inspections, 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 will facilitate the acquisition of real properties. All assets, liabilities, revenues and expenses are included in the financial statements of the Company.

In addition to ProGreen Realty, the Company has established separate LLC’s for each of the ten properties owned. The Company is the sole member of the LLC.

SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

The 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.

Estimates

The preparation of financial statements in conformity with the accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.

Property and real estate costs

Property and real estate costs are recorded at cost from expenditures relating to the acquisition, development, construction, and other costs that enhance the value or extend the life of rental properties are capitalized. All other expenditures necessary to maintain the properties are expensed as incurred.

ProGreen Properties, Inc.

(formerly Diversified Product Inspections, Inc.)

Notes to Unaudited Condensed Consolidated Financial Statements

January 31, 2011

Depreciation is computed using the straight-line method over the estimated useful life of the property, as follows:

	Lives	Method
Condominium	27.5 years	Straight line
Furniture	10 years	Straight line
Equipment	5 years	Straight line

Revenue recognition

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

Advertising costs

Advertising costs are expensed as incurred and are included in general and administrative expenses. Total advertising expenditures for the nine months ended January 31, 2011 and 2010 were approximately $77,447 and $0, 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.

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.

Fair Value Measurements

The Company did not have any assets or liabilities measured on a recurring or nonrecurring basis.

Reclassifications

Certain amounts in previous periods have been reclassified to conform to 2011 classifications.

ProGreen Properties, Inc.

(formerly Diversified Product Inspections, Inc.)

Notes to Unaudited Condensed Consolidated Financial Statements

January 31, 2011

Note 2. Real Estate Properties

The Company owns ten condominiums at January 31, 2011 as follows:

Condominiums - rental properties	$	194,993
Less accumulated depreciation		4,016
	$	190,977
Condominiums under development	$	379,824

Note 3. Residential Leases

The Company has entered into leases on four renovated properties. Lease terms range from twelve to eighteen months with lease payments ranging from $900 - $1,150 per month.

Note 4. Note Receivable

On August 3, 2010, the Company entered into a land contract to sell one of the properties renovated during the quarter.

Note 5. Related Party Secured Convertible Debenture Agreement

On November 5, 2009, the Company entered into a Secured Convertible Debenture with 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 Company issued to RF a 13.5% Secured Convertible Debenture, due November 2014, together with 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. The proceeds of the sale of this Debenture and other Debentures in this series, the terms of which are described below, will primarily be used for the purchase, refurbishment and upgrade of residential real estate in Michigan.

Each Debenture is secured by a first lien on the property to be purchased by ProGreen Realty. 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. The Debentures may be prepaid at any time after two years from the Closing Date, without penalty, by the Company. Any accrued unpaid interest due at such time will be paid in shares of Common Stock valued at the Conversion Price as of the date of the prepayment. RF has the right to choose to convert the Debentures in lieu of cash prepayment.

Debentures are 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 a 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 price ("Conversion Price") of the Debentures is the price equal to the average closing price (the mean average between bid and ask price) of the Common Stock during the period of twenty (20) consecutive Trading Days, ending on the Trading Day immediately prior to the due date of the interest payment, the prepayment date, or the date of RF’s giving the conversion notice, as the case may be, subject to equitable adjustment for any stock splits, stock dividends, reclassifications or similar events during such period. 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 13.5%.

ProGreen Properties, Inc.

(formerly Diversified Product Inspections, Inc.)

Notes to Unaudited Condensed Consolidated Financial Statements

January 31, 2011

Note 6. 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, par value $0.0001 per share (the “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 for a total purchase price of $59,000, to be purchased by EIG on or before July 16, 2009. The Phase II tranche consists of 43,108,504 shares of Common Stock for a total purchase price of $441,000, to be purchased by EIG on or before December 31, 2009; and the Phase III tranche consists of 48,875,855 shares of Common Stock for a total purchase price of $500,000, to be purchased by EIG on or before July 16, 2010. The shares comprising each of the tranches in Phases I through III may be purchased in one or more installments by the EIG; provided, that the number of shares required to be purchased in each tranche is purchased in its entirety by the final purchase date specified for the entire tranche.

On December 1, 2009, the Company entered into an Amendment to the Subscription Agreement with EIG. The amendment provides that, in the event EIG does not complete payment of the full Phase II or Phase III purchase price for the shares of Common Stock required to be purchased within the time period provided in the Agreement for the particular Phase, as an additional purchase price for the shares to be purchased in that particular Phase, EIG shall pay a penalty interest rate of 13.5% per annum on the unpaid balance as of the final purchase date from that date to the date the shares are purchased.

