UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
[ ] 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: 000-23338
THE CASTLE GROUP, INC.
(Exact name of registrant as specified in its charter)
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Utah
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99-0307845
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(State or Other Jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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500 Ala Moana Boulevard, 3 Waterfront Plaza, Suite 555, Honolulu HI 96813
(Address of principal executive office)
Registrant’s telephone number: (808) 524-0900
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.02 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes [ ] No [X]
Indicate by check mark whether the Issuer (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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [ ]
(Do not check if a smaller reporting company)
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[ ] Yes [X] No
Aggregate Market Value of Non-Voting Common Stock Held by Non-Affiliates
As of June 30, 2016, there were approximately 5,463,049 shares of common voting stock of the Issuer held by non-affiliates. As of June 30, 2016, the closing price of the common stock on the OTC Bulletin board was $.25 per share or an aggregate value of $1,365,762.
Applicable Only to Corporate Registrants
Number of shares outstanding of the Issuer’s common stock as of April 7, 2017: 10,056,392
Explanatory Note
This Amendment is being filed to correct errors in the audit reports of BDO USA, LLP (“BDO”), our Independent Registered Public Accounting Firm and our predecessor auditor, Mantyla McReynolds, LLC (“Mantyla”) that had appeared on pages 15 and 16, respectively, of the original Form 10-K of The Castle Group, Inc. for the year ended December 31, 2016. BDO had previously audited the adjustments relating to the 2015 financial statements (more fully described in the Reclassification paragraph of Note 1 to the consolidated financial statements included in the original Form 10-K) and has revised their audit report in this Amendment to opine on those 2015 adjustments. Mantyla has revised their 2015 audit report in this Amendment to state that they are opining on the 2015 consolidated financial statements before the effects of adjustments described in the Reclassification paragraph of Note 1 to the consolidated financial statements included in the original Form 10-K and therefore are not opining on the adjustments since they were audited by BDO. The corrected audit reports are included in this Amendment. The corrected audit reports replace in their entirety the reports originally included on pages 15 and 16 under "Item 8. Financial Statements and Supplementary Data" of the original Form 10-K.
Except as expressly set forth above, this Amendment does not, and does not purport to, amend, update or restate the information in any other item of the original Form 10-K or reflect any events that have occurred after the filing of the original Form 10-K.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors
The Castle Group, Inc.
We have audited the accompanying consolidated balance sheet of The Castle Group, Inc. (the “Company”) as of December 31, 2016 and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Castle Group, Inc. at December 31, 2016, and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the consolidated financial statements, the Company changed its method of presentation of deferred taxes in 2016 due to the adoption of Financial Accounting Standards Board Accounting Standards Update 2015-17, Income Taxes (Topic 740):
Balance Sheet Classification of Deferred Taxes
. This change was applied retrospectively to all periods presented.
We also have audited adjustments to the 2015 consolidated financial statements more fully described in the Reclassification paragraph of Note 1 to the consolidated financial statements. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2015 consolidated financial statements of the Company other than with respect to these adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2015 consolidated financial statements taken as a whole.
/s/ BDO USA, LLP
Salt Lake City, Utah
April 7, 2017
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors
The Castle Group, Inc.
We have audited, before the effects of the adjustments to the 2015 consolidated financial statements more fully described in the Reclassification paragraph of Note 1 to the consolidated financial statements, the accompanying consolidated balance sheet of The Castle Group, Inc. (the “Company”) as of December 31, 2015 and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for the year then ended (the 2015 consolidated financial statements before the effects of the adjustments discussed in the Reclassification paragraph of Note 1 to the consolidated financial statements are not presented herein). These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such 2015 consolidated financial statements, before the effects of the adjustments described in the Reclassification paragraph of Note 1 to the consolidated financial statements, present fairly, in all material respects, the consolidated financial position of The Castle Group, Inc. at December 31, 2015, and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
We were not engaged to audit, review, or apply any procedures to the adjustments more fully described in the Reclassification paragraph of Note 1 to the consolidated financial statements and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditors.
/s/ Mantyla McReynolds, LLC
Salt Lake City, Utah
March 30, 2016
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment to be signed on its behalf by the undersigned, thereunto duly authorized as of April 14, 2017.
THE CASTLE GROUP, INC.
By
/s/ Rick Wall
Chief Executive Officer and
Chairman of the Board
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