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Welcome to the first podcast from ProGreen US, Inc. In order to improve on communication we have now added this media, as it gives us a way to give a more physical presentation of the company, as well as of the progress of our projects in Baja California.

Podcast 1: GENERAL BUSINESS UPDATE – FOCUS ON FINANCIALS

ProGreen founder, Chairman and CEO, Jan Telander updates the general public as well as shareholders on the business, with a focus on the Company’s financing, past and future, as well as on the agriculture and real estate developments in Baja California.

THIS PODCAST CONTAINS FORWARD LOOKING STATEMENTS, ESTIMATIONS AND IDEAS THAT ARE ACCURATE AT THIS TIME BUT MAY CHANGE IN THE FUTURE. THE COMPANY RESERVES THE RIGHT TO MAKE THOSE CHANGES WITHOUT ANY PRIOR NOTICE.

Statements made within this podcast may constitute ‘forward-looking statements’ within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. ‘Forward-looking statements’ are based upon expectations, estimates and projections at the time the statements are made that involve a number of risks, uncertainties and other factors that could cause actual results or events to differ materially from those anticipated.

{TRANSCRIPT}

HELLO AND WELCOME TO THE FIRST PODCAST FROM PROGREEN US, INC.  FOR ANY OF YOU THAT DO NOT KNOW ME AND ARE NOT FAMILIAR WITH THE COMPANY, MY NAME  IS JAN TELANDER, THE FOUNDER OF PROGREEN.

IN ORDER TO IMPROVE ON THE COMMUNICATION TO THE GENERAL PUBLIC AS WELL AS TO SHAREHOLDERS GOING FORWARD, WE HAVE NOW ADDED THIS MEDIA AS IT GIVES US A WAY TO GIVE A MORE PHYSICAL PRESENTATION OF THE COMPANY AS WELL AS OF THE PROGRESS OF OUR PROJECTS IN BAJA CALIFORNIA.

THIS FIRST PODCAST WILL BE A GENERAL BUSINESS UPDATE, PARTICULARLY TOUCHING ON THE COMPANY’S FINANCING, PAST AND FUTURE, AS WELL AS ON THE AGRICULTURE AND REAL ESTATE DEVELOPMENTS IN BAJA CALIFORNIA.

I HAVE RECEIVED MANY CALLS AND EMAILS FROM SHAREHOLDERS WITH QUESTIONS ABOUT OUR FUNDING, THE OUTSTANDING NOTES, AND THE STATUS OF THE CHILI PEPPER HARVEST.

SOME HAVE ALSO EXPRESSED CONCERN ABOUT A SLOWDOWN IN COMMUNICATION FROM THE COMPANY.

THIS HAS HAD A NEGATIVE EFFECT ON THE TRADING OF OUR STOCK, BUT I WANT TO ASSURE ALL OF OUR SHAREHOLDERS, AS I HAVE TOLD THOSE THAT HAVE CONTACTED ME, THAT WE ARE DOING EVERYTHING WE CAN TO PROVIDE UPDATES, WHEN WE HAVE  MEANINGFUL AND ACCURATE INFORMATION TO SHARE.

EVERYONE UNDERSTANDS THAT THERE IS A LIMIT TO OUR RESOURCES AS WILL ALWAYS BE THE CASE, BUT IT HAS BEEN ESPECIALLY CHALLENGING FOR THE COMPANY DURING THE PAST MONTHS AND HERE IS WHY.

MOVING THE COMPANY TO SAN DIEGO IN JUNE, WAS IN ITSELF BOTH VERY TIME CONSUMING AS WELL AS A TOUGH ORGANIZATIONAL TRANSITION.

IN JUNE WE ALSO HIRED A CFO, AKIO ARIURA. AKIO IS A TRUE PROFESSIONAL, BRINGING EXTENSIVE  KNOWLEDGE AND EXPERIENCE FROM OTHER COMPANIES, AND HAS ALREADY BECOME AN INVALUABLE ASSET TO THE PROGREEN’S MANAGEMENT.

INITIALLY, IT THOUGH ENTAILED BRINGING HIM UP TO SPEED TO ASSUME THE TEDIOUS TIME-CONSUMING WORK ON THE FINANCIAL REPORTING WITH THE FILINGS OF THE 10K IN AUGUST AND THE 10Q IN SEPTEMBER.

