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**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**___________________**FORM 10-KSB**_________________________________

ý                                **ANNUAL REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

  

For the fiscal year ended June 30,2005

  

or

  

** ̈                     TRANSITION REPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For The Transition PeriodFrom  ___________ To ___________ Commission File No.: 0-27511

**PEREGRINEINDUSTRIES, INC.**(Exact Name Of RegistrantAs Specified In Its Charter)
| Florida                                                 | 65-0611007                           |
|---------------------------------------------------------|--------------------------------------|
| (State of Incorporation)                                | (I.R.S. Employer Identification No.) |
|                                                    |                                 |
| 115    East 57th Street, Suite 1118, New York, NY 10022 | 10022                                |
| (Address of Principal Executive Offices)                | (ZIP Code)                           |

 Registrant'sTelephone Number, Including Area Code: (212) 688-5688

**SecuritiesRegistered Pursuant to Section 12(g) of The Act: Common Stock, $0.0001**

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes x No  ̈Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the best of theregistrant's knowledge, in the definitive proxy or information statements incorporated byreference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  ̈

Issuer's revenuesfor its most recent fiscal year: none

At June 30, 2005,the aggregate market value of the 3,625,833 voting common stock held by non-affiliates ofthe registrant was approximately $3,626 based on the average bid and asked price of theRegistrants common stock on June 30, 2005. At June 30, 2005, the registrant had 29,270,000 shares of common stock outstanding.

Indicate by check mark whether the registrant is a shellcompany (as defined in Rule 12b-2 of the Exchange Act). Yes x No  ̈

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**TABLE OF CONTENTS**
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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        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|      **PART I**  
ITEM 1.
            
   DESCRIPTION    OF BUSINESS
        3  
ITEM 2.
            
   DESCRIPTION    OF PROPERTY
        7   
ITEM 3.
            
   LEGAL    PROCEEDINGS
        7   
ITEM 4.
            
   SUBMISSION OF    MATTERS TO A VOTE OF SECURITY HOLDERS
        7   
  **PART II**   

ITEM 5.
            
   MARKET    FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
        8  
ITEM 6.
            
   MANAGEMENT'S    DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
        8   
ITEM 7.
            
   FINANCIAL    STATEMENTS
        9   
ITEM 8.
            
   CHANGES    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
        9   
ITEM 8.A
            
   CONTROLS AND PROCEDURES
        9   
  **PART III**   

ITEM 9.
            
   DIRECTORS    AND EXECUTIVE OFFICERS OF THE REGISTRANT, COMPLIANCE WITH SECTION 16(A)
        10  
ITEM 10.
            
   EXECUTIVE COMPENSATION
        10   
ITEM 11.
            
   SECURITY    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
        10   
ITEM 12.
            
   CERTAIN RELATIONSHIPS    AND RELATED TRANSACTIONS
        11   
ITEM 13.
            
   EXHIBITS AND    REPORTS ON FORM 8-K
        11   
ITEM 14.
            
   PRINCIPAL    ACCOUNTING FEES AND SERVICES
        11   ****
**PART I**

**ITEM 1. DESCRIPTION OF BUSINESS**Back toTable of Contents

Some of the statements contained in this Form 10-KSB ofPeregrine Industries, Inc. (hereinafter the "Company", "We" or the"Registrant") discuss future expectations, contain projections of our plan ofoperation or financial condition or state other forward-looking information. In thisregistration statement, forward-looking statements are generally identified by the wordssuch as "anticipate", "plan", "believe", "expect","estimate", and the like. Forward-looking statements involve future risks anduncertainties, there are factors that could cause actual results or plans to differmaterially from those expressed or implied. These statements are subject to known andunknown risks, uncertainties, and other factors that could cause the actual results todiffer materially from those contemplated by the statements. The forward-lookinginformation is based on various factors and is derived using numerous assumptions. Areader, whether investing in the Company's securities or not, should not place unduereliance on these forward-looking statements, which apply only as of the date of thisAnnual Report. Important factors that may cause actual results to differ from projectionsinclude, 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. 
General Background of the Registrant

Peregrine Industries, Inc. wasincorporated in Florida in 1995 for the purpose of designing and manufacturing heat pumppool heaters, residential air conditioners and parallel flow coils for the heating,ventilation and air conditioning industry. In June 2002, the Registrant and itssubsidiaries filed a petition for Relief and Reorganization under Chapter 11 of theBankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Florida (caseno. 02-24188). In September 2002, the bankruptcy proceeding was converted to Chapter 7. Asa result of the conversion to Chapter 7, the Registrant's assets were transferred to aUnited States Trustee on September 4, 2002 and the Registrant terminated its formerbusiness operations. During 2003, the Bankruptcy Trustee had disposed of substantially allof the assets of the Registrant and its subsidiaries. On February 12, 2004, the Trusteefor Peregrine Industries, Inc. and Park Avenue Group, Inc. entered into a contract thatwas subject to Bankruptcy Court approval for the sale of Peregrine Industries, Inc. OnMarch 15, 2004, the Bankruptcy Court granted an order approving the contract and findingthat Park Avenue Group is a good faith purchaser within the meaning of 11 USC Section363(m) of the Bankruptcy Code. On March 29, 2004, the U.S. Bankruptcy Court confirmed theorder previously granted on March 15, 2004.

By filing under Chapter 7 of the USBankruptcy Code, all of the Registrant’s assets and liabilities, including those ofits subsidiaries, were transferred into the estate of the debtor which estate wasadministered by the trustee appointed by the US Bankruptcy Court. On March 29, 2004, theUS Bankruptcy Court confirmed an order granting the trustee’s motion to approve acontract for sale of the corporate entity, Peregrine Industries, Inc., free and clear ofall liens, claims and interests of others.

Inconnection with the order of the U.S. Bankruptcy Court dated March 15, 2004, the Courtauthorized that Park Avenue Group appoint a new board of directors and authorized theissuance of restricted shares to the new management of the Registrant. The issuance ofrestricted shares to the Registrant's new management effectively resulted in a change incontrol of the Registrant. The shareholders of the Registrant prior to the bankruptcyproceedings remained shareholders of the Registrant subsequent to the emergence of theRegistrant from bankruptcy.The Court order further provided that Registrant emerged frombankruptcy free and clear of liens, claims and interests. The court order authorized (i)that the existing officers and directors were deemed removed from office; (ii) theappointment of new members to the Registrant's board of directors; (iii) the amendment ofRegistrant's Article of Incorporation to increase the number of authorized shares to100,000,000 shares; (iv) the issuance up to 30,000,000 shares of common stock, par value$0.0001, to the new management of the Registrant, which management was appointed by thenewly-constituted board of directors; (v) the authority of the board of directors toimplement a reverse split of the issued and outstanding shares in a ratio to be determinedby the board of directors; (vi) the cancellation and extinguishment of all common shareconversion rights of any kind, including without limitation, warrants, options,convertible bonds, other convertible debt instruments and convertible preferred stock; and(vii) the cancellation and extinguishment of all preferred shares of every series andaccompanying conversion rights of any kind.

As aresult of the Bankruptcy Court order, Park Avenue Group appointed Thomas J. Craft, Jr.,Ivo Heiden and Richard Rubin to the board of directors of the Registrant. Messrs. Craft,Heiden and Rubin were subsequently appointed as officers of the Registrant("Management").

