NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2017
(UNAUDITED)
NOTE 1
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
|
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
April 19, 2017, the Company, entered into a Share Exchange Agreement, (the “Share Exchange Agreement”), by and among
the Company, Arista, and the holders of common stock of Arista (the “Arista Shareholders”). The closing of the Share
Exchange (the “Closing”) shall take place sixty days after the execution of this Agreement (the “Closing Date”),
conditioned upon the completion of due diligence by the Parties.
(A)
Basis of Presentation
The
accompanying unaudited condensed 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 unaudited condensed
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 presentation of these unaudited condensed financial statements. The results for the interim period
are not necessarily indicative of a full year.
PRACO
CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2017
(UNAUDITED)
(B)
Use of Estimates
In
preparing these unaudited condensed 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 March 31, 2017 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 March 31, 2017 and 2016,
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.
PRACO
CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2017
(UNAUDITED)
As
reflected in the accompanying unaudited condensed financial statements, the Company has minimal operations, used cash in operating
activities of $43,831 and has a net loss of $98,788 for the nine months ended March 31, 2017. The Company also has a working capital
deficit and stockholders’ deficit of $435,178 as of March 31, 2017. 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 unaudited condensed 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 March 31, 2017 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 nine months ended
March 31
, 2017 and 2016, 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 each 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 has accrued
$48,000 in compensation expense as of March 31, 2017.
NOTE 5
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RELATED
PARTY TRANSACTIONS
|
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. On January 10, 2017 the Company repaid the $7,000
to the related entity. Total balance due at March 31, 2017 and June 30, 2016 was $0 and $7,000, respectively.
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. On January 10, 2017
the Company repaid $3,000 to the related entity. Total balance due at March 31, 2017 and June 30, 2016 was $157,000 and $160,000,
respectively. 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 MARCH 31, 2017
(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, and $10,500 on January
11, 2017 from Hawk Opportunity Fund, LP, an entity indirectly owned by a stockholder of the Company. Total balance due at March
31, 2017 and June 30, 2016 was $66,578 and $56,078, respectively. 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 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 March 31, 2017 and June
30, 2016 was $12,500 and $0, respectively.
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 March 31, 2017 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, $600 on December 15, 2016, $10,940 on March 8, 2017. Total balance due at March 31, 2017 and June 30, 2016 was
$21,371 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 nine months ended March 31, 2017 and 2016 because the estimated annual effective
tax rate was zero. As of March 31, 2017, 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
April 5, 2017, the Company received $5,000 from Hawk Opportunity Fund, L.P. On April 24, 2017, the Company received $5,000 from
Hawk Opportunity Fund, L.P. This brings the total balance due to Hawk Opportunity Fund, L.P. to $76,578. Pursuant to the terms
of the notes, the notes are non-interest bearing, unsecured and are due on demand.
On
April 19, 2017, the Company, entered into a Share Exchange Agreement, (the “Share Exchange Agreement”), by and among
the Company, Arista, and the holders of common stock of Arista (the “Arista Shareholders”). The closing of the Share
Exchange (the “Closing”) shall take place sixty days after the execution of this Agreement (the “Closing Date”),
conditioned upon the completion of due diligence by the Parties.
Under
the terms and conditions of the Share Exchange Agreement, at Closing, the Company will exchange two shares of Praco common
stock in exchange for one common share of Arista common stock, which will equal 80% of the total outstanding shares of Praco,
subject to the terms and conditions set forth in the Share Exchange Agreement. In accordance with the Share Exchange
Agreement, the Company must reduce common shares outstanding to no more than 521,000 prior to the Closing.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
AS
OF MARCH 31, 2017
(UNAUDITED)
NOTE
7
|
SUBSEQUENT
EVENTS (CONTINUED)
|
Also,
at Closing, the Praco Shareholders shall be issued 240,417 warrants on a pro rata basis exercisable at $2.00 per share and subject
to the same terms and conditions as the warrants currently held by the Arista warrant holders except that a cashless exercise
shall not be permitted. In addition, at Closing, Praco will offer to exchange each outstanding Arista warrant for new warrants
issued by Praco entitling the holder to purchase an equal number of Praco shares and subject to the same terms and conditions
as the Arista warrants except that a cashless exercise will not be permitted. Also, at Closing, Praco will offer to exchange each
outstanding Arista convertible note into a convertible note issued by Praco convertible in to an equal amount of Praco shares,
subject to the same terms and conditions as the convertible notes currently held by Arista convertible noteholders.
All
Arista common share amounts and Praco common share amounts shall be adjusted accordingly if prior to Closing, any Arista noteholder
or warrantholder converts or exercises their respective securities and agrees to exchange such Arista shares for Praco shares
so as to allow Arista Shareholders to own 80% and Praco Shareholders to own 20% of the issued and outstanding shares on a non-diluted
basis at Closing. Furthermore, at Closing, Arista will pay Praco $75,000 to be used to pay outstanding liabilities of Praco.