WE HAVE ALSO BUILT OUT AND SET UP OFFICES IN ENSENADA FOR PROCON BAJA AND CONTEL.

NOW WE HAVE A GOOD BASE OUR PROJECTS HERE WITH THE RIGHT PLATFORM FOR OUR GROWING NEEDS TO BRING ON MORE STAFF, AS OUR PROJECTS ARE PROGRESSING.

WE HAVE NOW ALSO STARTED TO TAKE THE NEXT LOGICAL STEP FOR THE COMPANY.

I WILL BE SPENDING MOST OF MY TIME HERE IN ENSENADA IN ORDER TO HAVE A MORE HANDS ON APPROACH AND HAVE OBTAINED A MEXICAN RESIDENCE CARD AND WORK PERMIT,  RECENTLY SOLD MY HOUSE IN THE U.S. AND INSTEAD BOUGHT A HOME HERE.

AKIO IS TAKING OVER THE DAY TO DAY RUNNING OF THE COMPANY AS PROGREEN CAN NOW BE CONSIDERED MORE OF A U.S. HOLDING COMPANY, WITH THE MAJORITY OF THE ACTIVITIES AND ASSETS BEING IN BAJA CALIFORNIA.

I WILL THOUGH BE GOING BACK TO THE U.S. FAIRLY FREQUENTLY TO ATTEND BOARD MEETINGS AS CHAIRMAN, BUT ALSO TO MEET WITH POTENTIAL BUYERS FOR THE AGRICULTURE BUSINESS AS WELL WITH INVESTORS AND PARTNERS IN CONNECTION WITH CIELO MAR.

PROGREEN WAS INVITED TO JOIN THE SAN DIEGO CHAMBER OF COMMERCE, WHICH IS THE BIGGEST CHAMBER OF COMMERCE ON THE WEST COAST, AND PLAYS A BIG ROLE IN ACROSS BOARDER RELATIONSHIPS WITH MEXICO. WE JOINED IN SEPTEMBER AND WE ANTICIPATE A GROWING COLLABORATION AS IT WILL IN OPEN THE DOORS FOR THE COMPANY TO BUILD RELATIONSHIPS WITH NEW PARTNERS. IT WILL ALSO PLAY A BIG ROLE IN THE MARKETING OF CIELO MAR.

IF WE TAKE A LOOK AT WHERE WE HAVE COME SINCE THE BEGINNING OF THE YEAR.

WE DECIDED ON GROWING OUR OWN CROP ON THE ARENOSO FARM INSTEAD OF JUST LEASING THE LAND. THE OPPORTUNITY FOR MUCH HIGHER RETURNS WAS A DECIDING FACTOR, EVEN THOUGH WE WERE NEW TO THE GAME. WE MANAGED TO GET AN AGREEMENT WITH A SOLID BUYER FOR THE CHILI PEPPERS THAT WE DECIDED TO GROW FOR THE FIRST YEAR.

WE HAVE NOW A FULLY FUNCTIONING FARMING OPERATION AND HAVE BEEN HARVESTING AND COLLECTING CASH FROM OUR CHILI PEPPERS, THOUGH NOT AS MUCH AS WE HAD INITIALLY ANTICIPATED. THERE HAVE BEEN MANY BUMPS IN THE ROAD, SOMETHING THAT WE PROBABLY SHOULD HAVE EXPECTED FROM THE FIRST YEAR IN A NEW BUSINESS.

ON THE REAL ESTATE SIDE, WE ACQUIRED THROUGH OUR MAJORITY OWNED SUBSIDIARY PROCON, 5,000 ACRES OF LAND WITH 4.5 MILES BORDERING THE PACIFIC OCEAN IN THE BAY OF EL ROSARIO. THROUGH OUR JOINT VENTURE WITH CONTEL, WE MANAGED TO PURCHASE THE LAND ON TERMS THAT WOULD SIMPLY NOT HAVE BEEN POSSIBLE FOR ANYBODY ELSE. THE TOTAL PURCHASE PRICE FOR THE 5,000 ACRES WAS $500,000 ($100/ACRE) WITH 5 YEARS TO PAY AT 0% INTEREST. THAT LAND WOULD LIKELY BE VALUED AT 25-50M EVEN AS RAW LAND IF VALUED, BASED ON APPRAISALS OF OTHER TRACTS OF RAW LAND IN BAJA CALIFORNIA.