Business Objectives of the Company

Asa result of the Chapter 7 proceeding, the Registrant has no present operations. Managementdetermined to direct its efforts and limited resources to pursue potential new businessopportunities. The Registrant does not intend to limit itself to a particular industry andhas not established any particular criteria upon which it shall consider and proceed witha business opportunity.

Managementwould have substantial flexibility in identifying and selecting a prospective new businessopportunity. Registrant would not be obligated nor does management intend to seekpre-approval by our shareholders.

The Registrant is dependent on thejudgment of its management in connection with this process. In evaluating a prospectivebusiness opportunity, we would consider, among other factors, the following: (i) costsassociated with pursuing a new business opportunity; (ii) growth potential of the newbusiness opportunity; (iii) experiences, skills and availability of additional personnelnecessary to pursue a potential new business opportunity; (iv) necessary capitalrequirements; (v) the competitive position of the new business opportunity; (vi) stage ofbusiness development; (vii) the market acceptance of the potential products and services;(viii) proprietary features and degree of intellectual property; and (ix) the regulatoryenvironment that may be applicable to any prospective business opportunity.

Theforegoing criteria are not intended to be exhaustive and there may be other criteria thatmanagement may deem relevant. In connection with an evaluation of a prospective orpotential business opportunity, management may be expected to conduct a due diligencereview.

Thetime and costs required to pursue new business opportunities, which includes negotiatingand documenting relevant agreements and preparing requisite documents for filing pursuantto applicable securities laws, can not be ascertained with any degree of certainty. 

Managementintends to devote such time as it deems necessary to carry out the Registrant's affairs.The exact length of time required for the pursuit of any new potential businessopportunities is uncertain. No assurance can be made that we will be successful in ourefforts. We cannot project the amount of time that our management will actually devote tothe Registrant's plan of operation.

Selection and Structuring of a New BusinessOpportunity

Management owns 15,000,000 shares or 51.25% of the totalissued and outstanding shares of the Registrant as of June 30, 2005. As a result,Management will have substantial flexibility in identifying and selecting a prospectivenew business opportunity. The Registrant will be dependent on the judgment of itsmanagement in connection with the selection of a new business opportunity. In evaluating a prospectivebusiness opportunity, we would consider, among other factors, the following: (i) costsassociated with pursuing a new business opportunity; (ii) growth potential of thepotential new business opportunity; (iii) experiences, skills and availability ofadditional personnel necessary to pursue a potential new business opportunity; (iv)necessary capital requirements; (v) the competitive position of the new businessopportunity; (vi) stage of business development; (vii) the market acceptance of thepotential products and services; (viii) proprietary features and degree of intellectualproperty; and (ix) the regulatory environment that may be applicable to any prospectivebusiness opportunity.

Theforegoing criteria are not intended to be exhaustive and there may be other criteria thatManagement may deemed relevant. In connection with an evaluation of a potential businessopportunity, Management may be expected to conduct a due diligence review and may seekassistance of independent third parties.

Thetime and costs required to select and evaluate a potential new business opportunity,including conducting a due diligence review, and to structure a plan to pursue a potentialnew business opportunity cannot presently be ascertained. Management will devote such timeas it deems reasonably necessary to carry out plans for potential new businessopportunities. As a result, the time devoted to the Registrant's business may varydepending upon whether we have identified a business opportunity.

Weanticipate that various prospective new business opportunities will be brought to ourattention from various sources in the finance and investment community.

Conflicts of Interest

Our Management is not required to committheir full time to our affairs. As a result, pursuing new business opportunities mayrequire a greater period of time than if they would devote their full time to our affairs.Management is not precluded from serving as officers or directors of any other entity thatis engaged in business activities similar to those of the Registrant. Management has notidentified and is not currently negotiating a new business opportunity for us. In thefuture, Management may become associated or affiliated with entities engaged in businessactivities similar to those we intend to conduct. In such event, Management may haveconflicts of interest in determining to which entity a particular business opportunityshould be presented. In general, officers and directors of a Florida corporation arerequired to present certain business opportunities to such corporation. In the event thatour Management has multiple business affiliations, they may have similar legal obligationsto present certain business opportunities to multiple entities. In the event that aconflict of interest shall arise, Management will consider factors such as reportingstatus, availability of audited financial statements, current capitalization and the lawsof jurisdictions. If several business opportunities or operating entities approachManagement with respect to a business combination, management will consider the foregoingfactors as well as the preferences of the Management of the operating company. However,Management will act in what they believe will be in the best interests of the shareholdersof the Registrant and other respective public companies. The Registrant shall not enterinto a transaction with a target business that is affiliated with Management.

RISK FACTORS

FORWARD-LOOKING STATEMENTSThis Form 10-KSB contains forward-looking statements that are based on currentexpectations, estimates, forecasts and projections about us, our future performance, themarket in which we operate, our beliefs and our management's assumptions. In addition,other written or oral statements that constitute forward-looking statements may be made byus or on our behalf. Words such as "expects", "anticipates","targets", "goals", "projects", "intends","plans", "believes", "seeks", "estimates",variations of such words and similar expressions are intended to identify suchforward-looking statements. These statements are not guarantees of future performance andinvolve certain risks, uncertainties and assumptions that are difficult to predict orassess. Therefore, actual outcomes and results may differ materially from what isexpressed or forecast in such forward-looking statements.

DEPENDENCE ON KEY PERSONNELThe Registrant is dependent upon the continued services of its officers and directors.To the extent that their services become unavailable, the Registrant will be required toobtain other qualified personnel and there can be no assurance that it will be able torecruit and hire qualified persons upon acceptable terms.

LIMITED RESOURCES; NO PRESENT SOURCE OFREVENUES.At present, we have limited business operations and our business activities are limited toseeking potential business opportunities. Due to our limited financial and personnelresources, there is only a limited basis upon which to evaluate our prospects forachieving our intended business objectives. We have only limited resources and have nooperating income, revenues or cash flow from operations. Our Management or a related partyis providing us with limited funding, on an as needed basis, necessary for us tocontinue our corporate existence and our business objective to seek new businessopportunities, as well as funding the costs, including professional accounting fees, inorder to continue to be a reporting company under the Exchange Act. We have no writtenagreement with our Management or related parties to provide any interim financing for anyperiod. In addition, we will not generate any revenues unless and until we enterinto a new business, of which there can be no assurance.

BROAD DISCRETION OF MANAGEMENTAny person who invests in our securities will do so without an opportunity to evaluate thespecific merits or risks of any potential new prospective business in which we may engage.As a result, investors will be entirely dependent on the broad discretion and judgment ofManagement in connection with the selection of a prospective business. There can be noassurance that determinations made by our Management will permit us to achieve ourbusiness objectives.

ABSENCE OF SUBSTANTIVE DISCLOSURE RELATING TO PROSPECTIVE BUSINESS We have not yet identified any prospective business or industry in which we may seek tobecome involved and at present we have no information concerning any prospectivebusiness. There can be no assurance that any prospective business opportunity will benefitshareholders or prove to be more favorable to shareholders than any other investment thatmay be made by shareholders and investors.

THERE IS NO LIQUID MARKET FOR OUR COMMON STOCK AND NONE MAY DEVELOP OR BESUSTAINEDThe Registrant's common stock is subject to quotation on the NASDAQ Bulletin Board underthe symbol HVAC. There is currently no liquid trading market in our common stock. Therecan be no assurance that there will be a liquid trading market for our common stockfollowing commencement of a new business. In the event that a liquid trading marketcommences, there can be no assurance as to the market price of our shares of common stock,whether any trading market will provide sufficient liquidity to investors, or whether anytrading market will be sustained.

