10k, a whole lot of 'things' to ponder in here (i'll bold them):
Form 10-K for PEREGRINE INDUSTRIES INC
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11-Oct-2013
Annual Report
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND PLAN OF
OPERATION Back to Table of Contents
The following discussion contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use of words such as "anticipate", "estimate", "expect", "project", "intend", "plan", "believe", and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. From time to time, we also may provide forward-looking statements in other materials we release to the public.
Recent Developments
Subsequent to our fiscal year ended June 30, 2013, the Company had a change in control on July 8, 2013 as a result of the sale by our former principal shareholders, Richard Rubin, Thomas J. Craft, Jr. and Ivo Heiden, of their 324,000 shares of common stock, representing approximately 61.8% of the Company's outstanding common stock, to GreenStone Industries Ltd. In addition, in contemplation of the private sale of the 324,000 shares to GreenStone, on July 2, 2013, Messrs. Rubin and Heiden agreed to waive liabilities owed to them, which totaled $224,196 at June 30, 2013. On July 22, 2013, the Board of Directors appointed Yair Fudim, GreenStone's Chairman, as Chairman of the Company's Board of Directors and CEO of the Company and appointed Ofer Naveh, GreenStone's CFO, as CFO of the Company. On the same date, Richard Rubin resigned as CEO and CFO of the Company. At the date of this report, the Company's Board of Directors consists of three (3) persons: Yair Fudim, Richard Rubin and Ivo Heiden. Subsequent to our year ended June 30, 2013, GreenStone agreed to loan the Company up to $100,000 pursuant to loan agreement, which loan will bear an interest rate at 1% per annum. The loan will be funded by GreenStone from time-to-time, as needed by the Company, for its operating expenses, including professional legal and accounting fees. As of filing date, the Company had received $8,791 in relation to this loan.
Overview
Through our year ended June 30, 2013, our activities were related to seeking a new business opportunities. We used our limited personnel and financial resources in connection with such activities. It may be expected that in connection with the control acquisition by GreenStone, our activities in pursuing a new business opportunity will accelerate and will involve, among other things, the issuance of restricted shares of common stock. On June 30, 2013, we had no cash or other assets and had current liabilities of $492,321. We incurred $70,250 in general and administrative expenses during the year 2013 compared to $68,000 during 2012. We incurred interest expense of $23,400 during the years ended June 30, 2013 and 2012.
Liquidity and Capital Resources
Through our fiscal year ended June 30, 2013, we remained dependent upon interim funding provided by our Management to pay professional fees and expenses but had no written finance agreement with our Management to provide any continued funding. Subsequent to our fiscal year end, in contemplation of the change in control transaction on July 8, 2013, two of the Company's former principal shareholders agreed to waive liabilities owed to them by the Company in the aggregate amount of $224,196 at June 30, 2013. In addition, on September 12, 2013, GreenStone agreed to loan the Company up to $100,000 pursuant to a one-year loan agreement bearing interest at a rate at 1% per annum. The loan will be funded by GreenStone as needed by the Company for its operating expenses from time-to-time.. As of filing date, the Company had received $8,791 in relation to this loan. While there is no other commitment from our new Management or GreenStone to provide any additional funding, we expect that GreenStone or an affiliate will provide continued funding for general administrative expenses and legal and accounting fees, until such time as we commence active business operations, the timing of which there can be no assurance. As part of our intent to seek a business combination, our new Management may seek to raise funds from the sale of equity or debt securities. Other than the loan agreement for up to $100,000 from GreenStone in September 2013, we have no agreements to issue any debt or equity securities and cannot predict whether equity or debt financing will become available at terms acceptable to us, if at all.
We anticipate that in connection with the commencement of a new business and/or the consummation of a business combination, we will issue a substantial number of additional restricted shares or other securities. If such additional securities are issued, our shareholders will experience a dilution in their ownership interest in the Company. If a substantial number of shares are issued in connection with a business combination, a change in control may be expected to occur.
There are no limitations in our articles of incorporation on our ability to borrow funds or raise funds through the issuance of restricted common stock to pursue new business opportunities. Our limited resources and lack of operating history may make it difficult to do borrow funds or raise capital. Our inability to borrow funds or raise funds through the issuance of restricted common stock required to facilitate new business opportunities may have a material adverse effect on our financial condition and future prospects. To the extent that debt financing ultimately proves to be available, any borrowing will subject us to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest.
