SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-55811
PEONY GROVE ACQUISITION CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 82-1859022
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9454 Wilshire Boulevard, Suite 612
Los Angeles, California 90212
(Address of principal executive offices) (zip code)
310-888-1870
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of
the Exchange Act.
Large accelerated filer Accelerated Filer
Non-accelerated filer Smaller reporting company X
Emerging growth company
(do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of stock, as of the latest practicable date.
Class Outstanding at
August 14, 2018
Common Stock, par value $0.0001 20,000,000
Documents incorporated by reference: None
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FINANCIAL STATEMENTS
Condensed Balance Sheets as of June 30, 2018 (unaudited) and
December 31, 2017 2
Condensed Statements of Operations for the Three
and Six Months Ended June 30, 2018 and for the period
from May 17, 2017 (Inception) to June 30, 2017 (unaudited) 3
Condensed Statements of Cash Flows for the Six Months
Ended June 30, 2018 and for the period from May 17, 2017
(Inception) to June 30, 2017 (unaudited) 4
Notes to Condensed Financial Statements (unaudited) 5-8
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PEONY GROVE ACQUISITION CORPORATION
CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
2018 2017
------------ ------------
(Unaudited)
Current assets
Cash $ - $ -
------------ ------------
Total assets $ - $ -
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued liabilities $ 500 $ 2,000
------------ ------------
Total liabilities 500 2,000
------------ ------------
Stockholders' Equity
Preferred stock, $0.0001 par value
20,000,000 shares authorized;
none issued and outstanding at
June 30, 2018 and December 31,
2017, respectively - -
Common Stock, $0.0001 par value,
100,000,000 shares authorized;
20,000,000 shares issued and
outstanding at June 30, 2018 and
December 31, 2017, respectively 2,000 2,000
Additional paid-in capital 2,712 312
Accumulated deficit (5,212) (4,312)
------------ ------------
Total stockholders' deficit (500) (2,000)
------------ ------------
Total liabilities and
stockholders' deficit $ - $ -
============ ============
The accompanying notes are an integral part of these unaudited condensed
financial statements.
2
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PEONY GROVE ACQUISITION CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the period
For the three For the six from May 17, 2017
months ended months ended (Inception) to
June 30, 2018 June 30, 2018 June 30, 2017
------------- ------------- --------------
Revenue $ - $ - $ -
Cost of revenues - - -
------------- ------------- --------------
Gross profit - - -
------------- ------------- --------------
Operating expenses 250 900 3,312
------------- ------------- --------------
Operating loss (250) (900) (3,312)
------------- ------------- --------------
Loss before income taxes (250) (900) (3,312)
Income tax expense - -
------------ ------------- --------------
Net loss $ (250) $ (900) $ (3,312)
============ ============= ==============
Loss per share -
basic and diluted $ (0.00) $ (0.00) $ (0.0)
============ ============= =============
Weighted average shares - 20,000,000 20,000,000 20,000,000
basic and diluted ============ ============ =============
The accompanying notes are an integral part of these unaudited
condensed financial statements.
3
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PEONY GROVE ACQUISITION CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the period
For the Six from May 17, 2017
Months Ended (Inception) to
June 30, 2018 June 30, 2017
------------- -------------
OPERATING ACTIVITIES
Net loss $ (900) $ (3,312)
Non-cash adjustments to reconcile
net loss to net cash:
Expenses paid for by stockholder
and contributed as capital 2,400 312
Common stock issued for services 2,000
Changes in Operating Assets and
Liabilities:
Accrued liabilities (1,500) 1,000
--------------- -------------
Net cash provided by (used in)
operating activities - -
-------------- -------------
Net increase in cash - -
Cash, beginning of period - -
-------------- -------------
Cash, end of period $ - $ -
============== =============
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Income tax $ - $ -
============== =============
Interest $ - $ -
============== =============
The accompanying notes are an integral part of these unaudited
condensed financial statements.
4
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PEONY GROVE ACQUISITION CORPORATION
Notes to Unaudited Condensed Financial Statements
NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Peony Grove Acquisition Corporation) (the "Company") was incorporated on
May 17, 2017 under the laws of the state of Delaware to engage in any lawful
corporate undertaking, including, but not limited to, selected mergers and
acquisitions. The Company has been in the developmental stage since inception
and its operations to date have been limited to issuing shares to shareholders
and filing a registration statement on Form 10 to register a class of its common
stock.