UNSPECIFIED INDUSTRY FOR NEW PROSPECTIVE BUSINESS OPPORTUNITIES; UNASCERTAINABLERISKSThere is no basis for shareholders to evaluate the possible merits or risks of potentialnew business opportunities or the particular industry in which we may ultimately operate.To the extent that we effect a business combination with a financially unstable entity oran entity that is in its early stage of development or growth, including entities withoutestablished records of revenues or income, we will become subject to numerous risksinherent in the business and operations of that financially unstable company. In addition,to the extent that we effect a business combination with an entity in an industrycharacterized by a high degree of risk, we will become subject to the currentlyunascertainable risks of that industry. A high level of risk frequently characterizescertain industries that experience rapid growth. Although Management will endeavor toevaluate the risks inherent in a particular new prospective business or industry, therecan be no assurance that we will properly ascertain or assess all such risks or thatsubsequent events may not alter the risks that we perceive at the time of the consummationof any new business opportunity.

CONFLICTS OF INTERESTOur Management is not required to commit their fulltime to our affairs. There may be a conflict of interest in allocating their time in theevent that Management engages in similar business efforts for other entities. OurManagement will devote such time, in their sole discretion, to conduct our business,including the evaluation of potential new business opportunities. As a result, the amountof time devoted to our business and affairs may vary significantly depending upon whetherwe have identified a new prospective business opportunity or are engaged in activenegotiations related to a new business. In the event that a conflict of interest shallarise, Management will consider factors such as availability of audited financialstatements, current capitalization and the laws of jurisdictions. If several businessopportunities or operating entities approach Management with respect to a businesscombination, Management will consider the foregoing factors as well as the preferences ofthe Management. However, Management will act in what they believe will be in the bestinterests of the shareholders of the Registrant. The Registrant shall not enter into atransaction with a target business that is affiliated with Management.

COMPETITIONWe expect to encounter intense competition from other entities seeking to pursue newbusiness opportunities. Many of these entities are well-established and haveextensive experience in identifying new prospective business opportunities. Many of thesecompetitors possess greater financial, technical, human and other resources than we do andthere can be no assurance that we will have the ability to compete successfully. Basedupon our limited financial and personnel resources, we may lack the resources as comparedto those of many of our potential competitors.

ADDITIONAL FINANCING REQUIREMENTSWe have no revenues and are dependent upon the willingness of Management or relatedparties to fund the costs associated with the reporting obligations under the ExchangeAct, and other administrative costs associated with our corporate existence. As ofthe date of this filing, the Registrant has paid approximately $10,000 for general andadministrative expenses, including accounting fees, reinstatement fees, and otherprofessional fees related to the preparation and filing of reports under the Exchange Act.We may not generate any revenues unless and until the commencement of new businessoperations. We believe that we will have sufficient funds available to pay accounting andprofessional fees and other expenses to fulfill our reporting obligations under theExchange Act until we commence business operations. In the event that our available fundsfrom our Management or affiliates prove to be insufficient, we will be required to seekadditional financing. Our failure to secure additional financing could have a materialadverse affect on our ability to pay the accounting and other fees in order to continue tofulfill our reporting obligations and pursue our business plan. We do not have anyarrangements with any bank or financial institution to secure additional financing andthere can be no assurance that any such arrangement would be available on terms acceptableand in our best interests. We do not have any written agreement with our affiliates toprovide funds for our operating expenses.

STATE BLUE SKY REGISTRATION; POTENTIAL LIMITATIONS ON RESALE OF THE SECURITIESThe holders of our shares of common stock and those persons who desire to purchase them inany trading market that might develop, should be aware that there may be state blue-skylaw restrictions upon the ability of investors to resell our securities. Accordingly,investors should consider the secondary market for the Registrant's securities to be alimited one.

It is the present intention of theRegistrant's management after the commencement of new business operations to seek coverageand publication of information regarding the Registrant in an accepted publication manualwhich permits a manual exemption. The manual exemption permits a security to bedistributed in a particular state without being registered if the Registrant issuing thesecurity has a listing for that security in a securities manual recognized by the state.However, it is not enough for the security to be listed in a recognized manual. Thelisting entry must contain (1) the names of issuer's officers, and directors, (2) anissuer's balance sheet, and (3) a profit and loss statement for either the fiscal yearpreceding the balance sheet or for the most recent fiscal year of operations. Furthermore,the manual exemption is a nonissuer exemption restricted to secondary tradingtransactions, making it unavailable for issuers selling newly issued securities.

Most of the accepted manualsare those published in Standard and Poor's, Moody's Investor Service, Fitch's InvestmentService, and Best's Insurance Reports, and many states expressly recognize these manuals.A smaller number of states declare that they "recognize securities manuals" butdo not specify the recognized manuals. The following states do not have any provisions andtherefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois,Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.

DIVIDENDS UNLIKELYWe do not expect to pay dividends for the foreseeable future because we have no revenues.The payment of dividends will be contingent upon our future revenues and earnings, if any,capital requirements and overall financial condition. The payment of any future dividendswill be within the discretion of our board of directors. It is our expectation that afterthe commencement of new business operations that future management will determine toretain any earnings for use in business operations and accordingly, we do not anticipatedeclaring any dividends in the foreseeable future.

POSSIBLE ISSUANCE OF ADDITIONAL SECURITIESOur Articles of Incorporation, as amended, authorize the issuance of 100,000,000 shares ofcommon stock, par value $0.0001. As of June 30, 2005, we have 29,270,000 shares issued andoutstanding. We may be expected to issue additional shares in connection with our pursuitof new business opportunities and new business operations. To the extent that additionalshares of common stock are issued, our shareholders would experience dilution of theirrespective ownership interests. If we issue shares of common stock in connection with ourintent to pursue new business opportunities, a change in control of the Registrant may beexpected to occur. The issuance of additional shares of common stock may adversely affectthe market price of our common stock, in the event that an active trading marketcommences.  

COMPLIANCE WITH PENNY STOCK RULESOur securities will be considered a "penny stock" as defined in theExchange Act and the rules thereunder, unless the price of our shares of common stock isat least $5.00. We expect that our share price will be less than $5.00. Unless our commonstock is otherwise excluded from the definition of "penny stock", the pennystock rules apply. The penny stock rules require a broker-dealer, prior to a transactionin penny stock not otherwise exempt from the rules, to deliver a standardized riskdisclosure document that provides information about penny stocks and the nature and levelof risks in the penny stock market. The broker-dealer also must provide the customer withcurrent bid and offer quotations for the penny stock, the compensation of thebroker-dealer and its sales person in the transaction, and monthly account statementsshowing the market value of each penny stock held in the customer's account. In addition,the penny stock rules require that the broker-dealer, not otherwise exempt from suchrules, must make a special written determination that the penny stock is suitable for thepurchaser and receive the purchaser's written agreement to the transaction. Thesedisclosure rules have the effect of reducing the level of trading activity in thesecondary market for a stock that becomes subject to the penny stock rules. So long as thecommon stock is subject to the penny stock rules, it may become more difficult to sellsuch securities. Such requirements could limit the level of trading activity for ourcommon stock and could make it more difficult for investors to sell our common stock. 