Through our fiscal year ended June 30, 2013, the Company had no assets and only had available the limited capital advanced by our former principal shareholders. Additional financing necessary for the Company to continue as a going concern is expected to be provided by GreenStone until such time, if ever, that we complete a business combination and commence business operations that generate a cash flow. Our independent auditors have unqualified audit opinion for the year ended June 30, 2013 with an explanatory paragraph based on going concern.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Back to
Table of Contents
We have not entered into, and do not expect to enter into, financial instruments for trading or hedging purposes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Back to Table of
Contents
Report of Independent Registered Public Accounting Firm 12
Financial Statements for the Years Ended June 30, 2013 and 2012
Balance Sheets 13
Statements of Operations 14
Statement of Stockholders' Deficit 15
Statements of Cash Flows 16
Notes to Financial Statements 17
McConnell & Jones LLP Report of Independent Registered Public Accounting Firm
To the Board of Directors Peregrine Industries, Inc
We have audited the accompanying balance sheets of Peregrine Industries, Inc ("The Company") as of June 30, 2013 and 2012, and the related statements of operations, stockholders' deficit, and cash flows for the years ended June 30, 2013 and 2012.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 audits.
We conducted our audits 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 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 controls over financial reporting. Our audit included consideration of internal controls 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 controls over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Peregrine Industries as of June 30, 2013 and 2012 and the results of its operations and their cash flows for the years ended June 30, 2013 and 2012, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 of the financial statements, the Company continues to incur losses and has no revenues. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plan in regard to these matters is also described in Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Houston, Texas
October 10, 2013
3040 Post Oak Blvd., Suite 1600
Houston, TX 77056
Phone: 713.968.1600
Fax: 713.968.1601
Peregrine Industries, Inc.
Balance Sheets
Back to Table of Contents
Fiscal Fiscal
Year as of Year as of
June 30, June 30,
2013 2012
ASSETS
Current assets:
Cash $ 0 $ 0
Advances to related parties 0 0
Total current assets 0 0
Total Assets $ 0 $ 0
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable-trade $ 0 $ 8,446
Accrued interest expenses 73,125 49,725
Advances due to related party 224,196 145,500
Convertible notes, shareholders 195,000 195,000
Total current liabilities 492,321 398,671
Stockholders' deficit:
Preferred stock, $.0001 par value; 5,000,000 authorized, 0 0
none issued
Common stock, $.0001 par value; 100,000,000 shares
authorized;
524,200 issued and outstanding at June 30, 2013 and 52 52
2012
Additional paid in capital 157,832 157,832
Accumulated deficit (650,205) (556,555)
Stockholders' deficit (492,321) (398,671)
Total Liabilities and Stockholders' deficit $ 0 $ 0
See accompanying notes to the financial statements.
Peregrine Industries, Inc.
Statements of Operations
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Fiscal Fiscal
Year Ended Year Ended
June 30, June 30,
2013 2012
Revenue $ 0 $ 0
Costs and Expenses:
General and administrative 70,250 68,000
Interest expenses 23,400 23,400
Total costs and expenses 93,650 91,400
Net loss $ (93,650) $ (91,400)
Per share amounts:
Basic and diluted net loss $ (0.18) $ (0.17)
Weighted average shares outstanding (basic and diluted) 524,200 524,200
See accompanying notes to the financial statements.
Peregrine Industries, Inc.
Statement of Stockholders' Deficit
Back to Table of Contents
Common
Common Additional
Stock Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Deficit
Balance at June 30, 2011 524,200 $ 52 157,832 (465,155) (307,271)
Net loss (91,400) (91,400)
Balance at June 30, 2012 524,200 $ 52 157,832 (556,555) (398,671)
Net loss (93,650) (93,650)
Balance at June 30, 2013 524,200 $ 52 $ 157,832 $ (650,205) $ (492,321)
See accompanying notes to the financial statements.
Peregrine Industries, Inc.