THERE HAS BEEN A RECENT INCREASE IN INTEREST FOR INVESTMENTS IN BAJA CALIFORNIA, BOTH FROM MEXICAN AS WELL AS FROM INTERNATIONAL INVESTORS. A JAPANESE GROUP RECENTLY APPROACHED US WITH A 10M OFFER FOR THE LAND, WHICH WE BOUGHT FOR $500,000 LESS THAN 10 MONTHS AGO. THIS WAS OF COURSE OF NO INTEREST TO US, AS WE EXPECT THE VALUE, ONCE THE MASTER AND EXECUTION PLAN HAVE BEEN FINALIZED AND APPROVED, AND WE ARE ABLE TO BREAK GROUND, TO BE PERHAPS 10-20 TIMES AS MUCH. IT THOUGH SHOWS THAT WE DEFINITELY MADE A GOOD INVESTMENT.

AS FOR THE FUNDING, FINANCING, AND USE OF FUNDS FOR BUSINESS DEVELOPMENT AND GROWTH, I WOULD LIKE TO START OFF WITH DECLARING THE FOLLOWING:

OF COURSE ALL SHAREHOLDERS INCLUDING MYSELF WOULD PREFER THAT A STARTUP COULD, ALMOST MAGICALLY, DOUBLE, TRIPLE OR QUADRUPLE ITS VALUE YEAR OVER YEAR WITH NO INVESTMENT. BUT THAT IS UNFORTUNATELY NOT REALLY THE CASE EVER.

AS LONG AS PROGREEN CAN, WITH MINIMAL RISK, GENERATE SUBSTANTIALLY HIGHER VALUE OF THE COMPANY FROM CAPITAL EMPLOYED, WE WILL NEED TO RAISE CASH TO BE ABLE TO INVEST.

I NOW WANT TO ELABORATE A LITTLE, REGARDING OUR RECENT FILINGS HAVING TO DO WITH THE COMPANY’S FUNDING.

YESTERDAY, WE FILED WHAT IS CALLED A POST EFFECTIVE AMENDMENT TO THE S-1 REGISTRATION STATEMENT, WHICH IN EFFECT IS JUST BRINGING THE S-1 UP TO DATE WITH FRESH FINANCIALS, BEING A REQUIREMENT BY THE SEC IN ORDER TO KEEP THE S-1 ACTIVE.

TANGIERS HAS BEEN, AND REMAINS A GOOD FINANCING PARTNER TO PROGREEN, STARTING WITH THE EQUITY LINE AGREEMENT, FOR WHICH WE HAVE THE S-1, AND THEN THE NOTES THAT FOLLOWED.

FOR A SMALL BUSINESS LIKE PROGREEN, THE EQUITY LINE WITH TANGIERS PROVIDES A VERY SUITABLE AND ECONOMICAL FINANCING OPPORTUNITY AT ONLY 11% DISCOUNT.

WITH THIS TYPE OF FUNDING, THE COMPANY REMAINS IN TOTAL CONTROL OF THE SELLING OF SHARES AT MARKET PRICE, AND AT THE RIGHT TIME FOR THE COMPANY.

THIS IS TOTALLY DIFFERENT FROM CONVERTIBLE NOTES, WHERE THE INVESTOR GAINS FULL CONTROL, IF THE COMPANY IS UNABLE PAY THE NOTE OFF WITHIN THE PREPAYMENT PERIOD. THE DISCOUNT IS OFTEN HUGE AND CONVERSION CAN LEAD TO A DOWNWARD SPIRAL OF THE SHARE PRICE, WITH TRANCHES OF THE NOTE CONVERTING AND THE SHARES SOLD OFF QUICKLY.

THESE NOTES ARE OFTEN REFERRED TO AS TOXIC FOR THAT REASON. HOWEVER, AT CERTAIN TIMES, IT MIGHT BE THE ONLY FUNDING AVAILABLE TO COMPANIES, WHICH WAS THE CASE FOR PROGREEN WHEN WE NEEDED TO QUICKLY RAISE MONEY TO FUND THE DEVELOPMENT OF THE ARENOSO FARM AS WELL AS TO ACQUIRE  THE LAND FOR CIELO MAR.

