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 convertible note to determine whether the features qualify as an embedded derivative instrument at issuance. Such non-detachable conversion right provision and liquidated damages clause did not need to be accounted as derivative financial instruments.
On October 12, 2018, we issued a $75,000 convertible promissory note to Ivo Heiden evidencing previously accrued compensation. The convertible notes bears interest at 8% per annum until paid or converted. The conversion price of the note is $0.034 per share, the closing price of the Company's common stock on the date of issuance. Interest will be payable upon the maturity date at October 12, 2020. During the period ended March 31, 2019, the Company expensed $1,463 in interest. As of March 31, 2019, the Company has recorded $2,778 in accrued interest with respect to this convertible note.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 Convertible Note to determine whether the features qualify as an embedded derivative instrument at issuance. Such non-detachable conversion right provision and liquidated damages clause did not need to be accounted as derivative financial instruments.
The liquidated damages are justifiable, clearly reasonable and proportional to the prejudice that would be suffered by the Non-Defaulting Party in case of default on the part of the Defaulting Party to abide by their undertakings and, consequently, each party hereby recognises that the liquidated damages clause is not abusive but rather realistic given its purpose and that it does not give an excessive or unfair advantage to the Non-Defaulting Party.
a) The undertakings pursuant to Sections 5.1.9, 5.1.10 and 5.1.11 are reasonable in terms of the duration, the territory and the activities to which they refer; b) The scope and consequences of the liquidated damages clause are clear, concise and coherent; c) The terms of this Section and of Sections 5.1.9, 5.1.10 and 5.1.11 have been negotiated in good faith by the parties hereto which terms they consider reasonable and the parties declare being satisfied therewith; and d) The liquidated damages are justifiable, clearly reasonable and proportional to the prejudice that would be suffered by the Non-Defaulting Party in case of default on the part of the Defaulting Party to abide by their undertakings and, consequently, each party hereby recognises that the liquidated damages clause is not abusive but rather realistic given its purpose and that it does not give an excessive or unfair advantage to the Non-Defaulting Party. The payment of any liquidated damages pursuant to this Section or pursuant to any judicial proceedings instituted by the beneficiaries of the undertakings in this Section shall not in any way constitute acquiescence to such default or to the furtherance thereof. In addition, if despite the foregoing, a court should consider any of the aforementioned restrictions or the resulting liquidated damages to be excessive, the parties consent to such court reducing the scope of such restriction or the amount of the contested liquidated damages, to an amount which the court considers to be reasonable under the circumstances as opposed to rendering the restrictions or the liquidated damages unenforceable. Finally, it is understood between the parties that the aforementioned confidentiality and non-competition restrictions are separate and distinct from one another, so that if one restriction is considered to be unenforceable, this shall not in itself be cause for the other restrictions to be considered unenforceable.
In accordance to ASC #815, Accounting for Derivative Instruments and Hedging Activities, we evaluated the 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 for as derivative financial instruments. Additionally, since the conversion price of the two notes represented the fair market value of the Company's common stock at the time of issuance, no beneficial conversion feature exists. We believe that the Company's shares of common stock is and have been very thinly traded during the last 3 years and that the fair value of the stock price was deemed not to be a fair value. 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 conversion price was a better measure of fair market value. Based on that decision, no beneficial conversion feature was reflected in the financial statements.
The Fineldo SPA contains a €40 million (approximately $54.8 million based on the exchange rate as of June 30, 2014) liquidated damages clause payable by either party (plus additional damages, if any) in case that party breaches its obligation to consummate the closing. In addition to customary business representations and warranties concerning Indesit and related indemnification provisions from Fineldo, the Fineldo SPA also contains a special indemnity from Fineldo with respect to
In accordance to “ASC # 815”, Accounting for Derivative Instruments and Hedging Activities, we evaluated the 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 for as derivative financial instruments. Additionally, since the conversion price of the two notes represented the fair market value of the Company’s common stock at the time of issuance, no beneficial conversion feature exists.
