ITEM 1. DESCRIPTION OF BUSINESS
Some of the statements contained in this Form 10-K of Peregrine Industries, Inc. (hereinafter the "Company", "We" or the "Registrant") discuss future expectations, contain projections of our plan of operation or financial condition or state other forward-looking information. In this registration statement, forward-looking statements are generally identified by the words such as "anticipate", "plan", "believe", "expect", "estimate", and the like. Forward-looking statements involve future risks and uncertainties, there are factors that could cause actual results or plans to differ materially from those expressed or implied. These statements are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and is derived using numerous assumptions. A reader, whether investing in the Company's securities or not, should not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report. Important factors that may cause actual results to differ from projections include, for example:
- the success or failure of management's efforts to implement the Registrant's plan of operation;
- the ability of the Registrant to fund its operating expenses;
- the ability of the Registrant to compete with other companies that have a similar plan of operation;
- the effect of changing economic conditions impacting our plan of operation;
- the ability of the Registrant to meet the other risks as may be described in future filings with the SEC.
Organizational History and General Background of the Registrant
The Company was incorporated in Florida in 1995 for the purpose of designing and manufacturing heat pump pool heaters, residential air conditioners and parallel flow coils for the heating, ventilation and air conditioning industry. 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. The Company emerged from bankruptcy in March 2004 free and clear of all liens, claims and obligations. On July 17, 2017, Peregrine Industries, Inc., (the "Registrant") issued a total of 22,477,843 or 97.7% of the issued common restricted shares of the Registrant's common stock, par value $0.0001 (the "Shares") to Dolomite Holdings Ltd., organized under the laws of the State of Israel and the corporate parent and principal shareholder of the Registrant ("Dolomite"). The Shares were issued upon the conversion by Dolomite, effective July 14, 2017, of principal and accrued interest owed by the Registrant to Dolomite evidenced by convertible notes and other short-term debt in the aggregate amount of $443,718, representing all of the liabilities of the Registrant at its fiscal year-ended June 30, 2017. The fair value of the shares was deemed to be the carrying value of the principal and accrued interest, $443,718. Dolomite was a related party therefore the settlement had no gain or loss. The issuance of the Shares was made in reliance upon the exemptions provided in Section 4(2) of the Securities Act of 1933, as amended (the "Act") and Regulation S promulgated by the United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act"). . Effective July 21, 2017, Dolomite sold, transferred and assigned the total of 22,477,843 restricted shares of the Registrant's common stock, to four persons, none of whom were affiliated with the Registrant or with Dolomite. The 22,477,843 Shares represented in excess of 97% of the Registrant's total issued and outstanding Shares at July 21, 2017, resulting in a change of control of the Company.
The new management has developed a business plan which they anticipate implementing within the current fiscal year.
Recent Developments	
On June 12, 2017, the Board of Directors of the Registrant appointed Mr. Zohar Shpitz as Chief Financial Officer (CFO) of the Registrant. Mr. Shpitz was appointed as CFO in connection with the resignation of Mr. Ofer Naveh as the Registrant's CFO, effective June 19, 2017. On July 21, 2017 all of the aforementioned resigned as directors, and officers, where appropriate, after appointing the following directors and officers: Miaohong Hanson, director and chief executive officer; John C. Hanson, director and vice president, finance; Donghai Shi, director and executive vice president; Ronaldo Panida, director; Lili Fan, Secretary; and Ting Wang executive assistant.
Business Objectives of the Registrant
The Registrant has no present operations, but, the new management has a business plan which it intends to pursue during the coming fiscal year. The Company has selected a target business on which to concentrate and plans to implement a business combination, unless Management determines that such transaction is not in the best interests of the Company and its shareholders. Accordingly, there is no basis for investors in the Company's common stock to evaluate the possible merits or risks of the target business or the particular industry in which it operates. To the extent we effect a business combination with a company or an entity in its early stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of an early stage or potential emerging growth company.
Employees
Because the Company, presently, has no operations we currently have no employees. The officers perform any duties necessary for corporate maintenance. Our CEO performs all duties related to the operations of this business. We also plan to utilize additional independent contractors on a part-time/as needed basis.
ITEM 1A.
ITEM 1A. RISK FACTORS
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.
ITEM 2.