As of January 31, 2011 all of the Phase I and Phase II shares have been purchased and 39,100,684 shares of the Phase III tranche.

On June 1, 2010, the Company received $400,000 of the Phase III tranche and issued 39,100,684 shares to EIG. As of March 11, 2011, the remainder of Phase III and interest has not been paid. These amounts are reflected as amount due from related party subscriber under subscription receivable in the accompanying balance sheet. The remaining balance of $100,000 had not been received prior to the issuance of the financial statements and has been included in stockholders’ equity as amount due from subscriber under subscription agreement.

Note 7. 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 ended	Rental
April 30,	Amount
2011	$	4,736
2012		28,441
2013		28,691
2014		28,714
2015		28,964
2016		12,069

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, 2011 balance sheet. Rent expense is recognized on a straight line basis over the term of the lease. The excess of rent expense over required rental payments is recorded as a liability.

ProGreen Properties, Inc.

(formerly Diversified Product Inspections, Inc.)

Notes to Unaudited Condensed Consolidated Financial Statements

January 31, 2011

During the nine months ended January 31, 2011, the Company recorded $18,109 in rental expense as a result of the lease.

Note 8. Stock Agreement

On August 10, 2010 the Company set forth an agreement between themselves and CityVac IR Services (“CityVac”), an investor relations company, whereas (“CityVac”) will provide services in exchange for payment in the form of restricted shares. 400,000 restricted shares were issued on August 12, 2010 and 200,000 restricted shares were issued on November 12, 2010, and the remaining 400,000 restricted shares were issued on December 9, 2010 under the CityVac agreement for the balance of the first year term of the agreement. If this agreement is canceled on 30-day’s notice, (“CityVac”) will retain all payments made prior to the notification as full payment for services rendered.

Note 9. Income Taxes

The Company has not recorded any income tax benefit for the three or nine months ended January 31, 2011 and 2010. 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 NOL carry forward.

Note 10. Earnings (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 reflects, in periods in which they have a dilutive effect, the effect of common shares issuable upon the exercise of stock options or warrants, using the treasury stock method of computing such effects and contingent shares, or conversion of convertible debt.

Note 11. Going Concern

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As described in Note 1, on April 30, 2009, the Company disposed of its then existing operating business. The Company made acquisitions of residential property and has entered into four leases with tenants to occupy four of those properties. Also, as more fully discussed in Note 5, the Company issued a $500,000 Secured Debenture the proceeds of which will primarily be used for the purchase, refurbishment and upgrade of revenue producing residential real estate.

The Company’s primary plan and objective going forward is to acquire additional revenue producing property to generate rental cash flow and, over time, sell the properties to realize capital appreciation in order to increase profits and provide shareholder value. There is no assurance that the Company will acquire favorable business opportunities through such transactions. In addition, there is no assurance that these business opportunities will generate revenues or profits, or that the market price of the Company’s common stock will be increased thereby.

The Company will continue to incur costs that are necessary for it to remain an active public company. As with future acquisition, these ongoing costs are expected to be funded through the subscription agreements or through sale of renovated properties.

The financial statements do not include any adjustments relating to the recoverability of assets and the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 12. Commitments

The Company has no pending offers to purchase additional properties as of January 31, 2011.

Note 13. Amendments to Certificate of Incorporation

On July 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 Certificate of Amendment also authorized the issuance of 10,000,000 shares of a new class of preferred stock, par value $.0001 per share, with such rights, preferences and limitations as the Board of Directors may designate.

ProGreen Properties, Inc.

(formerly Diversified Product Inspections, Inc.)

Notes to Unaudited Condensed Consolidated Financial Statements

January 31, 2011

Note 14. Standby Equity Agreement

Effective August 25, 2010, the Company entered into a Standby Equity Purchase Agreement (the “SEP Agreement”), with LeadDog Capital LP (“LDC”), under which LDC agreed to provide an equity line of credit of up to $2,500,000 to purchase the Company’s common stock. The funding will not take place until an agreed upon date in the future. Under the SEP Agreement, the Company will issue to LDC a commitment fee of 300,000 shares of its common stock, and has agreed to issue to an affiliate of LDC a structuring and due diligence fee of 100,000 shares of common stock. We amended the SEP Agreement as of March 1, 2011 so that it provides for the filing by the Company of a registration statement under the Securities Act of 1933, as amended, on or before September 1, 2011, subject to further extension by agreement of the parties, to register the common stock to be issued under the SEP Agreement. We plan to include in such registration statement 24,000,000 shares of our common stock for this equity line financing. Upon the terms and conditions set forth in the SEP Agreement, during its two year term, the Company may issue and sell (or “put”) to LDC, and LDC shall purchase from the Company, up to that number of shares of common stock having an aggregate purchase price of $6,000,000, the maximum amount that LDC is required to purchase pursuant to any one put notice under the SEP Agreement being $500,000. The purchase price for the shares purchased by LDC shall be equal to 92% of the market price, which is defined in the SEP Agreement to be equal to the lowest daily volume weighted average price of the Company’s common stock during the ten consecutive trading days after the date of the related put notice.