2. In accordance with your Conversion Services Agreement with Titanium Metals Corporation pertaining to events of defaults and remedies, please explain how you handle the liquidated damages clause from a revenue recognition perspective and tell us whether there have been any instances of non-performance as defined in the agreement, and if so, how they have been accounted for. If there have been no instances of non-performance to date, please describe how you would account for those cases.
The Conversion Services Agreement with Titanium Metals Corporation contains certain default provisions which could result in contract termination and liquidated damages including, without limitation, provisions regarding a change of control, failure to comply with non-competition provisions and failure to meet established quality and on-time delivery measures. Management carefully considered each provision and the likelihood of the occurrence of a default that would result in liquidated damages. Based on the nature of the events that could trigger the liquidated damages clause, and the availability of the cure periods set forth in the agreement, management determined that none of these circumstances are reasonably likely to occur. Through nearly seven years of performing under this contract, there have been no defaults, and management continues to believe that none are reasonably likely to occur. Therefore, events resulting in liquidated damages have not been factored in as a reduction to the amount of revenue recognized over the life of the contract. If an event of default occurred and was not cured within any applicable grace period, the Company would recognize the impact of the liquidated damages in the period of default and re-evaluate revenue recognition under the
Note 1. Basis of PresentationPeregrine 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.In the opinion of management, the accompanying unaudited condensed 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. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended June 30, 2012. The accounting policies are described in the “Notes to the Financial Statements” in the 2012 Annual Report on Form 10-K and updated, as necessary, in this Form 10-Q. The year-end balance sheet data presented for comparative purposes was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. The results of operations for the three and nine months ended March 31, 2013 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.Accounting PoliciesUse of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles 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 March 31, 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 income or loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income 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.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.FASB ASC # 740 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 liability for unrecognized tax benefits at March 31, 2013 and June 30, 2012, respectively.Impact of recently issued accounting standardsThere were no new accounting pronouncements that had a significant impact on the Company’s operating results or financial position.Note 2. Going ConcernThe 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 and has insufficient working capital to meet operating needs for the next twelve months as of March 31, 2013, all of which raise substantial doubt about the Company's ability to continue as a going concern. We have no present operations or revenues and our current activities are related to seeking new business opportunities, including seeking an acquisition or merger with an operating company. The Registrant does not intend to limit itself to a particular industry and has not established any particular criteria upon which it shall consider and proceed with a business opportunity.Note 3. Convertible Notes to Related PartiesIn April 2010, we issued one convertible promissory note in the amount of $97,500 to our President/Director and one convertible promissory note in the amount of $97,500 to a Director. The notes bear interests at 12% per annum until paid or converted. Interest is payable upon the maturity date at December 31, 2013. The initial conversion rate is $0.10 per share. The note formalized a like amount due through the accretion of cash advances and the fair value of services provided without cost covering several years.In accordance with Accounting Standard Codification ( “ASC # 815”), Accounting for Derivative Instruments and Hedging Activities, we evaluated the holders non-detachable conversion right provision and liquidated damages clause, contained in the terms governing the notes stated above 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. However, 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 of fair value of 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 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 4. Related Party TransactionsFair value of services:The executive officer provides services to the Company, which services are accrued and are valued at $2,000 per month. The total of these accrued expenses was $18,000 for the nine months ended March 31, 2013 and 2012 and is reflected in the statement of operations as general and administrative expenses.The Company’s non-executive director who was appointed to the board of directors on December 7, 2009, is entitled to receive compensation of $1,000 per quarter, which amount is reflected under general and administrative expenses during the three and nine-months period ended March 31, 2013 and 2012.An entity affiliated by common management to the Company provided securities compliance services related to SEC filing services valued at $18,000 during the nine-month periods ended March 31, 2013 and 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.Amounts due to related parties totaled $424,500 at March 31, 2013 and $340,500 at June 30, 2012, including the convertible notes.