ITEM 2. DESCRIPTION OF PROPERTIES
The Registrant's corporate office is located at 9171 W Flamingo Rd. Las Vegas, NV. The office facilities consist of approximately 3,000 square feet of executive office space and are shared with the related party acquisition target. The Registrant believes that the office facilities are sufficient for the foreseeable future and this arrangement will remain until we consummate the business combination. The Companies are related through a commonality of officers and directors. Because of the lack of activity in the Registrant, its affairs did not require the use of either personnel or space and the parties agreed that a rental charge was not appropriate.
ITEM 3.
ITEM 3. LEGAL PROCEEDING
None.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTER
(a) Market Price Information
Our common stock is currently quoted on the OTCQB under the symbol PGID, an inter-dealer automated quotation system for equity securities not included on The NASDAQ Stock Market. Quotation of the Company's securities on the OTCQB limits the liquidity and price of the Company's common stock more than if the Company's shares of common stock were listed on The NASDAQ Stock Market or a national exchange. For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. The below prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.
(b) As of June 30, 2019, our shares of common stock were held by approximately 60 stockholders of record. The Company's transfer agent is VStock Transfer, LLC.
(c) Dividends
We currently do not pay cash dividends on our common stock and have no plans to reinstate a dividend on our common stock.
(d) Sale of Unregistered Securities
On July 17, 2017, Peregrine Industries, Inc., issued a total of 22,477,843 of its restricted common shares, par value $0.0001, to Dolomite Holdings Ltd., the corporate parent and principal shareholder of the Registrant, at that time. The Shares were issued upon the conversion by Dolomite, effective July 14, 2017, of principal and accrued interest owed by the Registrant to Dolomite evidenced by convertible notes and other short-term debt in the aggregate amount of $443,718, representing all of the liabilities of the Registrant at its fiscal year-ended June 30, 2017. The fair value of the shares is determined to be the carrying value of the principal and accrued interest of $443,718 since Dolomite was related party. Therefore the settlement didn’t have any gain or loss.
The issuance of the Shares was made in reliance upon the exemptions provided in Section 4(2) of the Securities Act of 1933, as amended and Regulation S promulgated by the United States Securities and Exchange Commission under the Securities Act of 1933, as amended.
Effective July 21, 2017, Dolomite sold, transferred and assigned a total of 22,477,843 restricted shares of the Registrant's common stock, par value $0.0001 that it acquired upon the conversion of all liabilities owed by the Registrant to Dolomite, to four persons, none of whom were affiliated with the Registrant or with Dolomite. The 22,477,843 Shares represented in excess of 97% of the Registrant's total issued and outstanding Shares at July 21, 2017, resulting in a change of control of the Company.
(e) Equity Compensation Plans
We have no equity compensation plans.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
N.A.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND PLAN OF OPERATION
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.
On July 21, 2017, the entire board of directors resigned, as directors and officers, after appointing the following directors and officers: Miaohong Hanson, director and chief executive officer; John C. Hanson, director and vice president, finance; Donghai Shi, director and executive vice president; Ronaldo Panida, director; Lili Fan, Secretary; and Ting Wang executive assistant.
Results of Operations during the year ended June 30, 2019 as compared to the year ended June 30, 2018
We have not generated any revenues during the 2019 and 2018 fiscal years. We have operating expenses related to general and administrative expenses being a public company and interest expenses. We incurred $20,042 of administrative costs and net loss for the year ended June 30, 2019 compared to $15,963 in net loss due to expenses consisting of general and administrative expenses.
Liquidity and Capital Resources
On June 30, 2019, we had $3,000 cash on hand and had a current liability payable to a related party of $40,029 compared to cash on hand of $3,000, accounts payable of $1,024 and $18,963 owing to the same related party, at June 30, 2018.
During the year ended June 30, 2019 a related party paid $21,066 directly to vendors for the cost of administering the public company. That same related party loaned $3,000 unsecured, and non-interest bearing, to the company. We had a negative cash flow from operations of $21,066 during the year ended June 30, 2019 due to a net loss of $20,042 and a decrease in accounts payable of $1,024. We financed our negative cash flow from operations during the year ended June 30, 2019 through advances of $21,066 made by the related party, who paid vendors directly.
The Company currently plans to satisfy its cash requirements for the next 12 months through borrowings from its majority shareholders or a related party and believes it can satisfy its cash requirements so long as it is able to obtain financing from its controlling shareholders. The Company expects that money borrowed will be used during the next 12 months to satisfy the Company's operating costs, professional fees and for general corporate purposes.