GENERAL ECONOMIC RISKSThe Registrant's current and future business plans are dependent, in large part, on thestate of the general economy. Changes in economic conditions may adversely affect our planof operation.

**ITEM 2.DESCRIPTION OF PROPERTIES**Back to Table of Contents

The Registrant's corporate officeis located at the offices of Park Avenue Group, Inc., 115 East 57th Street, 11th Floor,New York, NY 10022, which space is  provided to us on a rent-free basis. Thesefacilities consist of approximately 300 square feet of executive office space and areleased by Park Avenue Group, Inc. from an unaffiliated third party. The Registrantbelieves that the office facilities are sufficient for the foreseeable future and thisarrangement will remain until we find a new business opportunity or consummate a businesscombination. 

**ITEM 3. LEGAL PROCEEDING**Back toTable of Contents

The Registrant's officers and directors are not aware of anythreatened or pending litigation to which the Registrant is a party or which any of itsproperty is the subject and which would have any material, adverse effect on theRegistrant.

**ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS**Back toTable of Contents

During the year ended June 30, 2005, no matters weresubmitted to a vote of our security holders.

**PART II**

**ITEM 5.MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTER**Back toTable of Contents

(a) Market Price InformationThe Registrant's common stockis subject to quotation on NASDAQ bulletin board under the symbol HVAC. To the bestknowledge of the Registrant, there has been no liquid trading market for approximately thepast two years. The following table shows the high and low bid prices for the Registrant'scommon stock during the last two fiscal years as reported by the National Quotation BureauIncorporated. These prices reflect inter-dealer quotations without adjustments for retailmarkup, markdown or commission, and do not necessarily represent actual transactions.
        High    Low       Period Ended September 27, 2005
$
0.30
$
0.07  
Year Ended June 30, 2005
                                        
Quarter ended June 30,    2005
              $0.00        $0.00  
Quarter ended March 31,    2005
                0.00          0.00     Quarter ended    December 31, 20040.000.00  
Year Ended September 30,    2004
                                        
Quarter ended September    30, 2004
              $0.00        $0.00  
Quarter ended June 30,    2004
                0.00          0.00  
Quarter ended March 31,    2004
                0.00          0.00  
Quarter ended December 31,    2003
                0.03          0.03  
(b) Approximate Number of Holders of Common StockOn June 30, 2005, there were approximately 176 shareholders of our common stock.

(c) DividendsWe currently do not pay cash dividends on our common stock and have no plans to reinstatea dividend on our common stock.

(d) Sale of UnregisteredSecuritiesThe Registrant has not issued any restricted shares of common stock during fiscal year2005.

(e) Equity Compensation PlansWe have no equity compensation plans.

**ITEM 6.MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION**Back toTable of Contents

The following discussion containsforward-looking statements. Forward-looking statements give our current expectations orforecasts of future events. You can identify these statements by the fact that they do notrelate strictly to historical or current facts. They use of words such as"anticipate", "estimate", "expect", "project","intend", "plan", "believe", and other words and terms ofsimilar meaning in connection with any discussion of future operating or financialperformance. From time to time, we also may provide forward-looking statements in othermaterials we release to the public.

OverviewOur current activities are related to seeking a new business opportunities. We willuse our limited personnel and financial resources in connection with such activities. Itmay be expected that pursuing a new business opportunity will involve the issuance ofrestricted shares of common stock. At June 30, 2005, we had no cash assets and the Companyhad current liabilities of $2,421. 

Liquidity and Capital Resources

During the fiscal period ended June 30,2005, we received $2,988 through advances made to us by a related party. While we aredependent upon interim funding provided by such related party or by management to payprofessional fees and expenses, we have no written finance agreement with management toprovide any continued funding. Through the date of this filing, a related party ormanagement provided funding of approximately $10,000 which funds were used for generaladministrative expenses and accounting fees.

Aspart of our intent to seek new business opportunities, we may determine to seek to raisefunds from the sale of equity or debt securities.We have no agreements to issue any debtor equity securities and cannot predict whether equity or debt financing will becomeavailable at terms acceptable to us, if at all.

We anticipate that in connection withthe commencement of a new business opportunity or consummation of a business combination,we will issue a substantial number of additional restricted shares or other securities. Ifsuch additional securities are issued, our shareholders will experience a dilution intheir ownership interest in the Company. If a substantial number of shares are issued inconnection with a business combination, a change in control may be expected to occur.

Thereare no limitations in our articles of incorporation on our ability to borrow funds orraise funds through the issuance of restricted common stock to pursue new businessopportunities. Our limited resources and lack of operating history may make it difficultto do borrow funds or raise capital. Our inability to borrow funds or raise funds throughthe issuance of restricted common stock required to facilitate new business opportunitiesmay have a material adverse effect on our financial condition and future prospects. To theextent that debt financing ultimately proves to be available, any borrowing will subjectus to various risks traditionally associated with indebtedness, including the risks ofinterest rate fluctuations and insufficiency of cash flow to pay principal and interest.

**ITEM7. FINANCIAL STATEMENTS**Back to Table of Contents

The Registrant's audited financial statements for thefiscal years ended June 30, 2005 and 2004 are attached to this annual report.

Financial Statements

**ITEM8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE**Back to Table of Contents

None.

**ITEM 8A. CONTROLS AND PROCEDURES**Back toTable of Contents
*Evaluation of disclosure controls and procedures.As of June 30, 2005, the Company's chief executive officerand chief financial officer conducted an evaluation regarding the effectiveness of theCompany's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e)under the  Exchange Act. Based upon the evaluation of these controls and procedures,our chief executive officer and chief financial officer concluded that our disclosurecontrols and procedures were effective as of the end of the period covered by this report.

*Changes in internal controls*. During the period covered by this report, no changes occurred inour internal control over financial reporting that materially affected, or is reasonablylikely to materially affect, our internal control over financial reporting.

**PART III**

**ITEM9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, COMPLIANCE WITH SECTION 16(A)**Back to Table of Contents
**Name****Age****Title**Richard Rubin62CEO and ChairmanIvo Heiden  38  CFO, Vice    President and DirectorThomas J. Craft, Jr. 40President and Director
Officers are not elected for a fixed term of office but hold officeuntil their successors have been elected.

Richard Rubin, 62, is CEO and chairman ofthe Registrant. During the last five years, Mr. Rubin has been engaged in the business ofproviding corporate securities consulting services and reorganizing distressed publiccompanies. From October 2000 until February 2002, Mr. Rubin served as an officer anddirector of PlanetLink Communications, Inc. In February 2002, Mr. Rubin also became ansecretary and a director of Nettel Holdings, a reporting company and resigned as secretaryand director in May 2003. Mr. Rubin served as a director of Jeantex Group, a reportingcompany from August 2002 to September 2003.

Ivo Heiden, 38, has been CFO and a directorof the Registrant since January 2005. Since 2000, Mr. Heiden has been engaged in thebusiness of providing corporate securities compliance service and reorganizing distressedpublic companies. From October 2000 until February 2002, Mr. Heiden served as an vicepresident and director of PlanetLink Communications, Inc. Mr. Heiden served as a directorof Jeantex Group, a reporting company from August 2002 to September 2003.