Statements of Cash Flows
Back to Table of Contents
Fiscal Fiscal
Year Ended Year
Ended
June 30, June 30,
2013 2012
Cash flows from operating activities:
Net loss $ (93,650) $ (91,400)
Adjustments required to reconcile net loss to cash used in
operating activities:
Fair value of services provided by related parties 64,000 64,000
Interest expenses 23,400 23,400
Cash flows used by operating activities (4,750) (4,000)
Cash flows from investing activities:
Purchase of equipment 0 0
Cash flows used in investing activities 0 0
Cash flows from financing activities:
Proceeds from issuance of common stock 0 0
Cash advances from related parties 4,750 4,000
Cash flows provided by financing activities 4,750 4,000
Change in cash
Cash - Beginning of period 0 0
Cash - End of period $ 0 $ 0
See accompanying notes to the financial statements.
PEREGRINE INDUSTRIES, INC.
Notes to the Financial Statements
June 30, 2013
Back to Table of Contents
Note 1. Basis of Presentation
Peregrine Industries, Inc. (the "Company") was formed on October 1, 1995 for the purpose of manufacturing residential pool heaters. The Company was formerly located in Deerfield Beach, Florida. Products were primarily sold throughout the United States, Canada, and Brazil. In June 2002, the Registrant and its subsidiaries filed a petition for bankruptcy in the U.S. Bankruptcy Court for the Southern District of Florida. At present, the Company has no business operations and is deemed to be a shell company.
The Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). In the opinion of management, the accompanying audited financial statements include all adjustments, consisting of only normal recurring accruals, necessary for a fair statement of financial position, results of operations, and cash flows.
Accounting Policies
Use of Estimates: The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.
Cash and Cash Equivalents: For financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents.
Stock Based Compensation: Stock-based awards to non-employees are accounted for using the fair value method in accordance with Accounting Standard Codification ("ASC") 505-50, Accounting for Stock-Based Compensation . All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the third-party performance is complete or the date on which it is probable that performance will occur.
Fair Value of Financial Instruments: ASC 825, Disclosures about Fair Value of Financial Instruments, requires disclosure of fair value information about financial instruments. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2013. These financial instruments include accounts payable and accrued expenses. Fair values were assumed to approximate carrying values for these financial instruments since they are short-term in nature and their carrying amounts approximate fair values.
Earnings per Common Share: Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed using the weighted average number of common and dilutive equivalent shares outstanding during the period. Dilutive common equivalent shares consist of options to purchase common stock (only if those options are exercisable and at prices below the average share price for the period) and shares issuable upon the conversion of issued and outstanding preferred stock. Due to the net losses reported, dilutive common equivalent shares were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive for the periods presented. There were no common equivalent shares required to be added to the basic weighted average shares outstanding to arrive at diluted weighted average shares outstanding as of June 30, 2013 or 2012.
Income Taxes: The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized.
In 2006, the FASB issued FIN 48, currently prescribed in FASB ASC 740, which clarifies the accounting for uncertainty in tax positions. This guidance prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed "more-likely-than-not" to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. There are no uncertain tax positions taken by the Company on its tax returns. Tax years subsequent to 2006 remain open to examination by U.S. federal and state tax jurisdictions.
Management of the Company is not aware of any additional needed liability for unrecognized tax benefits at June 30, 2013 and June 30, 2012. The Company has net operating losses of about $650,000 which begin to expire in 2022.
Reclassification: Certain amounts in the prior period cash flows have been reclassified to conform to the current period presentation. These reclassifications had no effect on net change in cash.
Impact of recently issued accounting standards
There were no new accounting pronouncements that had a significant impact on the Company's operating results or financial position.
Note 2. Going Concern
The Company's financial statements 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 for the foreseeable future. Since adopting "fresh-start" accounting as of September 5, 2002, the Company has accumulated losses aggregating to $650,205 and has insufficient working capital to meet operating needs for the next twelve months as of June 30, 2013, all of which raise substantial doubt about the Company's ability to continue as a going concern.
Note 3. Stockholders' Deficit
Common Stock
The articles of incorporation authorize the issuance of 100,000,000 shares of common stock, par value $0.0001. All issued shares of common stock are entitled to one vote per share of common stock.
Preferred Stock
The articles of incorporation authorize the issuance of 5,000,000 shares of preferred stock with a par value of $0.0001 per share. None are issued
Stock Based Compensation
There were no grants of employee or non-employee stock or options in either fiscal period ended June 30, 2013 or 2012.
