Item 2.01 Completion of Acquisition or Disposition of Assets.

Effective as of June 30, 2022, The Castle Group, Inc., a Utah corporation (the "Company"), and GONZ Holdings, LLC, a Hawaii limited liability company ("GONZ"), entered into a Debt Restructuring Agreement that included an amendment (together, the "Agreement"), copies of which are filed herewith collectively as Exhibit 10.1 in Section 9, Item 9.01 hereof and are incorporated herein by reference. This summary should be considered in reference to this Exhibit.

Pursuant to the Agreement, GONZ exchanged $2,400,000 of the indebtedness owed to it by the Company for 55% of the shares of our wholly-owned subsidiary, Castle Resorts & Hotels, Inc., a Hawaii corporation ("Castle Hawaii"), with GONZ and the Company to share in the profits of Castle Hawaii in accordance with their respective percentages of ownership, with annual distributions to the Company, unless and to the extent such profits are required to fund the operations of Castle Hawaii. Pursuant to the Agreement, the interest rate on the remaining $2,400,000 owed to GONZ was reduced from 12% to 6.5%, compounded annually, and the payment of principal and accrued interest was deferred until June 30, 2025. The Agreement also contains customary representations and warranties, conditions to the closing, limited indemnification provisions and other customary miscellaneous provisions. The Company's management has been advised that no tax liability will result to the Company as a result of this transaction.

The remaining amounts owed to GONZ are secured by a pledge of the Company's remaining shares in Castle Hawaii and a mortgage on the condominium units in the "Spencer on Byron" condominium project owned by Mocles Holdings Limited, a New Zealand company ("Mocles"), which also is a wholly-owned subsidiary of the Company. The condominium units owned by Mocles consist of the ground floor, first floor and related portions of the Spencer on Byron condominium project in Takapuna, New Zealand, which are leased by the Company's wholly-owned subsidiary, NZ Castle Resorts & Hotels Limited, a New Zealand company ("NZ Castle"), for use in connection with its operation of a hotel rental program at the Spencer on Byron.

The Company's indebtedness arose in connection with the Agreement for the Sale and Purchase of Shares of Mocles Holdings Limited dated December 24, 2004, as amended (the "2004 Mocles Shares Purchase Agreement"), pursuant to which NZ Castle agreed to purchase the shares of Mocles. The entire purchase price of NZ $12,000,000 (approximately US $8,400,000) was financed by the owner of Mocles and was fully guaranteed by the Company.





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On December 4, 2018, the Spencer on Byron Trustee Company Limited, a New Zealand company, as Trustee of the Podium Trust, sold the shares of Mocles and its other rights under the 2004 Mocles Shares Purchase Agreement and related documents to GONZ. The sole member and manager of GONZ is the majority owner of the entities which own two hotels managed by the Company through Castle Hawaii, which generate approximately 38% of the Company's room revenue.

Since 2004, NZ Castle's rental program at the Spencer on Byron has not generated sufficient income to pay the amounts owed pursuant to the 2004 Mocles Shares Purchase Agreement and the maturity date of the indebtedness owed pursuant to that agreement was extended on multiple occasions. As of December 31, 2019, NZ Castle and the Company still owed approximately NZ $6,545,699 (US $4,407,873) to GONZ in connection with the 2004 Mocles Shares Purchase Agreement.

In that neither Castle NZ or the Company had the ability to pay the amounts owed to GONZ, the Company and GONZ agreed in principle in December, 2019, that the Company would exchange shares in Castle Hawaii for at least one-half of the indebtedness owed to GONZ. The Company and GONZ selected GMK Consulting, LLC, an independent business valuation company based in Honolulu, Hawaii, to determine the fair value of the shares of Castle Hawaii. Due to the Covid pandemic, the valuation project was not finalized until November, 2021. The independent directors of the Company then retained counsel to represent it in connection with the proposed exchange and after extensive negotiations and a thorough review of the Company's finances, business prospects, competition and ways that the Company might otherwise deal with the indebtedness owed to GONZ, approved the Agreement with GONZ, with a closing date of June 30, 2022.

Item 9.01 Financial Statements and Exhibits.





(d) Exhibits.



Exhibit No.       Description of Exhibit

  10.1            Debt Restructuring Agreement with GONZ Holdings, LLC,
                  effective June 30, 2022.

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