Thomas J. Craft, Jr., 40, has been president and adirector of the Registrant since March 30, 2004. Mr. Craft is an attorney practicing lawunder the laws of the State of Florida, specializing in corporate securities law. From May1996 through October 2001, Mr. Craft served as the secretary and a director of GlobeTelCommunications, Inc. From October 2000 until February 2002 Mr. Craft served aspresident and a director of PlanetLink Communications, Inc. Mr. Craft becamepresident and a director of Nettel Holdings in February 2002 and resigned in March 2003.In November 2002, Mr. Craft became a director of American International Industries, Inc.,a reporting company. Mr. Craft served as a director of Jeantex Group, a reportingcompany, from August 2002 to September 2003.

**ITEM 10.EXECUTIVE COMPENSATION**Back to Table of Contents

No executive compensation was paid during the fiscalyears ended June 30, 2005, 2004 and September 30, 2003 by the Registrant. The Registranthas no employment agreement with any of its officers and directors. 

**TEM11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**Back toTable of Contents

The table below disclosesany person (including any "group") who is known to the Registrant to be thebeneficial owner of more than five (5%) percent of the Registrant's voting securities. Asof June 30, 2005, the Registrant had 29,270,000 shares of common stock issued.

**Title of    Class**
**Name and    Address of Beneficial Owner**
**Amount    and Nature of Beneficial Owner**
**Percent of Class**Common StockThomas J. Craft, Jr.    11000 Prosperity Farms Road, Palm Beach Gardens, FL 334015,000,000 shares17.08%Common    StockRichard Rubin    115 East 57th Street, 11th Fl., New York, NY 100225,000,000 shares17.08%Common StockIvo Heiden    115 East 57th Street, 11th Fl., New York, NY 100225,000,000 shares17.08%
Common    StockRichard Szelewicki    22384 Siesta Key Drive, Boca Raton, FL 334281,912,500 shares6.53%
Common StockMerrill and Debra Yarbrough, JTTEN    2905 Via Napoli, Deerfield Beach, FL 33442 (1)8,731,667 shares29.83%
Common    StockAll officers and    directors as a group (3 people)15,000,000 shares51.25%(1) Includes 61,667 shares owned of record and    beneficially by Mr. Yarbrough individually.
**ITEM 12. CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS**Back to Table of Contents

Duringthe last two fiscal years, to the knowledge of the Registrant, there was no person who hador has a direct or indirect material interest in any transaction or proposed transactionto which the Registrant was or is a party. Transactions in this context relate to anytransaction which exceeds $60,000.

**ITEM13. EXHIBITS AND REPORTS ON FORM 8-K**Back to Table of Contents

(a) The following documents are filed as exhibits tothis report on Form 10-KSB or incorporated by reference herein. Any document incorporatedby reference is identified by a parenthetical reference to the SEC filing that includedsuch document.

Exhibit    No.Description31.1Certification of Chief    Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to    Section 302 of the Sarbanes-Oxley Act of 2002.31.2Certification of Chief    Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to    Section 302 of the Sarbanes-Oxley Act of 2002.32.1Certification of Chief    Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of    the Sarbanes-Oxley Act of 2002.32.2Certification of Chief    Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of    the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K During the Last Quarter of the Fiscal YearCovered by this Report:

The Registrant did not file a Form 8-K during the last quarter of thefiscal year covered by this annual report.

**ITEM 14. PRINCIPAL ACCOUNTING FEESAND SERVICES**Back to Table of Contents

Independent PublicAccountantsThe Registrant's Board of Directors has appointed Michael F. Cronin, CPA as independentpublic accountant for the fiscal year ended June 30, 2005 and June 30, 2004.

 

Principal Accounting FeesThe following table presents the fees for professional audit services rendered by MichaelF. Cronin, CPA for the audit of the Registrant's annual financial statements for the yearsended June 30, 2005 and 2004, and fees billed for other services rendered by Michael F.Cronin, CPA during those periods. 

  

**Year Ended ****June 30,  2005****June 30, 2004**
Audit fees (1)$ 4,000   $ 4,000
Audit-related fees (2)  -      - 
Tax fees (3)  -      - 
All other fees   -      - (1) Audit fees consist of    audit and review services, consents and review of documents filed with the SEC. (2) Audit-related fees    consist of assistance and discussion concerning financial accounting and reporting    standards and other accounting issues. (3) Tax fees consist of    preparation of federal and state tax returns, review of quarterly estimated tax payments,    and consultation concerning tax compliance issues. 
 

Code of Ethics The Corporation has adopted a Code of Ethics that are designed to deter wrongdoing and topromote honest and ethical conduct, full, fair, accurate, timely and understandabledisclosure in the Registrant's SEC reports and other public communications. The Code ofEthics promotes compliance with applicable governmental laws, rules and regulations. 

 
**Section16(a) ComplianceSection 16(a) of the Securities and Exchange Act of 1934 requires the Registrant'sdirectors 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 ofownership with the Securities and Exchange Commission. Copies of all filed reports arerequired to be furnished to the Registrant pursuant to Section 16(a). Based solely on thereports received by the Registrant and on written representations from reporting persons,the Registrant was informed that its officers and directors have not filed all reportsrequired under Section 16(a). The Registrant has not been furnished with any reports forMerrill and Debra Yarbrough, who beneficially own 8,731,667 shares or 29.83%.

**SIGNATURES**Back to Table of Contents

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has been signed below bythe following persons on behalf of the registrant and in the capacities and on the dateindicated.

/s/ RICHARDRUBINChief Executive Officer and Chairman*   Dated: September 28, 2005*

/s/ IVO HEIDENChief Financial Officer and Director*  Dated: September 28, 2005*

**FinancialStatements**Back to Table of Contents
Report of Independent Registered Public Accounting Firm14Financial Statements for the Years    Ended June 30, 2005 and 2004   Balance Sheets15   Statement of Operations16   Statement of Stockholders' Equity17   Statement of Cash Flows18Notes to Financial Statements19
 
**REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBack to Table of Contents

**Michael F. CroninCertified Public Accountant687 Lee Road****Rochester,****NY****14606**

To the Board of Directors and StockholdersPeregrine Industries, Inc.New York, NY

I have audited the accompanying balance sheet of Peregrine Industries,Inc. (the "Company") as of June 30, 2005 and 2004 and the related statements ofoperations, stockholders' equity and cash flows for the years then ended. The financialstatements are the responsibility of the directors. My responsibility is to express anopinion on these financial statements based on my audits.

I conducted my audits in accordance with auditing standards establishedby the Public Company Accounting Oversight Board. Those standards require that I plan andperform the audits to obtain reasonable assurance about whether the financial statementsare free of material misstatement. The company is not required to have, nor was I engagedto perform, an audit of its internal control over financial reporting. My audit includedconsideration of internal control over financial reporting as a basis for designing auditprocedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Company's internal control overfinancial reporting. Accordingly, I express no such opinion. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financialstatement presentation. I believe that my audits provide a reasonable basis for myopinion.

In my opinion, the financial statements referred to above presentfairly, in all material respects, the financial position of Peregrine Industries, Inc. asof June 30, 2005 and 2004 and the results of its operations, its cash flows and changes instockholders' equity for the years then ended in conformity with accounting principlesgenerally accepted in the United States.