The Company has only limited capital. Additional financing is necessary for the Company to continue as a going concern. Our independent registered auditors have issued an unqualified audit opinion for the years ended June 30, 2019 and 2018 with an explanatory paragraph on going concern.
Off-Balance Sheet Arrangements
As of June 30, 2019 and 2018, we did not have any off-balance sheet arrangements as defined in Item 303(a) (4) (ii) of Regulation S-K promulgated under the Securities Act of 1934.
Contractual Obligations and Commitments
As of June 30, 2019 and 2018, we did not have any contractual obligations.
Critical Accounting Policies
Our significant accounting policies are described in the notes to our financial statements for the years ended June 30, 2019 and 2018, and are included elsewhere in this registration statement.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have not entered into, and do not expect to enter into, financial instruments for trading or hedging purposes.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and board of directors of
Peregrine Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Peregrine Industries, Inc. (the “Company”) as of June 30 2019, and the related statements of operations, stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2019, and the 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.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ KSP Group, Inc.
CERTIFIED PUBLIC ACCOUNTANTS
We have served as the Company’s auditor since 2019.
Los Angeles, CA
September 27, 2019
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and board of directors of
Peregrine Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Peregrine Industries, Inc. (the “Company”) as of June 30 2018, and the related statements of operations, stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2018, and the 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.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ MaloneBailey, LLP
www.malonebailey.com
We have served as the Company's auditor since 2017.
Houston, Texas
November 19, 2018
Peregrine Industries, Inc.
Balance Sheets
(see accompanying notes to audited financial statements)
PEREGRINE INDUSTRIES, INC.
Notes to Financial Statements
For the Years Ended June 30, 2019 and 2018
NOTE 1 - ORGANIZATION AND OPERATIONS
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 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 Dolomite Industries Ltd ("Dolomite"). In connection with the private sale of their shares of common stock to Dolomite on July 2, 2013, Messrs. Rubin and Heiden agreed to waive a total of $224,196 in liabilities owed to them at June 30, 2013. In connection with the change of control transaction, two former principal shareholders transferred and assigned all $195,000 of their two convertible notes to three unaffiliated third parties and one affiliated party. See also note 3. On June 12, 2017, the Board of Directors of the Registrant appointed Mr. Zohar Shpitz as Chief Financial Officer (CFO) of the Registrant. Mr. Shpitz was appointed as CFO in connection with the resignation of Mr. Ofer Naveh as the Registrant's CFO, effective June 19, 2017. On July 21, 2017, new management acquired, 22,477,843 or 97.7% of the issued common restricted shares. The new management is developing a business plan which they anticipate implementing within the current fiscal year.
NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
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.
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.
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, 2019 and 2018.
Recently Adopted Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.
PEREGRINE INDUSTRIES, INC.
Notes to Financial Statements
For the Years Ended June 30, 2019 and 2018
Related Party Transactions
We consider all who own more than 5% shares to be related parties and record any transactions between them and the Company to be related party transactions and disclose such transactions on notes to the Financial Statements.
Income taxes
The Company follows ASC Topic 740 for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.
The Company applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC Topic 740 only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities. As of June 30, 2019, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positions with less than a 50% likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had a material effect on the Company.
The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months.
The Company classifies tax-related penalties and net interest as income tax expense. As of June 30, 2019, no income tax expense has been incurred.
NOTE 3 - 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 $638,713, as of June 30, 2019 and has insufficient working capital to meet operating needs for the next twelve months. All of which raise substantial doubt about the Company's ability to continue as a going concern.
PEREGRINE INDUSTRIES, INC.
Notes to Financial Statements
For the Years Ended June 30, 2019 and 2018
The financial statements do not include any adjustment relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company is taking appropriate action to provide the necessary capital to continue its operations. These steps include, but are not limited to: 1) implementation of new business plan 2) focus on sales to minimize the need for capital at this stage; 3) raising equity financing; 4) continuous focus on reductions in cost where possible.
