NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2016
(UNAUDITED)
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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.
The
Company is available for another operational company to acquire.
On
February 22, 2017, the Company entered into a Letter of Intent (“LOI”) with Arista Capital LTD. (“Arista”)
whereby the shareholders of Arista will acquire eighty percent (80%) of the issued and outstanding shares of the Company. In consideration
for the above, Arista will pay $75,000 and will assume all of the liabilities of the Company. This transaction is contingent upon
the Company and Arista executing a formal “Merger Agreement” which is expected to occur on or about March 31, 2017.
The closing of the transaction is expected to occur sixty (60) days from the execution of the Merger Agreement.
The
LOI may be terminated by (a) mutual consent of the parties, (b) by the Company if (i) a definitive Merger Agreement is not executed
and delivered by the parties, (ii) the Merger Agreement is enjoined by a court or any governmental body, or (iii) by Arista if
they are not satisfied with the results of their due diligence investigation of the Company.
(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 DECEMBER 31, 2016
(UNAUDITED)
(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 December 31, 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 December 31, 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 notes payable, approximate fair value
due to the relatively short period to maturity for these instruments.
(F)
Recent Accounting Pronouncements
In August 2014, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-15 “Presentation of Financial Statements—Going
Concern,” outlining management’s responsibility to evaluate whether there is substantial doubt about an entity’s
ability to continue as a going concern, along with the required disclosures. ASU 2014-15 is effective for the annual period ending
after December 15, 2016 and for annual periods and interim periods thereafter with early adoption permitted. The Company is currently
assessing the impact of ASU 2014-15 on its financial statements.
PRACO
CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2016
(UNAUDITED)
As
reflected in the accompanying financial statements, the Company has minimal operations, used cash in operating activities of $18,675
and has a net loss of $59,968 for the six months ended December 31, 2016. The Company also has a working capital deficit and stockholders’
deficit of $396,358 as of December 31, 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 December 31, 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 six months ended
December 31
, 2016 and 2015, the fees incurred were $-0- and $10,000, respectively.
On
October 1, 2016, the Company signed two employment agreements, one with the CEO/President and the other with one of the Directors.
Both agreements are the same which are effective October 1, 2016 to September 30, 2019. The agreements call for an annual salary
of $48,000 and 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. All refinancing, fund raising, debt or equity sales, and acquisitions when completed by the individuals would be subject
to a bonus payment of 10% of the gross proceeds. In connection with the two employment agreements, the Company recorded $24,000
in compensation expense in the current period and is also included in accrued expense as of December 31, 2016 on the accompanying
balance sheet.
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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 December 31, 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 December 31, 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 DECEMBER 31, 2016
(UNAUDITED)
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NOTE 5
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RELATED
PARTY TRANSACTIONS (CONTINUED)
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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 December 31, 2016 and June 30, 2016
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, $3,831
on August 25, 2016 and $600 on December 31, 2016, in exchange for various notes payable. Total balance due at December 31, 2016
and June 30, 2016 was $99,653 and $90,222, respectively. Pursuant to the terms of the notes, the notes are non-interest
bearing, unsecured and due on demand.
As
needed, Philly Residential Acquisition 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: $3,831 on August 25, 2016, $1,000 on October 19, 2016, $5,000 on
December 1, 2016 and $600 on December 15, 2016. Total balance due at December 31, 2016 and June 30, 2016 was $10,431 and $-0-,
respectively. 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 six months ended December 31, 2016 and 2015 because the estimated annual effective
tax rate was zero. As of December 31, 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.
On
January 11, 2017, the Company received $10,500 from Hawk Opportunity Fund, L.P. This brings the total balance due to Hawk Opportunity
Fund, L.P. to $66,578. Pursuant to the terms of the notes, the notes are non-interest bearing, unsecured and are due on demand.
On
January 17, 2017, the Company received $12,500 from HWC, LLC, a subsidiary of Hawk Opportunity Fund, L.P. Pursuant to the terms
of the note, the note is non-interest bearing, unsecured and is due on demand.