OF THE NOTES WE TOOK ON IN JANUARY THROUGH APRIL, WE HAVE NOW ELIMINATED ALL,  HOPPEL, POWER UP, BELLRIDGE, TANGIERS, SILO AND EMA. IT IS OUR INTENTION TO PAY OFF THE NEW TANGIERS NOTE WITH PROCEEDS FROM THE EQUITY LINE.

ON MONDAY WE FILED AN AMENDMENT TO THE FORM D THAT WAS INITIALLY FILED IN MAY.

FOR THOSE NOT FAMILIAR WITH THIS FORM D, I WOULD LIKE TO POINT OUT THAT IT IS A SEC COMPLIANCE REQUEST, SHOWING THE TOTAL DEBT FINANCING FROM SEP 1, 2016 TO DATE, NOW INCLUDING THE NEW NOTE REFERRED TO  IN THE 8K FILED LAST WEEK.

WHILE MANY COMPANIES CHOOSE NOT TO FILE THESE FORMS, WE AIM TO BE TRANSPARENT WITH OUR SHAREHOLDERS AND TO ALWAYS REMAIN IN FULL COMPLIANCE WITH THE SEC.

HOWEVER, IT IS IMPORTANT TO KNOW THAT IN THE FORM D FILING UNDER “OFFERINGS AND SALES AMOUNTS”, IT STATES THE TOTAL AMOUNT OF THE NOTES AND DOES AND NOT REFLECT THE NET BALANCE AFTER NOTES HAVE BEEN PAID OFF.

YOU PROBABLY ALSO SAW A FORM D FILED LAST FRIDAY, SHOWING THAT WE ARE NOW ACTIVELY RAISING UP TO $1,000,000 OF EQUITY INVESTMENTS THROUGH PRIVATE PLACEMENTS WITH A NUMBER OF  POTENTIAL ACCREDITED INVESTORS. THE FUNDING REPRESENTED IN THIS FORM D IS COMPLETELY SEPARATE FROM THAT OF THE FIRST FORM D. IT IS BASED ON  STRAIGHT EQUITY BY THE ISSUANCE OF 144 STOCK AT MARKET PRICE BASED ON A 10 DAY AVERAGE PRICE PRIOR TO CLOSING.

FOR YOU THAT ARE NOT AWARE, 144 STOCK IS RESTRICTED AND CANNOT BE SOLD IN THE OPEN MARKET FOR 6 MONTHS.

THERE IS A PROVISION IN SECURITIES PURCHASE AGREEMENT FOR THESE PRIVATE PLACEMENTS, GIVING THE INVESTOR A POTENTIALLY UNLIMITED UPSIDE AS THE SHARES ARE ISSUED AT CLOSING, BUT AT THE SAME TIME OFFERS A MINIMUM UPSIDE BASED ON A VALUATION OF THE STOCK ISSUED AFTER 180 AND 360 DAYS RESPECTIVELY, WHICH MAKES THIS OFFER UNIQUE.

WE SEE THE COMPANY’S RISK EXPOSURE IN RELATION TO THIS MINIMUM UPSIDE ASSURANCE TO BE VERY LIMITED, AS JUST GETTING THE PRICE LEVEL FOR THE STOCK BACK TO WHERE IT WAS SOME MONTHS AGO, WILL IN EFFECT ELIMINATE THE NEED FOR ANY COMPENSATION TO THE INVESTOR

WE STRONGLY BELIEVE THAT THE SHARE PRICE IS VERY DEPRESSED TODAY BECAUSE OF THE NOTES DUE IN NOVEMBER, BUT ONCE WE HAVE PAYED THOSE OFF, A MORE POSITIVE OUTLOOK ON THE STOCK GOING FORWARD, IS EXPECTED.

THIS BRINGS THIS PODCAST TO AN END. AND WE WILL CONTINUE TO COME OUT WITH MORE PODCASTS GOING FORWARD. THE NEXT, ALREADY OUT BY TOMORROW, WHICH WILL BE CONCERNING THE AGRICULTURE OPERATIONS.