September 28, 2005

/s/ Michael F. CroninCertified Public Accountant

**Peregrine Industries, Inc.**
Balance Sheet
Back to Table of Contents**  ****Fiscal Year Ended****Fiscal Year Ended****June 30, 2005****June 30, 2004**
ASSETSCurrent assets:      Cash$0$0   Advances to related    parties0566     Total    current assets0566               **Total Assets**$0$566  
LIABILITIES    AND STOCKHOLDERS' EQUITY  Current liabilities:   Accountants    payable-trade0523   Advances due to    related party2,4210         Total current liabilities2,421523  Stockholders' equity:   Preferred stock,    $.0001 par value; 5,000,000 authorized, none issued- -    Common stock,    $.0001 par value; 100,000,000 shares authorized;         29,270,000 issued and outstanding at June 2005 and 20042,9272,927   Additional paid in    capital4,5734,573   Accumulated deficit(9,921)(7,457)     Total    equity(2,421)43          **Total Liabilities and Equity**$0
$566  See Summary of    Significant Accounting Policies and Notes to Financial Statements.**Peregrine Industries, Inc.**Statement of Operations
Back to Table of Contents  **Fiscal Year Ended****Fiscal Year Ended****June 30, 2005****June 30, 2004**Revenue$0$0Costs and Expenses:   General and    administrative2,4657,456Total costs and expenses2,4657,456  Loss from continuing before income taxes and    discontinued operations(2,465)(7,456)Income taxes00Loss from continuing operations before    discontinued operations(2,465)(7,456)   Discontinued operations:   Loss from discontinued operations    (net of taxes) 00   Estimated loss on disposal of    assets used in discontinued operations00  Net loss$(2,465)$(7,456)  Per share amounts:   Basic and diluted from continuing    operations$(0.00)$(0.00)   Basic and diluted net loss$(0.00)$(0.00)   Weighted average shares outstanding (basic and    diluted)29,270,00029,270,000  See Summary of Significant    Accounting Policies and Notes to Financial Statements.
**Peregrine Industries, Inc.**
Statement    of Stockholders' Equity
Back to Table of Contents  **Preferred****Common****Common****Additional****Stock****Paid-In**
**Accumulated**
**Shares**
**Par Value**
**Shares**
**Amount**
**Capital**
**Deficit**Balance at September 30, 2002
133,363$14$14,270,000$1,427$
(1,442)$0   Net loss      
  
  
0Balance at September 30, 2003
133,3631414,270,000
$
1,427
(1,442)0   Stock issued for    cash15,000,0001,5006,000   Cancellation of    preferred stock(133,363)(14)14   Net loss          (7,456)Balance at June 30, 2004
0029,270,000
$
2,927
4,572(7,456)   Net loss          (2,465)Balance at June 30, 20050$029,270,000$2,927$4,572$(9,921)  See Summary of    Significant Accounting Policies and Notes to Financial Statements.
**Peregrine Industries, Inc.**
Statement of Cash    Flows
Fiscal Periods Ended
Back to Table of Contents  ** ****Fiscal Year Ended****Fiscal Year Ended**** ****June 30, 2005****June 30, 2004**  Cash flows from operating    activities:$(2,465)$(7,456)Net    lossAdjustments required to    reconcile net loss  to cash used in    operating activities:   Increase    (decrease) in accounts payable and accrued expenses(523)523        **Cash flows used by operating activities**(2,988)(6,933)  Cash    flows from investing activities:   Purchase of    equipment00        **Cash used in investing activities**00   Cash flows from financing    activities:      Proceeds from issuance of common stock07,500   Loans to    related parties2,988(7,500)   Repayment of    related party loans06,933        **Cash generated by financing activities**2,9886,933  Change in cashCash - Beginning of    period00**Cash    - End of period**$0$0  See Summary    of Significant Accounting Policies and Notes to Financial Statements.****PEREGRINE INDUSTRIES, INC.**BACKGROUND ANDSIGNIFICANT ACCOUNTING POLICIESJune 30, 2005Back to Table of Contents

**The Company**

Peregrine Industries, Inc. (the "Company" or "we"))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 soldthroughout the United States, Canada, and Brazil. In September 1998, the Company formed awholly-owned subsidiary, Alcool, Inc., in Montgomery, Alabama, in order to expand itsmanufacturing capacity and product line. Canadian operations were conducted through awholly owned subsidiary Thermopompe Peregrine Heat Pump, a Quebec corporation.
*Change in Fiscal Year

On April 22, 2004 we elected to change our fiscal year end fromSeptember 30 to June 30. Accordingly, the 2004 results of operations, cash flows andstatement of stockholders’ equity reflect transactions for the nine month transitionperiod ended June 30, 2004. 
*Bankruptcy Proceedings

On June 4, 2002, we filed a petition for Relief and Reorganizationunder Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the SouthernDistrict of Florida (case no. 02-24188). On September 4, 2002, the bankruptcy proceedingswere converted to Chapter 7 for liquidation of the Company’s business. As a result ofthe conversion of the Company's reorganization, to a case under Chapter 7, all of ourproperties were transferred to a United States Trustee and we terminated all of ourbusiness operations. The Bankruptcy Trustee has disposed of all of the assets.

On March 29, 2004, the U.S. Bankruptcy Court confirmed the sale of thePeregrine corporate shell entity. The accounts of the former subsidiaries were notincluded in the sale and have not been carried forward. 
**Basis of Presentation:

We adopted "fresh-start" accounting as of September 5, 2002in accordance with procedures specified by AICPA Statement of Position ("SOP")No. 90-7, "Financial Reporting by Entities in Reorganization under the BankruptcyCode.

**Significant Accounting Policies:**

*Use of Estimates*The preparation of financial statementsin conformity with generally accepted accounting principles requires management to makeestimates and assumptions that affect reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statement andthe reported amounts of revenues and expenses during the reporting period. Actual resultscould differ from the estimates.
*Cash and Cash Equivalents: For financial statement presentationpurposes, the Company considers those short-term, highly liquid investments with originalmaturities of three months or less to be cash or cash equivalents.
*Property and Equipment New property and equipment are recordedat cost. Property and equipment included in the bankruptcy proceedings and transferred tothe Trustee had been valued at liquidation value. Depreciation is computed using thestraight-line method over the estimated useful lives of the assets, generally 5 years.Expenditures for renewals and betterments are capitalized. Expenditures for minor items,repairs and maintenance are charged to operations as incurred. Gain or loss upon sale orretirement due to obsolescence is reflected in the operating results in the period theevent takes place.
*Valuation of Long-Lived Assets: We review the recoverability ofour long-lived assets including equipment, goodwill and other intangible assets, whenevents or changes in circumstances occur that indicate that the carrying value of theasset may not be recoverable. The assessment of possible impairment is based on ourability to recover the carrying value of the asset from the expected future pre-tax cashflows (undiscounted and without interest charges) of the related operations. If these cashflows are less than the carrying value of such asset, an impairment loss is recognized forthe difference between estimated fair value and carrying value. Our primary measure offair value is based on discounted cash flows. The measurement of impairment requiresmanagement to make estimates of these cash flows related to long-lived assets, as well asother fair value determinations.
*Stock Based Compensation:Stock-based awards to non-employeesare accounted for using the fair value method in accordance with SFAS No. 123, *Accountingfor Stock-Based Compensation*, and EITF Issue No. 96-18, *Accounting for EquityInstruments that are Issued to Other Than Employees for Acquiring, or in Conjunction withSelling Goods or Services*. All transactions in which goods or services are theconsideration received for the issuance of equity instruments are accounted for based onthe fair value of the consideration received or the fair value of the equity instrumentissued, whichever is more reliably measurable. The measurement date used to determine thefair value of the equity instrument issued is the earlier of the date on which thethird-party performance is complete or the date on which it is probable that performancewill occur. 