NOTE 4 - RELATED PARTY TRANSACTIONS
On July 17, 2017, Peregrine Industries, Inc., issued a total of 22,477,843 of its restricted common shares, par value $0.0001, to Dolomite Holdings Ltd., the corporate parent and principal shareholder of the Registrant. The Shares were issued upon the conversion by Dolomite, effective July 14, 2017, of principal and accrued interest owed by the Registrant to Dolomite evidenced by convertible notes and other short-term debt in the aggregate amount of $443,718, representing all of the liabilities of the Registrant at its fiscal year-ended June 30, 2017. The issuance of the Shares was made in reliance upon the exemptions provided in Section 4(2) of the Securities Act of 1933, as amended and Regulation S promulgated by the United States Securities and Exchange Commission under the Securities Act of 1933, as amended.
Effective July 21, 2017, Dolomite sold, transferred and assigned a total of 22,477,843 restricted shares of the Registrant's common stock, par value $0.0001 that it acquired upon the conversion of all liabilities owed by the Registrant to Dolomite, to four persons, none of whom were affiliated with the Registrant or with Dolomite. The 22,477,843 Shares represented in excess of 97% of the Registrant's total issued and outstanding Shares at July 21, 2017, resulting in a change of control of the Company.
During the year ended June 30, 2019, Mace Corporation, a related party has paid a total of $21,066 to service providers, compared to $15,963 paid during the year ended June 30, 2018. The advances were unsecured, non-interest bearing with no stated repayment terms.
NOTE 5 - 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. None have been issued since July 21, 2017.
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, 2019 or 2018.
PEREGRINE INDUSTRIES, INC.
Notes to Financial Statements
For the Years Ended June 30, 2019 and 2018
NOTE 6 - CONVERTIBLE NOTES
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 was 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. In connection with the change of control transaction, two former principal shareholders transferred and assigned all $195,000 of their two convertible notes to three unaffiliated third parties, of which $159,500 of these convertible notes were subsequently transferred to Dolomite, two convertible notes each in the amount of $8,500 were transferred to two unaffiliated parties and one convertible note in the amount of $18,500 was transferred to a third unaffiliated party. On July 11, 2013, the annual interest rate for the $195,000 of convertible notes was adjusted from 12% to 1%. Interest is payable upon the maturity date at July 1, 2017. The conversion rate of all convertible notes is $0.05 per share. In November 2015, Dolomite purchased the three unaffiliated party notes with principal amount of $35,500 including accrued interest at principal value. As of June 30, 2017, we have four convertible promissory notes outstanding all held by our control shareholder Dolomite totaling $195,000, bearing interest at the rate of 1% per annum until paid or converted. Reference is made to Note 7. Subsequent Events, below with respect to the disclosure that effective July 17, 2017, the four convertible notes together with accrued interest was converted into restricted shares of common stock.
On September 12, 2013, we entered into a Loan Agreement with Dolomite under which we receive funding for general operating expenses from time-to-time as needed by the Company. The Dolomite Loan bears interest of 1% per annum and shall be due and payable on a date 366 days from the date of the loan. As of June 30, 2017, the outstanding balance on this loan was $164,356. Reference is made to Note 7. Subsequent Events, below with respect to the disclosure that effective July 17, 2017, the Loan and accrued interest was converted into restricted shares of common stock.
In accordance with 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.
In April 2010, when the convertible notes were originally 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 for the conversion feature. Management decided that because the Company's ability to continue as a going concern was in question and that it has no revenue sources that the actual sale price was a better measure of fair market value. Based on that decision, no beneficial conversion feature was reflected in the financial statements.
PEREGRINE INDUSTRIES, INC.
Notes to Financial Statements
For the Years Ended June 30, 2019 and 2018
NOTE 7 - INCOME TAX
Of the total net operating loss carryover of $84,080, 20,042 incurred during the year ended June 30, 2019 will expire in 2039. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forward for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forward may be limited as to its use in future years.
The cumulative tax effect at the expected rate of 21% of significant items comprising our net deferred tax amount is as follows:
NOTE 8 - SUBSEQUENT EVENTS
Subsequent to June 30, 2019 and through the date when this report was completed, the Company has evaluated subsequent events through the date the financial statements were issued and has not identified any reportable events.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Management's Report on Disclosure Controls and Procedures
Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Rules 13a-15(b) and 15d-15(b) under the Exchange Act, requires us to carry out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2019. This evaluation was implemented under the supervision and with the participation of our officers and directors.
Based on this evaluation, management concluded that, as of June 30, 2019 our disclosure controls and procedures are ineffective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner and (2) accumulated and communicated to our management to allow timely decisions regarding required disclosure.
