NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2016
(UNAUDITED)
|
NOTE 1
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SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
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Hunt
for Travel, Inc. (the "Company") was incorporated in Nevada on December 15, 2009 to design and market enrichment excursions
for U.S. travelers. The enrichment component of these trips can be educational, informational or experiential and is tailored
to the travelers’ specific interests and tastes. Enrichment travel can also be referred to as adventure travel.
Effective
February 21, 2012, the Company filed with the State of Nevada a Certificate of Amendment to the Articles of Incorporation changing
the Company’s name from Hunt for Travel, Inc. to Praco Corporation. At the same time the Company ceased being a travel agency
and became a Public Shell.
On
July 3, 2012, the Company entered into an Equity Exchange Agreement (the “Exchange Agreement”) with Hawk Opportunity
Fund, LP, a Delaware limited partnership (“Hawk”), Philly Residential Acquisition LP, a Pennsylvania limited partnership
(“Philly”), Green Homes Real Estate, LP, a Pennsylvania limited partnership (“GH”), Nidus, LP, a Delaware
limited partnership (“Nidus”), and several other related parties. In the years since the Exchange Agreement was signed,
the assets of Nidus have been sold and Nidus will no longer be a part of the transactions contemplated by the Exchange Agreement.
Pursuant to the Exchange Agreement, the Company will issue 3,100,000 shares of its common stock, par value $0.0001 per share,
to Hawk, and in connection therewith, the Company will receive 89% of the aggregate equity interest of each of Philly and GH.
The
closing of the Exchange Agreement (the “Closing”) is still subject to certain conditions such as the completion of
an audit of Philly and GH, and the approval of the transaction from a lender, if necessary. These conditions of Closing have not
occurred and they may never be fulfilled, so the Closing may never occur. As the Closing has not yet occurred, the Company has
no interest in Philly and GH or any real estate at this time.
Philly
and GH own and manage real estate around Philadelphia and the Delaware Valley. Together these entities own approximately 225 separate
properties. These are primarily comprised of residential rental units which provide a steady stream of income. If and when the
Closing occurs, the Company will be the majority-owner and assume the operations of each of Philly and GH.
(A)
Basis of Presentation
The
accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in
the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission for
interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation
of financial position and results of operations.
While
the Company believes that the disclosures presented are adequate to make the information not misleading, these financial statements
should be read in conjunction with the financial statements and accompanying notes included in the Company’s annual Report
on Form 10-K for the year ended June 30, 2016.
It
is management’s opinion however, that all material adjustments (consisting of normal recurring adjustments) have been made,
which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative
of a full year.
PRACO
CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2016
(UNAUDITED)
|
NOTE 1
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (CONTINUED)
|
(B)
Use of Estimates
In
preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant
estimates include valuation of equity based transactions and the valuation of deferred tax assets.
(C)
Cash and Cash Equivalents
The
Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents.
At September 30, 2016 and June 30, 2016, the Company had no cash equivalents.
(D)
Loss Per Share
Basic
and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by Financial
Accounting Standards Board (“FASB”) ASC No. 260, “Earnings Per Share.” As of September 30, 2016 and 2015
there were no common share equivalents outstanding.
(E)
Fair Value of Financial Instruments
The
carrying amounts on the Company’s financial instruments including accounts payable and note payable, approximate fair value
due to the relatively short period to maturity for these instruments.
(F)
Recent Accounting Pronouncements
In
August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements
Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”.
The amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management
to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that
are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt,
(2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating
effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration
of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated,
and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to
be issued).
For
all entities, the new requirements are effective for annual periods ending after December 15, 2016, and interim periods within
annual periods beginning after December 15, 2016. Early application is permitted. We are currently reviewing the provisions of
this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
PRACO
CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2016
(UNAUDITED)
As
reflected in the accompanying financial statements, the Company has minimal operations, used cash in operating activities of $12,690
and has a net loss of $18,001 for the three months ended September 30, 2016. The Company also has a working capital deficit and
stockholders’ deficit of $354,391 as of September 30, 2016. This raises substantial doubt about its ability to continue
as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise
additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
Management
believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity
for the Company to continue as a going concern.
On
June 5, 2012 the Company received $9,000 from a third party. Pursuant to the terms of the note, the note is non-interest
bearing, unsecured and is due on demand. Total balance due at September 30, 2016 and June 30, 2016 was $9,000.
On
April 1, 2012, the Company entered into a consulting agreement with Europa Capital Investments, LLC for administrative and other
miscellaneous services.
The agreement is to remain
in effect unless either party desired to cancel the agreement.
During the three months ended
September 30, 2016 and 2015, the fees incurred were $-0- and $5,000, respectively.
On
October 1, 2016, the Company signed two employment agreements, one with the CEO/ President and one with a director of
the Company. The terms of both agreements are identical. They are effective October 1, 2016 to September 30, 2019, and call
for an annual salary of $48,000, and if such salary if not paid by the end of the year, the compensation would be paid in
Company stock at a 25% discount to the market value. In addition, all refinancing’s, fund raising, debt or equity sales,
and acquisitions, when completed by the respective individual, would be subject to a bonus payment of 10% of the gross
proceeds
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NOTE 5
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RELATED
PARTY TRANSACTIONS
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On
January 29, 2015, the Company received $7,000 from an entity owned by a stockholder of the Company. Pursuant to the terms of the
note, the note is non-interest bearing, unsecured and is due on demand. Total balance due at September 30, 2016 and June
30, 2016 was $7,000.
The
Company received $30,000 on April 30, 2013, $30,000 on July 12, 2013, $25,000 on October 9, 2013, $25,000 on January 9, 2014,
$25,000 on April 11, 2014 and $25,000 on July 10, 2014 from an entity owned by a stockholder of the Company. Total balance due
at September 30, 2016 and June 30, 2016 was $160,000. Pursuant to the terms of the notes, the notes are non-interest bearing,
unsecured and are due on demand.
PRACO
CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2016
(UNAUDITED)
|
NOTE 5
|
RELATED
PARTY TRANSACTIONS (CONTINUED)
|
The
Company received $8,500 on June 25, 2012, $20,000 on September 14, 2012 and $27,578 on January 17, 2013 from Hawk Opportunity
Fund, LP, an entity indirectly owned by a stockholder of the Company. Total balance due at September 30, 2016 and 2015 was $56,078.
Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand.
As
needed, Green Homes Real Estate, LP, an entity indirectly owned by a stockholder of the Company transfers funds to the Company
to cover operating expenses. Those transfers are as follows: $20,722 on November 13, 2014, $10,000 on March 17, 2015, $4,500 on
May 22, 2015, $20,000 on July 27, 2015, $20,000 on November 30, 2015, $15,000 on February 11, 2016, $5,000 on July 26, 2016 and
$3,831 on August 25, 2016, in exchange for various notes payable. Total balance due at September 30, 2016 and June 30, 2016 was
$99,052 and $90,222, respectively. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and due on
demand.
The
Company received $3,831 on August 25, 2016 from Philly Residential Acquisition LP, an entity indirectly owned by a stockholder
of the Company. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand.
The
Company recorded no income tax expense for the three months ended September 30, 2016 and 2015 because the estimated annual effective
tax rate was zero. As of September 30, 2016, the Company continues to provide a valuation allowance against its net deferred tax
assets especially since the Company believes it is more than likely than not that its deferred tax assets will not be realized.