Any combination will normally take the form of a merger, stock-for-stock
exchange or stock-for-assets exchange. In most instances the target company
will wish to structure the business combination to be within the definition
of a tax-free reorganization under Section 351 or Section 368 of the Internal
Revenue Code of 1986, as amended. No assurances can be given that the Company
will be successful in locating or negotiating with any target company. The
Company has been formed to provide a method for a foreign or domestic private
company to become a reporting company with a class of securities registered
under the Securities Exchange Act of 1934.
BASIS OF PRESENTATION
The summary of significant accounting policies presented below is designed
to assist in understanding the Company's unaudited condensed financial
statements. Such unaudited condensed financial statements and accompanying
notes are the representations of the Company's management, who are responsible
for their integrity and objectivity. These accounting policies conform to
accounting principles generally accepted in the United States of America
("GAAP") in all material respects, and have been consistently applied in
preparing the accompanying unaudited condensed financial statements.
Certain information and footnote disclosures normally present in annual
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP") were
omitted pursuant to such rules and regulations. The results for the
six months ended June 30, 2018 are not necessarily indicative of
the results to be expected for the year ending December 31, 2018.
USE OF ESTIMATES
The preparation of unaudited condensed financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the condensed financial statements,
and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
CASH
Cash and cash equivalents include cash on hand and on deposit at banking
institutions as well as all highly liquid short-term investments with
original maturities of 90 days or less. The Company did not have cash
equivalents as of June 30, 2018 and December 31, 2017, respectively.
CONCENTRATION OF RISK
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash. The Company places its cash with
high quality banking institutions. The Company did not have cash balances
in excess of the Federal Deposit Insurance Corporation limit as of June 30,
2018 and December 31, 2017, respectively.
5
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PEONY GROVE ACQUISITION CORPORATION
Notes to Unaudited Condensed Financial Statements
INCOME TAXES
Under ASC 740, "Income Taxes," deferred tax assets and liabilities are
recognized for the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. Valuation allowances are established
when it is more likely than not that some or all of the deferred tax
assets will not be realized. As of June 30, 2018 and December 31, 2017,
there were no deferred taxes due to the uncertainty of the realization of
net operating loss or carry forward prior to expiration.
LOSS PER COMMON SHARE
Basic loss per common share excludes dilution and is computed by dividing
net loss by the weighted average number of common shares outstanding
during the period. Diluted loss per common share reflect the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the loss of the entity. As
of June 30, 2018 and December 31, 2017, there are no outstanding dilutive
securities.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows guidance for accounting for fair value measurements
of financial assets and financial liabilities and for fair value
measurements of nonfinancial items that are recognized or disclosed at
fair value in the unaudited condensed financial statements on a recurring
basis. Additionally, the Company adopted guidance for fair value
measurement related to nonfinancial items that are recognized and
disclosed at fair value in the unaudited condensed financial statements
on a nonrecurring basis. The guidance establishes a fair value hierarchy
that prioritizes the inputs to valuation techniques used to measure fair
value. The hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to measurements involving
significant unobservable inputs (Level 3 measurements). The three
levels of the fair value hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The carrying amounts of financial assets such as cash approximate their
fair values because of the short maturity of these instruments.
RECENT ACCOUNTING PRONOUNCEMENTS
In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations
(Topic 805): Clarifying the Definition of a Business". The amendments
in this ASU clarify the definition of a business with the objective of
adding guidance to assist entities with evaluating whether transactions
should be accounted for as acquisitions (or disposals) of assets or
businesses. Basically these amendments provide a screen to determine
when a set is not a business. If the screen is not met, the amendments
in this ASU first, require that to be considered a business, a set
must include, at a minimum, an input and a substantive process that
together significantly contribute to the ability to create output and
second, remove the evaluation of whether a market participant could
replace missing elements. These amendments take effect for public
businesses for fiscal years beginning after December 15, 2017 and
interim periods within those periods, and all other entities should
apply these amendments for fiscal years beginning after December 15,
2018, and interim periods within annual periods beginning after
December 15, 2019. The Company does not expect that the adoption of
this guidance will have a material impact on its condensed
financial statements.