Our officers and directors have concluded that our disclosure controls and procedures had the following material weaknesses:
We were unable to maintain any segregation of duties within our financial operations due to our reliance on limited personnel in the finance function. This control deficiency resulted in an audit adjustment to our financial statements, and could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties.
We do not have an independent Board of Directors, nor do we have a board member designated as an independent financial expert. The Board of Directors is comprised of four members who also serve as executive officers. As a result, there is a lack of independent oversight of the management team, lack of independent review of our operating and financial results, and lack of independent review of disclosures made by us; and documentation of all proper accounting procedures is not yet complete. There is a lack of formal documentation of internal control policies and procedures.
To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, the following:
Engaging consultants to assist in ensuring that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures;
Hiring additional qualified financial personnel;
Expanding our current board of directors to include additional independent individuals willing to perform directorial functions; and
Increasing our workforce in preparation for exiting the development stage and commencing revenue producing operations.
Since the recited remedial actions will require that we hire or engage additional personnel, these material weaknesses may not be overcome in the near-term due to our limited financial resources. Until such remedial actions can be realized, we will continue to rely on the limited advice of outside professionals and consultants. These initiatives will be subject to our ability to obtain sufficient future financing and subject to our ability to start generating revenue.
Management's Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of our financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our officers have assessed the effectiveness of our internal controls over financial reporting as of June 30, 2019. In making this assessment, management used the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon its assessment, management concluded that, as of June 30, 2019, our internal control over financial reporting was ineffective.
Management has identified a lack of sufficient personnel in the accounting function due to our limited resources with appropriate skills, training and experience to perform the review processes to ensure the complete and proper application of generally accepted accounting principles. We are in the process of developing and implementing remediation plans to address our material weaknesses in our internal controls.
Management has identified specific remedial actions to address the material weaknesses described above:
Improve the effectiveness of the accounting group by augmenting our existing resources with additional consultants or employees to improve segregation procedures and to assist in the analysis and recording of complex accounting transactions and preparation of tax disclosures. We plan to mitigate the segregation of duties issue by hiring additional personnel in the accounting department once we have achieved positive cash flow from operations and/or have raised significant additional working capital; and improve segregation procedures by strengthening cross approval of various functions including cash disbursements and quarterly internal audit procedures where appropriate.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to an exemption for smaller reporting companies under Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Changes in Internal Control over Financial Reporting
During the fourth quarter ended June 30, 2019 there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, AND CORPORATE GOVERNANCE
The following table sets forth the names and ages of the members of our Board of Directors and our executive officers and the positions held by each:
Miaohong Hanson, President, CEO and Director: Ms. Miaohong Hanson, age 54 has served as President and CEO of Mace Corporation from December 2015 to present. She was Vice President and CFO of J.C. Hanson & Associates from 2006 to 2015. Ms. Hanson was previously Vice President, Sales of Jiangxi Techmed Inkjet Co. Ltd, from 1998 to 2005 and was responsible for management of the sales team for the South China Region. She has studied Business Accounting at Arizona Western College and Business at Zhejiang University. Ms. Hanson is Executive Vice Chairperson of the Zhejiang Chamber of Commerce of America and Vice Chairperson of the Zhejiang Association of Las Vegas. Ms. Hanson speaks fluent Chinese and English. Ms. Hanson was selected for the Board of Directors because of her general business experience and knowledge of the Chinese market.
Dong Hai Shi, Executive Vice President and Director. Dong Hai Shi, age 54, has served as Executive V.P. of Mace Corporation from December 2015 to present. He also is the founder and chairman Hong Kong WeChat Business E-Commerce Ltd and USA WeChat Business E-Commerce, Inc. He was founder and chairman of Shang Hai Hai Tong Architectural Ltd., Shang Hai Ao Tong Property Management Inc., and Shang Hai Si Tong Construction Ltd. He was the president of his own construction company in Shang Hai from 2005 to 2009. He speaks fluent Chinese and some English. Mr. Shi was selected for the Board of Directors because of his general business experience, knowledge and contacts in China.
John C. Hanson, Vice President - Finance and Director. John C. Hanson, age 73, is presently on the Board of Directors and has served as the Vice President of Finance, of the Mace Corporation from December, 2015 to present. He was the Owner/President of J.C. Hanson & Associates,Inc. from 1988 thru 2014. Prior to 1988 John held the position as Midwest Area Service Manager for the Trailways Bus Line System with 135 personnel under his management. Mr. Hanson attended McHenry County College in Illinois from 1969/1971. Mr. Hanson was selected as a Director because of his general business experience in the United States of America.