In December 2002, the Financial Accounting Standards Board("FASB") issued SFAS No. 148, *Accounting for Stock-BasedCompensation-Transition and Disclosure*, effective for fiscal years ending afterDecember 15, 2002. SFAS No. 148 amends SFAS No. 123 to provide alternativemethods of transition to the fair value method of accounting for stock-based employeecompensation. SFAS No. 148 also amends the disclosure provisions of SFAS No. 123to require disclosure in the summary of significant accounting policies of the effects ofan entity's accounting policy with respect to stock-based employee compensation onreported net income and earnings per share in annual and interim financial statements.SFAS No. 148 does not amend SFAS No. 123 to require companies to account fortheir employee stock-based awards using the fair value method. The disclosure provisionsare required, however, for all companies with stock-based employee compensation,regardless of whether they utilize the fair value method of accounting described in SFASNo. 123 or the intrinsic value method described in Accounting Principles Board("APB") Opinion No. 25, *Accounting for Stock Issued to Employees*. 

We account for stock-based awards to employees using the intrinsicvalue method in accordance with APB Opinion No. 25 and FIN No. 44. As permitted bySFAS No. 123, as amended by SFAS No. 148, we have chosen to continue to accountfor our employee stock-based compensation plans under APB Opinion No. 25 and providethe expanded disclosures specified in SFAS No. 123, as amended by SFAS No. 148.

We have adopted the disclosure requirements of SFAS No. 148effective October 1, 2003. The adoption of this standard had no impact on ourfinancial condition or operating results. 
*Fair Value of Financial Instruments: Statements of FinancialAccounting Standards No. 107, "Disclosures about Fair Value of FinancialInstruments," requires disclosure of fair value information about financialinstruments. Fair value estimates discussed herein are based upon certain marketassumptions and pertinent information available to management as of June 30, 2004. Therespective carrying value of certain on-balance sheet financial instruments approximatedtheir fair values. 

These financial instruments include cash and cash equivalents, accountspayable and accrued expenses. Fair values were assumed to approximate carrying values forthese financial instruments since they are short-term in nature and their carrying amountsapproximate fair values or they are receivable or payable on demand.
*Earnings per Common Share: Basic net loss per share is computedusing the weighted average number of common shares outstanding during the period. Dilutednet loss per common share is computed using the weighted average number of common anddilutive equivalent shares outstanding during the period. Dilutive common equivalentshares consist of options to purchase common stock (only if those options are exercisableand at prices below the average share price for the period) and shares issueable upon theconversion of our Preferred Stock. Due to the net losses reported, dilutive commonequivalent shares were excluded from the computation of diluted loss per share, asinclusion would be anti-dilutive for the periods presented.

There were no common equivalent shares required to be added to thebasic weighted average shares outstanding to arrive at diluted weighted average sharesoutstanding in 2004. In 2003 133,663 common shares would have been added from theconversion of the Preferred stock. 
*Income Taxes:The Company accounts for income taxes inaccordance with Statement of Financial Accounting Standards No. 109, "Accounting forIncome Taxes," ("SFAS 109") which requires recognition of estimated incometaxes payable or refundable on income tax returns for the current year and for theestimated future tax effect attributable to temporary differences and carry-forwards.Measurement of deferred income tax is based on enacted tax laws including tax rates, withthe measurement of deferred income tax assets being reduced by available tax benefits notexpected to be realized.
**Recent Accounting Pronouncements

.In January 2003, FASB issued Interpretation No. 46, *Consolidationof Variable Interest Entities*("FIN 46"). In general, a variable interestentity is a corporation, partnership, trust or any other legal structure used for businesspurposes that either (a) does not have equity investors with voting rights or (b) hasequity investors that do not provide sufficient financial resources for the entity tosupport its activities. FIN 46 requires certain variable interest entities to beconsolidated by the primary beneficiary of the entity if the investors do not have thecharacteristics of a controlling financial interest or do not have sufficient equity atrisk for the entity to finance its activities without additional subordinated financialsupport from other parties. The consolidation requirements of FIN 46 apply immediately tovariable interest entities created after January 31, 2003. The Company adopted theprovisions of FIN 46 effective February 1, 2003 and such adoption did not have a materialimpact on its consolidated financial statements since it currently has no variableinterest entities. In December 2003, the FASB issued FIN 46R with respect to variableinterest entities created before January 31, 2003, which among other things, revised theimplementation date to the first fiscal year or interim period ending after March 15,2004, with the exception of Special Purpose Entities ("SPE). The consolidationrequirements apply to all SPE’s in the first fiscal year or interim period endingafter December 15, 2003. The Company adopted the provisions of FIN 46R effective December29, 2003 and such adoption did not have a material impact on its consolidated financialstatements since it currently has no SPE’s.

In December 2003, the FASB released a revised version of InterpretationNo. 46, "Consolidation of Variable Interest Entities" ("FIN 46")called FIN 46R, which clarifies certain aspects of FIN 46 and provides certain entitieswith exemptions from requirements of FIN 46. FIN 46R only slightly modified the variableinterest model from that contained in FIN 46 and did change guidance in many other areas.We adopted FIN 46 during 2003. FIN 46R was adopted and implemented in the first quarter offiscal 2004 and had no impact on the Company’s financial position or results ofoperations.

In December 2004, the FASB issued SFAS No. 123 (revised 2004)"Share-Based Payment," or SFAS No. 123(R). SFAS No. 123(R) revises FASBStatement No. 123 "Accounting for Stock-Based Compensation," and supersedes APBOpinion No. 25, and its related implementation guidance. This Statement eliminates theability to account for share-based compensation using the intrinsic value method under APBOpinion No. 25. SFAS No. 123(R) focuses primarily on accounting for transactions in whichan entity obtains employee services in share-based payment transactions. SFAS No. 123(R)requires a public entity to measure the cost of employee services received in exchange foran award of equity instruments based on the grant-date fair value of the award (withlimited exceptions). That cost will be recognized over the period during which an employeeis required to provide service in exchange for the award, known as the requisite serviceperiod, which is usually the vesting period. SFAS No. 123(R) is effective for companiesfiling under Regulation SB as of the beginning of the first interim or annual reportingperiod that begins after December 15, 2005, which for us will be our first quarter of theyear ending December 31, 2006. We anticipate adopting SFAS No. 123(R) beginning in thequarter ending March 31, 2006. Accordingly, the provisions of SFAS No. 123(R) will applyto new awards and to awards modified, repurchased, or cancelled after the requiredeffective date. Additionally, compensation cost for the portion of awards for which therequisite service has not been rendered that are outstanding as of the required effectivedate must be recognized as the requisite service is rendered on or after the requiredeffective date. These new accounting rules will lead to a decrease in reported earnings.Although our adoption of SFAS No. 123(R) could have a material impact on our financialposition and results of operations, we are still evaluating the potential impact fromadopting this statement.