In May 2017, the FASB issued ASU 2017-09, "Scope of Modification
Accounting", which amends the scope of modification accounting for
share-based payment arrangements, provides guidance on the types of
changes to the terms or conditions of share-based payment awards to
which an entity would be required to apply modification accounting
under ASC 718. For all entities, the ASU is effective for annual
reporting periods, including interim periods within those annual
reporting periods, beginning after December 15, 2017. Early adoption
is permitted, including adoption in any interim period. The Company
does not expect that adoption of this guidance will have a material
impact on its condensed financial statements and related
disclosures.
In November 2016, the FASB issued Accounting Standards Update No. 2016-18,
"Statement of Cash Flows (Topic 230): Restricted Cash" ("ASU 2016-18").
The new guidance is intended to reduce diversity in practice by adding or
clarifying guidance on classification and presentation of changes in
restricted cash on the statement of cash flows. ASU 2016-18 is effective
for annual and interim periods beginning after December 15, 2017. Early
adoption is permitted. The amendments in this update should be applied
retrospectively to all periods presented. Managementbelieves that this
ASU will only impact the Company if it has restricted cash in the future.
In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic
230): Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-
15"). ASU 2016-15 will make eight targeted changes to how cash receipts and
cash payments are presented and classified in the statement of cash flows.
ASU 2016-15 is effective for fiscal years beginning after December 15, 2017.
The new standard will require adoption on a retrospective basis unless it
is impracticable to apply, in which case it would be required to apply the
amendments prospectively as of the earliest date practicable. Management
believes that the impact of this ASU to the Company's condensed financial
statements would be insignificant.
Other recent accounting pronouncements issued by the FASB (including its
Emerging Issues Task Force) and the United States Securities and Exchange
Commission did not or are not believed by management to have a material
impact on the Company's present or future condensed financial statements.
NOTE 2 - GOING CONCERN
The Company has not yet generated any revenue since inception to date
and has sustained operating loss of $900 for the six months ended
June 30, 2018. The Company had a working capital deficit of $500
and an accumulated deficit of $5,212 as of June 30, 2018 and a working
captial deficit of $2,000 and an accumulated deficit of $4,312 as of
December 31, 2017. The Company's continuation as a going concern
is dependent on its ability to generate sufficient cash flows from
operations to meet its obligations and/or obtaining additional financing
from its members or other sources, as may be required.
The accompanying unaudited condensed financial statements have been prepared
assuming that the Company will continue as a going concern; however, the above
condition raises substantial doubt about the Company's ability to do so. The
unaudited condensed financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification
of assets or the amounts and classifications of liabilities that may result
should the Company be unable to continue as a going concern.
In order to maintain its current level of operations, the Company will
require additional working capital from either cash flow from operations
or from the sale of its equity. However, the Company currently has no
commitments from any third parties for the purchase of its equity. If the
Company is unable to acquire additional working capital, it will be required
to significantly reduce its current level of operations.
NOTE 3 - ACCRUED LIABILITIES
As of June 30, 2018 and December 31, 2017, the Company had accrued
professional fees of $500 and $2,000, respectively.
NOTE 4 - STOCKHOLDERS' DEFICIT
On May 17, 2017, the Company issued 20,000,000 founders common
stock to two directors and officers for legal services provided to the
Company. The Company is authorized to issue 100,000,000 shares of common
stock and 20,000,000 shares of preferred stock. As of June 30, 2018,
20,000,000 shares of common stock and no preferred stock were issued and
outstanding.
NOTE 5 - SUBSEQUENT EVENT
Management has evaluated subsequent events through August 15, 2018,
the date which the financial statements were available to be issued.
Except for the events disclosed above, all subsequent events requiring
recognition have been incorporated into these financial statements
in accordance with FASB ASC Topic 855, "Subsequent Events."
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Peony Grove Acquisition Corporation (the "Company") was incorporated
on May 17, 2017 under the laws of the State of Delaware to engage in any
lawful corporate undertaking, including, but not limited to, selected mergers
and acquisitions. The Company is a blank check company and qualifies as an
"emerging growth company" as defined in the Jumpstart Our Business Startups
Act which became law in April, 2012.
Since inception the Company's operations to date of the period covered
by this report were limited to issuing shares of common stock to its
original shareholders and filing a registration statement on Form 10 on
September 11, 2017 with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 as amended to register its class of common
stock.
As of June 30, 2018 the Company had not generated revenues and had
no income or cash flows from operations since inception. The Company
had sustained net loss of $900 and an accumulated deficit of $5,212
for the six months ended and as of June 30, 2018, respectively.