Lili Fan, Secretary/Treasurer. Lili Fan, age 30, has served as Executive assistant/Office Manager of Mace Corporation from April 2016 to present. She was International Sales Manager/ Raw Materials Purchaser of Zhe Jiang Wei Hao Inkjet Technology Co.; Ltd from 2014 to 2016. Ms. Fan was previously Manager of Customer service and Human resources of Wuzhounet.Inc, from 2013 to 2014. She graduated with a Bachelor of Science degree in Business Administration, from W. P. Carey School of Business of Arizona States University. She also earned an associate degree of Business from Arizona Western College.
Ronaldo Panida, Director. Ronaldo Panida, age 57, is presently employed by Wal-Mart Vision Center as a Vision Center Manager. He was previously a District Manager for the Optical Division in Reno, NV, Hawaii and Alaska. Duties were, Operations, Budgeting and Compliance. He attended Leeward College of University of Hawaii major in Liberal Arts. Attended Kenway School of Accounting and received a Diploma as a Fullcharge Accountant in Hawaii. Mr. Panida later became an Optical Technician in Hawaii and received a Refracting Optician Diploma. Mr. Panida is currently a Licensed Optician in both the state of Nevada and the state of Hawaii. He is certified in both American Board of Optician and National Contact Lens Certified. Mr. Panida was selected as a director because of his business experience in a retail environment.
Code of Ethics
The Corporation has adopted a Code of Ethics that are designed to deter wrongdoing and to promote honest and ethical conduct, full, fair, accurate, timely and understandable disclosure in the Registrant's SEC reports and other public communications. The Code of Ethics promotes compliance with applicable governmental laws, rules and regulations.
Section 16(a) Compliance
Section 16(a) of the Securities and Exchange Act of 1934 requires the Registrant's directors and executive officers, and persons who own beneficially more than ten percent (10%) of the Registrant's Common Stock, to file reports of ownership and changes of ownership with the Securities and Exchange Commission. Copies of all filed reports are required to be furnished to the Registrant pursuant to Section 16(a). Based solely on the reports received by the Registrant and on written representations from reporting persons, the Registrant was informed that its officer and director have not filed all reports required under Section 16(a).
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
No executive compensation was paid during the fiscal periods ended June 30, 2019, and 2018. The Registrant has no employment agreement with its Directors.
Executive Employment Agreements
To date, we have not entered into any employment agreements with our executive officers.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock as of June 30, 2019. The information in this table provides the ownership information for: each person known by us to be the beneficial owner of more than 5% of our common stock; each of our directors; each of our executive officers; and our executive officers and directors as a group. Beneficial ownership has been determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to the shares. Unless otherwise indicated, the persons named in the table below have sole voting and investment power with respect to the number of shares indicated as beneficially owned by them.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
During the last two fiscal years, to the knowledge of the Registrant, there was no person who had or has a direct or indirect material interest in any transaction or proposed transaction to which the Registrant was or is a party.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The Registrant's Board of Directors appointed McConnell & Jones, LLP as independent public accountant for the fiscal year ended June 30, 2017. The engagement was terminated on August 15, 2017 and MaloneBailey, LLP was appointed on August 28, 2017. There were no reportable events or disagreements with McConnell & Jones on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of McConnell & Jones, would have caused the Company to make reference to the subject matter of the disagreement(s) in connection with this report. MaloneBailey, LLP performed audit and reviews for year ended June 30, 2018, and McConnell & Jones, LLP performed audit and reviews for year ended June 30, 2016 and 2017.
Principal Accounting Fees
The following table presents the fees for professional audit services rendered by McConnell & Jones, LLP for the audit of the Registrant's annual financial statements and fees billed for other services rendered by MaloneBailey for the year ended June 30, 2018 and KSP for year ended June 30, 2019
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(a) The following documents are filed as exhibits to this report on Form 10-K or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and on the date indicated.
PEREGRINE INDUSTRIES INC.
By: /s/ Miahong Hanson
President, Chief Executive Officer and Chief Financial Officer
Date: September 30, 2019
Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Miahong Hanson
President, Chief Executive Officer and Chief Financial Officer
Date: September 30, 2019