Note 4. Convertible Notes-Shareholders
In April 2010, we issued two convertible promissory notes in the amount of $97,500 to two shareholders, bearing interest at 12% per annum until paid or converted. Interest is payable upon the maturity date at December 31, 2013. The initial conversion rate of the notes had been $0.10 per share. The notes formalized a like amount due through the accretion of cash advances and the fair value of services provided without cost covering several years. On May 8, 2013, the Company's board of directors authorized and approved the adjustment of the conversion price of the notes from $0.10 per share to $0.05 per share. In connection with the change of control transaction, two former principal shareholders transferred and assigned all $195,000 of the two convertible notes to three unaffiliated third parties. Subsequently, a total of $159,500 of these convertible notes were transferred to GreenStone. On July 11, 2013, the interest rate for the convertible notes in the aggregate amount of $195,000 was adjusted to 1% per annum.
In accordance Accounting Standard Codification ( "ASC # 815"), Accounting for Derivative Instruments and Hedging Activities, we evaluated the note holder's non-detachable conversion right provision and liquidated damages clause, contained in the terms governing the Note to determine whether the features qualify as an embedded derivative instruments at issuance. Such non-detachable conversion right provision and liquidated damages clause did not need to be accounted as derivative financial instruments. Additionally, since the conversion price was below the current stock price a further evaluation needed to be performed for the existence of a beneficial conversion feature.
At April 2010, when the convertible notes were issued the price of our stock was $3.99, such price would have created a beneficial conversion feature but as the Company is and has been so thinly traded during the last 3 years, the fair value of the stock price was deemed not to be a fair value the conversion feature. Management decided that because the Company ability to continue as a going concern was in question and that it has no revenue sources that a conversion price of $0.10 was a better measure of fair market value. Based on that decision, no beneficial conversion feature was reflected in the financial statements.
Note 5. Related Party Transactions
Fair value of services:
During the year ended June 30, 2013, our CEO provided services to the Company, which services were accrued and valued at $2,000 in month. The total of these accrued expenses was $24,000 for the year 2013 and 2012 and is reflected in the statement of operations as general and administrative expenses.
During the year ended June 30, 2013, the Company's non-executive director who was appointed to the board of directors on December 7, 2009, was entitled to receive compensation of $1,000 per quarter for a total of $4,000 during years ended June 30, 2013 and 2012, respectively.
An entity affiliated by common management to the Company provided securities compliance services related to SEC filing services valued at $25,500 during 2013 and $24,000 during 2012. This amount was also reflected in the statement of operations as general and administrative expenses.
The Company leases office space at a rate of $1,000 per month from an entity controlled by our board members.
Due to Related Parties:
Amounts due related parties consist of:
- Expenses incurred in meeting ongoing disclosure and reporting requirements are accrued and payable to the principal shareholders and officers
- the fair value of services of management provided to the Company
- and the fair value of services provided by an entity affiliated by common management
Such items due totaled $419,196 at June 30, 2013 and $340,500 at June 30, 2012, of which $195,000 of these amounts were presented as convertible notes in the accompanying balance sheets as of June 30, 2013 and 2012.
In July 2013, the advances from related parties were waived and the convertible notes were transferred as part of a change in control. See Note 7 - Subsequent Events.
Note 6. Commitments and Contingencies
There are no pending or threatened legal proceedings as of June 30, 2013. The Company has no non-cancellable operating leases.
Note 7. Subsequent Events
Subsequent to our fiscal year ended June 30, 2013, the Company had a change in control on July 8, 2013 as a result of the sale by our former principal shareholders, Richard Rubin, Thomas J. Craft, Jr. and Ivo Heiden, of their 324,000 shares of common stock, representing approximately 61.8% of the Company's outstanding common stock, to GreenStone Industries Ltd. In addition, in contemplation of the private sale of the 324,000 shares to GreenStone, on July 2, 2013, Messrs. Rubin and Heiden agreed to waive liabilities owed to them, which totaled $224,196 at June 30, 2013. In connection with the change of control transaction, two former principal shareholders transferred and assigned all $195,000 of the two convertible notes to three unaffiliated third parties, . . .
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