Note 15. Subsequent Events

The Company has entered into an agreement to sell one condominium unit for $117,000, which is expected to close on or before April 15, 2011.

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

ProGreen Properties, Inc., formerly Diversified Product Inspections, Inc. (“we”, “us”, or 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 The Company is now controlled by the former plaintiffs in the now settled litigation.

Our Business

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 plan is to purchase residential real estate, condominiums and houses where we believe favorable investment opportunities exist based on market conditions at the time of the investment. We are initially concentrating on the Michigan market, and on July 28, 2009, purchased our initial property a condominium located in Oakland County, Michigan. The Company remodels and upgrades properties with an emphasis on using environmentally friendly materials. As of January 31, 2011, we have purchased eleven properties, leased four, sold one and are renovating or have completed renovation of six.

Our primary expenses relate to our reporting obligations under the Securities Exchange Act of 1934 (“Exchange Act”), and any costs relating to maintaining our current condominium investment including taxes and insurance and expenses related to the future acquisition of additional properties.

We currently have one employee. Our management expects to confer with consultants, attorneys and accountants as necessary.

FINANCIAL CONDITION

At January 31, 2011, we had total assets of $883,418, compared to total assets of $1,289,696 at April 30, 2010. The decrease in total assets was primarily due to net operating losses.

At January 31, 2011, we had stockholders’ equity of $367,972 compared to $749,030 as of April 30, 2010. The decrease in stockholders’ equity was due to net operating losses.

The Company continued to seek additional properties during the quarter, purchasing two properties and evaluating other properties. The company incurred significant costs in renovating properties to make available to rent. Costs incurred in the renovation of the properties that enhance the value or extend the life of the properties are capitalized. The Company also incurred professional fees in implementing its business plan and preparing to sell properties in the future.

Cash decreased approximately $251,000 for the quarter ended January 31, 2011. The Company invested approximately $146,000 in properties and expended approximately $105,000 to fund operations. The Company expects to fulfill cash needs to the coming quarter through the sale of renovated condominiums, as well as through purchase of remaining shares under the subscription agreement.

RESULTS OF OPERATIONS

Three Months Ended January 31, 2011 Compared to Three Months Ended January 31, 2010

During the three months ended January 31, 2011, we incurred a net loss of $160,854 compared to $77,279 for the three months ended January 31, 2010. The increase in our loss from operations for the three months ended January 31, 2011 over the comparable period of the prior year is primarily due to an increase in general and administrative expense. General and administrative expenses increased to $105,696 for the three months ended January 31, 2011 up from $7,155 for the same period in 2010. Advertising and investor relations are large components of general and administrative expenses. Advertising expenses totaled approximately $22,000 in the current quarter and the company incurred no advertising expenses during the same period in 2010. The company incurred no expenses related to investor relations in the three months ended January 31, 2010 compared to $10,000 in the current quarter end. Professional expenses continue to be significant due to the compliance cost associated with being a public company.

The company completed the purchase of two properties and began renovation, as well as continued renovation of six of the properties during the quarter. The company signed two leases in the current quarter bringing the total number of properties under lease to four as of January 31, 2011. In addition, renovation is complete on another four condominiums, which are available for sale or lease as of January 31, 2011. Management executed a purchase agreement on one such property subsequent to January 31st and anticipates closing on or before April 15, 2011.