In December 2004, the FASB issued SFAS No. 153, *"Exchanges ofNonmonetary Assets—an amendment of APB Opinion No. 29,"* which is effectivefor us starting July 1, 2005. In the past, we were frequently required to measure thevalue of assets exchanged in non-monetary transactions by using the net book value of theasset relinquished. Under SFAS No. 153, we will measure assets exchanged at fair value, aslong as the transaction has commercial substance and the fair value of the assetsexchanged is determinable within reasonable limits. A non-monetary exchange has commercialsubstance if the future cash flows of the entity are expected to change significantly as aresult of the exchange. The adoption of SFAS No. 153 is not anticipated to have a materialeffect on our consolidated financial position, results of operations or cash flows.
**Peregrine Industries, Inc.Notes to Financial StatementsJune 30, 2005

**1. "Fresh Start" Accounting:**

On September 4, 2002 all assets were transferred to the chapter 7trustee in settlement of all outstanding corporate obligations. We adopted"fresh-start" accounting as of September 5, 2002 in accordance with proceduresspecified by AICPA Statement of Position ("SOP") No. 90-7, "FinancialReporting by Entities in Reorganization under the Bankruptcy Code."

On March 29, 2004, the U.S. Bankruptcy Court for the Southern Districtof Florida confirmed the order previously granted on March 15, 2004 for the sale ofPeregrine as a shell entity. All results for periods including and subsequent to September5, 2002 are referred to as those of the "Successor Company".

In accordance with SOP No. 90-7, the reorganized value of the Companywas allocated to the Company's assets based on procedures specified by SFAS No. 141,"Business Combinations". Each liability existing at the plan sale date, otherthan deferred taxes, was stated at the present value of the amounts to be paid atappropriate market rates. It was determined that the Company's reorganization valuecomputed immediately before September 5, 2002 was $0. We adopted "fresh-start"accounting because holders of existing voting shares immediately before filing andconfirmation of the sale received less than 50% of the voting shares of the emergingentity and its reorganization value is less than its post-petition liabilities and allowedclaims. 
**2. Income Taxes:

The Company had approximately $808,000 in net operating loss carryoversavailable to reduce future income taxes. These carryovers were reduced to zero oreliminated through our bankruptcy proceedings. We have adopted SFAS 109 which provides forthe recognition of a deferred tax asset based upon the value the loss carry-forwards willhave to reduce future income taxes and management's estimate of the probability of therealization of these tax benefits. We have determined it more likely than not that our netoperating loss carry-forwards will not be utilized; therefore we have provided for avaluation allowance against the related deferred tax asset. A summary of the deferred taxasset presented on the accompanying balance sheets is as follows:
**2005**2004The provision (benefit) for    income taxes consists of the following:   Currently payable:     Federal$
0$
0     State
0
0Total currently payable
0
0   Deferred:     Federal
796
2,408     State
123
373Total deferred
920
2,781   Less increase in    allowance
(920)
(2,781)   Net deferred 
0
0Total income tax provision    (benefit)$
0$
0  **2005**2004Individual components of    deferred taxes are as follows: Deferred tax asset arising from    net operating loss carry forwards$
3,701$
2,781   Total
3,701
2,781Less valuation allowance
(3,701)
(2,781)   Net deferred $
0$
0Individual components of    deferred tax allowance are as follows: Deferred tax asset arising from    net operating loss carry forwards
(3,701)
(2,781)   Total
(3,701)
(2,781)Net Deferred Income Taxes$
0$
0
Utilization of federal and state NOL and tax credit carryforwards maybe subject to a substantial annual limitation due to the ownership change limitationsprovided by the Internal Revenue Code of 1986, as amended, and similar state provisions.The annual limitation may result in the expiration of NOL and tax credit carryforwardsbefore full utilization.
**3. Commitments: 

The Company, prior to its bankruptcy, was a party to numerous lawsuitsand claims. As a result of the bankruptcy and the subsequent transfer by the BankruptcyTrustee of the Company’s corporate shell entity free of all liens, claims andencumbrances pursuant to Section 363(f) of the US Bankruptcy Code, the Company is nolonger party to any litigation.

The Company is not a party to any leases and does not have anycommitments 

**4. Stockholders' Equity:**

*Common Stock*

In April, 2004, we increased our authorized shares of common stock to100,000,000 par value $0.0001. 15 million shares were issued to 3 of our officers inexchange for $7,500 in cash. These shares are restricted as to transferability. All issuedshares of common stock are entitled to vote on a 1 share/1 vote basis. 
*Preferred Stock

The articles of incorporation were amended in September, 1998 toauthorize the issuance of 5,000,000 shares of 5% cumulative, convertible preferred stockwith a par value of $.0001 per share. At the same time, Series A of such stock wasdesignated, consisting of 200,000 shares. The holders of the Series A preferred stock donot have voting rights and can convert such shares into the Company's common stock on aone to one ratio. The Company may redeem the Series A preferred stock at any time at thestated value of $5 per share plus accrued but unpaid dividends.

On May 12, 2004 and pursuant to authority granted to it by thebankruptcy court, the Board cancelled and extinguished all issued and outstandingpreferred stock. All related dividends obligations were also extinguished. 
*Stock Based Compensation

Stock based compensation is accounted for by using the intrinsic valuebased method in accordance with Accounting Principles Board Opinion No. 25,"Accounting for Stock Issued to Employees" ("APB 25"). The Company hasadopted Statements of Financial Accounting Standards No. 123, "Accounting for StockBased Compensation, ("SFAS 123") which allows companies to either continue toaccount for stock based compensation to employees under APB 25, or adopt a fair valuebased method of accounting. The Company has elected to continue to account for stock basedcompensation to employees under APB 25. APB 25 recognizes compensation expense for optionsgranted to employees only when the market price of the stock exceeds the grant exerciseprice at the date of the grant. The amount reflected as compensation expense is measuredas the difference between the exercise price and the market value at the date of thegrant. 

There were no employee or non-employee options granted in either fiscalperiod ended June 30, 2005 or 2004. 
**4. Change of Control/Related Parties: 

*Change of Control*

On February 12, 2004, the Trustee for Peregrine and Park Avenue Group,Inc. entered into a contract resulting in a change in control of Peregrine. On March 15,2004, the Bankruptcy Court granted an order approving the contract and finding that ParkAvenue Group is a good faith purchaser within the meaning of 11 USC Section 363(m). OnMarch 29, 2004, the U.S. Bankruptcy Court for the Southern District of Florida confirmedthe order previously granted on March 15, 2004. 

The confirmed Court order provided that the existing officers anddirectors were deemed removed from office and also authorized the following: (i)the appointment of new members to the board of directors; (ii) the amendment of theArticle of Incorporation to increase the number of authorized shares to 100,000,000shares; (iii) the issuance of up to 30,000,000 shares of common stock, par value $0.0001to the new management;(iv) the authority to implement a reverse split of the issued andoutstanding shares in a ratio to be determined by the board of directors; (v) thecancellation and extinguishment of all common share conversion rights of any kind,including without limitation, warrants, options, convertible bonds, other convertible debtinstruments and convertible preferred stock; and (vi) the cancellation and extinguishmentof all preferred shares of every series and accompanying conversion rights of any kind. 

On March 30, 2004, the three new officers and directors each subscribedto 5 million restricted shares for a total of $7,500 or $.0005 per share. After theissuance, each officer owns 17.1% of our common stock. Management collectively controls51.2% of the issued and outstanding shares. 
*Related Party Transactions

The Company’s operating expenses have been paid by advance fromits principal shareholders.*************************************** |