Accounting for Derivative Instruments and Hedging Activities, and ASC 815-40, Contracts in an Entity’s Own Stock. The Company considers these standards applicable by adopting “View A” of the Issue Summary–The Effect of a Liquidated Damages Clause on a Freestanding Financial Instrument in which the Warrants and the related registration rights agreement are viewed together as a combined instrument that is indexed to the Company's stock. The embedded conversion feature of the Debentures has not been classified as a derivative financial instrument because the Company believes that they are “conventional” as defined in ASC 470-20, Conventional Convertible Debt Instrument.
THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS OF A LOCK-UP AGREEMENT AND A SHARE EXCHANGE AGREEMENT WITH THE ISSUER. THESE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED, GIFTED OR OTHERWISE DISPOSED OF OTHER THAN IN ACCORDANCE WITH THE TERMS OF SUCH AGREEMENTS, AND ANY ATTEMPT TO DO SO SHALL BE VOID. THESE SHARES ARE ALSO THE SUBJECT OF A LIQUIDATED DAMAGES CLAUSE OF THE SHARE EXCHANGE AGREEMENT, WHICH PROVIDES THAT, IN THE EVENT OF ANY UNCURED MATERIAL BREACH THEREOF, THE SHARES REPRESENTED HEREBY SHALL BE IMMEDIATELY AND AUTOMATICALLY FORFEITED AND CANCELLED ON THE BOOKS AND RECORDS OF THE ISSUER, WITHOUT THE REQUIREMENT FOR DELIVERY OF THIS INSTRUMENT AND WITHOUT THE REQUIREMENT FOR THE ISSUER TO POST ANY BOND OR TAKE ANY FURTHER ACTION WHATSOEVER.
The Company accounts for its Warrants, which are Class B Warrants issued in a private placement of the 8% Convertible Debentures (the “Debentures”) with detachable Class A Warrants and Class B Warrants on April 10, 2006, and amended on June 8, 2010 to extend their expirations date to April 10, 2013, and reduce the exercise prices to amounts between $1.00 and $1.30 from $1.75 (see Note 3, 8% Convertible Debentures and Derivative Financial Instruments), as derivatives under the guidance of ASC 815-10, Accounting for Derivative Instruments and Hedging Activities, and ASC 815-40, Contracts in an Entity’s Own Stock. The Company considers these standards applicable by adopting “View A” of the Issue Summary–The Effect of a Liquidated Damages Clause on a Freestanding Financial Instrument in which the Warrants and the related registration rights agreement are viewed together as a combined instrument that is indexed to the Company's stock. The embedded conversion feature of the Debentures has not been classified as a derivative financial instrument because the Company believes that they are “conventional” as defined in ASC 470-20, Conventional Convertible Debt Instrument.
Derivative financial instrumentsThe Company accounts for its Warrants as derivatives under the guidance of ASC 815-10, Accounting for Derivative Instruments and Hedging Activities, and ASC 815-40, Contracts in an Entity’s Own Stock. The Company considers these standards applicable by adopting “View A” of the Issue Summary–The Effect of a Liquidated Damages Clause on a Freestanding Financial Instrument in which the Warrants and the related registration rights agreement are viewed together as a combined instrument that is indexed to the Company's stock. The embedded conversion feature of the Debentures has not been classified as a derivative financial instrument because the Company believes that they are “conventional” as defined in ASC 470-20, Conventional Convertible Debt Instrument.
The Warrants were classified as derivative financial instruments as a result of the registration rights agreement, which included a liquidated damages clause that was linked to an effective registration of such securities. Accordingly, the Company accounted for the Warrants as liabilities at estimated fair value. In accordance with the Company’s adoption of ASC 815-40, Contracts in Entity’s Own Stock, and ASC 825-20, Accounting for Registration Payment Arrangements, the classification of the warrant liability was changed to stockholders’ equity (additional paid in capital) as of January 1, 2007. The amended warrants do not carry a registration rights agreement.