Nine Months Ended January 31, 2011 Compared to Nine Months Ended January 31, 2010

During the nine months ended January 31, 2011, we incurred a net loss of $500,000 compared to a net loss of $140,270 for the nine months ended January 31, 2010. The increase in our loss from continuing operations for the nine months ended January 31, 2011 over the comparable period of the prior year is primarily due to an increase in property selling and maintenance expenses of $96,825 in the nine months ended January 31, 2011, from $4,123 in the prior period, an increase in general and administrative expense from $15,347 to $277,174 for the nine months ended January 31, 2011. Current year, general and administrative costs include advertising expense and investor relations expense of $77,446 and $30,000, respectively. The Company incurred no advertising or investor relations expense in the nine months ended January 31, 2010. Professional fees for the nine months ended January 31, 2011 increased to $154,378 up from $95,838 for the comparable prior period. Interest expense on the debenture increased to $83,049 in the nine months ended January 31, 2011 up from $27,030 for the comparable prior period. All other expenses increased due to our increasing efforts to find and renovate condominiums that will contribute to our rental revenue stream. Revenues also increased for the nine months ended January 31, 2011 from $2,910 for the nine months ended January 31, 2010 to $111,531 for the first nine months of the current fiscal year. The Company sold one condominium for $85,000 on land contract in the second quarter of the current fiscal year. Rental revenue increased to $20,276 for the nine months ended January 31, 2011 up from $2,910 in the same period of the prior year. The Company also earned $6,255 in brokerage commissions in the first nine months of the current fiscal year. No brokerage commissions were earned in the comparable prior period.

LIQUIDITY

We have limited working capital. EIG Venture Capital Ltd. (“EIG”), a company controlled by our Chief Executive Officer, Jan Telander, agreed to invest $1,000,000 through the purchase of 97,751,710 shares of common stock for $0.01023 per share in three tranches. The first two tranches were due in July 2009 and December 31, 2009, and the third tranche is due July 16, 2010. On December 1, 2009, we entered into an Amendment to the Subscription Agreement with EIG. The amendment provides that, in the event EIG did not complete payment of the full Phase II or Phase III purchase price for the shares of Common Stock required to be purchased within the time period provided in the Agreement for the particular Phase, as an additional purchase price for the shares to be purchased in that particular Phase, EIG would pay a penalty interest rate of 13.5% per annum on the unpaid balance as of the final purchase date from that date to the date the shares were purchased. As of April 30, 2010 EIG had purchased all the required shares in Phase I and 4,985,337 shares in Phase II; 38,123,167 shares in Phase II were subject to penalty interest of $12,838 as of that date. On May 11, 2010, EIG completed its purchase of the Phase II tranche of 43,108,504 shares of Common Stock for a total purchase price of $441,000, by the payment to the Company of $390,000 for 38,123,167 shares of Common Stock with, pursuant to a December 1, 2009 Amendment to the Agreement, penalty interest in the amount of $18,752, representing interest at the rate of 13.5% per annum on the unpaid balance of the Phase II subscription from December 31, 2009 (the date by which the Phase II tranche was required to be completed under the Agreement) to May 11, 2010. On June 1, 2010, EIG purchased 39,100,684 shares of the Phase III final tranche under the Agreement for $400,000. The Phase III tranche consists of 48,875,855 shares of Common Stock for a total purchase price of $500,000 to be purchased by EIG on or before July 16, 2010, leaving a balance of 9,755,171 shares to be purchased under the Agreement for a purchase price of $100,000.

In the coming quarter, 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.

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, 2010. We consider the following accounting policies to be the most critical going forward:

Revenue Recognition - Rental income is recognized on a straight-line basis over the term of each lease. Sale of home income is recognized when the closing on the property occurs.

Property and Equipment - Our property and equipment, including rental 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 4T. 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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The table below shows the Company’s sales of unregistered securities for the Company’s fiscal quarter ended October 31, 2010 (and amends the sales of unregistered securities as reported in the Company’s Quarterly Report on Form 10-Q filed December 14, 2010 for that quarter) and for the fiscal quarter ended January 31, 2011.

			Principal	Total Offering Price/
Date	Title and Amount	Purchaser	Underwriter	Underwriting Discounts

August 13, 2010	400,000 shares of common stock.	Consultant	NA	$0.05 per share/NA
November 15, 2010	807,175 shares of common stock issued as interest on convertible debenture held by director of Company.	Director of the Company	NA	$0.0836 per share/NA

November 15, 2010		200,000 shares of common stock.		Consultant		NA		$0.05 per share/NA
December 9, 2010		400,000 shares of common stock.		Consultant		NA		$0.05 per share/NA

The Company believes that the above transactions are exempt from registration under the Securities Act of 1933, as amended (“Securities Act”), pursuant to the provisions of Regulations S, promulgated by the Securities and Exchange Commission under the Securities Act.

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.

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 17, 2011

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.

Progreen US, Inc. - FORM 10-Q - March 17, 2011

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Progreen US, Inc. Reports