The president of the Company is the president, director and
shareholder of Tiber Creek Corporation. Tiber Creek Corporation assists
companies in becoming public reporting companies and with introductions
to the financial community. Such services may include, when and
if appropriate, the use of an existing reporting company such as
the Company. Tiber Creek is in continual discussions with client
companies for its assistance and the use of a company such as
the Company as a vehicle to become a public company. As such the
Company may effect a change in control pursuant to such discussions.
When, and if, the Company effects a change in control, the Company
will file a Form 8-K announcing it.
The Company's independent auditors have issued a report raising
substantial doubt about the Company's ability to continue as a going
concern. At present, the Company has no operations and the continuation
of the Company as a going concern is dependent upon financial support from
its stockholders, its ability to obtain necessary equity financing to continue
operations and/or to successfully locate and negotiate with a business entity
for the combination of that target company with it.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Information not required to be filed by Smaller Reporting Companies.
ITEM 4. Controls and Procedures.
Disclosures and Procedures
Pursuant to Rules adopted by the Securities and Exchange Commission,
the Company carried out an evaluation of the effectiveness of the design
and operation of its disclosure controls and procedures pursuant to
Exchange Act Rules. This evaluation was done as of the end of the
period covered by this report under the supervision and with the
participation of the Company's principal executive officer (who is
also the principal financial officer).
Management is responsible for maintaining a system of internal
control over financial reporting ("ICFR") that provides reasonable
assurance regarding the reliability of such reporting and the
accuracy and reliability of the preparation of financial statements
of such. Management is responsible to maintain records accurately and
fairly to reflect transactions and transactions are recorded as
necessary. The controls should provide reasonable assurance regarding
the prevention of unauthorized acquisition or use of assets.
In the present case of the Company, management maintained sole
control of all financial transactions and all assets. Since the
president of the Company is in sole control of the financial
transactions and assets management believes that its control reasonably
and adequately addresses the risk of a misstatement in the financial
reporting. Based upon that evaluation, the principal officer believes
that the Company's disclosure controls and procedures are effective in
gathering, analyzing and disclosing information needed to ensure that
the information required to be disclosed by the Company in its periodic
reports is recorded, summarized and processed timely. The principal
executive officer is directly involved in the day-to-day operations
of the Company.
This Quarterly Report does not include an attestation report of
the Company's registered public accounting firm regarding internal
control over financial reporting. Management's report was not subject
to attestation by the Company's registered public accounting firm
pursuant to temporary rules of the Securities and Exchange
Commission that permit the Company to provide only management's
report in this Quarterly Report.
Changes in Internal Control Over Financial Reporting
There was no change in the Company's internal control over
financial reporting that was identified in connection with such
evaluation that occurred during the period covered by this report
that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings against the Company and the Company
is unaware of such proceedings contemplated against it.
Management is aware that certain current and prior blank check
companies of which Messrs. Cassidy and McKillop, the officers and
directors of the Company, were the officers and directors have received
subpoenas for documents in regard to an inquiry by the Securities and
Exchange Commission requesting documentation regarding the transactions
and filings for the past five years and former share ownership of certain
blank check companies.
Management of the Company has also received subpoenas
from the Securities and Exchange Commission in regard to certain of
the transactions and filings for the past five years of certain of
its blank check companies. Management has no independent knowledge or
information as to the intent or purpose of such subpoenas but believes
the SEC is investigating whether the change in control transaction is
considered a sale of a security and if so whether a broker needs to be
used to effect the transaction.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the past three years, the Company has issued 20,000,000
common shares pursuant to Section 4(a)(2) of the Securities Act of 1933
at par as follows:
On May 17, 2017 the Company issued the following shares of
its common stock for services rendered to the Company:
Name Number of Shares
James Cassidy 10,000,000
James McKillop 10,000,000
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
(a) Not applicable.
(b) Item 407(c)(3) of Regulation S-K:
During the quarter covered by this Report, there have not been
any material changes to the procedures by which security holders
may recommend nominees to the Board of Directors.
ITEM 6. EXHIBITS
(a) Exhibits
31 Certification of the Chief Executive Officer and Chief
Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32 Certification of the Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
PEONY GROVE ACQUISITION CORPORATION
By: /s/ James Cassidy
President, Chief Financial Officer
Dated: August 16, 2018